Why have big cities gotten rich and rural/industrial areas gotten poor?
September 24, 2015 2:08 PM   Subscribe

Everybody knows that New York and London have both seen a big reduction in crimes and an even bigger increase in property values over the past 20 years. Moscow, too. At the same time, formerly prosperous industrial and suburban areas have gotten poorer (and, as evidenced by right-wing populism, angrier). But the one that surprised me was Copenhagen vs. the rest of Denmark, as outlined by mumimor.

Isn't Denmark the home of "hygge" and all that, and a very generous welfare state? Clearly there's something going on here that's bigger than national character, or variations on neoliberalism and socialism.

Maybe the rise of China as the workhouse of the world? I can see why it would make industrial areas in the West poorer, but why would it make so many Western cities so much richer - and more peaceful? And, if it is because of China, is the opposite happening in China, or the same thing there, too? I keep hearing about people from China's countryside flooding to the cities, and property values skyrocketing in the biggest Chinese cities, so I assume that China is subject to the same process that's affecting the rest of the world.

So what is the explanation? Or - what are the possible combined explanations?
posted by clawsoon to Society & Culture (24 answers total) 14 users marked this as a favorite
Be careful of how you perceive Denmark. It has had a neo-con government for most of the last 15 years (bar three or so years .. but even the Labour government was fairly fiscally neo-conservative) and which has left big, big marks on how housing and welfare has been restructured. The kommunereform [da: municipality reform act] of 2007 centralised a lot of power and money effectively removing fiscal control, public sector employment and public services from many rural areas to larger cities.

I grew up in a rural part of Denmark and every time I go back to visit, another library has shut down and nobody can sell their house to move where the jobs are.
posted by kariebookish at 2:39 PM on September 24, 2015 [9 favorites]

There are a lot of assumptions baked into this question that aren't so easy to assume, or even to address very firmly. Rising urban property values in certain cities, for instance, can get a bit semantic. Valuation of properties can inflate and deflate with market demand and scarcity, but people in city planning (etc.) debate what that means in terms of long-term valuation.

It's also important to very clearly define which cities or which kinds of cities you're referring to when you make statements about changing rates of crime, employment and so on, as these figures can change with your definitions. In most places in the U.S. crime rates have dropped since the early 90s, but in select places that trend has flattened. Contributing factors are poorly understood at best, but are exlpored in depth in a number of places (like this one).

Social policy is a very complicated layer on all of this, and people approach the concept differently. "Sacrifice zones" is a concept that's gained some popular interest, and the Hedges/Sacco comic that came out kinda recently talked about this sort of thing at great length. In my field--regulatory toxicology and public health--the discussion often drifts into this territory, but hazed by an awareness that the full picture (especially in terms of economics, with strident legal protections in place for confidential business information and the policies that relate to that information). We're a bit blinded by a lack of completeness with the information that can answer the questions you're asking, and we can only truly guess our way through the parts we can see.
posted by late afternoon dreaming hotel at 3:06 PM on September 24, 2015 [1 favorite]

The answer to this is pretty complex, and not completely agreed upon. But in general, the problems are economic centralization, the decline of manufacturing, and the desire for upward social mobility.

-Economic centralization. As companies merge, power becomes increasingly concentrated. The way it has worked out, companies from big cities have bought out companies in smaller cities. For example, there used to be a bank in the city I live in called City National Bank. It merged with First Chicago Bank, and the headquarters moved to Chicago to become Bank One. Bank One subsequently merged with Chase, and now the headquarters are in New York. (It should be noted, City National Bank had actually bought up a bunch of banks in small towns in Ohio, too.) So, while there is a fairly large Chase presence here, the main operations are elsewhere (and they're certainly not in the original small towns). In general, the finance industry tends toward bigger cities because that's where the financial markets are. The same process is true of companies in other sectors of the economy, but to a lesser extent. (Due to reason #2, though, finance has become a much bigger sector of the US economy than it was.)

-Deindustrialization. Many of the smaller cities and towns were supported by a base of manufacturing, and as the manufacturing industry declined, the economies of those cities and towns declined accordingly. Flint, Michigan is probably the most famous example. As seen in Roger and Me, GM closed a factory, and the city became a wasteland. (That's the abridged version!) Larger cities have more diversified economies, and so they're less affected by the decline of manufacturing. Since there are no jobs in the smaller cities anymore, people move to the bigger cities to find work, which creates a vicious cycle.

