What Elites Do Instead of Providing Services, Redux

Three years ago, I wrote about how American urban elites propose public monuments in lieu of providing public services. My topical example was an article by Larry Summers, whose proposal to reduce inequality was to invest in nicer-looking airports – per Summers, the rich have private jets, the poor fly commercial. The post overall focused on government projects. But in the last few days I’ve seen two examples in the same direction, involving thinktanks and the private sector, and no government projects at all. One is from a panel headlined by J. D. Vance, which Pete Saunders and Aaron Renn both sat on; I can’t find a link to the video anymore, but here is a recap (update: here is the video). The other is from a Brookings report about Philadelphia. In both cases, the elite speaker (Vance, or Brookings) looks at a region that’s not as wealthy as it would like to be, and proposes everything except better services.

Vance’s panel was held in Cleveland and discussed how Rust Belt towns could grow again. Vance, famous for talking about deep poverty in white Appalachia and for not proposing any political liberal or socialist solution to it, gave his usual spiel: Cleveland needs innovation, entrepreneurs, and venture capital. One of the panelists proposed dropping the name Rust Belt and replacing it with Heartland. It reminded me of how Providence subsidizes smartphone app developers in vain hopes that they’ll make it big and stay in town rather than decamping to Cambridge. Providence, too, went through rebranding attempts: first Renaissance City, and then, when I lived there, Creative Capital.

There is a cottage industry of right-wing pundits who talk about poverty and propose everything except center-left and left-wing (not the same thing!) solutions. Vance is clearly there, but the panel still didn’t discuss the usual center-right and neoliberal (not the same thing, again) solutions. Development economists on the right have a long list of proposals for fighting poverty, mainly in the third world, but with some applications to developed countries as well: give squatters legal title to the lands they’ve developed, make it easier to start a business, reduce occupational licensing requirements, improve capital markets, levy broad-based taxes, avoid industrial policy picking winners and losers. This is not what the panel said. The panel didn’t really say anything concrete, except that more ambition is needed.

The Brookings report about Philadelphia is similar in concept, even if the political and economic context is different. Brookings is center-left (though moderate enough to attract conservative experts like Ed Glaeser), and Philadelphia is not poor, just less rich than New York and Washington. But the list of recommendations, on PDF-pp. 39-40, is an exercise of how not to say anything. Most of the recommendations are nebulous: “appoint an executive director.” The one specific actionable item is to bring in star faculty to the universities; Penn in fact does that periodically, and the results are not always good, with several examples of tenured hires who weren’t as productive as hoped for.

These plans are reminiscent of alchemy. Medieval alchemical texts were never clear about what to do exactly; they couldn’t be, because then readers would try to replicate the results and see the recipe doesn’t work. So they can’t give an exact recipe for how to grow, because that wouldn’t work. Instead, they propose ten nebulous items. A city that succeeds will get praised for how it implemented six of them; a city that fails will get criticized for how it only implemented six and did so in the wrong way.

Nor can these plans offer services. They cannot talk about investing more in education and in hospitals, in improving social services, etc. That’s political. If they do talk about education, they talk about it in the same terms as a self-important tech entrepreneur or venture capitalist: attracting excellence, enterprise universities, global talent, anything to avoid talking about school segregation or funding disparities.

Cleveland urbanist Alex Baca complains that the Vance panel was overfocused on private-sector solutions and not on public-sector investments. But I don’t think that’s really the problem. Elite institutions and pundits who, to look like they’re above the political fray, propose non-solutions and irrelevant brand-building exercises, come up with both private and public programs. The biggest enduring fad, charter schools, is funded by the public, just not run by it. Brookings and Vance are proposing private programs, and New York and Providence both wasted money on public enterprise programs, but the principle is the same: branding is cool, social services are dirty.

