Urban Responses to the "Lost Decades"
As delegates to the World Social Forum (WSF) in Porto Alegre, Brazil, in January 2003, the authors examined alternatives to the neoliberal approach to urban development, to escape the negative results that are too often ignored by the media and even academia. Broad-scale, national-level alternatives to neoliberalism have been rare, but alternatives at the municipal level are more common. The authors draw from lessons in Brazil and from their home countries of Mexico, South Africa and the United States. Their lectures and seminars at the World Social Forum, and related programs at the University of São Paulo and the Federal University of Rio de Janeiro, have been supported in part by the Lincoln Institute.
Residents of enormous districts in some of the world’s largest cities suffer with miserable housing, difficult access to work, inadequate water supplies and sewerage, poor public services and exposure to violence. In many cases, conditions grew worse during the “lost decades” of the 1980s and 1990s, due to recession and cutbacks in planning and public investment. Those with faith in trickle-down improvements waited in vain for private markets to increase household incomes. Instead, in many countries the poorest three-quarters of the population suffered absolute losses.
Forced to respond to these kinds of problems, city governments contemplate new approaches to such questions as local versus national authority, productive efficiency versus neighborhood-based redistribution of services, and conflicts between plans and markets. At the municipal level the complications become painfully clear. Popular advocates of redistributive reforms struggle to survive in a hostile environment, often against strong private business interests, a privileged middle class, and conservative provincial and central governments. The problems in cities are immediate and concrete, requiring negotiation, concessions, compliance with an often-biased legal framework, and high degree of professional competence and leadership. Municipal planners and activists cannot overturn the whole system, but for success they must look to exploit cracks and find institutional openings. In spite of the manifest failures of the neoliberal regimes, reformers will find no simple return to an earlier age.
This brief discussion highlights complex issues, perhaps raising questions more than answering them. How does one deal with land issues underlying most urban problems: ownership, regulation, taxation and value? How much scope is available to municipal governments to pursue economic development or to redistribute basic needs, including household income and access to land? How much difference does it make at the municipal level whether or not the national regime is moving in progressive, redistributive directions? Complicating these issues, globalization may be intensifying, challenging cities with low-cost competition, increased transnational corporate reach, and ever-broader powers concentrated in multilateral institutions.
Land Values and Markets
The benefits of urbanization require public and private access to land, yet urban land values reflect differing degrees of access to a city’s benefits. Low bidders are excluded from more desirable land in most land markets, whether formal or irregular. The poor are pushed to the city margins or crammed into the deteriorated inner core. Weakly regulated land markets do not even guarantee economically efficient use of urban land, let alone ensure land use patterns vital to environmental survival. Local governments intervene with land use controls and taxation, or facilitate access to cheap urbanized land, in the best of cases pursuing equity, fiscal efficiency and environmental viability. Performance on all these counts is highly variable.
In Mexico, at least 60 percent of the urban population lives in areas developed by the illegal occupation of land that subsequently receives services and supports self-built (or rather, self-financed) housing. Thanks to historically ingrained traditions about the people’s right to land, informal settlements have been supported by infrastructure and service provision, regularization programs, and even credits for home improvements. Otherwise, the urban housing situation in Mexico would be much worse. During the 1980s, public institutions accrued significant land reserves, which were applied successfully in low-cost sites and services, core housing and mutual aid projects as alternatives to irregular development. But Mexico eliminated land banking, under World Bank influence, hampering the scope of planning to ensure equitable and sustainable urban development.
In recent years, mass-produced formal housing in cities has increased. In line with World Bank advice, the subsidized finance system for the salaried working classes and middle-income sectors has been restructured, enabling commercial developers to operate on a very large scale, acquiring vast tracts of cheap greenfield sites (and some inner-city sites), and then designing, constructing and marketing industrialized housing. The initial advantages are the provision of services and the seemingly spacious suburban atmosphere. The disadvantages are inaccessibility, lack of urban amenities, reduced space standards, and lack of space for future growth. The gigantic scale of this type of development may deplete irregular settlements of middle-income residents, thus increasing social segregation.
