Skip to content
Chris Prinz
Share
Explore
Reading

Kindle Highlights Database

Books
0
Search
Title
Author
1
The Death and Life of Great American Cities
Jane Jacobs
2
The Box: How the Shipping Container Made the World Smaller and the World Economy Bigger
Marc Levinson
3
The New Geography of Jobs
Enrico Moretti
4
The Rise and Fall of Nations: Forces of Change in the Post-Crisis World
Ruchir Sharma
5
Evicted: Povery and Profit in the American City
Matthew Desmond
6
The Pale King
David Foster Wallace
7
Brief Interviews With Hideous Men
David Foster Wallace
8
The Sympathizer
Viet Thanh Nguyen
There are no rows in this table
8
Count

Highlights
1
Search
Highlight
Color
Books
1
We don’t have a place around here to get a cup of coffee or a newspaper even, or borrow fifty cents. Nobody cared what we need. But the big men come and look at that grass and say, ‘Isn’t it wonderful! Now the poor have everything!’ ” This tenant was saying what moralists have said for thousands of years: Handsome is as handsome does. All that glitters is not gold.
Yellow
The Death and Life of Great American Cities
2
Howard set spinning powerful and city-destroying ideas: He conceived that the way to deal with the city’s functions was to sort and sift out of the whole certain simple uses, and to arrange each of these in relative self-containment.
Yellow
The Death and Life of Great American Cities
3
However they were arranged, the important point was that the monuments had been sorted out from the rest of the city, and assembled into the grandest effect thought possible, the whole being treated as a complete unit, in a separate and well-defined way.
Yellow
The Death and Life of Great American Cities
4
They differ from towns and suburbs in basic ways, and one of these is that cities are, by definition, full of strangers.
Yellow
The Death and Life of Great American Cities
5
To build city districts that are custom made for easy crime is idiotic. Yet that is what we do.
Yellow
The Death and Life of Great American Cities
6
The first thing to understand is that the public peace—the sidewalk and street peace—of cities is not kept primarily by the police, necessary as police are. It is kept primarily by an intricate, almost unconscious, network of voluntary controls and standards among the people themselves, and enforced by the people themselves.
Yellow
The Death and Life of Great American Cities
7
Los Angeles’ crime figures are flabbergasting. Among the seventeen standard metropolitan areas with populations over a million, Los Angeles stands so pre-eminent in crime that it is in a category by itself. And this is markedly true of crimes associated with personal attack, the crimes that make people fear the streets.
Yellow
The Death and Life of Great American Cities
8
First, there must be a clear demarcation between what is public space and what is private space. Public and private spaces cannot ooze into each other as they do typically in suburban settings or in projects.
Yellow
The Death and Life of Great American Cities
9
Second, there must be eyes upon the street, eyes belonging to those we might call the natural proprietors of the street. The buildings on a street equipped to handle strangers and to insure the safety of both residents and strangers, must be oriented to the street. They cannot turn their backs or blank sides on it and leave it blind.
Yellow
The Death and Life of Great American Cities
10
And third, the sidewalk must have users on it fairly continuously, both to add to the number of effective eyes on the street and to induce the people in buildings along the street to watch the sidewalks in sufficient numbers. Nobody enjoys sitting on a stoop or looking out a window at an empty street. Almost nobody does such a thing. Large numbers of people entertain themselves, off and on, by watching street activity.
Yellow
The Death and Life of Great American Cities
11
The basic requisite for such surveillance is a substantial quantity of stores and other public places sprinkled along the sidewalks of a district; enterprises and public places that are used by evening and night must be among them especially. Stores, bars and restaurants, as the chief examples, work in several different and complex ways to abet sidewalk safety.
Yellow
The Death and Life of Great American Cities
12
A city neighborhood can absorb and protect a substantial number of these birds of passage, as our neighborhood does. But if and when the neighborhood finally becomes them, they will gradually find the streets less secure, they will be vaguely mystified about it, and if things get bad enough they will drift away to another neighborhood which is mysteriously safer.
Yellow
The Death and Life of Great American Cities
13
What happens at Blenheim Houses is somewhat the same as what happens in dull gray areas of cities. The gray areas’ pitifully few and thinly spaced patches of brightness and life are like the visible corridors at Blenheim Houses. They do attract strangers. But the relatively deserted, dull, blind streets leading from these places are like the fire stairs at Blenheim Houses. These are not equipped to handle strangers and the presence of strangers in them is an automatic menace.
Yellow
The Death and Life of Great American Cities
14
In 1956, the New York City Youth Board, fairly desperate because of gang warfare, arranged through its gang youth workers a series of truces among fighting gangs. The truces were reported to stipulate, among other provisions, a mutual understanding of Turf boundaries among the gangs concerned and agreement not to trespass.
Yellow
The Death and Life of Great American Cities
15
“Togetherness” is a fittingly nauseating name for an old ideal in planning theory. This ideal is that if anything is shared among people, much should be shared. “Togetherness,” apparently a spiritual resource of the new suburbs, works destructively in cities. The requirement that much shall be shared drives city people apart.
Yellow
The Death and Life of Great American Cities
16
The park lacks benches purposely; the “togetherness” people ruled them out because they might be interpreted as an invitation to people who cannot fit in.
Yellow
The Death and Life of Great American Cities
17
To protect themselves, they make few, if any, friends. Some are afraid that friends will become angry or envious and make up a story to report to management, causing them great trouble. If the husband gets a bonus (which he decides not to report) and the wife buys new curtains, the visiting friends will see and might tell the management, who, in turn, investigates and issues a rent increase.
Yellow
The Death and Life of Great American Cities
18
“They contain people with real ability, wonderful people many of them, but the typical sequence is that in the course of organization leaders have found each other, gotten all involved in each others’ social lives, and have ended up talking to nobody but each other. They have not found their followers. Everything tends to degenerate into ineffective cliques, as a natural course.
Yellow
The Death and Life of Great American Cities
19
A store like this would fail economically if it had competition. Meantime, although monopoly insures the financial success planned for it, it fails the city socially.
Yellow
The Death and Life of Great American Cities
20
Where did these three battles occur? In a park and at the parklike grounds of the project. After outbreaks of this kind, one of the remedies invariably called for is more parks and playgrounds. We are bemused by the sound of symbols.
Yellow
The Death and Life of Great American Cities
21
In most cases (not all, fortunately), the most significant change is this: The children have moved from under the eyes of a high numerical ratio of adults, into a place where the ratio of adults is low or even nil. To think this represents an improvement in city child rearing is pure daydreaming.
Yellow
The Death and Life of Great American Cities
22
Poor, generalized play use eats up substance that could instead be used for good specialized play.
Yellow
The Death and Life of Great American Cities
23
The myth that playgrounds and grass and hired guards or supervisors are innately wholesome for children and that city streets, filled with ordinary people, are innately evil for children, boils down to a deep contempt for ordinary people.
The Death and Life of Great American Cities
24
Most city architectural designers and planners are men. Curiously, they design and plan to exclude men as part of normal, daytime life wherever people live. In planning residential life, they aim at filling the presumed daily needs of impossibly vacuous housewives and preschool tots. They plan, in short, strictly for matriarchal societies.
Yellow
The Death and Life of Great American Cities
25
Let us turn this thought around, and consider city parks deprived places that need the boon of life and appreciation conferred on them.
Yellow
The Death and Life of Great American Cities
26
In short, Rittenhouse Square is busy fairly continuously for the same basic reasons that a lively sidewalk is used continuously: because of functional physical diversity among adjacent uses, and hence diversity among users and their schedules.
Yellow
The Death and Life of Great American Cities
27
Parks intensely used in generalized public-yard fashion tend to have four elements in their design which I shall call intricacy, centering, sun and enclosure.
Yellow
The Death and Life of Great American Cities
28
Union Square in downtown San Francisco has a plan that looks deadly dull on paper or from a high building; but it is bent onto such changes in ground level, like Dali’s painting of the wet watches, that it appears remarkably various. (This is, of course, exactly the transformation that happens, on a larger scale, to San Francisco’s straight, regular gridiron street patterns as they tumble up and down the hills.)
Yellow
The Death and Life of Great American Cities
29
Paper plans of squares and parks are deceptive—sometimes they are crammed full of apparent differences that mean almost nothing because they are all below eye level, or are discounted by the eye because they are too often repeated.
Yellow
The Death and Life of Great American Cities
30
San Francisco is good at this. A tiny triangular street intersection leftover, which in most cities would either be flattened into asphalt or else have a hedge, a few benches and be a dusty nonentity, in San Francisco is a fenced miniature world of its own, a deep, cool world of water and exotic forest, populated by the birds that have been attracted. You cannot go in yourself. You do not need to, because your eyes go in and take you farther into this world than feet could ever go.
Yellow
The Death and Life of Great American Cities
31
First, a negative generalization: Magnificent views and handsome landscaping fail to operate as demand goods; maybe these “should,” but demonstrably they do not. They can work as adjuncts only.
Yellow
The Death and Life of Great American Cities
32
On the other hand, swimming operates as demand goods. So does fishing, especially if there is bait buying and boating along with it. Sports fields do. So do carnivals, or carnival-like activities.
Yellow
The Death and Life of Great American Cities
33
All this takes money. But American cities today, under the illusions that open land is an automatic good and that quantity is equivalent to quality, are instead frittering away money on parks, playgrounds and project land-oozes too large, too frequent, too perfunctory, too ill-located, and hence too dull or too inconvenient to be used.
Yellow
The Death and Life of Great American Cities
34
When we try to justify good shelter instead on the pretentious grounds that it will work social or family miracles we fool ourselves. Reinhold Niebuhr has called this particular self-deception, “The doctrine of salvation by bricks.”
Yellow
The Death and Life of Great American Cities
35
This “ideal” of the city neighborhood as an island, turned inward on itself, is an important factor in our lives nowadays. To see why it is a silly and even harmful “ideal” for cities, we must recognize a basic difference between these concoctions grafted into cities, and town life. In a town of 5,000 or 10,000 population, if you go to Main Street (analogous to the consolidated commercial facilities or community center for a planned neighborhood), you run into people you also know at work, or went to school with, or see at church, or people who are your children’s teachers, or who have sold or given you professional or artisan’s services, or whom you know to be friends of your casual acquaintances, or whom you know by reputation. Within the limits of a town or village, the connections among its people keep crossing and recrossing and this can make workable and essentially cohesive communities out of even larger towns than those of 7,000 population, and to some extent out of little cities. But a population of 5,000 or 10,000 residents in a big city has no such innate degree of natural cross-connections within itself, except under the most extraordinary circumstances.