The political problem is that the consultants need to justify their own existence. This requires them to exclude every solution that has a political address. Vance himself hints at his own conservative values (he thinks declining religiosity is a sign of decline), but he makes sure to propose things that everyone can relate to and that peg him as J. D. Vance, independent thinker, and not J. D. Vance, a cog in the religious right’s machine. This does not mean that his proposals are a veneer for the religious right. On the contrary: I think they’re a deliberate attempt to be independent of political partisanship. But the same principle also excludes every social program that orthodox progressives support. A consultant who proposed raising income or sales or property taxes, rather than an opaque TIF deal, would be treated as belonging to the city’s progressive Democrat faction; the same is true of a consultant who proposed raising teacher pay rather than bringing in outside school administrators.

This is not purely self-serving, since urban politics is corrupt, especially in poorer cities. Being treated as an outsider above the fray has legitimate value: a consultant who proposes ideas that are viewed as fresh will get more locals to listen purely for the mystique of outside opinion, regardless of whether those ideas are good. But the self-serving aspect of this kind of self-marketing ensures that there is no quality control, and the consultants who succeed the most at this are the ones who devote the least amount of effort to ensuring their proposals actually work.

I think the ultimate cause of this is the need to be seen to be doing something. If a peripheral city asked me what it could do to be as rich as San Francisco, I’d tell it, nothing. It can tax itself to make its poverty less desperate, it can improve the business climate somewhat, it can have better public transit based on best global industry practices, but it’s not going to be San Francisco, Munich, New York, or Paris. Forget about it. Elite consultants instead overpromise: they tell those cities what they want to hear. And they make sure to pick solutions that a) they will not be held accountable for when they invariably fail, and b) are complicated enough so as to justify those consultants’ own existence. Local urban elites benefit from looking leader-like and implementing a new program; consultants benefit by getting both money and kudos. Everyone wins, except the people who are governed by this arrangement.

29 comments

  1. Bob Skerker

    Well I’m not willing to give up. Yet. I think there are lots of things to try and if they don’t cost much it should be possible to experiment with changes that should be positive. I can think of a few. But for cities like buffalo Cleveland Detroit etc it starts with education and parental interest and participation. We can help but there are lots of people that can’t or won’t participate. It’s hard to believe that a wealthy country can’t solve these issues over time.

    Good article!

    Bob

    Mobile: 716.913.1265

    Spelling courtesy of Apple

    • Larry

      Sure, but you know what helps with education, parental interest, and participation? (and by no means is this a full list)

      Programs to remove lead from our environment
      Maternity (and paternity) leave
      Health care
      Less segregation by government zoning, lenders, and realtors
      Equitable school funding (Ohio’s system, for example, was declared unconstitutional by the State Supreme Court at least 20 years ago)
      Non-racist policing

      All of these are supported by reams of evidence, but consultants don’t suggest them because they’re “liberal” or “progressive” and don’t require paying a consultant to implement.

      • ckrueger99

        Speaking of Philadelphia, this is a good list of things that we can do in our city. Well, except for school funding, which is controlled by the Republicans in Harrisburg, who hate us. The new DA-elect should be especially helpful with the last item on the list.

        • Daniel Trubman

          I’m always in favor of bashing Republicans in Harrisburg, but let’s not pretend the City couldn’t do *anything* to increase revenue for public schools. Many of the city’s neighborhoods face tremendous demand for additional housing; up zoning (or at least ceasing to downzone!) and allowing more by-right development could generate tens of millions of additional property taxes quite soon for school (as well as other public services).

      • Alon Levy

        I’ll note that on top of your list, there are various education policy programs identified with the right. Generally there are fewer of those and they’ll less thought out (it’s still an issue that’s owned by the left – for the same reason, there aren’t a lot of policies identified with the left for making it easier to start a business), but they exist. Things like weakening teachers’ unions, and instituting school vouchers. A few cities have implemented them, but the panel and the report that I’m criticizing don’t say anything in that direction. Vouchers, too, are political, and the disruptive synergistic innovators are supposed to be above politics.

        • adirondacker12800

          Divorcing health insurance from employment is a left wing issue that makes it easier to start a new business.

