Narrative approaches are ill-designed for discerning what works and what does not

An interesting report which I think misses some key elements. From Nashville’s Star Rises as Midsize Cities Break Into Winners and Losers by Ben Casselman.

Forty years ago, Nashville and Birmingham, Ala., were peers. Two hundred miles apart, the cities anchored metropolitan areas of just under one million people each and had a similar number of jobs paying similar wages.

Not anymore. The population of the Nashville area has roughly doubled, and young people have flocked there, drawn by high-paying jobs as much as its hip “Music City” reputation. Last month, the city won an important consolation prize in the competition for Amazon’s second headquarters: an operations center that will eventually employ 5,000 people at salaries averaging $150,000 a year.

Birmingham, by comparison, has steadily lost population, and while its suburbs have expanded, their growth has lagged the Nashville area’s. Once-narrow gaps in education and income have widened, and important employers like SouthTrust and Saks have moved their headquarters. Birmingham tried to lure Amazon, too, but all it is getting from the online retail giant is a warehouse and a distribution center where many jobs will pay about $15 an hour.

Its an interesting narrative but only scratches the surface.

It also reflects the challenge of deriving systemic lessons from dynamic chaotic systems.

Birmingham and Nashville might have had some similar characteristics forty years ago but it is not clear to me that they were usefully identical enough to do apples-to-apples comparisons. As many similarities as they had, they also had distinct differences. This matters because if we are seeking to learn which urban policies make a difference, then there is a tendency to look at two nominally similar locations and compare actions and outcomes. But with complex systems, that is a fallacious approach. You cannot find two identical contexts to compare. Path dependency is materially influential and yet often not taken into account. In addition, emergent order is still a not fully understood phenomenon.

What you really need to do is look at a portfolio of similar initiatives across a large number of instances and see what the averaged outcomes might look like and seek predicate commonalities. Perhaps Initiative X works in City A which is otherwise identical to City B, but does not work in City B. If that is the case, then there is some independent variable which is driving the different outcome no matter how similar the two cities appear.

Why does building a taxpayer funded football stadium work in one city and not another? What about investments in education? Or policing strategies? Or infrastructure investments? How about streetcars? Mass transit? Rails-to-trails conversions? For every faddish urban renewal strategy, you can often find as many successes as failures. There is often an intense publication bias effect at work. Successes are trumpeted far more loudly than failures so for a period of time so that a particular urban fad will gain momentum as the great silver bullet for urban woes and only when there are too many failures to ignore does the bubble bust and urban planners move to the next fad.

Much as I think he misses the mark, Casselman's argument does bring attention to a deeper set of issues with which we are hardly yet engaging. In free-markets, there is an inherent tendencies towards monopolies and oligopolies. In many or most labor markets, there are is an inherent tendency towards winner-take-all reward structures. In national structures, there is an inherent tendency towards a small (usually one or two) number of economically dominant cities.

I have never seen such a study but I would wager that if you were to look at the 195 nations of the world and in each add up the total economic activity of all the cities in that nation, they would likely nearly all represent the standard Pareto distribution with twenty percent of the cities producing eighty percent of the GDP. Alternatively, I would not be surprised if the top three cities in most countries didn't account for 40-60% of the entire national GDP for that country.

In this respect, America has been an outlier, simply because of its size. We have multiple regional poles of productivity - Boston, New York, Chicago, Miami, Atlanta, Columbus, Dallas, Los Angeles, San Francisco, etc.

But there are a lot of trends supportive of Casselman's concern that we are winnowing down to a few winner take all cities.

This all comes down to market structure and productivity. What is there that can be done to make it feasible for all cities to have the highest levels of productivity? Not how do we spread the wealth but how do we ameliorate the trends towards winner-take-all? And it has to be about increasing productivity, not fairness or equality. Without the productivity, everyone is equally miserable.