Conventional wisdom on cities. Not.

The subtitle of , by Paul Cheshire, Max Nathan and Henry Overman, is “Challenging conventional policy wisdom.” This surprised me: these are eminent economists and Henry Overman runs the newish government-funded What Works Centre for Local Economic Growth, with a specific policy advice remit. In what way are these authors ‘challengers’?

[amazon_image id=”B00XIVBUZC” link=”true” target=”_blank” size=”medium” ]Urban Economics and Urban Policy: Challenging Conventional Policy Wisdom by Paul C. Cheshire, Max Nathan, Henry G. Overman (2014) Hardcover[/amazon_image]

Luckily, the final chapter of this excellent book answers that question. The conventional wisdom consists of the kind of “place-based” policies so much loved by local governments over the decades. The book: “Argues that focusing public expenditure on ‘turning around’ the economies of declining places has had little success; and specifically, many policy interventions have had little economic effect.” It argues that the evaluation of disparities between places should anyway take account of cost differences as well as nominal wages, and should consider too non-wage and non-monetary amenities. But in any case, disparities between people are more important than geographic ones – people, not places – although people do sort themselves with similar people into specific locations. Thus the skills of individuals matter – places don’t have skills – so the challenge is attracting and retaining the individuals. Or, conversely, enabling people to move away from declining places.

A separate, powerful strand of argument concerns housing supply and land use in general. The book argues that land-use is an under-appreciated factor in differences in urban performance. This is tied in to the argument that decline must be made possible: “We would argue for a greater focus on encouraging labour market activity and removing barriers to mobility. In practice, this will require a better understanding of the three-way interaction between the benefit system and the housing and labour markets, and the expansion of housing supply and reduction of costs of living in relatively successful places.”

The book does have a brief chapter on the city devolution process under way now in the UK, but it’s fair to say that the authors are unimpressed by the standard range of urban policies – ‘cluster’ policies, infrastructure investment, area-based initiatives and so on. While sharing their sentiment about some of the guff produced about localism (and there’s a lot of it), I think they are too sceptical about the potential. Consider for example the argument made in Chapter 8 that infrastructure investment does not deliver on regional ‘rebalancing’ and could be counterproductive; and look at the map below showing the way the UK’s motorways were planned (discovered courtesy of Tom Cheshire, @chesh):

All motorways lead to London

The railways post-Beeching cuts have the same radial pattern around London, as do the big internet pipes. Is it really any surprise at all that the UK is such an unusually capital city-centric economy?

This is a terrific book that summarises the state of economic knowledge about urban economies but – as it also acknowledges – there is much we don’t understand. Why do some declining places in fact achieve a turnaround? Why do people not leave poor locations even when they apparently can? Why do policy makers insist on trying over and over again things that don’t work? Answers will surely involve neighbouring social sciences as well as economics. The momentum toward city devolution in the UK, limited as it is, mean that these are pressing questions, and a lot of people will be piling in to offer answers. Although I don’t share the policy scepticism to the degree it is expressed here, provides an invaluable foundation for the debate ahead.

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Railways and plutocrats

This is a bit off-topic i.e. isn’t an economics book, but I enjoyed Iain Sinclair’s latest, . It’s an absolutely characteristic dyspeptic take on what’s happening in the unfashionable parts of London, the places linked by the tarted-up, more-or-less linked-up overground rail lines where Londoners can afford to live, if they’re lucky, pushed ever-further out by the tide of foreign plutocrat money drowning the housing market, leaving swathes of the city deserted because of the absentee landlords.

[amazon_image id=”024114695X” link=”true” target=”_blank” size=”medium” ]London Overground: A Day’s Walk Around the Ginger Line[/amazon_image]

Sinclair’s work is an acquired taste but I love it. This is not one of his best – not up to standard –  but it does feature one of my favourite things, a Victorian-built railway. Sinclair writes of the “functional elegance of Victorian arches” – indeed. And then there’s the anger, the anger, about the money: “Dirty money was never so bright, so blatant. So protected by the politics of no-nothing quiescence.” This week the Chancellor of the Exchequer said we should stop the banker-bashing; but I’m with the Governor of the Bank of England, saying there had been ‘ethical drift’, and the time really has come for the money people to regain their social licence to operate.

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Heatwave

There are terrible stories emerging from India, suffering an intense heatwave – such as this one from Vice News: Poor people are most affected as hundreds die in Indian heatwave. The story links to a study reporting an increase in the number of urban heatwaves over the period 1970-2012; and now more than half of us live in cities.

Reading these reminded me of Eric Klinenberg’s amazing 2002 book . The first warning of impending heatwave was broadcast on Wednesday 12 July 1995; the next day the temperature soared to 106F and the ‘heat index’ to 126F. Roads buckled, trains derailed, city workers sprayed the bridges with water to maintain the structures. People opened fire hydrants and water pressure around the city fell. “The body’s  defenses can only take about 48 hours of uninterrupted exposure to such heat before they break down,” Klinenberg writes in the opening chapter. So from the Friday many people started falling ill. The heatwave lasted until 20 July. There were so many deaths (over 700) that the city had to store bodies in refrigerated trucks in the parking lot of the morgue.

[amazon_image id=”0226443221″ link=”true” target=”_blank” size=”medium” ]Heat Wave: A Social Autopsy of Disaster in Chicago (Illinois)[/amazon_image]

Of course, extreme weather is a natural disaster, but its incidence is uneven because of social, economic and cultural structures. Klinenberg studied the ‘excess’ (i.e. above normal for the place and season) mortality rate in different parts of the city. Not surprisingly, poor people suffered the highest ‘excess death’ rate. The eye-opening thing about the research, though, is that some low income groups had a far worse experience than others. Matching districts for employment rates and average incomes, there was a higher death rate among African-American than among Hispanic people. Because the city authorities responded too slowly, because public services were poorly equipped, vulnerable people such as the elderly and those living alone had only their families and neighbours to rely on, and those social structures were at the time more intact among the recent Hispanic immigrants. Of the 700 who died over those few days, 41 ended up unclaimed by any relatives.