          • Alon Levy

            Yeah, fair enough. But “it makes it easier to start a new business” is like priority #10 for why universal health care is useful. Most center-left and leftist arguments focus on various flavors of equality (health access for poor and near-poor people, more power for workers to threaten to quit their jobs, government regulations for cheaper drugs) and efficiency (lower administrative costs, centralized comparative effectiveness treatments, centralized bargaining with providers over price, computerized records, preventive care). I’ve seen some liberals argue that universal health care makes it easier to start a new business, but it was never a major Democratic stump line, or a major argument pursued by mainstream liberal wonks like Ezra Klein.

          • adirondacker12800

            It used quite frequently against right wing nut jobs. One of the more trenchant ones was phrased as “freedom from being a health insurance serf”. It goes over their heads but it’s a good way to phrase it.

          • michael.r.james

            Reply to: Alon Levy 2017/05/22 – 18:10

            I’ve seen some liberals argue that universal health care makes it easier to start a new business, but it was never a major Democratic stump line, or a major argument pursued by mainstream liberal wonks like Ezra Klein.

            Other than that health expenses are the major reason for personal bankruptcy in the US?

            I haven’t chased it up, but during the French elections I read a claim that it is now easier to start a new business in France than the USA; in fact it was pointing out that the USA is now way down the OECD list. Same as the US is towards the very bottom in terms of social mobility. Of course if you walk around Paris, or anywhere in France, you see tens of thousands of small owner-operated businesses and far, far fewer of the multinational franchises: sure you see the American burger joints (67 Maccas in Paris; la-ment-aaable!) and Starbucks (36, even worse & probably a result of those 45 million tourists) but they are outnumbered by about 500 to 1 by non-chain local brasseries, bistros and cafes etc. When I lived in Paris I once did a night-time bit of flannery with a visiting Australian friend who ran a wholesale women’s fashion business; he kept taking photos of store-front displays and explained that there was simply no other place in the world like Paris with its thousands of small women’s fashion stores (and the designers and suppliers it supports) and the fact that they made a comfortable living which was impossible in the big-store dominated west. And that’s just one retail sector I hadn’t even particularly noticed.

            The point is that France has the best healthcare (and amongst the best health) in the world.

            Incidentally during the build up to the Brexit vote and in the aftermath, many of the 2 million expat Brits who live in the EU (many retired but also some running small businesses) worried fearfully about what would happen to them. Many shuddered at the thought of being made reliant once again on the inferior British NHS, saying that in both France and Spain (the two big retiree destinations) one got prompt service (for things like hip replacements etc) compared to endless delays in Blighty (and despite all the criticisms, needless to say, the NHS is superior to the US system).

          • Alon Levy

            Starting a business here takes only a few days, but you need a 4,000 euro deposit to open a corporate bank account. This has led to friction between me and the company that wants to employ me but can’t because of US visa restrictions; company wanted me to incorporate here, and it turns out to be easy but expensive. (Will give more details when the situation resolves itself. If I get a job, you’ll know.)

          • michael.r.james

            Reply to: Alon Levy 2017/05/22 – 22:45

            Starting a business here takes only a few days, but you need a 4,000 euro deposit to open a corporate bank account.

            Is €4,000 that much? And if a company wishes to employ you that doesn’t sound too serious if that is a roadblock? I dunno. I guess when you are young and essentially skint … I just remembered that when I first arrived in the UK to begin my PhD, I had the grand sum of US$50 cash left (and no credit card)–after a round-the-world jaunt done on a shoestring. Fast-forward 20+ years and when I was about 95% advanced in setting up a biotech back downunder, and it collapsed at the last moment when the NZ corporate who was the main customer and financial guarantor got cold feet (there was a boardroom change; probably nothing more than bloody new broom) I was left with six-figure demands from the lawyers and financier types one needs. To be fair after about 6 months the NZ corporate cut me a cheque to cover it all (well, after another 4 figures spent on Australian corporate lawyers and sending take-it-or-leave-it offers to the Oxford lawyers & accountants to accept one third of their demands). I try not to think of all the horrendous work in trying to set that thing up and the only beneficiaries were corporate lawyers across three countries!

