Here in Phoenix, where I run a commercial janitorial service, we just endured a special election seeking to derail, as it were, a major expansion of our light rail system. Our current system, as I understand it, cannot even cover operating costs with ridership revenue, let alone make any payments on the huge debt for the initial construction. I supported the referendum to halt expansion; the voters, in their wisdom, voted to continue expansion - with even more debt.
Coincidentally, I just read "Strong Towns". Interesting work; resonates with much else of what I read. The author argues that prosperity is a bottom up proposition, not created from on high, and thus the prosperity of our towns and cities is more significant than (at least our view of) our society as a whole. Problem is, our cities seem destined to become Detroit.
Traditional cities grew incrementally: a few modest structures at a road junction or a river crossing (think a bar, general store, and house of ill repute - all the necessities). Should those establishments fail, the owners will absorb a small loss, salvage what 
they can, and move on. No state of federal bail-out required. Should they succeed, more business will join them, and various stages of housing as well. The early tents and shacks will be replaced by one story frame, and then (as community grows, so there is more business and the property is more valuable) by two story, and eventually brick or stone. And maybe a mid-rise. Housing follows the same trajectory. Mixed use is the rule (one shouldn't have to walk very far, to work or the store or the bar). So folks are on site 24/7, accomplishing Jane Jakob's "eyes on the street". Property tends to increase in value, and so is maintained and improved.
Current method (mostly since the advent of the auto culture) involves existing cities borrowing money, or giving tax credits, to spur development, wherever the current political elite desires. Money is borrowed to put in streets and water lines (or credits given to get developers to do the same), and the infrastructure is booked as "investment", though it costs tax dollars to maintain, and rarely brings in much profit. Zoning, building regulations and financing require the development to be built to "finished state" - the houses, for instance, are all move in ready, and can't be much improved beyond cosmetics (you can't add a 2-story apartment off the alley, for instance). All being built at the same time, they will all deteriorate at the same rate - new roofs needed, streets needing re-paving. Homeowners who can afford to, move into a new neighborhood; they sell their house to someone less affluent, who can afford major maintenance even less. And the city can't afford to repave the streets; it's got another new development to borrow for. So streets and houses deteriorate (they can't be much improved, and nothing stays the same). Most post-war suburbs fit the pattern. Think Fergusson, or here in Arizona, Phoenix's Maryvale.
The only way for the city to appear prosperous is to borrow more, to grow more. And to pretend to be prosperous by booking "investments". An investment that does not pay a reasonable return is, instead, a luxury - or a toy.
The insidious thing is that drawing development to the edges - the suburbs - pulls people and firms out of the downtown, where investment is already sunk - buildings and utilities - thus lowering value, and encouraging deterioration.
Traditional cities, conversely, are the product of small incremental changes - a home or building or improvement here and there, now and then. Small bets that, if they fail, don't cost either owner or society much. And you learn along the way. And adapt
In much of this, Joseph Tainter's "The Collapse of Complex Societies" resonates. Tainter examines a couple dozen societies that have collapsed over the millennia, from Rome to the Mayas to the Chaco Canyon Indian civilization over in New Mexico, then considers a few common reasons given for collapse - environmental degradation, barbarians at the gates and so on - and finds a couple or three examples of collapse attributable, as the proximate cause, to each. But he suggests a common underlying cause for all - economics. To oversimplify, as a society lives its life, it fixes things. Today's famine in a province is solved for tomorrow by building roads, and keeping on hand extra carts, to take grain from the plentiful to the starving province. A good thing. But each fix increases overhead (you must maintain the roads, and administer the food requisitioning, transport and distribution), and with more and more fixes, and overhead, eventually society turns from booking a profit to taking a loss. Enough losses and you have no strength to overcome the next insult, whether from barbarians or crop failure.
Resonates also with Mancur Olson's "The Rise and Decline of Nations": the longer a nation has been in business, the more "rent seekers" and stifling regulations it accumulates; eventually it stagnates. Only a really big shake-up (think, say, French Revolution) can cut it back to lean bone and muscle.
