Re: ECON: Jane Jacobs Epiphany

The Low Golden Willow (
Sun, 17 Aug 1997 12:36:12 -0700 (PDT)

On Aug 17, 3:07am, wrote:

} >well-off people (the "people with choice', as she reiterates over and
} >over) choose to live in crowded and dynamic neighborhoods such as
} >Greenwich Village or much of San Francisco; etc.

} Of course one must remember that many of the well-off choose to live in the
} suburbs. My cynical take on this is that such people primarily do so in
} order to restrict their children's ability to learn of alternate ways of life
} and thought. For someone without a car, the modern homogenous suburbs

There's probably some of that -- keep the innocents from the fleshpots
of the city. Then again, since these families started in the city, I
think this is too simplistic. America, at least of the 1950s, has
having your own house as part of the "Dream". That supplies desire, and
tax subsidies for mortgages and direct subsidies of cars and freeways
supplies the means for an explosion into the suburbs. When the city
starts declining more people flee increasing crime and decay. I like to
think their safety remains the same, transferring risk of crime to risk
of auto accidents, but I have no data.

} >Now I've begun _Cities and the Wealth of Nations_ (1982), wherein she

} I haven't read that book of hers, but either she's wrong or you misunderstood
} her. Monetarist theory predicts stagflation as a typical result of sustained
} inflation. So did supply-side, but supply-side as we know it today was

I re-read that part. She doesn't say explicitly what monetarism said
about stagflation. For all the other theories she shows an explicit
contradiction, but elsewhere implies that stagflation defeated all
macro-economic theories. Monetarism was called in after stagflation
took effect but failed (as of her writing) to cure the problem, so there
is probably no contradiction. Monetarism seems adequate theoretically
but failed in practice, and thus was defeated. "In sum, measures
contrived to fight inflation were proving ruinous to producers and their
work forces, while measures contrived to help producers were enlarging
government deficits."

I think, but am not sure, that stagflation ended under Volcker/Greenspan
by the mid-80s. I presume that would provisionally count as vindication
for monetarism -- unless one could find some other reason for recovery.
I've been inclined anyway to suspect that macro-economics is the real
voodoo economics, simply due to lack of solid data (complex subject,
we've only been collecting good data for some decades, and screwing with
the system in different ways most of the time -- not exactly a
controlled experiment); Jacobs' criticism and the apparently universal
bafflement at the current state of the economy aren't doing much to
convince me otherwise.

} An interesting supporting point to her claim - I don't know if she makes it
} in that book - is that many countries are almost just one giant city-state

Yep, I've gotten that far. As Anton notes, she blames national
currencies. She accepts classical analysis of currencies as feedback
mechanism -- import too much and your currency drops, forming an
automatic and temporary tariff and export subsidy -- then first makes an
analogy to a hundred people with a hundred lungs and one brainstem. Not
a healthy situation; this is the multi-city nation. Later she describes
one brainstem controlling the breathing of an elephant, 3 sheep, 2
puppy dogs and a rabbit. This is a multi-city nation much of whose
trade is international. Presumably one city will be strongest in trade;
it then gets the most accurate feedback signals from currency
fluctuations. The other cities get choked off, and the nation-state
turns into a city-state with excessive welfare rolls (i.e. the rest of
the country. Rural America gets a larger share of welfare dollars than
most voters realize, I think.)

} and its hinterland. Examples: London/England, Paris/France,
} Berlin/Prepartition Germany, Tokyo/Japan, Moscow/Soviet Union, Madrid/Spain,
} Lisbon/Portugal, Athens/Greece, Mexico City/Mexico, Buenos Aires/Argentina,
} Sydney/Australia. The city-state is typically 1/6 or so of the population,

Milan and relatives/Italy, Stockholm Sweden, Copenhagen/Denmark,
Toronto/Canada. The
Netherlands are a partial exception: many cities are hooked up in a
"Ring City". The basic rule holds: one currency, one active economic

Large empires mostly trade domestically, so there's no feedback, and the
cities wander market space at random until they die off. This may be
what happened to the Roman Empire; control was increasing centralized,
and the various cities gradually decayed.

The US has a high proportion of domestic trade, so turning into a
city-state would be slow at best. Earlier in our history, and in Japan
as well, protective tariffs can take the place of currency fluctuation.
Post-colonial cities should have had weak currencies, because they were
weak, but being grouped with strong rural exports (especially from the
South) boosted the dollar and could have strangled development, as in
her example of Uruguay. Tariffs helped our cities develop, but
effectively this was a subsidy from the South, and tariffs don't provide
internal feedback.

One thing about the Pacific Rim, the "tigers of Asia": Hong Kong and
Singapore are nothing but cities with their own currencies, and Taiwan
and South Korea are pretty small, close to city-states naturally.

Another optimistic note about them was that Western Europe took
centuries to rebuild after the fall of Rome, led by Venice which fed off
of Constantinople in the beginning. America took about a century or two
to build up its cities. Japan took a few decades (twice) to
industrialize. The Pacific Rim has moved even faster. Whether this is
due to greater general knowledge or being smaller and smaller bits
relative to a large economy is unclear, but it might be good news for
the speed of development elsewhere, if it ever starts right.

But medieval Europe had many, many currencies, at least once they were
rich enough to have any currencies. The cities of the Hanseatic League
had their own currencies.

On Aug 17, 2:27am, Anton Sherwood wrote:

} She uses the term "city region", distinguishing cities with extensive
} influence on the hinterland, like Tokyo or Los Angeles, from others

True. "Great city", "city region", "import-replacing city". I like
"great city" myself. Do San Diego or the big cities of Texas qualify?
I'm wondering what the distribution of great cities is in this country,
and I'm not sure how to tell from a distance: what statistics to look
at, or whether I should get phone books delivered and look at the index.

} hummingbird, all sharing a single heart. The US has largely escaped
} the pattern because the role of "capital" is divided between New York,
} Washington and now Hollywood.

Maybe she says that later; so far it's because we have a lot of domestic
trade, and perhaps multiple strong international trading cities to begin

She also suggests that unification might have been China's bane,
claiming most Chinese innovations preceded full unification. If true
this would be a more concrete link than Jared Diamond used to explain
why Europe overtook China. He had to say being unified allowed China to
regress stupidly as one unit, without competition. Jacobs would posit
that stagnation was inevitable.

All of which suggests that Europe is about to make a big mistake. If
currencies -- feedbacks -- should be tightly linked to the regions they're
feeding back to, Europe needs more, not less. Scotland and Southern
Italy have cities, after all; they just don't do anything. Being
coupled without feedback to London and northen Italy is bad enough.
All of Europe?

Merry part,
-xx- Damien R. Sullivan X-) <*>

And even priests were coming to spend some time in it, because of the
collection of religious books. There were one thousand, two hundred and
eighty-three religious books in there now, each one--according to
itself--the only one any man need ever read. It was sort of nice to see
them all together. -- Terry Pratchett, _Small Gods_