AUSTERITY URBANISM The Neoliberal Crisis of American Cities By Jamie Peck - Rosa Luxemburg Stiftung
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
AUSTERITY URBANISM
The Neoliberal Crisis of American Cities
ROSA
LUXEMBURG
STIFTUNG
NEW YORK OFFICE By Jamie PeckTable of Contents
Austerity and Struggle in the 21st Century City. By the Editors.....................................................1
Austerity Urbanism
The Neoliberal Crisis of American Cities.....................................................................................2
By Jamie Peck
Extreme Economy: Neoliberalism’s Austerity Moment............................................................4
What the 1% Does to the Cities....................................................................................6
When the Lights Go Out: Cities Under Austerity Rule..............................................................8
The Case of Detroit.........................................................................................................9
Austerity Is Politically Imposed...................................................................................10
Advocates of Austerity................................................................................................12
Structural Adjustments...............................................................................................14
Chicago: “Make No Little Plans”..................................................................................15
Develop or Default: The Dynamics of Urban Austerity..........................................................18
Austerity Urbanism.....................................................................................................20
Conclusion: Austerity as the Fiscal Crisis of the Urban State................................................21
Published by the Rosa Luxemburg Stiftung, New York Office, May 2015
City Series, #1
Editors: Stefanie Ehmsen and Albert Scharenberg
Address: 275 Madison Avenue, Suite 2114, New York, NY 10016
Email: info@rosalux-nyc.org; Phone: +1 (917) 409-1040
With support from the German Foreign Office
The Rosa Luxemburg Foundation is an internationally operating, progressive non-profit institution
for civic education. In cooperation with many organizations around the globe, it works on democratic
and social participation, empowerment of disadvantaged groups, alternatives for economic and social
development, and peaceful conflict resolution.
The New York Office serves two major tasks: to work around issues concerning the United Nations and
to engage in dialogue with North American progressives in universities, unions, social movements,
and politics.
ww w .r osal u x - n yc.or gAusterity and Struggle in the 21st Century City
Cities are sites of contestation. This has never been truer than today, with inequalities in the indus-
trialized world rising to levels not seen in decades. Neoliberalism continues to reign—in spite of its
spectacular failures, most recently exemplified by the Great Recession of 2007-08—and austerity pol-
icies are the recipe du jour, marking a new stage in what David Harvey describes as “accumulation by
dispossession.”
While there is much debate about the so-called “gridlock” in Washington, D.C., and how it affects pol-
itics, comparatively little is said about the local effects of―and responses to―austerity. In the “entre-
preneurial city,” municipal governments act as cost-saving business actors that run their cities like cor-
porations. Facing tax cuts and other revenue-slashing measures, these governments have increasingly
turned to austerity policies. This has translated into fewer services for citizens and less investment in
the city, particularly in affordable housing.
In this study Jamie Peck, professor of geography at the University of British Columbia, Canada, delin-
eates how neoliberalism has tightened its grip on cities since the Great Recession, engendering what
he calls “austerity urbanism.” Due to the spatial concentration of unionized labor, communities of col-
or, poor people, and liberal constituencies, cities are favored―and particularly vulnerable―targets of
austerity measures. Municipal governments cut social services and the wages of public sector workers
(increasingly denying these workers the right to bargain collectively), slash school budgets, and elim-
inate affordable housing units—all while privatizing core city functions and subsidizing private inves-
tors. While a small number of city governments with corporate inclinations welcome this self-starva-
tion, most succumb to the pressures created by state or federal governments that pass down budget
cuts to the municipal level—essentially leaving each city and town to fend for itself. A few cities adapt
and ride the wave of privatization relatively unscathed, while others, most notably Detroit, drown.
Yet from the viewpoint of the Left, the situation in today’s cities is not all bleak. They are once again a
hotbed for progressive politics—both at the grassroots and electoral levels. Occupy Wall Street was a
distinctly urban movement that inspired similar formations in countless cities across the U.S. and even
abroad. “Right to the city” initiatives are stemming the flood of foreclosures, evictions, and rising rents.
Progressives have increasingly focused their efforts on city politics and paved the way for left-leaning
mayors in New York City, Boston, and Minneapolis, to name a few. These cities have recently enacted
policies including minimum wage increases, IDs for undocumented residents, protections for domes-
tic workers, paid sick leave, universal Pre-K, and more. So while our cities and towns are falling increas-
ingly under the dark spell of austerity, it is at the same time clear that the battle over austerity and the
fight for progressive urban experiments has only just begun.
Housing justice and urban politics represent a core area of our work at the Rosa Luxemburg Stiftung’s
New York office. With this study, we start a new chapter in our ongoing work on these issues: a series
of studies titled “City Series.”
Stefanie Ehmsen and Albert Scharenberg
Co-Directors of New York Office, May 2015
1Austerity Urbanism
The Neoliberal Crisis of American Cities
By Jamie Peck
“Austerity” was selected by the Massachu- thereby securing the confidence of the investor
setts-based dictionary company, Merriam-Web- class, appeasing the jittery markets, and paving
ster, as its Word of the Year for 2010. It has since the way to growth. The critical test case that is
become a keyword for these ostensibly post-cri- Europe, of course, shows no signs of working:
sis times, which by some accounts show signs there, growth has slowed or failed altogether,
of descending into an “age of austerity” (Edsall, mass protests have been provoked together
2012; Featherstone et al. 2012). Merriam-Web- with political countermoves on both the right
ster’s definition of austerity refers to a condi- and left, and a succession of pro-austerity gov-
tion of “enforced or extreme economy,” the ap- ernments have collapsed under the resulting
propriate minimalism of which indexes notions strains. In the United States, the brief episode of
of existential scarcity and stern oversight that post-crash stimulus spending under the Obama
resonate with historical meanings of this word Administration triggered a populist uprising on
(and its classical associations with self-disci- the right, with significant electoral consequenc-
pline, thrift, and scarcity), but which also exhibit es, culminating in an entrenched budgetary
distinctively neoliberal inflections. According stalemate in Washington and significant reduc-
to the neoliberal script, public austerity is a tions in state and local government spending.