-Desire for upward mobility. I don't think I've ever met a factory worker who wanted his child to work in a factory. And most of the blue-collar children I've met who have managed to go to college and move upward generally feel the same - they want to get as far away from the factories as possible. In general, this means moving to bigger cities with more diversified, creative-class economies. Another vicious cycle, as many of the people who are best equipped to help revive smaller cities are now moving elsewhere (the brain drain).

These are mutually reinforcing. For example, most local governments work to attract companies to open new locations in their cities. The company may decide that there aren't enough college-educated people in the city to support their operation. But the city can't attract college graduates without the promise of white-collar jobs. Catch-22.

The other thing is that as smaller cities and towns get left behind, they become plagued by the ancillary problems of poverty: drug use, crime, etc. This further scares people away.

Again, this is a really complex topic, and even with as much as I've written, I'm vastly oversimplifying, and I've probably left out a bunch. I'm interested in reading other responses.
posted by kevinbelt at 3:13 PM on September 24, 2015 [6 favorites]

Technology has also fundamentally changed the economic map. Unlike the dominant forms of manufacturing back then, software products worth billions are best manufactured in office buildings in a city. Only a few decades ago, that industry didn't exist, and today's it's one of the biggest industries there is. I would think that those changes alone would enough to influence the shape of communities and patterns of wealth.

The finance industry also has fingers in ever more (and more complex) pies, and that also concentrates wealth in cities.
posted by anonymisc at 3:19 PM on September 24, 2015

Response by poster: About deindustrialization: It seems like even more industrial production is happening than ever before, though, globally, in terms of volume of goods.
posted by clawsoon at 3:32 PM on September 24, 2015

You might explore the model of flexible accumulation, a.k.a. post-Fordism.

Fordism was a term coined by Gramsci in the 1920s, based on the kind of total factory town created by Henry Ford, in which employers were rooted in a geographical location, and promoted a lifetime of work for their employees. (And a totalitarian culture, in Gramsci's argument.) During the 1970s, a new worldwide economic regime emerged: flexible accumulation, in which value has increasingly become created by 'nimble' corporations and other actors rapidly shifting resources (investment money, manufacturing capacity, warehouses, shipping, professional careers) between specialized markets, targeting niche opportunities as they arise and discarding them as other lines became more profitable.

It's a lot easier to compete in this sort of economy if you're in a city like Shenzhen, China, where you can switch resources as particular opportunities open up. There's a famous story about the rollout of the iPhone: Steve Jobs suddenly realized, at very short notices, that the screens needed to be changed. In Shenzhen, not only could Apple readily hire manufacturers with flexible productive capacity and workforce, but the various interrelated technical processes were handled by manufacturers all within the same city, for maximal speed.

Perhaps even more important is the declining profitability of farming. My knowledge here is basically nil (except that in the second or third volume of Capital, neither of which I've read, Marx explains that the agricultural sector's profitability can never intensify on the scale of the industrial sector, and therefore in the long run we're all doomed, or something).
posted by feral_goldfish at 3:34 PM on September 24, 2015 [2 favorites]

Capitalism involves constant destruction. The jobs available today look nothing like the jobs available 100 years ago.

A stable economy is diversified. It's very difficult for a small towns to diversify. There's a tendency towards diverting most labor to their comparative advantage. Oil, Farming, Ranching, Manufacturing, Wal-Mart headquarters.

This makes their economies incredibly volatile. Once hurt by recession, they don't have a tax base to provide a safety net.

In a city, the economy can absorb any given decline in an industry. While retail might be soft, IT is booming. There is enough infrastructure and opportunities that people can switch industries, so they're not just waiting for coal mining to pick back up. There is also the tax base to provide resources for those affected by market changes.

A generous welfare system can help mitigate this issue. But the mobility of labor will always give cities the advantage. They will have a more diverse labor pool to start new endeavors, and the unemployed will have more diverse opportunities to find a good fit.
posted by politikitty at 3:55 PM on September 24, 2015 [1 favorite]

It's also important to very clearly define which cities or which kinds of cities you're referring to when you make statements about changing rates of crime, employment and so on, as these figures can change with your definitions.

For example, in Mexico City or post-Soviet Moscow, crime and capitalism interact very differently than in London or Shenzhen.
posted by feral_goldfish at 4:01 PM on September 24, 2015 [1 favorite]

Response by poster: There are a few answers (andrewcooke, politikitty) suggesting that there's something essential about big cities which is causing this. But, if that were the case, big cities wouldn't have been in such a shitty state 20 years ago. So I find those answers difficult.
posted by clawsoon at 4:05 PM on September 24, 2015

About deindustrialization: It seems like even more industrial production is happening than ever before, though, globally, in terms of volume of goods.

