Why does it seem that, with one conspicuous exception, the entire U.S. economy is booming thanks to what economists call productivity and average folk refer to as working smarter, not harder.

You see the evidence almost everywhere, except in government. Phone calls that Sprint used to advertise for a dime are now a nickel. This year's computer is half the price and twice the speed of last year's model.

According to Fed Chairman Alan Greenspan, the economy saw productivity increases of about 1 percent annually in the 1980s; then grew to 2 percent by the mid-'90s; and hit 2.5 percent last year.

As an exercise in wishful thinking, come back with me almost eight years and imagine Ed Rendell promising a "productivity bonus" for all Philadelphia taxpayers during his eight years in office. Had Rendell matched the nation's overall productivity performance, he would have cut his first $2.3 billion budget by about 2 percentage points and delivered an additional 2 percent cut every year thereafter.

Had he become "Mr. Two Percent", Mayor Rendell would have done more than merely shown that governments can be productive. By delivering a 2 percent reduction in the city budget, every year, Rendell's final budget would have come in at $1.980 billion rather than the $2.716 billion he actually proposed.

Yes, that's a $736 million difference. To put that in context, the city will collect about $1.5 billion in revenue from the wage, business privilege and real-estate taxes, combined.

Had Rendell promised, and delivered, a 2 percent productivity cut in the city budget for every year of his two terms, he could have cut all three of those dreaded taxes in half.

But that, of course, didn't happen, and many will suggest it's a pipe dream to suggest that Philadelphia, or any American city for that matter, can accomplish such miracles.

Yet isn't that pessimistic attitude precisely why most American cities are struggling while most American companies are enjoying an unprecedented, productivity-driven boom? We believe it can't happen, at least not in government, and therefore it doesn't.

And that pessimism, often accompanied by an overly cynical press corps, ends up producing a self-defeating cycle. We can't, therefore we shouldn't even try, and thus we end up losing another 150,000 residents even as America's Mayor was trying to do his best.

Fortunately for our city, Philadelphia is blessed this year with two exceptionally smart mayoral candidates, John Street and Sam Katz.

Both worked with Ed Rendell to trim city government, and both have watched while 150,000 more people fled the city during Rendell's tenure.

Obviously, Rendell's efforts have not been enough to convince those who have an option to stay rather than leave.

A far more aggressive response is needed, and both Street and Katz are capable of delivering it.

Yet both are probably scared of the initial reaction if they propose something as ambitious as the Two Percent Solution. They shouldn't be.

As the proudly liberal Democratic Mayor of Milwaukee, John Norquist, says in his book "The Wealth of Cities": "I learned that cutting spending need not be painful."

"Of all the myths government perpetuates, this is perhaps the biggest.

"The truth is, government is rife with entire systems, entire ways of going about the business of governing, that encourage needless spending and bad service.

"Reforming those systems enables government to help people rather than hurt them. Such reform relieves, rather than instills, pain."

Yes, that is contrary to conventional wisdom.

But it is also the truth as well as the only rationale needed for either Street or Katz to embrace the Two Percent Solution and, thereby, the goal of cutting Philadelphia's major taxes in half.