What Local Governments Need to Lead

LONDON – Local governments are manning the front lines of our most important global battles – from managing severe weather and other climate shocks to preparing for the next pandemic, ensuring health for all, rectifying longstanding racial inequities, and addressing housing affordability. Urban areas now account for over half the world’s population, and their governments are uniquely positioned to understand and address their own communities’ needs.

Whether or not we realize it, we have pinned many of our hopes for progress on municipal action and bottom-up creativity. Recent “recovery programs” like NextGenerationEU and the US Bipartisan Infrastructure Law are explicitly designed to inject cash into local economies, and such place-based funding requires local governments to bring new thinking to bear on issues such as sustainable mobility and the digital divide.

But after decades of everyone assuming that innovation must be left to the private sector, local governments often lack the capacity to mobilize resources and expertise on the scale required. We have mistakenly bought into the idea that governments should only rescue markets, not create new ones; that they should merely de-risk the value creators, rather than taking risks to create value themselves. Having absorbed the gospel of “efficiency,” we have eschewed public-sector investments and outsourced critical strategic functions.