There are as many different answers to that question as there are people left in Detroit, and each one of them could tell you something that they value about the place. But there is one force that helps explain why most of them stay—cheap, durable housing. Any area’s population is linked closely to the number of homes in that area, and homes don’t disappear overnight. They are also too valuable to abandon, at least immediately. Their prices drop precipitously, but they remain occupied, often for many decades. According to the Census Bureau, 86 percent of central-city Detroit’s housing stock was built before 1960. The average house in the city is valued at $82,000, which is far below the cost of new construction.
When cities are doing well, they can grow very quickly as long as homes can be speedily constructed to house new residents. When cities decline, they decline very slowly, because people are loath to abandon something as valuable as a home. In a sense, the durability of housing is a blessing, because it provides cheap space to people with few resources. The downside of cities kept alive through cheap housing is that they overwhelmingly attract the poor, creating centers of extreme deprivation that cry out for social justice.
Shrinking to Greatness
Many cities around the world have experienced some version of Detroit’s fate, and politicians have implemented many approaches to urban decline. U.S. cities have mainly tried to build their way out of decline. Spain has turned to transportation, spending tens of billions of dollars on high-speed rail, partly as a way to boost economic growth in poorer areas. Other places, like Italy, have used large tax subsidies to encourage enterprise in poorer regions. Many European cities have tried cultural strategies like the Guggenheim Museum in Bilbao. In 2008, Liverpool had a flurry of new construction to celebrate its one-year stint as Europe’s capital of culture. Which of these strategies can actually reverse urban decline? Which strategies generate benefits that cover their costs?
In the nineteenth century, when moving goods was enormously expensive, places with good transportation links, like New York or Liverpool, enjoyed a huge edge. Today, moving goods and people is pretty cheap almost everywhere, so further improvements in transportation provide far less of an edge.
Transportation investments are most effective when they radically increase the speed at which a poor area can access a booming, space-starved metropolis. In Spain, a spate of investment in high-speed rail has radically reduced travel times between Madrid and other cities, such as Barcelona and Ciudad Real. The high-speed rail connection shortened the 140-mile trip between Madrid and Ciudad Real to fifty minutes, and presto, people can live in Ciudad Real and work in Spain’s largest city. The population of Ciudad Real does seem to have increased since getting the rail connection. In compact England, cities like Birmingham, Manchester, and Liverpool could also grow significantly as a result of extremely fast rail connections to London.
Yet the very things that have helped Ciudad Real benefit from high-speed rail are absent in much of America’s Rust Belt. Flying to New York from Buffalo or Cleveland or Detroit will always be faster than taking a train. There’s a lot of empty space between New York and these cities, so why would those relatively distant places be natural spots for back-office overflow? Faster links to New York can certainly benefit nearby places like Philadelphia or New Haven, but America’s wide-open spaces are just too big for faster ground transportation to revitalize more distant areas.
Another way to bring places back is to give businesses tax cuts when they locate in a disadvantaged area. Research has found that tax breaks significantly increased employment in troubled areas, but it took $100,000 in tax breaks to generate just one job. But regardless of cost, should the national government even be using the tax code to shuffle economic activity around? Would it have made sense to tax nineteenth-century Chicago or Detroit to keep the population of Salem, Massachusetts, growing? Why should national policy encourage firms to locate in unproductive places?
National policy should strive to enrich and empower everybody, not to push people to live in any particular spot. The federal government has no business trying to encourage economic development in the foothills of the Rockies, and it is hard to see the case for spending billions to encourage people to move to politically favored cities. Expensive efforts to renew cities often do more for well-connected businesses than for the poor people living in those declining areas. Even if building a museum in a depressed neighborhood raises property values and brings in a stream of artsy visitors, that won’t help the renter who doesn’t care for art and now has to pay more for her apartment.
The success of Bilbao’s Guggenheim Museum has lent credence to the view that cultural institutions can be successful urban renewal strategies. Frank Gehry’s iconic structure has certainly spurred tourism, which rose from 1.4 million visitors in 1994 to 3.8 million in 2005; the museum alone attracts a million visitors annually. There are certainly Bilbao skeptics, however. One study attributed only about nine hundred new jobs to the museum, a project that cost the Basque treasury $240 million. But the bigger problem with drawing lessons from Bilbao is that its experience is far from standard. For every Guggenheim, there are dozens of expensive failures, like the National Centre for Popular Music, built in Sheffield, England, with the hope of four hundred thousand new visitors each year. It attracted a quarter of that number when it opened in 1999 and closed the same year. Leipzig also has a beautiful art museum, with splendid soaring rooms that unfortunately emphasize the museum’s paucity of visitors.
Leipzig is worthy of emulation less for its cultural strategy than for its hardheaded policy of accepting decline and reducing the empty housing stock. In 2000, one fifth of the city’s homes stock was vacant, a total of 62,500 units. After refusing to accept the reality of decline for decades, the city government finally recognized that those units would never again house anybody and that it made more sense to demolish them and replace them with green space. Bulldozing vacant homes reduces the costs of city services, eliminates safety hazards, and turns decaying eyesores into usable space. Leipzig set a target of destroying 20,000 vacant units.
