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'Everybody wants to be where everyone is'

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Ryan Avent on the tautologies of urban economics:

The value in economically dynamic cities is the people that populate them. Where once, firms would pay high land prices to be near coal deposits or harbors, based on the economic advantages those amenities conferred, they now pay high land prices to be near talent. This yen to concentrate in particular areas has a number of dynamics. Firms want to be near customers and clients. Workers want to be near firms. Firms want to be near workers. Where there are lots of firms and workers, there will also be businesses serving those workers — in business and in the provision of consumption opportunities — and those services attract additional firms and workers. Everyone wants to be where everyone is, and it’s tough for anyone to go somewhere else because somewhere else is where people aren’t.

The result is an urban geography that’s very lumpy. People clump together, because there are gains to doing so.

Particular places do well because they're doing well, and the fact that they're already doing well helps them do, uh, well-er. I'm more sympathetic than Avent is to Alec MacGillis's takedown of Richard Florida, who's made millions convincing languishing cities that he's cracked the code to their revival even though there's no evidence he's done anything of the kind. But if you can separate Florida's desire to make a buck from his actual analysis, the underlying theory that the modern city lives and dies on talent rather than natural resources remains compelling.

Photo credit: Chip Chipman/Bloomberg.

By Ezra Klein  |  January 5, 2010; 1:30 PM ET
Categories:  Urban Policy  
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Comments

The value of urban settings is that they are as close as you can get to being in 2 places at once.

Posted by: bdballard | January 5, 2010 1:36 PM | Report abuse

*the underlying theory that the modern city lives and dies on talent rather than natural resources remains compelling.*

A point also made by Goto Dengo in the last act of Neal Stephenson's Cryptonomicon.

Posted by: constans | January 5, 2010 1:43 PM | Report abuse

Florida underplayed the role of universities, particularly major universities, in fostering vibrant communities. They aren't enough, clearly, but they are a factor that helps make an area tolerant, intellectually interesting and innovative, and therefore attractive to creative people.

Which is why undermining Califiornia's universities is one of Schwarzenegger's stupidest moves.

Posted by: Mimikatz | January 5, 2010 2:13 PM | Report abuse

The natural retort to this srticle belongs to the great American philosopher, Yogi Berra:
"Nobody goes there anymore. It's too crowded."

Posted by: gratis11 | January 5, 2010 2:36 PM | Report abuse

Mimikatz-

Think Schwartzenegger's just doing that for no good reason? Just yesterday, Ezra wrote a great deal on the budgetary problems of California, which go far deeper than you suggest.


Ezra-

This isn't a tautology. It would be if you were characterizing a single point in time perhaps, but if you're looking at development over time, it's a feedback loop.

Posted by: mdrecun | January 5, 2010 2:36 PM | Report abuse

As a Pittsburgh native, I kind of detest Richard Florida. I don't know what terrible experiences he had when he lived there, but it seemed like he went out of his way to use the city as the poster child for how all of America except for the coasts and maybe Chicago is destined to die. Now, as the piece to linked to notes, he's sort of backtracked and said Pittsburgh might be an exception now that their economy seems to be doing well.

As to the headline of your blog post, I think it might be true that *jobs* want to be where other jobs are - and in some ways that supports Florida's argument - but I'm not sure that's true of people. I live in DC now, and while it's great career-wise and I do have a lot of friends here, I miss not facing tough for everything from an apartment to a seat at the bar from obnoxious yuppies just like myself.

Posted by: bupkiss | January 5, 2010 2:39 PM | Report abuse

that should say "tough competition for everything..."

Posted by: bupkiss | January 5, 2010 2:40 PM | Report abuse

"Where once, firms would pay high land prices to be near coal deposits or harbors...they now pay high land prices to be near talent." – Ryan Avent

And what does the talent want to be near?

– Good schools

– Good universities

– Good parks and recreation

– Good public health and safety

– Good infrastructure

– Good environment

– and other good public goods of the kind the pure free market will grossly under provide, or inefficiently provide, due to long established in economics pure free market problems like externalities, free rider problems, natural monopoly, asymmetric information, etc.

There was a great line I read in an article I'm having trouble digging up now that Pat Brown in the 1960s rejected the argument that you had to slash taxes to bring in business. That's the way to Mississippiize your state. He would raise taxes and use the money to attract business and workers with world class schools, universities, infrastructure, parks, etc., and he made California a wondrous place.

So good smart governance is crucial, and this includes good rules. The Charter Cities idea of famed growth economist Paul Romer is very important. I strongly recommend his blog at:

http://chartercities.org/blog

Posted by: RichardHSerlin | January 5, 2010 2:49 PM | Report abuse

The other major downside of being where everyone else is is traffic. I could say that doesn't affect me because I live in the city and travel where I need to by transit or walking, but it does affect me, because a big reason I have to pay an arm and a leg to live in a place where I can do that is because the traffic elsewhere in the region is so horrendous. So I don't know if an increased "clumping" is our future, but if it is, there are major quality-of-life costs in traffic and unaffordable housing. Of course, this could be mitigated with better urban planning, but that doesn't always pan out in reality...

Posted by: bupkiss | January 5, 2010 2:55 PM | Report abuse

Cities are about necessity.

Once people are able, even the most lively and entertaining city places, like Manhattan, cannot hold many of those who are able to leave.

I love Manhattan, and consider it, at this point, a pleasant occasional spot. If I had to live there out of necessity, it would be a step down. Partly this is stage-of-life. Most people want to have families. Most families want to have family-quality-of-life aspects that are harder to make happen in vibrant city centers.

Posted by: HalHorvath | January 5, 2010 3:51 PM | Report abuse

Thanks, Richard Serlin, for answering mdrecun@2:36. Of course I know CA has budget problems--I live here. The point is that trying to remedy the problem by slashing the very things that makes the state a magnet for both business and creative people is stupid; it is eating your seed corn. If Schwarzenegger hadn't slashed the car tax when he came in, and then opposed any tax increases thereafter, we wouldn't be in this mess, or rather it would be manageable. But he doesn't understand what Pat Brown understood and he is Mississippiizing CA.

Posted by: Mimikatz | January 5, 2010 4:29 PM | Report abuse

Avent is saying nothing new. Read Sasia Sasken. Erudite and informative.

Posted by: ctown1 | January 5, 2010 9:07 PM | Report abuse

"The result is an urban geography that’s very lumpy. People clump together, because there are gains to doing so."

This is a completely reasonable argument but for some reason that I believe still hasn't been fully explained, Americans don't function that way. They, at least a significant portion of them, insist on a settlement geography that is as un-lumpy as possible. It's called suburbia and it has created its own vicious feedback loops undermining the value of clumping together. The result is a high degree of inefficiency.

Posted by: carbonneutral | January 7, 2010 1:42 AM | Report abuse

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