Two Thoughts About Cities

The NY Times has a long piece about China's Communist Party (CCP) forcing its farmers to urbanize.  This will be an interesting test of the Roy Model (i.e comparative advantage and sectoral choice).       The article suggests that the CCP is assuming that urbanization always raises one's wages and happiness.   Such an assumption ignores population preference and talent diversity (this may be a consistent theme with communists).   In the real world, people differ with respect to their endowments of brains and muscle and in what is their "conception of the good life".   If rural people are free to choose whether they want to urbanize, then a standard comparative advantage model would predict that those with a high brain to muscle ratio of will urbanize (because cities offer a higher wage per unit of brains than rural areas and rural areas offer a higher wage per unit of muscle than urban areas).

So, this is a long winded way of saying that China's increased incentives for rural people to urbanize is likely to lead to the fact that the marginal new migrant will have a lower brain/muscle ratio than the early migrants.  This suggests that the urbanization returns to the new cohort of rural people who now are "forced" to urbanized will be lower than for earlier cohorts.  This group will also find real estate prices to be very high. So imagine that you are forced to leave your rural social network to move to an urban area to work where you don't have the skills to qualify for good jobs and rents for housing are extremely high. This is a recipe for very low quality of life and future trouble.  

The CCP appears to believe that all farmers are identical in terms of skills and ambition.  The CCP is about to learn a lesson about marginal versus average!

Switching topics; the Los Angeles Times has a very interesting front page article about new urbanism.  More new homes have "micro lots" so they stand side by side.  Does this look like the LA you think of?



While this housing isn't for everyone, it is more "affordable" because the absence of a backyard means that the home sits on little land.   This is an example of how we adapt our urban form as our needs change.  Why Los Angeles has so much green grass when nobody spends time in their own private outdoor space remains a mystery to me.