If Dallas goes under, the state authorities aren’t going to be keen to bail out the city government. Some of the bloodiest fights over the next few years will be between blue cities and red state legislatures as pension liabilities force municipalities to ask for assistance. With Republicans dominant at the state level (and now at the federal level), cities aren’t going to have an easy time getting help.Republican-friendly suburbs are in little better shape, but in the absence of a growing economy, agglomeration economies aren't enough for the big cities either.
There’s a lot of talk these days about urban renewal, with greener waterfronts and hipster gentrification driving up real estate values and making previously-decrepit neighborhoods hot spots of culture. But today’s urban havens are built on a very unsteady foundation of blue city governance. At what point will the costs of maintaining today’s blue cities outweigh the appeal of what we might call “Brooklynization”? It’s not just rising housing prices that could drive people out; imagine the tax rates which could be necessary to pay off pension liabilities. Particularly for families looking to make an investment in real estate, cities may start to look much riskier.That's already happening in Chicago, and at what point will the city no longer be able to maintain what is effectively a gated community surrounded by increasing despair and increasing frustration with Democrats?