The economic case for density

By • on August 15, 2013

In two recent New York Times posts Paul Krugman has explored the economic benefits dense regions enjoy compared to those characterized by sprawl. They are worth checking out.

The first looks at the Detroit bankruptcy. Its entitled “A Tale of Two Rust-Belt Cities“. Krugman asks: “Here’s a question: is the crisis in Detroit simply a function of the industrial decline of the U.S. heartland, or is it about internal developments within the metro area that have produced a uniquely bad outcome?” He looks for the answer by comparing metro Detroit to metro Pittsburgh. As he notes one declining, the other expanding. Krugman writes:

“… Obviously, however, Detroit’s central city has collapsed while Pittsburgh has had at least something of a revival. The difference is really clear in the Brookings job sprawl data (pdf), where less than a quarter of Detroit jobs are within 10 miles of the traditional central business district, versus more than half in Pittsburgh. At this point, … Pittsburgh is showing a lot of resilience; it seems to have managed to diversify its economy, and in fact is more than matching national employment performance. Detroit, despite the auto rescue, isn’t — and, of course, its center did not hold. It’s hard to avoid the sense that greater Pittsburgh, by taking better care of its core, also improved its ability to adapt to changing circumstances. In that sense, Detroit’s disaster isn’t just about industrial decline; it’s about urban decline, which isn’t the same thing. If you like, sprawl killed Detroit, by depriving it of the kind of environment that could incubate new sources of prosperity.” (Emphasis added.)

Krugman also explores the connection between density/sprawl and economic mobility. This is based on the must read new study from the Economic Mobility Project of economic mobility –– the ability of those who grow up at the bottom to move up the economic ladder. (A great summary, with terrific interactive graphs, from the New York Times can be found here.)

As one might expect metro Detroit is one of the laggards. A place where those at born at the bottom have a small chance to move up the economic ladder. In a post entitled “Stranded by Sprawl” Krugman explores why metro Detroit and metro Atlanta –– two very different metros –– both are near the bottom of the economic mobility rankings. He writes:

“Yet in one important respect booming Atlanta looks just like Detroit gone bust: both are places where the American dream seems to be dying, where the children of the poor have great difficulty climbing the economic ladder. In fact, upward social mobility — the extent to which children manage to achieve a higher socioeconomic status than their parents — is even lower in Atlanta than it is in Detroit. And it’s far lower in both cities than it is in, say, Boston or San Francisco, even though these cities have much slower growth than Atlanta. So what’s the matter with Atlanta? A new study suggests that the city may just be too spread out, so that job opportunities are literally out of reach for people stranded in the wrong neighborhoods. Sprawl may be killing Horatio Alger.”

(By the way race did not turn out to be a major contributor to the differences between regions. As Krugman writes: “When the researchers looked for factors that correlate with low or high social mobility, they found, perhaps surprisingly, little direct role for race, one obvious candidate.”)

Incubating new sources of prosperity and improving economic mobility are both outcomes that metro Detroit desperately needs. That more density –– particularly a dense/vibrant central city –– and far less sprawl are an important part of the recipe to get both is a lesson metro Detroit needs to learn. The sooner the better.

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