Winner-takes-all urbanism and superstar cities: on Richard Florida’s “New Urban Crisis”

Richard Florida speaking in 2011. Image: Getty.

The city, the late political theorist Benjamin Barber argued in his 2013 book If Mayors Ruled The World, would be our salvation: while nations concerned themselves with sovereignty, wars, and other forms of political dick-waving, it would be cities that would have to address global problems such as climate change.

There was, though, a slight kink in this argument: a big reason cities were best placed to reduce emissions was because cities were producing most of them. The city, as Barber himself acknowledged, has always been an ambiguous and contradictory idea – representing, on the one hand, civilisation, opportunity and freedom; on the other, decadence, poverty, isolation. There’s little point trying to work out which view is correct, since clearly both are. The true meaning of the city is simply a matter of taste.

It’s another contradiction that’s at the heart of The New Urban Crisis, the latest manifesto from Richard Florida, an American  urbanist and guru of the “creative city” approach to urban regeneration. Cities now house around 55 per cent of the world’s population; the most successful – London, New York, San Francisco – are today as sought after as ever, sources of growth, innovation and cultural vibrancy.

So used are we to this state of affairs that it’s easy to forget how big and how recent a turnaround this is. Just a generation ago these same cities were characterised by industrial decline, crime and depopulation as their citizens fled to the suburbs. Between 1939 and 1988, London lost a quarter of its population.

In the 1990s, that changed. Living downtown became aspirational again – I’ve always suspected New York sitcoms to be the culprit, although the departure of foul-smelling industries should probably get some credit, too. Crime fell; populations rose. Today, while Britain’s international stature may have faltered, London is one of the few serious candidates for most important city in the world. Together, Florida says, these “superstar cities” are so successful that, with just 7 per cent of the world’s population, they can generate 40 per cent of its GDP. It’s stirring stuff.

That’s the good news. The bad – the crisis of the book’s title – is a messy set of connected problems. One is the failure of urbanism in the developing world where, in contrast to earlier phases of history, cities are booming without much in the way of economic growth. Florida credits this, as he does so much else, to globalisation: why develop your own resources when you can just buy them in?


Another concern is the scale of the drop off between the most successful cities and the rest. In a pattern familiar in the UK, the ambitious, talented and creative are drawn to those centres where productivity, and wages, are highest. The resulting brain drain makes it even harder for the places they leave behind to catch up.

This “winner-takes-all urbanism”, as Florida terms it, would be bad enough if the two sides contained equal numbers of cities, but they don’t: the few-dozen cities with high wages and booming tech scenes are dwarfed in number by those where wages are low, deindustrialisation is still a concern, and the new urban crisis looks a lot like the old one. The cities in the latter group include many that were recently unexpectedly enthusiastic for Brexit on one side of the Atlantic, and for Donald Trump on the other.

Perhaps the biggest issue of Florida’s new urban crisis, though, is that winner-takes-all urbanism doesn’t even seem to be working for the people who live in the superstar cities. The clustering of economic activity in a relatively small number of cities has sent land values through the roof. The result is that, even though average wages are higher, after housing costs the poor are effectively worse off in New York than in, say, Houston.

Not for the first time we’ve managed to construct an economic system that’s brilliant for wealthy landowners but terrible for pretty much everyone else. “Class today,” Florida writes, “is not just about the kind of work we do, but also the places in which we live, which shape everything from our access to jobs to the schools our kids attend and our prospects for upward mobility.” It’s a sort of Marxist theory of place.

Like the problems Florida identifies, his solutions are many, varied and intimidating. They include a land-value tax and better public transport, to enable more people to live and work in these big, productive cities; a new generation of subsidised housing for key workers in danger of being priced out of places that wouldn’t survive their departure; higher minimum wages and even that perennial favourite, a universal basic income.

It’s not that these ideas are bad, or unambitious: quite the opposite. What’s not clear is how we would implement them. There are still some winners in the current system – and those who can afford to grab a slice of the superstar cities include much of the West’s dominant political class.

Florida’s new urban crisis is, he claims “the defining issue – and struggle – of our time”. Perhaps he’s right. But while one side of that struggle has the numbers, the other wields all the power. We may be struggling with these particular urban contradictions for some time to come.

“The New Urban Crisis: Gentrification, Housing Bubbles, Growing Inequality and What We Can Do About It” by Richard Florida is published by Oneworld.

This review originally appeared in our parent publication, the New Statesman.

 
 
 
 

“Stop worrying about hairdressers”: The UK government has misdiagnosed its productivity problem

We’re going as fast as we can, here. Image: Getty.

