In a time of national dysfunction and, frankly, gloom, our best hope for our society lies in our cities and metropolitan areas. That’s the message of the newly released book The New Localism, by Bruce Katz, the noted urbanist at the Brookings Institution, and Jeremy Nowak of Drexel University’s Lindy Institute for Urban Innovation. Based on their detailed research into urban trends and initiatives in the United States and around the world, with case studies of Pittsburgh, Indianapolis, Copenhagen, and other cities, the book describes the shift from outmoded hierarchical models of national governance to more flexible, networked, multi-stakeholder models of local and metropolitan governance.
I talked to Katz and Nowak about the book and their optimistic take on the future of cities. Our conversation has been edited for length and flow.
In a nutshell, how do you define the New Localism?
Katz: The New Localism is a philosophy of problem-solving for the 21st century. Cities are now dealing with some of the hardest challenges facing our society: social mobility, competitiveness, climate change, and more. The 20th century was very much about hierarchical systems; specialized, compartmentalized, highly bureaucratic. The 21st century is going to be networked, distributed, and led by cities.
Nowak: It calls into question how we think about leadership. It must be much more horizontal than vertical. These are things that we have observed on the ground, so this isn’t only aspirational, although we’re certainly in a nascent stage.
Who in your view are the leaders and catalysts of the New Localism?
Nowak: We’re seeing it play out in different ways in different places. Sometimes it may be led by a group of universities or philanthropies, or a business group or the public sector, but in almost all cases, it is networked and collaborative and it is cross-sector. And it happens when groups form around very concrete problems, and move forward with solutions to very concrete problems.
What we tried to do is understand the norms that go into that practice, so that we can try to get better and better at it—norms particularly around growth models, around governance models, and around finance models.
You note that the New Localism is not the same as government. The question that comes to mind is: How can cities ensure democratic accountability from what are essentially non-elected, extra-governmental organizations?
Nowak: Ultimately, accountability goes back to public officials and their role. But in all these processes, transparency, where possible, is really important.
Katz: Networked governance is really a form of participatory democracy. Our vision of city power extends beyond traditional governmental power, to market and city power. What is happening among many of the stakeholders is a kind of co-governing that is evidence-driven, data-rich, and outcome-oriented. How do we drive that through multiple segments of society, and really have it become a new way of governing our cities? The old representative democracy which only approached governing is not up to the task of the 21st century.
Where did the New Localism come from? What are the factors, the forces, the trends that have driven it?
Katz: This has been in play for quite some time, particularly in the United States, because we’ve seen the degrading of the public sector at multiple levels, and we’ve seen the federal and state governments become mired in partisan gridlock and ideological polarization. The so-called lower levels of government—cities, counties, and metro areas—have begun to fill the vacuum. They began to do that initially beginning in the Eighties and the Nineties in parts of their downtowns, by remaking their waterfronts that had been depopulated, by revitalizing areas that were beset by drug trafficking and crime, and through school reform.
Ultimately, this networked approach has begun to mirror the complexity of the challenges we face. The governmental response to most of these challenges tends to be specialized, bureaucratic, and compartmentalized. Networks look at challenges in more complex and varied ways.
Nowak: If we go back a year ago, many of us were feeling pretty miserable about the election. But we also saw more hopeful and optimistic things happening on the ground, everywhere. We saw all politics being national, and all solutions being local.
The act of optimism is not to talk about only how the national politics may change, but to lay out our observations about the things that have been going on for 30 years, which are telling this whole other story in America. Even if Hillary Clinton had been elected, it’s not like there would have been a lot of room in the federal budget for lots of changes. These same issues would’ve still been here. We wanted to tell that story.
You estimate that many cities are operating at 50 to 60 percent of their economic-development potential. Tell us more about the connection between the New Localism and how to unlock potential growth.
Nowak: The most important thing is for cities to understand what they’re good at, and to understand the assets they have. This is, in some ways, Economic Development 101. We use the example of Pittsburgh because that is a place that experienced a dramatic decline in the Seventies and Eighties. It’s a city people wrote off.
Yet today, it is thriving in many ways. And it’s not thriving because it gives out tax subsidies—although, like any place, it gives out some of those—but it’s thriving because companies want to be there, because there is talent there. It’s emblematic of how the Rust Belt and the industrial heartland can reinvent itself.
Katz: What’s interesting about Pittsburgh is, there’s a level of long-term-ism there that is defining how stakeholders think about their investments, and investments are less transactional and more platform-setting.
How far in the evolution of these new governance models are we?
Katz: I think they’re early days. All we have to do is look at our graduate schools and universities, where we don’t have anyone really deconstructing how the Central Indiana Corporate Partnership works, or how a publicly owned, professionally managed entity like the Copenhagen City and Port Development Corporation works. We study 20th century models to the nth degree, when they are no longer adequate for, or aligned with, the multi-dimensional challenges we face.
Very few places have the formal structures of Indianapolis, or some of the models we talk about in St. Louis or Cincinnati. But these are going to become the models that have the most hope for raising large amounts of capital that can be put towards very concrete, very tangible challenges.
I agree that this area of urban governance is completely under-studied, and it’s a critical issue. As you say, a key part of the governance discussion is finance, and your book raises important points about reclaiming public wealth and redefining public finance. Could you elaborate on them?
Katz: On the idea of public wealth, what struck us is that we are caught, ideologically and structurally, between two arguments that are going to get us no place. On the one hand, the argument that everything should be privatized, and on the other, the argument that by default we go along with the mediocre aspects of government management. The real question is, how can we have private-driven incentives, and private-driven systems that are managing public wealth for the benefit of the public?
