On Brexit and the Devolution and Evolution of City Power

Bruce Katz & Jeremy Nowak · April 17, 2018


Our friends at Centre for Cities in London recently hosted a New Localism event at The Shard, Renzo Piano’s inspiring and imposing skyscraper on the south bank of the Thames. Being London, nothing was visible from the upper floors of the building given rain and fog on the evening of our gathering. But the discussion was illuminating nonetheless, which you can listen to here —www.centreforcities.org/multimedia/event-catch-city-horizons-bruce-katz-cities-age-populism/.

The focus of our discussion: the need for U.K. cities to gain and exercise new powers in the face of Britain’s decision to withdraw from the European Union, Brexit in shorthand. To prepare for the discussion, we co-authored several blogs for the LSE Business Review (blogs.lse.ac.uk/businessreview/2018/04/03/brexit-and-the-new-localism-how-to-leverage-the-competitive-advantages-of-uk-cities/), the Royal Society of Arts (www.thersa.org/discover/publications-and-articles/rsa-comment/2018/03/the-new-localism-think-like-a-system-act-like-an-entrepreneur), Economia (https://economia.icaew.com/en/opinion/march-2018/financing-cities-of-the-future) and Centre for Cities itself (www.centreforcities.org/blog/brexit-trump-new-localism).

As the Brexit deliberations unfold, the conventional wisdom, reinforced by relentless daily media coverage, is that the future of Britain will be decided by a small number of national elected officials who are responsible for negotiating the contours of the final relationship between Britain, Europe and the rest of the world. The Brexit game, one would conclude, is a game played exclusively by the few and the powerful. (Similarly, the excessive media focus on the doings of Donald Trump, Paul Ryan & Company leads many U.S. citizens to believe that the United States is nothing more than a subsidiary of the federal government rather than a fully functioning, highly distributed federal republic).

Yet the 21st century no longer plays by the conventional, top-down rules of the 20th century. In our recent book, The New Localism: How Cities Can Thrive in the Age of Populism we lay out the parallel global operating system that is emerging in the world today, one driven, designed and delivered by cities.
This parallel operating system has several characteristics.

First, cities and their multi-sectoral networks are exercising the agency they have to design and deliver (and often finance) initiatives that enhance their distinctive competitive position and leverage their special competitive advantages. These efforts — a particular sectoral initiative in one city, a customized skills initiative in another — can and must happen irrespective of Brexit or other changes in the rules of the market game by national governments. Most if not all of these efforts can be orchestrated at the local and metropolitan level, if institutions and leaders collaborate to compete.

Second, cities both exist within and transcend nations and national borders. Given their indisputable role as engines of national economies and centers of global trade and investment, cities (and their major corporations, universities and civic institutions) regularly conduct business with other cities and a broad array of global entities around the flow of capital, ideas, people, services and goods. These relationships are obviously affected by the rules of trade, exchange and migration set by national governments but those rules shape rather than stop interaction.

Finally, we are re-entering a world where networks of cities trade together, share lessons together and increasingly come together to affect rules and practices on issues as disparate as climate change, refugee migration and technological adaptation and deployment. Think of this as a modern Hanseatic League which is taking shape with the formation of such urban networks as C-40, the Rockefeller Foundation’s 100 Resilient Cities and the Global Parliament of Mayors.

The upshot of all this is that cities need to maximize their power in the face of populist demagogues and disruptions. In countries like the U.K. — highly centralized and compartmentalized – that means, first and foremost, the devolution of powers from central government. The election of city mayors and metro mayors — and the flexibility enabled by City Deals — has been an important step forward. But true fiscal devolution needs to accompany the direct election of mayors if the potential of these posts is to be realized. If ‘mayors are to rule the world’, to use the late Ben Barber’s indelible phrase, then cities need to have a broad array of revenue raising capabilities — from basic taxes to ballot-box referenda to value capture mechanisms like tax increment financing and public asset corporations.

Yet the devolution of formal government powers is not sufficient to enhance urban resilience and performance. New Localism celebrates the rise of cities as organic multi-sectoral networks, not as the mere representation of local government and elected officials. What is needed, therefore, is the evolution of new governance arrangementsto complement and supplement the expanded powers of local government. Our UK writings provided specific examples of formal entities — the Central Indiana Corporate Partnership, the Copenhagen City & Port Development Corporation, Kommuninvest in Sweden — that have been endowed with public, private and civic capital and the ability to invest, move markets and solve hard problems.

The Age of Populism (Brexit in Britain, Trump in the United States) is not only undermining political stability and, in some cases, altering basic rules of market engagement. It is also creating an opening for a wholescale redefinition of city power and practice and a new global architecture of urban intermediaries and institutions. A new 21st century global urban order is being made alongside the 20th century network of nation-states.

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