America’s cities and metropolitan areas constitute the engines of the national economy and our centers of trade and investment. They deliver and help finance the public goods in our country, and they influence, through a myriad of powers, the shape of our built environment, the physical space of our communities, and, hence, how individuals negotiate their personal and professional lives on a daily basis.
Yet cities and metropolitan areas cannot go it alone. Their efforts depend on the support of federal and state governments—maddening, meddling, and domineering as they may be. State and federal governments are, through mandatory entitlements, tax incentives, and spending programs, the largest single investors in cities and metropolitan areas, their infrastructure, their residents (particularly disadvantaged residents), and their leading-edge institutions. They set the regulatory rules of the game by which cities and metros (and their companies and core institutions) grow advanced industries, attract global talent, and compete on the world stage.
Throughout the past century, states and the federal government—at different times, at different levels, for different purposes—have been large, shared investors in both the economic infrastructure (for example, institutions of higher learning, advanced research institutions, vast health care complexes), physical infrastructure (roads, transit, water and sewer), and social infrastructure (schools, supportive services) of cities and metropolitan areas. It is impossible to imagine the late twentieth-century rise of "cities of knowledge" in Silicon Valley or the Research Triangle or the Boston megalopolis without recognizing the foundational role played by federal investments in basic and applied science and state investments in public universities. It is similarly dangerous to underestimate the positive impact that a national safety net has had on the economic evolution of cities and metropolitan areas. There has been a hidden, virtuous intersection of people-oriented and place-oriented policies. Federal and state support for the elderly and the very poor, for education, and for health care has mitigated the fiscal burden of supplementing income and providing services that cities and metropolitan areas—and their private and civic charities—must bear.
At the same time, there have been plenty of negative effects and unintended consequences of state and federal action in cities. As early as 1969, Professor Daniel Patrick Moynihan (later urban affairs adviser to President Nixon and eventually a powerful U.S. senator) explained:
There is hardly a department or agency of the national government whose programs do not in some way have important consequences for the life of cities, and those who live in them. Frequently—one is tempted to say normally!—the political appointees and career executives concerned do not seem themselves as involved with, much less responsible for the urban consequences of their programs and policies. They are, to their minds, simply building highways, guaranteeing mortgages, advancing agriculture, or whatever. No one has made clear to them they are simultaneously redistributing employment opportunities, segregating or desegregating neighborhoods, depopulating the countryside and filling up the slums, etc: all these things as second and third consequences of nominally unrelated programs.
Moynihan was describing the way that federal and state governments have deified specialized expertise and organized themselves as a collection of balkanized executive agencies overseen by separate legislative committees. States have used their power not only to define and limit the power and geography of cities and municipalities but also to create a dizzying, often comical array of special-purpose entities: school districts, fire districts, library districts, sewer districts, mosquito districts, public benefit corporations, industrial development authorities, transportation authorities, port authorities, workforce investment boards, redevelopment authorities, control boards, and emergency financial managers. Fundamentally, cities and metropolitan areas have either been places acted on or the backdrops and locations where state and federal interventions have been made, whether for ill or good. They have been treated like one more constituency group to be ignored (or occasionally placated) rather than an integral part of economy shaping in their own right.
It’s time to recognize that cities and metropolitan areas are actors, not subjects. We know how to talk about the relationship between the federal government and states—we call it federalism, an arrangement in which the states cede some powers to the federal government but retain others, so that the different tiers of government act as dual sovereigns. But metros have been conspicuously missing from that construct. They do not have a place in the U.S. Constitution and are absent from state law, which recognizes municipalities, villages, cities, townships, and counties, but not the metropolitan areas of which they are a part. Metros are not governed by a single executive but rather are loosely knit together by overlapping networks of business, civic, philanthropic, nonprofit, and elected leaders. They are less powerful politically but more powerful economically than states.
We are now in a different economic epoch. The favored production system is now flexible and distributed rather than standardized and concentrated. The key factor of production is now innovation and knowledge rather than capital and labor. Waves of economic change have put cities and metros at the forefront of developing nimble, customized responses to the new fundamentals: knowledge exchange, networks of innovators, the rising importance of collaboration, and the centrality of local mediating institutions and platforms, including metros themselves.
The federalism that best serves the cities and metros that drive economic development in the 21st century is not the traditional "dual sovereignty" that splits power between federal and state governments according to subject matter—but a form of collaborative federalism in the service of cities and metros that set priorities and lead implementation. This requires a re-sorting of the roles and responsibilities of government that focuses on how the constitutional sovereigns—the state and federal governments—interact with their city and metro partners across the private and public sectors to co-produce the public good.
