How to build a city

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Cities form because people are more productive when they come together. Over the course of history, they’ve sprung up organically, as new arrivals create neighbourhoods where it makes sense to do so. 

Today, we live in an age of centralised city planners. Through zoning, regulation and infrastructure, bureaucrats increasingly seek to shape how cities grow, aiming to create utopian environments. 

But despite the best of intentions by planners, there is a fundamental tension between the needs of markets (and, by extension, workers and employers) and the desires of the state. 

This can best be observed by studying the development of various cities over the last few decades. 

In 1968, New York introduced a remarkably wide-ranging zoning system, establishing areas for lower and higher-density housing. While that might seem sensible, it has stifled crucial development. In fact, many older iconic Manhattan buildings would now have ‘too many’ apartments. The code is now constraining upward development in the midst of a crippling housing shortage. 

And urban planning isn’t just a problem in the developed world. In many developing countries, burdensome red tape means that people can’t afford to build homes within city centres, where wages are higher. Instead, they are forced out to the city’s edge, where they create vast informal settlements outside of its jurisdiction. As a planner in Tlemcen in Algeria and Chandigarh in India, I saw first hand how unrealistic planning laws damaged their organic growth. 

Interestingly, in countries like Yemen, where property rights are a long-established concept, such slum dwellings are far less common and development has been a much more orderly process. 

Ultimately, by trying to uphold standards, red tape actually ends up pushing more people into low-quality slum housing. Most regulation, whether in the developed world or the developing world, is fundamentally insensitive to the needs of ordinary people. 

In this regard, China’s planning evolution is particularly illuminating. Before Deng Xiaoping’s reforms, the state had gone so far as to mandate that each house receive an hour of sun a day, meaning housing density was determined not by demand but by latitude. This meant northern cities like Beijing were far less dense than cities in the south. But, the state had to determine supply somehow. 

When it finally unshackled itself from these regulations, Chinese cities massively grew in size, creating the bustling megacities it is known for today. It was these giant cluster cities that allowed it to become such a manufacturing giant. 

With Zohran Mamdani, an avowed socialist who has pledged to introduce rent controls, looking likely to win the NYC mayoral election, it’s worth noting that he is now to the Left of the Chinese Communist Party. At the 18th session of the Central Committee of the CCP in November 2013, they conceded that ‘the basic economic system should evolve on the decisive role of the market in resource allocation’. In planning, it is no different. 

Underpinning the concept of market-driven city planning is an acceptance that spontaneous order emerges without design. Labour markets create cities, ensuring that, even as millions of people make unpredictable decisions, equilibrium is maintained. Price signals lead to more housing where it’s needed and at no point are millions of workers left without a home. 

Unfortunately, the appeal of central planning prevails. The latest myth of urban planning is the 15-minute city – the idea that you should have your job, grocery store, gym, all within a 15-minute walk of your house. 

It could only be manifested through complete and crippling control of everything from health to industry to housing on the part of the central planner. Cities are made up of a multitude of economic hubs, with housing becoming more dispersed the further you go from them, and transport corridors bringing people from their homes to economic centres. 

In fact, people often make sacrifices to work for a job they value further from their home. After all, which Londoner applies for a job based on whether it’s within 15 minutes of their flat? 

The location of jobs is decided by the market. In order to respond as efficiently as possible to maintain this spontaneous order, the location of housing should be too. Urban planning has a place but it’s in responding to what infrastructure people say they need – not breaking ground where planners think housing ‘should’ be built. In short, planners should respond to the labour market, and not try to shape it themselves. 

As in centuries past, the future of cities will be driven by the labour market. As our fertility rate falls, our workforce will age and shrink. Pro-natalist policies, touted by some, are doomed to fail. History tells us that people’s personal choices are not very sensitive to economic incentives, especially where fertility is concerned. 

So, what does this demographic change mean? 

The smaller pool of young workers will flock to the largest cities, with small and medium-sized towns and cities seeing the biggest exodus. We’re already seeing this in Japan. Despite its shrinking population, Tokyo and a handful of other nearby prefectures are growing rapidly while the country’s minor cities face a huge outflow of talented youth. 

Young people will always chase opportunity. Going forward, the largest cities will hold an increasingly high share of the country’s jobs and young people, so that’s where they’ll go. Even as the population of the country ages rapidly, the population of big cities can remain remarkably youthful. 

Cities until now have been seeking to attract jobs. Very soon, they will be competing for people to fill existing jobs. Like it or not, the labour market, not central planners, continues to shape the urban geography of the cities we know and love.

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