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Editor Rich Oppel probably doesn't want my support, but his lament in Sunday's American-Statesman about Austin losing its middle class pointed to the greatest economic problem our city faces.

I spent big chunks of July visiting inner-city poverty-fighters in Philadelphia, Washington, Indianapolis and St. Louis, and most of them talked about how three of those cities have become more and more home to either the very rich or the very poor. Sky-touching city taxes, suffocating city red tape and concerns about inadequate and often amoral education have sent hundreds of thousands of former urbanites sprawling across the countryside.

Austin could follow those paths of decline. Ironically, our City Council now is embracing Smart Growth, which could hurt the opportunity for middle-class people to buy homes, but isn't willing to help them by disassembling Dumb Bureaucracy.

One city I visited is working: Indianapolis. There, Mayor Steve Goldsmith had paid attention to the negatives (high taxes, red tape, bad schools) that drive middle-class people away. Unable to do much about the public schools, Goldsmith—although Jewish—has been raising money for the local archdiocese's Catholic schools. But he has succeeded on the tax and red tape front.

Goldsmith succeeded in cutting taxes by emphasizing competition in service provision. As the liberal magazine The New Democrat reported last year, contracting out microfilm services saved nearly $1 million over three years; window washing, $45,000 over the same period; printing and copying, $2.8 million over seven years. Competition to service the city's swimming pools and utilities saved nearly $500,000 over seven years. The city saved $15-20 million on trash collection over three years. So it went, area by area, with every function except police and fire put out for bid. Total savings: $400 million.

Some city functions were privatized, but Goldsmith emphasized that his goal was competition, not necessarily privatization. He encouraged government employees to compete for contracts, as long as they could do a quality job for a lower cost than others.

Tax-saving stories emerged. The street repair department had 36 middle managers supervising 90 crew members. Faced with having to put in a competitive bid, union members recommended sending out four workers and one truck to fix problems, rather than two trucks with up to eight workers, including a supervisor. Those requests were granted, and the union won the contract by cutting overall costs more than 25 percent without reducing service levels.

Our City Council should encourage competition in city services, and not just there: What about competition in dealing with social issues, by encouraging churches and other faith-based groups to help address problems such as alcohol abuse, broken families and decaying neighborhoods? Steve Goldsmith's other success came with Front Porch Alliance, which helps religious groups do their jobs without having to spend half their time fending off government bureaucrats and ACLU lawyers who are more interested in fighting God than solving problems.

Goldsmith noted that churches were assets to neighborhoods, yet “Government has been hostile to these institutions—not neutral, but hostile.”

He told of his initial experience in spending some federal summer job money through faith-based organizations that reached out to neighborhood kids. When a state regulator complained that he had violated the terms of the agreement, Goldsmith expressed surprise, for that summer the money had actually been used for kids rather than stolen. But the regulator complained that “you allowed the young men and women in the program to participate in a voluntary prayer before lunch.”

Austin needs not only a commitment to tax reduction but something akin to the Front Porch Alliance, which in Indianapolis has worked as a civic switchboard to develop 800 church-civic partnerships. Indianapolis has seen big successes and also small but vital ones: Neighborhood churches have adopted 25 parks, and now graffiti is gone, litter is picked up and vacation Bible schools have replaced drug sales.

“Only hardened skeptics have trouble accepting that widespread belief in a Supreme Being improves the strength and health of our communities, ” Goldsmith says.

Austin should follow Rich Oppel's advice to cut the red tape. We should also encourage competition in city services and social programs. That way, we will not have to fight sprawl by prohibiting development; instead, many who have left Austin will eagerly return to one of the most vibrant cities in the country.

Marvin Olasky is a UT professor of journalism and a senior fellow at the Acton Institute.