Yellow
The Death and Life of Great American Cities
36
As it is, the price of trying, and not even succeeding at a misguided aim is conversion of a city into a parcel of mutually suspicious and hostile Turfs. There are many other flaws in this “ideal” of the planned neighborhood and its various adaptations.
Yellow
The Death and Life of Great American Cities
37
Looking at city neighborhoods as organs of self-government, I can see evidence that only three kinds of neighborhoods are useful: (1) the city as a whole; (2) street neighborhoods; (and 3) districts of large, subcity size, composed of 100,000 people or more in the case of the largest cities. Each of these kinds of neighborhoods has different functions, but the three supplement each other in complex fashion. It is impossible to say that one is more important than the others. For success with staying power at any spot, all three are necessary. But I think that other neighborhoods than these three kinds just get in the way, and make successful self-government difficult or impossible.
Yellow
The Death and Life of Great American Cities
38
To accomplish these functions, an effective district has to be large enough to count as a force in the life of the city as a whole. The “ideal” neighborhood of planning theory is useless for such a role. A district has to be big and powerful enough to fight city hall. Nothing less is to any purpose. To be sure, fighting city hall is not a district’s only function, or necessarily the most important. Nevertheless, this is a good definition of size, in functional terms, because sometimes a district has to do exactly this, and also because a district lacking the power and will to fight city hall—and to win—when its people feel deeply threatened, is unlikely to possess the power and will to contend with other serious problems.
Yellow
The Death and Life of Great American Cities
39
The help we got puts some individuals on our street under obligation, of course, to help other streets or aid more general district causes when help is wanted. If we neglect this, we may not get help next time we need it.
Yellow
The Death and Life of Great American Cities
40
Sometimes, to be sure, a neighborhood too small to function as a district gets the benefit of power through possessing an exceptionally influential citizen or an important institution. But the citizens of such a neighborhood pay for their “free” gift of power when the day comes that their interests run counter to those of Papa Bigwheel or Papa Institution. They are helpless to defeat Papa in the government offices, up where the decisions are made, and therefore they are helpless also to teach him or influence him. Citizens of neighborhoods that include a university, for example, are often in this helpless fix.
Yellow
The Death and Life of Great American Cities
41
effective neighborhood physical planning for cities should aim at these purposes: First, to foster lively and interesting streets. Second, to make the fabric of these streets as continuous a network as possible throughout a district of potential subcity size and power. Third, to use parks and squares and public buildings as part of this street fabric; use them to intensify and knit together the fabric’s complexity and multiple use. They should not be used to island off different uses from each other, or to island off subdistrict neighborhoods. Fourth, to emphasize the functional identity of areas large enough to work as districts.
Yellow
The Death and Life of Great American Cities
42
There are only two ultimate public powers in shaping and running American cities: votes and control of the money. To sound nicer, we may call these “public opinion” and “disbursement of funds,” but they are still votes and money.
Yellow
The Death and Life of Great American Cities
43
“I have often amused myself,” wrote James Boswell in 1791, “with thinking how different a place London is to different people. They, whose narrow minds are contracted to the consideration of some one particular pursuit, view it only through that medium…But the intellectual man is struck with it, as comprehending the whole of human life in all its variety, the contemplation of which is inexhaustible.”
Yellow
The Death and Life of Great American Cities
44
To understand cities, we have to deal outright with combinations or mixtures of uses, not separate uses, as the essential phenomena.
Yellow
The Death and Life of Great American Cities
45
Indeed, one reason, among many others, why the much-heralded postwar exodus of big offices from cities turned out to be mostly talk is that the differentials in cost of suburban land and space are typically canceled by the greater amount of space per worker required for facilities that in cities no single employer need provide, nor any one corps of workers or customers support.
Yellow
The Death and Life of Great American Cities
46
To generate exuberant diversity in a city’s streets and districts, four conditions are indispensable: 1. The district, and indeed as many of its internal parts as possible, must serve more than one primary function; preferably more than two. These must insure the presence of people who go outdoors on different schedules and are in the place for different purposes, but who are able to use many facilities in common. 2. Most blocks must be short; that is, streets and opportunities to turn corners must be frequent. 3. The district must mingle buildings that vary in age and condition, including a good proportion of old ones so that they vary in the economic yield they must produce. This mingling must be fairly close-grained. 4. There must be a sufficiently dense concentration of people, for whatever purposes they may be there. This includes dense concentration in the case of people who are there because of residence.
Yellow
The Death and Life of Great American Cities
47
Today, typically, they still do fulfill three of the conditions. But they have become (for reasons that will be discussed in Chapter Thirteen) too predominately devoted to work and contain too few people after working hours. This condition has been more or less formalized in planning jargon, which no longer speaks of “downtowns” but instead of “CBD’s”—standing for Central Business Districts. A Central Business District that lives up to its name and is truly described by it, is a dud.
Yellow
The Death and Life of Great American Cities
48
This movement has been well described by Richard Ratcliff, professor of land economics at the University of Wisconsin. “Decentralization is a symptom of degeneration and decay,” says Ratcliff, “only if it leaves a vacuum behind. Where decentralization is the product of centripetal forces, it is healthy. Much of the outward movement of certain urban functions occurs as they are pushed out of the center, rather than as they respond to a pull toward outlying locations.”
Yellow
The Death and Life of Great American Cities
49
We might call this the case of the courts and the opera. Forty-five years ago, San Francisco began building a civic center, which has given trouble ever since. This particular center, placed near the downtown and intended to pull the downtown toward it, has of course repelled vitality and gathered around itself instead the blight that typically surrounds these dead and artificial places. The center includes, among the other arbitrary objects in its parks, the opera house, the city hall, the public library and various municipal offices. Now, considering the opera house and the library as chessmen, how could they have best helped the city? Each would have been used, separately, in close conjunction with high-intensity downtown offices and shops. This, and the secondary diversity they would help anchor, would also have been a more congenial environment for either of these two buildings themselves.
Yellow
The Death and Life of Great American Cities
50
From the Chicago Fair of 1893 came the architectural ideology that sees a city as a monumental court of honor sharply set off from a profane and jumbled area of “concessions.”…There is no evidence, in this procedure, of feeling for the city as an organism, a matrix that is worthy of its monuments and friendly with them…The loss is social, as well as esthetic…
Yellow
The Death and Life of Great American Cities
51
Furthermore, a city matrix needs its own less spectacular internal minglings (“jumbles” to the simple-minded). Else it is not a matrix but, like housing projects, it is “profane” monotony, working no more sensibly than the “sacred” monotony of civic centers like San Francisco’s.
Yellow
The Death and Life of Great American Cities
52
Of the four generators of diversity, two represent easy problems to deal with in curing the troubles of gray areas—aged buildings are usually already present to do their potential share; and additional streets where they are needed are not innately difficult to acquire. (They are a minor problem compared with the large-scale land clearance we have been taught to waste our money on.) The two other necessary conditions, however—mixtures of primary diversity and sufficient concentration of dwellings—are more difficult to create if they are lacking. The sensible thing is to begin where at least one of these two conditions already exists or can be fostered relatively easily.
Yellow
The Death and Life of Great American Cities
53
If a city area has only new buildings, the enterprises that can exist there are automatically limited to those that can support the high costs of new construction.
Yellow
The Death and Life of Great American Cities
54
We are dealing here again, as we were in the case of mixed primary uses, with the economic effects of time. But in this case we are dealing with the economics of time not hour by hour through the day, but with the economics of time by decades and generations. Time makes the high building costs of one generation the bargains of a following generation. Time pays off original capital costs, and this depreciation can be reflected in the yields required from a building.
Yellow
The Death and Life of Great American Cities
55
This is an advantage they can get with many old buildings but not with new apartments, whether they are public housing at $14 a room per month or luxury housing at $95 a room per month. Some people would rather pay for improvements in their living conditions partly in labor and ingenuity, and by selecting which improvements are most important to them, instead of being indiscriminately improved, and all at a cost of money.
Yellow
The Death and Life of Great American Cities
56
Brooklyn, like most of our city areas in decline, has more old buildings than it needs. To put it another way, many of its neighborhoods have for a long time lacked gradual increments of new buildings. Yet if Brooklyn is ever to build upon its inherent assets and advantages—which is the only way successful city building can be done—many of those old buildings, well distributed, will be essential to the process. Improvement must come by supplying the conditions for generating diversity that are missing, not by wiping out old buildings in great swathes.
Yellow
The Death and Life of Great American Cities
57
Neighborhoods built up all at once change little physically over the years as a rule. The little physical change that does occur is for the worse—gradual dilapidation, a few random, shabby new uses here and there. People look at these few, random differences and regard them as evidence, and perhaps as cause, of drastic change. Fight blight! They regret that the neighborhood has changed. Yet the fact is, physically it has changed remarkably little. People’s feelings about it, rather, have changed. The neighborhood shows a strange inability to update itself, enliven itself, repair itself, or to be sought after, out of choice, by a new generation.
Yellow
The Death and Life of Great American Cities
58
The economic value of new buildings is replaceable in cities. It is replaceable by the spending of more construction money. But the economic value of old buildings is irreplaceable at will. It is created by time. This economic requisite for diversity is a requisite that vital city neighborhoods can only inherit, and then sustain over the years.
Yellow
The Death and Life of Great American Cities
59
“He based his findings,” reported the New York Times, “on the lack of a sufficient density of population to support cultural facilities. Mr. Denton…said that decentralization produced such a thin population spread that the only effective economic demand that could exist in suburbs was that of the majority. The only goods and cultural activities available will be those that the majority requires, he observed,” and so on.
Yellow
The Death and Life of Great American Cities
60
One reason why low city densities conventionally have a good name, unjustified by the facts, and why high city densities have a bad name, equally unjustified, is that high densities of dwellings and overcrowding of dwellings are often confused. High densities mean large numbers of dwellings per acre of land. Overcrowding means too many people in a dwelling for the number of rooms it contains. The census definition of overcrowding is 1.5 persons per room or more.
Yellow
The Death and Life of Great American Cities
61
The Garden City planners and their disciples looked at slums which had both many dwelling units on the land (high densities) and too many people within individual dwellings (overcrowding), and failed to make any distinction between the fact of overcrowded rooms and the entirely different fact of densely built up land. They hated both equally, in any case, and coupled them like ham and eggs, so that to this day housers and planners pop out the phrase as if it were one word, “highdensityandovercrowding.”