necessary response to market conditions, and
the state has responded by inaugurating new This is not a passing moment. What one as-
rounds of fiscal retrenchment, often targeting sessment has called the “local squeeze” will be
city governments and the most vulnerable, felt “for years to come” (Pew Charitable Trusts,
both socially and spatially. Austerity represents 2012: 2). The U.S. Government Accountability
an historic opportunity to press for yet small- Office has estimated that property tax receipts
er small-state settlements at the urban scale; (which historically account for around one-
in defining government downsizing and rolling third of local government revenues) will not
privatization as fiscal necessities, it is neoliber- return to 2009 levels until 2039, opening up a
al terrain. It is not the same terrain, of course, “fiscal gap” that is structural in nature. Absent
because this latest austerity offensive is being policy change, local government expenditures
prosecuted under historically and geographi- will have to be reduced by 12.7 percent per
cally distinctive conditions and in the context of year, every year until 2062, to close this gap
already neoliberalized configurations of (local) (GAO, 2012). To make things worse, 46 of the
state power and (urban) politics. 50 states now restrict the capacity of local gov-
ernments to raise taxes. The result is a “one-
In the period since the Wall Street crash of two punch” of falling revenues and increasing
2008, the refurbished rationale for austerity need (Pew Charitable Trusts, 2012).
measures is that the imposition of strict fiscal
discipline and government spending cuts is In mainstream public discourse, austerity con-
the (only) way to restore budgetary integrity— tinues to be principally associated with the
2JAMIE PECK
AUSTERITY URBANISM
protracted European crisis in contrast to the ruptcies in California and elsewhere have cap-
United States where the practice has been tured the headlines, but behind this lies a deep-
both normalized and localized while the term er pattern of structural imbalances between
itself has rather less onshore currency.1 As Paul revenues (mainly from property and sales tax-
Krugman (2012: 7) has observed, even though es, plus intergovernmental transfers—all of
American policy elites “never fully embraced which are under severe pressure) and ongoing
the doctrine” after the Wall Street crash, the commitments to public services and workforces
country has nevertheless experienced “de fac- (which are now being unilaterally renegotiated).
to austerity in the form of huge spending and
employment cuts at the state and local level.” Clearly, the situation is far from uniform, but
In all but name, austerity has trickled down. the generalized manifestations of devolved
In the United States, devolved austerity mea- austerity are becoming increasingly evident
sures have played a part in sapping, at source, at the urban scale across the country. While in
what continues to be an anemic economic re- important respects, this represents an incipi-
covery, but Krugman sees little prospect of the ent fiscal crisis for the local-government sec-
de facto policy consensus changing any time tor as a whole in the United States, it is also a
soon. While those Krugman brands as “the distinctively urban crisis in the sense that the
austerians [may have] given up on hope, they cities were hit especially hard by the housing
haven’t given up on fear—that is, the claim that slump and by the parallel wave of mortgage
if we don’t slash spending, even in a depressed foreclosures; in the sense that cities are dis-
economy, we’ll turn into Greece” (Krugman, proportionately reliant on public services;
2012a: 7; see also Crotty, 2012). This amounts and in the sense that they are home to many
to an especially brazen application of a tried- of the preferred political targets of austerity
and-tested neoliberal tactic of refracting crisis programs—the “undeserving” poor, minorities
pressures back onto the state itself. As Krug- and marginalized populations, public-sector
man (2012b: A27) points out, “the austerity unions, and “bureaucratized” infrastructures.
drive […] isn’t really about debt and deficits at Cities are therefore where austerity bites—but
all; it’s about using deficit panic as an excuse to never equally. A fortunate minority of cities,
dismantle social programs […]. [E]conomic re- with access to the credit markets, have begun
covery was never the point; the drive for aus- to fashion their own financial arrangements in-
terity [is] about using the crisis, not solving it.” dependently of Washington and the state cap-
itals. A larger number of struggling cities have
In the context of this apparent normalization of been attempting to manage, in the context of
austerity conditions in the United States, where falling revenues and often structural deficits,
the post-crisis corollary of decentralized gover- significant reductions in staffing and service
nance has been a new wave of devolved fiscal levels—some at the cusp of fiscal receivership
discipline, this paper explores the emergent or bankruptcy. In between, conditions of “or-
phenomenon of “austerity urbanism.” Here, dinary austerity” are prompting city govern-
state and local governments, cities in particular, ments around the country to prune budgets
are being exposed to the full force of austeri- while moving to leaner operating models, driv-
ty’s “extreme economy,” which in some cases is ing new rounds of innovation in outsourcing
driving a fiscal crisis of cities. Municipal bank- and privatization.
1 As Adam Gopnik (2012: 18) has wryly remarked, “To the In three parts, the paper begins by framing this
American right, anything that goes wrong in Europe
does so because Europe is wrong, and not because of
most recent austerity moment in the context of
austerity, because austerity is right.” ongoing processes of neoliberal urbanization
3JAMIE PECK
AUSTERITY URBANISM
and restructuring strategies. It then turns to an are being forced to enact “extreme measures.”
exploration of some of the bleeding edges of The paper concludes by asking whether auster-
austerity urbanism in the United States, where ity urbanism represents an extended phase or
in the context of reduced revenue flows and the merely a temporary facet of the continuing neo-
withdrawal of state and federal assistance, cities liberal transformation of the American city.
