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Reading Cities and the Wealth of Nations: II

In the third and fourth chapters of Cities and the Wealth of Nations, Jane Jacobs distinguishes between two kinds of non-urban regions. The first, which she calls the "city region," is the inevitable byproduct of economically vibrant cities. The second, "supply regions," do not replace imports and tend to export one or more staple commodities. Neither type of region can be economically self-sufficient.

To recapitulate Jacobs's second premise, vibrant city economies excel at import replacement and export creation. They replace imports with locally produced goods, and through innovation they develop new types of goods which they then export to other regions. Transactions between cities and their city regions, however, do not constitute imports or exports. Indeed, one of the ways in which cities replace imports is by drawing on city-region production.

City regions are areas of activity that is intimately dependent upon their center cities. They lie beyond the cities' suburbs. (Jacobs also refers to such regions as hinterlands.) Not all cities sprout city regions. Jacobs's list of cities that don't is interesting. It includes many capitals and administrative centers. "Rome," she writes, "has an amazingly small and feeble city region, considering the city's own size." This makes sense, however, because symbolic cities, such as capitals (and certainly Rome) don't require active economies at all. The inhabits work in the city's symbolic industry, which either grows slowly over time or doesn't grow at all. Churches and legislatures don't produce more and more of something; they just go on reproducing and exporting the same sorts of things in the same quantities. Their populations are stable. Not that a capital need be stable. London, Paris, Copenhagen and Amsterdam are just four examples of capitals that double as active economic centers, and they all have vast city regions.

What distinguishes a city region from, say, the towns in Southern states that boast large automotive factories? Jacobs lists five factors that characterize urban expansion. Because I find it handy to view these factors in list form, I have broken out the quotation into bullets. They are:

"city markets for new and different imports,

abruptly increased city jobs,

technology for increasing rural production and productivity,

transplanted city work, and

city-generated capital."

In a city region, these factors are brought to bear more or less equally, as we shall see. A Southern town whose economy is dominated by a single industry resembles a supply region: it exports the labor, if not the workers themselves, of local inhabitants. The number of jobs is relatively fixed. The investment of city-generated capital used to build the industry is not correlated to any change in the local markets, for what the city imports to feed its industry (other than raw materials), it does not purchase locally. And industrial domination means that changes in larger markets can cause the local industry to collapse. The Southern town, in short, has a transplant economy, and Jacobs will this up in her seventh chapter.

Once again, Jacobs has a textbook case to illustrate the workings of a city region economy. Her source is Shinohata: Portrait of a Japanese Village, by Ronald P Dore, a British sociologist (Pantheon, 1978). Mr Dore gave the object of his study a fictitious name to protect the village's privacy, so don't go looking for it on a map, where the actual town could be found less than a hundred miles north of Tokyo. Until 1955, Shinohata enjoyed a poor agricultural economy, often at subsistence levels. Between 1900 and 1955, Jacobs notes, the third item of her list, enhanced technology, freed rice farmers to devote more time to cocoon cultivation, but Shinohata's overall economy improved only slightly; Jacobs notes elsewhere that improved technology alone can be nothing more than a way of putting lots of people out of work.

In 1955, presumably owing to expansions of Tokyo's population and its transportation network, Shinohata became engaged in the capital's city-region economy. As she did in the case of Bardou, Jacobs provides a wealth of details, many of them charming, to recount the big local changes brought about by a more-or-less distant city. Here, however, she uses them to show how each of the five factors was brought to bear in an articulated manner upon the village's economy. I shall compress them into five brief bullets.

Once they were directly connected to Tokyo's markets, the villagers found that there was a demand for all sorts of new agricultural products, or what we call truck farming.

By 1975, all the children in fourteen of the forty-nine households had left Shinohata for jobs elsewhere in the Tokyo region. "In the meantime, one outside family arrived and added a fiftieth house to the hamlet: a Tokyo professor and his wife who chose it as a weekend and holiday retreat."

The villagers developed a vastly superior technology for harvesting one of their new exports, oak mushrooms. In some cases, technological improvement was paid for by children who resettled in Tokyo, nicely showing the mesh between this factor and the final one.

A substantial food-processing plant, with a relatively small workforce, was followed four other factories, the most interesting of which is a repair shop for medical centrifuges. A Shinohata man worked for the manufacturer in Tokyo, and when he decided to return to the village he managed to get the local franchise for repairing the machines. Here we have a mesh with the second factor.

Important capital improvements include reliable concrete dikes and the extraction of gravel from the riverbed; all but fifteen percent of such improvements were funded by the government, which is, of course, redistributing city-generated wealth.

