price_of_citizenship.jpg (9774 bytes) The Price of Citizenship

Chapter Five

Chapter Five: Urban Social Welfare in an Age of Austerity

Under the Reagan and Bush administrations, the flow of federal funds to cities slowed. In the 1990s, a new cohort of mayors solution was to trim labour expenses, cut services, tighten management, privatize city responsibilities - to assimilate city government to the market. The likely casualties of the new urban agenda were social welfare services, inner-city neighbourhoods, and the poor. Empowerment zones were created with the intent to revive cities by creating markets in spaces that markets had abandoned.

The Fiscal Crisis of Urban Social Welfare

The combination of lost tax revenue and declining federal funds would have strained cities' capacity to pay for social welfare. But in the 1980s and 1990s four developments intensified the gulf between needs and resources: heightened poverty, increased homelessness, the emergence of AIDS, and the rising human and fiscal costs associated with drug use, especially of crack cocaine.

A new breed of mayors now occupies city halls across America. With a deep understanding of the need for smaller government, and determined to attain a better life for citizens in tough urban neighbourhoods, these new mayors have blurred the lines between Republican and Democrat, conservative and liberal. They do not want bigger checks from Washington; they want freedom to solve their cities' problems in their own way. In many respects, they have more in common with each other than they do with some of their respective parties' national leadership.

They downsized government, privatized city services, and faced down city unions. They concentrated on managing city government efficiently in the public interest rather than using it as a mechanism for arbitrating competing group interests. "A sustainable economic base can be created in the city but only as it has been created elsewhere: through private, for-profit initiations and investment based on economic self-interest and genuine competitive advantage. Governments are inefficient because they are monopolies. The basic concept is the market produces competition, competition produces value. The way to create wealth is through the marketplace, not through government spending. The "key" to successful urban governance rested in creating "a marketplace for municipal services" - "marketization".

"pin-stripe patronage": "take care of your buddies who take care of you, or find new buddies."

With subsidies to suburban housing and highway construction, the federal government had helped destroy the viability of American cities. By itself, federal money could not overcome the problems of fragmented government authority, concentrated and persistent poverty, or industrial flight.

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The Federal Government and the Marketization of Urban Policy

Three strategies linked urban and housing policies from the 1980s through the 1990s:

  1. replacing housing construction with certificates and vouchers
  2. promoting homeownership among low-income families
  3. re-creating markets in depressed urban cores.

Unlike AFDC, food stamps, or Supplemental Security Income, housing never became an entitlement.

America's housing problem was diagnosed as a crisis of affordability, not supply.

Concentrated poverty, racial segregation, homelessness, and economic stagnation all increased during the 1980s. Critics remember the era for its reduction in social benefits and federal withdrawal from the cities.

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The Revival of Urban Policy

In enterprize zones, government relaxed controls, reduced taxes, and modified regulations and other "inhibitions on business investment." Empowerment zones made "the private sector the driver of economic growth, with the government acting as a partner.

The Problem of Affordable Housing: Public Housing, Section 8, and Homelessness

Self-motivation, personal responsibility, and self-sufficiency.

The public increasingly associated the homeless with beggars cluttering the streets - that is, with the undeserving poor. The intractable persistence of homelessness underlined the limits of the market as a universal solution to public problems.

Cities have retooled themselves, to some degree, from the previous two decades of decline as the U.S. economy moved away from manufacturing toward information-based   and service industries. Mayors complained of the problems of prosperity: too many high-skill jobs, and not enough people to fill them; too many well-off people moving back to the city, and not enough houses for all of them, driving up prices for everyone else. Poverty increasingly concentrated in cities, isolating the poor, heightening segregation, and burdening services. By decimating social services, some experts argued, cities had balanced their budgets on the backs of the poor.

Cynical observer: The new mayors, indifferent to the growing inequality in America, had written off poor neighbourhoods and accepted the emergence of "dual cities" serving the affluent far better than the poor, signaling a new form of class war that was a piece with the latest trends in "welfare reform".

Charitable observer: Only tough medicine would induce recovery. The cold bath of the market would produce a solid and lasting prosperity that would diffuse work and good wages among the entire population. This was not class war but necessary discipline.

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Chapter Summary

Due to cutbacks in funding to the cities by the Reagan and Bush administrations along with lost tax revenue from people and industry (manufacturing) moving to the suburbs, cities found themselves strained to pay for social welfare. Heightened poverty, increased homelessness, emergence of AIDS and drug use (crack cocaine) became the norm.

Mayors responded by trimming labour expenses, cutting services, tightening management and privatizing city responsibilities. They also created Empowerment Zones. "Duel cities" have emerged resulting in class war. By decimating social services, it can be argued, that mayors balanced their budgets on the backs of the poor.

Concentrated poverty, racial segregation, homelessness, and economic stagnation all increased during the 1980s.


Conservative right-wing philosophy is one of 'self-motivation, personal responsibility, and self-sufficiency'. Anyone who is unable to measure up does not count, and is forgotten about. Only the strong survive... as it should be, is their thinking.

New urban agenda resulted in meaner streets, dog-eat-dog mentality and a harsher reality for the poor.

In the U.S. housing is not considered an entitlement and is diagnosed as a crisis of affordability, not supply.

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