The Diminishing Returns of Large Cities: Population Growth Myths

One of the big myths of the twentieth century is that large American cities are necessary and inevitable. Yet in reality growth has been dispersing to suburbs and smaller cities for the last two decades. As the decline of Detroit, once the country’s fourth largest city, reveals in all too harsh terms, being bigger is not always better.

Yet the big city myth remains virtually unchallenged. A biased print media and a subsidized academic cartel are constantly singing the praises of big city life (as opposed to suburban or rural life). While American cities exhibited strong population growth in the early part of the twentieth century, recent Census numbers show America’s mega cities are growing below the national growth rate. According to the 2010 Census, San Antonio was the only city with a population of over 1 million people that grew above the national growth rate of 9.7%.   

Years ago, scholar Milton Kotler wrote an important but much forgotten book on local government. Kotler showed what was behind the amazing growth numbers of the some big cities:

Statistics show New York's population increase from 1890-1900 to have been 2,096,370. This seems amazing, except that most of the increase came about with the annexation of Brooklyn, population 1,166,582. In short, its population grew at a rate far less than the increase by annexation.

Municipalities are creations of the state legislature. In many cities, the boundaries changed to expand the power of cities along with their political class and related business rent-seekers. While some would argue about New York city’s population numbers, which has recovered from their lows, few would question Detroit’s long-term decline. As Detroit takes center stage line, the entire municipal bond market is about to take notice. Much is at stake here.

Not only the economic foundation of a large American city but the concept that a creditor will get back its principal back.  The Detroit Free Press explains:

Borrowing for Michigan cities could get more expensive in the future, if Detroit emergency manager Kevyn Orr’s restructuring plan is accepted by creditors and Chapter 9 bankruptcy is avoided, some bond experts caution.

That’s because Orr’s plan would set a major precedent by treating all unsecured debt the same way — instead of giving a better payout or greater deference to general obligation bonds, sold for generations as safer investments backed by a city’s taxing authority.

In Detroit, both the lack of checks and balances, and the maintenance of an engaged, informed public undermined the city’s fiscal health. Many Detroit citizens voted with their feet by exiting the corrupt system. With the middle class of all races deserting, the city of Detroit was ripe for looting of the taxpayers.

In conclusion, it’s time for the informed public to realize many of our big cities are expensive, corrupt, and not redeemable. The Michigan Legislature should cut Detroit down to size. Perhaps they should consider de-annexation. It’s better to have Detroit become ten smaller municipalities. Of course there would be major political resistance for those who have made big money from Detroit’s decline. But without de-annexation, Detroit seems likely to remain on the brink of insolvency for a long-term since its political boundaries are too large for responsive governance and the crafting of unique solutions to its problems.