Ed Glaeser says city residents are treated unfairly:
A level playing field for cities, by Edward L. Glaeser, Commentary, Boston Globe: From Athenian philosophers to Florentine painters to Chicago architects, cities have long been wellsprings of collaborative invention. In the past, urban creativity was an interesting sideshow, not the main economic event, but today, the rebirth of Boston and New York and London has been built on the increasingly important urban edge in connecting innovative people. The same economic forces that did so much to harm industrial cities in the 1970s - globalization and technological progress - also increased the returns to being smart and you become smart by being around other smart people. We are in a great urban age, because urban connections forge human capital and create innovation.
Does the special role that cities play in the economy and society mean that cities need special treatment from state and national governments? No. ... However, cities shouldn't have to face a policy deck stacked against urban living. Urban firms and residents shouldn't have to pay a disproportionate share of the taxes needed to care for disadvantaged Americans. Suburbanites shouldn't get a free pass on the environmental damage created by a car-based lifestyle.
How are city residents unfairly taxed? For centuries, cities have disproportionately attracted the poor. In the 2000 Census, 19.9 percent of city residents were poor; only 7.5 percent of suburban residents lived in poverty.
Urban poverty does not reflect urban failure, but rather the enduring appeal of cities to the less fortunate. Poor people come to cities because urban areas offer economic opportunity, better social services, and the chance to get by without an automobile. Yet the sheer numbers of urban poor make it more costly to provide basic city services, like education and safety, and those costs are borne by the city's more prosperous residents. Taking care of America's poor should be the responsibility of all Americans. When we ask urban residents to pick up the tab for educating the urban poor, then we are imposing an unfair tax on those residents. That tax artificially restricts the growth of our dynamic cities.
Cities also face an uneven playing field because suburban residents do not pay for the full environmental costs of low-density living. ... People who live surrounded by green space often do much more harm to that green space than people who live in dense cities. ...
As we face the prospect of climate change encouraged by vast quantities of man-made greenhouse gases, we should rethink those decisions that lead to more energy consumption and carbon dioxide emissions. Is it wise for American development to be so concentrated in low-density, car-oriented, energy-intensive suburbs? ...
While we should be encouraging development in dense, urban areas that use less energy, many of our policies work exactly in the wrong direction. Our land use restrictions push development away from dense areas, with plenty of NIMBY-ist neighbors, toward empty spaces with fewer noisy abutters. Our transportation policies fail to charge people for the full social costs of driving long distances on crowded highways. Our localized school system encourages prosperous parents to flee urban poverty. Just think of how the 1974 Supreme Court decision that limited busing to within city boundaries encouraged mass suburbanization to get beyond those city borders.
No region should receive special favors from the federal government; no city should get special treatment... But our cities deserve a level playing field. A level playing field requires that urbanites should not bear an undue burden of caring for the poor and that suburbanites should pay for the environmental costs of energy-intensive lifestyles.
I wrote up several responses to this, but I didn't like any of them. Now it's sorta late, so I guess I'll hand it off to you. If you feel like responding, please do.
Update: Richard Green comments on how we might respond to these problems.
Update: Tyler Cowen responds as well. His questions about positive externalities for wealthy residents living in cities was part of what I was going to say in the responses I couldn't quite get right, so I am sympathetic to this argument I also wondered about the distribution of benefits, i.e. access to museums, plays, concerts, sports events, zoos, airports, and so on. Since many of these are government supported, the question is whether there is any cross-subsidization from suburban/rural residents to city dwellers that offsets other types of inequities.
Update: More from Ryan Avent at The Bellows.