This only makes sense for certain industries. Pharma, which is a massive global market, is perpetually (1) coalescing into purposefully complicated-to-regulate multinational companies, and (2) massively investing in the production of high-demand new drugs that can be quickly manufactured at industrial scale. Total volume of goods is minimal, final products get very long patent periods, and the cost of manufacturing and distributing is incredibly, mind-bendingly lower than the costs of exploring other (usually failed) candidate drugs, which in turn drive prices even higher.

In the process, manufacturing can shift from place to place, needing no "anchor city" for efficient production and distribution (in the way that, say, steel or cars currently require).

Bad Pharma is a good primer on this slice of the pie.
posted by late afternoon dreaming hotel at 4:07 PM on September 24, 2015

Working off of andrewcooke 's point, because of the network effects of cities, and the value that accrues from the successful cities, that by nature makes them rare and thus valuable. By contrast, rural and industrial regions are relatively common and easily substituted.

Read up on the concept of Preferential Attachment. People and wealth are in cities. That means when people and wealth are choosing where to go to, they will prefer to go to where people and wealth are. In this case, the rich get richer. And as that wealth concentrates, that level of human/monetary capital becomes more rare, making them more valuable.
posted by deanc at 4:15 PM on September 24, 2015 [1 favorite]

You mention crime. New York, London, Moscow. You have a sample size of three.

Chicago's crime rate has skyrocketed.
posted by Cool Papa Bell at 4:20 PM on September 24, 2015

Chicago's crime rate has skyrocketed.

Crime in Chicago has gone up only relative to historic lows. Chicago isn't an especially dangerous city. It just has the highest crime rate of any large city in the USA. And, honestly, in any ranking, one city will be the highest. Murders are still lower than they were 20 years ago and way down from their peak.
posted by deanc at 4:28 PM on September 24, 2015 [3 favorites]

1. Cities and Rural areas will both see recessions. Cities aren't immune to recessions, they're simply better situated to survive recessions. Twenty years ago, cities were still richer than many rural areas. South & Eastern Texas were already struggling after the quick boom of local oil in the 80's.

2. For the US: White flight. Laborers continued to live close enough to enjoy the economic benefits of working in the city, but the infrastructure fell apart. Cities couldn't fund schools or police forces, and states were slow to help the undesirable. Cities were still economic engines, however the wealth was not attributed to the city.

For other cities, I'm sure there are similar cultural reasons. Rural areas tend to be homogenous, which leads to less cultural tension. This also means that rural areas are sometimes the last to adopt changing social norms. They don't feel the change as acutely.
posted by politikitty at 4:29 PM on September 24, 2015

We don't really have an explanation for crime. There was apparently a crime "bubble" from about 1968 to the early 1990s.

Historically, rural areas have always been desperately poor compared to cities, with the only significant disincentive of cities being the enormous death rate due to disease and sickness. Once you create a modern sewage system and eliminate infectious disease via antibiotics and vaccination, suddenly you have a city with both better economic opportunities AND a place that won't kill you. The crime factor turned out to be a generational anomaly.
posted by deanc at 4:34 PM on September 24, 2015 [1 favorite]

Chicago's crime rate has skyrocketed.

Let me clarify, I apologize. Chicago's murder and shooting rates have gone up 20 percent in the past six months.
posted by Cool Papa Bell at 4:36 PM on September 24, 2015

Response by poster: In your explanations, please try to remember to also explain Copenhagen; as mumimor put it, "Denmark was a very rich country in 1980, but Copenhagen was a third world country, filled with poor addicts, students, old working-class people and immigrants..."
posted by clawsoon at 4:37 PM on September 24, 2015

clawsoon, I think you're looking at this from the wrong angle: the question is not "why are cities rich?" The question is, "Why were cities so poor in the 70s and 80s?"
posted by deanc at 4:41 PM on September 24, 2015 [3 favorites]

Just for shits and giggles, I used the FBI Uniform Crime Reporting database to find average rates of violent crimes in Ohio (to pick a state at semi-random), from 1985 to the present. I averaged the rates* for the six largest cities (Akron, Cincinnati, Cleveland, Columbus, Dayton and Toledo) and for a bunch of small cities with populations under 50,000. While the small cities had crime rates 1/5 of the big cities, both had the same general pattern of a big spike in crime between 1985-1995, peaking around 1990 at 30-40% higher than the average rate over this period; the spike was actually slightly higher and longer in small towns. So I wouldn't take it as an article of faith that cities were terrible over a certain time period (and that rural areas were not also terrible).

