American Dreams by Unknown

American Dreams by Unknown

Language: eng
Format: epub
Tags: POL040010 Political Science / American Government / Executive Branch
Publisher: University of Virginia Press

Get Out of the Way

Once state and federal governments create a stable fiscal environment, they should get out of the way. Cities are capable of promoting economic opportunity and mobility if we just let them.

Consider the number of cities that have now adopted living-wage legislation, a policy that has been shown to reduce poverty significantly. Cities are also adopting family leave, health care, and labor-friendly legislation, in this way addressing inequality in the absence of state or federal regulation.

Economic theorists often assert that the minimum wage and other forms of social welfare regulation have to be pursued at the national level. Conventional wisdom suggests that municipal regulation will prompt businesses and residents to flee.

But that is not what has happened. Millions of Americans are now living in cities with minimum wages that will reach at least $15 an hour. The efforts by mayors and city councils in Los Angeles, New York, Chicago, Santa Fe, and hundreds of other cities have also induced some states to adopt higher minimums. Cities have been the first movers in regulating low-income service work and in providing much-needed support for low-income laborers.

Indeed, the primary barrier to cities addressing economic inequality is state and federal interference. State legislatures regularly adopt preemptive legislation that prevents cities from acting. Federal law also makes it difficult, if not impossible, for cities to adopt regulations that directly regulate labor rights or mortgage lending. Cities need more room to maneuver. The new administration can give them this policy space by avoiding unfunded mandates, by directing federal agencies to permit local flexibility in applying social welfare programs, and by providing resources directly to cities, bypassing state legislatures. Preemptive federal laws should be modified to permit cities more room to regulate in areas like labor and employment, banking, and insurance.

When cities have the authority, they can do a great deal. In analyzing local social welfare policy, urban theorist Michael Craw found that even when constrained by limited fiscal capacity, many local governments “still have a significant degree of independence in reacting to local policy preferences when it comes to decisions on providing social welfare services and participating in federal and state intergovernmental grants.” He concludes that rather than “simply being ‘junior partners’ to federal and state governments, some local governments possess considerable autonomy in addressing local poverty.”28 The political scientists Chris Tausanovitch and Christopher Warshaw recently found that “liberal” cities have higher taxes, less regressive tax systems, and spend over twice as much per capita than do “conservative” cities on social welfare.29

Despite conventional economic theory, cities are addressing inequality, and doing so aggressively. City residents are willing and able to pay taxes for redistributive social programs. And the wealth being generated in cities is being plowed back into city services.


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