Yellow
The Death and Life of Great American Cities
62
Homogeneity of uses poses an unavoidable esthetic dilemma: Shall the homogeneity look as homogeneous as it is, and be frankly monotonous? Or shall it try not to look as homogeneous as it is and go in for eye-catching, but meaningless and chaotic differences? This, in city guise, is the old, familiar esthetic zoning problem of homogeneous suburbs: Shall they zone to require conformity in appearance, or shall they zone to prohibit sameness? If to prohibit sameness, where must the line be drawn against what is too nonconforming in design?
Yellow
The Death and Life of Great American Cities
63
Raskin, in his essay on variety, suggested that the greatest flaw in city zoning is that it permits monotony. I think this is correct. Perhaps the next greatest flaw is that it ignores scale of use, where this is an important consideration, or confuses it with kind of use, and this leads, on the one hand, to visual (and sometimes functional) disintegration of streets, or on the other hand to indiscriminate attempts to sort out and segregate kinds of uses no matter what their size or empiric effect. Diversity itself is thus unnecessarily suppressed, rather than one limited manifestation of it, unfortunate in certain places.
Yellow
The Death and Life of Great American Cities
64
Competition based on retail profitability is most apt to affect streets. Competition based on working- or living-space attraction is most apt to affect whole groupings of streets, or even whole districts. Thus, from this process, one or few dominating uses finally emerge triumphant. But the triumph is hollow. A most intricate and successful organism of economic mutual support and social mutual support has been destroyed by the process.
Yellow
The Death and Life of Great American Cities
65
This narrows down the possibilities—even purely commercial possibilities. Eighth Street’s worst potential threat to its diversity and its long-term success is, in short, the force let loose by outstanding success.
Yellow
The Death and Life of Great American Cities
66
These banks were making the same mistake as a family I know who bought an acre in the country on which to build a house. For many years, while they lacked the money to build, they visited the site regularly and picnicked on a knoll, the site’s most attractive feature. They liked so much to visualize themselves as always there, that when they finally built they put the house on the knoll. But then the knoll was gone. Somehow they had not realized they would destroy it and lose it by supplanting it with themselves.
Yellow
The Death and Life of Great American Cities
67
Diversity is crowded out by the duplication of success. Unless they are handsomely financed to start with, or instantly successful (which is seldom the case), new ideas tumble into second-best locations; thereby second-best becomes first-rate, flourishes for a time, and eventually it too is destroyed by the duplication of its own greatest successes.
Yellow
The Death and Life of Great American Cities
68
Conservatism, applied to the choice of city locations, means investing where success is already a well-established fact. To see that investment may destroy success requires looking too far ahead for those who value most what is already achieved—and are perhaps mystified by localities with a potential for success, or are insecure about them, because of not understanding why some places in cities should be successful, and others not.
Yellow
The Death and Life of Great American Cities
69
Zoning for diversity must be thought of differently from the usual zoning for conformity, but like all zoning it is suppressive. One form of zoning for diversity is already familiar in certain city districts: controls against demolition of historically valuable buildings.
Yellow
The Death and Life of Great American Cities
70
Indeed, raising the assessments on city property because of increased profitability of the neighbors, is a powerful means today of forcing excess duplications. This pressure would continue to force them, even in the face of controls overtly intended to hamper duplications. The way to raise the tax base of a city is not at all to exploit to the limit the short-term tax potential of every site. This undermines the long-term tax potential of whole neighborhoods. The way to raise a city’s tax base is to expand the city’s territorial quantity of successful areas. A strong city tax base is a by-product of strong city magnetism, and one of its necessary ingredients—once the object is to sustain success—is a certain amount of close-grained, deliberate, calculated variation in localized tax yields to anchor diversity and forestall its self-destruction.
Yellow
The Death and Life of Great American Cities
71
Universities could make portions, at least, of their campuses more like seams and less like barriers if they placed their uses intended for the public at strategic points on their perimeters, and if they also put at their perimeters, and opened up as scenes, their elements congenial to public view and interest—instead of hiding them.
Yellow
The Death and Life of Great American Cities
72
Our present urban renewal laws are an attempt to break this particular linkage in the vicious circles by forthrightly wiping away slums and their populations, and replacing them with projects intended to produce higher tax yields, or to lure back easier populations with less expensive public requirements.
Yellow
The Death and Life of Great American Cities
73
The key link in a perpetual slum is that too many people move out of it too fast—and in the meantime dream of getting out. This is the link that has to be broken if any other efforts at overcoming slums or slum life are to be of the least avail.
Yellow
The Death and Life of Great American Cities
74
The first sign of an incipient slum, long before visible blight can be seen, is stagnation and dullness. Dull neighborhoods are inevitably deserted by their more energetic, ambitious or affluent citizens, and also by their young people who can get away. They inevitably fail to draw newcomers by choice. Furthermore, aside from these selective desertions and the selective lack of vigorous new blood, such neighborhoods eventually are apt to undergo rather sudden wholesale desertions by their nonslum populations. The reasons why this is so have already been stated; there is no need to reiterate the sheer impracticality of the Great Blight of Dullness for city life.
Yellow
The Death and Life of Great American Cities
75
Sometimes, to be sure, a deliberate conspiracy to turn over the population of a neighborhood does exist—on the part of real estate operators who make a racket of buying houses cheaply from panicked white people and selling them at exorbitant prices to the chronically housing-starved and pushed-around colored population.
Yellow
The Death and Life of Great American Cities
76
City officials today prate about “bringing back the middle class,” as if nobody were in the middle class until he had left the city and acquired a ranch house and a barbecue and thereby become precious. To be sure, cities are losing their middle class populations. However, cities need not “bring back” a middle class, and carefully protect it like an artificial growth. Cities grow the middle class. But to keep it as it grows, to keep it as a stabilizing force in the form of a self-diversified population, means considering the city’s people valuable and worth retaining, right where they are, before they become middle class.
Yellow
The Death and Life of Great American Cities
77
The processes that occur in unslumming depend on the fact that a metropolitan economy, if it is working well, is constantly transforming many poor people into middle-class people, many illiterates into skilled (or even educated) people, many greenhorns into competent citizens.
Yellow
The Death and Life of Great American Cities
78
The first, and most important, of the three kinds of money is the credit extended by conventional, nongovernmental lending institutions. In order of size of their mortgage holdings, the most important of these institutions are: savings and loan associations, life insurance companies, commercial banks and mutual savings banks.
Yellow
The Death and Life of Great American Cities
79
The third kind of money comes from a shadow world of investment, an underworld of cash and credit, so to speak. Where this money comes from ultimately, and by what avenues it finds its way, is concealed and devious. This money is lent at interest rates starting at about 20 percent and ranging as high as the market will bear, apparently in some cases up to 80 percent in combinations of interest rates and arrangers’ fees and cuts. It does many jobs—a few of which are actually constructive and useful—but it is most notable for financing exploitative conversions of humdrum buildings to slum buildings at exorbitant profits. This money is to the mortgage market what loan-shark money is to personal finance.
Yellow
The Death and Life of Great American Cities
80
The Council, and people within the district, refer to the banks’ interest and cooperation in their improvement with gratitude. And the banks, in their turn, speak admiringly of the area as a location for sound investment. Nobody was thrown out of the district and “relocated.” No businesses were destroyed. Unslumming, in short, has proceeded, even though the process reached a point—as it eventually does everywhere—when the need for credit becomes crucial.
Yellow
The Death and Life of Great American Cities
81
The worst cases are neighborhoods that are already stagnant, with much that is inherently wrong. These localities, which are losing their former residents anyway, often undergo a special form of investment cataclysm. Within a short interval after they are blacklisted for conventional credit, there may come into the vacuum money from the shadow world of investment. It pours in, buying up property for which there are no other purchasers now, and presumably will not be, and to which their current owners or users have no great, effective attachment.
Yellow
The Death and Life of Great American Cities
82
First the withdrawal of all conventional money; then ruination financed by shadow-world money; then selection of the area by the Planning Commission as a candidate for cataclysmic use of government money to finance renewal clearance. This last stage makes possible cataclysmic re-entry of conventional money for financing renewal-project construction and rehabilitation. So well do these three different kinds of money prepare the way for each other’s cataclysms that one would be impelled to admire the process, as a highly developed form of order in its own right, were it not so destructive to every other form of city order. It does not represent a “conspiracy.” It is a logical outcome of logical men guided by nonsensical but conventional city planning beliefs.
Yellow
The Death and Life of Great American Cities
83
The immense new suburban sprawls of American cities have not come about by accident—and still less by the myth of free choice between cities and suburbs. Endless suburban sprawl was made practical (and for many families was made actually mandatory) through the creation of something the United States lacked until the mid-1930’s: a national mortgage market specifically calculated to encourage suburban home building.
Yellow
The Death and Life of Great American Cities
84
Private investment shapes cities, but social ideas (and laws) shape private investment. First comes the image of what we want, then the machinery is adapted to turn out that image. The financial machinery has been adjusted to create anti-city images because, and only because, we as a society thought this would be good for us. If and when we think that lively, diversified city, capable of continual, close-grained improvement and change, is desirable, then we will adjust the financial machinery to get that.
Yellow
The Death and Life of Great American Cities
85
The more exploited a building, the higher its earning power, and the more the owner is given. So profitable are such condemnation sales for slum landlords that some of them make a business of buying up buildings in areas already condemned, overcrowding them, and raising rents, less for the profits to be made in the interim than for the profits to be made by the building’s sale to the public.
Yellow
The Death and Life of Great American Cities
86
No amount of code enforcement or tax abated housing rehabilitation by the New York City Housing Authority will be able to keep pace with slum formation, until and unless the profit is taken out of slums by taxation. [Taxation on the basis of profits is necessary] to overcome the effect of the Federal Income Tax structure, the depreciation and capital gains provisions of which make slum ownership a highly profitable speculation for slumlords…. A slum owner in a congested area, where need for shelter is desperate and where the rents are what the traffic will bear, need not maintain the property. He pockets his annual depreciation allowance year after year, and after he has written down the book value of his slum property to zero, he then sells it at a price that capitalizes his high rent roll. Having made the sale, he pays a 25% capital gains tax on the difference between the book value and the sales price. He then acquires another slum property and goes through the same process again. [Saturation inspection by the Bureau of Internal Revenue of the income returns of owners of slum properties would] determine the amount of back taxes and penalties due as a result of their pocketing any improperly claimed depreciation allowance.
