Economic Research Relevant to the Formulation of National Urban Development Strategies : Volume 1

Name: Economic Research Relevant to the Formulation of National Urban Development Strategies:Volume 1
ISBN: 9781315644905

doi:10.4324/9781315644905

Book

Economic Research Relevant to the Formulation of National Urban Development Strategies

ABSTRACT

Originally published in 1971, this volume contains papers invited for a conference on economic research relevant to national urban development held in September of the same year. The conference pulled together researchers from both the United Kingdom and the United States who were interested in economic research on key issues of both countries’ management of their urban areas. Papers are varied from those in the early stages of research to those whose research has been completed and all provide an insight into the increase of urbanisation present in the first world. This title will be of interest to students of environmental studies and economics.

Thompson Many are impatient today with questions such as: how big should cities be, what mixtures of work should they perform, and where should they be located? This emphasis sounds too dated and too closely related to the impersonal focus of the earlier city planner who was almost wholly a physical planner. It is people not places that demand our attention, the new breed of urbanists sternly insist. It is poverty, race, crime and the quality of the environment that are at issue. This charge can not be answered without first admitting that at many times and in many contexts --in policy contest with local merchants, landlords, land-owners and publix officials -- vested business, property or job interests of people and places are in sharp conflict. But in more extended discussion among persons with less vested interest in particular pieces (academics, with little at stake any place?), it should be possible to reaffirm quickly the primacy of people and then to move quickly on to a consideration of the size, function and location of cities as a means to good ends. We might choose to save some small place because we wish to save some elderly poor person an expensive and unnecessary move, or we may wish to conserve a stock of good, used housing during a housing shortage. Or we may elect to shut down a small place to break a cycle of poverty that threatens persons yet unborn. We may limit the size of a city or empty out a fragile natural area to avoid creating an ecological "hot spot" that would be very costly or impossible to reverse. We may see in •* national settlement 27 May 1971

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Thompson policy the welfare of the next generation. It is less a question of what is relevant to people and more one of the length of the planning period; land planning in a national context has a very long pay-off period, greater than even educational investments in most cases. It is in this spirit that this paper is written. 27 May 1971

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Thompson On City Size City Size and Consumer Welfare: Variety versus Economy From the vantage point of the household, the gains from larger city size probably vary with socio-economic status. Scale brings variety for greater consumer choice, and sheer numbers of sellers promote competition in price and quality. (The small town pro-vides the best illustrations of "local monopoly" outside of the regulated public utilities -- what small town has a "discount house?) But the advantages of variety vary directly with educa-

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Thompson general increases, with scale, virtually without limit. To these more objective variations in consumer welfare with city size, we must, of course, add the more subjective variations in life style that go along with different city size. Even so, the platitude that we need a wide range of city sizes in which to express a wide variety of life styles seems to miss the main public policy issue. The normal market process has given us this. The problem is, apparently, that the number of lower income and/or less-educated households that prefer or are indifferent to large city living is less than the number of such households that are "needed there --

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Thompson town, when they say, in effect, through their supply price of labor, that they do not care where they live? If it is unlikely that organized labor would be willing to experiment with geographical wage differentials sufficient to induce the relocation of industry, the national public policy issue would seem to be whether alternative ways might be found to register labor cost differentials that would guide production into locational patterns that would better reflect household living preferences (i.e., raise real wages). How much money wage (after taxes) would various groups of workers trade for the objective and subjective gains from living in smaller places, if a stable way of accomplishing this could be found -- cut-throat competition in wages prevented? Urban Economic Scale and Local Government We have had a number of inconclusive studies on the relationship between city size and public expenditures, and by implication the efficiency of the local public sector. Those local public services that are like, or are in fact, public utilities (e.g. water, sewage disposal and public transportation) do show economies of scale up to populations of medium size. But the cost functions of the more

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Thompson and difficulty of the work. And surely it is not only the lure of higher salaries but also that very challenge of complexity that serves to attract the most able public managers to the bigger cities. But the net balance of the "supply and demand for skill

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Thompson should count heavily. One does not need to resolve the relative importance of cost-efficiency versus policy-effectiveness to argue that the latter is more central to a consideration of national urban policy. A re-sponsible Federal government should care most of all about the ability of local government to reinforce national policy, or at the very least the awareness to not counteract it. We can not re-make the country into a monolithic system of middle-size cities, even if we should so desire, but the Federal government can act to strengthen the hand of local government at the ends of the size spectrum. The rebirth of metropolitan area government in the form of "two-level local government is a step in that direction, pre-

