Innovations spread through an economy in complicated ways, especially when we look beyond the private sector. For instance, economists have noted that the surprisingly slow adoption of leading-edge medical practices across the United States mirrors the glacially slow propagation of hybrid crop seeds a half-century ago.

In this new book, Brookings Institution researchers Bruce Katz and Jennifer Bradley celebrate American metropolitan leaders of the last decade whom they consider forward-thinking and innovative politicians. To a degree, it’s hard to argue with their choices. For instance, they laud both Rudy Giuliani and Michael Bloomberg, which seems appropriate given the remarkable transformation of New York City in the last 20 years, with crime rates down by over two-thirds, public schools improving after hitting rock bottom, and tangible improvements in transportation. Along with various other developments, these efforts add up to a greatly increased quality of life in the city, and the government helped to achieve that. It’s hard to look at today’s New York City and not give Giuliani and Bloomberg some credit for these changes, concluding that effective government can make a difference.

But not all metropolitan areas have been as innovative and successful as New York City, and some of the innovations trumpeted by Katz and Bradley may not work elsewhere—or even in New York. For instance, in the last two years the city held a competition among several universities to award the winner a sizeable parcel of land on Roosevelt Island, along with $100 million in infrastructure support, in return for the winner using the parcel to establish an innovative applied sciences campus in the city. Cornell won the contest, thanks in part to an alumnus coughing up $100 million in project support to push them over the top. Bradley and Katz trumpet this investment as laying the groundwork for a new high-tech era in the New York economy, with the promise of helping the city insulate itself from its dependence on the finance industry for jobs and tax revenues.

More engineering students are probably a good thing for society. And employing an underused parcel of land to get an Ivy League school to make a major investment in the city is probably a far superior use of that resource than the usual things that cities do with land. But New York’s future as a science hub is far from a sure thing: while young computer programmers and electrical engineers may like living in Brooklyn, expecting that some sort of economies of agglomeration will develop because of this investment is dicey.

New York’s supremacy owes itself to many things, and it has re-invented itself myriad times. These days, finance drives the city’s economy, although it is not impossible to envision a world where Wall Street plays a much smaller role in the global economy—or even New York’s economy—than today. Regulatory overreach, greater global competition shrinking finance’s outsized profits, or technology lessening the need for central financial districts could all shrink Wall Street’s footprint. The city’s desire to diversify away from finance is laudable, but chasing the sexy geek jobs every other big city desires may not work, especially when the city has no comparative advantage other than being a hip locale.

But being a place where people want to live is nothing to sneeze at. In fact, improving a community’s livability is probably the best thing a mayor or city council can do to attract jobs. Entrepreneurs also like living in places with good schools, low taxes, and clean streets. In the long run, the Brooklyn brand as a hip, fun place to live and work will lead to more jobs created in New York than Cornell’s tech campus. Government isn’t very good at knowing what sorts of jobs those will be, and is even worse at influencing what sorts of jobs those will be.

‘Investment’ going awry / Governments that spend money to attract or retain new businesses have myriad motivations for doing so, some noble and some more base. And even the most noble of intentions can result in the state wasting taxpayer money.

When I was an economics professor in Wisconsin, I wrote an article for a Milwaukee newspaper criticizing the state’s penchant for using tax breaks and subsidies to entice new businesses to enter the state or (more commonly) encourage businesses already in the state to remain. It was a fool’s game, I argued, thinking that politicians know how to allocate scarce capital in a way that produces anything close to an economically optimal result.

A couple days later the governor’s office invited me to a meeting in Madison with some of the governor’s staff and a few economists from Madison to talk about the state’s economy. The purpose of the meeting, it turned out, was to tell me to shut up. The various economic Pooh-Bahs informed me that they knew quite well how to allocate government money and the only reason that some of the state’s investments failed was that the data they used to make their decisions were incorrect or incomplete. The governor and his team of economists were on their way to making the Madison–Milwaukee corridor a biotech hub—or maybe an engineering hub, they hadn’t yet made up their mind—by thoughtfully allocating various tax breaks and subsidies, or so they told me.

But the reality was that most of the state’s “investments” went to large manufacturing concerns already in the state, ostensibly to entice them to remain, although many of them had no real intention of going anywhere. That occurred because short-term political exigencies and cronyism invariably outweigh any long-term investment plans made by any government.

In the late 1990s, state and local governments in Wisconsin financed a new baseball stadium and a renovated football stadium for teams that had no real options to move. It handed tax breaks to Miller Brewing Company and Midwest Airlines, both of which were subsequently purchased and moved elsewhere, along with a soon-to-close Chrysler factory and any other entity employing enough blue collar workers earning union wages. Yet the state received no discernible returns on its spending.