* Yes, I know, it's not super-scientific.
posted by Homeboy Trouble at 4:51 PM on September 24, 2015

Mod note: Couple of comments deleted. clawsoon, no biggie but maybe ease off in here since it's not really a discussion space; you've asked, now just let folks give the best answers they can.
posted by LobsterMitten (staff) at 4:53 PM on September 24, 2015

In terms of relative value of land, in the US, regarding corn (so limited!), from 1950 to 2000, productivity grew from 39 bushels to 153 bushels per acre. That's almost four times as productive; you simply need LESS LAND to produce the same amount of food. (And, indeed, that's one of the reason so much corn goes into HFCS and ethanol ... corn acreage produces A LOT of corn.) In 1940, again in the US, a single farmer fed about 20 people with his surplus production. In 2000, a single farmer fed about 140 people with his surplus. (I think in 1900 it was about 12 people per farmer, and in 1850 barely more than his own family, but I can't quickly find that data.) A 2000 farmer is TWELVE TIMES as productive per hour as his 1950 counterpart, due to mechanization.

So while rural land is actually more valuable in a lot of places (because you can get four times the crop production on the same land) than it used to be relative to, say, undeveloped forest or scrubland, it is less valuable than it used to be relative to suburban or urban land because you can get enough food to support non-agricultural households with way, way less land.

Also length of commute is turning out to be a limit on urban growth and a factor in the decline of exurban areas.

I might also consider better health care, and fortification and regulation of food, and refrigeration; cities in the early 1900s were not super-healthy places for children with the soot and the rickets and the adulterated milk and the dangerous food supply. Fortifying milk with vitamin D virtually eliminated rickets in the US and Canada and Europe (where milk is popular); regulation of food meant that you didn't have to either keep your own cows or risk death for your children buying milk. (Adulterated or spoiled milk was the leading cause of death in children in some years in Victorian Britain, largely in big cities where people couldn't know the source of the milk they bought.) A lot of the people who moved to the suburbs in the 50s had grown up in dirty, dangerous cities before fighting WWII and wanted fresh air and sunshine for their own kids, and the perception of more rural areas simply being safer and more bucolic persisted -- and antibiotics were brand new, and immunizations just picking up steam -- living less close together and getting a lot of sun was often the only thing you could do to keep your kids healthy. I think that perception has faded the longer we've gotten away from the very dirty cities of the first half of the 20th century, and the more advances we've made in childhood medicine, the less we worry about kids getting enough fresh air and sunshine and distance from other people's feces that they don't all drop dead of measles or cholera. Those factors might be a little older than you're thinking, but I think those attitudes have something of a generational delay -- my parents (who are Baby Boomers) talked a lot about cities not being healthy and being very dirty, which is why both of THEIR parents moved out to the burbs after WWII; people of my generation worry about pollution (especially smog) when having kids in a city, but aren't so worried that their kids will get sick from the city itself, and certainly suburbia is no protection from anti-vaxxers. There's also more awareness that agricultural chemicals and industrial brownfields can be DEADLY, even if they're not quite as obvious as smog. (As people who live in a small post-industrial city that butts up against agricultural areas, when we look at houses we always consider "is it close enough to farm fields that we'll get overspray?" and "did this used to be an industrial site?" and "what's the lead reading on this land?" because holy balls is the environment dirty around here. Way more so than people in close-ring suburbs to Chicago, that have been residential since 1880, have to worry about.)
posted by Eyebrows McGee at 5:14 PM on September 24, 2015 [4 favorites]

"Denmark was a very rich country in 1980, but Copenhagen was a third world country, filled with poor addicts, students, old working-class people and immigrants..."

I was living in Copenhagen in 1980, and this is not my memory at all.

