It was a romp. After several cycles of underpolling Republicans and counting Trump out, for once the polls underpredicted how well Democrats would do. Not a single state flipped from a Democratic senator to a Republican one. As of this writing, Democrats picked up a massive seven seats in the Senate, with Alaska and Mississippi still in play. The House of Representatives will have a sizeable Democratic majority. Multiple states turned blue in gubernatorial races. Texas sprang for a Democratic governor for the first time in over 30 years. Kansas will have a Democratic senator for the first time in nearly a century. There isn’t a single bright spot for Republicans to hang their hat on.
While much attention will rightly be paid to Congress, so too should Americans keep an eye on their state and local governments, which also shifted left. A lot of voter dissatisfaction over the last 20 years has been about poor governance. In a time of Democratic success, team blue needs to take note. They are, after all, the party of government, and lately they have struggled to inspire confidence in that role. Thus, a few common-sense tips for running a city.
If a policy interfering with the free market distorts it to the point that more interventions are needed to counteract the damage, the original policy needs to be altered.
Our nation’s capital provides a textbook case of this. Concerned about affordability, DC has made it difficult for landlords to make a profit. Thousands of units are designated affordable housing, preventing owners from charging their tenants market rent. Nonpayment of rent takes months, or longer, to result in eviction. The outcome is entirely predictable. Low-income apartment buildings are racking up code violations and ignoring maintenance issues.
Several articles have highlighted the Gale Eckington, a large apartment complex with 603 units. The building has been issued over 250 code violations since 2023. The result? A member of the city council is now proposing a 10-year tax abatement, which would give the owners of the building up to $21 million in tax breaks if they fix all their issues.
This shows a clear failure of DC tenant protections. Real estate is one of the easiest areas to make a profit in. Rents have skyrocketed over the last 10 years. If landlords are so restricted from evicting nonpaying tenants or charging market rates they cannot keep a building up to code, those rules are not helping low-income Americans. Far from it; they condemn the poor to substandard housing at best. At worst, homelessness.
Government services should focus on those receiving, not providing, benefits.
One economically illiterate comment I often see comes from governments announcing a new program and touting the number of jobs it will generate as a result. It must be noted that if this is a factory or office complex, new jobs are a benefit. Government should pave the way, figuratively and literally, for private business to create jobs. On the other hand, when it’s a new government program, whether it be directly managed or a social services partnership, new jobs are a cost. These are positions being funded with taxpayer dollars. Ideally, they would not exist.
Consider a hypothetical city that is launching a tax-funded youth soccer league. This is a fine use of government money. It helps give kids something to do on the weekends. However, say the government proudly announces it will form 10 teams, and each team will have two paid city employees as coaches, thus creating 20 new jobs. And those 20 jobs are touted as a good thing. They are not. The program would be better, from an economic point of view, if each team were staffed with volunteers.
That isn’t to say all government jobs are bad or worthless. Far from it. The point is that every government job created, or job funded with public money, goes in the ledger as a debit, not a credit, to the program. Local governments should not be advertising which nonprofits they are partnering with and why that’s worthwhile. They should be advertising who is receiving the benefits. To do otherwise feeds the suspicion, sometimes accurate, that the whole program is just a way to funnel money to Democratic-leaning constituencies.
Some services need to be what taxpayers want.
It is true that each citizen is worth one vote. Doesn’t matter if you’re living under a bridge or on millionaire’s row. Each person gets one vote and one vote only. Because of this, politicians have the constant temptation to veer towards populism and do whatever will get them the most votes. Unelected bureaucrats face less pressure than elected officeholders, but have similar incentives to please as many people as possible.
What this overlooks is that while everyone has the same number of votes, not everyone pays the same amount of taxes. Contrary to popular belief, the rich, far from being untaxed, pay more in tax than everyone else. This isn’t necessarily bad policy, but as the tax base narrows, government, especially at the local level, needs to be somewhat cognizant of what the wealthy want. As many American cities found out in the second half of the 20th century, ignoring the desires of those paying the bills can have disastrous consequences. Wealthy taxpayers will vote with their feet and move to the suburbs. Once this cycle starts, it’s hard to stop and can result in the complete destruction of the tax base over the course of a generation.
Thus, government should pay extra attention to the wishes of the biggest taxpayers. Thankfully, most of the time they will want public services that benefit everybody, not just the rich. Good schools, maintained infrastructure, and low crime. Combine these with amenities like great restaurants and cultural institutions that economies of scale can only achieve in cities, and you have yourself a winning formula. Now, delivering all three isn’t easy. But it is possible with a sufficiently wealthy tax base and, more importantly, enough political will.
Democrats have a chance to effect meaningful change. To prove that government can work. That institutions matter. Let’s hope they are successful.