Post-urban Economics
Tags: Future, Economics, Urban Planning

The concept of a city, of a large group of people living in close proximity to exchange value, has played an essential role in human development from the earliest recorded history to the present era. How desirable a city is to live in is one of the most fundamental factors powering civilization. Cities still prominently contribute to human development today. But it is not at all clear our conception of what a city is, and the major metropolitan areas of the world, will continue to play such a primary role in the future. The proliferation of technology may disrupt the natural logic that keeps cities together, at least in the Western world. The death of a city-centric model of civilization will represent something new, and its effects are poorly understood.

People have always faced problems that they lacked the proper skills for solving, so knowing others who had these skills and living close to them was important. When one specific problem was solved in a given location, it was more likely that the same problem would be solved again in that same location. Thus, mounds of information collected on sites that became cities. Put in another way, by Brendan O’Flaherty in City Economics, cities provided a natural dominance in services generated at scale. It is no surprise given this structure, that city space manifested rationality throughout its existence. This rationality is at times literally etched into us, as for example, with numerous English-derivative family names like Fletcher, Thatcher, and Chapman, marking the urbanization of the medieval world in the 12th and 13th centuries.

As rationality is at the core to city formation, so also is it when cities decline or when people leave its immediate area. And as with any rational behavior, people who leave a city will attempt to balance competing priorities, say, avoiding congestion with length of commute, or public safety with income earning potential. When balancing between these priorities, and the relative geographic distances required for each, it becomes easier to interpret the functional nature of what a suburb is and its relation to a host city. Suburbs are the built environment of optimizers who need the city to collect income, but don’t want perceived city problems. The first American suburbs grew from commuter traffic around the Boston and New York areas with the advent of regular rail traffic to and from the cities. With the growth of suburbs and a shift of population in a metropolitan area there came a tipping of the scales in terms of priorities of an electorate, with the relative realignment of freedoms and costs to transact in an area: everything from property taxes, to the cost and distribution of school funding, to development incentives. The suburbs grew in power.

Peoples’ desire to move into cities has see-sawed over the last few decades. From the early 2000s forward, more people were relocating to cities across the country. In 2020, the balance seems to be shifting in favor of the suburbs, which, according to one recent survey, were found by respondents to be substantially preferable to city life.

Although the move from cities to suburbs highlights the rational behavior of individuals substituting out of perceived costs for perceived gains, an interesting and converse process is happening in the suburbs to which these people move. The suburbs are starting to resemble cities as metropolitan areas become denser in relation to the suburbs and as political heft centers back into cities (evident with present debates on zoning, taxation, and public services).

Unlike previously, suburban communities are now less dependent on being physically present in an urban center to collect pay. With more technology, there is proportionately less need to keep as close to a city as before. And, with an estimated 3 or 4-fold rise in the number of people working remotely, according to McKinsey, this process will increase, and profoundly influence the economic and political ecology of major metropolitan areas.

If the suburbs no longer need the cities, then it is conceivable they will become more geographically disconnected from them.

As more large urban centers risk losing population from this process, a longer gradient of population density between city and countryside might open up a new layer of rationalizing space across the entire country, including in areas like the upper Mid-West that currently lack significant population. Several years before the coronavirus, we started seeing evidence for this with the fast growing settlement rates of Idaho and Nevada, with 73% of Idaho’s urbanization stemming from outside population flow.

Will such a departure unseat the economic fundamentals of large metropolitan areas? It is at least a possibility, given the fact that in cities like NY, 17% of the population pay 80% of the taxes. The logic of migrating to cities for work opportunities may invert, where urban dwellers move to geographically spread out regions for new opportunities.

As the new lines of the economy are rationalized on information, not geographic proximity, circumstantial factors that, say, lead to uniform settlement of the upper Mid-West and New England may find them with more in common than their closest metropolitan neighbors. The result could be a redrawing of a functional economic and political framework across America, contrasting that presumed by the founding fathers, where a state’s economy featured a harmonious arrangement between city and countryside. Political localism and economic localism may become two different and competing concepts. The long-lived rationality of the urban metropole may become undone and the idea of a large city may be replaced.