Extreme Economy: Neoliberalism’s Austerity Moment
Austerity measures, selectively applied, have et al. 2010; Peck et al. 2013). At root, it is the
long been part of the neoliberal repertoire. failure of these successive waves of neoliberal
Fiscal purges of the state (especially the so- reforms to generate sustainable economic, so-
cial state) derive from the most elemental of cial, or environmental development, of course,
neoliberal motives—to “roll back the frontiers that results in periodic returns to crisis (fis-
of the state.” Neoliberal ideology constructs cal and otherwise). But this is interlaced with
governmental downsizing as the sine qua non deep-seated political motivations as well to
for the reinvigoration of private enterprise, denigrate the state and its allies and to asperse
free markets, and individual liberty. The awk- the viability of governmental solutions. The se-
ward reality that the state and the market do rial underperformance of the state becomes a
not exist in a zero-sum relationship and the self-fulfilling condition of this willfully malign
stubborn fact that the suppression of the Le- process of neglect (see Frank, 2008).
viathan state does not result in an automatic
expansion of freedom is a lesson that neolib- Fiscal purging is therefore a recurrent condi-
eral reformers had to learn in political practice, tion under neoliberal governance (see Peck
not from classical theory. The contradictory et al. 2010; McBride and Whitehead, 2011), al-
strategy of public-sector cuts is nevertheless a though so are frequent episodes of overreach,
recurring one. This does not mark a unidirec- failure, and crisis. The most recent wave of
tional path to small-state equilibrium but more austerity measures is more than a mere rerun
commonly serves as a prelude to political in- of 1980s rollbacks, however, more than a form
stability and institutional degradation, to crisis of retro-Reaganomics. It comes “after” these
management, to backfilling efforts on the part moments not by repeating them but by selec-
of nonprofit or business interests, and in some tively consolidating and intensifying both their
cases to de facto abandonment. Hence the pat- underlying logics and their (deepening) con-
terns of roiling, dialectical transformation that tradictions. Many of the effects are politically,
have come to define the institutional dynamics socially, institutionally, and fiscally cumulative.
of actually existing neoliberalization: rollback More than a temporary bout of fiscal fasting,
moments of deregulation, dismantling, decon- successive purging has resulted, historically,
struction, and downsizing yield market failures in the cumulative incapacitation of the state.
and a host of negative externalities, prompting Eventually, this impacts not only those govern-
ostensibly corrective rollout responses in the mental functions that neoliberal critics choose
form of experimental governance, pro-mar- to construct as “fat,” such as welfare, social
ket reregulation, and all manner of short-term services, and bureaucracy but also those basic,
fixes—complete with their own limits and con- essential, and skeleton services often deemed
tradictions (see Peck and Tickell, 2002; Brenner indispensable (even) to the neoliberal state,
4JAMIE PECK
AUSTERITY URBANISM
such as policing, prisons, and public safety. tions become almost inevitabilized in this envi-
Consequently, austerity is not merely a cycli- ronment once the alternatives to fiscal surgery
cal condition; its long-term consequences are are rapidly exhausted. This is a clear instance of
associated with cumulative incapacitation and the way in which neoliberalism operates as an
institutional wasting, and the lock in of various ideological frame—one that defines, in effect,
forms of low tax/low service disequilibrium. the politically tractable solution space from
which mainstream remedies can be sought.
Loïc Wacquant has argued that the American
mode of neoliberalization is inescapably (and The costs of austerity are commonly external-
indeed even necessarily) associated with a sec- ized and downloaded to the state and local lev-
ular expansion of the punitive, law-and-order el, raising the real prospect of (local) state fail-
state (Wacquant, 2012; Peck and Theodore, ure. Ironically, in a fiscally stretched, tax-averse
2012), but there are signs that this latest auster- environment, the specter of state failure tends
ity drive may be threatening to emaciate even to beget yet more austerity measures, suggest-
some of these “right arm” functions. Further- ing that a systemic (or perhaps even structur-
more, in federal systems like the United States, al) logic is coming into play. The situation is too
the fact that many of these functions are state unstable to warrant the label of a new order;
and local responsibilities—as indeed are many austerity defines the prevailing politics of re-
of the “left arm,” social-state functions that structuring more than it denotes a sustainable
have long been subject to neoliberal attacks— destination. An orderly transition to lean local
means that the costs of austerity measures are government seems less likely, in this respect,
disproportionately falling on subnational gov- than a future marked by crisis management
ernments—which have been duly constituted and political instability.
as the testbeds for crisis-driven service roll-
backs and hotspots for the toxic politics of fis- For a host of reasons, the nexus of deep neo-
cal retrenchment. This is the scale at which the liberalization and entrenched austerity is likely
neoliberal buck-passing ultimately has to stop. to be an especially challenging one for cities. In
Hence the peculiarly American spectacle of this context, the staple neoliberal maneuver of
law-and-order Republicans initiating “early re- refracting crisis pressures back onto the state
lease” schemes due to financial stresses on the raises the prospect of self-discipline descend-
overcrowded state prison system or downsiz- ing into auto-evisceration or incapacitation.
ing local police forces on budgetary grounds.2 The projection downward of these pressures
establishes a socially regressive form of sca-
Although the causes of the 2008-2009 financial lar politics—with cities positioned at the sharp
crisis are widely recognized to have had little end. The principal dimensions of this escalat-
or nothing to do with governmental profligacy ing process, which might be conceived as an
(see Crotty, 2011; Callinicos, 2012), its down- urbanization of neoliberal austerity, can be
stream consequences are nevertheless being summarized as follows:
measured in terms of a deeply inscribed fiscal
crisis of the state in the service of the same neo- ⇒⇒ Destructive creativity. Austerity conditions
liberal interests that were culpable in the first amplify the destructive moment in neo-
place. Lurches towards smaller-state condi- liberalism’s ongoing process of creative
destruction. The project of neoliberaliza-
2 On prisons, see Steinhauer (2009) and Davey (2010); on tion has proceeded, historically, by way of
policing and other service cutbacks, see Cooper (2010,
2011a, 2011b), McKinley and Wollan (2010), and Lowen-
targeted attacks on those state and social
stein (2011). forms deemed antithetical to market prog-
5JAMIE PECK
AUSTERITY URBANISM
ress, such as public-sector unionism, wel- marginalized. However, they also extend
fare programs, and collective services. This into middle-class terrain (such as schooling
rollback does not lead to the spontaneous and community facilities), where costs can
emergence of deregulated or free markets be externalized and services incrementally
(as neoliberal ideology would have us be- privatized.
