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Do We Need New York City?

October 10, 2013

In Triumph of the City, Harvard urban economist Edward Glaeser argued that dense cities were still important even in the age of telecommuting and the Internet because of the importance of face-to-face contacts. For this reason, while Glaeser didn’t support subsidies for density, he still expected to see dense cities well into the future.

The Antiplanner disagreed. “Thanks to the automobile, we can have such face-to-face contact with far more people, and a greater diversity of people, than those who are within walking distance of a Manhattan high rise. Thanks to the Internet, we can dispense with face-to-face contacts when doing such routine things as shopping and many types of work. In other words, the economic forces that built dense cities such as London and New York are far weaker today.”

In this light, it was interesting to read yesterday’s report in the Wall Street Journal that New York banks are moving many employees well out of Manhattan (if this link doesn’t work, Google “New York Banks Cut and Run”). After the financial crisis, the city’s ten largest banks reduced their Manhattan rental space from 38 million to 32 million square feet. Property owners hoped that they would pick up that space as the economy recovered, but instead they are moving people to lower-cost areas such as Florida.

“The new reality is that you do most of your work by phone,” says an employee of Deutsche Bank who works in Jacksonville (if this link doesn’t work, search for “Deutsche Bankers Warm Up to Florida”). “Why can’t we do that in a location with a better cost of living?”

 

Apparently, for many workers in the financial industry, face-to-face contacts are not as critical as Glaeser imagined. While some may still depend on such contacts, I suspect the number will steadily decline in the future, allowing more people to work in low-cost areas or telecommute.

If this is true, then Manhattan, the densest county in the United States, is becoming obsolete. (New York’s five boroughs are each a county, with Manhattan being New York County.) Between 1910 and 1980, Manhattan population densities declined from more than 101,000 to 62,000 people per square mile. Then, thanks in large part to reduced crime, the population grew until densities reached just under 70,000 people per square mile in 2010. Although the data are not as accessible, job densities probably followed a similar pattern.

If Manhattan jobs decline, however, the population is likely to decline as well. That means that high-cost projects such as the Second Avenue Subway and Long Island Railroad East Side Access, each of which are costing more than $2 billion per mile, could be an even greater waste of money than they appear to be at current densities.

Manhattan densities probably depend on subways; while I haven’t done an analysis, it is unlikely that the streets could move that many people on buses unless taxis and other personal automobiles were banned (which would alienate many of the high-income executives who wouldn’t want to rub shoulders would ordinary transit riders). While fares cover a higher share of New York City subway operating costs than those of most transit systems, they don’t cover maintenance costs. If population densities are declining, it may make more sense in the long run to abandon the subways as they wear out rather than build more.

Many planning advocates have an obsolete view of what a city is. They think that “real cities” have high-density urban cores surrounded by lower-density housing. That hasn’t been realistic at least since Henry Ford’s mass-produced automobile if not since the development of the electric streetcar. For that matter, cities didn’t look like that until the industrial revolution led to the creation of the factory system in the early nineteenth century.

Yet planners of older cities spend an inordinate time “revitalizing” downtown (meaning subsidizing downtown property owners), while planners in newer cities try to create high-rise downtown areas. These efforts are misguided. Politicians may be pressured to respond to special-interest groups, but instead of enabling this dependency, planners should let cities evolve to be the way they want to be considering new transportation and communications technologies.

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