Wall Street Journal...
Democrats and Dying Cities
What South Bend tells us about the 2012 election.
By William McGurn 

South Bend, Ind. 

Folks get a mite touchy when someone declares their hometown dead. So when Newsweek earlier this year ranked this Hoosier town in its top 10 list of dying American cities, the mayor huffed and puffed about the criteria and complained that the magazine relied on preliminary census estimates for its conclusion. 

When the actual census figures came out a few weeks later, it turned out that the population drop was even more severe than the estimates. 

Now maybe Newsweek’s criteria weren’t exhaustive, and maybe “dying” was too strong. Still, despite real advantages including a downtown riverfront and a good location not far from Chicago, South Bend by almost any measure—crime-plagued neighborhoods, boarded-up homes, people fleeing—is a challenged city. In fact, it’s not really even a college town, notwithstanding the presence of Notre Dame and the university’s growing involvement in some development projects. 

It is, however, an excellent case study. Especially when its dismal performance is set against the economic recovery that Gov. Mitch Daniels’s reforms have brought to the rest of the state. 

When Mr. Daniels was first elected governor in 2004, he inherited a state whose budget was in the red, whose citizens were losing hope, and whose businesses were being weighed down by taxes and regulation. Over the next few years, he pursued an agenda that he described this way in his latest state of the state address: “We live within our means, we put the private sector ahead of government, the taxpayer ahead of everyone, and we will stay in the black, whatever it takes.”

It seems to be working, too. Even as the nation has faced hard economic times, Indiana has put its budget in order. It has done so, moreover, while cutting taxes, adding jobs at twice the national rate, and building roads and bridges at a record pace. 

South Bend, alas, has been an exception. There’s a reason for that too. Though it’s popular here to blame all its woes on the loss of manufacturing giants such as Studebaker and Bendix, the truth is that the city’s predicament owes more to the bad decisions taken over the years by its political class. After all, Studebaker shut its doors in 1963. 

For example, when Gov. Daniels succeeded in getting a property tax cap through in 2008, South Bend responded by pressing the county to raise local income taxes—threatening that otherwise it would have to cut police and crossing guards and the like. Today that same mayor says he has $9.1 million in extra revenue he wants to spend on another round of capital projects. Even the South Bend Tribune found this too much, pleading in an editorial, “Taxpayers, speak up!” 

It’s considered bad form to notice, but one problem might be that South Bend, like at least one of its companions on the dying cities list, Detroit, hasn’t had a Republican mayor for four decades. Yes, there are badly run Republican cities, and well-run Democratic ones. South Bend, however, is a classic Democratic city, with a classic Democratic approach to business. And it shows. 

Joel Kotkin, a presidential fellow at Chapman University who writes on successful cities, says that places such as South Bend often overlook their homegrown businesses and their real competitive advantages, e.g., a low cost of living. “Often these advantages are very different from what the pundits tell them,” he says. “For example, they are told to invest in ‘clusters’ in fashionable fields like green tech or nanotechnology or in the arts, when they should be trying to figure out how to be themselves but only better.” 

He could be describing South Bend. Instead of providing a low-tax, low-regulation, business-friendly environment for all comers, the city is chockablock with special zones and industrial parks whose tax revenues go to other government-directed investment projects.

Meanwhile, the locals whose businesses have been here for years (restaurants, cleaners, etc.) get none of the favorable treatment the city rolls out for the larger and sexier newcomers. When people complain, the city fathers point to things such as South Bend’s recent designation as an “All American City,” a designation bestowed by judges who haven’t visited. 

The good news is that change may be coming. Last month, outsider Peter Buttigieg—a 29-year-old former Rhodes Scholar—defeated the machine candidates in the Democratic primary. Notwithstanding his impressive academic credentials, Mr. Buttigieg’s true test will be whether he has the smarts to recognize that the answer isn’t a South Bend government that does a better job of picking winners. The answer is a government competent enough to provide the basics, and humble enough to let the market decide the winners and losers. 

Come to think of it, that’s the same challenge Republicans will be making to President Obama in 2012. If you want to see the legacy of the other approach, visit South Bend. 

Read it at the Wall Street Journal