Prosperity of American Cities Essay

Submitted By fstahar
Words: 4771
Pages: 20

Pursuit of Prosperity for American Cities
Urban areas are very attractive places for people to live because they offer not only high paying jobs, but also plenty of things to do and see. There are museums, concerts, restaurants, and public parks. There are large department stores and all within walking distance. Other benefits of cities is easy trade and education. As cities grow, as they have over the last century, from 40% in 1900 to now about 80% of the population living in them, these urban areas see many growing issues as well. Cities all over face the same problems. As they become more populated there are rising issues of poor housing, unemployment, congestion in the streets, pollution, and crime. So what makes for an economically sound urban area?
The great financial crisis of 2008 caused a global Recession. High risk lending and borrowing practices took place due to easy credit conditions and a lack of regulation which all led to the housing bubbles. Once the housing bubbles burst, the global economy was left in economic peril. People lost their jobs and homes, unemployment rose to unthinkable numbers not seen since the Great Depression, and spending greatly declined, lowering the Gross Domestic Product. In 2011, the Regional Economic Development Councils were created in New York State to focus on job creation and turning the economic position of the ten regions around. In the region of New York City, there is a strong skills gap, aging population, inadequate infrastructure, high concentration of poverty, joblessness, and a challenging business climate. This paper will discuss principles behind the development of cities, the critical urban issues that exist today, and the efforts to develop and sustain a strong economy in areas such as New York City.
Why Cities Exist
Household Business In order to understand why cities develop, it is essential to understand the assumptions that would eliminate the need for cities to be created at all. The first factor is that every worker and every piece of land would have to be equally productive. All workers could produce the exact output in the same amount of time and every piece of land could produce the same amount and type of crop equally. In this scenario, there is no specialization and therefore no need for a city to exist. Another requirement is constant returns to scale in exchange. The unit cost of exchange remains constant causing households to link together and exchange products with each other in which they have a comparative advantage. Constant returns to scale in production is also necessary in order to eliminate the need for cities to develop. If production is subject to economies of scale, then workers will not produce in a factory because they are just as efficient on their own. By changing these conditions, trading cities emerge.
Conditions for Development of Cities No individual can produce everything they will need or want to consume efficiently. People generally specialize in a given skill. Cities develop because people are not self-sufficient. According to O’Sullivan, cities defy the natural order of the animal kingdom. People create a separation between themselves and the land they need for food and other resources in order to live in dense cities. One factor that must exist in order for an urban area to develop is a surplus of food. People living in farms outside the city must produce enough food to feed themselves as well as those living in the city. On the other side of that, city dwellers must produce goods or services to provide in exchange for the food they receive. Specialized workers are more productive than those who are not and costs for firms are much lower than for individual households. Lastly, there must be systems of transportation that allow for the exchanges between the city dwellers and those who live outside the city. Therefore, in order for a city to develop comparative advantage must be linked…