Moreover, Wisconsin never had much of a chance to be anything like a hub for biotech or information technology. The University of Wisconsin is a very good school, but it isn’t in the league with Berkeley/​Stanford, MIT/​Harvard, or the Research Triangle, and central Wisconsin is in a far different league than Boston or San Francisco when it comes to attracting the top foreign entrepreneurial talent.

While a series of governors lusted for high-tech jobs and concomitantly spent public money to keep blue collar jobs, a water services industry quietly developed in the greater Milwaukee area, despite receiving no significant subsidies or tax breaks. Its development came as a result of the city’s location, connections to a few long-established companies in the area, and some civic-minded (and profit-minded) activities by a few key entities.

Lessons for smaller burgs / While Mayor Bloomberg may be able to meet with other big city mayors and tell them how he managed to construct bike lanes or ban smoking, a lot of what he has achieved while in office is sui generis. Any observations he offers will be of little value to growth-hungry politicians in Dallas or Chicago.

Or, for that matter, Peoria, Ill., a city of 115,000 (and nearly a half-million in the metropolitan area) where the schools continue to deteriorate but no mayor or city council has the fortitude or desire to wrench control of them away from the succession of mediocrities the school board appoints to run things. Central Illinoisans have responded to this by voting with their feet, and middle-class families with children either move to the suburbs or send them to Catholic schools—or leave the area altogether. What D.C. or New York did is of no particular interest to the city’s government.

The gridlock in Congress has cut off the urban grant spigot in Washington, pushing metropolitan governments to do more. That is something that believers in small government ought to celebrate, even if we don’t agree with everything those city governments do. The value of federalism has been utterly forgotten in recent years, with no one bothering to pay even lip service to it. Having a couple hundred governments trying new things and seeing what works—and what doesn’t—and watching those lessons propagate through the country is the sine qua non of Jeffersonian democracy.

But we need to temper our enthusiasm by realizing that there are limits to what a hundred blooming flowers can achieve. What succeeds in dense urban centers may not work in prairie metropolises, navigating the shoals of public unions takes a lot of effort and political talent, and change is hard. The mayor of Omaha, Neb. may get inspiration from what Mayor Bloomberg achieved, but it’s not clear what else can be taken from his tenure.

Small-town snobbery / My favorite Andy Griffith Show episode is “Andy’s Rich Girlfriend.” It takes place before Helen Crump comes to town and becomes Andy’s steady girl. In the episode, Andy meets a wealthy, attractive, and nice woman from the big city (Raleigh in this case). He takes her on a series of dates designed to test her comfort level with small-town living—fishing and pheasant-hunting trips among them—before she finally calls out Andy for being a small-town snob, prejudiced against big-city people.

There’s a lot of that in the country, I think, and I was guilty of that for much of my life until I wound up living in a big city and enjoying it. That sentiment infects Congress as well: the very structure of the Senate ensures that rural residents get disproportionate representation in Congress, as well as a disproportionate share of government largesse. If you would assume that New York City would get a greater per-capita allocation of mass transit dollars than Mobile, Ala. or Oshkosh, Wisc., then you don’t know Congress.

Yet the lack of such largesse isn’t a negative for the big metropolises. Bradley and Katz are spot-on in declaring that the neglect cities receive from the federal government is a blessing and that cities across the country are tackling big problems on their own. More neglect would be even better: fewer regulations, fewer tax dollars going from big-city residents to subsidize the lifestyle of corn farmers, and fewer strings on the dollars that the federal government does deign to return to the local level would improve things.

The deal of the fix / Innovations in government travel slowly and often translate poorly from one locale to the next. For a community to attract a new business or an entire industry, the formula is simpler than trying to identify a promising industry to develop. Creating a place where people want to live and work and raise a family is the first and foremost thing that can be done to attract people—and jobs. It is a more passive perspective than deal-making mayors are comfortable with, but such a perspective would circumscribe government activities in a healthy way.

Cities are certainly more important in the global economies today than they were a decade ago, with a majority of the world’s inhabitants living in one for the first time ever. And the urbanization of humanity will only continue. However, convincing Chicagoans that the city needs to invest first and foremost with an eye toward foreign cities that Mayor Rahm Emmanuel sees as its competitors is a tough sell—save for the livability aspect of it.

Devolving power to cities and metropolitan areas is a development that we rightly ought to celebrate, as Bradley and Katz do. There’s still more that could be done in this realm: abolishing the federal government’s role in allocating transportation funding would be a reform that would allow state and local governments to be even more creative in how they fund and provide transportation, for instance. The next logical step in the progression would be for U.S. cities to emulate other foreign cities and begin devolving more services to the private market—but that’s grist for the next generation of mayors.