In the United States, Youngstown, Ohio, which has lost more than half of its 1970 population, has also embraced this vision of shrinking to greatness. In 2005, the city’s newly elected mayor immediately earmarked funds for demolishing abandoned homes. Many of these homes are being destroyed. Parks, open space, and large lots will replace once-dense neighborhoods. This strategy won’t bring Youngstown’s population back, but it will make the city more attractive, less dangerous, and cheaper to maintain. And finally Detroit has itself found a mayor, David Bing, who understands that the people aren’t coming back and that empty homes should be replaced with some more reasonable use of space. Mayor Bing is not short on compassion, but he also understands the edifice error. He knows Detroit can be a great city if it cares for its people well even if it has far fewer structures.
Museums and transportation and the arts do have an important role in place-making. Yet planners must be realistic and expect moderate successes, not blockbusters. Realism pushes toward small, sensible projects, not betting a city’s future on a vast, expensive roll of the dice. The real payoff of these investments in amenities lies not in tourism but in attracting the skilled residents who can really make a city rebound, especially if those residents can connect with the world economy.
The path back for declining industrial towns is long and hard. Over decades, they must undo the cursed legacy of big factories and heavy industry. They must return to their roots as places of small-scale entrepreneurship and commerce. Apart from investing in education and maintaining core public services with moderate taxes and regulations, governments can do little to speed this process. Not every city will come back, but human creativity is strong, especially when reinforced by urban density.
While poverty and urban failure are often linked in people’s minds, particularly because declining places attract poor people with cheap housing, there’s nothing intrinsically
wrong with urban poverty. In fact, as we’ll see in the next chapter, poverty is usually a sign of a city’s success.
CHAPTER 3
What’s Good About Slums?
There are few pleasures simpler or purer than drinking a plastic cup of cool, cheap beer on Ipanema Beach in Rio de Janeiro at sunset. Rio’s beaches are among the most hedonistic of urban spaces. The weather is generally sublime. The beach is usually adorned with beautiful people. Looking eastward toward the sea, one takes in a spectacular coastline graced by the Sugar Loaf hill. Landward, a row of impressive structures takes advantage of the oceanfront views. It has been forty years since Rio was Brazil’s capital, and its political and economic importance has waned over that time, but the city remains the most pleasurable place in a pleasurable nation. Beautiful older buildings and great natural beauty are the physical bones on which Rio’s natives, the Cariocas, create an exciting urban space. That space is a mecca for tourists, but the Cariocas usually seem to be having even more fun than the foreigners.
If you look from Ipanema Beach into the hills, your eye will be drawn by the vast statue of Christ the Redeemer, the Corcovado. But look carefully, and you’ll spy a blot upon this urban arcadia. The hills surrounding Rio are filled with shantytowns, favelas, that often lack electricity or sewers. Their presence in those hills seems puzzling, incongruous. Rio’s hills have some of the best views in the world, so why are they occupied by disheveled huts, where rule of law is as rare as decent infrastructure? The sight of the favelas reminds the beachgoer that Rio is not just a playground for the prosperous, but a city where more than a million poor people crowd into dilapidated housing.
Twenty-five hundred years ago, Plato noted that “any city, however small, is in fact divided into two, one the city of the poor, the other of the rich.” Almost every city in every developing country has its concentrations of poverty, its shantytowns. In some places, like Kolkata or Lagos, the suffering can be so extensive and extreme that observers can’t help but see the entire city as hellish. Even in the developed world, cities are disproportionately poor. In America, the poverty rate is 17.7 percent within cities and 9.8 percent in suburbs.
The terrible prevalence of urban poverty seems to indict cities as places of inequality and deprivation. Many urban analysts see a great crisis in the problem of the megacity, which usually means the vast numbers of poor people living in Mumbai or Mexico City. It seems wise to many to limit the growth of these megacities, whose crowds and squalor doom millions to harsh, dead-end lives. In the developed world, cozy, homogeneous suburbs can appear far more egalitarian than the extraordinary urban gulfs that separate a Fifth Avenue billionaire from a ghetto child.
But the preceding paragraph is filled with nonsense. The presence of poverty in cities from Rio to Rotterdam reflects urban strength, not weakness. Megacities are not too big. Limiting their growth would cause significantly more hardship than gain, and urban growth is a great way to reduce rural poverty. The seemingly equal world of the suburb is in many ways more of a problem for society as a whole, especially those people who can’t afford its pleasures, than the unequal world of the city.
Cities aren’t full of poor people because cities make people poor, but because cities attract poor people with the prospect of improving their lot in life. The poverty rate among recent arrivals to big cities is higher than the poverty rate of long-term residents, which suggests that, over time, city dwellers’ fortunes can improve considerably. The poorer people who come to cities from other places aren’t mad or mistaken. They flock to urban areas because cities offer advantages they couldn’t find in their previous homes. The great problem of urban slums is not that there are too many people living in a city, but that those residents are often too disconnected from the economic heart of the metropolis. The great masses of the urban poor do create challenges that must be faced, and those are the topic of the next chapter, but it’s far better to hope for a world where cities can accommodate millions more of the rural poor than to wish that those potential migrants would end their days in agricultural isolation.
