hough it might, at first glance, seem a paradox, the history of nations has been dominated by cities. Those cities were created by colonial empires in locations with water and possibilities for transporting people or goods, and the economic advantages coming from centralized economic activities. Historically, tax revenues were frequently sent to imperial cities such as Beijing, Istanbul, or Rome. Cities as diverse as Abidjan, Buenos Aires, Karachi, London, and Mumbai share these origins.
The historical legacies of these cities are apparent today in the global concentration of wealth—with 65 percent of global GDP coming from 600 cities—in the global concentration of greenhouse gas emissions, and the growing share of global population, now almost 55 percent. Both the power of these cities and their current serious problems are legacies of their histories but also their contemporary inability to resolve many of the urgent and important problems they face.
The resilience of cities has, for a decade now, been trendy policy catchphrase, but it masks their many vulnerabilities. To name but a few, cities are sensitive to global interest rates, global oil prices, sea-level rise and extreme weather events. And we can name more, including the social and cultural challenges coming from diversity and new migratory flows resulting from climate change and civil conflicts.
With these challenges in mind, it may be that concentrating more and more people into limited spaces could become less a source of resilience but eventually a source of political instability and insecurity. More than half the world’s population lives within 70 miles of the coast. The anticipated “water wars” will not be between rural farmers. Rather, they will occur when urban centers make disproportionate claims on available water resources to assure urban food supply and human survival itself. Cities in arid climates, such as Cairo, illustrate this competition for scarce fresh water. Similarly, the demographic concentration of people in cities likely to face sea-level rise in the next half century suggests that urban dwellers will need to move to new settlements in previously unoccupied rural land.
Amid all these challenges, a fundamental contradiction is likely to shape the global urban future: the very sources of wealth and power generated by these cities can also become the forces that undermine them.
The case of New York illustrates this conundrum very clearly. Mayor Michael Bloomberg was an effective cheerleader for his city, touting it as an example for the global future, with its financial and economic base, its cultural creativity and diversity, and its seemingly unlimited capacity to generate employment and income. Yet, in his electoral campaign Mayor Bill de Blasio pointed out that 56 percent of the New York City population lived below the poverty line, while others began to count the number of millionaires in the Big Apple, a number that exceeded 650,000 by 2016. In his first State of the City Report, Mayor de Blasio declared that New York was becoming “Apartheid City” and a “gated community”. Skyrocketing rents and housing prices are driving young couples to New Jersey and beyond in search of affordable housing. The high costs of housing in New York City, together with those in Silicon Valley in California, were even found to have the power to reduce America’s GDP.
This process is, in some ways, analogous to the experience of Brazil. In 2014, the future host of the Olympic Games and the World Cup appeared to many investors to have the magic mix of resources and government commitment to assure financial and economic success. Yet, by 2016 its economy had faltered because enthusiastic global investors had contributed to the overvaluing of the Brazilian real. Brazil’s exports declined, unemployment increased, and the Brazilian government faced an economic and public financial crisis. Poorly managed success was fatal, as deficits rose, trade faltered, and short-term thinking undermined economic performance. Widespread street demonstrations in urban Brazil in 2016 contributed to the downfall of President Dilma Roussef and the subsequent election of Jair Bolsonaro, a Brazilian former military officer and Trump-like figure.
Other local problems have the potential to undermine stability over time. The dramatic examples of the 62 million empty apartments in Chinese cities in 2016, or the five million empty housing units around Mexico City in 2014, suggest that ineffective use of resources and the lack of effective regulation can ultimately have high opportunity costs while distorting patterns of growth. “Too much” can be hard to swallow. Or, as Mexican urbanist Alicia Ziccardi has written, “mucho vivienda, poco ciudad.”
What do these local examples have to do with global politics? The answer is that these cities account for a very large share of national GDP, usually over 75 percent, and together, for an equal share of global GDP. If these cities—the most favored sites for public and private investment—are unable to manage their problems, what can be expected for global stability? The answer, in a word, is trouble.
When specific cities face serious problems, such as Wuhan with the Corona Virus crisis of January 2020, or the Arab Spring halting the Egyptian economy in 2014, the global economy feels the impacts. Similarly, the impacts can go from the global to the local levels. If trade wars between the United States and China, or unequal trade agreements between the United States and Mexico, upset global markets, their greatest impacts will be found in cities where local economies will contract, cutting jobs, incomes, and opportunities for upward mobility. Public revenues will decline, thereby leading to reduced public infrastructure and social services, such as health or education.