          • michael.r.james

            This may be too outside your interests but in this context I just remembered it.

            Left Bank Waltz; The Australian Bookshop in Paris.
            by Elaine Lewis, 2006. ISBN-13: 978-1740513494

            Elaine Lewis was a retired Australian (I think she worked in publishing) who sank all her money into fulfilling a dream she had for half her life, setting up a bookstore in Paris. (Yes, like many a dreamer I had mused about it too, but no more: it’s one of those things to do only if you want a small fortune … after beginning with a large fortune!) It was on Quai des Grands Augustins (nr rue Sequier) in the 6th. She was actually making a success of it after a very hard beginning, but then an unfortunate bit of French business banking law caught up with her completely without warning. Turns out her (French) accountant had given extremely bad advice (in fact IMO she should have sued him as it was grotesquely irresponsible) in recommending a much too low “working capital” because the law is utterly unforgiving on this. The moment the business has higher liabilities than the nominated working capital it is automatically declared bankrupt and nothing can stop the proceedings! Part of her problem was this nominated sum was way too low (she could have committed much more as she had the money) but she learned the hard way that government business (she had secured university and cultural institution’s business for her Australasian focus just as these authors were getting a lot of notice around the world) comes with one big drawback: they are extremely slow payers, deliberately. Invoices can go a year before payment. Terrible on small businesses which is why they tend to avoid dealings with government …

            Here is an extract:

            Towards the end of April, an acquaintance tells me about a shop on the Quai des Grands Augustins, close to Saint Michel. There is a sign in the window saying that it is available to rent. I phone the owner who makes an appointment to meet me at the shop.
            My first visit to the shop is in early May and I fall in love with it. It is spring; the sun is shining on the waters of the Seine, the trees are still wearing their young green leaves and from the doorway of the shop I can see the spire of the Sainte Chapelle and the rows of blossom trees at the side of Notre Dame. Across the road the stalls of the bouquinistes look very much as they do in ancient postcards. I feel as though I am in the very heart of Paris.
            The owner, Monsieur Vinarnic, tells me that the shop was built to serve as a bookshop in the nineteenth century but has more recently been used to sell clothing. This explains the pale pink carpet. The original shelving, some of which is still lined with worn green felt, is in place although the old glass doors have been removed and are stacked in a back room. The wooden paneling is typical of the beautiful old nineteenth-century rare-book shops along rue Jacob and rue de Seine, most of which have been beautifully restored. There are also two back rooms, one with a separate entrance to rue Sequier.
            The shop is a dream but the rent is at the extreme top of my range. I argue to myself that I would have to pay this amount for a similar-sized shop in Melbourne and, as I don’t expect to make a profit for at least three years, I can cut corners and live very simply until the business becomes established.
            ….. There are endless business meetings, one of which is at M. Vinarnic’s home, the most luxurious I have yet seen in Paris. He is enthusiastic and tells me that he has chosen the Australian Bookshop as a tenant from a list of 150 applications for his boutique. At last, on the fifteenth of May, he hands me the keys and I have a home for both the books and my personal effects, which are due to arrive any day from Australia. The two back rooms are a bonus as I can put the books in one room and my belongings in the other until I have a permanent home address. To celebrate the occasion, M. Vinarnic invites me to lunch at a very superior restaurant, close by the shop.

  2. Commentor Man

    We have too many places. There is no need for places like West Virginia. Close them off. Make them into national parks. There is economic activity, jobs, and prosperity elsewhere. It is time to stop dumping welfare into these areas.

    • spencepatrickj

      That position is a bit extreme, but I certainly agree that policies like that should be implemented in some areas.

      • adirondacker12800

        He would be very upset when the lights went out in Washington D.C. because no one is maintaining the generators in West Virginia.

        • Alon Levy

          How important is West Virginia to US energy nowadays? Coal is in rapid decline (which is part of why the state is in “I hate the world” mode – part).

