One of the best posts I've read in a good long while comes from Aaron Renn at The Urbanophile: "Is Urbanism the New Trickle-Down Economics?" It's challenging, interesting, and touches on critical economic development issues of importance to the city. Here's his first shot fired:

[M]odern day urbanism often resembles nothing so much as trickle-down economics, though this time mostly advocated by those who would self-identify as being from the left. The idea is that through investments catering to the fickle and mobile educated elite and the high end businesses that employ and entertain them, cities can be rejuvenated in a way that somehow magically benefits everybody and is socially fair.

For example:

The people most aggressively pushing urbanist policies like bike lanes, public art, high end mixed use developments, high tech startups, swank boutiques and restaurants, greening the city policies, etc. are disproportionately those who want to live that lifestyle themselves, or hope to someday. Like me in other words. The fact that you’re a Millennial who rides around to microbreweries on your fixie without necessarily having a high paying job yourself (yet) doesn’t matter. You are still advocating for your own preferred milieu, and that of others who think like yourself.

I'm guilty of a lot of this myself, save for the fixie, which I'm way too lazy and uncoordinated for. So it's probably with some self-justification that I offer a rationale for why these policies exist, not that Renn is opposed to them necessarily. Cities throughout the country were scarred by central-city flight and the urban blight that followed, especially in the Midwest, and the powerful mayors who ruled Chicago as the Rust Belt collapsed approached the Loop as the city's bulwark. For all his reputation as a Bridgeport ward heeler, Daley the Elder was a master at courting the city's business powers—even the Republican ones—a talent he passed on to his son. As Elizabeth Taylor and Adam Cohen write in American Pharaoh:

Daley's [1958 development plan] was almost single-mindedly focused on the downtown business district. Where Burnham had looked at Chicago as an organic whole, Daley's planners proceeded as if downtown were the only part of the city whose future mattered…. The only improvement it offered to most of the city's residential neighborhoods was a highway that would move cars more rapidly through them on the way to shopping in the Loop.

In that, Daley was quite successful, but the Loop was still far from what it is today, which is how Chicago got its first tax-increment finance district under Harold Washington in 1984:

Begun by Mayor Harold Washington in 1984, when the Loop did indeed contain areas of blight, Daley extended the life of the Central Loop TIF to seemingly great effect. Before eventually expiring in 2008, the TIF district helped spearhead the Loop's renewal, ushering in an era of huge expansion that increased the tax base and businesses within its borders, and saw a rise in the estimated assessed land value in the district to $2.6 billion from its original $985 million. The renewed strength and vibrancy of Chicago's core allowed the city to comeback from its "buckle-on-the-Rust-Belt" lows, and become a relevant player on the Global City index.

TIFs use leverage to work, driving tax revenues created by a district back into that district. In an area with a strong foundation—lots of transportation, high density, and an existing economic base—they can change the fortunes of an area quickly. And Chicago's downtown economic development has succeeded. In a lengthy, fascinating piece for Crain's, Greg Hinz details just how the city's downtown has weathered the recession and come out strong on the other end:

In fact, the Census Bureau reported in 2012 that Chicago gained more people within two miles of City Hall—48,288, or 36.2 percent—than any other American city, including New York, in the previous decade, in both absolute and percentage terms. An outsize share of these newcomers are young, ages 25 to 34. By the city's estimate, 38,000 full-time college students attend classes in the greater Loop.

Renn argues that urbanists are no less self-interested than other forms of the urban elite: for example, Chicago's friendly spat with Seattle over stealing their tech jobs with sophisticate-friendly transit options. "What’s needed," he writes, "is a new orientation of these ideas so that we don’t end up with an explicitly elitist policy rationale and policy set that caters to the already privileged at the expense of the poor and middle classes of our cities."

But it's hard to tell where that self-interest ends and begins. Part of the reliance on policy sets that cater to the privileged, or at least areas that house the privileged, is that they've worked—those areas have a lot of economic leverage. One of the reasons that TIFs are so appealing is that they don't cost existing money. They're not free, as Ben Joravsky has documented, but diverting future tax revenues above a certain level is different than shelling out straight from the coffers. That's also why the Infrastructure Trust is also appealing, because it's not an up-front investment.

Compare that to the investment required to lift up a truly troubled neighborhood. My colleague Elly Fishman looked into Land's End founder Gary Comer's massive, long-term investment in his old South Side neighborhood, $86 million over about a decade; it's an honorable project that's done some good, but the gains have been modest. In the context of saving a neighborhood, $86 million just isn't that much. It's improved education and housing in the neighborhood, but Pocket Town has still been a hard sell for employers:

New homes can improve a neighborhood only so much, Reid points out, when there aren’t many economic anchors at hand. Pocket Town contains only four businesses: a gas station, a paper supply company, an auto salvage yard, and Reid’s real-estate company. “There’s still no new retail, no grocery store, and there isn’t even a pharmacy,” he says. Without meaningful commercial activity in Pocket Town, building houses there “is no different than building in Englewood.”

Responds Schleicher: “We tried to identify how to bring in other businesses. . . . The problem is, the neighborhood is very isolated. You can’t attract big-box retailers or grocery stores, because they won’t reach a big enough market to make money.”

Economic development on the level of Pocket Town is extremely expensive, which is why cities are looking towards private capital for development during this age of austerity. Private capital wants to minimize risk… and blighted neighborhoods are a much greater risk. It's harder, and our models for it aren't great. New York took the lead: stabilize your tax base with a wealthy industry, then take it from there. As Alan Mallach puts it, "downtowns are the low-hanging fruit of urban revitalization." It's not just Chicago; the downtown population is up in St. Louis, Baltimore, even Detroit. So it's not just self-interest; cities don't have much reach right now, and downtown is within their grasp.

Photograph: Monika Thorpe (CC by 2.0)