The Coming American City

In business, one seeks to establish a sustainable long-term competitive advantage — something that allows you to outperform or outlast others.

Cities provide multiple competitive benefits: their compactness directly affects time, energy, and resource efficiency. In addition, cities generate new ideas and cultural experiences by bringing together a critical mass of diverse people.

While technology has certainly made it possible for people to work from just about anywhere, this is really only useful for executing work which has already been broadly defined; when it comes to generating new ideas nothing beats face-to-face interaction. It is simply a higher-bandwidth form of communication, and ideation requires trust and some level of long-term interaction.

Car culture is inefficient and runs counter to a lifestyle designed primarily around face-to-face interaction and ideation. Idea-based industries (advertising, banking, technology) have long flourished in urban environments — the kind in which walking, bicycling, and public transportation are the most effective modes of transport.

The very idea of parking is a ridiculous and outdated concept. The notion that we should devote land, tie-up business resources in this feudal enterprise, and perhaps most ridiculously spend time looking for parking spots should convince anyone that this arrangement is not sustainable.

The strategic competitive advantages of cities are clear and incontrovertible. But if cities are so great, why are ours in such terrible shape?

Take Cleveland, for Example…

Most arguments against the benefits of cities tend towards the “Yeah, but” flavor — citing examples of how specific cities have failed. Such arguments are more informed by historical economics than by rational analysis of the present or future.

The argument in support of cities is deductive: inefficiency costs money, cities are more efficient, therefore cities have an advantage. The arguments used against cities are inductive: our cities have not worked well, therefore no cities can ever work well. One possibly valid reason to doubt the deductive argument is the very fact that so many people believe the inductive argument to be valid: the deductive argument can be invalidated only if the presumed efficiency never exists, which could happen if a critical mass of people does not accrue to realize it. Thus, the only thing in the way of a more efficient American future is our own doubt that it is achievable.

Here’s how Americans have been duped about the nature of cities, and how we can overcome our 20th Century biases to realize the sustainable competitive advantage that awaits us in our cities.

Industry

Industrial America was not a particularly pleasant place. Cities were crowded with workers, factories, coal smoke, animal waste, polluted waterways, and with the possible exception of New York’s Central Park were not designed environments in any way. It is quite understandable that people of means would have wanted to separate themselves from “common workers” and remove themselves to land surrounding the city. After all, land was the ostensible indicator of wealth for generations. Speaking generally, city centers were thus for people of lesser wealth.

Immigration

America’s great industrial centers required a vast supply of workers, and they came from across the globe. Each new wave depressed wages, which made them seem less desirable than the last, and clashing value systems created a constant xenophobic revulsion that made for de-facto segregated neighborhoods. Not wanting to risk these vagaries or witness these shifts, many opted for less dense, more stable environments.

Unions

Large numbers of low-wage workers densely packed in urban centers could be readily organized for collective bargaining. Henry Ford, in particular, hated this idea, not because he opposed the interests of those being organized, but because he hated the idea of someone profiting from those organizing activities. Ford was deeply anti-Semitic and he ascribed everything from banking to labor organizing as an evil influence of the Jew on the pastoral idea of the progress of industry.

As much as anyone else, Henry Ford invented the suburb and he did it to prevent workers from becoming organized. The Model T, and the suburban hierarchy it enabled, were not only the products of his business — they were a design element in the industrial, suburban future that Ford helped to create.

Industrial Consolidation

It is common to throw around words like “industrial decline” and to talk about the “rust-belt”, but the fact is that the post-war period was marked more by prosperity and consolidation than any kind of “decline.”

The capitalist system was just doing what it is supposed to do: create value for shareholders by eliminating inefficiency, and in many cases firms followed Ford’s example by relocating to suburban locations where land was cheaper and unions could be more readily controlled.

Reflexivity

Reflexivity is the idea that market participants can affect a market just by observing it. For example, a currency trader with an established track record can move a currency merely by stating an intention to take a position. In the same way, cyclical disinvestment in cities was launched by corporations who began to systematically disinvest in cities as part of their consolidations.

