i don't think these are easy problems that can be solved just by the city being "less wasteful" and stopping doing stupid things, which seems to be the common response to the problems.
Then Reagan happened.
Then Reagan happened.
No, the ACLU happened. Because of their efforts, it's much more difficult today to involuntarily commit someone to an institution who thinks that aliens are controlling their digestive system.
That's not to say that state governments weren't happy to empty out and shut down their mental institutions, however.