Yellow
The Death and Life of Great American Cities
87
I am going to deal with several subjects that, in themselves, are already well recognized as within the province of city planning: subsidized dwellings, traffic, city visual design, analytical methods. These are all matters for which conventional modern planning does have objectives and therefore does possess tactics—so many tactics, so well entrenched, that when their purposes are questioned they are generally justified in terms of the conditions laid down by still other tactics (e.g., We must do this for the purpose of getting the federal loan guarantees). We become the prisoners of our tactics, seldom looking behind them at the strategies.
Yellow
The Death and Life of Great American Cities
88
The answer we long ago accepted went like this: The reason we need dwelling subsidies is to provide for that part of the population which cannot be housed by private enterprise. And, the answer went on, so long as this is necessary anyway, the subsidized dwellings should embody and demonstrate the principles of good housing and planning. This is a terrible answer, with terrible consequences. A twist of semantics suddenly presents us with people who cannot be housed by private enterprise, and hence must presumably be housed by someone else.
Yellow
The Death and Life of Great American Cities
89
The notion that the fact of a subsidy required that these people be housed by someone other than private enterprise and normal landlords was an aberration in itself. The government does not take over the landlordship or ownership or management of subsidized farms or of subsidized airlines.
Yellow
The Death and Life of Great American Cities
90
The more successfully such guaranteed-rent buildings were able to hold tenants as their financial condition improved, the more rent subsidy would be available for more buildings, and for other households.
Yellow
The Death and Life of Great American Cities
91
Expansion would represent no threat to private builders and landlords (as the expansion of public housing does), because private builders and landlords would be the direct proprietors of the expansion. Nor need it represent any threat to private lending institutions, for the functions of these institutions would be supplanted only insofar as they themselves did not wish to participate in the capital cost financing.
Yellow
The Death and Life of Great American Cities
92
The physical standards and regulations applying should be those embodied in a city’s own codes and body of regulations, and should therefore be the same for guaranteed-rent dwellings as they would be for any unsubsidized building at the same place. If it is public policy to improve or to change dwelling standards for safety, sanitation, amenity or street design, then this public policy must be expressed for the public—not for an arbitrarily selected, guinea-pig part of the public.
Yellow
The Death and Life of Great American Cities
93
To combat both stultification and corruption, we ought, every eight or ten years at least, to try out new methods of subsidizing dwellings or add variations to old ones that are working well enough for us to retain.
Yellow
The Death and Life of Great American Cities
94
The next step will require great humility, since we are now so prone to confuse big building projects with big social achievements. We will have to admit that it is beyond the scope of anyone’s imagination to create a community. We must learn to cherish the communities we have; they are hard to come by. “Fix the buildings but leave the people.” “No relocation outside the neighborhood.”—These must be the slogans if public housing is to be popular.
Yellow
The Death and Life of Great American Cities
95
We went awry by replacing, in effect, each horse on the crowded city streets with half a dozen or so mechanized vehicles, instead of using each mechanized vehicle to replace half a dozen or so horses.
Yellow
The Death and Life of Great American Cities
96
In real life, we do not suddenly jump five million square feet of city roadbed to sixteen million square feet, and so the implications of accommodating a few more cars and a few more cars and a few more cars are a little harder to see. But swiftly or slowly, the positive feedback is at work. Swiftly or slowly, greater accessibility by car is inexorably accompanied both by less convenience and efficiency of public transportation, and by thinning-down and smearing-out of uses, and hence by more need for cars.
Yellow
The Death and Life of Great American Cities
97
In that case we Americans will hardly need to ponder a mystery that has troubled men for millennia: What is the purpose of life? For us, the answer will be clear, established and for all practical purposes indisputable: The purpose of life is to produce and consume automobiles.
Yellow
The Death and Life of Great American Cities
98
Like the housers who face a blank if they try to think what to do besides income-sorting projects, or the highwaymen who face a blank if they try to think what to do besides accommodate more cars, just so, architects who venture into city design often face a blank in trying to create visual order in cities except by substituting the order of art for the very different order of life. They cannot do anything else much. They cannot develop alternate tactics, for they lack a strategy for design that will help cities.
Yellow
The Death and Life of Great American Cities
99
It is the easiest thing in the world to seize hold of a few forms, give them a regimented regularity, and try to palm this off in the name of order. However, simple regimented regularity and significant systems of functional order are seldom coincident in this world.
Yellow
The Death and Life of Great American Cities
100
Only intricacy and vitality of use give, to the parts of a city, appropriate structure and shape. Kevin Lynch, in his book The Image of the City, mentions the phenomenon of “lost” areas, places that the people he interviewed completely ignored and were actually unaware of unless reminded, although it would seem the locations of these “lost” places by no means merited this oblivion, and sometimes his observers had just traversed them in actuality or in imagination.*1 Wherever the fires of use and vitality fail to extend in a city is a place in the murk, a place essentially without city form and structure. Without that vital light, no seeking for “skeletons” or “frameworks” or “cells” on which to hang the place can bring it into a city form.
Yellow
The Death and Life of Great American Cities
101
Still another possibility is to build some of the street-side edifices in cheap and makeshift fashion (which does not necessarily mean they must be ugly), with the intention of making overhead low at the most economically difficult stage, and their replacement practical in future when economic success warrants it. This is not as promising as the other methods, however, because buildings built well enough to stand five years or ten years have to be built well enough to stand a great deal longer. It is hard to give buildings a calculated built-in obsolescence and make really appreciable savings.
Yellow
The Death and Life of Great American Cities
102
holding people by choice when they develop choice (which means they must become gladly attached before they have choice), and for this the kinds of salvage already suggested, outside and inside, are necessary. However, in addition, people must of course be permitted to stay by choice, which means that maximum income limits must be abandoned. It is not enough to raise limits; the tie of residency to income price tags must be abandoned altogether.
Yellow
The Death and Life of Great American Cities
103
No one, or even two, of the suggestions I have made will be effective as an all-purpose salvager in itself. All three—grounds reconverted and woven back into surrounding city; safety inside buildings; removal of maximum income limits—are necessary.
Yellow
The Death and Life of Great American Cities
104
When human affairs reach, in truth and in fact, new levels of complication, the only thing that can be done is to devise means of maintaining things well at the new level. The alternative is what Lewis Mumford has aptly called “unbuilding,” the fate of a society which cannot maintain the complexity on which it is built and on which it depends.
Yellow
The Death and Life of Great American Cities
105
Big-city government is today nothing more than little-city government which has been stretched and adapted in quite conservative fashion to handle bigger jobs. This has had strange results, and ultimately destructive results, because big cities pose operational problems that are innately different from those posed by little cities.
Yellow
The Death and Life of Great American Cities
106
Citizens of big cities are forever being berated for not taking sufficiently active interest in government. It is amazing, rather, that they keep trying.
Yellow
The Death and Life of Great American Cities
107
Planners like to think they deal in grand terms with the city as a whole, and that their value is great because they “grasp the whole picture.” But the notion that they are needed to deal with their city “as a whole” is principally a delusion.
Yellow
The Death and Life of Great American Cities
108
In short, great cities must be divided into administrative districts. These would be horizontal divisions of city government but, unlike random horizontality, they would be common to the municipal government as a whole.
Yellow
The Death and Life of Great American Cities
109
Because these real and important problems exist, and because we have, administratively, no very good ways of getting at them, a concept called “Metropolitan Government” has been developed. Under Metropolitan Government, politically separate localities would continue to have a political identity and autonomy in purely local concerns, but they would be federated into a super-area government which would have extensive planning powers and administrative organs for carrying the plans into action. Part of the taxes from each locality would go to the Metropolitan Government, thus helping also to relieve great cities of part of the financial burden they carry, unrecompensed, for major central city facilities used by the hinterland.
Yellow
The Death and Life of Great American Cities
110
This conception of the city as a collection of separate file drawers, in effect, was suited very well by the Radiant City vision of Le Corbusier, that vertical and more centralized version of the two-variable Garden City. Although Le Corbusier himself made no more than a gesture toward statistical analysis, his scheme assumed the statistical reordering of a system of disorganized complexity, solvable mathematically; his towers in the park were a celebration, in art, of the potency of statistics and the triumph of the mathematical average.
Yellow
The Death and Life of Great American Cities
111
City dwellings—either existing or potential—are specific and particularized buildings always involved in differing, specific processes such as unslumming, slumming, generation of diversity, self-destruction of diversity.
Yellow
The Death and Life of Great American Cities
112
Why reason inductively? Because to reason, instead, from generalizations ultimately drives us into absurdities—as in the case of the Boston planner who knew (against all the real-life evidence he had) that the North End had to be a slum because the generalizations that make him an expert say it is.
Yellow
The Death and Life of Great American Cities
113
The advertisement tells us that Brooklyn’s downtown is too dead by 8 P.M., as indeed it is. No surveys (and certainly no mindless, mechanical predictions projected forward in time from statistical surveys, a boondoggle that today frequently passes for “planning”) can tell us anything so relevant to the composition and to the need of Brooklyn’s downtown as this small, but specific and precisely accurate, clue to the workings of that downtown.
Yellow
The Death and Life of Great American Cities
114
Ordinary people in cities have an awareness of “unaverage” quantities which is quite consonant with the importance of these relatively small quantities. And again, planners are the ones at the disadvantage. They have inevitably come to regard “unaverage” quantities as relatively inconsequential, because these are statistically inconsequential. They have been trained to discount what is most vital.
Yellow
The Death and Life of Great American Cities
115
After four months of hearings in 1931, the commission ruled weight-based rates illegal. Although it found the container to be “a commendable piece of equipment,” the commission said that the railroads could not charge less to carry a container than to carry the equivalent weight of the most expensive commodity inside the container. With that ruling, containers no longer made economic sense on the rails.
Yellow
The Box: How the Shipping Container Made the World Smaller and the World Economy Bigger
116
Malcom McLean’s fundamental insight, commonplace today but quite radical in the 1950s, was that the shipping industry’s business was moving cargo, not sailing ships.
Yellow
The Box: How the Shipping Container Made the World Smaller and the World Economy Bigger
117
Containerization, he concluded, “would appear to present the fortunate circumstance of a promising initial course of action offering the option of going as far as desired and stopping at any point that prudent planning dictates.”
