NCPA - National Center for Policy Analysis

Urban Renewal Policies Are Not the Answer

March 30, 2011

The Census just reported that Detroit's population dropped by 25 percent between 2000 and 2010.  The story of this city's devastating decline reminds us that urban fortunes depend on entrepreneurial human capital.  Failed public policies that tried to fix Detroit with urban renewal and transportation projects stand as stark evidence against the view that our economic woes call for more federal spending on infrastructure, says Edward Glaeser, a professor of economics at Harvard University and a senior fellow at the Manhattan Institute.

All of America's older, colder cities faced de-industrialization crises in the 1970s.  Education proved the best source of urban resurgence.  

  • The success of Minneapolis and Boston reflects their high numbers of college graduates -- 43.3 percent and 42.9 percent, respectively -- and the links between their universities and pioneering firms.
  • In Detroit, only 12 percent of adults have college degrees.

In other cities, such as New York, entrepreneurial talent was more important than book learning.

  • In Detroit, the very success of the Big Three automakers squeezed out the kinds of self-starting entrepreneurs that New York had in scores.
  • And the high wages earned on assembly lines meant that there was little reason for many to pursue higher education.

The city's big firms, with highly paid but less-educated workers, made urban reinvention difficult enough on their own.  Public policies only made things worse.  The defining characteristic of declining cities is that they have plenty of infrastructure relative to the level of demand.  Detroit didn't need the People Mover -- an expensive monorail that glides over empty streets.  And today, a light rail project is being pitched by the federal government, which seems to have learned nothing from the failures of past follies, says Glaeser.

Source: Edward Glaeser, "Detroit's Decline and the Folly of Light Rail," Wall Street Journal, March 25, 2011.

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