In other words, the sustained productivity of cities requires international political stability. Again, the example of the impact of the attack of September 11, 2001 on New York as a case where catastrophe results from either conflict or a weather event illustrates this very well.
On September 11, 2001, New York’s “city product” was larger than the incomes of 191 countries, including Russia, Belgium, the Netherlands, Switzerland, and Sweden. Its product was bigger than Argentina, or more than three times the size of Portugal, or oil-rich countries like Norway and Saudi Arabia. It was 20 percent larger than the more than 40 countries of Africa combined. In 2001, New York accounted for about 62% of the GDP of Spain. This metropolitan area, with a population of 17 million, would have been the 49th largest country in the world in demographic terms and the 13th largest national economy.
Three weeks after 9/11, the City Government estimated the economic loss of the attacks to New York to be between $90 to $105 billion. (The equivalent of wiping Portugal or the Netherlands off the map for a year.) While the economy had already started to slow down in the second quarter of 2001, with increasing unemployment in the technology and financial sectors. The capital loss in terms of buildings and infrastructure amounted to about $45 billion, while the ongoing economic losses in 2002 and 2003 would be between $45 and $60 billion. About 115,000 jobs were lost in the months after the attack. However, when the likely losses to the New York metropolitan economy, which produced about $1 billion a day in 2001, were projected forward, the combined estimate of capital and ongoing losses of $90-105 billion alone was greater than many national economies.
The losses to the New York economy in 2001, beyond the terrible loss of life, should have raised a red flag about the high degree of interdependence between the globalized economy and polity. The August 5, 2019 decision by the Chinese government to devalue the yuan had notable consequences in the global economy, from stock market losses, estimated to be USD $750 billion in the New York stock market alone, to increasing uncertainty affecting the borrowing power of national and city governments and weakening the medium-term prospects for sustained economic growth. These cumulative effects at various scales suggest that disruptions in cities can be both the cause and the effect of changes in global politics.
Taken together, it is clear that the performance of cities and their ability to manage challenges, such as the Wuhan case, can have global consequences. But the path of causation can go the other way as well, with global disruptions generating instabilities at local levels. Interdependence is inevitable in a globalized world. The question is whether national and local institutions are able to take interdependence into account when they make decisions.
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Cities and Nations: A Mutual Dependency
February 3, 2020
T
hough it might, at first glance, seem a paradox, the history of nations has been dominated by cities. Those cities were created by colonial empires in locations with water and possibilities for transporting people or goods, and the economic advantages coming from centralized economic activities. Historically, tax revenues were frequently sent to imperial cities such as Beijing, Istanbul, or Rome. Cities as diverse as Abidjan, Buenos Aires, Karachi, London, and Mumbai share these origins.
The historical legacies of these cities are apparent today in the global concentration of wealth—with 65 percent of global GDP coming from 600 cities—in the global concentration of greenhouse gas emissions, and the growing share of global population, now almost 55 percent. Both the power of these cities and their current serious problems are legacies of their histories but also their contemporary inability to resolve many of the urgent and important problems they face.
The resilience of cities has, for a decade now, been trendy policy catchphrase, but it masks their many vulnerabilities. To name but a few, cities are sensitive to global interest rates, global oil prices, sea-level rise and extreme weather events. And we can name more, including the social and cultural challenges coming from diversity and new migratory flows resulting from climate change and civil conflicts.
With these challenges in mind, it may be that concentrating more and more people into limited spaces could become less a source of resilience but eventually a source of political instability and insecurity. More than half the world’s population lives within 70 miles of the coast. The anticipated “water wars” will not be between rural farmers. Rather, they will occur when urban centers make disproportionate claims on available water resources to assure urban food supply and human survival itself. Cities in arid climates, such as Cairo, illustrate this competition for scarce fresh water. Similarly, the demographic concentration of people in cities likely to face sea-level rise in the next half century suggests that urban dwellers will need to move to new settlements in previously unoccupied rural land.
Amid all these challenges, a fundamental contradiction is likely to shape the global urban future: the very sources of wealth and power generated by these cities can also become the forces that undermine them.
The case of New York illustrates this conundrum very clearly. Mayor Michael Bloomberg was an effective cheerleader for his city, touting it as an example for the global future, with its financial and economic base, its cultural creativity and diversity, and its seemingly unlimited capacity to generate employment and income. Yet, in his electoral campaign Mayor Bill de Blasio pointed out that 56 percent of the New York City population lived below the poverty line, while others began to count the number of millionaires in the Big Apple, a number that exceeded 650,000 by 2016. In his first State of the City Report, Mayor de Blasio declared that New York was becoming “Apartheid City” and a “gated community”. Skyrocketing rents and housing prices are driving young couples to New Jersey and beyond in search of affordable housing. The high costs of housing in New York City, together with those in Silicon Valley in California, were even found to have the power to reduce America’s GDP.