Systematic disinvestment in downtown areas by corporations led to a cycle of negative effects, almost all of which are what people mean when they talk about our “urban ills.” But as intractable as these problems seem, they do not negate the deductive argument in favor of urban environment. Instead, the argument is more along the lines of Yogi Berra’s, “No one goes there anymore — it’s too crowded,” which is both fallacious and clearly informed primarily by human perception.

Feudal Equilibrium

Reflexive disinvestment has affected politics in particular. Populations in many American cities are off 40% or more from their historical peaks (around 1950). Voter engagement in municipal elections has been abysmal; city officials are often elected on turnout under 25% and by margins of just a few thousand votes.

As a result, city politics often pulls in people more interested in using these positions for their own personal gain than for the greater good. However, there is a catch: if the abuses are too egregious, even more people will leave the cities and the parasite will kill its host. And so we end up with a kind of Peter principle of public service: each post is filled by someone competent enough to survive minimal public scrutiny and still get away with whatever shenanigans is motivating them. (Obviously this cannot be a fair characterization of every individual, but it is descriptive of the system as a whole.)

The political power establishment thus wishes to prolong this state of affairs; attracting large numbers of new, middle class voters will assuredly end their reign. So they do not advocate this; instead of implementing designs that would attract real investment, they talk about “getting tough on crime” and “fixing our schools,” and sometimes they genuinely believe they can address these problems. However, these issues are just final effects of reflexive disinvestment; fix that and crime and schools will fix themselves.

American Exceptionalism

Americans are too often blind to lessons from other parts of the world. Europeans are too effete and socialistic; Asians are too “foreign”. And everybody else, with few exceptions, is the enemy. We are not terribly good at stealing ideas from elsewhere, and we tend to over-value our own experiences.

Detroit’s current failures do not mean that cities are inherently ungovernable or inefficient.  Tokyo, Berlin, Paris, London, Shanghai, Seoul and countless others serve as examples of livable modern cities that are being productively adapted with 21st century designs. Within the US, a few cities like Portland offer hints at what can be.

Still, neither examples (nor counterexamples) affect the deductive argument. But when considering examples, Americans are biased towards negative American examples over positive international ones.

If one is going to try to argue against a deductive argument using an inductive one, it could at least be complete and balanced.

“But I Like the Suburbs…”

Thankfully, everyone is different. And often I hear people say, “But I like living in the suburbs.” Or they point out that I (or others) did or do. [Full disclosure: I have lived in the suburbs, worked in the suburbs and the city, went to college in the city when I was younger, and just bought a house in the city because I think now is a good time to make that investment; I am also tired of spending time driving.]

But here again it is inappropriate to try to use single individual examples to invalidate the general deductive argument. I am also not making a judgment about the relative value of the city or the suburbs. Too often people feel that their lifestyle is being threatened, and that is not the point of this argument. The only relevant issues are economic: if someone wishes to live in the suburbs, they should expect to pay for it with time, fuel cost, relative isolation, and a potential long-term political marginalization.

And the fact is that they will probably be less happy. A study recently showed that commuting is the single-most injurious activity to happiness, while having dinner with friends created the most happiness.

Right now, we are subsidizing the suburbs with fuel costs which do not account for environmental externalities. There is no reason to expect this to continue; however even if it does, energy will never be free. Suburbs are a bad economic bet for this reason alone.

Race and Partisan Politics

These two issues are so complex and divisive, I will refrain from discussing them here, despite the fact that I have considered them both in great detail. Each deserves a post (or a volume of books) in its own right.

However it should be said: race is not important to the deductive argument, and neither is partisan politics. Positive, reflexive investment in cities will make them efficient, productive, and diverse; this is a centrist idea that should make both the left and the right happy. Politics and race are both issues that have all-too often been hijacked by people looking to promote their own interests, and Americans have been historically unable to perceive any issue free of these lenses.

Placing Bets on the Future

The long-term strategic advantage that cities can provide (specifically through time, energy, and resource efficiency) is not made any less real by our past failures; America’s cities are indisputably its best hope for the future. The natural evolution of the American economy tends towards higher-order activity, and will ultimately settle on creativity and design at its apex. The longer we wait to begin a cycle of positive, reflexive investment in our cities, the longer we stall our country’s competitiveness and our ability to innovate.

We must only convince ourselves that a more efficient and livable future is possible; the rest will follow.