Some Organizational Influences on Urban Renewal Decisions

Abstract

Prescribing "corrective actions" for "market failures" is not a new activity for economists. Such corrective actions usually amount to the replacement of a market mechanism by some other mechanism such as a governmental agency charged with certain powers and responsibilities. Curiously enough, we know less about the behavior of these alternative institutional arrangements than we do about market institutions. It is hoped that this paper will add some insights into part of the workings of one such mechanism: the urban renewal program. Parts of the behavior of two separate political bodies within the urban renewal institutional framework will be examined. The first will be that of the federal Urban Renewal Administration (URA). The second will be that of the local public agency (LPA) which represents the community. With respect to URA it will be argued that the particular institutional structure has influenced the locational distribution of urban renewal activities on one hand and the time sequence of project approvals on the other. With respect to the localities it will be argued that the institutional structure has influenced the method by which the local share of the project is paid. The central theme about the workings of a political process is drawn from the works of Downs, Tullock, and Wildavsky. Individuals within political processes must be responsive to the wishes of those who can control their future within the organization either directly or indirectly by means of financial control. Otherwise they will not survive. This is not really so different in principle from a market in which the seller must consider the tastes and alternatives of his customers if he is to continue as a seller.