Steve Teles writes:
Mike O’Hare asks a good question below–how, if at all, can you help an area whose economic raison d’etre has degraded shrink gracefully? I’m not sure, but here are a couple of suggestions:
a) One thing that would seem to be imperative would be to make whatever resources that are given to individuals as mobile as possible. Thus, in an area of the kind that O’Hare imagines, you at least would want to make sure that there were no disincentives to moving–such as housing subsidies that are in-kind rather than in voucher form.
b) Second, interested outsiders (like the federal government) can condition their urban renewal funding on geographic concentration, insisting that they be spent in a focused way on making certain parts of the effected area viable, rather than spread over its entirety.
c) Third, one problem with depopulation is that it necessarily reduces the value of all the land in the area, as well as making it more difficult to provide geographically-oriented services (like policing). One answer is to go with the flow of depopulation and spend money not on trying to find tenants for the buildings the demand for which has gone down, but on demolishing them and building attractive public amenities (especially parks) in their place. This will tend to increase the value of the remaining land in two ways: by contracting supply and by creating locational amenities the proximity to which will tend to increase the value of property.