Weeping Because There Were No More Worlds to Conquer

In what is possibly the dumbest post from a smart guy I’ve ever read over at Bloomberg Noah Smith argues for “intensive growth”:

Extensive growth is based on greater inputs. More energy, more cheap labor, more land. When you use existing technologies to build more roads and more buildings, that’s extensive growth. Intensive growth, on the other hand, is about getting more output for a given about of input — doing a lot with a little. One famous example of intensive growth was early modern Dutch agriculture, in which the Netherlands created flooded basins called polders to reclaim land from the sea. Improved production technology, of course, is one of the biggest generators of intensive growth.

The U.S. isn’t as good at intensive growth as it should be. For example, the country uses too much energy to produce each dollar of economic output — though it is improving. The U.S. has very low urban population density relative to other advanced countries. Though the country is considered highly urbanized, many so-called urban residents actually live in far-flung suburbs. Where Europe and Asia cluster, America sprawls.

Sprawl probably reduces productivity. When people cluster more tightly together, they become more productive — this is known in economics as an agglomeration externality. This explains why the same person will produce more economic output in New York City than in a small town.

Is that really the interpretation of the graph he submits as evidence?
SizeandProductivity
If it is why are there more triangles below the hypothesized trend line than above it? And why are Los Angeles and Chicago below the trend line? Isn’t it possible that insurance and finance skew the results?

Also, if density is so good for economic growth why is Europe growing more slowly than the U. S.? Shouldn’t it be the other way around?

I don’t think that Dr. Smith understands why people have been fleeing the cities for the suburbs for the last 70 years. In Chicago in particular it isn’t because it’s so easy. There are been a targeted strategy of making it hard to move out of the city which has flopped.

Allow me to offer a unified theory for why people have left the cities and why Detroit and Chicago (just to name two) are in such terrible shape: entrenched power structures. They won’t become transient if more people move downtown.

Yet another example of cargo cult thinking. And highly selective cargo cult thinking at that.

1 comment… add one
  • Guarneri Link

    Well, I think Rahm Emanuel may have solved Chicagos problem. Dude just appointed a “Chief Resilience Officer.” ‘Bout time. Said officer will focus on recovering more quickly from floods or blizzards, and minimize environmental impact. Wow. Not only that he will “help us think… From a holistic, more of a global approach……seeing it in the context of a set of opportunities and challenges.”

    Well sheeee-it. I can hear the screeching of wheels as people turn around and head back to the city. Government at its finest, and typical.

    BTW – anyone give a rats ass about Emanuel covering up his trigger happy cops from blowing away blacks? Anyone even heard about it recently? Didn’t think so. But we are now resilient……..

Leave a Comment