12 January 2010

Untethered Cities

Only about 4% of the population in engaged in farming, fishing, forestry and mining, the industries that harvest our natural resources for use in our economy. This percentage is almost certain to fall. A modest percentage of our farms produce the vast majority of our agricultural products. We have farm more fishing boats than are necessary to harvest the entire sustainable catch of fish available, and have more only because the fishers hold onto the their boats and fishing rights as a way of life. Forestry and mining, slowly but surely are benefiting from technological advances that make them more productive as well.

The industries that turn raw materials into retail goods and services are growing more efficient as well. Factories are lonely places, with vast amounts of machinery per employee, and many factories could be built to eliminate most of the remaining low skilled jobs with only a modest additional investment in machinery. Trains and ships and cranes get vast quantities of goods to their destinations using a stunningly low number of people. Computer technology and telecommunications allow firms that need to move goods to move those goods as little as possible and to keep inventories low as production is closely aligned with demand. new machines use less energy and less water. Technologies like the Internet thin the ranks of middle men in the distribution process.

E-mail and other telecommunications technologies and mail processing technology has greatly reduced the number of people involved in the physical delivery of mail. The United State Postal Service has reduced its workforce more than ten percent (more than 80,000 employees) in the last decade and the trend shows every sign of continuing to do so.

A decade ago, I send a heaping bundle of mail out to clients, opposing counsel and others with whom I did business every day. Now I send more than one or two letters a day only a few days a month and don't send anything in the mail at least a couple of days each week. I used to send or receive a fax several times a day. Now, I use the fax to send or receive documents only once every week or two I used to need a living room sized law library to do my work and photocopied the pages I needed from stacks of books as tall as I am; now all but five small shelves of books in two half sized bookcases that I use in my practice (mostly frequently used statutes that are hard to skim and read on a screen), and I access everything else online. Documents in commercial lawsuits are typically exchanged via a single CD-ROM, instead of multiple banker's boxes of paper. It isn't that I'm doing less as a lawyer, it is just that everything goes via e-mail these days. And, as less paper is being used, the copier spends more time quiet as well, and fewer trees are felled in service of my law practice. The trends in other paper intensive industries is similar. Increasingly, for example, credit card transactions involve only electronic, not paper signatures.

The construction industry has used power tools and construction machines to be more efficient. But, around the corner, the niche industry of building large components of buildings more precisely, more safely and more efficiently in factories that are indifferent to weather considerations that hold up traditional construction jobs, allowing for the quick and less disruptive erection of a building at a construction site, is just about ready to become the norm in the industry. Greater efficiency in manufacturing these components, and improved engineering will allow us to use few materials and a greater share of recycled materials, while still producing a high quality, energy and water efficient product. This in turn, will reduce demand for natural resources.

One of the implications of greater efficiency, is that the needs of a modern city (and the demise of the natural resource industry means that almost everyone is in some sense a city dweller), are increasingly untethered from its location. The food on the shelves of a grocery store look pretty much the same in Orlando and Denver and New York and Los Angeles and Seattle. Little of what we buy at the mall, or order for our offices and stores, is produced locally. We buy our oil in a global marketplace. Our electricity in part of regional and national grids and the fuels that create it are often shipped thousands of miles.

Many "back office" jobs can be done from anywhere. Big law firms, for example, off shore some of their more menial work like document review and scanning, to India and the Philippines. When my father-in-law started his diagnostic radiology practice, being on call meant getting into his four wheel drive vehicle at the buzz of a pager to go to the hospital to read images. At the tail end of that practice, it meant slipping away to his home office to look at an image on a screen for a few minutes and getting on the phone with the treating physician to discuss it.

Developments like non-invasive surgery and drug based therapies mean that health care can make less intense use of hospitals. Ambulatory surgery centers, which handle non-emergency planned surgeries, can operate at close to full capacity without fear of being overwhelmed, can develop efficient systems for getting patients in and out with little waiting and little excess inventories of supplies or personnel, and can reduce complications because patients who dangerous infections never enter the building. If the surgery is arthroscopic, the patient is likely to be at home far sooner and have far less recovery time or risk of infection because less of the patient's insides were opened up in a way that requires the patient to heal afterwards and be exposed to germs in the surrounding environment during the procedure itself. Greater efficiency and better diagnostic tools mean fewer physical resources devoted to making someone better. These medical wonders are extraordinarily expensive in the United States. But the examples of Japan and Europe show that they don't have to be that expensive.

As fewer people in our economy have any need to be close to natural resources, either to harvet them or to process them in close proximity to where they are harvested, their economic ties to any particular geographic location diminish. Lots of people have strong ties to the people they work with in their local area, but not many people have strong ties to the things that they work with in their local area (other than their homes).

Las Vegas, a city built in the middle of nowhere for reasons almost completely unrelated to the availability of local resources that imports almost everything it needs, isn't anomolous. Denver used to be a hub that supported the local rail and mining industries; now those industries are just tiny baubbles in the larger regional economy. Cleveland and Buffalo's access to Lake Erie used to be vital to their economic prosperity. Now, the cities could be relocated thirty miles inland and their rust belt economies would barely register a blip.

Were you to build a city of ten million people from scratch in the middle of Siberia, the benefits it would receive from having modern infrastructure from day one would probably outweigh the downsides of being in the middle of a barren tundra a very long way from anywhere. Once it had a modern airport, a rail head, and communications lines, it would be almost as strongly connected to the rest of the world as far more centrally located cities, and become a thriving metropolis. Local physical geography would be almost irrelevant to the kind of economy that it developed. It could be a medical mecca, a manufacturing center, a financial hub, or have almost any other imaginable economic base.

Sense of place has become more a matter of scenery and human ties, than a natural resource foundation upon which our economy is built, for the vast majority of people in the developed world.

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