If we want a more productive economy, we must let our cities grow

“Chicago in 1850 was a muddy frontier town of barely 30,000 people. Within two decades, it was 10 times that size. Within another two decades, that number had tripled. By 1910, Chicago… had more than two million residents.”

The city’s name is derived from a Native American word referring to the wild garlic that grew in great abundance locally. This isn’t why Chicago is known as the Windy City, but it did attract the attention of French explorers in the 17th and 18th Centuries. It’s also a reminder that, at some point, all cities were founded upon unspoilt countryside – and expanded by gobbling up greenfield land.

Until a few decades ago, what determined how big a city got, wasn’t the severity of planning restrictions, but its economic potential as judged by those willing to move and invest there. This was a pretty good way of directing people and capital to the most productive locations.

No longer, though:

“The places that are booming in size aren’t the economic boomtowns — the regions with the greatest prosperity and highest productivity. In theory, we’d expect those metros, like the Bay Area, Boston and New York, to be rapidly expanding, as people move from regions with high unemployment and meager wages to those with high salaries and strong job markets…

“The metro areas that offered the highest pay in 2000 have grown by some of the slowest rates since then, while people have flocked to lower-wage metros like Las Vegas, Phoenix and Charlotte, N.C.”

If we’re serious about boosting productivity and wages, then we need to stop strangling the most dynamic cities. Obviously it’s harder to expand a city of 10 million than one of 50,000. Moreover,  poorly planned, sprawling growth can have counter-productive effects in the longer-term.

However, these complications should be a spur to creative problem-solving, not an excuse for stagnation. Take the twin examples of Oxford and Cambridge in the United Kingdom – global centres of excellence in science, technology and higher education. Neither could be described as being too big, but both are surrounded by green belts that impose severe limits on their growth.

One can see why local residents would object to architecturally-unsympathetic, unstructured ‘sequential development’ – but is there any good reason why we shouldn’t free-up farmland to build properly integrated, beautifully designed, garden suburbs? (See this excellent proposal, for an example of what could be achieved).

Emily Badger writes that in many economically dynamic, but physically constrained, cities, the domestic population is leaving in droves:

“The population growth that is occurring in these metro areas is fueled almost entirely by immigration, as Ryan Avent points out in ‘The Gated City,’… If we consider only domestic moves, about 900,000 more people have moved away from New York than to it since 2010. On net, about 47,000 have left both San Jose and Washington, D.C., while Boston has lost a net 36,000.”

One might wonder why property prices dissuade the native population, but not migrants. It’s an interesting question, and the answer is one of extremes. Some incomers are highly-skilled, very well-paid and therefore able to pay top dollar for prime locations. At the other end of the income scale, however, are unskilled, low-paid migrants willing to tolerate the worst housing on offer.

This is a highly divisive dynamic. Within a nation it creates two cultures – one that resides in cosmopolitan, but grotesquely unequal, cities; the other in the excluded, nativist outlands.

Our failure to provide affordable housing where it’s needed most isn’t just economically damaging, it’s socially toxic too.

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Peter Franklin is Associate Editor of UnHerd. He was previously a policy advisor and speechwriter on environmental and social issues.

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