The Relationship Between Urban Density and Affluence

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The Relationship Between Urban Density and Affluence

In a recent New York Times article columnist Farhat Manjoo states: “Cities are the standard geographical unit of the global economy. Dense urban areas are quite literally the “real America” — the cities are where two-thirds of Americans live, and they account for almost all national economic output.” 

The implication is that since high-density urban areas are the places that create all the nation’s wealth, we should facilitate the creation of more such places and encourage more people to live there.  But is this conclusion correct?  Does legislation such as Senate Bill 50 (or SB 50), which sought to density urbanization in California make sense?

Consider the facts.

Manjoo’s observation that nearly all of America’s economic output is produced in cities, is primarily based on research performed by the McKinsey Global Institute.  In a study tiled,  Urban America: US cities in the Global Economy, McKinsey found that, in 2010, 85 percent of economic output was produced in what it termed “large cities.” But a closer look reveals that these are not dense cities or dense urban areas; but instead, they are metropolitan areas, all of which have more rural land than urban.  In fact, McKinsey simply defines “large cities” as the 259 metropolitan area labor markets with more than 150,000 population.  This includes not only the megacities of metropolitan New York and Los Angeles, but also such places as Madera, California, Joplin, Missouri, Elkhart, Indiana and Bangor, Maine.  And contrary to popular opinion, America does not have any  dense urban areas.  That is, none  of these 259 metropolitan areas is characterized by “dense urbanization,” as defined by either historical or become a paid subscriber for full access.
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