Every metropolitan area and its leadership network could easily start hosting sessions several times a year with the people who represent that metro in the U.S. Congress and state legislature. These "metropolitan caucuses" could be a bipartisan, business-like vehicle for keeping track of metro-generated visions and initiatives and the federal and state policies and investments that could be put to work in service of same. The meetings should be roll-up-your-sleeves work sessions, providing a federalist equivalent to the problem-solving process that city and metro leaders follow on the ground level. Some federal delegations from large cities like New York do have a tradition of meeting as a caucus. These caucus meetings should be metro led and include both the state (or states) and the federal delegation so that the dual sovereigns can tackle issues together, along with their network of public and private partners at the city and metropolitan level.
Beyond this regular interaction and collaboration, what metropolitan areas need most from federal and state governments is fairly straightforward, if rarely discussed. First, metropolitan leaders need federal and state governments to set a strong safety net for the nation’s frail and disadvantaged citizens and a progressive tax system. That means strengthening entitlement programs like Social Security, Medicare, and Medicaid (with improvements and efficiencies) as the country grows, diversifies, and ages. That also means, given broader wage dynamics, making work pay by investing smartly at both the federal and state levels in entitlements like the earned-income tax credit and the refundable child credit. But smartly investing in people is not enough. The tax code must be fair so that poor citizens do not bear an undue burden for financing government services, for example, through regressive state sales taxes.
Second, metros need both states and the federal government to support the kind of economy they are trying to build. A panoply of business, university, and philanthropic leaders have consistently argued for the government to further invest in innovation, infrastructure, and education and skills training to enhance American competitiveness in the twentieth-century global economy. The President’s Council on Jobs and Competitiveness—which is chaired by Jeff Immelt, the CEO of General Electric—has recommended that public and private R&D investment increase to the level of at least 3 percent of U.S. GDP by 2020 in order for America to maintain its position as a global leader in innovation. Respected business leaders such as Felix Rohaytn have been consistent champions of a national infrastructure bank that would use public resources to leverage private sector capital for a wide range of needed investments. Andrew Liveris, the CEO of Dow Chemical, has called for significant investment in STEM (science, technology, engineering, and mathematics) education and improved skills-training programs at community colleges so that workers can learn the skills necessary for high-paying advanced manufacturing jobs in the United States.
The federal government has one other critical task: To help metropolitan leaders such as those in Portland and Miami further internationalize the American economy, Congress and the president need to act on immigration reform, favorable trade agreements, and a new openness to foreign investment, including from China. America’s simultaneous diversity and insularity sets us apart from every other nation on earth. Our metropolitan areas have enormous potential to participate in and benefit from the seamless exchange of goods, services, ideas, capital, and people. But Los Angeles does not set the rules on immigration, nor does Portland determine the framework for trade and investment, nor does Miami determine the antitrust laws that condition business competition. These decisions must be taken at the national or state level to create common markets and common rules, or chaos will ensue at the metropolitan scale. Metropolitan power does not absolve the federal and state governments of taking strong, clear action on enhancing America’s economic position in the world. The consequence of inaction is to further constrict metropolitan globalism and stunt metropolitan performance. If U.S. metros are to be fully globally fluent, their co-sovereigns need to lay down a path for global engagement.
All the things mentioned here fall outside the traditional bounds of urban policy. And that’s the way it should be. The federal government does not have a “state” policy. Confining what matters to states to small offshoots and corners of the federal government would be absurd, given the multidimensional nature of modern challenges and the multilayered, intertwined nature of the engagements between the federal and state governments. But that is what the United States has done with cities and metropolitan areas. We have had a Federal Department of Housing and Urban Development since 1965, even though the policies with the greatest impact on cities and metros (and housing, for that matter) are hatched somewhere else in the government. Recall the ways that the federal government (and states) engage with the big, game-changing initiatives: policies and dollars related to immigration, research, and development, Head Start, and the National Science Foundation. Nobody would call these "urban" policies. They aren’t taking up a little tiny speck of the federal budget, like community development block grants or other typical “urban” programs. Urban policy can no longer contain, if it ever did, the power of cities and metropolitan areas.
This piece was adapted from The Metropolitan Revolution, now available from the Brookings Institution Press.