Category Business

In my last article, I wrote about how an economically and culturally vital city is able, without central planning, to generate two things that are essential to the city’s success: diversity and cohesion. I argued that when lots of people who reflect a huge range of skills and tastes can live together peacefully (diversity) and when they feel free to associate to any degree they choose (cohesion), the result tends to be rich, complex, and dynamic social networks that channel information from person to person rapidly and effectively. For many who hear this argument, however, how this happens remains a mystery. And I don’t blame them for feeling that way. Some urban economists and urban sociologists explain this in terms of “knowledge spillovers.” Proximity enables people who are socially distant to mingle and exchange ideas; the image of chance meetings and chatting up over coffee or a beer comes to mind. Sometimes it does happen that way. Many of the innovators in Silicon Valley in the 1960s, for example, informally traded ideas at the famed Wagon Wheel bar. The term “spillover” evokes this informality over the occasional sloshed mug of beer (or sloshed patron). Social Media:  Complement or Substitute? I listened to an interview recently with urban economist Edward Glaeser of Harvard University on Russ Roberts’ podcast, Econtalk. The main topic was the recent declaration of bankruptcy by the Detroit city government, but the discussion also touched on more basic issues such as why people still need to live in cities. Some of my colleagues argue, for example, that face-to-face interactions are becoming obsolete with technical advances such as Facebook, Skype, and email. Back in the early twentieth century, as the telephone spread to more and more homes, pundits at the time—among them the architect Frank Lloyd Wright—claimed that science would “obliterate distance” […]