This week edition of The Economist has a very stimulating briefing on New York and the impact of the Corona. Cities are under immense pressure, as they are by definition and purpose places where people are densely packed and crowd together. The article cites an intriguing observation by the Santa Fé physicist Geoffrey West: The same mechanisms that explain the productivity and creativity of cities are the ones that explain the epidemiological dynamics of the virus. In simplest terms: Both ideas and the Corona spread by the same social network dynamics.
Indeed, Sana Fé researchers have shown that the superlinear growth dynamics, or in economics terms, the increasing returns to scales of cities result from the fact that social connectivity operates differently from physical mechanism that work, say, in infrastructure utilization, implying that in investing physically into cities, societies gain socially. Another scholar cited in the article, Edward Glaeser, in 2011 published a widely read book, ‘The Triumph of the City’ which details these mechanisms, which economists call ‘positive externalities’: In New Growth Theory, as employed in spatial economics, the positive externalities explain the statistical fact that cities overwhelmingly drive the growth of national economies. However, the Corona makes us aware that since the inception of urban growth, especially during industrialization, this meant that the positive mechanisms competed against the mechanisms of disease, epidemics, and social disorder: For most of the 19th century, cities were drivers of growth, but also very dangerous places to live in. This dilemma was resolved by the massive investments into urban infrastructure, such as sewage systems, which made cities more healthy places. The Corona challenges this assumption: As I argued in the previous blog post, we are in a race between technosphere evolution and virus evolution where relative velocities count (what I call ‘Eigenzeiten’).
As argued by The Economist, if this race continues for a longer time, this poses an existential threat to cities. Just take the New York metro: It is close to bankruptcy, and how can it survive economically, if people continue shunning it, even if the governor proudly presents disinfected and clean salons? But the alternative is bleak: Even more cars and congestion? Well, let people work elsewhere and work on the distance! But within relatively short time, that will erode the economic foundations of much what defines a city, such as the entire service industry that caters to the people who crowd there for working together. The longer the race with the Corona will last, the higher the probability that crucial thresholds will be passed that define the economic sustainability of large-scale urban agglomerations. And never forget: The Corona is not the last word, there are possible mutants and other viruses that might come next.
Environmentalists all over the world noticed that the lockdown had beneficial effects on the environment and on CO2 emissions. That raises the question whether we might use this as an opportunity to radically change the pattern of human settlement. Economists will not accept this as a reasonable option, pointing towards the superior economic performance of cities. But there are also new ideas. One is the important proposal by John Collier, a very distinguished British development economist, in his recent book. Collier noticed that the argument on positive externalities also means that the performance data are explained by an implicit subsidy that urban dwellers enjoy: The productivity of cities is not mainly determined by the individual performances of its inhabitants, but by the collective sharing of being and working together. Collier therefore argues that this must be internalized via a tax differential, i.e. a higher income tax on urban dwellers, which can be used to finance more balanced spatial development.
One can further support such an argument by adding eco-engineering aspects. In my view, a most important point has been made by Vaclav Smil in his book on power density. Economists like Glaeser always argue that concentrating people spatially in high rise buildings is the most efficient way to generate the positive externalities of their interaction and is also efficient in energetic terms. But Smil shows that there is the problem to align the spatial power densities in production and consumption of energy: In cities, energy flow per spatial unit is extremely dense, whereas energy density of renewables is low, i.e. renewables such as wind and solar energy require much space, which explains the need for storage, long-distance transmission and so on to feed the highly concentrated urban places. Evidently, another solution is to move to an entirely different settlement pattern: decentralized energy production and decentralized consumption in spatially dispersed human settlements and dwellings. Renewables and social distancing are complements!
Let the megacity die! The Corona offers the chance to fundamentally rethink a global trend, namely the growing concentration of people in cities. The eminent Chinese sociologist Fei Xiaotong suggested in the 1980s that China should follow her developmental track in Imperial times, i.e. strengthening the vast network of townships, and containing the growth of large cities. Today, China is underway to develop the largest and densest mega-urban agglomerations in the world. Edward Glaeser counts this as another ‘triumph of the city’. But perhaps Fei was right: Both the virus and the climate challenge might motivate to give up the city as beacon of modern economic growth.