Too bad that it often requires a crisis to enable reform. The big cities survive to the extent that innovation is possible in the small cities that make up their suburbs. Exit happens when voice loses its appeal.
The world is changing too fast for conventional big-city interest-group-driven government to cope. Those who dream of a resurgence of the big cities (see this in The Atlantic) do not pay adequate attention to big city governance.
John L. Chapman cites the privatization of public services in Indianapolis. The story is encouraging. Flexibility and the capacity to innovate are necessary for survival. To the extent that politics as usual moves in the other direction, it is poison.
I just heard Don Shoup deliver his paper "Zoning for Land Assembly and Urban Redevelopment" (at WRSA in Kona, forthcoming in the Journal of Public Education and Research). He cites innovators in the City of Simi Valley, a suburb of Los Angeles. They found that hold-outs in land assembly need not invite eminent domain condemnation. Rather, the City people hit on the idea of offering higher density zoning on larger sites. More profits became available to overcome transactions costs. Land assembly worked on a voluntary basis.