In Brazil, municipal governments have begun to experiment with ways to regulate land use, such as property tax increases linked with progressive taxation, including broad-scale exemptions for as many as half the property owners, and popular participation in decision making for regulatory changes (planning and zoning) and for investments in urban infrastructure. Many changes were first implemented by Workers Party (PT) mayors, operating in opposition to the federal and state governments, with the aid of fiscal and regulatory changes introduced in the 1988 Constitution. Now, with the PT government holding national power under President Luis Inacio (Lula) da Silva, left or center-left municipal governments may find themselves able to experiment more. Nevertheless, the obstacles are very great. Even in the relatively rich city of Porto Alegre a third of the population lives in irregular settlements.
The South African experience since democracy was won in 1994 shows that tremendous difficulties confront those who would use public agencies to assist the poor to gain access to land. The government did succeed in subsidizing over a million families previously living in shacks and shared rooms, but almost all new houses were located at the extreme peripheries of the cities. A key progressive gain is that many large metropolitan areas are now consolidated in single municipal governments. But economic growth concerns and fiscal crises have limited the ability of the new jurisdictions to redistribute resources in favor of the poor. Planners intended to raise ample funds through taxation of high-value central land, to pay for subsidies for developments in poorer districts, but values did not follow predictions, and receipts were grossly inadequate. Land markets continue, by and large, to exclude the disadvantaged, and they haven’t yielded sufficient tax revenue. A continuing lack of coordination in the formulation of policy has seen programs in land, housing, services, public works and employment working against each other in some cases.
In the United States, nearly all land and housing development is “regular,” market-driven and dominated by private banking, real estate and development firms, and better-off households. The results are starkly unequal, pitting suburbs against much poorer central cities. Efforts to right the imbalance have generally been frustrated, because land markets do not deliver great efficiencies or fairness. The process is highly regulated, so that inequalities are generated not only by (land) markets themselves, but also by political groups such as “growth coalitions” and by fierce regulatory manipulation on behalf of privileged middle-class and wealthy districts.
The regulation of land markets through planning, land banking and taxation constitutes a broad arena for municipal intervention in land policy. Local governments have extensive potential authority, and they typically have constitutional prerogatives for planning and taxation (although in practice they are still constrained by powerful national forces). They may act to support economic growth or to redistribute it, even in a conservative provincial or national climate. Local planning does constrain land markets, but often without redistributive effects, since city governments must contend with strong financial interests, patterns of privilege, and entrenched power. Professional competency and consistency are required to exploit the full potential of property registration and taxation systems, and financial decentralization limits the possibility of cross subsidies and redistributive measures.
Progressive Local Government
In spite of claims about the conservative nature of powerful constraints on the redistributive capacity of local governments, evidence from the four countries cited here suggests that municipalities may indeed find ways to redistribute public goods and services on behalf of their less well-off residents. Municipalities also may serve as laboratories for social experimentation and as sources of progressive ideological change.
In Mexico, the role of municipal and state governments in achieving more equitable cities is undisputed and constitutionally sanctioned, yet fraught with obstacles. In the 1990s, the first electoral defeats of the Revolutionary Institutional Party (the PRI, which dominated the political arena from the 1920s) were at municipal and then state levels. Throughout the country there are genuine examples of successful innovative and socially redistributive programs run by municipal governments, such as participatory budgeting and planning, and community recycling. Mexico City’s Federal District is now governed by the left-of-center Democratic Revolution Party, which also controls most of the poorer and more populous jurisdictions of the metropolitan area. In 2001, this government introduced a social investment program targeting the poorer districts, providing monthly cash payments of US $70 in 2002 to people over seventy years, interest-free loans for home improvements in irregular settlements, and traditional public services and social assistance. Criticized from the left and right as populist and electioneering, this program is now emulated on a smaller scale by the center-right federal government and in local electoral platforms by the PRI. Despite initial positive evaluations, however, questions remain about costs for universal coverage and viability in poorer municipalities, and about reinforcing clientilism.
