[migration of firms to small cities is inhibited by] Insufficient maturity of the coordination mechanisms – Maybe tomorrow’s equivalent of the free-state project/charter cities could be a proper linked in group where people can quite literally call out for all sorts of talent that they want in a city. This group could take over small towns or build new cities on empty land with finance coordinated with dominant assurance contracts enforced by blockchain like trustless/minimal trust mechanisms. All of these mechanisms are still immature. Maybe someday when the costs of the bay area really go up, the next big tech firm could try this.
Competing with San Francisco or New York for talented people is like trying to compete with Google in search or Facebook in social networking. In fact, it is more difficult, because the coordination problem is more subtle.
For instance, if you wanted to lure me to new city, you would need to insure that there are Israeli folk dance sessions. That requires coordinating enough dancers to move there. But prior to that, it requires that you know that this is an issue for me. And, of course, to get those dancers, you have to deal with their primary considerations, which might not be dancing.
Also, to get me to move, you need to persuade my wife. And she has her own considerations.
Established big cities have “solved” these coordination problems through a spontaneous order. You can think of them as overlapping networks of coordination. They attract Jane with a particular job opportunity, John with a particular amenity, and someone else with the opportunity to meet John and Jane.
Economists say the best cure for high prices is high prices; so spontaneous order will eventually “solve” the high costs of SF and NYC.
Agreed
Note the commonality of winner cities. While climate, geography, and even nation may differ, culturally they are more alike than not. For that reason I doubt any of these different fantasies.
That’s a nonsequitur. Why does urbanization causing certain cultural commonalities effect the plausibility of planned migration?
Isn’t this all just driven by gains from ever more granular labor specialization? Doesn’t that make it kind of crazy to push for new cities?
The only valid answer is expansion of second and third tier cities, not new ones.
It would probably be more effective to work with what’s already been built. If I want to start a tech company but avoid Sikicon valley prices, rather than trying to start a new city, why not just pick, say whichever of Texas’s big cities has the most programmers? Or whatever dearth of talent there is in a given city, make up for by recruiting younger: comp acid majors right out of college. As technical knowledge becomes more diffuse this should become more plausible.
Note that folk dancing requires people to be close to each other. Meatspace > Cyberspace. Maybe once upon a time great chess players thought it useful to move to cities with clubs where they could reliably find challenging partners. But now anyone can play online, so for chess Cyberspace > Meatspace.
The argument I’ve presented here is that winner cities are for expensive-to-automate activities for which Meatspace > Cyberspace. I’ve focused on income-earning activities, but it also applies more broadly to consumption experiences and person-matching opportunities for which the same criterion holds.
One interesting implication of this thesis is that increased diversity in skills and preferences is correlated with increased minimum scale of a viable city. The greater specialization and extent of these markets means lower ‘scale diversity’ as smaller communities evaporate, since they are increasingly unable to provide a chance for everyone to make their most desired matches.
You see this happening all the time at the other end of the scale. Small towns regularly disappear (or almost so) due to these very same reasons. Often they exist(ed) to serve a one-industry purpose, but due to their size never developed the social/conceptual/skills infrastructures to sustain them once the main industry declines. Nothing remarkable in all this.
Thanks for the callout, Arnold.
I agree with your assessment of the current state of affairs. I just believe that the social networks as they are currently structured could have the kernel of a future city in them. Let’s take the example of dating. The spectre of being rejected was solved by tinder when it matched people who find each other attractive. There really are no meatspace equivalent solutions which are comparable in elegance to the same.
The coordination problem may seem insurmountable as of now, but do you agree that these things could be negotiable? How much do you value this specific experience? Maybe once the cost differences became juicy enough, there may be a possibility of a collapse in the wave function. Your idea is that as you follow the graph, the needs will multiply and become an unbounded monster. My thought is that there is a possibility that people with similar tastes may find convergence somewhere and the prospect of gaining financial independence sooner could be very tempting. Most people just want a good school, hospital and a market for their services.
People work very hard to get the equity of a firm that could be a world beater. If they could be offered equity of a new silicon valley, that would be worth something.
The thing is these need a huge number of things to come together. You need people with talent, you need to have a very large financial capability to take into account all the costs, you need willing hosts. My point is that with growing ability to run simulations, we should be able to get closer to these solutions with time.
Israeli folk dancing is a non-negotiable?
It seems that cities should advertise the ability to solve the coordination problem. “We’re a hub for startups,” for example, would be a bat signal for people trying to solve coordination problems.
Every single city is already doing this. It’s almost a turn off. You wouldn’t go to a college that advertised on a billboard. And if your a start up hub already you don’t need to tell anyone that for them to know.
Actually, here in NYC, plenty of colleges do advertise on the equivalent of billboards, i.e., signs in the subway and on buses. And I don’t mean just junior colleges and trade schools.