13.1 INTRODUCTION
The
nations concern with urban problems began in earnest during the 1960s. It
was easy to perceive that something was wrong. American cities were
characterized by high unemployment among nonwhites, high crime rates, pressing
fiscal problems, and serious pollutionconditions that have continued with
more or less intensity to the present day.
The urban
crisis was generally viewed as being aggravated by excessive population
increase and interregional migration to central cities of large metropolitan
areas. For some people the solution was as obvious as the problem: slow down
the population growth of urban areas, either by stemming the flow from
nonmetropolitan areas or by encouraging out-migration. Establishment of growth
centers in less developed or economically lagging areas was urged as a
plausible means of easing urban problems by keeping the rural populations
employed closer to home and out of the large cities. Viable growth centers,
however, were never established.
Even as
proposals for diverting migration and population growth away from the larger
cities were being formulated, the long-standing tide of net migration to the
large cities was slowing to a trickle.1 In
the 1960s, the population growth of American metropolitan areas was almost all
accounted for by natural increase. As we have seen, the decade of the 1970s
brought a resurgence of nonmetropolitan population growth as well as a relative
(and in some cases absolute) decline in metropolitan-area populations. With
this change came new perspectives on the "urban crisis." The questions being
asked today often concern the problems of urban areas in transition from one
economic base to another, and we have come to recognize more fully that the
powerful forces of decentralization that were discussed at length in Chapter 7 are at the root of many of the most
pressing urban problems.
In the
present chapter, we focus attention on the role of changes in spatial patterns
of urban activities in the emergence of current urban problems, and we discuss
associated policy issues. We shall concentrate on four areas of special concern
and importance: declining activity in the central core of cities, urban
poverty, the transportation of people within urban areas, and fiscal disparity
between central cities and their surrounding suburbs. All of the problems that
we shall discuss are related and can be traced to underlying changes in land
use, location, or locational advantage that make life or business survival more
difficult for some groups. By relating these problems to changes in locational
incentives, useful perspective can be gained on the challenges they pose and
the responses they may elicit.
13.2 DOWNTOWN: PROBLEMS AND RESPONSES
Given the
extent of decentralization of economic activity that has characterized urban
areas in the United States,2 we could accept
it as normal that the central core of an urban area will tend to show less
rapid growth (in terms of such measures as employment, business sales, and
daytime population) than peripheral areas. No special problem or basis for
concern would arise from such a trend. Actually, however, the downtown areas of
many American cities are in trouble, and their ills constitute part of the
whole complex of urban problems.
There are
three principal symptoms: declining levels of activity, congestion, and
environmental deterioration. The distress is, of course, felt in different ways
by such different groups as downtown merchants, property owners, commuters,
residents, shoppers, and taxpayers.
13.2.1 Declining Levels of Activity
The acute
cause for concern here is, as noted above, absolute losses rather than
merely a failure to keep up with the suburbs. Although the number of office
jobs is increasing in many downtown areas, especially those of the larger
metropolises, a great many other downtown activities shrank substantially in
the years following the end of World War II, when removal of wartime
constraints on automobile production, motor fuels, and new construction
released some pent-up pressures for suburbanization. Estimates of average daily
travel into the Chicago "Loop" appear in Figure 13-1 for the period 1946-1961, in which time the citys population was roughly
stable but the Chicago SMSAs population rose about 20 percent.
Figure 13-2 refers to another casethe Manhattan
central business district, comprising that part of the island below 61st
Streetover a much longer period and with some information on the types of
vehicles in which people entered the area. It appears that the total traffic
peaked some time around the end of World War II and then fell off, as in
Chicagos case. Most of the decline between 1963 and 1971 was in off-peak
riders, with rush-hour travel nearly constant. There was a large increase in
the use of individual motor vehicles and other vehicles.
By American
standards, both Chicago and New York are well provided with rapid transit. In
cities lacking such facilities, the decline in the relative importance of the
central business district as a trip destination has probably been still more
marked.
In Chapter 7, reasons for the reduced locational
attractiveness of the downtown areas in recent decades were adduced for
manufacturing, wholesale and retail trade, residence, routine office work, and
some types of information-processing activities such as research. Activities
historically attached to downtown locations are (1) those that require a great
deal of daily face-to-face contact with a variety of activities that are
themselves subject to strong cluster economies (such as the financial district,
law firms, power-structure luncheon clubs, and the like), (2) activities such
as opera houses, city halls, newspapers, or museums serving the entire
metropolitan population at a single location, and (3) activities catering to
large numbers of out-of-town visitors (such as hotels, convention halls, and
wholesalers or manufacturers salesrooms for visiting
buyers).
The use of
planes and cars by out-of-town visitors has greatly weakened these central ties
for such categories as hotels and convention halls, and many business
conferences are now being held in suburban motels and rented space at airports.
Regional sales and service offices that are the home bases for traveling sales
or servicing personnel have similarly found access advantage in outlying
locations. After these and other defections, the corporate headquarters office
has remained as a bulwark of downtown areas. Even in this activity, however,
there has been a continual segmenting of office functions, with many of the
more routine jobs being shifted to suburban locations.
Accordingly, it appears that declining downtown employment is either
already prevalent or threatened in each of the major categories of activity
that have historically made up the city core. The mutual interaction between
fewer employees and fewer customers is obvious.
Though the
actuality or the prospect of absolute decline in central business districts
obviously injures property owners and others who have a stake in the level of
downtown activity, we need not fall into the place prosperity fallacy of
assuming that every location as such has a "right" to be shielded against
obsolescence. If downtown decay is to be treated as a legitimate public concern
justifying preventive action, the case for such concern and action should be
made on a broader basis than the interest of the property holders immediately
involved. The basic questions for policy judgment are (1) whether an active and
viable downtown is a valuable part of the urban economic and social complex,
affecting its overall efficiency and quality of life, and (2) whether there are
substantial hidden social benefits and externalities not taken into account in
the market pricing system. It is hoped that the rest of this chapter will be of
some help to the reader in forming an opinion on these questions.
13.2.2 Congestion
Another
cause for concern in downtown areas is traffic congestionwhich is not
only inordinately wasteful of time and street space but is certainly one of the
important reasons for the declining popularity of downtown locations. Concern
with congestion may seem paradoxical, since total travel to downtown areas is
apparently not growing much and in many cities is even diminishing. The
explanation lies partly in the greater use of automobiles and partly in the
increased peaking of the traffic in rush hours.
Congestion
affects two types of movement: circulation within the downtown area by vehicles
and pedestrians, and movement into and out of the area (primarily by vehicles).
The former problem has been acute as long as large cities have existed,3 and it would be difficult to demonstrate any great
progress or retrogression, in terms of speed or comfort, for mobility within
downtown areas. Getting into and out of downtown has however become more of a
problem with the decay of public transit, greater distances from residential
areas, and vastly increased use of the space-consuming private automobile. Thus
it is at least a fair surmise that the time required for downtown circulation
and access has not been reduced. In the face of improved access by suburbanites
to suburban jobs and shopping facilities, this implies deterioration in the relative access advantages of downtowns.
13.2.3 Amenity
There is
abundant evidence that the troubles of downtown areas involve in part some
unfavorable manifestations of obsolescence. The street utility layouts and the
buildings of high-density downtown areas are more expensive to modernize than
those of less intensively developed neighborhoods. In situations of rapid
locational and technological change, it is especially difficult for districts
and buildings to grow old gracefully and to develop the positive attractions
associated with maturity and age in downtown areas that have grown up under
more stable and regulated conditions (such as those of many old European
cities). So far at least, it seems clear that downtown amenities have not
merely failed to keep pace with those of outer areas but have suffered absolute
deterioration.
Greater use
of automobiles is partly responsible. Whether parking at the curb, in open
lots, or in multilevel garages, cars occupy large amounts of scarce downtown
space and thus reduce convenience of access by increasing the distance from one
work or shopping destination to another. In a thoroughly motorized city such as
Los Angeles, more than two-thirds of the downtown area can be preempted by
streets and parking facilities, and this is all "dead space" as far as any
ultimate destinations are concerned. The prime potential advantage of a
downtownquick and convenient access among various kinds of
activitiesis thus dissipated.
Another
factor in deterioration of the quality of downtown life reflects rising income
levels and the changing distribution of income groups of the population. In
Chapter 7, we found that urban growth was associated with the proliferation of
subcenters of economic activity. With rising income levels, the density of demand increases, and a metropolitan area can support more shops
catering to the more affluent population. Some of these will be located in
subcenters that, in effect, compete with the downtown shopping district and
draw away potential customers. Even more important, however, has been the
effect of suburbanization. As the middle- and higher-income people have led the
way to the suburbs, the populations with closest access to downtown areas are
increasingly the poor. The changing composition of downtown consumer demands
has been apparent in the cheapening of stores, restaurants, amusements, and
other types of consumer-serving facilities; and this, of course, further
discourages the more affluent from choosing downtown as a place to work, play,
shop, or live.
13.2.4 Some Responses
We have
identified and explained some aspects of a major urban problem variously
described as "strangulation," "the downtown dilemma," "dry rot at the core,"
and in other equally vivid terms. What can or should be done about
it?
