It’s Time for Cities to Reject the Welfare Mentality

It’s Time for Cities to Reject the Welfare Mentality

All over the nation-from New York to Los Angeles, from San Diego to Milwaukee-cities are on the rebound. Each successful city has accomplished its renaissance in its own particular way, with its own special twist. But if you look across the spectrum of flourishing cities, you can discern a clear set of principles that leads to urban health.

To start with, there is a total rejection of the old municipal welfare state ideology, whose decades of failed policies led the nation's cities to the brink. Urban government, that idea went, was above all to achieve social justice and the uplift of the poor. It seemed to make sense: Cities always had big concentrations both of poor people to help and of wealth to tax. So cities piled on welfare benefits and social services, created huge bureaucracies to administer them, and taxed heavily to fund them. But things didn't work out as expected. With the information revolution, all those companies whose great skyscrapers made them look eternally rooted there no longer had to be in the cities to be near their suppliers, customers, or bankers. And global competition required them to get efficient and cut costs. No more could they justify paying high corporate income taxes, commercial rent taxes, inflated utility taxes. So the number of Fortune 500 companies headquartered in New York fell from 140 in 1947 to 31 now. And the new, smaller businesses that have generated all of the new jobs of the past decade or more never started up in many of the old cities. Result: A city like New York has created not one single net new job since World War II.

Worse, the costly municipal welfare state turned out not to work. All the indicators are worse, not better, than when the whole rescue effort began. The inner city illegitimacy rate is way up, the urban high school graduation rate way down. The poverty rate hasn't dropped and, until the new-paradigm reforms, the welfare dependency rate had soared. All these billions of dollars made things worse, because, we learned, if communities don't make their citizens personally responsible for themselves and their families, but instead tell them they're victims, they will become dependent and demoralized. If the welfare state tells people that it's fine to have illegitimate children, that poverty excuses crime, that welfare payments are appropriate reparations for historical victimization, and that working in "dead-end" jobs for "chump change" is undignified-what can possibly result but illegitimacy, crime, welfare dependency, and non-work?