Cities as Engines of Productivity and Bad Public Policy

I recently read Glaeser's Triumph of the City, Yglesias's The Rent is too High, and Avent's The Gated City. All three books hum along a similar line; they point to cities being the wealth and productivity engines of civilization and all are concerned about discriminatory policies against cities and urbanization. The argument is that we are hurting wealth, productivity, innovation and prosperity through bad policies at the local and national level.

Glaeser calls the city humanity's most important innovation. from historical times to modern history the city has been where people have gathered to create, produce and consume. While we have the modern view of the romantic countryside with its happy peasants and simplified life, history points to rural people moving to cities for a better life and a greater chance in partaking in a nation's prosperity. The current modernization of China and India are good examples of this.

Glaeser has genuine and expressive love the city as a place. He points to Bangalore as one of the great cities despite it seeming inequalities as he sees hope for all the rural poor that have moved there in order to improve their lives.

Cities don't make people poor; they attract poor people. Te flow of less advantaged people into cities from Rio to Rotterdam demonstrates urban strength, not weakness. ... Poor people constantly come to New York and Sao Paulo and Mumbai in search of something better, a fact of urban life that should be celebrated.

and;

Urban poverty should be judged no relative to urban wealth but relative to rural poverty. The shanty towns of Rio de Janeiro may look terrible when compared to a prosperous Chicago suburb, but poverty rates in Rio are far lower than in Brazil's rural north east. The poor have no way to get rich quick, but they can choose between cities and the countryside, and many of them sensibly choose cities.

While Glaeser focuses on modern policy that anti-urban, Yglesias and Avent focus on these aspects of public policy more closely. Avent's thesis is that American prosperity is being hurt by the housing policies of the cities. People are moving to the sun-belt cities because housing is cheaper and a better quality of life can be obtained.

I am one of these people. I moved from Washington DC to Phoenix for the reason I can get a high salary in Phoenix but don't have to deal with the high cost of housing that Washington DC and North Virginia have. Avent writes:

A high salary in a good job is important. But if a household finds that its income is too low to buy a comfortable home in a good neighborhood within a manageable commuting distance, well, what is the point of earning more money? That's the calculation over half a million residents of the [San Francisco] Bay Area made in the 2000s.

Yglesias has the same argument but focuses more on local policies in cities and all the manner of things which stop development of new housing stock. He writes:

Progressives and urbanists need to move beyond their romance with central planning and get over their distate for business and developers. Conservatives need to take their own ideas about economics more seriously and stop seeing all proposals for change through a lens of paranoia and resentment.

Last, politicians of both parties who like to complain about regulation and red tape ought to spend some time looking at the specific area of the economy where red tape and regulation are most prevalent.

Avent and Yglesias argue that location is relevant again. The higher paid service sector jobs are in cities. The higher paid information work is in cities as well. Additionally network and productivity effects are at work in cities which leads to high salaries in total for all areas. However policies are actively discriminating against these processes and as Avent and Yglesias argue, is ultimately leading to less than optimal outcomes.
Permalink, Cities as Engines of Productivity and Bad Public Policy, Apr 2012, cam

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