In recent decades, the following trends have held in the United States:
- A few metro areas have prospered at the expense of everyone else;
- Within those metros, specific core neighborhoods (and a few suburbs) have prospered at the expense of everyone else;
- Housing and office costs in those neighborhoods have exploded, effectively preventing large numbers of businesses and employees from sharing in the prosperity they generate.
Now Conor Sen suggests that this process may have run its course. Housing and office costs have reached so high that people might finally take advantage of recent improvements in communication technology to move employment outside the core parts of the lucky metros. Just because the past quarter-century has watched the inexorable advance of a few metros does not mean that the next quarter century will do the same.
If he is right, two things will happen. First, we may still have expensive playground cities, like (I hate to say this) Manhattan and Brooklyn, but their exclusivity will no longer directly hurt the people who cannot partake in that exclusivity. They will be like Disneyland or a fancy restaurant. Living there will be an exclusive consumption good rather than an investment that increases the income of people who can afford to make it. Second, the people who predicted an urban to rural migration back in the 1970s will be proved right. 2040 will look about the way we expected it to back in 1970.
The analogy is with the automobile: mass produced from 1908 onwards, it did not really start to reshape the American landscape until 1945.
I am not so sure. Face-to-face meetings and random interactions seem as important as they ever were. The agglomeration economies in our cities do not look set to dissipate. And the communications technologies are here and have been here for a decade or more; no Interstate Highway Systems necessary. And inasmuch as metropolitan dominance is policy-driven, those policies show no sign of going away.
So what will the cities of 2040 look like? There are three possibilities:
- Gated communities. The agglomeration economies persist; more people get priced out. The recent trend of Americans for the first time ever migrating from richer areas to poorer ones continues. Cities remain pleasant; overall society, not so much.
- Urban growth. The dam breaks and America lets suburbs urbanize and cities Manhattanize. This makes cities less pleasant for many, of course, but it increases opportunities for people currently locked out. The Bay Area balloons to 15 million people, Los Angeles becomes a forest of four-story buildings, Brooklyn becomes Manhattan.
- Things turn around. Some cities remain playgrounds, but who cares?
My money is on (1).