At Issue

John O. Norquist
The Self-Reliant City—Milwaukee
Summer 1994

Elected mayor of Milwaukee in 1988, Democrat John Norquist has earned a reputation for streamlining city government and promoting economic growth. Under his leadership, Milwaukee has cut tax rates six years in a row. Mayor Norquist has taken bold positions on crucial urban issues: he calls for abolishing welfare and is a vocal proponent of school choice. He delivered the following speech in New York City at a forum sponsored by the City Journal.

Cities have always been the source of wealth and culture. If you study the history of Babylon, Damascus, Mexico City before the arrival of the Spanish, or any city that has ever existed, you will find that it formed because people moved beyond farming and developed special skills and knowledge. That specialization created wealth and leisure time, which ultimately led to the creation of culture.

It is unfortunate that in the last forty or fifty years in the United States we have lost sight of the great purpose of cities. Instead, we view our cities as problems or objects of sympathy. For example, shortly after the L.A. riots following the Rodney King verdict, I attended an advisory committee meeting of the U.S. Conference of Mayors. There was almost a feeling of glee among some mayors who attended: finally the Federal Government would realize it had to do something for cities. I was saddened and puzzled by their reaction. If anyone was likely to change his or her view of Los Angeles following the riots, it would not be politicians in Washington but bankers and investors, who, remembering the violence, would avoid investment in South Central L.A. for a long time.

The strategy of building a city on fear doesn’t work. Back in the late 1970s and early 1980s, city officials used to say that if cities didn’t get federal money,
there would be violence in the streets. But this “trick-or-treat” strategy did not work. Between 1981 and 1993 the Federal Government cut its funding to cities by 80 percent.

City officials have also tried to obtain federal dollars by making people feel sorry for cities. But you can’t build a city on pity any more than you can on fear. Several New York mayors have pleaded that their city would collapse financially if the federal or state government did not give it more funds. Imagine a corporation announcing to its stockholders and customers that it is about to go bankrupt and needs more money: Would you invest in a bankrupt company?

We will only save our cities if people value them. City governments need to understand that they must compete for people and businesses—by steadily reducing city spending and improving services so that people have a reason to stay.

In Milwaukee, we have reduced city spending and lowered our tax rate for the sixth year in a row. We have eliminated about 450 city positions—mostly through attrition—and added two hundred police. This has encouraged investment: businesses are doing well, and the city’s overall unemployment rate is about four and a half percent.

Frequently, mayors are tempted to create a lot of publicity about an impending fiscal collapse, thinking that when they resolve the budget problems later on, they will look like heroes, and this will help them win reelection. But they are mistaken: Voters are not impressed when a budget collapses because the city plugged the gaps in past budgets with one-time revenue sources, or federal and state funding is not enough to make up the deficit. In the long run, politicians will find they are better off if they have stable balance sheets, reduced costs, and better services.

Let me give you some examples of how we have saved money in Milwaukee. We have been able to significantly lower the cost of health insurance for city employees without having to demand sacrifices from the unions. Instead, we told insurance companies they would have to compete to cover city workers. We have almost no copayments. We offer the lowest-cost HMO free to our employees; they must pay the additional cost of more expensive HMOs. We have also saved money by contracting with suburban communities to provide services such as fire protection and road signs. We have instituted internal charges between city departments, so that if one department of city government wants something from another department, they have to pay for it. Oftentimes they decide they don’t want it, or they may decide they can buy it less expensively someplace else.

These changes have helped us to reduce costs while, in many cases, increasing the quality of services. Cities that don’t understand the need to do this will suffer mightily. We are in a competitive world. The United States economy increases its efficiency about three percent per year, and governments that fail to do the same will be passed by.

When businesses want to increase their share of the market, they know they must do three things: reduce price, increase quality, and increase the speed at which service is delivered. Johnson Controls, a big corporation in Milwaukee, used to take weeks to deliver some of their products. They now deliver within hours, and as a result, they get more market share. The W. H. Brady Corporation, also of Milwaukee, used to take three months to deliver some things; they now deliver industrial labeling products used in factories within a day, or the product is delivered free.

City bureaucracies tend to work against these means of increasing competitiveness. They focus on their own survival rather than on the survival of their city. In the 1970s, for example, when Medicaid began covering immunizations for children, employees in the Milwaukee Health Department, which had always provided immunizations, felt threatened. Instead of finding something more productive to do, they protected themselves by getting a contract with the Medicaid HMOs requiring them to refer children to the Health Department for immunizations. Under this arrangement, the city had to provide immunizations with property-tax funding, and the parents had to make an extra trip to the Health Department to immunize their children. Partly as a result, when a measles epidemic spread across the United States, two children in Milwaukee died.