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Thompson Today, it is more the variety and quality of local employment opportunities in the smaller urban area that creates cause for con-cern. The narrow range of occupations that emanate from a narrow product base offers little opportunity for up-grading on the job, a still important alternative to formal education. But probably most important of all, especially in days to come, is the place-ment problem posed by the highly educated husband and wife team --professional or technical labor in joint supply. If females would resign themselves to roles as teachers and nurses, if they insist on becoming educated and professional, joint placement would be easier. There are schools everywhere and a clinic, if not a hospital, almost everywhere. But reflect on the vocational problem of the psychologist wife of the chemical engineer whose employer selects a small town plant location (near the basic raw material). The probability of both positions appearing in the same urban place is the product of the two probabilities for that size place. But an even greater scale is required to generate enough positions in each occupation so that there is a high probability that both positions will be open simultaneously, or nearly so. Again, while the chemical company may make provision for continuing graduate education in chemical engineering, what are the prospects for post-degree work in psy-chology in a remote small town? 27 May 1971

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Thompson On the Outlook for Remote Small Places The Three Fates In the absence of decisive public policy, the typical remote small town appears to face one of three fates: de-population, socio-economic deterioration or economic absorption. Towns in very sparsely populated regions will ordinarily experience out-migration to larger places much in excess of the slow inflow from nearby smaller places. While an out-pouring of local residents can be somewhat slowed, a substantial gross out-migration is inevitable, as simple reflections of occupational and life style preferences and just plain restlessness. With few "lower places

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Thompson layers of an inferior one. Towns in this context remain "alive" by being transformed into low-skill, low-income, isolated ghettoes --under-development traps. Many "remote" small towns are nearly ripe enough to fall into the expanding commuting range of the nearest metropolitan area; they will be rescued by transportation improvements before they have time to de-populate to a point of no return. Such a town will tend to become a specialized part of a more complex system --typically a dormitory satellite. Euthanasia The appropriate public policy responses to recent develop-ments in remote small places is much too complex to be detailed in so short a paper and too much beyond the present state of knowl-edge to be discussed definitively in any length paper. Still, the three fates sketched above suggest the broad outlines of three quite different policies and strategies. No one should still be surprised by the pervasiveness of absolute decline in population; no statistic has been more quoted over the past few years than the fact that one-half of our counties lost population during the 1950-60 period. Nor will the almost inexorable power of this trend be obscured when the 1970 data have been assessed and popularized; two-fifths of our counties have lost population for three successive decades. Certainly, an official de-population policy and strategy would be political dynamite, but why is there virtually no literature on the graceful abandonment 27 May 1971

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Thompson of obsolete places, created by those who are not in a politically sensitive position. In general, the current position of students of regional development is that capital investments in semi-permanent infra-structure -- interpreted broadly to range from transportation and utility systems to technical institutes and housing -- are most appropriate for small cities that have been designated as "growth poles." Investments in health and education, especially in younger persons, increase occupational and geographical mobility and are therefore most appropriate for remote small places with bleak futures, as well as the more direct and obvious relocation allow-ances.^ As general policy, so far so good; but it is an operational strategy that is so needed and so unclear. A few illustrations will, however, suggest the kinds of ques-tions that we need to address seriously. At what point in the de-population of a settlement is it appropriate for the next larger unit of government to assume responsibility for the financing and/or the provision of a given public service? Just as the county sheriff was responsible for the safety of the rural population before in-corporation, so too the sheriff could resume that function with contraction. Should the state reserve the right — practice the policy -- of revoking local government charters at some given stage of contraction? Turning from institutional arrangements to human resources, the order-of-march in migration, by age and education and whatever, 27 May 1971

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Thompson certainly affects the stability of the process. Clearly, the normal sequence of migration in which the younger and the more educated tend to leave first is one which threatens a progressive deterioration --a cumulative disequilibrium -- and virtually ensures a "premature collapse, defined here as an unnecessarily

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Thompson of serving the nation as a half-way house between the fields and the factories. The paradox of migration is that everyone could become better-off -- the rural migrant moving in, the out-migrant to the city and even those who stay and rise in the local hier-archy, due in part to the out-migration of the strong -- the nation, as a simple collection of these parts, would be richer because the allocation of labor would be better, but the locality as a place could be worse-off. Those who rrove into a community do not have to be less educated or poorer than those they join to impoverish a community, merely of lower socio-economic status than those they replace -- the top of the stock that moved out. We do not have to put places ahead of people to recognize that places are environments for people, who may thrive or languish on the basis of rich or poor personal contacts and public sectors. We are probably fortunate, as a nation, that localities can not prevent the in-migrâtion that beggars them, but we err in not providing compensatory payments to these staging areas, not just for the sake of equity in income redistribution but even more to provide incentives to localities to undertake the critical func-tions of education and acculturation less reluctantly and more effectively. The nation should monitor the gross flows of migra-tion at the local level to know better which of its many agents in human resource development are most strategically located: typically and paradoxically,.those communities most impoverished in inter-regional trades in human capital. Can we express national development goals in these localities 27 May 1971