Note that each of these factors ties Shinohata to the greater Tokyo economy in many different ways, and that there is no preponderant factor. Children have left, but natives have returned and newcomers have shown up. Villagers work less but earn more, and the village is no longer subject to a twenty-year cycle of flood and famine. It sounds too good to be true, but even allowing for a rosy bias in Jacobs's account, it is not hard to see that easy intercourse with Tokyo and with Tokyo's region is responsible for each of Shinohata's transformations. At the same time, no one can claim that Shinohata has become a city in its own right. Its luster depends entirely on Tokyo's.

It is tempting to attribute Shinohata's economic transformations to the industriousness, intelligence, and resourcefulness of its people. But people in the transformed Shinohata are the first to admit that their forebears worked harder than they do. As for resourcefulness, it takes more of that to make straw rain capes, as the people of old Shinohata did, than to go to a store and buy rain gear as Shinohatans do today. Considering how little they had to work with, the people of old Shinohata were unbelievably resourceful. Their present-day descendeants are the "same" people - some of them literally the same individuals, in fact. What has changed is not their attributes as human beings, but rather the fact that city markets, jobs, technology, transplants and capital all came to bear upon Shinohata, massively and in reasonable proportion to one another. The transformations are inexplicable in other terms.

In supply regions, in contrast, "cities shape stunted and bizarre economies in distant regions," where only one or two of the five factors is brought to bear, "massively," but not in reasonable proportion. Jacobs's case study here is Uruguay. Uruguay was basically one big ranch, supplying beef to Europe, for most of its modern existence. In the immediate postwar period, devastated Europe's demand caused Uruguayan exports to boom, but the boom didn't last, and the bust has proven to be persistent. While the going was good, Uruguayans were content to import what they needed. When the going got bad, they discovered that you cannot set up import-replacement overnight. In a paragraph that corresponds to the preceding quotation, she writes,

It may be tempting to lay Uruguay's economic troubles to incompetence, fecklessness, lack of foresight, self-indulgence and the like. But actually, Uruguayans ran their supply economy competently and responsibly. What they did do, they did well. What they did not do was create a productive city for themselves - a city replacing wide ranges of its imports from time to time in the normal course of growth, and thus automatically generating a complex and many-sided city region producing amply and diversely for its own people and producers as well for others.

As I noted on the previous page, when I look at today's New York, I see a supply region. New York exports many symbolic goods, for many of which the market is expanding at the moment. But it imports almost everything material from somewhere else. (It was the two chapters under discussion, by the way, that made me realize that New York City would never be a viable economic unit if it did not control its enormous watershed.) For decades, city leaders have sought to drive industry out of the city, failing to realize that industry has changed. It is no longer a blight. It is no longer dirty. In most cases, it is no longer "heavy." It is pretty much what it was in old Florence: artisanal. Only now the tools run on electricity and involve computers.

To embark on a tangent of my own, I'd point out that in order to keep a diverse population employed diversely, every city has a very great interest in the regulation of rents. This is so out of fashion, however, that cities resort to tax breaks, which amounts to transferring public wealth into private pockets. I don't want to sound too Maoist, but property owners contribute almost nothing to the general wealth, and their perspicacity, or, more likely, that of their ancestors, ought not to be too ludicrously rewarded, at least at the expense of a city's economic health. I have watched "rising rents" transform what was still a distinctively German neighborhood in 1980 into an open-air mall, one largely dedicated to regional and national chain stores specializing in clothes and consumer electronics. It is true that most of the German-speaking residents of Yorkville - once known as "Germantown" - had long since moved to the suburbs. But to the extent that rising rents were a factor in the transformation, it was a gratuitous worsening.

Jacobs ends the chapter by debunking the supply-side syllogism that, in supply economies, "specialties represent division of labor at the regional or international scale, that division of labor is efficient, and therefore that supply economies form and persist because the arrangement is efficient. First, she counters that the argument is "teleological ... On might as well say that rain is beneficial to plants and that that is why it rains." Supply regions don't exist because they're efficient, but because they have no import-replacing cities of their own, and often can't. Supply economies are "efficient," perhaps, for cities, but the inhabitants of supply regions are often desperately poor. This is Jacobs's second argument. It has become common, since Cities and the Wealth of Nations appeared, to distinguish extractive from productive regions. The efficient extraction of a commodity does not imply an efficient local economy. "An economy that can fill few of the needs of its own people and producers is not efficient." Adam Smith believed the supply-side argument, of course, because he viewed economy from national perspective, jumbling together the wildly different economies of, say, London on the one hand and Wales on the other. (May 2006)

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