“This book has shown that extreme exogenous forces such as climate have become so disastrous partly because the emerging isolation and privatization, the extreme social and economic inequalities, and the concentrated zones of affluence and poverty in contemporary cities create hazards for vulnerable residents in all seasons,” he writes. None of which has changed anywhere in the 12 years since the book was published. He identifies as causes for concern the increase in the number of people living alone, growing spatial inequality separating social groups, the huge social distance between city governments and the people they serve, and the fact that we have government by PR with few mechanisms for holding the authorities to account on results.

The book ends with a plea to understand the consequences of natural disasters as societal events. That lesson is hardly ever put into practice, unfortunately.

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Grass roots

There’s an interesting evaluation of Jane Jacobs in The Architectural Review, arguing that her fabulous book  misses the real target in attacking ‘planners’ instead of developers, and discounting the scope for state involvement. This made conservatives fond of her, essay author Sharon Zukin argues. But it concludes warmly: “Jacobs’s challenge to maintain the authenticity of urban life still confronts the fear of difference and the hubris of modernising ambition. At a time in which local shopping streets are the target of attacks against a broader alienation, we urgently need to connect her concern with economic development and urban design to our unsettled social condition.”

[amazon_image id=”067974195X” link=”true” target=”_blank” size=”medium” ]The Death and Life of Great American Cities (Vintage)[/amazon_image]

The essay cites the famous ‘sidewalk ballet’ in the second chapter in :

“Under the seeming disorder of the old city, wherever the old city is working successfully, is a marvelous order for maintaining the safety of the streets and the freedom of the city. It is a complex order. Its essence is intricacy of sidewalk use, bringing with it a constant succession of eyes. This order is all composed of movement and change, and although it is life, not art, we may fancifully call it the art form of the city and liken it to the dance — not to a simple-minded precision dance with everyone kicking up at the same time, twirling in unison and bowing off en masse, but to an intricate ballet in which the individual dancers and ensembles all have distinctive parts which miraculously reinforce each other and compose an orderly whole. The ballet of the good city sidewalk never repeats itself from place to place, and in any once place is always replete with new improvisations.”

Echoes of course of that other grassroots philosopher Adam Smith. Not only: “It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest,” from , but also this from :

“The man of system…is apt to be very wise in his own conceit; and is often so enamoured with the supposed beauty of his own ideal plan of government, that he cannot suffer the smallest deviation from any part of it… He seems to imagine that he can arrange the different members of a great society with as much ease as the hand arranges the different pieces upon a chess-board. He does not consider that in the great chess-board of human society, every single piece has a principle of motion of its own, altogether different from that which the legislature might choose to impress upon it.”

  [amazon_image id=”0143105922″ link=”true” target=”_blank” size=”medium” ]The Theory of Moral Sentiments (Penguin Classics)[/amazon_image]   [amazon_image id=”B00JVST6CA” link=”true” target=”_blank” size=”medium” ]The Wealth of Nations[/amazon_image]

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Venetian capitalism, 1515 and 2015

I’ve had a short break to celebrate my 25th wedding anniversary, and we went to Venice. One of my books was Peter Ackroyd’s , which has lots of interesting facts but is frankly a bit long and dull. I did enjoy, though, the sections about the Venetian economy. It was the engine of the world economy in the 16th century, a bustling, dynamic trading economy, built on a marsh with no natural resources apart from lots of fish.

Angus Maddison’s  is excellent on this, and on the tides of economic history more generally; one of the fascinating things is how different places have had their moment. Italy’s was the during Renaissance, and look at it now. Maddison writes of the Venetian Republic: “It created political and legal institutions which guaranteed property rights and the enforceability of contracts. It was a pioneer in developing foreign exchange and credit markets, banking and accountancy. It created what was effectively a government bod market. … Its fiscal system was efficient and favorable to merchant profits and the accumulation of capital.” On the accountancy, Jane Gleeson-White’s  is a great read.

[amazon_image id=”0099422565″ link=”true” target=”_blank” size=”medium” ]Venice[/amazon_image]  [amazon_image id=”B00BTM3SCU” link=”true” target=”_blank” size=”medium” ]Development Centre Studies The World Economy: A Millennial Perspective unknown Edition by Angus Maddison (2001)[/amazon_image]  [amazon_image id=”1743311435″ link=”true” target=”_blank” size=”medium” ]Double Entry[/amazon_image]

Venice was also the first centre of commercial publishing thanks to Aldus Manutius (there’s an exhibition on him now at the John Rylands library in Manchester). Ackroyd writes: “Printing was the first form of mass production technology, creating identical objects at identical cost.” Venice pioneered commercial printing and publishing, although the activity led to complaints that the technologically-driven abundance of books was making people less studious, a vulgarising influence. Sounds familiar!

One thing that intrigued me in Venice (the city, not the book) was the fact that the identity of the sellers of cheap handbags and selfie sticks in the streets has shifted. Last time I was there, five years ago, these men were mainly Senegalese. This time they were mainly South Asian. I wonder how these shifts happen? Of course, the city’s main trade these days is tourism, and all the services and goods that requires – like so many other beautiful places whose earlier economic function has vanished into the mists of time.

Beautiful - and redundant?

Beautiful – and redundant?

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