lieve) but to further rounds of state and
⇒⇒ Devolved risk. The neoliberal proclivity
social action patterned in neoliberal terms
for downloading, by way of responsibility
(from private provision to voluntarism and
dumping and devolved discipline, assumes
restrained governance). The current round
an increasingly radical and regressive form
of austerity measures is qualitatively dif-
in an environment of austerity, as both
ferent, however, from the welfare-state
budget cuts and responsibility for their
retrenchments of the 1980s in that it oper-
management are handed down to local
ates on, and targets anew, an already neo-
authorities, actors, and agencies—where
liberalized institutional landscape. It cuts
the capacity to respond is uneven at best.
deeper into the remnants of the socially re-
Fiscal restraint reinforces the hierarchical
distributive and welfare state (the target of
powers of budget chiefs and audit regimes,
1980s rollbacks) while also curtailing many
inducing instrumentalism, entrepreneur-
of the institutional accretions and adapta-
ialism, and muscular modes of manage-
tions associated with rollout neoliberalism
ment at subordinate scales. The long-term
(such as those associated with “third-way”
rollback of fiscal transfer regimes, revenue
governance); it is rollout neoliberalism’s
sharing, and both redistributive and in-
very own rollback moment.
vestment-based programming means that
⇒⇒ Deficit politics. A macro-fiscal environment there is little option but to manage budget-
defined by austerity actively favors neo- ary crises at the local scale. Even localities
liberal responses, which are fortified by that were fortunate enough to miss the
negative budget scenarios that stretch be- worst of the housing-market collapse and
yond most electoral horizons. Preemptively the recession that followed have become
restricting the options of opponents (es- indirectly subject to this fate as federal and
pecially those calling for new investment, state-level cuts cascade down; many will
progressive redistribution, or ameliorative suffer twice, first from the localization of
spending), deficit politics is neoliberal ter- economic decline and then from the local-
rain. Long-term public deficits set the stage ization of budget cuts.
for “starve the beast” tactics, to recall the
vivid formulation coined by Ronald Rea-
gan’s budget director, David Stockman, What the 1% Does to the Cities
in that they induce downward budgetary
pressure, in effect as an environmental Above all, it is important to recognize that en-
condition. In a climate of systemic financial forcing economy is a relational strategy: auster-
restraint and tax cuts, soft budget mea- ity is ultimately concerned with offloading costs
sures and discretionary spending become and displacing responsibility; it is about making
subject to a politically amplified form of ex- others pay the price of fiscal retrenchment. In
istential threat. Spending fields that are not the language of the Occupy movement, it is
defended by powerful constituencies or something that the one percent, which con-
large voting blocs are especially vulnerable tinues to accumulate wealth and power at an
under such conditions, resulting in the de- alarming rate, does to the 99 percent. To put it
fault targeting of programs for the poor and another way, it is something that Washington
6JAMIE PECK
AUSTERITY URBANISM
does to the states, the states do to cities, and the same region/state and in turn stratification of
cities do to low-income neighborhoods. This is populations into places that offer high capacity,
expert government and strong protection of public
the common thread between the high politics
well-being versus those that do not […]. [O]ur find-
of austerity in Washington, D.C., with its bud- ings suggest that austerity policy response strains
getary shell games and deficit ceiling theater, emerge first among higher capacity governments,
and the politics of everyday austerity at the those that are larger, professionalized and also
street level, where the effects of public-service more unionized. These governments are currently
cutbacks, job losses, and increased exposure to under attack for “over-reaching” in providing social
protections as the right seeks to reign in organized
socioeconomic risks are experienced in work-
public workers (2011: 433).
places, households, and the public sphere. The
benefits of economic growth never trickled Notably, Lobao and Adua’s extensive study of
down, as promised, but the costs of econom- more than 1,000 local governments covered
ic decline and budgetary culling evidently do. the period immediately prior to the Wall Street
Austerity, in this sense, is the means by which crash of 2008. Their evidence for 2001-2008
the costs of macroeconomic mismanagement, suggests that pressures for budget cutbacks
financial speculation, and corporate profiteer- and service retrenchment were already quite
ing are shifted onto the dispossessed, the dis- widely distributed and that many local govern-
enfranchised, and the disempowered. In the ments had been operating for some time in a
process, an austere federalism is taking shape normalized state of low tax/low capacity/low
in the United States, together with a new oper- service (dis)equilibrium. The larger, more pro-
ational matrix for urban politics. fessionalized, and more heavily unionized local
administrations were more likely to have cut
None of these pressures are experienced uni- services, to have frozen the pay of public em-
formly, of course, especially in highly decen- ployees, and to have engaged in outsourcing
tralized systems like the United States (see or privatization. The counties most likely to be
Cox, 2009; Lobao and Adua, 2011). Here, fiscal found selling off public assets were those with
restraint is a long-established fact of life across a declining tax base and/or a significant Afri-
many jurisdictions, especially at the subnation- can-American population (Lobao and Adua,
al scale (Clavel et al. 1980; Clark and Walter, 2011). These were the conditions under which
1991; Pierson, 1998; Pollin, 2003; Peck, 2011). American cities entered the Great Recession.