          • adirondacker12800

            The world’s largest pumped storage plant is in the border between Virginia and West Virginia. It needs maintenance. It goes PFFT on a hot sumer afternoon so does Philadelphia. And Richmond. The cleverly flavored coffee lightener at the overpriced coffee shops, made with West Virginia milk, will probably go bad.

            https://www.nass.usda.gov/Statistics_by_State/West_Virginia/Publications/Annual_Statistical_Bulletin/2016/Bulletin2016-All.pdf

            …. I suppose everyone can go vegan once the beef, pork, turkey, lamb etc. stops being raised. Or at least part time. They can take home their take-out in their bare hands once the chemical plants in West Virginia close. On foot because the automobile parts plants closed.

          • Ian Mitchell

            Wyoming alone produces 4 times the coal that WV does, and actually employs fewer people.
            That pumped-storage plant you talk about, likely employs what… 3 figures worth of people?
            Perhaps more of them on the virginia side of the border than the west virginia side?

            West virginia isn’t even in the top 10 for milk production, and the number 1 milk producer (california, which is ill-advisedly doing so given drought), produces as much as numbers 5-11, or number 50-15, combined. West virginia is not a big player in meats either. Nor chemicals (that’d be Texas and New Jersey, and again, california) Nor cars/components (That’d be michigan, south carolina, and again, California)

            West virginia has fewer people than Queens. About as many as the Bronx and staten island put together. In a year or two Alameda county (the wrong side of the bay), will have more. Many suburban california counties, including santa clara, orange, riverside, and others have more people, and massively more economic productivity than West Virginia. Broward county, Florida (where miami is not located) is also more populous and economically productive.

            Furthermore, west virginia punches *below* its weight, as the only state in the Union where under half of civilians contribute to society via work.

            It’s a fringe-level extreme position to believe that West Virginia ought to be “closed off”, but it’s an absolute denial of on-the-ground reality to pretend that WV is necessary to the broader US in any material way.

            The transfer payments to WV do a disservice to the citizens of WV, to the taxpayers of the other 49 states, and serve to damage the natural environment of one of the most enchantingly beautiful places America is blessed to govern. Exploiting WV’s environment has only brought disaster, if we should employ any taxpayer dollars from elsewhere there, it should be in reversing the damage already done, and preserving her. That doesn’t take 1.8 million people to do, either.

          • adirondacker12800

            The people monitoring, maintaining etc. the plant want to eat. So they need a grocery store. Californians consume the majority of the milk produced in the state so the dairy farms for places like Washington D.C. need to be someplace. So there would be those people working in the dairy plant. They will very likely own cars. For the next few years anyway, there will be gas stations. They will all want a few cops around. Ambulance drivers with an emergency medical technician in the back. Some of them will have kids. Who need to go to school. Teachers, janitors, a principal and guidance counselor. I suspect they will want telecom too so a few telecom workers. Pretty soon there’s a small town with doctors and dentists…

            The fifth largest employer in West Virginia is Mylan Pharmaceuticals. It’s not all coal miners and clerks in the company store. Even the miners and clerks need rent agents and payroll clerks…

          • Ian Mitchell

            None of what you said refutes any point I made, except for your erroneous assumption that California doesn’t export dairy.

            Mylan employs under 5,000 people in WV. They’re the 5th largest employer.
            That doesn’t show WV as strong or necessary. It shows that they’re destitute.

          • Ian Mitchell

            Yes, you’ve readily disproved a point that nobody made.
            There are under 80,000 coal miners in the entire US. There are 1,800,000 people in WV, and while under half of them work, that still leaves 700,000 or so West Virginians who work in something other than coal.

            That doesn’t make WV important, nor the transfer payments made to the state necessary or beneficial.

          • adirondacker12800

            Tell that to the people who can’t get their prescriptions filled because there’s a shortage of whatever it was that Mylan used to make in West Virginia.

    • johndmuller

      Enough of this bashing of West Virginia already.

      Why don’t we leave it as “Almost Heaven”?
      [If you must, you can stress the “Almost” part under your breath.]
      Really, a lot of it is quite nice.

