Over half of the world’s population now lives in urban areas, and that is expected to swell to 70 percent by 2050.World urbanization is expected to reach 70 percent by 2050

This was the backdrop for this year’s World Habitat Day, which falls on the first Monday of October of every year to bring attention to the needs of inadequate shelter, unsustainable development, and other challenges faced by cities and towns around the globe. This year’s activities were co-hosted by the United States for the first time, featuring kick-off remarks by HUD Secretary Donovan, U.N. Ambassador Susan Rice, and even Jon Bon Jovi.

But as one forum participant noted, the World Habitat Day theme seemed too glum. Why is urbanization couched as a problem?

The folks at IBM, on the other hand, have seized this statistic with optimism and fervor. For the company and their business partners and public allies, rapid urbanization is a sign of progress and enormous possibilities. The future is cities. You may have seen their slick, Benetton-like ads filled with diversity and dynamism, calling for smart solutions to a smarter planet or smarter cities.

At a gathering of over 500 executives and government leaders last week in New York, IBM Chairman and CEO Sam Palmisano described the power of data, interactive technology, and digital intelligence in helping cities work better--manage traffic congestion, combat crime, build more effective water resource management systems, and monitor and deploy energy more efficiently. Mayor Bloomberg reinforced how data and technology has enabled him to improve city services and programs, such as his 311 hotline and a new handheld device for all city firefighters so they can run into a blaze (while everyone else is running out), armed with critical building statistics that will keep them safe.

But one message seemed to ring loud at the gathering: The federal government has a long way to go to catch up to the innovation of the private sector and local leaders.

Melody Barnes, the head of the White House Domestic Policy Council, did a laudable job in describing the Obama administration’s commitment to cities and metropolitan areas. And the administration’s new initiatives on renewal and early signals toward governance reform, obviously in their early stages, are to be applauded.

But overall, her list of new federal investments--$1.5 billion in grants for intermodal transportation, $5 billion for Race to the Top education funds—are table scraps in comparison to the size, scale, and transformative effect of the private investment in our cities.

While these are bold programs by federal standards, federal policies should stay focused on what matters most. They must help cities and metro areas tap their assets and adapt to future growth (or decline) by catalyzing and empowering local and private sector innovation. 

The CEOs at the meeting articulated it best. Government should not provide the answers but instead set broad goals and standards and then let the private sector act. It should then be more trusting and flexible, rather than be prescriptive. Yet, it should simultaneously hold private sector leaders accountable, through enforcement and other mechanisms. And the federal government must facilitate data flow to empower smart solutions and inform progress on performance and outcomes.

This is the same mantra (and frustration) argued by city and metropolitan leaders around the country.

While it is no doubt much harder to steer the federal Titanic to a more goal-oriented, data-driven, and flexible operation, it is long overdue. It also happens to be more fiscally realistic and impactful in today’s cash-strapped times. Let’s hope our federal leaders heed the call so we can together, smartly, embrace our urban future.