Rio’s slums are densely packed because life in a favela beats stultifying rural poverty. Rio has long offered more economic opportunity, public services, and fun than the desolate areas of Brazil’s hinterland. America’s ghettos were filled by immigrants fleeing pogroms or poverty and by African Americans fleeing the hardships of agricultural work in the Jim Crow South. The great economic engine of nineteenth-century Manchester was associated with vast amounts of poverty, not because the city was failing but because its mills were attracting rural folk eager for work. Indeed, we should worry more about places with too little poverty. Why do they fail to attract the least fortunate?
In a free society, people choose where to live, either explicitly by moving or implicitly by staying in the place of their birth. A city’s population tells you about what the city offers. Salt Lake City is full of Mormons because it’s a good place to be a Mormon. London has many bankers because it’s a good place to manage money. Cities like Rio have plenty of poor people, because they’re relatively good places to be poor. After all, even without any cash, you can still enjoy Ipanema Beach.
The free movement of people means that certain types of urban success can make a place poorer. Economics emphasizes the power of incentives. When the payoff for doing something goes up, more people will do that something. The absence of poor people in an area is a signal that it lacks something important, like affordable housing or public transportation or jobs for the least skilled. The great urban poverty paradox is that if a city improves life for poor people currently living there by improving public schools or mass transit, that city will attract more poor people.
When American cities have built new rapid-transit stops over the last thirty years, poverty rates have generally increased near those stops. This doesn’t mean that mass transit was making people poor, but rather that poor people value being able to get around without a car. The fact that public transit disproportionately carries and attracts the poor is a benefit, not a flaw.
What forces draw the poor to urban areas? Above all, they come for jobs. Urban density makes trade possible; it enables markets. The world’s most important market is the labor market, in which one person rents his human capital to people with financial capital. But cities do more than merely allow laborer and capitalist to interact. They provide a wide range of jobs, often thousands of them; a big city is a diversified portfolio of employers.
If one employer in a city goes belly-up, there’s another one (or two or ten) to take its place. This mixture of employers may not provide insurance against the global collapse of a great depression, but it sure smooths out the ordinary ups and downs of the marketplace. A one-company town like Hershey, Pennsylvania, depends on a single employer, and workers’ lives depend on whether that employer rises or falls. Not so in New York City or Rio de Janeiro, where there’s a plethora of factories in different industries. A classic study by two economists found that unemployment rates were almost 3 percent higher in the downturns of the 1970s and 1980s in places that lacked a diverse range of employers.
The sheer variety of urban jobs also allows people to figure out what they can and can’t do well. For millennia, most humans toiled on farms regardless of whether or not they had any aptitude for tilling the soil. In a city, people can hop from firm to firm and industry to industry. As people job-hop, they learn what they like and can do well. How much would the world have lost if Thomas Edison or Henry Ford had been forced to spend all his days farming?
Rio’s Favelas
Rio’s shantytowns began in the late nineteenth century, when Brazil was lurching out of its quasi-feudal past. In the 1870s and 1880s, when other New World countries, like Argentina and the United States, elected their rulers, Brazil was ruled by an emperor, a scion of Portugal’s ancient house of Braganza, and slavery was still legal.
By the middle of the nineteenth century, about 40 percent of Rio’s population—eight
y thousand people—were slaves. As abolitionism grew as a political force, slaves increasingly ran away to the city to escape plantation life. Runaway slaves in Rio formed shantytowns called quilombos in the nineteenth century, which were the ancestors of favelas. Emperor Pedro II disliked slavery, but fear of a political backlash may have kept him from trying to emancipate the rest of the country. Finally, in 1888, when the emperor was out of the country, his daughter, acting as regent, signed Brazil’s emancipation proclamation, making it the last country in the Americas to end slavery. The emperor had been right to fear a backlash. In the next year, a military coup, backed by oligarchs outraged by losing their human chattels, toppled the Braganza dynasty.
The first true favela had its roots not in urban Rio but in the impoverished countryside of northeastern Brazil, where an itinerant preacher and erstwhile abolitionist, Antonio the Counselor, founded a town called Canudos, populated by former slaves, and started a tax rebellion. Canudos had grown to thirty thousand people by 1895, so the Counselor’s refusal to pay taxes was no mere whiskey rebellion. In 1896, open war broke out, and the government sent thousands of soldiers to take the town. Before Canudos finally fell, about fifteen thousand people were killed.
While the Brazilian army won, the parsimonious government opted not to pay the soldiers. They responded by setting up their own village, unconsciously aping the Counselor they had just defeated, in the hills outside Rio. That shantytown became the Morro da Providência, the ur-favela. Over the next seventy years, hundreds of thousands of poor peasants, many of them freed slaves, came to Rio. The dilapidated dwellings may not look like much, but they beat working on a plantation for one’s former master. Just like the freed American slaves who populated U.S. cities in the twentieth century, the freed Brazilians chose urban promise over rural poverty.
Triumph of the City: How Our Greatest Invention Made Us Richer, Smarter, Greener, Healthier and Happier Page 9