Why Diverse Cities Have Emerged As the Drivers of Growth
Urban and rural economies are much like the proverbial fox and the hedgehog. Like the hedgehog, rural economies do essentially one thing very well. But like the fox, urban areas can do many things well. More than any other factor, that may explain why cities have emerged as the driver of economic growth.
For some, it may seem hard to believe that at one time not that long ago rural America saw itself as the bulwark of the U.S. economy. Indeed, at one time rural Americans were largely characterized by contempt for city dwellers, whom they saw as dependent on farm communities for sustenance and even survival.
The great populist William Jennings Bryan expressed this view most pungently in one of his three unsuccessful campaigns for president, during the late 19thcentury. As Bryan put it: “Burn down your cities and leave our farms, and your cities will spring up again as if by magic; but destroy our farms and the grass will grow in the streets of every city in the country.”
Bryan didn’t realize that he was describing a rustic America that had already begun to change dramatically – from rural to urban – before he was born in 1860. In 1910, when Bryan was still active in politics, rural America’s share of the U.S. population was over 70 percent. Just 10 years later, the 1920 census marked the first time that over half of the U.S. population was defined as urban. Today, urban metropolitan areas are home to more than 80 percent of the U.S. population. Rural areas contain less than 20 percent.
The internal migration of Americans from rural to urban areas reflect the same motivation as immigration to the United States: People in search of economic opportunity. The industrial revolution and its need for factory workers, combined with the agricultural revolution and the need for far fewer farmers, was the first great trigger for urban growth. But it was hardly the last. The truth is, the most dynamic, high-growth cities in the United States are not manufacturing centers – they are former manufacturing centers. What characterizes them is a willingness and ability to adapt to changing economic opportunities and needs.
As RealClearMarkets editor John Tamny has pointed out, at one time New York was the leading manufacturing center of the United States. Not surprisingly, it drew millions of people from across the Atlantic and from the U.S. interior to make a 20th century living working in a factory. Today, one would be hard-put to find a factory in New York. Yet the Big Apple is still the economic center of the United States. Rather than cling to jobs in the rag trade and other manufacturing sectors, New York has developed new ways of making a living – better ways of making a better living. The same is true of former manufacturing centers like Boston and Minneapolis. How we earn our money depends largely on how we spend our money, and how we produce the things we are willing to spend money on. Economies – local as well as national – change over time, along with the most efficient ways of making a living.
We are seeing the triumph of the urban fox over the rural hedgehog. Rural areas are based around farming, usually a limited, specialized number of crops. In many ways, rural areas – and one-industry industrial towns – are like someone at a Las Vegas casino, constantly putting all of their chips on one roulette square. They may win a single spin, maybe even enjoy a relatively long winning streak. But sooner or later, their luck runs out and the wheel stops at a different number. Dynamic urban areas, on the other hand, spread their bets. And they change their bets over time, reflecting shifting odds.
But what happens to a coal-dependant state like West Virginia, when coal becomes uncompetitive? What happens to rural areas, when instead of requiring 40 percent of its population to provide its food, the United States needs less than 3 percent? Or when more efficient transportation gives people the opportunity to enjoy a wider selection of foods, from all over the world, all of the time?
In William Jennings Bryan’s era, it may have been impossible to imagine a robust national economy that did not have a well-populated bread basket. Today, it would be difficult to imagine one that did – and lacked dynamic cities, characterized by multiple industries, technological leadership, and well-educated, entrepreneurial and diverse populations. Over time, it is simply better to be a fox than a hedgehog.
