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the urban life cycle, has noted that "new ideas need old

buildings" to take root and grow.23  That is to say that new

businesses or entrepreneurs need the inexpensive real estate

and property that can be found in neighborhoods that have

outlived their utility for other purposes.  Vacant lots,

cheap loft space, and abandoned factory buildings can become

the kindling for the sparks of new economic ideas.  On the

contrary, the HUD approach can have the effect of suppress-

ing that cycle of growth, decline, and spontaneous renewal.

If poorer neighborhoods are not allowed to fall in value to

their true market level, but instead are artificially sus-

tained, the opportunities for their reuse can never be

realized.

That is not to say that government cannot, or should

not, make underused land or buildings more easily adaptable

to new uses.  There are countless ways in which local gov-

ernment can aid market forces that help to renew cities,

such as demolishing dangerous buildings to create develop-

able lots and improving streets and infrastructure.  But

policies that actively try to deny or suppress the market,

such as the attempt to maintain buildings at standards for

which there is no long-term income stream, cannot long be

sustained.  To the extent that HUD is based on the premise

that older neighborhoods should be restored to what they

were, it is built on a foundation of sand.

The failure of the first generation of HUD programs to

accomplish their twin purposes of lifting up the poor and

saving specific neighborhoods has not dulled the agency's

zeal to tilt at the same windmill again.  In language strik-

ingly reminiscent of that of HUD's founding fathers, former

HUD assistant secretary Michael Stegman asserts that "many

American cities are in deep trouble.  Our great urban cen-

ters, which once generated unparalleled social and economic

opportunity, now act to isolate the poor--and especially the

minority poor--from those opportunities, perpetuating in-

equality and despair."24  The latest incarnation of the

Model Cities program is called the Empowerment Zone program

and is meant to direct funds toward 105 cities.  Elements of

that program may have merit, but the core concept--that

government must act to ensure that capital is directed

toward specific locations and that such direction can lead

to a sustainable prosperity in those locations--is economi-

cally unsound.

Even contemporary liberal observers strongly sympathet-