This said, cumulative processes of neoliberal-
ization have progressively remade the terrain It follows that the effects of neoliberal aus-
of urban governance in significant ways over terity measures, while generalized, are not
the period since the 1970s. As Lobao and Adua experienced uniformly but remain politically
conclude their empirical analysis of subnation- and institutionally mediated. Some sunbelt ju-
al governance under conditions of austerity: risdictions have been operating according to
small state principles all along. Others, cush-
counties have been particularly affected by devolu-
ioned by relatively robust tax revenues and
tion of welfare reform, growing use of competitive
grants to disperse funds and reliance on indepen- comparatively mild local recessions, have been
dent fund raising to attract business. In this envi- able to hold the line. But many of those big-city
ronment, the institutional capacity of local govern- administrations—with their bigger budgets,
ments […] becomes more critical in whether locali- more unionized workforces, and higher levels
ties have any chance of securing external funding,
of institutional capacity, usually under Demo-
in addition to the effective formulation and imple-
mentation of programmes and policies. The future cratic Party control—have been coming under
response to downturns is likely to involve increas- intense (budget) pressure to downsize and ra-
ing stratification among local governments within tionalize despite increasing social need. Condi-
7JAMIE PECK
AUSTERITY URBANISM
tions of tax aversion span this variegated land- 2011; Walsh, 2012). The rash of post-crash mu-
scape, in some cases as a neoliberal virtue and nicipal bankruptcy filings was led by Vallejo, CA
a preference of conservative-voting electorates in 2008, followed in 2011 by Harrisburg, PA and
but elsewhere as an economic necessity (due Jefferson County, AL (the latter establishing a
to an ideologically amplified threat of capital new record, at $4.2 billion), before the Califor-
or key-worker flight). And finally, against this nia cities of San Bernardino and Stockton filed
general backdrop of budgetary stringency and in 2012. Stockton, CA had been the largest city
tax phobia, the option of more expansive or in- to file, before Detroit’s bankruptcy in 2013 set
vestment-based approaches is restricted to a a new mark in terms of scale, depth, and public
fortunate minority of cities for whom (market) attention, combining a revenue collapse with
conditions are propitious. These cities are able up to $18 billion in long-term debt.
to access credit markets on relatively favorable
terms and can attract project-based govern- While not wishing to gainsay the challenges
ment spending, premised on opportunities for confronting many rural jurisdictions, where
rent seeking or profit taking rather than social low-intensity crisis is in some respects almost
need. The devolution of austerity is driving the normal condition, it must be recognized
a sharp wedge between those cities that can that cities are facing challenges on a scale, and
feasibly go it alone and those that, by virtue in a form, that is unique. Just as the states in-
of local economic frailty or high poverty rates, herited the federal budget squeeze, cities have
have no real option but to downsize munici- become the places of reckoning for what has
pal government and retrench public services. become a devolved and protracted fiscal crisis.
Fiscal discipline is duly applied in a downscale Cities are on the receiving end of austerity pol-
manner: Moody’s, the credit-rating agency, has itics for a number of reasons. They are sites of
observed that the U.S. states “are increasingly concentrated social need and economic mar-
pushing down their problems to their local gov- ginalization. They tend to be disproportionate-
ernments” (quoted in Cooper, 2011b: A20). ly reliant on public services and public employ-
ment. They are the places where the big bud-
Municipal bankruptcies used to be rare finan- gets—and their constituencies—reside and (as
cial events but have become increasingly com- a result) tend to be sites of serial forms of ag-
monplace in the wake of the Great Recession. gravated neoliberal reform, many of which tar-
More than 60 municipalities have entered get, for political as well as fiscal reasons, large
bankruptcy protection since 2007, typically in bureaucracies, municipal unions, and pub-
the context of precipitous multi-year reduc- lic-sector pension funds. Moreover, cities oc-
tions in local tax revenues (especially from cupy the lowest, politically accountable spatial
property taxes) and intergovernmental trans- scale at which the books, in principle, might be
fers. Several hundred more cities are reckoned rebalanced, following conspicuous failures to
to be on the brink of default (see Lowenstein, do so in Washington and in the state capitals.
When the Lights Go Out: Cities under Austerity Rule
Highland Park, Michigan, has a place in history the 20 th century, the city rose to working-class
as the birthplace in 1909 of Henry Ford’s mov- affluence as a locus of Detroit’s expanding au-
ing assembly line. During the middle decades of tomobile economy, but it later sank into struc-
8JAMIE PECK
AUSTERITY URBANISM
tural decline as the factories moved away (Su- governing the city differently, if not governing
grue, 2005; Steinmetz, 2009). Today, having lost a different city. As a self-styled “restructuring
more than three-quarters of its residents, both professional” (and allegedly by the same to-
the economy and the tax base have collapsed. ken, no “political animal”), Orr pledged to gov-
Of the remaining residents, 42 percent are liv- ern the city according to the “rule of reason”
ing under the poverty line while an embattled (quoted in Vlasic and Yaccino, 2013: A17). The
city hall—having exhausted all other rational inexorable logic of finance is duly raised above
options for budget cuts—has been reduced to the earthly domain of politics. By implication,
surrendering most of its remaining streetlights Detroit before the time of emergency manage-
in a debt-forgiveness deal with the local utility ment was a place of unreason, a politicized city,
company (Davey, 2011). What one local council- in contrast to the financially rationalized city
or described as a “responsible reduction” in lo- where politics-as-usual is suspended. A future
cal services entailed the permanent removal of beckons in which financial order begets social
1,300 streetlights, leaving only a few hundred and political order—and eventually the earned
in “strategic locations.” The mayor encourages resumption of home rule.
residents to turn on their porch lights.