Gonna level with you here, I have mixed feelings about this one. On the one hand, I’m a huge fan of schadenfreude, so learning that it the government has messed up in a previously unsuspected way gives me this sort of warm glow inside. On the other hand, the way it’s been screwing up is probably making the country poorer, and exacerbating the north south divide. So, mixed reviews really.

Here’s the story. This week the Centre for Cities (CfC) published a major report on Britain’s productivity problem. For the last 200 years, ever since the industrial revolution, this country has got steadily richer. Since the financial crash, though, that seems to have stopped.

The standard narrative on this has it that the problem lies in the ‘long tail’ of unproductive businesses – that is, those that produce less value per hour. Get those guys humming, the thinking goes, and the productivity problem is sorted.

But the CfC’s new report says that this is exactly wrong. The wrong tail: Why Britain’s ‘long tail’ is not the cause of its productivity problems (excellent pun, there) delves into the data on productivity in different types of businesses and different cities, to demonstrate two big points.

The first is that the long tail is the wrong place to look for productivity gains. Many low productivity businesses are low productivity for a reason:

The ability of manufacturing to automate certain processes, or the development of ever more sophisticated computer software in information and communications have greatly increased the output that a worker produces in these industries. But while a fitness instructor may use a smartphone today in place of a ghetto blaster in 1990, he or she can still only instruct one class at a time. And a waiter or waitress can only serve so many tables. Of course, improvements such as the introduction of handheld electronic devices allow orders to be sent to the kitchen more efficiently, will bring benefits, but this improvements won’t radically increase the output of the waiter.

I’d add to that: there is only so fast that people want to eat. There’s a physical limit on the number of diners any restaurant can actually feed.

At any rate, the result of this is that it’s stupid to expect local service businesses to make step changes in productivity. If we actually want to improve productivity we should focus on those which are exporting services to a bigger market.  There are fewer of these, but the potential gains are much bigger. Here’s a chart:

The y-axis reflects number of businesses at different productivities, shown on the x-axis. So bigger numbers on the left are bad; bigger numbers on the right are good. 

The question of which exporting businesses are struggling to expand productivity is what leads to the report’s second insight:

Specifically it is the underperformance of exporting businesses in cities outside of the Greater South East that causes not only divergences across the country in wages and standards of living, but also hampers national productivity. These cities in particular should be of greatest concern to policy makers attempting to improve UK productivity overall.

In other words, it turned out, again, to the north-south divide that did it. I’m shocked. Are you shocked? This is my shocked face.

The best way to demonstrate this shocking insight is with some more graphs. This first one shows the distribution of productivity in local services business in four different types of place: cities in the south east (GSE) in light green, cities in the rest of the country (RoGB) in dark green, non-urban areas in the south east in purple, non-urban areas everywhere else in turquoise.

The four lines are fairly consistent. The light green, representing south eastern cities has a lower peak on the left, meaning slightly fewer low productivity businesses, but is slightly higher on the right, meaning slightly more high productivity businesses. In other words, local services businesses in the south eastern cities are more productive than those elsewhere – but the gap is pretty narrow. 

Now check out the same graph for exporting businesses:

The differences are much more pronounced. Areas outside those south eastern cities have many more lower productivity businesses (the peaks on the left) and significantly fewer high productivity ones (the lower numbers on the right).

In fact, outside the south east, cities are actually less productive than non-urban areas. This is really not what you’d expect to see, and no a good sign for the health of the economy:

The report also uses a few specific examples to illustrate this point. Compare Reading, one of Britain’s richest medium sized cities, with Hull, one of its poorest:

Or, looking to bigger cities, here’s Bristol and Sheffield:

In both cases, the poorer northern cities are clearly lacking in high-value exporting businesses. This is a problem because these don’t just provide well-paying jobs now: they’re also the ones that have the potential to make productivity gains that can lead to even better jobs. The report concludes:

This is a major cause for concern for the national economy – the underperformance of these cities goes a long way to explain both why the rest of Britain lags behind the Greater South East and why it performs poorly on a

European level. To illustrate the impact, if all cities were as productive as those in the Greater South East, the British economy would be 15 per cent more productive and £225bn larger. This is equivalent to Britain being home to four extra city economies the size of Birmingham.

In other words, the lesson here is: stop worrying about the productivity of hairdressers. Start worrying about the productivity of Hull.


You can read the Centre for Cities’ full report here.

Jonn Elledge is the editor of CityMetric. He is on Twitter as @jonnelledge and on Facebook as JonnElledgeWrites

Want more of this stuff? Follow CityMetric on Twitter or Facebook