It is
important to keep reminding ourselves that the raison dêtre of an urban concentration is provision for close, easy, and multifarious
interpersonal contact. From this standpoint, an urban pattern is "efficient"
when there is a focal point for concentration of as many as possible of those
activities that require access to a high proportion of the firms and households
of the area and are best concentrated (because of scale economies or external
economies of close agglomeration) in one single location in the area.4
Among the
activities that are logical candidates for central location, on the basis of
their access and agglomeration requirements, terminals for interregional
passenger transport are certainly included. Yet airports, in the present state
of air transport technology, are obviously far too space consuming and noisy to
be eligible for anything like a central location, and become increasingly
remote as they get larger. If the interurban public transport of the future can
be compactly designed and compatible with intensive development in its terminal
area, it is reasonable to expect cities to have their main passenger terminals
integrated centrally with their internal transportation as they were until
around the middle of this century.5 Possible
developments in fast interurban ground transport (for example, in the
BostonWashington "Northeast Corridor") suggest some hope in this
direction. Prospects for relocating air terminals to city centers seem much
more conjectural. But it is possible that at some future time urban historians
will consider as a curious temporary aberration the latter-twentieth-century
period in which interurban transport did not go directly from one city center
to another.
Perhaps the
most fundamental and abiding urban problem involves the search for ways to
exploit the citys unique potential for maximum mass and diversity of
contact, choice, and opportunity without unduly sacrificing other values.
However, we need to understand a great deal more (and in more specific and
quantitative terms) about what urbanism contributes to economic and social
progress through its contact opportunities. There is room for more empirical
analysis as well as for amplification of the theories of location and regional
development to cover complex spatial relations involving contact and time as
major parameters. A host of suggestive hypotheses still await
verification.6
The problem
of advantages of concentration and how to exploit them comes to a head in the
central business district, since there the potential contact opportunities are
highest and the conflict with space requirements the most serious. A basic
challenge to the ingenuity of urbanists is to devise ways of improving downtown
areas in the three relevant aspects: making them easy to get to, easy to get
around in, and attractive and effective as places to work or
visit.
As yet, we
do not know very much about the effectiveness of various methods of increasing
the realized contact potential of central business districts. Efforts in this
direction in the United States have been fragmentary and often mutually
conflicting, and there has been some reluctance to regard experiences in
foreign cities (such as Rotterdam or even Toronto) as applicable to American
cities. Pedestrian malls have in general been tiny and tentative. New downtown
amenities have mostly been in the form of wider streets, parking garages,
convention halls, and shiny skyscrapers. Radical modernization of mass transit,
integrated with adequate parking and transfer facilities at outlying stations
and adequate intradowntown facilities (such as minibuses and moving sidewalks),
has not been tried. Policies of various public authorities on transport have
generally been both conflicting and self-defeating, as will be shown
later.7 Imaginative and consistent transport
planning is basic to any improvement or even maintenance of the functional
effectiveness of downtown areas, though clearly not the only essential element
in a solution. The possible benefits of a more efficient system for bringing
large numbers of people into close contact in agreeable surroundings appear
large in terms of revitalization of the urban mechanism at its
center.
13.3 URBAN POVERTY
13.3.1 Dimensions of Urban Poverty
Our primary
concern in this section is with the spatial distribution of poverty and its
incidence. We shall find that important related trends can be explained
substantially by the forces that have shaped American patterns of
urbanization.
There are
two fundamentally different ways of defining poverty. It may be defined in absolute terms, by establishing a threshold level of income that is
consistent with a standard of living which satisfies basic needs, or in relative terms (e.g., 50 percent of the median income). Poverty
statistics compiled by the U.S. Bureau of the Census are based on absolute
standards. Thus by the 1981 standard, an average nonfarm family of four8 with an annual income below $9287 was considered
poor (i.e., classified as living in poverty).9
The poverty
thresholds for various groups change from year to year to reflect the effects
of inflation on the purchasing power of income; therefore, in "real" terms they
have remained virtually unchanged since the 1960s. Median income has risen
substantially since that time, so it is not surprising that the poverty rate
(the percentage of persons classified as poor) has fallen from 22.2 percent in
1960 to 14 percent in 1981.10 Much less
progress would be evidenced if a relative standard had been applied.
Table 13-1 shows that poverty in the United States is
primarily urban poverty. In 1981, nearly 61 percent of the persons
living in poverty resided in metropolitan areas; whereas only 43.9 percent of
the nations poor were urban in 1959. Within metropolitan areas, the
majority of the poor live in central cities. However, the percentage of urban
poor who live outside central cities has increased from just under 39 percent
in 1959 to roughly 42 percent in 1981. Thus not surprisingly, these figures
indicate that as the nations population became more urban, poverty became
concentrated in metropolitan areas; and as the metropolitan populations moved
to the suburbs, urban poverty became somewhat less concentrated in central
cities.
Table 13-2 offers additional perspective on the
poverty problem by focusing on its racial incidence in major geographic
groupings. Looking first at the figures for the United States as a whole, we
find that in 1981 the incidence of poverty among blacks was over three times
that of whites and that this ratio has changed very little since 1959. Thus
while there are many more white persons classified as poor (in 1981 two out of
three poor persons were white),11 in terms
of lifes chances, blacks have a tremendous burden to overcome.
The high
incidence of poverty among urban blacks in 1959, as shown in Table 13-2, relates directly to the in-migration of
poor persons "released" from the agricultural sector.12 The rapid increase in metropolitan populations of the 1950s was due
largely to the decline of the agricultural sector and consequent interregional
migration, which brought many rural poor people, especially blacks, to the
nations largest urban areas. The magnitude of this movement and the
subsequent concentrations of poverty in urban areas were at the heart of the
"urban crisis" as perceived in the 1960s and early 1970s. Despite these
regional shifts, nonmetropolitan areas continue to exhibit high rates of
poverty. Table 13-2 indicates that in 1981 the
percentage of poor persons in nonmetropolitan areas was nearly as large as that
in the central cities of metropolitan areas.
At least
some portion of the apparent gains made by blacks in the 1960s was a result of
an explicit reaction to the urban crisis. The "War on Poverty" declared by
President Lyndon B. Johnson represented an important phase of income
redistribution in the United States. The rapid economic growth of the overall
economy during this period also could have contributed to whatever progress
these figures suggest.
Focusing on
metropolitan areas as a whole, we find that the percentage of persons living in
poverty decreased during the 1960s; however the poverty rate increased for all
races during the 1970s. This setback was largest among blacksparticularly
those residing in central cities. But the incidence of poverty among suburban
blacks actually fell slightly from 1970 to 1981, even in the face of an adverse
trend in poverty for the nation as a whole.
One factor
aggravating the problems of urban poverty areas is their sheer size and
cohesiveness. They represent segregation (often racial) on a grand scale, in
contrast to a pattern of small poverty or minority group pockets. And it is all
too clear that a given aggregate amount of poverty and deprivation is a far
more serious problem if it is solidly massed in one large area than if it were
scattered throughout a city. This will be recognized in theoretical terms as a
case of adverse neighborhood effects, or external diseconomies of
agglomeration.
In a large
poverty area, a much greater proportion of the residents live far from the
edges, where there would be at least some exposure to superior opportunity,
amenity, evidences of hope, and avenues of gradual escape; and the "outside
world" can come to be something remote and alien, identified as an oppressive
and hostile "establishment." Polarization of ways of life and attitudes between
poor persons and outsiders is fostered in such situations. In more specific
terms, access to jobs is harder, and genuine integration of schools becomes
impossible without such controversial devices as the long-distance busing of
schoolchildren. Improvement, rehabilitation, and renewal of housing are more
difficult in an extensive slum, since the prevailing character of the
neighborhood determines both the incentive to improve an individual property
and the benefits thereby achieved.13 Maintenance of public safety likewise poses greater problems in
massive areas of poverty and social stress.
Another
particularly aggravating factor in poverty areas is poor access to employment
opportunities. Although urban poverty areas are typically rather central, their
people are at an increasing disadvantage in job access. This partly reflects
the fact that they are the least mobile group in the whole urban area, in terms
of either work or change of residence. Many cannot afford cars and find even
transit fares a serious financial burden. Overall home-to-work commuting speeds
by most existing modes of transit are lower than by car, which restricts the
feasible range of commutation. (Halving ones commuting speed reduces by
75 percent the area that is within one hours travel time.)
The effect
of decentralization on the urban poor is complex. Many of the jobs that
promoted access to skill ladders and encouraged mobility for generations of
European and other immigrants were going to the suburbs, or had already gone,
while the concentrations of urban poor were growing in the nations
central cities. The consequence of this has been described by some as a "dual"
labor market, whereby many persons are trapped in a last-hired, first-fired
class of jobs with little opportunity for advancement.
The
suburbanization of whites has been a feature of urban areas for many years;
however, as we saw in Chapter 7, evidence of significant suburbanization of
blacks was first apparent in the 1970s. Some of the growth of black populations
outside central cities during the 1970s may be the result of "spillover,"
rather than of suburbanization per Se. That is, as the number of central-city
blacks increases, it is likely that black neighborhoods will simply be extended
beyond the central-city boundary. As noted earlier, however, Table 13-2 indicates that the incidence of black
poverty outside central cities changed little during the 1970s, while poverty
among central-city blacks increased substantially. From this, one is tempted to
draw the conclusion that suburbanization among blacks has been selective, just
as it has been for whites; higher-income blacks have moved to the suburbs in
sufficient numbers to overcome an adverse national trend in poverty that has
been particularly difficult for blacks as a whole. Reduced discrimination and
advances made by blacks in gaining better jobs may be enhancing their
residential mobility within metropolitan areas. Also, suburbanization itself
may be improving the job access of blacks and enabling more of them to move
above the poverty level.