There were a few neighborhoods like that. Christiana, for example, where drugs were officially unpoliced. The neighborhood around the anarchist book-café. I was a privileged teenage girl and went everywhere without fear -- the worst that happened to me was once a businessman mistook me for a prostitute (no problems once this was cleared up), and once some guy at a small protest threw an egg at me, which was likewise merely embarrassing. (From Copenhagen we moved to Kingston, Jamaica, and the difference between Copenhagen and a third world country became very clear.) Much of Copenhagen was prosperous, safe, either stable working class, old upper crust, or trendy yuppies. Public museums, department stores, designer shops, walking streets decorated for Christmas, a sandwich restaurant run by a family who had been in the Resistance and frequented by others in their network, an expensive confectioner whose windows displayed marzipan fruits so lifelike that they included the bloom on the plum and the bruise on the peach, tattoo parlors lining the canal for sailors, the café at the Hotel Angleterre. There was a fabulous public transportation network, and it worked on the honor system.
posted by feral_goldfish at 5:42 PM on September 24, 2015 [5 favorites]

I just ran across this and thought of this question:

Thomas Piketty, Capital in the 21st Century, p. 196ff (chapter 5):
The Mystery of Land Values

Consider first the case of farmland in a traditional rural society. It is very difficult to say precisely what portion of its value represents "pure land value" prior to any human exploitation and what corresponds to the many investments in and improvements to this land over the centuries (including clearing, drainage, fencing, and so on). In the eighteenth century, the value of farmland in France and Britain attained the equivalent of four years of national income. According to contemporary estimates, investments and improvements represented at least three-quarters of this value and probably more. The value of pure land represented at most one year of national income, and probably less than half a year. This conclusion follows primarily from the fact that the annual value of the labor required to clear, drain, and otherwise improve the land was considerable, on the order of 3-4 percent of national income. [...]

In particular, it seems impossible to compare in any precise way the value of pure land long ago with its value today. The principal issue today is urban land: farmland is worth less than 10 percent of national income in both France and Britain. But it is no easier to measure the value of pure urban land today, independent not only of buildings and construction but also of infrastructure and other improvements needed to make the land attractive, than
to measure the value of pure farmland in the eighteenth century. [...]

Two further points are worth mentioning. First, the fact that total capital, especially in real estate, in the rich countries can be explained fairly well in terms of the accumulation of flows of saving and investment obviously does not preclude the existence of large local capital gains linked to the concentration of population in particular areas, such as major capitals. It would not make much sense to explain the increase in the value of buildings on the Champs-Elysees or, for that matter, anywhere in Paris exclusively in terms of investment flows. Our estimates suggest, however, that these large capital gains on real estate in certain areas were largely compensated by capital losses in other areas, which became less attractive, such as smaller cities or decaying neighborhoods.

Second, [this] in no way implies that this will continue to be true in the future. From a theoretical point of view, there is nothing that guarantees long-term stability of the value of land, much less of all natural resources.
posted by Eyebrows McGee at 4:07 PM on September 27, 2015 [2 favorites]

I was living in Copenhagen in 1980, and this is not my memory at all.

I was a privileged teenage girl

No doubt you were.

Facts are that Copenhagen almost went bankrupt in 1995, and that before the big renovation projects in Nørrebro and Vesterbro (1978-1998), there were tens of thousands of homes without central heating or even a bathroom. This in a country where winters can be with below-zero degrees for months*. Many didn't even have a private toilet. In these areas, and in parts of Christianshavn, Nordvest and even the inner city which is today the richest part of Copenhagen, crime, prostitution and drugs were commonplace. I always felt safe, but one of my sister's friends was brutally murdered.

All but a few of the Copenhagen public schools were hopelessly lost, and most of the elderly were poorer and more sick than their peers in the rest of Denmark.

It's funny that you mention Christiania, because from the outset, Christiania was in a way a very bourgeois hippie commune. There were drugs and drug addicts in the very beginning, but they got thrown out (except for all marihuana-related items). There were poor people and crazy people in Christiania, but there were also a lot of upper-class youth with solid funding from their parents in the northern suburbs.

I think it goes for many countries, maybe even most, that those who are privileged, or just on the good end of middle class, have no idea of "how the other half lives" - to quote two very different Danish photographers in the US.
Right now, in Denmark, most of "the other half" are still living in places where the middle class never venture, but these places are suburban and rural, and most of them have bathrooms and some source of heating. So I guess that is an improvement.

Clawsoon, I'll maybe get back to your question tomorrow, when I have more time. It's really interesting, and the research I've done so far is quite useful for my work this week!

*I once lived with my boyfriend in an 18 m2 apartment with a toilet, but no sink except the kitchen-sink, and no heating. No bath. We used electrical heaters, but never once did the temperature go over 14 degrees celcius, summer or winter. It did go below during the winter. Before us, a family with five children had lived there. Most of our friends thought it was a really good apartment. And the neighbors bought it when we moved.
posted by mumimor at 4:57 PM on September 27, 2015

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