Yellow
The Box: How the Shipping Container Made the World Smaller and the World Economy Bigger
118
The experience of Grace Line offered a graphic warning. Grace had won a $7 million government subsidy to convert two vessels into containerships and spent another $3 million on chassis, forklifts, and 1,500 aluminum containers, only to have longshoremen in Venezuela refuse to handle its highly publicized ships. Having badly misjudged the politics and the economics of container shipping, it would eventually sell the ships to Sea-Land at a loss. As a Grace executive noted ruefully, “The concept was valid, but the timing was wrong.”
Yellow
The Box: How the Shipping Container Made the World Smaller and the World Economy Bigger
119
Neither city had much besides canned tuna to ship out in containers, but providing container service earned McLean the goodwill of Teodoro Moscoso, the creator of Operation Bootstrap and a powerful figure in Puerto Rico’s economic development.
Yellow
The Box: How the Shipping Container Made the World Smaller and the World Economy Bigger
120
There might not even be a transit shed, the most expensive part of pier construction.
Yellow
The Box: How the Shipping Container Made the World Smaller and the World Economy Bigger
121
For their part, Tobin and King were now convinced that the container was the future, and the Port Authority lost interest in taking over city piers that would never have the acreage or transport connections for containers. Although the Port Authority was proceeding with plans to turn twenty-seven outmoded piers in Brooklyn into twelve modern ones, the agency understood that it was in a race to recover its investment before container shipping made the reconstructed piers obsolete.
Yellow
The Box: How the Shipping Container Made the World Smaller and the World Economy Bigger
122
Longshore families, now receiving stable incomes, were free to move from tough waterfront neighborhoods to comfortable suburbs, dealing a blow to the class solidarity that came from isolation.
Yellow
The Box: How the Shipping Container Made the World Smaller and the World Economy Bigger
123
Despite these discontents, the longshore unions’ tenacious resistance to automation appeared to establish the principle that long-term workers deserved to be treated humanely as businesses embraced innovations that would eliminate their jobs. That principle was ultimately accepted in very few parts of the American economy and was never codified in law. Years of bargaining by two very different union leaders made the longshore industry a rare exception, in which employers that profited from automation were forced to share the benefits with the individuals whose work was automated away.
Yellow
The Box: How the Shipping Container Made the World Smaller and the World Economy Bigger
124
Marad’s desire to set common standards was supported by the Navy, which had the right to commandeer subsidized ships in the event of war and worried that a merchant fleet using incompatible container systems would complicate logistics.
Yellow
The Box: How the Shipping Container Made the World Smaller and the World Economy Bigger
125
The railway precedent suggested that ship lines might eventually make their container systems compatible without a government dictate. Yet the analogy is misleading. The gauge that became “standard” on railways had no particular technical superiority, and standardization had almost no economic implications;
Yellow
The Box: How the Shipping Container Made the World Smaller and the World Economy Bigger
126
If government agencies in those days had made it a routine practice to conduct cost-benefit studies, most likely the entire process of container standardization would never have begun.
Yellow
The Box: How the Shipping Container Made the World Smaller and the World Economy Bigger
127
The specifics mattered less: within the limits set by state laws, trucks and railroads could accommodate almost any length and weight. The maritime interests that were influential in the Marad committees, in contrast, cared greatly about the specifics. A ship built with cells for 27-foot containers could not easily be redesigned to carry 35-foot containers.
Yellow
The Box: How the Shipping Container Made the World Smaller and the World Economy Bigger
128
The cart, however, had gotten ahead of the horse: the ISO container committee had agreed on what the corner fitting should look like without defining all of the loads and stresses it should be able to withstand. Starting in the autumn of 1965, dozens of ship lines and leasing companies began ordering containers with fittings based on the design that had worked for Sea-Land’s operations but had never been tested under other conditions.
Yellow
The Box: How the Shipping Container Made the World Smaller and the World Economy Bigger
129
He was followed by Sea-Land’s chief engineer, Ron Katims, who called for the subcommittee to recognize 35-foot containers as well. Sea-Land’s containers, the subcommittee was told, tended to hit weight limits long before they were filled to physical capacity, so 40-foot containers would not in practice hold more freight than 35-footers.
Yellow
The Box: How the Shipping Container Made the World Smaller and the World Economy Bigger
130
Freight forwarders took advantage of the rate difference, arranging to consolidate smaller shipments into full carloads, for which they could demand lower rail rates.
Yellow
The Box: How the Shipping Container Made the World Smaller and the World Economy Bigger
131
Behind the scenes, though, the prerequisites for the container revolution were falling into place. Dock labor costs were poised to fall massively thanks to union agreements on both coasts. International agreements were in place on standards for container sizes and lifting methods, even if few containers yet met those standards. Wharves designed for container handling were on the way. Manufacturers had learned to organize their factories so that they could save money by shipping large loads in single units to take advantage of containerization. Railroads, truckers, and freight forwarders had grown familiar with switching trailers and containers from one conveyance to another to move what was now being called “intermodal” freight. Regulators were cautiously encouraging competition so that carriers could pass some of the cost savings from containerization on to their customers. Only one crucial ingredient was missing: ships.
Yellow
The Box: How the Shipping Container Made the World Smaller and the World Economy Bigger
132
The army instructed its depots to stop combining shipments that would need to be sorted in Vietnam and to abide by the Three Cs: one container, one customer, one commodity.
Yellow
The Box: How the Shipping Container Made the World Smaller and the World Economy Bigger
133
With its ship operating costs fully covered by its military contracts for Vietnam, Sea-Land was guaranteed to make money no matter how little cargo it picked up in Japan.
Yellow
The Box: How the Shipping Container Made the World Smaller and the World Economy Bigger
134
By the late 1950s, the lesson for public officials already was clear. As container shipping expanded, maritime traffic would be drawn to a small number of very large ports.
Yellow
The Box: How the Shipping Container Made the World Smaller and the World Economy Bigger
135
Nutter dreamed up a lease very different from the norm of so many cents per ton: Sea-Land would pay a minimum fee high enough to cover the cost of building its terminal and would pay more as its tonnage rose, but beyond a certain point there would be no additional charge. That “mini-max” provision gave Sea-Land an incentive to pump cargo through Oakland, because once its tonnage exceeded the upper limit, its average port cost per ton would plummet.
Yellow
The Box: How the Shipping Container Made the World Smaller and the World Economy Bigger
136
As early as 1966, though, public officials in Seattle were sensing that their remote city, with little industry, might be able to develop a new economy based on distribution rather than on factories.
Yellow
The Box: How the Shipping Container Made the World Smaller and the World Economy Bigger
137
“Commodity distribution has grown out of the dependent sector to link production and consumption,” port planner Ting-Li Cho wrote presciently. “It has become an independent sector that, in return, determines the economy of production and consumption.”
The Box: How the Shipping Container Made the World Smaller and the World Economy Bigger
138
Seattle began no fewer than three new terminals with no tenants in place, driven by a new imperative: if the supply of terminal space was not adequate to meet the demand for container shipping, the ships might go somewhere else.
Yellow
The Box: How the Shipping Container Made the World Smaller and the World Economy Bigger
139
The emerging economics of container shipping meant that the laggards faced potentially serious consequences. The newly built containerships coming on the scene in the late 1960s carried far more cargo than the vessels they supplanted; even if the total amount of cargo grew, fewer voyages would be required. Shipowners wanted to keep their ships under way to recover the high construction cost, so they preferred that each voyage involve only one or two stops on either side of the ocean rather than four or five.
Yellow
The Box: How the Shipping Container Made the World Smaller and the World Economy Bigger
140
Sea-Land was a conference carrier in the Pacific, charging the same rates as its competitors. The SL-7s’ faster transit time would help Sea-Land attract cargo, and other carriers, bound by the conference agreement, would not be able to drop their rates in response.
Yellow
The Box: How the Shipping Container Made the World Smaller and the World Economy Bigger
141
In the 1950s and 1960s, though, a temporary imbalance between the amount of space on breakbulk ships and the amount of general cargo usually was not a fatal problem. The war-surplus ships that filled most merchant fleets had been acquired for little or nothing, so shipowners were not saddled with huge mortgage payments. Their main expenses—cargo handling, fees for the use of docks, pay for crews, fuel—were operating costs. If business was bad, the shipowner could lay the vessel up and most of the costs would go away. The economics of container shipping were fundamentally different. The huge sums borrowed to buy ships, containers, and chassis required regular payments of interest and principal.
Yellow
The Box: How the Shipping Container Made the World Smaller and the World Economy Bigger
142
In container shipping, quite unlike breakbulk, overcapacity would not diminish as owners temporarily idled their ships. Instead, rates would fall as carriers struggled to win every available box, and overcapacity would persist until the demand for shipping space eventually caught up with the supply.
Yellow
The Box: How the Shipping Container Made the World Smaller and the World Economy Bigger
143
The hundreds of containerships built in the first half of the 1970s had been designed for the world of the late 1960s. High speed was important because of the closure of the Suez Canal in the 1967 Arab-Israeli war, which forced ship traffic between Europe and Asia and Australia to take a much longer route around the tip of Africa. High fuel consumption—the inevitable result of high speed—did not much matter, because oil was cheap. The world of the mid-1970s was totally different.
Yellow
The Box: How the Shipping Container Made the World Smaller and the World Economy Bigger
144
A round-the-world route, McLean thought, would solve one of the industry’s inherent problems, the imbalanced flow of freight that left some ships sailing full in one direction and half-empty in the other. The new vessels would have the lowest construction cost per container slot of any vessel in the world and the lowest operating costs per container as well.
Yellow
The Box: How the Shipping Container Made the World Smaller and the World Economy Bigger
145
By the 1980s, new ships holding the equivalent of 4,200 20-foot containers could move a ton of cargo at 40 percent less than could a ship built for 3,000 containers and at one-third the cost of a vessel designed for 1,800.
Yellow
The Box: How the Shipping Container Made the World Smaller and the World Economy Bigger
146
Entire technologies, such as on-dock rail, proved to be sinkholes: ports that laid train tracks on the docks, so that cranes could transfer cargo directly from ships to waiting railcars, learned that the time required to move the train forward as the crane loaded each railcar delayed ships and reduced productivity.
Yellow
The Box: How the Shipping Container Made the World Smaller and the World Economy Bigger
147
Unlike government agencies, the private port operators had no imperative to expand for the sake of local economic development; they could insist on long-term contracts, backed by banks or by collateral, to assure that they would recover whatever investments they made. Governments retreated to the role of landlords, renting out waterfront land to private companies. By the end of the twentieth century, nearly half the world’s trade in containers would be passing through privately controlled ports.
