Mayors ruling the world? No thanks

Mayors gather at a planning session for the Global Parliament of Mayors. Image: GPM.

In September, the first planning session of the Global Parliament of Mayors took place in Amsterdam: a conference about mayors, for mayors, attended by mayors, moderated by mayors and hosted by a mayor, all triggered by a book about mayors: If Mayors Ruled the World: Dysfunctional Nations, Rising Cities by Benjamin Barber.

In this book, the current political system and its leaders are dismissed as dysfunctional. Defined by borders and with an inevitable focus on national interests, they are not an effective vehicle to govern a world defined by interdependence. Mayors, presiding over cities with their more open, networked structure and cosmopolitan demographics could do it better – or so the book argues.

Yet it's difficult imagine how a world governed by cities could be a viable alternative to a world governed by nations. The current generation of mayors may well be successful precisely because they do not rule the world; because they can focus on smaller, more immediate, more local responsibilities, which means that their efforts generate quicker and more visible results. It seems unwise to remove that focus by giving them global responsibilities.

Giving mayors a greater slice of world governance also raises democratic concerns. Just over half the world’s population lives in cities. That's an impressive proportion, but it also means that the other half does not live in cities – so if a mayoral parliament did have extensive powers, who would represent the other half? 

Another problem is that, in some countries, the mayor is not an elected figure. In the Netherlands, mayors are appointed by the national government, while in Ukraine, the mayor is simply the most highly-ranking politician in the municipality. In most countries, voter turnouts for local elections are still significantly lower than those for national elections.   

It has been claimed that cities are a more effective vehicle to deal with global problems like climate change and migration, but I fail to see how an escalation of world problems can ever be addressed through a de-escalation (from nation to city) of the scale of governance. Mayors aren't well-placed to reimagine large-scale energy strategies or tackled the root source of global migration: a fundamental global disparity of wealth.    

 

The global political system should clearly recognise which decisions should be taken at which level

The idea of a Global Parliament of Mayors raises questions, not answers.. What is the exact nature of this proposition? Historically, the idea of the parliament was invented as a dialectical instrument to control power once the necessity to separate powers had been recognized: to pass, modify or reject laws proposed by Kings or governments. So which power does the parliament of mayors control? Whose laws does or doesn’t it pass? To whom does it direct its difficult questions? Without an answer to the above questions, the proposition that mayors would rule the world through a global parliament of mayors feels like little more than a combination of recklessness and naiveté.   

In such a context, I would not advocate to replace national governments with a parliament of mayors. I would prefer to give a new relevance to the notion of subsidiary, in which the increased importance of cities is recognized and actively crafted, but where they are integrated in a global political system that clearly recognizes which decisions should be taken at which level.   

Reinier de Graaf is a partner of the Office for Metropolitan Architecture. He directs the work of AMO, the research and design studio established as a counterpart to OMA’s architectural practice. Over the last several years, he has overseen OMA's planning work in several emerging cities and led AMO's research on the Megacity.

 
 
 
 

High streets and shopping malls face a ‘domino effect’ from major store closures

Another one bites the dust: House of Fraser plans to close the majority of its stores. Image: Getty.

Traditional retail is in the centre of a storm – and British department store chain House of Fraser is the latest to succumb to the tempest. The company plans to close 31 of its 59 shops – including its flagship store in Oxford Street, London – by the beginning of 2019. The closures come as part of a company voluntary arrangement, which is an insolvency deal designed to keep the chain running while it renegotiates terms with landlords. The deal will be voted on by creditors within the month.

Meanwhile in the US, the world’s largest retail market, Sears has just announced that it will be closing more than 70 of its stores in the near future.

This trend of major retailers closing multiple outlets exists in several Western countries – and its magnitude seems to be unrelated to the fundamentals of the economy. The US, for example, has recently experienced a clear decoupling of store closures from overall economic growth. While the US economy grew a healthy 2.3 per cent in 2017, the year ended with a record number of store closings, nearly 9,000 while 50 major chains filed for bankruptcy.

Most analysts and industry experts agree that this is largely due to the growth of e-commerce – and this is not expected to diminish anytime soon. A further 12,000 stores are expected to close in the US before the end of 2018. Similar trends are being seen in markets such as the UK and Canada.

Pushing down profits

Perhaps the most obvious impact of store closures is on the revenues and profitability of established brick-and-mortar retailers, with bankruptcies in the US up by nearly a third in 2017. The cost to investors in the retail sector has been severe – stocks of firms such as Sears have lost upwards of 90 per cent of their market value in the last ten years. By contrast, Amazon’s stock price is up over 2,000 per cent in the same period – more than 49,000 per cent when considering the last 20 years. This is a trend that the market does not expect to change, as the ratio of price to earnings for Amazon stands at ten times that of the best brick-and-mortar retailers.

Although unemployment levels reached a 17-year low in 2017, the retail sector in the US shed a net 66,500 jobs. Landlords are losing longstanding tenants. The expectation is that roughly 25 per cent of shopping malls in the US are at high risk of closing one of their anchor tenants such as a Macy’s, which could set off a series of store closures and challenge the very viability of the mall. One out of every five malls is expected to close by 2022 – a prospect which has put downward pressure on retail real estate prices and on the finances of the firms that own and manage these venues.

In the UK, high streets are struggling through similar issues. And given that high streets have historically been the heart of any UK town or city, there appears to be a fundamental need for businesses and local councils to adapt to the radical changes affecting the retail sector to preserve their high streets’ vitality and financial viability.


The costs to society

While attention is focused on the direct impacts on company finances, employment and landlord rents, store closures can set off a “domino effect” on local governments and businesses, which come at a significant cost to society. For instance, closures can have a knock-on effect for nearby businesses – when large stores close, the foot traffic to neighbouring establishments is also reduced, which endangers the viability of other local businesses. For instance, Starbucks has recently announced plans to close all its 379 Teavana stores. Primarily located inside shopping malls, they have harshly suffered from declining mall traffic in recent years.

Store closures can also spell trouble for local authorities. When retailers and neighbouring businesses close, they reduce the taxable revenue base that many municipalities depend on in order to fund local services. Add to this the reduction in property taxes stemming from bankrupt landlords and the effect on municipal funding can be substantial. Unfortunately, until e-commerce tax laws are adapted, municipalities will continue to face financial challenges as more and more stores close.

It’s not just local councils, but local development which suffers when stores close. For decades, many cities in the US and the UK, for exmaple Detroit and Liverpool, have heavily invested in efforts to rejuvenate their urban cores after years of decay in the 1970s and 1980s. Bringing shops, bars and other businesses back to once derelict areas has been key to this redevelopment. But today, with businesses closing, cities could once again face the prospect of seeing their efforts unravel as their key urban areas become less attractive and populations move elsewhere.

Commercial ecosystems featuring everything from large chain stores to small independent businesses are fragile and sensitive to change. When a store closes it doesn’t just affect employees or shareholders – it can have widespread and lasting impacts on the local community, and beyond. Controlling this “domino effect” is going to be a major challenge for local governments and businesses for years to come.

Omar Toulan, Professor in Strategy and International Management, IMD Business School and Niccolò Pisani, Assistant Professor of International Management, University of Amsterdam.

This article was originally published on The Conversation. Read the original article.