This process is, in some ways, analogous to the experience of Brazil. In 2014, the future host of the Olympic Games and the World Cup appeared to many investors to have the magic mix of resources and government commitment to assure financial and economic success. Yet, by 2016 its economy had faltered because enthusiastic global investors had contributed to the overvaluing of the Brazilian real. Brazil’s exports declined, unemployment increased, and the Brazilian government faced an economic and public financial crisis. Poorly managed success was fatal, as deficits rose, trade faltered, and short-term thinking undermined economic performance. Widespread street demonstrations in urban Brazil in 2016 contributed to the downfall of President Dilma Roussef and the subsequent election of Jair Bolsonaro, a Brazilian former military officer and Trump-like figure.
Other local problems have the potential to undermine stability over time. The dramatic examples of the 62 million empty apartments in Chinese cities in 2016, or the five million empty housing units around Mexico City in 2014, suggest that ineffective use of resources and the lack of effective regulation can ultimately have high opportunity costs while distorting patterns of growth. “Too much” can be hard to swallow. Or, as Mexican urbanist Alicia Ziccardi has written, “mucho vivienda, poco ciudad.”
What do these local examples have to do with global politics? The answer is that these cities account for a very large share of national GDP, usually over 75 percent, and together, for an equal share of global GDP. If these cities—the most favored sites for public and private investment—are unable to manage their problems, what can be expected for global stability? The answer, in a word, is trouble.
When specific cities face serious problems, such as Wuhan with the Corona Virus crisis of January 2020, or the Arab Spring halting the Egyptian economy in 2014, the global economy feels the impacts. Similarly, the impacts can go from the global to the local levels. If trade wars between the United States and China, or unequal trade agreements between the United States and Mexico, upset global markets, their greatest impacts will be found in cities where local economies will contract, cutting jobs, incomes, and opportunities for upward mobility. Public revenues will decline, thereby leading to reduced public infrastructure and social services, such as health or education.
In other words, the sustained productivity of cities requires international political stability. Again, the example of the impact of the attack of September 11, 2001 on New York as a case where catastrophe results from either conflict or a weather event illustrates this very well.
On September 11, 2001, New York’s “city product” was larger than the incomes of 191 countries, including Russia, Belgium, the Netherlands, Switzerland, and Sweden. Its product was bigger than Argentina, or more than three times the size of Portugal, or oil-rich countries like Norway and Saudi Arabia. It was 20 percent larger than the more than 40 countries of Africa combined. In 2001, New York accounted for about 62% of the GDP of Spain. This metropolitan area, with a population of 17 million, would have been the 49th largest country in the world in demographic terms and the 13th largest national economy.
Three weeks after 9/11, the City Government estimated the economic loss of the attacks to New York to be between $90 to $105 billion. (The equivalent of wiping Portugal or the Netherlands off the map for a year.) While the economy had already started to slow down in the second quarter of 2001, with increasing unemployment in the technology and financial sectors. The capital loss in terms of buildings and infrastructure amounted to about $45 billion, while the ongoing economic losses in 2002 and 2003 would be between $45 and $60 billion. About 115,000 jobs were lost in the months after the attack. However, when the likely losses to the New York metropolitan economy, which produced about $1 billion a day in 2001, were projected forward, the combined estimate of capital and ongoing losses of $90-105 billion alone was greater than many national economies.
The losses to the New York economy in 2001, beyond the terrible loss of life, should have raised a red flag about the high degree of interdependence between the globalized economy and polity. The August 5, 2019 decision by the Chinese government to devalue the yuan had notable consequences in the global economy, from stock market losses, estimated to be USD $750 billion in the New York stock market alone, to increasing uncertainty affecting the borrowing power of national and city governments and weakening the medium-term prospects for sustained economic growth. These cumulative effects at various scales suggest that disruptions in cities can be both the cause and the effect of changes in global politics.
Taken together, it is clear that the performance of cities and their ability to manage challenges, such as the Wuhan case, can have global consequences. But the path of causation can go the other way as well, with global disruptions generating instabilities at local levels. Interdependence is inevitable in a globalized world. The question is whether national and local institutions are able to take interdependence into account when they make decisions.