Yellow
The Box: How the Shipping Container Made the World Smaller and the World Economy Bigger
148
Quite unlike either breakbulk ships or first-generation containerships, though, the second-generation ships came with obligations payable regardless of the business situation.
Yellow
The Box: How the Shipping Container Made the World Smaller and the World Economy Bigger
149
A global recession would hit shipowners twice over: the lack of freight would cause their fixed cost per container to increase at the same time as it would weaken their ability to hold rates at profitable levels.
Yellow
The Box: How the Shipping Container Made the World Smaller and the World Economy Bigger
150
Many nonfreight costs undoubtedly fell with the growth of container shipping. Packing full containers at the factory eliminated the need for custom-made wooden crates to protect merchandise from theft or damage. The container itself served as a mobile warehouse, so the traditional costs of storage in transit warehouses fell away. Cargo theft dropped sharply, and claims of damage to goods in transit fell by up to 95 percent;
Yellow
The Box: How the Shipping Container Made the World Smaller and the World Economy Bigger
151
In industry, the traffic department, housed in the back of the plant near the loading dock, would be given whatever the manufacturing department produced, with instructions to ship it. A tariff clerk, his desk piled high with the freight classification guidelines of various liner conferences, trucking conferences, and railroads, would try to describe the cargo in whatever way brought the lowest rate. An export manager would then call ship lines to select a vessel, balancing the desire for fast delivery with the need to keep from becoming too dependent on a particular carrier. With decentralized organizations and fairly primitive computer systems, even large, relatively sophisticated multinational corporations could end up paying dramatically different prices for the same type of cargo, depending on what the tariff clerk and the export manager could accomplish. “In some cases we’d pay $1,600 for a 40-foot container in the North Atlantic, and in other cases we’d be paying $8,000 for the same container,” recalled a former chemical-industry executive.
Yellow
The Box: How the Shipping Container Made the World Smaller and the World Economy Bigger
152
In July 1983, American President Lines sponsored the first experimental train composed only of the new double-stack cars. Within months, ship lines and railroads had negotiated ten-year contracts under which dedicated double-stack container trains would speed imports from Seattle, Oakland, and Long Beach directly to specially designed freight yards in the Midwest.
Yellow
The Box: How the Shipping Container Made the World Smaller and the World Economy Bigger
153
When American President Lines studied the matter a few years later, it concluded that freight rates from Asia to North America had fallen 40 to 60 percent because of the container. Between 1966 and 1990, economists Daniel M. Bernhofen, Zouheir El-Sahli, and Richard Kneller reported in 2013, the container was more than twice as important in increasing the flow of international trade among the wealthy countries as governments’ efforts to eliminate formal trade barriers. The box made the world economy much, much bigger.
Yellow
The Box: How the Shipping Container Made the World Smaller and the World Economy Bigger
154
In 2014, inventories in the United States were perhaps $1.2 trillion lower than they would have been had they stayed at the level of the 1980s, relative to sales.
Yellow
The Box: How the Shipping Container Made the World Smaller and the World Economy Bigger
155
The globalization of the late twentieth century took on quite a different character. International trade was no longer dominated by essential raw materials or finished products. Fewer than one-third of the containers imported through Southern California in 1998 contained consumer goods. Most of the rest were links in global supply chains, carrying what economists call “intermediate goods,” factory inputs that have been partially processed in one place and will be processed further someplace else.
Yellow
The Box: How the Shipping Container Made the World Smaller and the World Economy Bigger
156
If high shipping costs, high port costs, and long waiting times do not leave a country at an economic disadvantage, a cargo imbalance might.
Yellow
The Box: How the Shipping Container Made the World Smaller and the World Economy Bigger
157
In 2014, U.S. farmers exported more than 50,000 40-foot boxes loaded with soybeans, a commodity long deemed unsuitable for shipping in containers.
Yellow
The Box: How the Shipping Container Made the World Smaller and the World Economy Bigger
158
The giant vessels’ size required ocean terminals to load and discharge more boxes but made it harder for them to do so. Their added width—as many as 23 containers abreast—meant that a crane took longer to move the average box from ship to shore, while their lack of additional length left terminals no room to move more cranes alongside to handle the additional cargo. The net result was longer port calls, wiping out some of the saving gained from greater efficiency at sea.
Yellow
The Box: How the Shipping Container Made the World Smaller and the World Economy Bigger
159
If labor-intensive manufacturing shifts from an increasingly expensive China to lower-cost countries in South Asia or Africa, more America-bound ships may sail through the newly widened Suez Canal and cross the Atlantic rather than the Pacific, depriving the Panama Canal of traffic.
Yellow
The Box: How the Shipping Container Made the World Smaller and the World Economy Bigger
160
At first, the system did not run smoothly: the veteran crane drivers, it turned out, relied partly on sound to get their bearings, and working in silence hurt their accuracy. Once microphones were installed on the cranes and speakers placed in the control room so the operators could hear every clang and whir, the tempo returned to normal.
Yellow
The Box: How the Shipping Container Made the World Smaller and the World Economy Bigger
161
With several distribution centers at a single location, often owned by a single developer, a logistics cluster could support better transportation infrastructure and more frequent service than any single distribution center could have hoped for.
Yellow
The Box: How the Shipping Container Made the World Smaller and the World Economy Bigger
162
If a containership ever reaches Malacca-Max, the maximum size for a vessel able to pass through the straits, it will be more than a quarter mile long and 210 feet wide, with its bottom at least 55 feet below the waterline. It may be uneconomical to build, because its width could require a structure of thicker steel, reducing cargo space. If such a vessel should sink, it could take nearly $2 billion of cargo with it.
Yellow
The Box: How the Shipping Container Made the World Smaller and the World Economy Bigger
163
After all, the fact that planes are flying people from one corner of the country to another at affordable prices has as much to do with innovative hedges against high fuel costs as with advances in aviation technology.
Yellow
The New Geography of Jobs
164
Most of the 27 million jobs created over the past two decades have been in the non-tradable sector, with health care as the fastest-growing.
Yellow
The New Geography of Jobs
165
My research, based on an analysis of 11 million American workers in 320 metropolitan areas, shows that for each new high-tech job in a metropolitan area, five additional local jobs are created outside of high tech in the long run.
Yellow
The New Geography of Jobs
166
the undisputed world leader in financial innovation. Historically, the Washington, D.C., area never had many
Yellow
The New Geography of Jobs
167
In a study that I published in 2004, I found that for a college graduate, an increase in the number of other college graduates in the same city does result in a salary increase, but not a particularly large one. For a high school graduate, the increase is four times larger. For a high school dropout, the effect is five times larger. Thus, the lower the skill level, the larger the salary gains from other people’s education.
Yellow
The New Geography of Jobs
168
In fact, the full return on education for society—sometimes called social return—is larger than its private return.
Yellow
The New Geography of Jobs
169
Just as investors have a portfolio of stocks, each city has, in effect, a portfolio of industries.
Yellow
The New Geography of Jobs
170
From 1994 to 1998, the federal government gave thousands of public housing residents in Baltimore, Chicago, Boston, New York, and Los Angeles vouchers to leave the projects and move to private housing in the same city but in significantly better neighborhoods.
Yellow
The New Geography of Jobs
171
With every passing election, the top counties gain influence in the political process while the bottom counties lose it.
Yellow
The New Geography of Jobs
172
In America today, culture, education, and health care are increasingly provided by charities.
Yellow
The New Geography of Jobs
173
This externality is another example of market failure, a case where government intervention could improve efficiency by subsidizing workers and firms for the benefits they generate.
Yellow
The New Geography of Jobs
174
Today about half of American households change addresses every five years, a number that would be unthinkable in Europe, and a significant number relocate to a different city.
Yellow
The New Geography of Jobs
175
In the United Kingdom, the unemployment rates of highly educated workers in different regions are similar, because the high propensity to migrate tends to equalize job opportunities across regions, while the unemployment rate of less educated workers is vastly different. When Europeans are asked by pollsters whether they are “attached to their town or village,” the number answering that they are “Not at all attached” or “Not very attached” is high in countries such as Finland, Denmark, and the Netherlands, which have high average educational levels, and low in countries such as Portugal and Spain, which have low average levels of education.
Yellow
The New Geography of Jobs
176
Relocating is like an investment: you spend money up front, to cover the direct costs of the move and your living expenses until a job becomes available, in exchange for a better job later. But many unemployed workers with low skills are unable to make this investment, because they have limited savings and limited access to credit.
Yellow
The New Geography of Jobs
177
What is striking about the system is that it does not provide any incentive for unemployed workers to look for jobs in places with better labor markets. If anything, it discourages mobility from high-unemployment areas to low-unemployment ones, because it does not compensate for the difference in cost of living. If you are living off an unemployment check in Flint, you do not have a lot of incentives to move to Austin to look for a new job, because your housing expenses would double but your check would still reflect the cost of living in Flint.
Yellow
The New Geography of Jobs
178
This points to a surprising conclusion: unemployed workers who stay in a local labor market with high unemployment effectively impose a cost, or negative externality, on everyone else in that market, while workers who move away generate a positive externality.
Yellow
The New Geography of Jobs
179
The pull of innovation hubs dwarfs their efforts. This is great news for the cities that attract the college graduates—these cities effectively receive free human capital paid for by someone else.
Yellow
The New Geography of Jobs
180
Essentially, this acted like a redistribution mechanism that favored renters over homeowners. It meant that a larger share of the wealth created by the rise of the local high-tech sector went to the former group instead of the latter.
Yellow
The New Geography of Jobs
181
As new residents flocked to the urban core, public schools experienced noticeable improvements. Test scores increased, and not just for those children who had well-educated parents but also for children whose parents were less well educated and who had non-high-tech jobs.
Yellow
The New Geography of Jobs
182
In 1928, Henry Ford tried to establish a new industrial center called Fordlandia, building it from scratch on virgin land. His vision was to apply the rational efficiency of Ford engineering to the building of an ideal community in the middle of the Brazilian rainforest to harvest rubber for Ford’s tires. As it turned out, it was difficult to engineer utopia. Ford’s experiment proved to be a disaster for residents and investors alike. It was sold at a big loss just seventeen years after it had been inaugurated with great fanfare.
Yellow
The New Geography of Jobs
183
unlike industrial policies that target specific companies or sectors, policymakers did not act as venture capitalists: public funds were directed toward any form of investment that might benefit the community.
