 The measures of inequality, the genie coefficient for economists in many U.S. cities is much worse than it is in developing nations overseas. Los Angeles, Miami, other cities have higher measured inequality than places like Costa Rica or Zimbabwe. So there's terrible inequality and it continues within cities. There's also inequality between cities. And economists thought both of these things would be competed away by the market, that within the city skills would equalize and incomes would come down, and between cities expensive places would be too expensive and capital and labor would move. But they haven't. That hasn't happened. Neither of those inequalities has diminished significantly. I'm Rick McGayhee. I'm an economist at the New School. I used to work here at INET. I have a lot of public policy experience working as Senator Kennedy's economic advisor and also time at Foundations at the Ford Foundation on Urban Economic Development. My book is Unequal Cities, published by Columbia University Press in January of 2023. America is an urban economy. As most modern economies are, 90 percent of our GDP comes from metropolitan areas. So you would think, well, that's great. We must honor. We must take care of cities. We must promote them. But the history of the United States and contemporary practice is, in fact, to treat cities badly, to underfund their needs, to strip their political power, and to make them unequal. This is deeply rooted in American history. It goes all the way back to the revolution and the Constitution, and has not—it's changed, but I would say cities are still at a significant disadvantage from where they should be economically. So the book has three case studies, New York, Detroit, and Los Angeles. Those are all cities that tried pretty much on their own to fight inequality, to institute social policies and housing, employment, economic civil rights. And by and large, I'm sad to say they all largely failed because they faced several structural challenges. One is the hostility of the federal government to cities. Second, and a bit of a surprise to me when I was writing the book, is how hostile state governments are to the cities, and the power of the states in our political economy really disadvantages these three areas. The third major factor is structural racism, that the concentration of non-whites, especially blacks, in the core cities in the metropolitan region from housing segregation and economic discrimination, really gave the cities most of the region's problems and much less of the resources they need to combat them. This goes way, way back. Thomas Jefferson said cities are a pestilence on the body politic. I'm paraphrasing this one, but when Yellow Fever epidemic hit, he said, well, it may be—it'll have some benefits. It'll kill off a lot of this urban population. Now, you might think, OK, this is an 18th century slaveholder, and you would expect those views, but it's pretty built into our system, this hostility. States start with the electoral college. Rural states have much more power to elect people. The U.S. Senate, I think a person from Wyoming has something like 70 or 80 times the representation that a citizen of California has. Each state has two senators. And then within states, states have the ability to set voting rights, to set their legislative districts or gerrymander them, as they often do. And the combination of those factors, both federal and state, puts cities at a real disadvantage. It's heightened in America in a lot of ways. If you look at London, for example, people think, well, there's something natural about the formation of the cities we have. The New York economy has over 750 municipal governments in it, three state governments, a bunch of regional boards, water boards, planting boards. You could say, well, it's just so big it had to sprawl out that way. But the city of London, Westminster, the little pocket aside, is run by one mayor. Now they delegate authority to the regional areas. And then think in square miles, it's about the same size as New York's smaller population. So it's not anything that's natural or just occurs because of the way the economy works. It's driven by policy. So economists, mainstream economics has a very partial view of cities, but it's improved some in recent years. It used to be that it was just models of household choice. How do people decide where to live and trade off commuting versus work costs? That's a truism, but not really the driver. The revival of mainstream urban economics really came by paying attention to cities as hubs of innovation and hubs of growth. Ed Glazer at Harvard is a big proponent of this work and has done a lot of good empirical work on it. The theoretical work is problematic in my view. It actually draws on Jane Jacobs, the famous urbanist, who was a big believer in cities as innovators. And that's been the real energy that's come into mainstream urban economics in the last couple of decades. Cities as innovators bringing together innovative forces and those innovations in term drive economic growth for the whole economy. So what to do about this problem? And I am somewhat skeptical about our ability within the current political structure to solve this city problem. I was inspired by looking at some geographers who did a study of what economists call commuting zones and just what are the mapped patterns of where people go to work and where they live. And they were able to map almost 90 plus percentage of commuting trips in the lower 48 states to about 50 pockets all centered on metropolitan areas. And I look at that map, I thought, well, what if those were the states instead of the states we have? They would be centered on cities. Some would still be Republican or more conservative but probably not as strongly as the states that we have. And so I thought, well, let's return to city states. Let's just get rid of the states in the United States, make the political map look a lot more like the economic map so we can align those interests and cities wouldn't be harmed so much. It's a thought experiment. It makes you think about why the political arrangements that we do have are so disadvantageous to cities, which are the things that give us prosperity. So there's two types of inequality that I look at in the book. One is within the cities that the cities are very unequal places. The measures of inequality, the genie coefficient for economists in many new US cities is much worse than it is in developing nations overseas. Los Angeles, Miami, other cities have higher measured inequality than places like Costa Rica or Zimbabwe. So there's terrible inequality and it continues within cities. There's also inequality between cities. And economists thought both of these things would be competed away by the market, that within the city skills would equalize and incomes would come down. And between cities, expensive places would be too expensive and capital and labor would move. But they haven't. That hasn't happened. Neither of those inequalities has diminished significantly. And a lot of that's due to the policy structure that we have. The, again, states are empowered over cities. Cities are creatures of states legally, not the federal government. They, and cities can't do anything if their states won't let them. And so to the extent that you have a non-progressive state, which is a lot of them, they block cities from doing anything. One quick example, state of Missouri has two big cities, Kansas City and St. Louis. Both cities passed a city-wide minimum wage increase, not a statewide but a city-wide. The Missouri state legislature overturned both those laws and then passed a law saying that neither city could enact a minimum wage increase on its own. It had to have state