The rise and fall and rise of New York introduces us to the central paradox of the modern metropolis—proximity has become ever more valuable as the cost of connecting across long distances has fallen. New York’s story is unique in its operatic grandeur, but the key elements that drove the city’s spectacular rise, sad decline, and remarkable rebirth can be found in cities like Chicago and London and Milan, as well.
In this book, we’ll look closely at what makes cities our species’ greatest invention. We’ll also unpack their checkered history, which is relevant now because so many cities in the developing world struggle with the vast challenges that once plagued today’s urban stars like San Francisco, Paris, and Singapore. And we’ll examine the often surprising factors that shape the success of today’s cities—from winter temperatures to the Internet to misguided environmentalism.
Cities are the absence of physical space between people and companies. They are proximity, density, closeness. They enable us to work and play together, and their success depends on the demand for physical connection. During the middle years of the twentieth century, many cities, like New York, declined as improvements in transportation reduced the advantages of locating factories in dense urban areas. And during the last thirty years, some of these cities have come back, while other, newer cities have grown because technological change has increased the returns to the knowledge that is best produced by people in close proximity to other people.
Within the United States, workers in metropolitan areas with big cities earn 30 percent more than workers who aren’t in metropolitan areas. These high wages are offset by higher costs of living, but that doesn’t change the fact that high wages reflect high productivity. The only reason why companies put up with the high labor and land costs of being in a city is that the city creates productivity advantages that offset those costs. Americans who live in metropolitan areas with more than a million residents are, on average, more than 50 percent more productive than Americans who live in smaller metropolitan areas. These relationships are the same even when we take into account the education, experience, and industry of workers. They’re even the same if we take individual workers’ IQs into account. The income gap between urban and rural areas is just as large in other rich countries, and even stronger in poorer nations.
In America and Europe, cities speed innovation by connecting their smart inhabitants to each other, but cities play an even more critical role in the developing world: They are gateways between markets and cultures. In the nineteenth century, Mumbai (then called Bombay) was a gateway for cotton. In the twenty-first century, Bangalore is a gateway for ideas.
If you mentioned India to a typical American or European in 1990, chances are that person would mutter uncomfortably about the tragedy of Third World poverty. Today, that person is more likely to mutter uncomfortably about the possibility that his job might be outsourced to Bangalore. India is still poor, but it’s growing at a feverish pace, and Bangalore, India’s fifth- largest city, is among the subcontinent’s greatest success stories. Bangalore’s wealth comes not from industrial might (although it still makes plenty of textiles) but from its strength as a city of ideas. By concentrating so much talent in one place, Bangalore makes it easier for that talent to teach itself and for outsiders, whether from Singapore or Silicon Valley, to connect easily with Indian human capital.
Echoing antiurbanites throughout the ages, Mahatma Gandhi said that “the true India is to be found not in its few cities, but in its 700,000 villages” and “the growth of the nation depends not on cities, but [on] its villages.” The great man was wrong. India’s growth depends almost entirely on its cities. There is a near-perfect correlation between urbanization and prosperity across nations. On average, as the share of a country’s population that is urban rises by 10 percent, the country’s per capita output increases by 30 percent. Per capita incomes are almost four times higher in those countries where a majority of people live in cities than in those countries where a majority of people live in rural areas.