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Thompson in income terms? Surely, we are not trying to maximize per capita income in any given area because that criteria could be perverted into a beggar-thy-neighbor strategy -- skimming-off the cream. We

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Thompson is not an unmixed blessing for the (formerly) remote small place. That settlement will almost certainly undergo a radical change as it is integrated into a larger urban system as a very specialized part. For example, local trades and services -- the local down-town -- could become revitalized by the increased "foreign earn-

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Thompson base may therefore be joined to the loss of the non-residential tax base, and a blighted town with a starved public sector is more likely to be avoided than saved by the coming tide of exurbanites flowing out of the nearby metropolitan area, "Rescuing remote

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Thompson fessionals who because of growing "telemobility" can have their desks anywhere and prefer to have their homes in natural environ-ments. Populated by consultants, thinkers, writers and artists, these new-style "rural areas could come to exhibit higher average

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Thompson Growth and Migration The Rate of Local Growth is the Change in City Size A national policy on the size distribution of cities that does not also incorporate a position on the rate of growth of local populations, that is, the rate of change in city size, would soon be obsolete. One might, in fact, argue that local well-being is more immediately sensitive to rate of growth than to city size, and that the "proper" pattern of city sizes might better be de-rived from the preferred pattern of local growth rates. But, while there have been many studies of actual urban growth patterns, the literature has little to offer on the optimum rate of local growth in population, or even the analyst s own preferred rate of

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Thompson supply of streets, sewers, schoolrooms and trained personnel. The case for the U shaped curve is almost always an easy

million population have the best of both worlds: scale enough to attain moderate economic stability but still small enough to avoid difficult-to-manage complexity. If so, smaller places would be better off being larger, and the sooner, the better. Smaller places would then attain their maximum welfare by growing a little

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Thompson underemployment in the hinterland --or better its "migration-shed/ Both the local and broader national interest are served,

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Thompson example, a very rapid rate of local growth could swamp the local cycle, with a cycle trough barely if at all lower than the preced-ing prosperity peak. A local recession is then expressed as a reduced rate of in-migration, with local employment holding steady¿^ But since total national unemployment is unchanged, one local economy escapes unemployment by exporting it to others. Similarly, rapid growth draws in the most mobile part of the labor force and gives to that local labor market an unusual power to adapt to rapid contraction at some later time, if need be, -7*/:h quick and easy

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Thompson Migration, City Size and the Market Can we trust the market and self-interest to adjust the size distribution o f cities through migration? On the whole, social scientists have preferred to work with the process of migration because it is a clear act, observable and measurable in a familiar behaviorial framework, rather than with the structure of city sizes, the culmination of a long and complex chain of historical, physical, technological and institutional forces. But migration is much more complicated than it appears on first impression, for there are many less-appreciated linkages between persons to add to the more-appreciated non-market forces. Small places do not empty out as promptly or as fully as they would under a pure market model of behavior for at least two reasons. First, each wave of out-migrants draws more than pro-portionately from the more educated, talented and ambitious elements of the local population, leaving behind an ever weaker labor pool from which to draw the teachers, counsellors and leaders of all kinds that must meet the challenge of re-working a harder and harder core of unemployables and immobiles. Reinforcing this adverse sequence is the conflict of interest between parent and child. Middle-aged parents with poor schooling and few, if any, job skills that will transfer to the newer, larger place are often better off staying on the farm or in the village through the remainder of their working lives, and on into retirement. But their children have no future in agriculture or in the small place and, in fact, 27 May 1971

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Thompson face a bleak future anywhere if they remain in the local school system through graduation. Inter-generational ties and a conflict of interest, with decisions made by unsophisticated parents, is clearly non-optimal from a social point of view. At the opposite end of the city size spectrum, very large urban areas probably do not slow in growth as much as they should under the pure market model, because migration is characterized by a decided asymmetry. Large cities appeal more to the affluent because they offer much greater consumer choice, especially to the more educated element seeking the more esoteric offerings, and to the young adult with a thirst for adventure and an unlimited faith in his (her) potential to win big in the biggest arenas. But these are also the more mobile persons, so that those who prefer big cities tend to move to them. With time and aging, the pre-ferred life styles tend to shift more in line with the environ-ment of smaller places, but the elderly tend not to move easily due to sunken investments in homes, friends and local institutions and due also to the shorter remaining life over which the cost of moving must be recaptured. Note that one can hardly keep from "choosing to live in a