Yellow
The New Geography of Jobs
184
What about gentrification? The program did not seem to lead to a displacement of original residents, because rents in the area were not significantly affected. (Harlem is a major exception.) This probably reflects the fact that the program targeted workers who already lived and worked in the neighborhood.
The New Geography of Jobs
185
These are the basic principles: Avoid straight-line forecasting and foggy discussions of the coming century. Be skeptical of sweeping single-factor theories. Stifle biases of all kinds, be they political, cultural or “anchoring.” Avoid falling for the assumption that the recent past is prologue for the distant future, and remember that churn and crisis are the norm.
Yellow
The Rise and Fall of Nations: Forces of Change in the Post-Crisis World
186
In the United States, for example, investment is six times more volatile than consumption, and during the typical recession it contracts by more than 10 percent; while consumption doesn’t actually contract, its growth rate merely slows to about 1 percent.
Yellow
The Rise and Fall of Nations: Forces of Change in the Post-Crisis World
187
banks funnel the money saved by households and companies into investments in roads, factories and new technology.
Yellow
The Rise and Fall of Nations: Forces of Change in the Post-Crisis World
188
an economy is most likely to begin rising steadily when the nation is emerging from crisis, has fallen off the radar of the global markets and media, and has chosen a democratic leader with a mandate to reform.
Yellow
The Rise and Fall of Nations: Forces of Change in the Post-Crisis World
189
One critical cause of the missing growth was, of all things, a shrinking supply of people in the active workforce.
Yellow
The Rise and Fall of Nations: Forces of Change in the Post-Crisis World
190
For a nation’s economic prospects, the key demographic question is: Is the talent pool growing? The first part of the rule for finding the answer is to look at the projected growth of the working-age population over the next five years, because workers (more than retirees or schoolchildren) are the drivers of growth.
Yellow
The Rise and Fall of Nations: Forces of Change in the Post-Crisis World
191
Today no country can expect a similar boost, not when commodity prices are falling and political unrest is spreading.
Yellow
The Rise and Fall of Nations: Forces of Change in the Post-Crisis World
192
In 2014 Denmark revised its high school sex education curriculum, which now warns teenagers about the dangers of waiting too long to have their own children.
Yellow
The Rise and Fall of Nations: Forces of Change in the Post-Crisis World
193
To drill down into likely changes in the size and talent of the labor pool, watch mainly for shifts in the number of senior citizens, women, migrants, and even robots entering the workforce.
Yellow
The Rise and Fall of Nations: Forces of Change in the Post-Crisis World
194
The first government retirement benefits, offered to ease the financial uncertainties of old age, also appeared in the late nineteenth century, in Bismarck’s Germany. Back then fertility rates in Europe were well above the replacement level, and life expectancy was much lower, so the working-age population was growing rapidly, in absolute numbers and as compared to the elderly population. With a growing supply of workers to fund a limited number of pensioners, Bismarck’s retirement plan—which taxed the young to pay pensions to the old—worked fine.
Yellow
The Rise and Fall of Nations: Forces of Change in the Post-Crisis World
195
To figure out which nations are most vulnerable to aging and its costs, simply compare the number of working-age people between 15 and 64 to the number of dependent people who are older than 64 or younger than 15—also known as the dependency ratio.
Yellow
The Rise and Fall of Nations: Forces of Change in the Post-Crisis World
196
As the dependency ratio declines, with more people entering the workforce and earning an independent living, a country’s income increases, and that creates a greater pool of capital, which can be used to invest in ways that further raise productivity.
Yellow
The Rise and Fall of Nations: Forces of Change in the Post-Crisis World
197
“If you guys cannot figure out your immigration system, we’re going to invite the best and the brightest to come north of the border,” he said.
Yellow
The Rise and Fall of Nations: Forces of Change in the Post-Crisis World
198
One way to identify winners is to look for countries where immigrants account for a large and growing share of university grads, which suggests that the nation has been gaining in educated talent.
Yellow
The Rise and Fall of Nations: Forces of Change in the Post-Crisis World
199
To assess which nations are best or worst positioned to grow, look first at projections for growth or shrinkage in the working-age population, to gauge the potential baseline gain for future economic growth.
Yellow
The Rise and Fall of Nations: Forces of Change in the Post-Crisis World
200
In the United States and Britain, that template included some mix of loosening central control over the economy, cutting taxes and red tape, privatizing state companies, and lifting price controls while supporting the central bank policies that played the critical role in taming inflation.
Yellow
The Rise and Fall of Nations: Forces of Change in the Post-Crisis World
201
No member of this leadership generation did more to reform the basic structure of his nation’s economy, which is one reason South Korea remains economically stronger than Russia, Turkey, or Brazil today.
Yellow
The Rise and Fall of Nations: Forces of Change in the Post-Crisis World
202
crises raise the likelihood that a new leader can push through tough reform but do not guarantee it.
Yellow
The Rise and Fall of Nations: Forces of Change in the Post-Crisis World
203
Bell served in Jakarta from 1968 to 1972 and, along with a circle of U.S.-educated Indonesian technocrats who came to be known as the “Berkeley Mafia,” helped transform the impoverished country into a mini-Asian miracle over the next two decades.
Yellow
The Rise and Fall of Nations: Forces of Change in the Post-Crisis World
204
But technocrats can cause more harm than good to the economy when they try to push reforms that sound smart in theory but ignore local sentiment.
Yellow
The Rise and Fall of Nations: Forces of Change in the Post-Crisis World
205
In an attempt to prevent this natural slowdown, Beijing has resorted to increasingly aggressive manipulations. Most dangerously, it has unleashed a flood of more than $20 trillion in credit since 2008, and that flood now threatens to swamp the economy.
Yellow
The Rise and Fall of Nations: Forces of Change in the Post-Crisis World
206
The New York University development expert William Easterly has analyzed coverage in The New York Times between 1960 and 2008 and found that the paper ran some 63,000 stories on autocratic governments, a staggering 40,000 on their successes, and just 6,000 on their failures. These were not all China stories, but the overreporting of autocratic triumphs may well have reinforced the general impression that Chinese authoritarian capitalism is a model worth emulating for developing countries,
Yellow
The Rise and Fall of Nations: Forces of Change in the Post-Crisis World
207
Two things stand out on this list: first that 34 of these 36 countries were in the emerging world—testimony to the link between weak institutions in the emerging world and volatile growth.
The Rise and Fall of Nations: Forces of Change in the Post-Crisis World
208
The resulting chaos can delay the formation of a stable new regime for a half a decade—longer if a civil war breaks out, argued Goldstone. In that light, Tunisia’s move to a relatively stable new government came unusually fast. The rest of the Arab world is following the more normal pattern and in fact may need a good deal more than half a decade to begin repairing the social fabric.
Yellow
The Rise and Fall of Nations: Forces of Change in the Post-Crisis World
209
Pressed to follow through on the subsidy cuts, according to Basri, the president responded, “Why? The country is now doing fine.”
Yellow
The Rise and Fall of Nations: Forces of Change in the Post-Crisis World
210
This basic menu of growth-killing policies has shaped the agenda of populists in many deeply unequal societies, including postcolonial cases such as Robert Mugabe of Zimbabwe, Kenneth Kaunda of Zambia, Julius Nyerere of Tanzania, Kim Il-sung of North Korea, Sheikh Mujibur Rahman of Bangladesh, and Zulfiqar Ali Bhutto of Pakistan.
Yellow
The Rise and Fall of Nations: Forces of Change in the Post-Crisis World
211
By discouraging investment, which Chile needs to move beyond commodities, Bachelet was inadvertently preventing economic progress—in a predictable response to the popular clamor for wealth redistribution.
Yellow
The Rise and Fall of Nations: Forces of Change in the Post-Crisis World
212
To identify countries in which tycoons are taking an unusually large and growing share of the pie, I calculate the scale of billionaire wealth relative to the size of the economy. To identify countries in which the tycoon class is becoming an entrenched elite, I estimate the share of inherited wealth in the billionaire ranks.
Yellow
The Rise and Fall of Nations: Forces of Change in the Post-Crisis World
213
The hope was that this infusion of capital would promote a strong recovery and job growth. Instead, the United States experienced its weakest recovery of the postwar era, coupled with an unprecedented period of financial speculation.
Yellow
The Rise and Fall of Nations: Forces of Change in the Post-Crisis World
214
Some academic research shows that growth typically tends to slow when inequality is very high but also when it is very low.
Yellow
The Rise and Fall of Nations: Forces of Change in the Post-Crisis World
215
The competition in these sectors is often focused on securing access to a greater share of the national wealth in natural resources, not on growing the wealth in fresh, innovative ways.
Yellow
The Rise and Fall of Nations: Forces of Change in the Post-Crisis World
216
Between mid-2010 and mid-2015, India’s stock market rose 50 percent, while the connected companies’ index lost half its value, a sign that crony capitalism was in decline,
Yellow
The Rise and Fall of Nations: Forces of Change in the Post-Crisis World
217
Popular resentment against the billionaire class is also palpable in Mexico, where the tycoons are famous for growing rich on monopolies. They have almost exclusive control over industries ranging from telephones to concrete, and television to tortillas, which earn monopoly profits for their owners while driving up prices.
Yellow
The Rise and Fall of Nations: Forces of Change in the Post-Crisis World
218
As a result, during periods when the rich control a growing share of the national income, growth in total consumer spending tends to slow, holding back the economy’s growth rate.
Yellow
The Rise and Fall of Nations: Forces of Change in the Post-Crisis World
219
“Inequality may impede growth at least in part because it calls forth efforts to redistribute that themselves undercut growth. . . . In such a situation, even if inequality is bad for growth, taxes and transfers may be precisely the wrong remedy.”
Yellow
The Rise and Fall of Nations: Forces of Change in the Post-Crisis World
220
Tossing more money at the problem of poverty can throw budgets out of balance, create an unwieldy state, and ultimately backfire by derailing the growth necessary to pay for social welfare.
Yellow
The Rise and Fall of Nations: Forces of Change in the Post-Crisis World
221
Bad billionaires are the kings of this shady realm, which is large. It accounts for 8 percent of GDP in the United States and over 10 percent of GDP in many European countries, including Britain, Germany, and France.