13.3.2 Some Policy Considerations
The
magnitude of the urban poverty problem precludes a detailed discussion of
related policies here. However, a subset of policy issues is explicitly spatial
in nature and deserves at least some mention. We shall concentrate on policies
for central-city poverty areas, which have come to be called ghettos.14
Since the
most urgent need of poor populations is more jobs, policies to stimulate new
business growth in and near poverty areas have been given a good deal of
consideration. The task is not easy, since the prevailing trends of location
are in the opposite direction, with increased emphasis on just those things
that the inner-city areas lack: ample space for expansion, low taxes, and a
community environment offering amenity, visibility, prestige, and quick access
to circumferential and intercity highways. It can be surmised that a large
permanent subsidy would be needed to entice enough private employers to locate
near central-city poverty areas and employ wholly or mainly local residents;
and that such large sums might better be used in other ways to provide improved
job access.
A policy
akin to "import substitution" had some strong adherents in the 1960s and early
1970s. Recommendations entailed assistance to ghetto entrepreneurs to establish
small consumer-serving businesses within the area. The assumption was that such
"black capitalism" can take advantage not only of an ample low-cost labor
supply but also of a somewhat protected home market (that is, the ghetto
consumers will prefer to patronize a firm operated and staffed by neighbors).
It was also urged that the profits of such enterprises would accrue to ghetto
residents and would, to a greater extent, be spent in the neighborhood. The
importance of developing black entrepreneurial skills and financial backing, so
that blacks can win a more adequate foothold on the middle and higher rungs of
the business management ladder, was also recognized.
Unquestionably, the nurturing of a much larger cadre of black
business managers and entrepreneurs, and the accumulation of capital and
credit-worthiness by black-controlled firms, must play an essential part in
redressing the wide interracial gap in levels of opportunity that exists today.
At the same time, there are obvious limitations on what can be accomplished in
the kinds of businesses that can be expected to survive within ghetto areas
proper. Profitability is color blind; what is profitable for blacks would be
equally profitable for whites. With respect to the actual creation of
additional black employment, it is not realistic to expect much more to
materialize than the equivalent of replacing whites now working in ghetto
areas. Such a number would be small compared to ghetto unemployment. Moreover,
empirical investigations have shown that the neighborhood multiplier effects
created by additional employment and income in ghetto areas are extremely
small.15
More
recently, the merits of "enterprise zones" in poverty areas have been the focus
of substantial debate.16 The idea is to
create an open "free-market environment" in order to stimulate economic
activities of all sorts. Thus the program would not be limited to activities
serving the local market but also would hope to attract manufacturing and other
activities to inner-city poverty areas. The incentives for relocation and local
development include primarily (1) tax relief and (2) easing of government
regulations.
Such
programs seem to deny the real disadvantages of central-city locations that are
so characteristic of urban areas, and it is difficult to be optimistic about
their success. It is doubtful whether the possible savings afforded by tax
exemption would be enough to match the economies associated with production and
distribution in suburban locations, especially in light of the considerable
body of evidence suggesting that taxes are not a powerful locational
determinant.17
The effects
of reduced government regulations are difficult to gauge. Some productivity
gains can be expected, but their size relative to the competitive advantages of
suburban locations is a matter of speculation. Further, this aspect of the
subsidy involved in enterprise zones may well imply further concentration of
"nuisance" industries (i.e., industries with relatively large negative side
effects such as noise, dirt, or traffic congestion) in poverty areas.18 Thus the social and environmental costs of this policy
may be substantial.
All the
measures discussed above share a place prosperity approach, in that they focus
on improving conditions and opportunities within the distressed area itself.
This is not to say that such measures are misguided or unnecessary. But a
complementary line of endeavor, involving opportunities outside central-city
ghettos, must be considered also.
One
approach has been to recognize the relatively long distances between ghetto
areas and the areas of positive employment growth: a handicap compounded by
inadequacy of public transit, low car ownership, generally low job
qualifications, and discrimination. These component factors of the access
problem were being attacked in various cities by the late 1960s or were the
subject of serious proposals for government action. Special bus routes were
established on a trial basis to take ghetto workers to job locations previously
out of reach;19 programs were proposed for
financing automobile purchase or rental by ghetto workers seeking to extend
their commuting range; continuing public programs of education, training, and
inducement to cooperating employers nibbled away at the problems of inadequate
training and employer discrimination; and some progress was made in attacking
the more serious and extensive racial discrimination practiced by
unions.
Here, at
least, the "people prosperity" side of the poverty problem is recognized more
explicitly. With black suburbanization now a reality, many of the old concerns
about removing barriers to black decentralization seem less pressing. However,
job training and programs for the provision of high-quality basic education
should be priority items on any list of policies designed to encourage
mobility, even at the local or intraurban level.
13.4 TRANSPORTING PEOPLE
Among the
major urban problems covered in this chapter, transportation has a special
claim to our attentionnot because it is necessarily the most pressing or
the most complex, but because it is the most fully identified with the
economics of location and space, which is the province of this book.
Urban
transportation in America today involves mainly the uses and requirements of
the private automobile, and the serious problems confronting us emerge mainly
from difficulties in locational accommodation to the very rapid adoption of
this mode of travel. Data from the Census Bureau show that for metropolitan
areas having a population of one million or more, over 80 percent of all
workers commute to their jobs by car, truck, or van. Of these, the vast
majority drive alone. Public transit is the principal means of transportation
for only 11.9 percent of all workers in these cities.20
The
twentieth-century locational adjustments required by the use of the automobile
were even more drastic and far-reaching than those required in the nineteenth
century by the advent of the railroad. In the United States at any rate, the
speed of introduction of the new means of transport was somewhat greater in the
case of the automobile. The changed conditions of transport apply to a wider
range of distances, routes, and types of travel. A higher proportion of the
populationapproaching 100 percentis directly affected. More potent
and articulate political pressures are generated because of the greater number
of parties directly involved. Coming at a later stage of economic development,
the locational impact of the automobile was imposed on a larger complex of
fixed facilities than was the impact of railroads; for that reason it created
more functional and locational obsolescence of capital. Particularly relevant
within urban areas is the fact that the automobile is not merely a conqueror of
distance but, at the same time, is in its own right a major claimant for scarce
space. A substantial part of the difficulty caused by automobile use in urban
areas is precisely due to its large space requirements. Moreover, the
automobile appears to be the chief culprit in the air pollution crisis that has
threatened the very habitability of densely populated urban areas.
13.4.1 Some Transport Problems
One aspect
of the urban transport problem shows up in the statistics of travel distances
and times, not to mention the complaints of individual commuters. It seems that
the search for quicker journeys, to work and to other destinations, has been in
large part self-defeating. This is particularly true with regard to daily work
trips in urban areas, both large and small. By and large, the advantages of
speed, flexibility, and better roads have been offset by increased traffic and,
most important, by a vastly wider separation of residences and work places. The
average commuter travels greater distances in an American urban area than he or
she did ten or twenty years ago but spends about as much time en route.
Relative to the time spent at work, time spent in traveling to and from work
has probably even increased. In addition, the trip is more costly. As to
whether the strain or disutility of the trip is greater for the automobile
driver or for the public transit rider, there appears to be no consensus; this
is likely to remain a matter of personal taste. But up to the present, the
direct consumer benefits of automobile ownership seem to involve not reduction
of travel times but somewhat more spacious styles of living and a greater
variety and frequency of recreational and other nonwork journeys.
A second
aspect of the transport problem, affecting some of the people all the time and
all of the people some of the time, is the emasculation of public transport
services that has resulted directly from automobile competition and indirectly
through dispersed residence and employment patterns fostered by highway
transport. For example, rapid transit systems can achieve substantial economies
of scale if large numbers of persons are concentrated along "trunk line"
routes. A dispersed population means that volumes of traffic sufficient to
generate these economies can be realized only if passenger collection systems
or "feeder lines" are used. The time and expense involved for commuters in
making changes from one bus line to another or from bus to rapid transit reduce
the attractiveness of public transportation. As additional dispersion occurs,
public transit is put at further disadvantage, worsening access for substantial
groups of the population (especially the poor).
13.4.2 Approaches to Solution
In a
theoretically perfect "transportation market," the person wanting transport
would choose the most efficient mode and would be willing to pay for it up to
the point where incremental benefits no longer exceeded incremental costs. Each
kind of transport service provided by others to the user would be made
available in response to demand, up to the point where incremental revenues no
longer exceeded incremental costs of providing the service.
In the
present urban setting, however, such an ideally efficient allocation of
resources is an unattainable and therefore partially irrelevant goal. The
obstacles to any easy attainment of an efficient solution lie partly in
travelers assessments of their own costs, partly in the externalities
involved in transport investment and traffic congestion, partly in the lack of
coordination of public policies, and partly in the feedback effect of the
supply of transport services and facilities on subsequent demand.