Even if city governments were run as efficiently as possible, however, the vitality of our cities would not improve enough as long as federal policy remains unchanged. Several federally funded programs are actively hostile to cities. One of them is the welfare system. Welfare pays millions of people not to enter the labor market. If they do enter it, they are punished if they make more than a certain amount, not only by getting kicked off welfare, but in some cases by having to repay their earnings. Abolishing welfare is key to the health of cities, and I wish that the organizations that represent cities would spend more time trying to bring that about.

The Federal Government’s housing programs also hurt cities. The involvement of the Department of Housing and Urban Development (HUD) in mortgage guarantees and lending disrupts the housing market for lower-income people. The principal attraction of housing in distressed neighborhoods is its price, which used to be so low that many people could afford to pay cash for a house. You didn’t need a HUD mortgage to buy a house in the heart of Milwaukee for eight thousand dollars. But the net effect of HUD’s programs has been to bid the price of that house up to forty-five, fifty thousand, or seventy thousand dollars.

The area of federal policy that does the most harm to cities, however, is transportation. One of the qualities that makes cities valuable is the proximity of businesses and people. But the U.S. has spent more than any other country on interstate highways that encourage businesses to move away from cities. When Lewis Mumford said in 1956 that the Interstate Highway Act would cause more damage to American cities over the next twenty years than all the bombing did to European cities in World War II, it was, if anything, an understatement.

The Federal Government ought to get out of the transportation business entirely or balance the interests of cities against those of the suburbs. Fortunately, Senator Daniel Moynihan, who understands cities better than any other member of Congress, was instrumental in crafting the Intermodal Surface Transportation and Efficiency Act of 1991, which provides a reasonable balance between public transportation and highways.

In Canada, there is no federal transportation program at all. If Toronto had wanted the kind of freeways that were built in cities across the United States, Toronto would have had to pay for them. But Toronto chose not to build superhighways. Instead, Toronto has a wonderfully balanced transportation system that makes it a very livable city: You can drive, walk, ride a bike, and the city has every kind of public transportation imaginable.

Finally, I want to discuss the importance of education and school choice because it is so essential to cities and civilization. Because large cities have so many people, and millions of business transactions take place every day, they tend to offer a wide selection of high quality goods and services at a low price—whether it’s restaurants, art, or financial transactions. And this is also true of higher education. For instance, New York has Fordham, Columbia, NYU, Yeshiva, and City universities, which attract students from all over the world. But who comes to New York City to go to public grammar school or public high school? On the contrary, people leave because of the public schools. The difference is that in higher education we have schools of choice. People can use government money to attend any school they want. That is a system worth emulating. Instead this country has the most monopolistic public school system in the world.

In Milwaukee, we’ve begun to break up this monopoly: nine hundred children are able to use state-funded vouchers to go to nonreligious private schools. Even the analyst hired by the state’s public education bureaucracy, University of Wisconsin Professor John Witte, admits that the program is a success. If religious schools are included, there will be 4,500 more seats available, and we will have a larger array of choices for our children.

School choice would force the public schools to improve in order to compete. As for the question of separation of church and state, this country was founded on the notion that there shouldn’t be a state religion like the Church of England. But the founders never intended to drive religion out of all of our institutions. In fact, in the early days of this nation, Congress financed many charitable institutions and schools run by churches. Certainly, there are far greater threats to the children of America’s inner cities than religion.

Cities have always been fundamental to civilization. They will not lose their importance because of the telecommunications super highway anymore than they did because of the invention of the telephone. Cities are the building blocks of American civilization, but this civilization is under attack; it is changing in ways that are frightening and disturbing to people. Rebuilding cities is the way to restore civility and culture in America.

We have to set about solving our urban problems. Our cities should be rich; they should be admired as they are in most of the rest of the industrial world. Very few people in France or Japan pity or fear Paris or Tokyo. They know that cities are the engine of their economy. They may be jealous; they may make big-city jokes; but they don’t think cities are a problem. Canada, which is closer to home, certainly doesn’t share our attitude that its cities can only thrive through government programs. This is an attitude that has to change very quickly in the United States if we want our cities to survive and prosper.

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