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Housing Perspectives

Research, trends, and perspective from the Harvard Joint Center for Housing Studies

The Metropolitan Revolution

Next Wednesday, September 25, I will be coming to Harvard to share a message: there is a Metropolitan Revolution underway in this country.

While the national economy continues to suffer the lingering effects of the Great Recession—with nearly 10 million jobs needed to make up the jobs lost during the downturn and keep pace with labor market dynamics and more than 107 million people living in poverty or near poverty—the federal government is mired in partisan gridlock and ideological polarization, leaving local and metropolitan leaders to pick up the slack.

In many ways, this transfer of responsibility is not only a cyclical event but also a structural change, given the harsh realities of the shifting federal budget. With a rapidly aging national population, mandatory federal spending on health care and retirement benefits is projected to rise by $1.6 trillion annually by 2023.  This will inevitably squeeze federal spending on critical investments around education, infrastructure, housing and innovation. The result will be a U.S. governance structure that looks very different in a decade: Washington will do less; local governments and metropolitan networks will do more.

To make it through this fiscal resort, we need to rethink power in America. Metros will lead on policy innovation; the federal government (and even state governments) will follow.

The good news is that smart city and metropolitan leaders aren’t waiting for national solutions to local problems. Across the nation, in metros as diverse as New York, Houston and Denver, Portland and Detroit, Los Angeles and Cleveland, leaders are doing the hard work to grow jobs and make their economies more prosperous: investing in infrastructure, making manufacturing a priority again, linking small businesses to new investors and global markets, giving workers the skills they need to compete.

A new metropolitan playbook defines the Metropolitan Revolution:

First, cities and metros are forming broad based networks to co-design and co-produce solutions. The unique advantage that metropolitan areas have over states and the national government is that they are networks of leaders, rather than hierarchies of government officials. Successful metro-level initiatives incorporate broad input and support—from business and civic leaders, heads of universities and philanthropies, as well as elected officials.

Second, city and metropolitan leaders are taking the time to understand the starting points of their disparate economies and set distinctive visions based on their analysis. The Great Recession reminded us that metro areas perform different functions in the global economy depending on what they make, the advanced services they provide, what they trade and which cities and metros they trade with. What makes Denver a powerful metropolis on the global stage is different from what propels Detroit; the same for Portland, Pittsburgh and Phoenix.

Finally, city and metropolitan leaders are “finding their game changers” — designing, financing and delivering transformative economy-shaping solutions that build on their distinctive assets and advantages. The Applied Science Districts in New York City. State-of-the-art transit in Los Angeles and Denver. A new export strategy in Portland; smart manufacturing initiatives in Northeast Ohio; successful efforts to integrate immigrants in Houston.  Even a burgeoning Innovation District in Detroit.

Cities and metropolitan areas will do more because they can.

The United States is the world’s quintessential Metropolitan Nation.  All 388 metropolitan areas house 84 percent of the nation’s population and generate 91 percent of the national GDP. The top 100 metropolitan areas in the United States alone sit on only 12 percent of the land mass of the country but house 65 percent of the population, generate 75 percent of the GDP. They also concentrate and congregate disproportionate shares of the assets that the nation needs to compete globally: modern infrastructure, skilled workers, advanced industry firms and advanced research institutions.

The United States also devolves more fiscal responsibilities to cities and metropolitan areas (and their states) than other countries. Despite the attention given federal efforts like No Child Left Behind and Race to the Top, local and state governments already account for over 90% of total government spending. Despite the focus on still unrealized proposals like a National Infrastructure Bank, states and localities already account for over 70 percent of transportation infrastructure spending and are the driving force behind such investments in such asset categories as roads, transit, rail, ports, airports, water and sewer and, of course, urban regeneration and basic municipal services.

Make no mistake: cities and metropolitan areas (and a mixed group of states) will drive strategic investments in education and infrastructure going forward, and they already are. San Antonio’s recent passage of a ballot initiative—Pre-K for SA and Detroit’s corporate and civic support for the M1Rail along Woodward Corridor—are only the latest examples of communities (broadly defined) stepping up to get stuff done.

Yet it is also likely that cities and metropolitan areas will lead in areas traditionally left to the federal government, like investments in basic and applied science and affordable housing. The recent sequestration of federal funding for such traditional federal responsibilities as the National Institutes of Health and public housing sent a strong signal about how unreliable our national government has become. The response will be growing state and metropolitan support via the ballot box for basic and applied research (e.g., California’s $3 billion Stem Cell Research and Cures Initiative) and growing local and metropolitan innovation on the affordable housing front via inclusionary zoning, public private partnerships and local housing trusts capitalized through real estate transfer taxes.

The bottom line is this: the health of the United States should never be defined by what happens in Washington, D.C. Our metropolitan areas are the engines of our economy, the centers of global trade and investment and the driving forces of national competitiveness and prosperity.  In the coming decade — in this century — they will be the vanguard of policy innovation and national progress.

Bruce Katz is a Vice President at the Brookings Institution, co-director of the Metropolitan Policy Program, and the co-author of The Metropolitan Revolution (Brookings Institution Press, 2013).  He will speak at the Harvard Kennedy School on Wednesday, September 25 at 7pm (Belfer Building, 79 JFK Street, Cambridge, MA, Starr Auditorium). The event is free & open to the public.