The costs
of operating a private automobile have been variously estimated, depending on
the type of car, roads, and traffic conditions; the allowances for tolls; and
the distance driven per year. The Federal Highway Administration estimated the
costs of owning and operating a car in 1979 at 24.6, 21.7, and 18.5 cents a
mile for standard, compact, and subcompact models respectively.21 For a typical new car in that year, they
estimated that gasoline, oil, and maintenance accounted for just under half
these expenses; fuel per se represented only 26 percent of total costs. The
remainder was attributable to fixed costs, such as depreciation, insurance,
registration, and taxes.22
The
commuter making a decision on whether to drive to work or use public
transportation may be inclined to look just at the direct out-of-pocket costs
associated with the specific trip; that is, fuel plus any parking fees or tolls
involved. It may be reasoned that a car is needed in any case, so that expenses
other than fuel and parking are fixed costs unaffected by car use and therefore
properly ignored in the marginal decision. But maintenance, repairs, and
insurance premiums are in fact affected by mileage driven; and in a growing
proportion of households, the issue of having a second or even a third car is
relevant. If the need for an additional car depends on whether or not a
breadwinner drives to work, then obviously the whole cost associated with
owning that added ear ought to be taken into account in the choice of commuting
mode.
Even if the
traveler were to weigh his own costs fully, a misallocation of resources in
urban transport could result from a failure to charge him for the use of
highways, parking facilities, or public transit in accordance with how much it
costs to provide those facilities.
The
building and maintenance of highways (including the necessary traffic control
appurtenances) is necessarily a public function. It is financed, in the United
States, by the proceeds of state and federal motor fuel taxes and license fees
plus further funds from the public treasuries. Because of this, it is often
argued that motor travel within cities and elsewhere is heavily subsidized,
which would help to explain the growing extent of private automobile commuting
and the decay of public transit services.
The
existence and magnitude of such subsidy are extremely difficult to establish. A
searching study by John R. Meyer, J. F. Kain, and M. Wohl in the early 1960s
reached the conclusion that the user charges levied on motorists nearly if not
wholly cover the costs of providing urban facilities for motor traffic except
for regular travel on "local streets and roads" and peak-hour travel on
high-cost urban expressways.23
There is
not, however, general agreement that the subsidy element is inconsequential.
Meyer, Kain, and Wohl argue that partial payment for local streets and roads
out of general funds is not really subsidy, since such facilities would be
needed regardless of whether private automobiles or public transit were used
for trunk-line traffic. But since local streets and roads include everything
that is not a state or federal highway, it is hard to believe that their
widths, construction costs, and maintenance expenditures are in the long run
really independent of the number of cars in operation. If such streets (or,
say, everything beyond minimal two-lane access roadways) were built and
maintained solely from charges on motorists, there would doubtless be fewer
motorists, fewer highway commuters, and a smaller effective demand for
freeways. There would also be better public transit.
The
exception noted by the same authors in regard to peak-hour travel is a vital
one. The size and design of a roadway have to be geared to maximum rather than
average traffic load, and in this sense the incremental cost of providing for
one more car is many times greater in the rush hour than at off-peak hours.
This principle is, of course, equally true for public transit
services.
Congestion costs are a prime example of the multifarious
externalities of urban economies that pose a challenge to the pricing system
and the economic insight of public authorities.24 "Marginal travelers" in the rush hour are to some extent penalized
for their timing by having a slower and less pleasant journey; but they are not
charged anything for the discomfort and delay they impose on the rest of the
traffic stream. For example, rush-hour travelers as a group are surely more
responsible than the off-peak driver for costs of the next added expressway
lane.
One
approach to this problem is to internalize the cost of peak travel; that is,
make rush-hour travelers pay at least some of the extra costs for which they
are responsible. Estimates of such costs vary substantially from city to city
and even within cities. As an indication of their magnitude, however, one study
of urban transportation in San Francisco recommended congestion tolls of
16.3 cents per mile (in 1973 prices) for peak hours of the week in the central
city.25 Ingenious suggestions have been
formulated that would make it possible to assess and collect congestion tolls,
both for public transit and for private automobiles. For example,
individualized electronic signals emitted by cars could be recorded at short
range by receivers along congested routes, appropriate charges automatically
figured by electronic computer, and bills periodically rendered to the car
owner.26
The role of
various levels of government in financing highway and transit improvements also
has affected the balance between private automobile and public transit. Federal
and state highway authorities enjoy their own special revenue sources. In 1980,
motor fuel tax collections by all levels of government amounted to $14.7
billion, while state and local motor vehicle and operators license fees
brought in an additional $5.7 billion.27 These sources are ready-made and powerful mechanisms for channeling
money into urban streets and expressways; there is no corresponding source of
public funds for public transit.
Another
factor here is the sharing of expenses among various levels of government.
Since World War II, the state and federal governments have shouldered
increasingly large shares of the financial responsibility as long-distance
intercity and interstate routes assumed more importance and the cost of road
building outran the revenue-raising powers of local governments. Presently, up
to nine-tenths of the cost of an urban freeway can be covered by federal money
and the rest by state money. Even though all, or nearly all, of the total cost
is ultimately met from state and federal taxes on vehicles and fuels, the fact
that most of the funds come from Washington naturally makes such expressways
appear to the local and state governments and their citizens as goodies to be
won, rather than as investments to be judiciously pondered.
Bias toward
private automobile transport is also encouraged by current practices concerning
the provision of public parking facilities in downtown areas. Some space is
provided free at the curb, an additional amount at the curb for quite low fees,
and a growing amount in garages built by municipal parking authorities and
either operated publicly or leased to private operators. An element of subsidy
is implied, of course, by the fact that municipalities are in the parking
business at all. The argument advanced for this activity is that there is a
demand for the service which could not otherwise be met; but this argument can
involve a degree of circularity. The demand for downtown parking depends on how
easy it is for people to drive into the downtown area; thus each new expressway
creates fresh evidence in support of the parking authoritys desire to
expand. At the same time, provision of easier and cheaper parking downtown
makes more people want to drive there, producing fresh evidence in support of
the highway planners projects. Since two or more separate agencies and
budgets are involved, coordination is, at best, difficult to achieve. It is a
little reminiscent of the man who took another piece of bread in order to
finish his butter, and then another piece of butter in order to finish his
bread. . .
Perhaps a
rational policy would be to determine first the maximum number of private
automobiles that can efficiently circulate within the downtown area, given the
rather inelastic limits of downtown street space. This could then be translated
into needed parking capacity, and parking fees could then be set at such a
level as to discourage any additional downtown trips. Such a policy, however,
would require a degree of coordination and bureaucratic restraint that
apparently does not widely prevail.
The rate
schedules for parking are likewise open to criticism on economic grounds. A
reasonable schedule of rates would heavily penalize the all-day parker who
comes in at the peak hour in the morning and leaves at the peak hour in the
evening, and would offer much lower rates to the short-time off-peak parker,
who adds little to traffic congestion but much to the sales of downtown
merchants. In practice, however, the opposite principles are generally
followed. Hourly rates are lowest for the all-day parker, generally a rush-hour
commuter who is the real culprit in creating the demand for more highway and
related facilities; and rates are generally designed to promote fullest use of
the parking facilities, regardless of the effect on traffic.
A minor but
interesting misallocation of resources can arise from the provision of parking
space that is free or below cost by business establishments or institutions for
their employees or patrons. Space is not a free good, so the cost of a
"free" parking lot is in effect shared among all the employees or patrons,
including those who do not use the lot. Transit riders and pedestrians are thus
made to subsidize drivers. Urban universities, for example, are always under
strong pressure from a majority of the students and staff to furnish subsidized
parking space. It may be overlooked that this policy really amounts to a
special penalty on the members of the university community who do not use cars
to get to the campus; and these people may well be less affluent than those who
enjoy the subsidy.
The
combination of forces described above contributed to a steady decline in public
transit service levels throughout the 1960s and early 1970s.28 Transit costs have been rising steadily. Although
fares have also increased, they do not come close to covering the total costs
of providing transit services.29 In response
to this and formidable political pressure from urban constituencies, Congress
passed the Urban Mass Transportation Act of 1964. Capital grants programs under
this act were operating at a rate of approximately $2 billion dollars a year in
the latter half of the 1970s, and more recently they have been in the
neighborhood of $2.5 billion to $3 billion per year. The federal subsidy for
operating expenses has always been substantially less than $1 billion per
year,30 although local and state subsidies
have been common.
The small
size of these commitments relative to state and federal highway funds reveals a
striking bias in public investment. The apparent historical and political
reasons for it are interesting. State, and especially federal, aid to highway
building has been defended on two quite separate grounds. One is fiscal: Local sources of taxation have simply not been adequate to finance all of
the public services and investments demanded. The other reason is geographical: Intercity and interregional highways serve much more than
a local need.
