U.S. News

06.17.13

How Cities Are Fixing America

While the federal government stagnates, metropolitan areas lead the way to the future.

A revolution is stirring in America. Like all great revolutions, this one starts with a simple but profound truth: Cities and metropolitan areas are the engines of economic prosperity and social transformation in the United States. Our nation’s top 100 metropolitan areas sit on only 12 percent of the nation’s land mass but are home to two thirds of our population and generate 75 percent of our national GDP. Metros dominate because they embody concentration and agglomeration—networks of innovative firms, talented workers, risk-taking entrepreneurs, and supportive institutions and associations that cluster together in metropolitan areas and coproduce economic performance and progress. There is, in essence, no American (or Chinese or German or Brazilian) economy; rather, a national economy is a network of metropolitan economies.

Cities and metropolitan areas are also on the frontlines of America’s demographic change. America’s population—and its workforce—will be much more diverse in the future than at present, and soon no single race or ethnic group will be the nation’s majority. Many of our metros are already living that future. In fact, every major demographic trend that the United States is experiencing—rapid growth, increasing diversity, an aging demographic—is happening at a faster pace, a greater scale, and a higher level of intensity in our major metropolitan areas.

In traditional political-science textbooks, the United States is portrayed neatly as a hierarchical structure—the federal government and the states on top, the cities and metropolitan areas on the bottom. The feds and the states are the adults in the system, setting direction; the cities and metropolitan areas are the children, waiting for their allowance.

But in fact, cities and metropolitan areas are on their own. The cavalry is not coming. Mired in partisan division and rancor, the federal government appears incapable of taking bold action to restructure our economy and grapple with changing demography and rising inequality. With each illustration of partisan gridlock and each indication of federal, and also state, unreliability, metros are becoming more ambitious in their design, more assertive in their advocacy, more expansive in their reach and remit.

The metro revolution reflects the maturing of U.S. cities and metros in terms of capacity and focus. For 50 years, metropolitan areas relied on their biggest single investor—the federal government—to finance infrastructure, housing, innovation, and human capital. They have dutifully competed for federal grants and aligned their visions and strategies to the federal focus du jour. Now cities and metros are driving the conversation, making transformative investments in the public goods that undergird private investment and growth. Networks of metropolitan leaders—not just mayors and council members but civic, corporate, philanthropic, educational and labor leaders— are innovating on the big stuff. That includes: the commercialization of innovation; support for advanced manufacturing, export promotion, and foreign direct investment; the public-private financing of advanced transport and energy infrastructure; upgrading the education and skills of a diversifying workforce; and forging strong relationships with trading partners in mature and rising economies alike.

What is happening in the United States today is rooted in timeless and quintessential American values and is uniquely aligned with the disruptive nature of this young century and the manner and places in which people live. We are living in a disruptive moment that extols collaboration, rewards customization, demands differentiation, and champions integrated thinking to match and master the complexities of modern economies and societies. The metropolitan revolution is like our era: crowd-sourced rather than close-sourced, entrepreneurial rather than bureaucratic, networked rather than hierarchical.

The contrast between the federal and state governments and metropolitan networks is stark. The federal government and the states are present oriented. They govern, administer, and legislate in two-year cycles, aligned more with the timeline of political elections than with social or market dynamics. By contrast, the new metropolitan leadership is intensely focused on the future right. They think in the long term, act in the short run.

The federal and state governments, at their core, establish laws and promulgate rules. In so doing, they reflect the curse of the 20th-century Weberian state: highly specialized, overly legalistic, prescriptive rather than permissive, process oriented rather than outcome directed. Cities and metropolitan areas, by contrast, are action-oriented. They reward innovation, imagination, and pushing boundaries. As networks of institutions (for example, firms, agencies, schools), they run businesses, provide services, educate children, train workers, build homes, and develop community. They focus less on promulgating rules than on delivering the goods and using cultural norms rather than regulatory mandates to inspire best practice. They reward leaders who push the envelope, catalyze action, and get stuff done.

The federal and state governments have a cartoon version of the economy, focusing on atomistic firms and workers and silver-bullet tax and regulatory solutions. Cities and metros, by contrast, blend the ecosystem and the enterprise. They focus not just on a singular transaction, firm, or solution but rather on building effective structures, institutions, intermediaries, and platforms to give dozens of entrepreneurs and firms what they need: skilled talent, strategic capital, stable governance, reliable rules, functioning infrastructure, collective branding, and marketing.

The federal and state governments create cookie-cutter, one-size-fits-all solutions that frustrate rather than serve. They spread resources in a way that dilutes return on investment and diminishes public confidence in public action. Cities and metropolitan areas are, by contrast, aligned and attuned to the differentiated nature of their economies. They build on their distinctive strengths, buttress and leverage their specific assets, attributes, and advantages. They follow Dolly Parton’s maxim: “Find out who you are and do it on purpose.”

The federal government, driven by ideological division and partisan rancor, will not heal itself any time soon. The states are political artifices, not natural markets. Metropolitan pragmatism, metropolitan power, and metropolitan potential will fix our broken politics and restore our fragile economy.