What governments should and should not do is an old question. Adam Smith had his say. "Little else is requisite to carry a state to the highest degree of opulence from the lowest barbarism but peace, easy taxes, and a tolerable administration of justice: all the rest being brought about by the natural course of things." But this is hard because of the great urge by officials to be expansive -- and to get re-elected.
What about cities? Keep the streets safe, pick up the trash, remove the snow, patch the pavement, etc. Get the basics right. Do few things but do them well. But here again, the impulse is to do too many things -- and end up doing them badly. In the interests of "economic development," we gets sports stadia and and a thousand other such projects that feed the local corporatism.
Ray Avent is astute about these questions. He discusses modern American cities and ends this way: "And so one thing society might want to discuss is whether leaving land-use decisions mostly in the hands of a metropolitan area's local, rich elite is likely to produce the best outcomes or is maybe just a recipe for inefficiency and rent-seeking on a jaw-dropping scale." It's a simple idea but seemingly very hard to execute