The best example we could find was Copenhagen. A couple of decades ago, it had 18 percent unemployment, a crisis in every way imaginable. So the local and national government came together and the first thing they did [was] roll all of their public assets into the Port Corporation, which, while public, is run as a private entity. And it is now paying off the debt for the rebuilding of all of Copenhagen’s transportation infrastructure.
Nowak: Cities are good at knowing what they owe, but not good at knowing what they own. If you go into public finance, people will tell you about the budget, and bondholders will tell you about liabilities. But how many cities can you go to and say, “Show me your balance sheet, which includes your assets, and tell me what the market value of those assets is”? And, to take it a step further, who can tell you what the productivity or the return on those assets is?
This is a big area to rethink in this country. Frankly, given the fact that we have such significant legacy liabilities, with unfunded pensions and the like, there’s not going to be any choice but to rethink how we manage what we own. It’s not a matter of privatization; it’s a matter of effective management.
It goes without saying that this country is divided, not only in terms of politics, but in what people are willing to pay for. I can see the New Localism making great headway in a place where the city and the state are aligned, where both are willing to invest in public goods. But what about more anti-urban states that undercut their cities through cutbacks, preemption, and more? How can a city in that kind of state make headway?
Nowak: In many of those places, there’s a political issue. In many cases, metros are going to have to fight against that preemption. And they’ve been pretty effective at it: There are many more preemption bills that have been proposed than have been passed successfully. My own state of Pennsylvania—where Pittsburgh does what Pittsburgh does, and Philly does what Philly does, along with the Lehigh Valley and many other areas—they all have got to learn how to work together in Harrisburg to get things done for their own benefit.
Katz: I would push back just a little. Two stories from our book are Indianapolis, which for many years had a Republican mayor and leadership, and Oklahoma City, which is a red city in a red state. What makes those examples important is that the state governments have been weak and ineffectual for decades—and compare that to New York, where the state government is overbearing and interventionist.
So, in a way, the success of an Oklahoma City or an Indianapolis is because, even though there’s a very conservative political culture, the corporate, civic, and university leadership of the city realized, “It’s us, or no one.” The New Localism is in many respects going to show us a whole bunch of red counties and red cities that have learned a new pattern of governance that now the blue cities are going to have to catch up with.
There are internal obstacles to the New Localism that come from cities themselves. It’s not just wealthy coastal cities that are unequal and experiencing political conflict over gentrification. It’s happening in places like Pittsburgh and Detroit. More to the point, most cities face real issues with overly restrictive land-use regulations and rampant NIMBYism. What can be done to overcome these obstacles?
Nowak: There’s no perfect solution. Whenever you’re leaning toward the future, you’ve got to figure out how to manage the past. But it is much easier to manage growth than to manage decline. It’s good that there’s something to deal with in Pittsburgh. The question is, how can you have growth that includes the most people and the most places?
You want lower-income people to be advantaged by the growth that’s there and not disadvantaged by it. That’s got to be part of the conversation in all of the platform-building we talk about. Is it all the public sector? No. Is it all local? No. Because a lot of redistribution has to happen nationally. In general, it’s a question of human capital, and whether lower-income people are going to be able to skill up so they can take advantage of what growth there is. There’s no way out of that.
Katz: One product of the 20th century and the centralization of governments is how it infantilized local leadership. They were told, “You don’t own the problem of housing; you don’t own the problem of early childhood education.” I think what’s happened with the New Localism—and it’s taken decades—is for a series of stakeholders at the local level to realize [they] have to step up, there is no one else.
Many elements of the New Localism have been pioneered in American cities. But cities around the world—in Copenhagen, in the U.K., in Canada—seem to be moving more rapidly toward it. Do you think the U.S. and its cities might be in danger of falling behind?
Nowak: The Northern Europeans have basically perfected public-sector innovation. The U.S. has basically perfected product innovation. Our universities are working closely with companies and investors and entrepreneurs to basically drive the next technological revolution. In the next five to 10 to 15 years, Europe will become a little more like us. The business community, the universities, and the philanthropic sector are going to come together and begin to act a little more like stewards of their city, like they do in the U.S. At the same time, the kind of public-asset corporation pioneered in European cities like Copenhagen is going to move into the U.S.
How do these local initiatives stand up in the face of big structural forces which are anti-city and anti-urban?
Nowak: The big idea we lay out is that in globalization, the global and the local converge. The role of the nation-state in economic growth is changing. There are global networks, global capital, global institutions; whether they’re universities or companies, it’s a new world. If you go back to the election, Bernie Sanders was talking about the national economy and the loss of manufacturing jobs. Donald Trump was talking about it. Both of them were talking about a national economy that doesn’t exist. The problem is that we’ve had difficulty coming to terms with the world as it is. What we’ve tried say here is in the midst of globalization, this is what we have to concentrate on.
Katz: There is an elite view, in the U.S. and frankly many other countries, that the country is governed from the capital, and that has not been true for decades. When L.A. votes for $120 billion to build its own transit system, it doesn’t fit the elite view. Or, when city after city, including red counties, votes to finance more early-childhood education or to deal with climate, or whichever issues are bedeviling [them].
These old, compartmentalized, hierarchical perspectives of the world die hard, because they challenge everything that people hold true: how decisions get made, how problems get solved, how big moves get financed. So the elite focuses on the gloom, and the rest of the country goes ahead and keeps getting the work done.