In
financing intrametropolitan expressways, the fiscal justification is, of
course, applicable. The same justification could be invoked in support of state
and federal aid to urban transit, since such transit is recognized as an
essential public service in any sizable urban area, and public transit firms
have long been strictly regulated as public utilities. But there has been a
good deal of delay in recognizing that unaided private enterprise can no longer
compete effectively with automobiles operated on the public highways, and
government has been slow to accept any responsibility. It has been much easier
(though harder on the patrons) to let the private transit firms sink into
bankruptcy before finally taking over their equipment at junk prices.31
The geographical justification for state and federal aid is not legitimately
applicable to the transport within metropolitan areas with which we are
concerned in this chapter. But in terms of governmental organization and
legislative authority, roads are roads. State and federal aid does not stop at
the city or metropolitan boundary but carries a predominant share of the burden
for major arteries and particularly expressways within urban areas serving
local needs. It seems obvious that urban transit facilities and services should
be equally eligible for outside financial support.
The
question of subsidies is complex indeed, and their effects on resource
allocation can be significant. If all transport technologies (private
and public) were priced so as to cover the marginal social costs imposed by
transport users, the efficiency of resource allocation would be improved. In
such a world, subsidies would serve two distinguishable ends. First, for
technologies characterized by increasing returns to scale, such as public
transit, setting price equal to marginal cost would necessarily imply operating
deficits (marginal cost is always less than average cost when scale economies
are realized). Thus subsidies would be necessary to ensure continuation of
vital services. Second, subsidies would serve as a mechanism for income
redistribution, ensuring that those most in need were provided with basic
services. Hence efficiency and equity would each be given explicit
consideration.
Short of
implementing such a set of policies, however, we are left to recommend that the
nature of public subsidies and their effects be fully recognized in a balanced
transport program. If highway and transit investments were both financed in the
same way, it would be feasible and eminently logical to pose the investment
decisions to voters as alternatives, explicitly spelling out the tradeoffs
involved. For example, the benefits of a projected rapid-transit route could be
assessed in terms of how much highway investment would be saved as a result.
Even more broadly, one might try to include the savings in private automobile
ownership and operating costs; and more broadly still, one could evaluate the
long-run implications of the decision in terms of the transportation costs
involved in a dispersed, road-oriented metropolitan complex compared to those
in a partially transitoriented spatial pattern.32 Our previous discussion explains why the issue is almost never
posed in such terms. And unless voters are asked the right questions, they can
hardly be expected to give the right answers.
13.5 URBAN FISCAL DISTRESS
Another
major problem, closely related to those of transport, poverty, and declining
levels of activity in central business districts, is fiscal distress in central
cities of metropolitan areas. Strain on fiscal resources of local governments
is evidenced by rising local tax rates, growing dissatisfaction with the
quality of public services, and rapidly rising reliance on state and federal
financial support and programs.
The
decentralization of economic activity has been a major contributing factor to
these trends. Suburbanization of middle- and upper-income families, decreasing
population, and coincident shifts in employment have meant that the tax base of
many central cities has been weakened substantially. However, central-city
public expenditures have been slow to respond by adjusting downward. In part,
this is due to the fact that these governments have always provided some
services for the metropolitan area as a whole. Museums, parks, and zoos are
there for all to use and enjoy; they are rarely restricted to city residents.
Additionally, as we found earlier in this chapter, the majority of urban poor
reside in central cities, and the rate of poverty in central cities increased
substantially during the 1970s (see Tables 13-1 and 13-2). The provision of public services to this
segment of the population also has added to the burden of local
governments.
The recent
growth of nonmetropolitan areas and the rapid shift of economic activity from
the Northeast and North Central regions of the country to the South and West
have contributed to the difficulties imposed by decentralization on cities in
declining regions. Thus the fiscal crisis we observe results from a complex
mixture of economic factors. Policies formulated to cope with problems stemming
from decentralization may be quite inappropriate as mechanisms for dealing with
problems associated with the transition of economic base in declining but
highly industrialized urban areas.
We shall
turn first to specific consequences of central-city fiscal problems and then go
on to discuss policy options. We shall look also at some related issues from a regional development perspective.
13.5.1 Some Economic Effects of Fiscal
Distress
William H.
Oakland has identified several specific consequences of central-city financial
problems that concern issues of resource allocation as well as equity.33
Since
public expenditure in central cities has been relatively insensitive to
population decline, the weakening of the local tax base in central
cities (especially property values) has meant rapidly rising tax rates. By contrast, the tax base in suburban areas has been growing, and the tax
rates have increased more slowly in these areas. Location decisions certainly
reflect this fiscal disparity. While this has meant tax savings for individuals
and businesses moving to the suburbs, it has added to the tax burden of those
remaining in the city. The net result has been an increase in total
transportation costs and wasted resources for the economy as a whole.34
Another
resource allocation issue mentioned by Oakland concerns the provision of
"public goods." By definition, the provision of pure public goods by any local
authority would mean that all metropolitan-area residents could enjoy
associated benefits. The benefit-cost calculus by which optimal levels of
provision for such goods are determined theoretically does not depend on the
distribution of population between city and suburbs. If decentralization
results in a diminished willingness and ability of central-city governments to
pay for such goods, resource misallocation is implied.
Equity
issues also are involved. A substantial share of the cost of providing public
services to central-city poor is borne by middle- and upper-income city
residents. Thus our cities are clearly playing an important redistributive role in the economic system. In Oaklands view, income redistribution
is a matter of concern for the whole society, and the social benefits of
redistribution do not stop at the central-city boundary. Thus "equity would
require a households redistributive burden to be independent of the
community in which it resides."35
13.5.2 Some Problems and Policy Responses
Each of the
consequences of urban fiscal distress mentioned above can be traced to a
mismatch between the area of concern for specific public services and
the area responsible for financing these services.36 In this sense, the spatial dimension of related
policies lies in recognizing that public service needs can be categorized as
being of local, metropolitan, regional, or national concern.
Metropolitan Needs for Public Services. Since
some services that are typically provided by central-city governments are
important to the metropolitan area as a whole, their planning, operation, and
financing should be carried out with that perspective in mind. Water and sewer
systems, intrametropolitan highways and transit, airports, large metropolitan
outdoor recreation areas, and some types of local environmental protection seem
to fit this category. Fairly strong arguments could be made for adding to the
list such services as police and fire protection, libraries, and
museums.
For these
activities, the economies of scale and the need for coordination are so strong
that independent efforts by individual municipalities produce wasteful
duplication, inefficiently small facilities, and much bickering. Metropolitan
governments, however, are virtually nonexistent in the United States and do not
seem likely to proliferate soon. In default of an appropriate existing unit of
government, the most practical recourse seems to be the creation of
special-purpose metropolitan authorities or districts, with the constituent
cities and towns sharing the costs, benefits, and ultimate control. Such
districts are particularly common in cases of water supply, sewerage, and rapid
transit services, and there are also a number of metropolitan park districts;
more fragmentary mergers of two or three adjacent small municipalities or rural
school districts also exist for special purposes.
Higher Levels of Government as Providers of "Local" Services. When the public services in question are clearly a metropolitan responsibility, the role of the state or federal government
should be limited. If no suitable metropolitan fiscal unit with adequate taxing
power exists, however, a higher level of government (state or federal) may
serve as an expedient substitute. Nevertheless, our earlier discussion of the
prevailing bias in aid to intraurban highways compared to transit underlies the
necessity of a clear understanding of the appropriate role of external
financing of those services that benefit a single metropolitan area rather than
the whole country.
In some
instances, the area of concern extends well beyond the metropolitan-area
boundary. For example, we have argued previously that it is inappropriate as a
matter of equity for local governments to shoulder the responsibility for
income redistribution. On this basis, it is easy to recommend that the cost of
welfare services should be the responsibility of state and federal governments,
rather than individual cities. In practice, the public financing of welfare
does follow this structure; however, as Oakland points out, similar
justification exists for extending support to local governments for the public services consumed by the poor.37 Equity considerations also argue for reductions in the local role in financing primary and secondary education. These services are now
supported primarily from local property tax receipts, and there is an obvious
danger of inequity as the structure of property values changes with
decentralization.
User
Charges for Public Services. The fact that a service is provided
by a public agency does not mean that it has to be provided free and thus paid
for by the taxpayers as a group. On the contrary, there are cogent arguments
(to be found in any elementary economics textbook) for applying the pricing
mechanism as far as is feasible as a check on demand and a guide to supply. The
exceptions are cases in which it is technically unfeasible or socially
undesirable to charge individual users (such as public safety and basic
education).
The
desirability of applying the user charge principle more widely to transport
facilities and services has already been suggested. If users of street space,
public transit, and curb or off-street parking space were charged according to
the incremental costs that they impose on the public authority, depending on
the time and place of use, a more efficient use of scarce space and transport
investment could be achieved. Charges for such utility-type public services as
sewerage and water supply could also be geared more closely than they are to
the incremental cost of providing such service to the individual user or the
individual neighborhood.38
User
charges placed on those services most commonly used by non-residents could be
an effective mechanism for reducing fiscal disparity between the city and
suburbs. By thus reducing the economic incentives that encourage
suburbanization, user charges would promote a land-use pattern more compact in
character and conducive to lower average cost of all utility-type services,
including transportation.
Intergovernmental Financial Assistance. Direct
aid from higher levels of government has had a major impact on local government
finances. The most important program of this type is known as General Revenue
Sharing (GRS) and was enacted in 1972. Its purpose is to provide fiscal support
from the federal government to state and local governments in the form of
unrestricted grants. Generally, funds that had been designated for specific
programs, such as housing, urban renewal, or public transportation, are
combined under this program and given to lower levels of government to spend as
they see fit.
