Cities are central to prosperity as hubs of innovation and growth, but they labor with persistent inequality, driven by America’s deeply entrenched anti-urban policies and politics. I argue in a new book that economists don’t pay enough attention to anti-urban state and federal policy and structural racism in our metropolitan areas, making it harder to fight inequality than it should be.
America has a long-standing anti-urban bias, rooted in the nation’s origins and the power of states over cities. Thomas Jefferson hated cities, saying “I view great cities as pestilential to the morals, the health, and the liberties of man.” He thought yellow fever epidemics would produce “some good” by discouraging “the growth of great cities in our nation.”
Jefferson’s anti-city views, amplified by the power of rural-based slave agriculture in southern states, are built into America’s governance and policy. Even though cities were a central driver of American economic growth, they were (and are) consistently disfavored by federal and state policy and power.
After the Civil War, legal battles over public financing for railroad and other activities resulted in the doctrine of “Dillon’s Rule,” with the Supreme Court finally affirming the victory of states over cities. In 1903, the Court ruled cities are “only auxiliaries of the state” and “may be created…may be destroyed, or their powers may be restricted, enlarged, or withdrawn at the will of the (state) legislature.”
Economists like Edward Glaeser and urbanists like Jane Jacobs correctly point to cities as the places where innovation is created, driving economic growth and national prosperity. According to the Brookings Institution, in 2021 America’s 192 largest metropolitan areas produced 84% of our GDP while housing 78% of our population.
Standard urban economics, while correctly celebrating urban economic innovation and wealth creation, only provides a partial picture of the inequality problem. Our metropolitan structure, with politically independent suburbs ringing more fiscally troubled central cities, generates persistent inequality.
American metros are single regional economies. But each region is fragmented into literally hundreds of independent governments, mostly suburbs surrounding the core city. Those suburbs benefit from urban economies’ innovation and growth, but they don’t share the costs or the tax revenues, concentrating inequality in the core city.
This metropolitan form also is built around structural racism. Especially after World War II, massive housing subsidies and automobile-based transportation infrastructure fostered suburban growth. But federal and state policies, with outright racist components, limited the ability of Blacks and low-income people to live in those suburbs.
Higher property values in politically independent suburbs allowed financing of superior schools, feeding multi-generational disadvantage. And many racially-biased practices were at work—contract covenants forbidding home sales to Blacks, refusing federally subsidized mortgages, not allowing multi-family housing, lack of public transportation, segregated employment, spatial mismatch of new jobs, and inadequate schools.
All of these worked to keep suburbs more prosperous, and more white, than the cities driving overall regional prosperity. Wealth from housing accumulated mostly to white families, further increasing the Black-white wealth gap over generations.
Mainstream urban economics doesn’t incorporate these realities of political economy. Empirical studies often treat metropolitan areas as synonymous with cities, both in data and in analysis, downplaying or ignoring the political fragmentation.
Many economists actually endorse this fragmentation and competition within regions. They see multiple governments akin to firms in a competitive market trying to use taxes, regulations, and amenities to lure residential “customers,” not as free-riders profiting from urban economic innovation and growth while avoiding their fair share of costs and contributing to segregation.
Structural racism, suburban subsidies, regional government fragmentation, the hostility of state legislatures, and anti-urban federal policy all contribute to our unequal status quo. We underfund our cities while preventing them from pursuing fairer outcomes.
My new book, Unequal Cities (published by Columbia University Press), analyzes America’s troubled urban history with case studies from New York, Detroit, and Los Angeles while pointing out the strengths and limits to mainstream urban economic analyses. But I also discuss hopeful political coalitions pursuing equity through alliances among communities of color, unions and pro-growth forces, and environmentalists.
The book’s official publication date is January 10th, but it’s available now. If you purchase it through Columbia University Press, you can get a 20% discount using the code CUP20—still in time for the holidays! I’m also giving book talks; here’s a recent one recorded at New York’s great Skyscraper Museum, including a discussion with CUNY’s John Mollenkopf, one of our best thinkers about cities.
Greater equity in cities can build on local energy and advocacy but ultimately will require reforming state and federal policy. I hope Unequal Cities contributes to the necessary changes.