Brazilian experience with redistribution by municipal government has been documented in many notable cases, from giant cities such as São Paulo, to large cities such as Porto Alegre, Santo Andre and Belem, to the hundreds of smaller municipalities that have elected left-of-center administrations over the past 15 years. The case most often discussed is participatory budgeting, the innovation that has involved more than 10 percent of Porto Alegre’s residents in decisions to allocate more than one billion dollars of public expenditures on infrastructure and services. Other innovations include improvements in transit services and expansion of bus lanes to challenge the hegemony of the automobile, which serves a privileged minority. Some progress has been made in housing, but local government capacity is limited.
South African municipal government has emerged only in the last two years from its long history of apartheid division and the turmoil of reform since 1994. But, new trends demonstrate innovation at the municipal scale. Although many aspects of municipal government have been “corporatized” in Johannesburg, the city is beginning to make substantial progress on the regeneration of decayed inner city areas, using a wholly owned company (the Johannesburg Development Agency) as the instrument of change. Agencies of this kind seem to be able to solve some of the problems of intricate relationships between different spheres of government—local, provincial (or state) and national—and to attract greater private interest in supporting municipal initiative.
New approaches to planning in South Africa are also starting to show signs of success. These participatory approaches bring public utility agencies and big-budget government departments, as well as citizens, into framing municipal action over the short- to medium-term. Such developments indicate that working on the linkages between different agencies is crucial for increasing effectiveness and reducing frustration during the early democratic period. Some municipalities are beginning to find ways of sharing experiences and shaping new forms of cooperation. An example is the new national Cities Network, which brings together nine of the largest municipalities in the country as a means of stimulating innovation and expanding impact.
Social and political innovation has also been documented at the municipal level in cities of various sizes throughout the U.S., often in situations that require resisting politically conservative national trends. Very large cities such as Cleveland and Chicago developed city plans aimed explicitly at redistribution to provide assistance to needy households and deprived neighborhoods. Chicago also developed solid programs to support smaller and more local business enterprises, versus the usual beneficiaries among large firms and downtown interests. Smaller cities such as Burlington, Vermont, and Santa Monica, California, developed aggressive programs in housing and rent control aimed at helping needy constituents. As in the heralded examples of participatory budgeting in Brazil, these progressive municipal programs typically have strict limitations, because they can do little to improve the labor market and thus can offer only small improvements to household cash incomes.
Municipal efforts on land use and housing in the U.S. are often constrained by local control or “home rule,” which isolates the more numerous, wealthier suburbs that literally surround poorer central cities. The wealth and significant taxing power of these separate jurisdictions combines with a U.S. peculiarity—local financing of public schools—to burden city residents with powerful disadvantages. Since about 90 percent of U.S. children attend public schools, local control of schools is a hot-button issue in U.S. politics. Scholars construe de jure public suburban control as de facto privatization: by purchasing homes in suburbs, households are purchasing control of local schools, thereby excluding others, such as new immigrants and ethnic groups, especially African Americans.
One hears echoes of such U.S. suburban privatization and division in the rigidly separated districts and gated communities of Rio de Janeiro, São Paulo and other Brazilian cities; in the huge separations of privileged central districts and the unserviced periphery in Mexico City; and in the surviving apartheid spatial structure of Johannesburg. We find that municipal governments do act against these inequities, at least in part because of an ideological commitment and because the resulting problems threaten their capacity to govern. Some localities may turn their limited victories into building blocks for larger progressive structures at the national scale, as evidenced in Brazil.
