You Can’t Build a City on Pity

Commentary, Frontier Centre, Local Government

At first glance, the cities of Milwaukee, Wisconsin and Winnipeg have little in common, but they do. Both are manufacturing and transport centres, largely working class, with a history some might describe as socially progressive. Milwaukee elected America’s first openly socialist mayor in 1916, and three years later Winnipeg’s general strike catalyzed Canada’s left wing. Today, both communities are governed by men with a passion for their cities.

Of the recent wave of reform mayors in the United States, Milwaukee’s four-term incumbent, John Norquist, stands out for his no-nonsense approach to running cities. Today, his city is booming, and the turnaround was accomplished through smart policy and without outside help and subsidies. Norquist, an admirer of Canadian cities, abhors the damage easy federal money and subsidies have done to American cities and warns civic leaders about the downside of seeing more money, particularly more federal money, as the main solution to the ills of the city.

Norquist, the keynote speaker at a recent Frontier luncheon, is blunt that a city’s sustainability cannot be built with handouts. In his book, The Wealth of Cities, he writes, “The effect of this residue of federal aid is not so much to build cities, but to keep mayors wandering in the wilderness, waiting for bread to fall from on high.” He argues instead for policies that maximize the natural advantages of cities – they are tremendously efficient engines for wealth creation – and build a framework for independent prosperity.

Norquist’s success in revitalizing Milwaukee has been quite spectacular. His downtown has blossomed with development, sparked by about three-quarters of a billion dollars in new investment, including residential conversions and new multiple housing that have attracted tens of thousands of people back to the centre. On top of that – and partly because of the expanded tax base it implies – he was able to reduce property taxes by more than 20 percent over eight years.

He accomplished that by re-inventing how city hall works and with old-fashioned frugality, a refreshing character trait in a liberal Democrat. He ended internal monopolies that provided administrative services within city government, allowing departments to purchase from external suppliers. Services were re-oriented to focus on outputs and outcomes, instead of process. He also followed, Glen Murray take note, what has become famous as “Norquist’s Law”, counting on productivity increases to hold increases in city spending below the rate of inflation. That means that permanent programs be funded with stable revenues.

Norquist would likely express little surprise at the underwhelming results of the various transfer and subsidy programs showered down on Winnipeg and Manitoba to fight poverty, save the downtown, create housing and otherwise stoke the economy. He emphasizes that cities should focus on fundamentals, creating excellent and affordable services, public safety and good schools, areas he tackled one by one in Milwaukee. A hardliner on crime, he pushed an aggressive policy of frontline community policing. It paid off, he says, with “higher property values, business expansion and job creation, restored cultural and civic life, and a renewed sense of community.” Winnipeg’s laissez-faire attitude towards petty crime – to wit, the chronic intimidation of tourists by panhandlers at the Sheraton Hotel – significantly affects our downtown’s economy.

Norquist’s appreciation of markets extends to his critique of traffic planning and urban policies on housing. He eliminated one-way streets to create a friendlier driving environment in Milwaukee’s downtown. Much of the new housing occupies land reclaimed by tearing down a freeway and restoring the old city street grid, which favoured local use instead of speeding traffic from suburb to suburb. Older buildings and new ones cluster around an expanded river walk system along the Milwaukee River.

Zoning codes that discourage density by restricting the development of multiple-use neighbourhoods have been repealed. Entrepreneurs can obtain building permits within two weeks, a process geared to the rapid conversion of buildings into living space. Cities grew and thrived as seamless mixes of housing, businesses and services, Norquist explains, and separation by fiat of these life functions through rigid zoning rules forbids cities to express their natural value. He likens it to baking a cake. By themselves, the ingredients are worthless. When mixed properly, they become quite delectable.

Norquist is mystified by our enduring policy of rent control. During the last three years, 3,500 housing units have been added to downtown Milwaukee without any subsidies. The interesting living spaces of converted downtown buildings are now home to over 17,000 people. After a quick drive through our mostly empty exchange district, he raved about the “potential of Winnipeg’s beautiful downtown”. All frozen by rent control. He added an interesting twist to the classic analysis of its destructive effects. Why, he asks, should city employees cap their own wages and benefits by imposing a regulated ceiling on the tax base?

The central message is compelling. Forget about subsidies. Seeking a productive role for government – to identify and counter impediments to the natural flow of people and capital – allows cities to make the best use of their natural advantages of diversity and specialization. The consequent prosperity takes care of their fiscal problems at the same time.

“You can’t build a city on pity,” is Norquist’s rallying cry. This nominal “left-winger” in our simplistic local parlance sees intelligent policy reform as the key to unleashing the potential of the city. We already have the tools to rebuild a vibrant downtown economy.

Milwaukee’s success proves that we shouldn’t be afraid to use them.