The Urban Economics of Big City Mayors

In early June 2020, Baltimore’s Democratic Primary will take place and the winner will be highly likely to be elected mayor in November.  Here is a profile of the key candidates.  In this brief blog post, I want to sketch out a few thoughts about Mayors.  What do Mayors do?  They are the city’s leader but are they like a CEO?  What powers do they really have?

Perhaps surprisingly, urban economists have not written much about urban elections.  Joe and Fernando have done the best work (see here).    I co-authored a 2017 paper that examined how urban leaders affects the cost of public transit service.   

Candidates for mayor are “differentiated products” that on some abstract level resemble cars or yogurt.  Different cars (Tesla, Honda Civic) are substitutes but are not perfect substitutes.   Consumers who have never bought the car before can use the Internet to observe some attributes of the product such as its look and horsepower but there may be hidden and hard to observe attributes (i.e safety and comfort) that can only be known by driving it.

In the case of Mayors, the public has incomplete information about how the candidate will perform once he/she becomes mayor.   Each voter has a different perspective of what he/she hopes the mayor will achieve in office.

In the case of Baltimore,  should a mayor focus on;  reducing crime?  Attracting new firms to move to Baltimore?   Improving the public schools?   Rebuilding blighted neighborhoods? 

If a candidate announced her clear priorities, voters still need to decide how productive the Mayor will be in achieving a specific goal. A type of production function (that is hard to describe) lurks.   It is believed that Baltimore is not a well governed city.   The economics of management teaches us that leaders matter but how do they matter?   If Mike Bloomberg became the Mayor of Baltimore, how would he run the city?  Who would benefit from the changes he would make?  Four years from now in the year 2024, would poor people in the city believe that their quality of life improved from 2020 to 2024?

Going forward, Baltimore will be a stronger city featuring less crime and less poverty if new rules of the game can be crafted that encourage greater investment along four fronts;  young people must invest more time and effort in their human capital growth,  businesses must invest in the capital stock so that they have a physical presence in Baltimore, and real estate interests must rebuild the real estate stock for this shrinking city and the public sector must invest in the backbone of the city’s infrastructure.

A poverty trap arises when at least one of these key actors does not invest.  The mayor helps to co-ordinate economic activity and thus can play a key role in helping an under-performing city to escape from a poverty trap.  Baltimore needs a new Mayor who seeks to boost economic growth.  As the federal government and state governments face large COVID-19 related deficits, local economic growth is the only sustaining strategy for reducing medium term poverty.