IT'S TIME FOR THE CITIES TO RESTRUCTURE
Many Americans believe the cities need a helping hand. We agree. There are many federal initiatives that could carry a big economic payoff: an expanded Head Start program, welfare reform, and an increased income tax credit for the working poor (page 30). But to maintain political support for help to the cities, municipal governments are going to have to face the fact that they are perceived as unwieldy and inefficient. The blunt truth is that city governments in the 1990s, like corporations in the 1980s, need to restructure. Cut back on sclerotic bureaucracies. Streamline operations. Build accounting and information systems that show where and how taxpayer money is being spent. Free municipal employees from layers of stifling management. The potential payoff: Businesses will be more willing to invest in the cities, given a more dependable quality of urban life.
But city governments should privatize as many government services as possible. The reason is that fostering competition over who will provide a service, rather than relying on a monopoly, will lead to better service. Some form of school choice would take power away from the bureaucrats. And in many cases, competition will force the public agency to become the more efficient organization.
Improving city schools, rebuilding a decayed infrastructure, and making the streets safe is going to cost a lot of money and require an activist government. But if city government doesn't change, political support for aid to cities will rapidly dwindle. Worse yet, fed-up middle-class urban residents and their corporate employers will continue their mass exodus. Then, what remains of urban America will be beyond help.