Mr. Orr’s first significant task as the manager
of Detroit’s emergency was to prepare a pro-
The Case of Detroit posal for the city’s creditors, in principle as a
means to avert a bankruptcy filing but in prac-
Although the wider Michigan economy has tice as its prelude. This first-cut financial plan
been slowly returning to growth again—led (since much revised) took the form of an ex-
by the bailed out, structurally adjusted, and tended litany of structural problems, depicting
downsized auto industry—many of its cities a broken-down place with a local-government
remain mired in a long-run fiscal crisis. Detroit system already shrunk to the point of incapac-
is one of eleven Michigan cities (and a further itation: even as the city’s operating costs had
five public school systems) where a state of fi- been slashed (due to headcount reductions,
nancial emergency has been declared by the wage cuts, and mandatory furloughs), reve-
(Republican controlled) state government, nues were falling still faster and would contin-
prelude to the appointment of an “emergen- ue to do so as accumulated deficits skyrock-
cy manager” by the governor in March 2013. eted, possibly quadrupling the debt burden
Emergency managers possess sweeping pow- by the fiscal year 2017 in the face of “strong
ers to restructure public services, planning economic headwinds” (City of Detroit, 2013: 6,
procedures, and delivery systems while void- 37). Technically insolvent, the city had been de-
ing contracts with service-providers and labor ferring capital outlays and contributions to its
unions—in the process not only circumventing (underfunded) pension fund; two-thirds of its
normal decision-making channels but subvert- parks had been closed; some 78,000 buildings
ing local democracy itself (Nichols, 2014). within the city limits were considered aban-
doned, half of these in a dangerous state, while
The job description of the Emergency Manag- an additional 66,000 structures were either
er for the City of Detroit, Kevyn Orr, has been vacant or (deemed) blighted. The fire depart-
summarized as, “[u]rban planner, numbers ment was found wanting for standard-issue
cruncher, city spokesman, negotiator, politi- equipment; the fleet of police patrol cars was
cian, good cop, bad cop” (Davey and Vlasic, “extremely old” and poorly maintained; bare-
2013: A1). Emergency management is about ly one third of the city’s ambulances were in
more than balancing the books. It is about service while some of the emergency-medical
9JAMIE PECK
AUSTERITY URBANISM
service’s other vehicles had been running over The dark is one of the most visible and oppressive
potholed streets for more than 250,000 miles, signs that Detroit’s impoverished government
struggles to provide even the most basic of ser-
“break[ing] down frequently” (City of Detroit,
vices to its dwindling population… What is clear
2013: 12-14). In Orr’s plan, alongside the pro- to government officials, neighborhood activists
posed downsizing of municipal government, and utility experts is that a decision about re-
modest provision was made for essential items ducing and repositioning streetlights is a decision
of new spending (on emergency services, about the ultimate size and shape of Detroit and
blight remediation, an IT upgrade, and urgent its neighborhoods. Once a part of the city goes
permanently dark, it is unlikely to come back.3
maintenance of the city’s dilapidated electrici-
ty and sewer system), but it transpired that the
city’s creditors were not prepared to counte-
Austerity Is Politically Imposed
nance the necessary “haircuts,” in the order of
20 cents on the dollar. The plan was doomed,
The challenges facing Detroit may be extreme,
and Orr would file for bankruptcy protection
but they are not exceptional. Cities in Califor-
the following month, in July 2013. Worse was
nia, Illinois, Wisconsin, Minnesota, Oregon, and
to come.
elsewhere have been forced to shut off street-
lights. This crude imposition of austerity logics
In a protracted hearing, required to deter-
is rarely popular, though it seems more often
mine the city’s legal eligibility for bankrupt-
to be met with ill-tempered resignation than
cy “protections,” Mr. Orr was later chided by
meaningful resistance. It is certainly consis-
Judge Steven W. Rhodes for having failed to
tent with a reading of austerity as a politically
bargain in good faith with the city’s creditors;
imposed condition. However, there are some
although it was conceded that dealing equi-
instances where this kind of street-level aus-
tably with around 100,000 interested parties
terity apparently reflects the will of the people.
would have been practically impossible. Orr
The relatively affluent but ideologically tax-
has been repeatedly accused of rattling the
averse city of Colorado Springs, for example,
municipal-bonds market, Detroit’s travails hav-
has adopted a brown-out strategy (with an op-
ing been reported to have driven up borrowing
tion for residents to band together on a volun-
costs elsewhere in Michigan and, in some cas-
tary basis to pay for reconnection on a street-
es, beyond (Nolan, 2013). At the time of writ-
by-street basis) as part of a self-administered
ing, Detroit remains under bankruptcy “protec-
experiment in municipal minimalism.
tion.” Extreme measures such as shutting off
water to tens of thousands of Detroit residents
For some time now, Colorado Springs has en-
behind on their payments have drawn interna-
joyed a reputation as the “capital and staging
tional attention. While the precise form of the
ground for America’s Christian right” (Coo-
city’s “adjustment,” as the restructuring plan is
per, 1995: 9). Indeed, such is the density of
appropriately called, is not known at this point,
religious-right organizations headquartered
it is likely to involve further rounds of privat-
there, the city has become known in some
ization, asset selloffs, and reductions in pub-
circles as the “Evangelical Vatican.” The roots
lic-sector employment, together with the ero-
sion of workplace and pension rights. 3 Cheyfitz, K. (2012) “Returning light to Detroit,” Detroit
News, April 12. Above and beyond its clearly deleterious
local consequences, this raises the unpalatable prospect
Meanwhile, the lights have been slowly going of Detroit sliding down yet another league table, the
out across the city. It is estimated that 40 per- newly unveiled ranking of cities by “light-based regional
product,” in which urban economic capacity is calculated
cent of Detroit is now in darkness. As a com- on the basis of light emissions, captured by satellite data
mentary in the Detroit News put it, (cf. Florida et al, 2012).
10JAMIE PECK
AUSTERITY URBANISM
of this distinctive, postindustrial profile date Colorado Springs’ libertarian localism, how-
back to the late 1980s. Seeking to diversify an ever, is actually a rather curious exception to
economic base formerly reliant on military in- the more general pattern of neoliberal rule.
stallations, in the period of cold-war cutbacks, Much more common are the circumstances in
Colorado Springs was successful in targeting which austerity urbanism is imposed, rather
a range of new economy employers in the than electorally chosen, by a combination of
high-tech and knowledge sectors but also in- budget cuts handed down by higher tiers of
troduced a package of tax breaks designed government, the curtailment of intergovern-
to favor religious organizations. As if moved mental transfers, and the cumulative effects of
by a hidden hand, one of the behemoths of localized economic decline and falling tax rev-
Christian conservatism, Focus on the Family, enues. But what might resemble a naturalized
was attracted there from Los Angeles in 1991, condition of fiscally automated budget cuts re-
and its 1,200 employees now occupy a 45- mains, of course, an intensely political process.
