Inner City Futures: An American Dilemma Revisited

Traditional heartland dominance of the U.S. economy, described by Myrdal's 'process of circular and cumulative causation', has been reversed within the past decade. Sparked by shifts in job location, and structured by housing market dynamics, dominant migration streams are from core to periphery, from large cities to small, from higher to lower density areas, and from metropolitan to non-metropolitan regions. These reversals are restructuring the nation's settlement patterns. This paper examines the role of U.S. housing policy in promoting new low-density residential construction far in excess of household growth, thereby accelerating neighbourhood filtering and the abandonment of housing constructed in earlier decades, and facilitating locational adjustments to the growth reversals. Within this context, the forces promoting revitalization of certain inner neighbourhoods in certain metropolitan regions are evaluated: local 'tightness' of housing supply; life-style shifts in the 'baby boom' generation; and a particular coincidence of neighbourhood externalities such as high-quality older housing, public-good amenities, and abundant facilities and services. It is concluded that each of these forces is subject to limits that will severely constrain the extent of inner city revitalization, however, unless other more potent contributing causes appear. GUNNAR Myrdal posed two interrelated dilemmas, the first of race relations and the second of differential regional growth caused by what he called a process of circular and cumulative causation. He saw the play of forces in the market as tending to increase rather than decrease the inequalities between regions. This, he said, was the consequence of the clustering of activities in areas that promote increasing returns through both the internal and the external economies that are present in centres of agglomeration. He believed that the agglomeration advantages of the major north-eastern urban industrial complexes so swamped the cheaper factor prices of the periphery that they produced a continuous stream of disequilibriating flows of labour, capital, goods and services from poor to rich regions. He concluded that free trade in an interregional system will always work to the disadvantage of poor regions, inhibiting their growth prospects and distorting their pattern of production. This led him to strong advocacy of governmental intervention to correct what he perceived to be the 'normal tendencies' in a capitalist system to sustain and increase inequality. The kind of direct governmental intervention sought by Myrdal never came. Instead, the key premise underlying policy development in the United States has always been and remains today the belief that solutions to the nation's needs and problems must be found, for the most part, in the private sector. Market processes are relied upon to allocate resources efficiently and to provide new jobs, rising incomes, and better housing. An essential prerequisite is believed to be the necessary mobility of capital and labour to realize differential market opportunities. The principal roles of government are thus those of regulator, facilitator, and occasionally social engineer in preserving, supporting, and enhancing mainstream objectives: providing informa- tion if it is lacking on the part of buyers or sellers; preventing emergence of undue concentra- tions of economic power which results in higher prices and fewer services than if competition prevailed; reducing market fluctuations; and facilitating mobility-in other words, promoting the mainstream values of democratic pluralism. Other forms of governmental intervention are