approval. This is because cities are legally creatures of states in America. So another great example of the difference between politics and economics in states and cities, the Texas Triangle. So at the top, it's Dallas-Fort Worth, San Antonio, Austin and Houston. That triangle is about 75% of Texas GDP. It's not cows and oil. It's those cities driving the economy, about 65% of the state's population. Yet they are totally disempowered in terms of state politics. If you look at Texas, what it passes, it's not anything that those cities support. And that's because the state has gerrymandered heavily and unequally and controlled. This summer during the heat wave, the state legislature passed a law forbidding those cities to mandate heat breaks for workers when the temperature was routinely over 110 degrees. Because the cities wanted to pass those laws and the states were able to prevent, Texas was able to prevent them from doing that because, again, cities are creatures of states in America. Most of the working from home, it's not people moving from one metro to another. Most of the moves working from home are within the same metropolitan area, but people not commuting into the central business district. Let's take New York for an example. The reduction of trips into the central business district has hurt cities' tax revenue, has hurt the low-income workers, food service, janitorial services, office cleaning, security guards that depended on a vigorous central business district for their jobs. So that the suburban workers who already disproportionately benefit from the urban economic effects created in a metropolitan area but live in exclusive suburbs where non-whites aren't allowed to live and there's no multi-family housing, by staying home or expanding out a little bit further into their metro have made it even harder in the short run for New York and cities like it to deal with inequality. So I was surprised when I was writing the book. I knew the federal government was bad on cities because of the support to states. What really surprised me was how hostile historically states have been to cities and how I think that continues in most or many American states. The power of state governments to control cities entirely, this was a legal battle that was fought out in the late 19th century, oddly over railroad financing, but states won and the prevailing rule now is that states can block cities from doing almost anything and they often do. At the same time, those cities and metropolitan structures within those states, I gave an example of Texas earlier, think about New York. The New York metro area is by far the largest contributor of revenue to New York state but yet the state controls a large number of things that the city has allowed to do and constrains it in policy terms. So the cities, you also see this between states that more metropolitan states send revenue through the federal government to more red rural Republican states. They benefit greatly from the economic prowess of cities but the fiscal and tax returns aren't nearly equivalent. Of my three cities, Los Angeles I think has done the most consciously around cities. After the Rodney King riots where a black motorist was beaten almost to death by the Los Angeles police department, a group of people got together and tried to bring together different, call them progressive, but different groups in the population who hadn't worked well together and those were labor unions and some economic developers and the second is communities of color who wanted jobs but had been excluded by unions and also by traditional economic development. And the third were environmentalists who often or sometimes take anti-development position and by harnessing those three groups together through a process of intense organizing and constant meeting and constant talking to each other. This isn't a magic thing where suddenly everybody gets enlightened. You have to work out those interests but they did that. My best example of how they were successful in 2008 in the middle of the global recession depression, Los Angeles passed a tax increase, a sales tax increase on the ballot to build the metro system and in California it takes a two-thirds vote to pass a tax increase as a legacy of Proposition 13 and they did it. They got a two-thirds vote in the middle of one of the worst recessions we've had since the depression and they did that because the metro appealed to the environmentalists for those reasons. They had a vigorous jobs program for people of color, particularly young men, to get into unionized construction jobs and it created unionized construction jobs and new opportunities for economic development. So that triangle of forces I think is the best hope I've seen for cities to move forward in a progressive way. Even, this is a controversial thing for some progresses, but even market rate or luxury housing helps everybody and we have a lot of good empirical evidence now. One of the good things about the new twist in mainstream economics is they do a lot of good empirical work. The theoretical stuff is you don't need to look at the empirics and there's very good empirical work that shows that housing supply lowers rents and lowers prices and doesn't lead to the displacement and gentrification of people legitimately fear, but you just can't find it statistically. I'd make those housing jobs unionized if I could and also make sure that the communities of color got their share of that work and it would have mandatory affordable housing in it, but housing would be where I'd start. One thing that's important to always remember, and this is true of lots of issues in the United States, is that you can't understand what's happened to cities and what's happening to them without thinking about structural racism. It permeates really everything about the city experience. So in the post-World War II period when these mostly white suburbs grew, they grew with federal support in transportation and mortgage lending. At the same time that blacks were legally barred from owning houses and buying them, Levittown, the famous suburban Long Island outside of New York, had explicit clauses in contracts saying that houses could not be sold or resold to someone who wasn't white. And you see those all across the country. I grew up in Kansas City and the main developer there, J.C. Nichols, was a pioneer of these racial covenants. So it really shaped the political form that as the suburbs are politically independent from the city and the city can't get the tax revenue. It also blocked city residents, particularly black and poor residents, from moving to places with higher tax bases and better schools and perpetuates this inequality. So there are a lot of factors that go into this, but it's I think very important to understand how racism is an integral part of it and remains part of it now. I've always been interested in cities and I'm an economist and I read a lot of urban economics and it wasn't satisfying to me, but it goes back for that. I grew up in an all-white suburb of Kansas City and cared a lot about civil rights, but there was nothing happening in the civil rights movement when I was growing up. And I've always wondered why things were so unequal and so both economically and racially unequal. When I was in high school when Martin Luther King was assassinated, there were violent disturbances in downtown Kansas City. Three miles from my high school, I was in a high school of 2,100 people that had two people of color, exchange students from abroad. And that level of segregation and inequality has just always, I've never understood it really. And so I think the book is an attempt many years later to try and really understand it, but also understand the economics of it.