To the
extent that such aid is directed specifically to central cities most in need,
it can go far toward relieving the problems of resource allocation and equity
mentioned above.39 Grants of this sort can,
for example, ensure that local governments have the financial resources to make
public goods available to all persons in a metropolitan area. They also have
the potential of addressing the equity problems that arise when local
governments must assume responsibility for the provision of public services to
the poor.
As
mechanisms for correcting locational distortions, problems associated with the
provision of public goods, and redistributional inequities, it is likely that
GRS and other such programs will fall short of their task. Part of the reason
lies with existing political pressures, which encourage the dispersal of such
funds to many localities. Part lies also in the fact that we have come to rely
on grants programs to meet a wide range of objectives. The importance of each
of these factors can be brought out if we examine the character of federal
grants programs as a political response to urban development problemsthat is, problems faced by urban areas most seriously
affected by regional shifts in economic activity.
13.5.3 Federal Programs for Urban
Development
As the
General Revenue Sharing legislation was being written, one of the most hotly
contested issues was that of the mechanism by which grants would be distributed
regionally and to various cities and towns. This was basically a matter of
choosing between two alternatives. The first would target funds to
specific areas on the basis of "need," however defined. The second would spread funds as broadly as possible, so that virtually every political
jurisdiction would be assured of participation. As Paul R. Dommel puts it, "The
coalition-building process leading to enactment of general revenue sharing
resulted in entitlements to all states and all units of general purpose local
government, nearly 39,000 recipients. "40
Targeting was thus a second-level priority.
Because
general revenue sharing funds were so widely distributed, the political costs
of altering the distributional formula to favor urban areas more explicitly
would have been enormous.
The
Community Development Block Grant Program. The federal response
to this situation was the Community Development Block Grant (CDBG) program
enacted in 1974, which has been described as "urban revenue sharing."41 It consolidated a number of programs carried out
by the U.S. Department of Housing and Urban Development (HUD) such as urban
renewal, model cities, and neighborhood improvements. Though CDBG funds had to
be used in projects included under the programs replaced by the CDBG program,
local governments had more latitude in choosing how to spend these
funds.
Unlike
general revenue sharing, the targeting of funds is given a high priority under
the CDBG program; thus "need" is defined in terms of the objectives of the
program. To quote Harold L. Bunce and Norman J. Glickman:
The 1974
Act listed several national objectives and also stipulated that activities
financed with CDBG funds must benefit principally families with low or
moderate income, or aid in the prevention or elimination of slums, blight,
or other urgent community development needs.42
Accordingly, the distributional formula now in use for this program
is sensitive to slow population growth, the incidence of poverty, and the age
of housing. As one might expect, by these criteria older industrial cities rank
highly and are particularly favored by the CDBG formula.43
The
Urban Development Action Grant Program. The Urban Development
Action Grant (UDAG) program provides direct capital subsidies to encourage
private investment in distressed urban areas. Unlike indirect subsidies to
capital such as the public provision of sewer systems, UDAG funds are meant "to
provide local jurisdiction with up-front money to help them capture
and leverage private investment when it is live or
ready to be committed; hence the term Action Grant."44 Thus applications to HUD for UDAG funds include
commitments from private investors that they will go ahead with a specific
project if a subsidy is made available. The final package of incentives may
include state and local government contributions to the private investors as
well as the federal UDAG funds.
Here the
intent is to create jobs by initiative of the private sector, one consequence
of which would be to strengthen the tax base of the local community. Thus areas
with out-migration and stagnating or declining tax bases are given high
priority under this program; but the criteria for designation as a distressed
area are sufficiently broad so that "In Fiscal 1978, 66 percent of all central
cities in the United States were eligible for the UDAG program, as were a
smaller percentage of all suburbs and nonmetropolitan areas."45 Eligible places are concentrated in the Northeast
and North Central regions, which together account for 42 percent of UDAG
funds.46
The CBS
program is by far the largest of the "grants programs operated by the federal
government; yet because its funds are widely distributed, it is an inefficient
mechanism for dealing with the resource allocation and equity problems that
accompany fiscal distress in central cities. CDBG and UDAG have been
targeted at such areas, but these are development programs that happen
to relieve some of the problems mentioned earlier.
The
characteristics of CDBG and UDAG programs expose a great deal about what
Americans learned and failed to learn from the experiences of the Economic
Development Administration and the regional commissions, as discussed in Chapter 12. In this respect we might note some
similarities and differences between regional programs such as those and
the more recent "urban" development programs.
All of
these programs can be described as "place prosperity" directed, with "worst
first" priorities; distressed areas are defined, and then funds are targeted to
those areas.47 Thus in the United States the
essential roles of human resource development and out-migration in economic
adjustment have not yet been fully recognized. Though some contracyclical
programs, such as the one implemented during the recession of 1981-1983, have
included job retraining provisions, our longer-term strategies continue to
eschew this option.
One of the
major differences between the earlier programs and those directed toward urban
areas concerns the organization of development efforts. Although the
planning districts and regional commissions actually established under the
Public Works and Economic Development Act of 1965 had serious faults (Section 12.7), the development programs
associated with these efforts recognized a need for planning that went beyond
immediate political boundaries. In contrast, urban programs treat individual
political jurisdictions as if they were always the best development planning
regions. Although the wide latitude that local governments have in spending
CDBG funds enhances this programs value as a mechanism for dealing
with fiscal problems, this characteristic detracts from its value as a
development program; here, as with the UDAG program, one need not justify
funding for a particular project on the basis of an overall development
strategy.
It is
rarely the case that a single policy can achieve diverse ends. Policy makers
must recognize that problems concerning regional development demand explicit
attention, as do the fiscal problems specific to urban areas (which may have
little to do with development per se). A coordinated federal-regional response
to the metropolitan and nonmetropolitan problems of the 1980s seems unlikely.
Instead policies continue to rely on federal largess, offered through a
political system that makes it difficult to avoid partisan
interests.
13.6 THE VALUE OF CHOICE
We have
covered four important problems of present and foreseeable urban lifewith
emphasis throughout on the spatial aspects, wherein the special interests and
competences of the regional economist are particularly relevant. It should now
be clear that judgments about goals and policies have to be made in a broad
context that recognizes at least the major interrelationships among poverty,
downtown areas, transport, and public finance.
Having
these insights, however, does not endow even the most learned urban economists
with a set of "right answers." What, then, is their useful role? They can
contribute to a realistic and objective presentation of the implications of
alternative courses of development, especially in terms of spatial patterns,
access, neighborhood character, public services, and fiscal burdens, so that
voters will know what they are really voting for and decision makers will know
what problems they are creating for themselves. They can use the
economists criterion of efficiency to expose hidden costs, externalities,
and demonstrably self-defeating or inconsistent combinations of policies.
Finally, on the basis of their insights into the nature of the process of urban
change, they can advocate flexibility and variety as basic aims on a par
with the conventional objectives of high income, low unemployment, equity, and
security.48
Recognition
of the value of flexibility follows from recognition that an urban economy is a
live organism. Thus any formal design for the physical layout of an urban area
should be challenged with the question of what happens in response to the
forces of change discussed earlier in this book: growth, aging, economic
improvement, and the unforeseeable variety of changes in technology. No design
can be judged until pictured in a state of adjustment. Our most acute
distresses, and our most intriguing opportunities, are accompaniments of
adjustment.
A
fundamental urban value that is partly distinct from flexibility is variety.
The prime function of a city is to provide opportunities for the widest
possible variety of contacts. The employer wants to be able to tap a labor
market and find, on short notice, the right skills and aptitudes; the job
seeker wants to find a job that fits his or her abilities, interests, and
personal preferences; the business firm wants to be able to choose from a wide
range of technical, advisory, transport, and marketing services; the shopper
wants a large selection of wares from which to choose; the homeseeker wants to
find a neighborhood and a house tailored to his or her needs; and so on. Wide
freedom of choice in these and other respects is unquestionably both desirable
and conducive to the best utilization of the communitys resources, quite
aside from any other merits or faults that cities may have.
Sheer size
is associated with increased latitude of choice. A larger city contains not
merely more of each kind of activity and opportunity but more kinds, permitting a closer and more efficient fit of supply to demand. But size is
not the only determinant of varietythis is a characteristic that can vary
rather widely among cities of a given size, and one that can be enhanced or
impaired by technical change or other factors. Let us merely note here a few of
the many ways in which urban variety of choice relates to the spatial
pattern.
A conscious
policy of fostering variety of opportunity and choice will entail efforts to
increase interoccupational, interindustry, and spatial mobility. Programs of
education, training and retraining, and improved placement organization are
directed this way. These developments, in addition to providing greater spatial
mobility, more effective communication, and progress in softening racial and
other discriminatory barriers, should widen effective job choicemaking
urban labor markets less imperfect as markets, while at the same time
increasing interregional mobility and choice.
Two spatial
factors are principally involved in widening job choices within urban areas:
reduced residential segregation and improved transportation. Both are
especially applicable to low-income, low-skilled, and nonwhite members of the
labor force; these are the people for whom and from whom the greatest economic
benefits will accrue in the widening of urban residential and work choice and
the fuller utilization of manpower resources that this makes
possible.
