Brickonomics

The excellent Mark Thoma reproduces two fine Financial Times articles for our delectation. Here are some selected quotes.

Engine of enterprise in push and pull of rural desertion, by Alan Beattie

Today, about 180,000 people around the world will leave the countryside and move to a city. Humans are becoming urban creatures at an accelerating speed. … Cities are the future. Whether they turn out to resemble the gleaming perfection promised by the Emerald City in the Land of Oz or the dystopian chaos of Blade Runner will depend on the technology and governance of future economic development…

The lessons of history are clear: cities do better if they prepare for migrants. And it is easier to deal with people “pulled” towards cities by the prospect of jobs and better lives than those “pushed” by eviction from the countryside.

The British Isles contain three models… As in England, it can be gradual and relatively painless: the “enclosure” by landowners of small tenant farms and publicly held land into bigger enterprises took centuries and monarchs in the 16th and 17th centuries tried to slow the process down to placate protesting villagers. Later, country-dwellers often voluntarily moved to towns when industrialisation created better jobs, in textile mills and the like. As in Scotland, the move can be brutal and abrupt, such as the Lowland and Highland Clearances – the forced removal of tenant farmers to make way for bigger and more productive farms – that began in the 18th century. Glasgow and Edinburgh were inundated with indigent refugees. And as in Ireland, the change can be achieved in a way that in practice if not intent resembled genocide – the famine and land evictions of the mid-19th century that helped to populate Liverpool, Boston and New York.

Thus cities such as Shanghai, to which millions of rural Chinese are desperate to move but are regulated by internal migration controls, do rather better than Mumbai, where refugees fleeing drought and crop failure in the villages of India mean that more than half the city’s population live in shanty towns or slums.

Important though government is, it operates in a landscape shaped by technology and globalisation. Just as the growth of cities was driven by one technological revolution, so others can change or reverse it. Edward Glaeser, a Harvard specialist in the economics of cities, points out that the original reasons for the existence of cities are disappearing. The cost of transporting manufactured goods dropped by 90 per cent in real terms in the 20th century, removing the need for regions to have their own manufacturing and distribution hub.

“The great force that reshaped the city in the 20th century is the engine,” Prof Glaeser says. “People have increasingly been able to propel themselves and their goods over long distances.”

Cheap transport pushed Americans away from Cleveland and Detroit and towards the cheap land and warm weather in sprawling low-density sunbelt cities such as Phoenix, Arizona. Liverpool, the port in north-west England that handled much of Britain’s transatlantic trade, was once the country’s richest city. The decline of its port almost halved its population from 867,000 in 1937 to 442,000 in 2001.

The revolution of information technology and digitisation ought, perhaps, to have completed the job, removing the need for a physical workplace. Yet several of the cities that seemed to be dying in the 1970s – New York, Chicago, Boston and London – have since had remarkable revivals. …

The success of the modern city appears to have two features: one, that digitisation has created a very specialised elite who benefit even more from clustering together and, two, that people are moving to cities not just to work but to play. The industries that are most digitised and computerised – software and financial services – are those that huddle in small, expensive areas … where their top-level staff still need the edge of face-to-face contact with clients and with each other…

Meanwhile, Prof Glaeser notes that the ratio of housing costs to real wages in cities has risen sharply, suggesting that people are choosing to live in cities for reasons other than income. With falling crime rates, the attractions of some cities – bars, restaurants, theatre, not to mention the city as a marriage market – have launched their renaissance as a place of consumption.

How the lure of the city is rapidly swelling the world’s slums, by Fiona Harvey

“A dirtier or more wretched place he had never seen. The street was very narrow and muddy, and the air was impregnated with filthy odours … Covered ways and yards, which here and there diverged from the main street, disclosed little knots of houses, where drunken men and women were positively wallowing in filth.”

The well-heeled residents of 21st-century Clerkenwell would not recognise the description of their chic streets in Charles Dickens’ Oliver Twist. By locating Fagin’s thieves’ kitchen in Saffron Hill, he was choosing one of Victorian London’s most notorious slums; today, even a small flat on the same street can cost more than £500,000 ($954,000, €741,000).

But the sort of urban squalor Londoners associate with the 19th century is growing “at an unprecedented rate”, according to the United Nations. Next year, the UN estimates, more than 1bn people – one out of every three city residents – will live in slums. … In 2007, … the balance of the world’s population will change, perhaps forever. For the first time, more people will live in cities than rural areas…

Overcrowding and poor housing are the most obvious issues for slumdwellers, but these are compounded by poor sanitation and a lack of clean water. There is often little provision for the disposal of solid waste. … Slums also often suffer badly from pollution, because they are built on contaminated land or undesirable areas near large industrial installations…

For these reasons, slumdwellers suffer what Anna Tibaijuka, executive director at UN-Habitat, the human settlements programme, calls the “urban penalty”. She explains: “They have worse health [because of poor sanitation] and they are affected by the worst effects of industrial pollution. If there is a flood or a disaster, it’s the poor who always suffer.”

So far, there seems little prospect of solving these problems in most cities. … The scale of the problem is daunting. More than one-quarter of the developing world’s urban population – more than 560m people – lack access to clean water and sanitation, and about 1.6m people a year die as a direct result. The World Health Organisation estimates that as much as one-quarter of global disease is caused by environmental problems that, if tackled, could save up to 13m lives a year…

Few developing country governments could hope to afford the vast sums needed to clean up their slums. … Annual spending on slums, from both public and private funds, amounts to between 5 and 10 per cent of the sums needed.

What lessons does history teach about tackling the scourges urbanisation brings in its wake? London’s Dickensian misery was alleviated only through a massive programme of public works in the second half of the 19th century. The sewage system built in the wake of the Great Stink of 1858 [from effluent in the Thames] took advantage of existing waterways and serves the city to this day.

Himanshu Parikh, … director of Buro Happold Engineers, … adds that the most successful developments she has seen involve local people, businesses and government working together on slum improvement projects. These have tended to be on a small scale, involving between 800 and 1,200 houses at a time. Projects on a larger scale can become bogged down in bureaucracy and the need to co-ordinate a greater number of interested parties.

The UN-Habitat report on the world’s cities identified strong central government as another essential ingredient in effective slum improvement…

Land reform can be an important weapon in the battle against urban poverty. Slumdwellers suffer from an inherent insecurity because they rarely own title to their land. This leaves them vulnerable to government interference and the whims of developers and reduces their incentive to improve their areas.

None of these issues are easily addressed but, as the UN’s report makes clear, the problems incubating in the world’s slums can no longer be ignored. Moving from Dickensian squalor to the fashionable restaurants and penthouses of today’s Clerkenwell took well over 100 years. Given the speed at which slums are spreading today, urban dwellers must hope the 21st century will yield a more rapid solution than the 19th.

Housing and environmental problems which continue to be a significant driver of inequality in the rich countries seem to pale into insignificance alongside the problems faced by slum dwellers in the places like Nairobi and Mumbai. Which is not to say they’re not important, but that the same arguments for intervention, redistribution and empowerment that hold in the UK must do so at the global level, but perhaps with more urgency and certainly on a far greater scale.