Does America need its states?

Are states an anachronism, an outdated relic of an earlier era? That’s the question prolific writer, blogger, and urbanist Aaron Renn—a.k.a. the Urbanophile—poses in a recent blog post, reposted from 2011. Mr. Renn draws heavily upon the writings of Richard Longworth in describing the myriad ways states are hobbling cities and metro areas economically and politically—and states certainly provide a lot of fodder. Specifically, there are five broad ways in which states are harming cities’ and metro areas’ economic competitiveness—which, in turn, is damaging the national and, ironically, state economies as well:

  1. “States do not represent communities of interest.” The vast borders of most of the states pull together cities and regions with disparate histories, cultures, and economies. No wonder there is such dysfunction in so many state governments.
  2. “Arbitrary state lines encourage senseless border wars.” Take Kansas and Missouri, for example. Forget competing with Europe, China, India, and the rest of the world; they’re just slugging it out with each other.
  3. “Many state capitals are small, isolated, and cut off from knowledge about the global 21st century economy.” Look at the location of many, if not most, state capitals: they’re located at the geographic, not economic and cultural, center of the state. Sure, you have Atlanta, Boston, and Phoenix, but you also have Sacramento, Tallahassee, and Jefferson City—the last of which is so isolated it’s not even connected to the Interstate Highway System. (A certain town called Albany also comes to mind.)
  4. “Metro areas are the engines of the modern economy, but the rules for municipal and regional governance are set by states, and often in a manner that is directly contrary to urban interests.” This neatly sums up my years of work for The United States Conference of Mayors and its Metro Economies Reports: metro areas are the engines of the nation’s economy—some 90% of GDP is produced within the nation’s 360+ urban areas. If we want our economy to grow and to remain viable in the face of mounting global competition, we need to concentrate public and private investment in urban areas, and we need to cooperate rather than compete with each other.
  5. “States can’t do much to help, but they can do a lot to hurt.” Mr. Renn notes two states where statewide policies seem to make no difference: in Ohio, Columbus thrives while Cleveland falters, and down in Tennessee, Nashville grows while Memphis stagnates.

Mr. Renn notes one area of state policy that has had long-lasting implications, banking:

I think that historically states imposed rules on cities deliberately designed to hobble their growth. For example, the laws that restricted branch banking in most states until recently had the effect of keeping big city banks from buying up rural and small town banks around the state. The end game of course is that when deregulation occurred, the banks in most big cities were so small because of these rules, they were easy prey to out of state acquirers. Thus most states saw basically their entire indigenous banking industry swallowed up.

(I’ll note that my home state, North Carolina, got it right on this score: it had no such restrictions on intrastate banking, which allowed its homegrown banks, NCNB/NationsBank, First Union, and Wachovia, to become national behemoths. Though the crisis in the banking industry took its toll and today only one of those, Bank of America, the successor to NCNB and NationsBank, remains headquartered in the state today.)

Are states an anachronism? Personally, I don’t think so. Most of us still have a strong identity with what we consider our home state. At least, I know I do—even if I never live in North Carolina again, you’ll never scrape the tar off these heels. And I think they provide a necessary middle ground in American governance, balancing power not just across branches of government but across levels of government as well. From health care to the environment to infrastructure to education, there are plenty of examples of forward-thinking states blazing trails on progressive public policy when the federal government wasn’t up to the task and it was outside the scope of local government.

But the question leads to an interesting discussion, and undoubtedly we can come up with some fixes that will allow states to help more than they hurt.

Read more
Replay: Are States an Anachronism?
by Aaron Renn
The Urbanophile, 5 May 2014

The Georgia State Capitol against the backdrop of the Atlanta skyline.
by dgphilli via Flickr, CC BY-NC 2.0

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s