The above
suggests that intraurban transportation (private, public, or both) has a case
for subsidy (though not necessarily an ever-increasing amount of
subsidy).49 On the basis of the general
virtues of widened choice, one could argue for preserving and developing a wide
range of densities of development and a wide range of modes of
intraurban transport. These could include a core-and-radial configuration with
high-density, high-speed transit services on special rights of way in one
setting, and a more even dispersion, replicated subcenters, and a de-emphasized
central core with low-density, automobile transport in another.50
Interregionally, the widening of job choices would be greatly
enhanced if government-operated employment (job-hunting) services were
organized on a national basis rather than by individual states or
municipalities. Given the rapid rate of technological change in electronic data
transmission, such a change is surely more feasible now than in the recent
past.
Another
aspect of variety in the urban pattern is variety in levels and "styles" of
public services. The desire of small suburban municipalities to preserve their
independence is very strong; this is related to but not identical with their
desire to preserve homogeneity in such characteristics as race, income, or
religion. We cannot consistently condemn their resistance to annexation or
metropolitan government while still recognizing the value of keeping the
latitude of choice of environments as wide as possible.
The
difficulty, and the challenge to administrative ingenuity, comes in reconciling
diversity and local pride with a suitable degree of coordination in basic
services of common importance to the whole metropolitan areasuch as water
management, health services, higher education, and transport.
We are
still groping for an answer to this problem. Apparently what a large urban area
needs, for optimum functional efficiency and satisfaction, is great
heterogeneity and diversity on a macrospatial scale; but this is associated in
practice with homogeneity on a microspatial scale.51
13.7 SUMMARY
This
chapter deals mainly with the spatial aspects of four urban problems: downtown
obsolescence, poverty, transportation of people, and fiscal distress in central
cities.
The drift
of activity from downtown to outlying areas was observed, and some explanatory
factors suggested, in Chapter 7. Additional
factors include traffic congestion and the loss of convenience and amenity for
pedestrians in central areasmuch of which is associated with the
relatively large space requirements of the private automobile.
High-density downtown areas are believed to have a high, perhaps
unique potential in terms of external economies and other benefits derived from
variety of direct personal access. More adequate exploitation of these
potential benefits, however, awaits innovative redesign of downtown spatial
structure and means of circulation, with focus on the convenience of the
pedestrian.
Poverty in
the United States is concentrated in metropolitan areas, and its incidence is
particularly high among blacks. The factors contributing to decentralization
within the nations large cities have affected the poor significantly. One
important aspect of decentralization has been the movement of jobs to suburban
communities, which has hindered the opportunities open to the central-city
poor. Some policies that have been suggested for encouraging the growth of
employment in urban ghettos do not give sufficient recognition to the powerful
locational forces governing the trends toward decentralization within urban
areas.
General
adoption of automobile transport has affected in one way or another the whole
range of urban problems. Densities of settlement have been greatly reduced,
resulting in generally longer commuting journeys and other types of trips.
Access problems for nondrivers (including many of the poor) have been
aggravated. The potential contact advantage of downtown areas has been
dissipated to a major extent.
Efforts to
avoid or mitigate such undesirable side effects of this revolution in transport
should take account of distortions in the market for urban personal transport
services. It has been argued that distortions biasing decisions toward still
greater reliance on private transport arise from (1) failure of individual
travelers to evaluate their driving costs fully; and (2) public policies on
financing and pricing of roads, parking facilities, and other facilities and
services that involve net subsidies to highway commuters. The resulting
emasculation of public transport in American cities has apparently contributed
both to the decay of downtown areas and to the uniformity of residential
density and character over large areas.
A fourth
major urban problem has been the increasing inability of municipal governments
to finance the services that their residents, workers, and visitors demand.
Fiscal difficulties have been especially acute in the central cities of
metropolitan areas. Suburbanization has weakened the tax base of many cities,
and recent population shifts have added to this problem. Fiscal disparities
between central cities and suburbs result in resource allocation and equity
problems. These can be mitigated to some extent by various policies. One of the
most important of these policies has been direct aid from the federal
government in the form of grants.
One of the
greatest challenges facing urban economists and planners is the need to
reconcile and coordinate metropolitan-area interests without sacrificing the
legitimate diversity of community life styles and aspirations. Variety of
choice for the individual should in fact be one of the chief ultimate
objectives for urban planning and public policy.
TECHNICAL TERMS INTRODUCED IN THIS CHAPTER |
Ghetto |
|
Congestion costs |
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Congestion tolls |
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SELECTED
READINGS
Anthony
Downs, Urban Problems and Prospects, 2nd ed. (Chicago: Rand McNally,
1976).
John F.
Kain and John R. Meyer, "Transportation and Poverty," in John F. Kain (ed.), Essays on Urban Spatial Structure (Cambridge, Mass.: Ballinger, 1975),
pp. 341-352.
John R.
Meyer, J. F. Kain, and M. Wohl, The Urban Transportation Problem (Cambridge, Mass.: Harvard University Press, 1965).
Peter
Mieszkowski and Mahlon R. Straszheim (eds.), Current Issues in Urban
Economics (Baltimore: Johns Hopkins University Press, 1979).
William H.
Oakland, "Central Cities: Fiscal Plight and Prospects for Reform," in Peter
Mieszkowski and Mahlon R. Straszheim (eds.), Current Issues in Urban
Economics (Baltimore: Johns Hopkins University Press, 1979), pp.
322-358.
Arthur F.
Schreiber and Richard B. Clemmer, Economics of Urban Problems: An
Introduction, 3rd ed. (Boston: Houghton Mifflin, 1982).
Mahlon R.
Straszheim, "Assessing the Social Costs of Urban Transportation Technologies,"
in Peter Mieszkowski and Mahlon R. Straszheim (eds.), Current Issues in
Urban Economics (Baltimore: Johns Hopkins University Press, 1979), pp.
196-232.
Raymond
Vernon, Metropolis 1985 (Cambridge, Mass.: Harvard University Press,
1960).
ENDNOTES
1. See Harry W. Richardson, Regional Economics (Urbana:
University of Illinois Press, 1978), pp. 281-289, or a more detailed discussion
of the transition in regional problems and policies.
2. See Section 7.7.
3. In Julius Caesars Rome, vehicles were excluded from the
continuously built-up area during the daylight hours in an effort to cope with
traffic jams. Faded photographs of Fifth Avenue in horse-and-buggy days show it
crammed from curb to curb in the rush hour.
4. For a suggested "hierarchy of CBD land uses and land values,"
identifying a series of specific business activities and the ranges of land
values that they can support, see Larry Smith, "Space for the CBDs
Functions," Journal of the American Institute of Planners, 27, 1
(February 1961), Table 4, p. 38.
5. This suggestion is introduced simply as provocative
speculation. John R. Meyer, J. F. Kain, and M. Wohl, The Urban
Transportation Problem (Cambridge, Mass.: Harvard University Press, 1965),
Chapter 2, expect freight terminals to move to beltway junction
locations, and we do not dispute the reasonableness of that
projection.
6. See, for example, three sources cited in earlier chapters:
Robert M. Lichtenberg, One Tenth of a Nation (Cambridge, Mass.: Harvard
University Press, 1960); Benjamin Chinitz, "Contrasts in Agglomeration; New
York and Pittsburgh," American Economic Review, 51, 2 (May 1961),
279-289; and Harry W. Richardson, Regional Growth Theory (London:
Macmillan, 1973).
7. See Section 13.4 and also E. M. Hoover,
"Motor Metropolis," Journal of Industrial Economics, 13, 3 (June 1965),
177.
8. A family of four may be comprised of two parents and two
children, four adults (two or more children over the age of eighteen), or other
such combinations, and poverty standards have been established for each of
these. Thus the "average" referred to here is taken across all such standards
for a family of four.
9. U. S. Bureau of the Census, Current Population Reports, Series
P-60, No. 138, Characteristics of the Population Below the Poverty Level:
1981 (Washington, D.C.: Government Printing Office, 1983), p. 1.
10. Ibid., Table 1, p. 7.
11. Ibid.
12. See John F. Cogan, "The Decline of Black Teenage Employment:
1950-1970," American Economic Review, 72, 4 (September 1982)
621-638.
13. See Otto A. Davis and Andrew B. Whinston, "The Economics of
Urban Renewal," in James Q. Wilson (ed.), Urban Renewal: The Record and the
Controversy (Cambridge, Mass.: MIT Press, 1966), pp. 50-67.
14. The term "ghetto" implies ethnic segregation rather than
poverty per se, and was originally applied to those parts of Italian cities to
which Jews were confined. The first ghetto was established in 1516 on
Ghèto (Foundry) Island in Venice.
15. For a sobering appraisal of programs aimed at stimulating new
business enterprises in ghettos, see Sar Levitan, Garth Mangum, and Robert
Taggart III, Economic Opportunity in the Ghetto: The Partnership of Government and Business (Baltimore: Johns Hopkins University Press,
1970). See also William H. Oakland, F. T. Sparrow, and H. L. Stettler III,
"Ghetto Multipliers: A Case Study of Hough," Journal of Regional Science, 11, 3 (December 1971), 337-345.
