The political economy of urbanization in America

by Ryan Streeter on April 9, 2012. Follow Ryan on Twitter.

One of the great paradoxes of recent decades is that as technology has made it easier for people to live and work in a more dispersed fashion, people have actually been moving closer together.

Put another way: as technological innovation has accelerated, so has urbanization. And what’s more, urban areas are home to most of the fast-growing sectors of the economy, from finance to health care services to education to technology. This means that our faster urbanizing areas are increasingly where the economic and political clout in America lies.

Yet the economic and political implications of all this are frequently misunderstood.

Via Alex Tabarrok, we see this chart from a useful new study (PDF) by Credit Suisse on global urbanization, which shows the positive relationship between per capita GDP and urbanization rates in the U.S.:

In other words the more urban your state’s population becomes, the higher your per capita GDP.

The study also has this chart on p. 19:

While the trends in China show urban areas exploding beyond the national growth average at a far higher rate than in the U.S., it’s clear nonetheless that our urban areas are outpacing the nation as a whole. What would be even more interesting than this chart would be one that shows Austin, TX, Charlotte, NC, etc. – namely Sun Belt metro areas that have been dominating the migration game in the U.S. for at least the past decade.

Looking at these charts, it’s hard not also to think of this one from Lane Kenworthy:

This chart shows that our national economic growth and middle class prosperity have become, in Kenworthy’s parlance, “decoupled.” As much of our growth is generated by urbanizing areas, it seems pretty clear that urbanization has not been friendly to middle class America.

One thing that’s important to remember is that “urbanization” should frequently be called “suburbanization” instead, as the larger metro areas across the U.S. experience their fastest growth in the suburban areas around the urban core. The whole metro area is often misleadingly called a “city.”

And it is this suburban class that is typically home to technology company presidents, global travelers, dual income homes bolstered by high levels of education, engaged citizens, and churchgoers. This is, by its sheer numbers, the super class that will increasingly determine elections, drive our future economic growth, and generate our next generation’s leaders.

These people all typically think of themselves as middle class. And yet the middle class in Kenworthy’s chart is more likely to be those living in the stagnant inner ring suburbs, dying manufacturing towns, and rural areas – all of which just one generation ago were understood, according the American myth, as the promise and future of our great land.

This radical shift of the American landscape is still poorly understood by the elite, which desperately sees America’s future lying in our (shrinking) super cities, and which sees the middle class suburbs as the place that at best keeps America steady and at worst makes us a backward place.

But it’s those who understand the dynamics of suburbanization of metro America and the stagnation of cities’ in- and out-lying areas that will understand the political economy of growth going forward.