Urbanization has been driven more by the positive benefits of highly networked social groups that it allows for.
After my post two days ago about urbanization—i.e., the general desire to make big cities even bigger—I ended up in a Twitter conversation with David Schleicher that started getting into the weeds of land-use rules and the economic benefits of building more housing in large cities. But after a few back-and-forth tweets, I realized that I owed everyone a clear explanation of what my real issue with the urbanists is. It’s something I mentioned on Thursday, but it’s worth pulling it out and spotlighting it on its own.
It’s true that in my previous posts about urbanization I’ve talked about the nuts and bolts of the urbanist arguments and I’ve illustrated many of my points with charts. But all of this stuff is secondary to me. It’s there to explain where my viewpoint comes from and to give readers a fair chance to assess what’s motivating me. None of it is meant to be a precision review of the literature, just a brief layman’s summary of some of the main threads of the urbanist case. I want everything to be in the right ballpark, but that’s all.
The key driver for urbanization, IMHO, stems from the network effects of human populations. A wide range of factors based on these networks, such as innovation, patents, disruptive tech, increase faster than population growth.
ß greater than 1 means that the trait scales faster than population, equal to 1 means it scales with the population and less than one means it scales slower than the population. ß of about 1.12 means that every time the population goes up 2-fold, that trait goes up by 2.24-fold.
This has huge effects as cities and their social networks get larger. Here is an example of the math, using total wages with a ß of 1.12. The math follows ln(y)=1.12ln)x)
Say everyone in an un-networked condition in a rural area gets paid $1. Two un-networked people will have total wages of say $2, while a networked pair in a 2 person city will have total wages of $2.17. 10 un-networked will have wages of $10 while a networked group will have total wages of $13.18.
A hundred separate people would have total wages of $100 but together in a small town this would be $174. This means that in a city of a million people the expected average wage would be about $5.25, 5.25 times higher than the wage for an individual working by themselves in a rural area. And about double what a town of 1000 would see.
The same happens with innovation, patents GDP and other markers of change and disruption. They scale faster than population in cities. All things that have produced successful societies for centuries.
I think this has been the inherent drive towards larger cities at least over the last 300 years or so. Today, more than 50% of the world population lives in urban environments.It seems to me that the economic benefits derived from the network effects would provide positive selective pressure toward larger cities.
But we are now approaching the limits that such highly networked cities can sustain. Historically, for these benefits to be useful, people had to live close to each other. But not anymore.
Luckily, we have the Internet which can allow some of the positive benefits of networking without needing everyone collocated in one city. So I expect that the drive to urbanization will ameliorate some as we see more of this.
If we do things properly.
Image: dan Chmill