acre campus. Around the same time, the city Recently elected Republican governors, in par-
passed a pioneering taxpayers bill of rights ticular, have turned the austerity-driven (or at
(TABOR), the prelude to a 1992 constitution- least austerity-legitimated) restructuring of the
al amendment at the state level designed to public sector into something of a cause. For ex-
permanently restrict the scope of tax increas- ample, Wisconsin’s Republican Governor Scott
es (see Johnson and McMaken, 2004; Stanley, Walker has implemented a rolling program of
2009). TABOR now applies to all local govern- budget cuts at the state and local level clearly
ment units in the state of Colorado, where intended not only to balance the books but to
it has been associated with an unrelenting propel a fundamental redefinition of the role
trend towards public-sector shrinkage, to the (and indeed scale) of government. It entailed
point that even sympathetic observers are educational reform and labor-market deregu-
concluding that the “resulting reductions [in lation; a far-reaching program of privatization;
government capacity] go well beyond a sim- the rollback of pension provisions, equal-pay
ple conservative fiscal agenda,” cramping local laws, and collective-bargaining rights; and
political discretion and undermining economic an historic effort to break the public-service
growth (Hoffman and Hogan, 2005: 16; Stan- unions—all of which transformed the state
ley, 2009). In Colorado Springs, property taxes into a key battleground for both the advocates
have fallen by 41 percent in the wake of TABOR and the opponents of austerity.4 A recall-elec-
and are now among the lowest in the country tion challenge to Governor Walker, which took
(at a per capita annual rate of around $55). place in June 2012, duly became the locus of
The radically downsized city hall depends al- a national struggle over the reach, role, and
most exclusively on a trickle of sales-tax rev- responsibilities of state and local government,
enues (Patton, 2010). When these revenues with significant out-of-state involvement on
suddenly slowed, in the last recession, parks both sides. Walker won the recall election by
were immediately closed, public washrooms a slightly increased margin after Republicans
were padlocked, and the mowing of roadside outspent Democrats 7:1 in what was a feverish
verges ceased. Three-quarters of Colorado campaign. This was interpreted as a serious,
Springs’ remaining municipal workforce of strategic setback for the labor movement as
1,600 performs public-safety functions in law well as for the Democratic Party, “provid[ing]
enforcement or firefighting. This bold experi- a blueprint for elected officials considering a
ment in do-it-yourself government and skele-
tal staffing veers close to the neoliberal ideal 4 See ATR (2011), Korbe (2011), Fraley (2012), and Nichols
of a nightwatchman state. (2012a+b).
11JAMIE PECK
AUSTERITY URBANISM
rollback of public employee bargaining rights In6 concert with the Tea Party movement and
elsewhere” (Kocieniewski, 2012: A17). the Fox News echo chamber, the new Republi-
can policy agenda for the states has been dis-
proportionately shaped by a secretive, mem-
Advocates of Austerity bership-only organization called the American
Legislative Exchange Council (ALEC). In closed
Wisconsin-style reforms have defined the dom- sessions, corporations and conservative pol-
inant direction of change during the Great Re- iticians gather to draft and ratify model bills
cession, with a series of electoral defeats for for implementation in state capitals around
the Democrats culminating in the resumption the country—the state-by-state rollout of
of Republican control over the majority of state which has been achieved with a remarkable
capitals. The rise of Tea Party populism has degree of success.7 The activities of ALEC and
been widely credited as a driving force of this fellow-traveler organizations like Americans
rightward slide into anti-tax fundamentalism, for Prosperity, Freedom Works, and the Her-
nativism, and constitutional originalism—re- itage Foundation’s State Policy Network call
vealed for all to see in primary election purges attention to some of the ways in which the
of moderates and the timid accommodation of most recent rounds of austerity programming
the Republican Party leadership. For all its dec- are wired into the central nervous system
larations of anti-establishment, grassroots in- of the neoliberal project (see Peck, 2014). At
dependence, however, the Tea Party movement the same time, the dynamics of the austerity
derives much of its power and influence from moment are certainly not restricted to such
the nexus of conservative media organizations, actions (or indeed actors). The wider signif-
plutocratic funding networks, and free-mar- icance of this moment is that it remakes the
ket advocacy groups with which it is intricately conditions for policymaking across the board.
aligned (Skocpol and Williamson, 2012). In sync The election of Democrats to state and local
with these forces, the Tea Party movement au- office, after all, is hardly a shield against what
thenticated and consolidated a distinctively are in many ways systemic budget pressures,
American strand of folk neoliberalism: It com- though in relative terms they tend to be less
bines a morbid fear of tax hikes with deep antip- strident in their embrace of fiscal crisis as a
athies to social redistribution benefitting those political opportunity. For Republicans (espe-
branded as unproductive or undeserving, like cially in this age of Tea Party and Fox News
recent immigrants and the workless poor— fidelity tests), budgetary restraint creates an
rapidly refashioning the base of the Republi- ideological following wind, enabling the ne-
can Party in its own image. Perhaps the most cessitarian embrace of small-government re-
unambiguous measure of fiscal purity, in this structuring measures (see Munck, 2003). For
context, is Grover Norquist’s “Taxpayer Protec- Democrats, these same conditions constitute
tion Pledge,” a politically binding commitment more of a headwind, but “fiscal realities” often
to “oppose and vote against tax increases.”5 All compel many of the same “hard choices,” even
but one of those belonging to this gubernatorial if these are presented to local electorates un-
class of fiscal fundamentalists, which includes der the veneer of third-way angst. One way or
Scott Walker of Wisconsin, were elected in the
6 Skubick, T. (2012) “Gov. Rick Snyder still not ‘breaking
aftermath of the 2008 Wall Street crash.6 bread’ with GOP’s tea party base,” MLive.com, www.
mlive.com.
5 Norquist, a leading figure in the “leave us alone” coa- 7 On ALEC, see Williams (2010), McIntire (2012), and
lition, heads Americans for Tax Reform in Washington, alecexposed.org. On ALEC’s work in Wisconsin and the
D.C. For the pledge, see www.atr.org. Many governors “Cronon affair,” see Cronon (2011), Medvetz (2012), and
are signatories of ATR’s Taxpayer Protection Pledge, as William Cronon’s blog at scholarcitizen.williamcronon.
are almost all House and Senate Republicans. net.