      The original edition of this topic, and now again this time – the first thing I think about is Building Pyramids. Of course, they don’t have to be pyramids, although if you built one really really big one somewhere in West Virginia maybe it would do something for all those people out of work, not to mention the “Almost Heaven” thing again.

      The point is that properly chosen, even “Monument” style economic boosts can have beneficial effects – think Great Depression and the CCC & WPA stuff. Surely someone can dream up ideas for thousands of people to work on that are at least slightly useful; given that idea, the support industry needed to go along with it will generate a good mix of useful basic underlying social framework.

      While we are at it we could build some things that were glamorous too, like high speed rail lines. A good new right of way through Ohio and Indiana connecting Chicago to the NEC; something similar connecting Florida to the NEC and to Texas, and maybe something in the middle of the country too. They don’t have to be trains either, maybe we need a Spaceport off Houston in the Gulf of Mexico, or somewhere in the desert southwest or in Long Island Sound. How about some more water projects in the West (there must be some way to do it ecologically OK).

      To some extent, the lower tech the better, the more to provide work for the kind of people whose jobs are losing out to globalization and/or are otherwise being replaced by high tech.

      • adirondacker12800

        Up until the 70s the average workweek was decreasing. The eleventh commandment is not “Thou shalt work 40 hours a week”

        • michael.r.james

          adirondacker12800 2017/05/28 – 12:36

          Up until the 70s the average workweek was decreasing. The eleventh commandment is not “Thou shalt work 40 hours a week”

          Indeed, why not take it the next logical step? Use all of WV as an experimental social laboratory and apply UBI (Universal Basic Income)?

      • Alon Levy

        The problem with what you’re proposing is that 2017 is not 1937. To wit:

        – Construction jobs are far more skilled than they used to be. You don’t build infrastructure by handing armies of proles shovels. You use advanced machinery, and workers who are trained on it and on the latest construction techniques and get paid well. Labor-intensive work is more local, like installing rooftop solar panels and insulating buildings, and these can’t really create jobs in depopulating areas.

        – The US is not in a depression. It has low unemployment and incipient wage pressure. It just has a politically unacceptable distribution of growth – too much in fake areas with (((globalists))) and immigrants, not enough in Real America where everyone pretends to go to megachurch.

        – The construction industry in the US has a shortage of labor, and not a shortage of jobs. Wages are rising faster than productivity, dragging up housing construction costs.

        – Why does the US need a new spaceport? Especially if the point is to reduce interregional equality, the existing one is at a perfect place – Brevard County is lower middle-class, way poorer than the Houston region.

        • johndmuller

          I’m not arguing about any of the points you made (except maybe the spaceport which could keep the lucky city from going backwater in the 22nd century), but I think you need to zone in on a more local level where yes, there is a shortage of jobs in West Virginia or whereever rust-belt or other hard-hit collapsed economies exist. There are plenty of low skilled or obsoleted skilled people in their mid-forties or older who do not feel able to uproot their family from their ancient family manse or the underwater mortgaged home and move to and start over at some job which comes with the kind of job security that only a single twenty-something could love. These people do not actually need the ideal job, they mostly need a job, preferably local, to tide them over until social security bringing with it the ability to plow back their wages into the also struggling local economy and fertilize that as well.

          You might say, and probably be right, that there are already some local jobs going begging (perhaps because someone in a high place wants to deport the workers), and maybe there is a matter of pride standing in the way of once better off people going lower status in the job market to take those jobs, but someone could get a new post globalism job dreaming up (in)expensive small (or pyramid sized) projects and the appropriate spin control which will turn these jobs into face-saving employment for these casualties of global capitalism run amok. Maybe the Donald can browbeat some industrialists who want to move their jobs to China into paying into a fund to turn their former old (and possibly polluted) factory sites into very very beautiful (really beautiful, that is) parks and what nots as the price of not doing business here anymore, in the process hiring those very people they are laying off.

  3. Pingback: Links 5/25/17 | Mike the Mad Biologist

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