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Thompson is an "age-bias in migration toward bigness because those who

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Thompson On Containing the Size of the Largest Cities Slowing In-Migration versus Promoting Out-Migrâtion Perhaps the reason that we do not seem to be able to come up with an operational strategy for containing the growth of very large cities is that there isn t any. And we should have been

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Thompson it is easy to get around. Retirement communities are, in fact, much over-represented among the nation's fastest growing urban places. How much has the growth of these places already slowed the growth of big cities, and how much more of a redistribution of population could be achieved with a more intensive promotion of retirement communities? Transportation Technology and Natural Ecology But even if we should begin to approach "zero population growth as a nation and zero net migration into metropolitan areas,

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Thompson A forty per cent increase in the average commuting speed (radius) --a not unreasonable expectation for the year 2000--would double the land area of the local economy. If, moreover, progress in telecommunications reduces the need to interact per-sonally with others in central places to one-half of the present level, and if the work week has been cut to :bree days by then, most of us would need to "commute to a large center only once

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Thompson pollution and the re-cycling of matter. Physical planners have, of course, long been concerned with the loss of open space in and around cities. But too often they over-played the "calamitous loss of irreplaceable prime agricultural land" which in some not too clear way was held to threaten our very existence. Their anguish in a time of farm surpluses did not transfer well to their critics.9 Tax abatement for near-in farms never did elicit much support, nor would it have prevented many rural to urban land con-versions. Care would have to be taken that property tax reductions did not simply subsidize and encourage land speculation. The case for urban open space has always seemed to rest primarily on recre-ational use and secondarily on its use to delineate boundaries more sharply to strengthen community identity and build civic responsi-bility. An ironic turn of fate may bring forth a new variation on the old theme of agricultural land as urban open space. Experimental design is underway in at least one urban area (Muskegon, Michigan) for dumping liquid household effluent on porous soils (sand dunes) over a period long enough to enrich these soils to good agri-cultural quality. Waste disposal becomes the re-cycling of matter. Natural ecological imperatives could come to dictate popula-tion densities and urban land-use patterns. Given then the speed of transportation and the maximum acceptable commuting time (one hour?), the urban area may come to be defined "from the ground-up." The current direction of causation would then be reversed: city size would not determine population density and land-use patterns but rather land-use patterns and population density, as bounded by 27 May 1971

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Thompson current transportation technology, would determine city size. At least in the formal accounting, the population continuum across space could be broken every hour of travel time and summed into (trivial?) population aggregates if one just had to know summary (and nominal) growth rates and city sizes. 27 May 1971

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Thompson On Industrial Structure From Nation-Wide Industry Location to Local Industry-Mix We have a rather considerable literature on the efficient location of industries, in partial equilibrium, but only scattered sentences on the optimum industry-mix for an urban region, especi-ally in a longer time perspective. The distinction between the industry and regional vantage points can be visualized by imaging a series of industry locational maps, one for each of the many industries, overlaid one upon another, through which a vertical shaft is sunk at some given point; the "core so removed would

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Thompson redundant (cheap) female labor, but there are some very clear weaknesses in the connecting chains. The blending of the capital intensive ("heavy") industries, invariably unionized, with the ("footloose") industries would not

lighter work of the more mobile seem to happen naturally or automatically through the market forces. Typically, oligopoly product price power in combination with aggressive unionism raises heavy-industry wage rates/"roll-

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Thompson industries age and their technology matures, skill requirements fall and the industries become free to relocate in lower wage (lesser skill) areas. The higher a city stands on the industrial skill hierarchy, the younger its industries and the more likely it is to fashion an average rate of growth out of a fast-growing industry-mix and declining shares of that work -- the innovation of new work and the spinning-off of work that has become routine. The lower an urban area in the skill and wage hierarchy, the older an industry tends to be when it arrives in town and the slower its national growth rate. Intermediate level places tend to fashion a slightly above average rate of growth out of growing shares of slow-growing industries, but below this size the positive change in share weakens and erodes to zero, leading to slower than aver-age growth (net out-migration) below about 25,000 population and absolute employment decline below 2,500 population. This hypothesis has not been subjected to anything more than very preliminary testing (which did support it) and probably can not be rigorously tested without a more disaggregated data than the U. S. Census S.I.C. two-digit ("industry group) employment

figures that currently serve as the basic data of "shift-share analysis. But the credibility that even casual reflection and observation lend to this hypothesis does seem to suggest that it would not be premature to give some thought to the implications that a national industry filtering process carries for national