National-level Urban Reform
Urban affairs is a hot issue in Brazil, and various laws, administrative practices, budgets and regulations have been brewing since the new Constitution of 1988 promised an improved status for cities. After more than a decade of extensive public debate, new legislation was enacted in the 2001 City Statute, a federal law on urban policy. The new left-of-center government led by President da Silva is betting on a new national ministry to integrate different activities and to find more effective approaches to persistent urban problems. This Ministry of Cities (Ministerio das Cidades) was established in early 2003 to improve housing, transit and neighborhood services for poor majorities, preserve and renovate historic centers, promote economic development, and drastically increase participation. National leaders aim to emphasize the concerns of mayors, city councils and the neediest citizens in the federal agenda. Other countries are generally a long way from such an urban policy, and the Brazilian experiment will be closely watched.
Mexico is a clear example of how constitutional rights to such things as decent housing, health and education may be considered important, but are not valued enough to guarantee their fulfillment; nor are all those good intentions laid out in the highly complex planning legislation. Even municipal-friendly constitutional amendments of the 1980s have not fully undermined the high degree of centralization of all public policy, including social spending and virtually all environmental regulation. As a result, the urban and social agendas of different levels of government are often competing rather than complementary, and are always insufficient to meet demand.
South Africa has tried to develop a new national policy in the urban field, starting with a national Urban Development Strategy after the 1994 democratic elections. But relatively little has been accomplished since the strategy has tended to remain a paper commitment to good outcomes rather than a concrete program or a real obligation on different departments and levels of government to work together toward common goals. Part of the problem has been competition between different agencies over who should set the agenda. Diverse centers of power, from the president’s office to the finance ministry, the local government department of the national government, some of the provincial governments, and the national municipal association, are vying for position in shaping urban policy.
The lack of coherent urban policy in South Africa also must be placed in the context of the central agenda of government, which stresses not only economic growth but also the continuing empowerment of the previously disadvantaged black majority. There is by no means consensus over the roles of the cities in accomplishing either of these objectives. A single ministry addressing urban issues would seem like a dream to many observers, but other ways of achieving similar objectives by reorganizing relationships between parts of government suggest that progress can be made.
In the United States, the federal agenda for urban policy has been weak since the late 1970s, and general fiscal constraints have combined with suburban voters’ indifference to cities. These problems have been greatly exacerbated by the consequences of the terrorist attacks of September 11, 2001, by demands of the U.S. war economy, and by the conservative nature of redistribution pursued by the Bush Administration.
This range of international experience suggests that profound national changes and legislation can have immense local effects. A national government can provide fiscal, regulatory and administrative support for a whole series of municipal improvements, many of which would be eagerly implemented by local governments. National governments (and even international agreements, as in the earlier European common market) can inhibit or even prohibit such things as municipal tax-cutting competition in pursuit of relocated private investment, thus eliminating a lose-lose situation for public budgets. But, even in the best of cases, such opportunities are limited, politically difficult and technically complicated.
In the context of the globalizing economy, city politicians and officials face remarkably similar uncertainties in Brazil, South Africa, Mexico and the United States. As economies have become more open, some industrial sectors have been hammered, while others have been able to take up new opportunities (such as motor vehicle exporting in South Africa) and new niches have emerged. The current geopolitical context poses challenges for city administrations; how they think about their role in this period of imported instability is significant. There is a tension between those who think that the role of city government is to frame competition with other cities, and those who see more cooperative roles.
Cities themselves need to develop capacity to formulate and implement plans. They cannot simply rely on the panoply of outside professionals and agencies that have increasingly defined urban agendas. Some of the needed sharing can fruitfully take place in an academic environment, especially where long-term research helps to inform choices. It is particularly important to widen opportunities for sharing between the city officials and scholars of the global South and the North, to the mutual benefit of both.
Priscilla Connolly teaches urban sociology and planning at the Autonomous Metropolitan University in Azcapotzalco, Mexico. William W. Goldsmith directs the Program on Urban and Regional Studies at Cornell University. Alan Mabin is associate professor in the Graduate School of Development Management at Witwatersrand University in Johannesburg, South Africa.