12JAMIE PECK
AUSTERITY URBANISM
Figure 1: Local government employment change in U.S. recessions, 1969-2012
Source: author’s calculations from Bureau of Labor Statistics, Current Employment Survey
another, fiscal conservatism is established as a Recession that started in 2007,” CBPP budget
bipartisan condition. analysts McNichol et al (2012: 1) conclude,
“caused the largest collapse in state revenues
This is reflected, in turn, in a pattern of fiscal on record.” At least 46 states and the District of
revanchism that is quite unprecedented in its Columbia have enacted deep cuts to services
reach and intensity, even in comparison to the as a result. 43 of the 50 states have cut funding
Reagan and Gingrich revolutions of the 1980s to colleges and universities, 34 have cut K-12
and 1990s. Analyses conducted by the Center education, 29 have cut services for the elder-
on Budget and Policy Priorities (CBPP) have ly and disabled, and 31 have cut health ser-
confirmed that the revenue reductions experi- vices—all during times of increasing need.8 In
enced by U.S. states in the protracted econom-
ic slump since 2007 have far exceeded those 8 See CBPP (2011), www.cbpp.org, McNichol et al (2012)
experienced in the three preceding “neolib- and Williams et al (2011). In contrast, 17 states have
raised sales taxes, 13 have raised personal income tax-
eral recessions” (those of the early 1980s, the es, 17 have raised business taxes, and 22 have raised
early 1990s, and the early 2000s). “The Great excise taxes. Many states have also deregulated long-es-
13JAMIE PECK
AUSTERITY URBANISM
an historical inversion of Keynesian logic, pub- nation of these efforts. Meanwhile, the same
lic-sector payrolls have been slashed during initiative passed with a 70 percent margin in
the protracted economic slowdown, on a scale San Jose, the home of Silicon Valley, where the
comparable only to the Reagan-era attacks on Democratic mayor had campaigned for the
government workforces during the double dip pension-cutting measure on the grounds that
recession of the early 1980s (see Figure 1). Gov- this would enable the city to rehire some of
ernment employment at the subnational scale its furloughed police officers and to provide
fell by 615,000 between August 2008 and Au- staffing for four public libraries that had been
gust 2014, with nearly three-fourths of these built in better times but had to remain shut-
job losses occurring in the local government tered, empty of both books and staff (Cooper,
sector. The states have deflected the pain of 2012). California’s Democratic Governor Jerry
restructuring onto the cities. As Figure 1 re- Brown,who has been pushing his own mea-
veals, the pattern of continuing retrenchment sures to gut pension obligations, said the vote
in local-government employment has exceed- in San Jose sent “a very powerful signal that
ed Reagan-era rollbacks, being set to become pension reform is imperative” (quoted in Inter-
the largest on record. national Herald Tribune, June 8: 5).
Budget cuts, in this sense, may prefigure struc-
Structural Adjustments tural reforms. As Figure 2 reveals, virtually all
of the U.S. states have enacted targeted or
The latest round of austerity measures, how- across-the-board spending cuts since the fi-
ever, has been pushing considerably beyond nancial crisis of 2008. Simultaneously, they
headcount reductions. In 2012, citizens of San have applied a familiar repertoire of neoliberal
Diego and San Jose voted overwhelmingly to restructuring strategies, including outsourcing
decimate the pension entitlements of current to private corporations and nonprofits, the re-
and future city workers. These well-funded organization and downsizing of government
campaigns were widely regarded as pat- operations, and the adoption of socially re-
tern-setting for other cities (and states) with an gressive revenue generators, such as user fees
interest in the new frontier “pension reform” and service charges. New programs of privat-
(Cooper and Walsh, 2012). San Diego’s efforts ization have been initiated in Arizona, Florida,
to finesse its pension commitments had earli- Illinois, Indiana, Kansas, Louisiana, Michigan,
er breached Securities and Exchange Commis- Missouri, Ohio, and Virginia. Meanwhile, no
sion reporting requirements, effectively deny- fewer than 31 states have opted to pass down
ing the city access to public bond markets. In budget cuts to local governments, including
order to cope with funding shortfalls, the city “some instances of significant reductions,” in
had been reduced to closing firehouses on a the characteristically sober words of the na-
rotating basis. For years now, San Diego has tional association of state budget officers (NGA
been a pension-reform beachhead for con- and NASBO, 2010: 56). This has taken a variety
servative organizations like ALEC, the Heritage of forms, from straight reductions in aid to lo-
Foundation’s State Policy Network, and the calities to funding cuts for specific programs,
Manhattan Institute (see Cokorinos, 2005). The such as K-12 education, road maintenance, and
2012 referendum result represented the culmi- property-tax relief. Some states have also be-
gun to dismantle revenue-sharing agreements
tablished controls on the sale of alcohol and gambling, with local governments. Most egregiously,
and even on the purchase of fireworks, not as a mat-
ter of political choice but as a result of extreme budget
Governor Brown of California, faced with a $26
pressures (Economist, 2012b). billion state deficit, has moved to claw back
14JAMIE PECK
AUSTERITY URBANISM
Figure 2: State strategies for closing budget gaps, 2008-2014
Source: National Governors Association and National Association of State Budget Officers.
$5.6 billion from the cities by unilaterally abol- parties). And as if to underline the existential
ishing 400 redevelopment agencies reliant on grip of neoliberal rationalities, the option of
tax-increment financing, which by 2011 were operating beyond austerity is increasingly re-
channeling 12 percent of property-tax reve- stricted to sites and situations in which market
nues in the state (Stephens, 2012). conditions are favorable. Those cities capable
of summoning sufficient political-economic
Confronted by these programmatic cutbacks muscle to go it alone are doing just that.
at the state level and shrinking or static tax
revenues locally, many cities have no alterna-
tive but to follow the path to austerity. Quite Chicago: “Make No Little Plans”
often, the question of operating in the red is
rendered moot by state laws that formally pre- To take one example, Chicago’s mayor, Rahm
clude (or severely limit) deficit budgeting or in- Emanuel, called on former President Bill Clin-
deed tax increases. Untended budget deficits ton to join him in the launch of a public-private
also create political vulnerabilities for elected partnership venture designed to raise $7 bil-
officials, who are almost guaranteed to face lion for long-neglected infrastructure projects
more fiscally hawkish challenges (from both in the city, including investments in the com-
15You can also read
