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1 " Our goal might be more ambitious, directed toward restructuring capital's constraints altogether. Recall that the rejection of the corporatist medieval and early colonial city represented the end of monopoly, mercantilism, and autocracy in favor of open markets, democracy, and individual economic freedom. One may wish to reassert these same goals in the face of the power and authority of large, hierarchical corporate entities. The goal of the city would be to become less a passive recipient of global capital than a shaper of local capital in a direction more conducive to freedom. "
― Richard Schragger
2 " Questionable investment deals certainly contributed to a number of municipal financial crises that occurred after the 2008 stock market crash. Jefferson County, Alabama, for example, entered into interest rate swaps that helped swell its debt burden to $3 billion when interest rates collapsed. The county sued the lead underwriter, J.P. Morgan, on the grounds that it misled the county and investors. The Securities and Exchange Commission also imposed significant penalties on the underwriter in 2009. Detroit similarly entered swaps that the bankruptcy court ultimately settled for much less than their face value after the bankruptcy judge raised significant questions about the swaps' legality and enforceability. "
3 " The stories of failure are commonplace. Reporting that, five years after locating there, IBM fired most of its employees in Dubuque and Columbia despite a combined $84 million in tax breaks, the author of a Bloomberg News story noted that this scenario has 'played out often across America: Big company comes to town, provides boost to the local economy and then leaves.' The Kelo case ended similarly: New London provided Pfizer with significant subsidies only to see the company depart a few years later. "
4 " Local and state tax incentives are much less visible because they do not constitute a direct charge to local budgets and are often paid for by future generations through municipal debt. This relative invisibility makes it much less probable that the local political process can be counted on to prevent bad incentive deals. "
5 " Indeed, the move to connect public subsidy and private compliance must be understood in the context of the postwar history of urban redevelopment initiatives, most of which have been considered failures. A thorough history of these programs is beyond this chapter, but the litany of criticisms is familiar: Urban redevelopment has relied too heavily on private-side investment; it has emphasized displacement and gentrification over reinvestment; it has lacked citizen participation or neighborhood input; and it has been riddled with patronage, incompetence, and distribution to favored groups. Mostly, however, urban redevelopment policy has been unsuccessful. "
6 " That being said, it may be that opponents of bailouts are not worried about public officials' behavior at all. Perhaps the strategic behavior that we are trying to avoid is on the lender's side, not on the government's. A standard objection to bailouts is that investors anticipating a bailout will be too aggressive in extending credit. They too have a potential moral hazard that needs to be remedied. "
7 " Inter-jurisdictional competition for growth can and does lead to potentially misplaced investments - stadiums instead of schools, highways instead of health care. There is nothing intrinsic about the mark in jurisdictions that ensures that it will produce the right kind of spending, even if we knew that that spending was. "
8 " If geographically uneven economic development is a deep feature of economies on all scales, as economic geographers tell us, then the existence of leading and lagging economies will be a long-term feature of the landscape. And competition will merely exacerbate the shift of productive enterprise to leading places, generate unproductive races to the bottom, or induce lagging cities to give up altogether. "
9 " One of the first modern American clawback provisions was adopted by New Haven over twenty years ago. Now twenty states and over on hundred cities have clawback provisions. "
10 " Despite having become an urban nation in the last century, Americans still have yet to come to terms with the exercise of urban democratic power. To do so requires treating cities as something other than consumption preferences or as location providers for agglomeration-seeking firms, or as entities that are incompetent, corrupt, and in need of discipline. We have to think instead of the city as a process of economic development, as a generator of the middle class, and as the primary location for the exercise of robust self-government. "
11 " Consider one of the most important developments in local government finance in the last 50 years - state constitutional taxation and spending limitations. Starting with Proposition 13 in California, adopted in 1978, many states began to severely limit local governments' ability to tax and spend. In the California case, these limits were arguably spurred by rapid rises in property values as newcomers found their way to California in the 1970s. Again, an institutional reaction appear to *follow* economic growth - California was growing rapidly and existing residents were concerned about the fiscal effects brought about by the influx of immigrants. Colorado's Taxpayer Bill of Rights (TABOR), adopted in 1992, also appears to have been in part a reaction to rising tax rates brought about by increasing service demands of increasing populations. "