Yellow
The Rise and Fall of Nations: Forces of Change in the Post-Crisis World
222
In India, many of the top tycoons command sprawling empires that often include at least one but often all four of the following businesses: a local hospital, a school, a hotel, and a local newspaper. One of India’s top newspaper publishers recently pointed out to me that this rule of four now often holds true even for local kingpins in relatively small towns.
Yellow
The Rise and Fall of Nations: Forces of Change in the Post-Crisis World
223
China had been praised for avoiding the massive debts that had tripped up the U.S. economy, but now it was directing state banks to provide easy credit to state companies, which were visibly failing to put the money to good use:
Yellow
The Rise and Fall of Nations: Forces of Change in the Post-Crisis World
224
Government attempts to manage economic growth come in many and varied forms, but I watch three basic trends: changes in the level of government spending as a share of GDP, coupled with an assessment of whether that spending is going to productive ends; the misuse of state companies and banks to achieve essentially political goals; and the extent to which the government allows private companies room to grow.
Yellow
The Rise and Fall of Nations: Forces of Change in the Post-Crisis World
225
The culture of tax avoidance and welfare fraud that it fostered made it difficult if not impossible to fund its generous welfare state, which is what pushed the country so deep into debt.
Yellow
The Rise and Fall of Nations: Forces of Change in the Post-Crisis World
226
The streamlined Swiss state is in part a product of a political system that gives a lot of power to local cantons and to voters. Many major issues have to be decided by public referendum, which gives Swiss voters the right to veto any hike in a tax rate of just 27 percent,
Yellow
The Rise and Fall of Nations: Forces of Change in the Post-Crisis World
227
For example, to help overcome one of South Korea’s big economic obstacles, which is that relatively few women participate in the workforce, the government has been investing in childcare centers to help new mothers get back to the office—a move that by some estimates could add a full percentage point to GDP growth.
Yellow
The Rise and Fall of Nations: Forces of Change in the Post-Crisis World
228
In 1995 it had no public healthcare system, and it now has one that covers nearly 100 percent of the population and costs just 7 percent of GDP compared to 18 percent for the mixed and still spotty public and private coverage in the United States.
Yellow
The Rise and Fall of Nations: Forces of Change in the Post-Crisis World
229
typical civil war lasted fifteen years and reduced national GDP by around 30 percent. Even after peace arrived, it took a decade on average just to recover the prewar levels of income,
Yellow
The Rise and Fall of Nations: Forces of Change in the Post-Crisis World
230
When changing any policy, the state has to take into account how it will affect business sentiment, as an abrupt shift can hurt the animal spirits in an economy.
Yellow
The Rise and Fall of Nations: Forces of Change in the Post-Crisis World
231
China started on the road to becoming an industrial superpower only after the all-encompassing state started to interfere less in the economy.
Yellow
The Rise and Fall of Nations: Forces of Change in the Post-Crisis World
232
So the key factor to look for—at least in the current global scene—is states that are just meddling less.
Yellow
The Rise and Fall of Nations: Forces of Change in the Post-Crisis World
233
Over the next two years, among the world’s twenty major economies, the governments of developed nations spent a sum equal to 4.2 percent of their GDP on various projects aimed at combating the recession. Their counterparts in the big emerging nations spent more than half again as much, 6.9 percent of GDP, and they outspent rich nations for a simple reason: They could afford to, at least for a time.
Yellow
The Rise and Fall of Nations: Forces of Change in the Post-Crisis World
234
What this ratio shows is that before 2007, it took one dollar of new debt to generate one dollar of GDP growth in the emerging world, including in China. Five years after the global crisis, it took two dollars of new debt to generate one dollar of GDP growth in the emerging world, and in China it took four dollars of new debt to generate a dollar of GDP growth.
Yellow
The Rise and Fall of Nations: Forces of Change in the Post-Crisis World
235
By 2014, in many emerging nations, more than 10 percent of total bank loans had gone bad—meaning the borrower had not made a payment in months. In most cases, including in Brazil, India, and Russia, the
Yellow
The Rise and Fall of Nations: Forces of Change in the Post-Crisis World
236
In the Middle East and North Africa as well as parts of Central Asia, many governments spend more on providing their people with cheap fuel than on schools or healthcare.
Yellow
The Rise and Fall of Nations: Forces of Change in the Post-Crisis World
237
According to the IMF, in emerging economies, more than 40 percent of the $600 billion in annual energy subsidies worldwide goes to the richest 20 percent of the population.
Yellow
The Rise and Fall of Nations: Forces of Change in the Post-Crisis World
238
When a tech start-up first gains a foothold in an emerging country, politicians see it as a ticket to national riches and, fearful of killing a golden goose that they don’t really understand, leave it alone, at least until it grows big enough to matter.
Yellow
The Rise and Fall of Nations: Forces of Change in the Post-Crisis World
239
Another way to judge how well the state is managing the private sector is to watch for good versus bad privatizations.
Yellow
The Rise and Fall of Nations: Forces of Change in the Post-Crisis World
240
My checklist for what to watch for starts with taking a read on government spending as a share of GDP, to spot the real outliers, and checking on whether the spending is going to productive investment or giveaways. I also watch whether the government is using state companies and banks as tools to artificially pump up growth and contain inflation, and whether it is choking or encouraging private businesses.
Yellow
The Rise and Fall of Nations: Forces of Change in the Post-Crisis World
241
To spot likely winners, I track which countries are doing the most to exploit their location by opening doors to trade and investment with the world and with their neighbors, and to balance growth in the major cities with the provincial regions.
Yellow
The Rise and Fall of Nations: Forces of Change in the Post-Crisis World
242
The old consensus born in good times—that more free trade is better for all countries—has been deeply shaken in the post-crisis slow-growth world.
Yellow
The Rise and Fall of Nations: Forces of Change in the Post-Crisis World
243
Among the largest emerging nations, trade including both exports and imports amounts to 70 percent of GDP on average, and countries that are above average are led by major export manufacturers.
Yellow
The Rise and Fall of Nations: Forces of Change in the Post-Crisis World
244
Between 1500 and 1850, they argued, the boom in Europe was driven mainly by nations with two key advantages: port cities on major Atlantic trade routes, and monarchies that respected private property rights and granted merchants the most latitude to exploit growing trade channels.
Yellow
The Rise and Fall of Nations: Forces of Change in the Post-Crisis World
245
Japanese firms cited Vietnam ahead of Thailand and Indonesia as their preferred site for new Asian plants, drawn in by a cheap currency, reasonably inexpensive labor, and a rapidly improving transportation network.
Yellow
The Rise and Fall of Nations: Forces of Change in the Post-Crisis World
246
The impact of regional trade deals could be even larger in the least well-connected neighborhoods.
Yellow
The Rise and Fall of Nations: Forces of Change in the Post-Crisis World
247
They are not necessarily going to the countries with the cheapest labor, which in any event counts for only 5 percent of export production costs in emerging nations, on average.
The Rise and Fall of Nations: Forces of Change in the Post-Crisis World
248
The new highways could add a full percentage point to Colombia’s GDP annual growth rate, in part by reconnecting the big three inland cities to the coasts and to the world.
Yellow
The Rise and Fall of Nations: Forces of Change in the Post-Crisis World
249
To get a sense of which countries in that cohort have dynamically growing regions leading to more balanced growth, I look at the broader rise of second-tier cities—meaning cities with more than a million people.
Yellow
The Rise and Fall of Nations: Forces of Change in the Post-Crisis World
250
One of the surprises about China’s top-down approach to development is how much freedom Beijing granted to its lesser cities to take advantage of their location, even to commandeer land or funnel bank loans into building projects. This was authoritarian-style development but with power dispersed to the local level.
Yellow
The Rise and Fall of Nations: Forces of Change in the Post-Crisis World
251
In contrast, India is a large and slow-moving democracy, where local opposition can block land development and the state still reserves huge swaths of urban land for itself.
Yellow
The Rise and Fall of Nations: Forces of Change in the Post-Crisis World
252
To carve out a geographic sweet spot, a country needs to open its doors on three fronts: to trade with its neighbors, the wider world as well as its own provinces and second cities.
Yellow
The Rise and Fall of Nations: Forces of Change in the Post-Crisis World
253
The basic question for a nation’s economic prospects: Is investment rising or falling as a share of the economy? When it is rising, growth is much more likely to accelerate.
Yellow
The Rise and Fall of Nations: Forces of Change in the Post-Crisis World
254
While rising investment usually augurs well for economic growth, any strength taken too far can become a weakness. The trick is to stop short of overdoing it, which is why the ideal level of investment is capped at roughly 35 percent of GDP.
Yellow
The Rise and Fall of Nations: Forces of Change in the Post-Crisis World
255
The United States itself is undergoing a mini-manufacturing revival driven by the discovery of cheap shale gas, which is bringing down power costs, and by a shrinking gap between U.S. manufacturing wages and those of its competitors, including China.
Yellow
The Rise and Fall of Nations: Forces of Change in the Post-Crisis World
256
This is just one striking case of how strong manufacturing can provide stabilizing ballast amid storms that would normally sink an economy.
Yellow
The Rise and Fall of Nations: Forces of Change in the Post-Crisis World
257
The best way to fund a binge is by foreign direct investment, which often flows to emerging markets in the form of foreigners building or buying direct stakes in new factories or other businesses.
Yellow
The Rise and Fall of Nations: Forces of Change in the Post-Crisis World
258
The general rule is that what goes up must come down, but a recent report on eighteen of the worst housing price busts since 1970 showed that all of them struck only after real estate construction investment reached an average of about 5 percent of GDP.
Yellow
The Rise and Fall of Nations: Forces of Change in the Post-Crisis World
259
The way the curse works is that the production of oil sets off a scramble among elites to secure shares of the profits rather than invest to build roads, power plants and factories.
Yellow
The Rise and Fall of Nations: Forces of Change in the Post-Crisis World
260
The situation is most dire in countries where investment is under 20 percent of GDP, and there is little sign that the government can rally the confidence or find the funding to change the situation. That is the predicament of Russia, Brazil, and South Africa.
Yellow
The Rise and Fall of Nations: Forces of Change in the Post-Crisis World
261
In practice, however, a young economy is most vulnerable to demand-driven inflation when if it has invested too little in its supply networks.
Yellow
The Rise and Fall of Nations: Forces of Change in the Post-Crisis World
262
If businesses are afraid to build new supply networks or improve old ones, those networks continue to fall short of meeting demand, which keeps driving up prices. The economy then becomes permanently inflation prone.
Yellow
The Rise and Fall of Nations: Forces of Change in the Post-Crisis World
263