Cities will make a comeback
The pandemic has driven people away from big cities to smaller ones or even to rural communities. Like all noticeable trends, our natural human tendency is to think the migration will last forever, dooming cities. Looking back, however, I can’t identify a trend that didn’t run its course and reverse itself. Can you?
Will the escape from big cities have some permanent effects? Yes. There will be highly paid professionals who remain in their rural retreats and continue to be highly paid professionals. But what of newly-minted graduates who seek to make their fortunes? Will they move to Peoria, or will they move to New York?
The economic benefits of urbanization are well-documented. The aggregation of talent enables firms to grow and new enterprises to flourish. Many cities become specialized as talent matures -- finance in New York, technology in Palo Alto or energy in Houston, for example.
The World Cities Report 2020 reaffirms that well-planned and managed cities and towns create economic and social value and the resilience required to bounce back from pandemics and improve the quality of life of their residents. Yet, here in the U.S., our cities are plagued by poverty and inequality. And the bigger the city, the bigger the problems.
So, which way will the trend move in the future?
In my view, cities will continue to grow as economies of scale drive the shift of surplus labor from rural to urban environments. While researching my new book, I encountered this map:
In 2015, 50% of all US economic activity took place in only 15 urban centers. What if, I wondered, those same cities aggregated 80% or even 90% of business activity in the future? What would the world look like?
The folks at ITR Economics have predicted another Great Depression in the 2030’s driven largely by an excess of government debt exacerbated by strains on the safety net from Baby Boomer retirements. In my upcoming book, The Awakening of Artemis, I have named the second Great Depression GD2. And I recall that during the last one in the 1930’s, the government confiscated gold from its citizens.
So, please join me in imagining our economic history in 2049:
In the depths of GD2, with the economy already teetering, the federal government had responded by creating a new currency to replace the overinflated US Dollar, confiscated the wealth of Americans whose net worth exceeded $1 million and created a Universal Basic Income (UBI) to ensure that all Americans were able to live under a roof and feed their families.
It was too little too late to prevent economic chaos and many economists believed the chaos was caused by those actions. Others saw economic demons in the clean energy laws that gutted the automobile, energy and agricultural industries by banning fossil fuels and chemical fertilizers. The former put those who worked in coal mines and the oil and gas industries out of work. The latter undermined the productivity of farms resulting in lost revenue, unpaid bank loans and bankruptcy.
People began flocking to cities. Those well-educated could earn a good living by managing the artificial intelligence environment that governed modern life and those who were educationally impaired could live in group homes on UBI.
Does that seem a little too far-fetched to you? In my last post, I mentioned a Deloitte study projecting 47% of jobs will be lost to artificial intelligence (AI) by the middle of the 2020’s. What if the advance of those technologies resulted in higher and higher unemployment by the middle of this century? Would politicians institute a UBI? Would they have a choice?
In my version of 2049 America, the trend toward adoption of AI has resulted in 60% unemployment, the implementation of UBI, and 90% of the population living in the 15 cities in the above map. They would be like gated communities, guarding against invasion by the 10% who remained outside their walls. Life inside the Pods (as I have dubbed them) would be wonderful for those who could take advantage of AI-driven consumer services – smart homes that anticipate your needs based on your mood; retailers who have what you want to buy waiting on the counter by the time you arrive in the store; and robotic arms handing you your desired drink as you walk past Starbucks on your way to work. All you have to do to take advantage of this ideal world, is have a chip embedded in your neck so your responses to stimuli can be measured and your needs anticipated.
If this sounds a bit like Big Brother, it should. But in George Orwell’s 1984, a similar social order was imposed. In Aldous Huxley’s great book, Brave New World, people opt in to such a society because they enjoy the pleasures of it -- just like we currently abandon our privacy in order to join social networks, have our health monitored and our shopping needs met by smart phones we bring with us everywhere.