16. See Peter J. Ferrara, "The Rationale for Enterprise Zones," Cato Journal, 2, 2 (Fall 1982), 361-371; and Otto A. Davis and Denise
DiPasquale, "Enterprise Zones: New Deal, Old Deal, or No Deal" Cato Journal, 2, 2 (Fall 1982), 391-406.
17. See Davis and DiPasquale, "Enterprise Zones," p.
397.
18. Raymond J. Struyk and Franklin J. James, Intrametropolitan
Industrial Location (Lexington, Mass.: Lexington Books, D. C. Heath, 1975),
pp. 115-122, examines patterns of intraurban location for manufacturing
activities in a sample of four cities and finds that activities of this type
may be especially attracted to poverty areas.
19. For an account of an unsuccessful attempt along these lines
in St. Louis and some indication of the difficulties involved, see John M.
Goering, "Transporting the Unemployed," Growth and Change, 2, 1 (January
1971), 34-37.
20. These percentages are calculated from data published in the
U.S. Bureau of the Census, Statistical Abstract of the United States.
1982-1983, 103rd ed. (Washington, D.C.: Government Printing Office, 1982),
Table 1079, p. 622.
21. See G. Kulp, D. B. Shonka, and M. C. Holcomb, Transportation Energy Conservation Data Book. Edition .5 (Oak Ridge,
Tenn.: Oak Ridge National Laboratory, November 1981), pp. 2-28.
22. Ibid., pp. 2-29. These estimates represent a ten-year average
of costs per mile for a new car purchased in 1979. Estimates of fixed costs
include garaging, parking, and tolls, although a portion of each could be
classified as variable costs.
23. Meyer, Kain, and Wohl, Urban Transportation, especially Chapter 4. A more recent study, by Mahlon R. Straszheim,
"Assessing the Social Costs of Urban Transportation Technologies," in Peter
Mieszkowski and Mahlon R. Straszheim (eds.), Current Issues in Urban
Economics (Baltimore: Johns Hopkins University Press, 1979), pp. 196-232,
also finds that capital costs that can be attributed to private auto use are
small. Straszheim estimates that roadway land and construction costs, defined
on a long-run average cost basis, add only 1.8 cents per mile (in 1975 prices)
to automobile costs.
24. Congestion costs are the most important negative externality
associated with auto use, but others are also significant. Straszheim.
Social Costs," p. 214, estimates that congestion costs account for nearly
70 percent of the total costs associated with such externalities. He attributes
the remainder to pollution, right-of-way costs (noise, smell, etc.), and
construction dislocation.
25. Theodore E. Keeler and Kenneth A. Small, The Full Cost of
Urban Transport, Part 3 (Berkeley, Calif.: Institute of Urban and Regional
Development, University of California, July 1975).
26. See William S. Vickrey, "Congestion Theory and Transport
Investment, American Economic Review, 59, 2 (May 1969), 251-260;
and Vickrey, "Current Issues in Transportation, in Neil W. Chamberlain
(ed.), Contemporary Economic Issues (Homewood, Ill.: Irwin, 1969), pp.
185-240. Vickrey led the way in developing the theory of congestion tolls and
in working out practical ways of assessing and collecting them.
27. U.S. Bureau of the Census, Statistical Abstract of the
United States: 1982-1983, 103rd ed. (Washington, D.C.: Government Printing
Office, 1982), Table 466, p. 276.
28. Revenue passengers carried by public transit dropped steadily
from 7521 million in 1960 to 5643 million in 1975. There has been a small but
significant rebound in public transit service by this measure in subsequent
years. See U.S. Bureau of the Census, Statistical Abstract of the United
States: 1982-1983, 103rd ed. (Washington, D.C.: Government Printing Office,
1982), Table 1080, p. 623.
29. Straszheim, "Social Costs," pp. 199-204.
30. The source of this information was correspondence from the
U.S. Department of Transportation, Washington, D.C.
Because
capital expenditures have been favored by the financing arrangements for
transit systems and highways, substantial building programs have been
undertaken without adequate planning for future maintenance. This has placed
the current operating budgets of some states and localities under serious
strain.
31. The Port Authority of New York is a good example of the
reluctance of local public authorities to assume responsibility for really
supporting local transit. The Port Authority enthusiastically built and
operated profitable bridges, tunnels, and a central bus terminal but refused to
help salvage any form of rail transit (on the grounds that its overall earnings
position would be impaired) until it was finally pressured into taking over the
trans-Hudson tubes on a "just this once but never again" basis. For a critique
of local-government posture toward private transit firms, see E. M. Hoover,
"Motor Metropolis," Journal of Industrial Economics, 13, 3 (June 1965),
177-192.
32. Vickrey argues that the usual methods of evaluating costs and
benefits of alternative types of urban transport have a built-in bias in favor
of modes that require large amounts of space, and against "land-saving" modes
(mass rapid transit). Briefly, his argument runs as follows. The differential
access advantages of urban sites are not fully reflected in rent bids and land
prices, since part of the benefits of proximity accrue to parties other than
the occupier of a given siteit is in fact these mutual or external
economies of proximity that constitute the main basis of urbanism. Since urban
land tends, then, to be valued in the market at less than the true social value
created by its access opportunities, cost assessment for alternative
transportation projects (for example, transit versus highways) understate the
costs of the more land-using type of transport compared to those of the more
land-saving type. Vickrey, "Current Issues in Transportation, pp.
220-221.
33. This section and portions of the following section concerning
policy options draw heavily on William H. Oakland, "Central Cities: Fiscal
Plight and Prospects for Reform," in Peter Mieszkowski and Mahlon R. Straszheim
(eds.), Current Issues in Urban Economics (Baltimore: Johns Hopkins
University Press, 1979), pp. 322-358. which offers excellent perspective on
central-city fiscal problems and should be given high priority by readers
interested in this topic. Oakland is concerned with spatial and nonspatial
aspects of urban fiscal distress. The latter, which he describes as focusing on
the tendency of local governments toward over-expenditure, are not included in
the discussion to follow.
34. Ibid., p. 333.
35. Ibid., p. 334.
36. See Mancur Olson, Jr., "The Principle of 'Fiscal
Equivalence': The Division of Responsibilities Among Different Levels of
Government," American Economic Review. 59, 1 (May 1969), 479-487, for a
discussion of some related issues.
37. Oakland, "Central Cities," p. 334.
38. Two excellent treatments of this complicated question are
Patrick Mann, "The Application of User Charges for Urban Public Services," Reviews in Urban Economics, 1, 2 (Winter 1968), 25-46; and William W.
Vickrey, "General and Specific Financing of Urban Services," in Howard G.
Schaller (ed.), Public Expenditure Decisions in the Urban Community (Washington, D.C.: Resources for the Future, 1963), pp. 62-90.
39. See Oakland, "Central Cities," pp. 348-351.
40. Paul R. Dommel, "Distributional Impacts of General Revenue
Sharing," in Norman J. Glickman (ed.), The Urban Impacts of Federal Policies (Baltimore: Johns Hopkins University Press, 1980), p. 545.
41. See Harold L. Bunce and Norman J. Glickman, "The Spatial
Dimensions of the Community Development Block Grant Program: Targeting and
Urban Impacts," in Glickman (ed.), The Urban Impacts of Federal Policies, pp. 515-541.
42. Ibid., p. 516.
43. Ibid., Table 5, p. 525.
44. Susan S. Jacobs and Elizabeth A. Roistacher, "The Urban
Impacts of HUDs Urban Development Action Grant Program, or Wheres
the Action in Action Grants," in Norman J. Glickman (ed.), The Urban Impacts
of Federal Policies, p. 340.
45. Ibid., p. 347.
46. Ibid., p. 348.
47. As discussed in Chapter 12,
the criticisms leveled at programs with a place prosperity orientation
recognize that the best way to help people in an area is to direct policies to
those persons in need rather than to the areas in which they happen to reside.
Oakland, "Central Cities," argues that grants programs established specifically to address the equity and efficiency problems associated
with urban fiscal distress cannot be criticized on these grounds, as their
immediate concern is not the well-being of the poor or disadvantaged. The
programs described above, however, are not nearly so farsighted in their
intent, and the usual criticisms of place versus people prosperity are
applicable to a substantial degree.
48. For a good statement of the value of wide choice in this
context, see Webb S. Fiser, Mastery of the Metropolis (Englewood Cliffs,
N.J.: Prentice-Hall, 1962), pp. 160 ff.
49. On the rationale for subsidy to public transport in
urban areas, see Benjamin Chinitz, "City and Suburb," in Benjamin Chinitz
(ed.), City and Suburb (Englewood Cliffs, N.J.: Prentice-Hall, 1964),
pp. 35-41 (part of a Section written by the editor).
50. One thing that makes comparative evaluation difficult is that
in terms of return on the transport investment, each of the schemes tends to be
somewhat self-justifying. That is, a well-developed rapid-transit system
fosters the kind of settlement pattern that gives such a system good business,
while reliance on highways fosters the kind of settlement pattern that can
least economically be served by anything but the private automobile.
51. For a discussion of some related issues, see Charles M.
Tiebout, "A Pure Theory of Local Expenditure, Journal of Political Economy, 64, 5 (October 1956), 416-424; and William B. Neenan, Urban Public
Economics (Belmont, Calif.: Wadsworth, 1981), pp. 59-67.
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