Towns Down

The plight of America's cities and what it portends for the once affluent heart of commerce...

(Source: Getty Images)

Bill Bonner, reckoning today from Paris, France...

I’d rather be dead than in Philadelphia

~ W.C. Fields

Zombies shuffle along the streets. Broken windows. Trash blowing through the allies. Abandoned buildings. Deep holes in the pavement.

Are we describing Bakmut? Baltimore? Or all America’s major cities 30 years from now?

This week, we’ve seen that the big cities have been hit hard…

…by incompetent and parasitic local governments that have turned them into infernos of crime, filth, sloth, and insolvency…

…by federal programs that create anti-poverty bureaucracies, welfare-dependent citizens…and a thriving illegal drug trade…

…by the covid lockdown, which normalized working remotely…

…by the Fed’s fake low interest rates - which pushed up home prices to levels where the middle class couldn’t afford them…

…and now, by higher interest rates which make it hard to refinance urban commercial property…

But wait. There’s more.

Where the Money Was

Arriving at London’s St. Pancras station, we stood in line for 45 minutes to get a taxi. Then, it took nearly another half hour to get to the office…weaving through heavy traffic…and frequently halted by road construction crews.  

Air travel can be worse. It can take as long to get through a big airport as it does to get to it. If you’ve ever flown through London Heathrow airport, you know what a nightmare it can be. The place is huge. Good luck finding the parking lot.  

And how long does it take to get from one side of LA to the other? Buenos Aires? São Paulo?

Cities arose naturally. They were centers of transportation, trade, commerce, manufacturing, crime, corruption, finance and entertainment. Most are situated on trade routes or have convenient harbors. They were handy places to send products to market. As they grew, they benefited from the ‘network effect.’ You were in close contact with others – producers and consumers – so it was easy to make deals…to learn…and to innovate. Cities were where the money was – including the government mints and tax offices. Ambitious people hastened thither.

Typically, people are better looking and more fit in chic urban areas than they are in the countryside. Economic and social opportunities draw the best-looking men and women…the richest entrepreneurs…the smartest writers and inventors…the most famous actors…the most powerful politicians – everybody who is anybody—to the urban zip codes.

Diminishing Returns

But as cities grew, problems grew too. Traffic slowed. It became hard to find a parking place. Real estate prices rose. And bigness – which used to be an advantage – worked against them.  

The traffic congestion was eased by putting trains underground. But property prices continued to rise. Exchanging goods and services became more difficult. Trucks slowed down. And the cost of doing business increased. 

In Paris, for example, farmers used to bring their produce into the famous ‘night market’ at Les Halles. It was a jolly place, where you could go at all hours of the night to drink, eat or just pass the time. Piles of cabbages…prostitutes…animal carcasses…the smell of onion soup…truck drivers, porters, restaurant owners – the place was a delight. By a stroke of luck, we were there on the jolliest…and saddest night of all…the night they closed it down. Parisians bid farewell to the night market with singing and dancing in the streets until the morning.

“Those were the days, my friend,” was heard from every bar and street-corner.

Cometh the World Improvers

But the night market had to face the harsh light of big city growth. Even at night, Paris couldn’t handle the delivery trucks coming into the city. The market had to be moved to the suburbs.  

Old industries, generally, either closed up…or moved out. Retailers moved to suburban malls – with parking!  What was left were the ‘suits’ – insurance, finance, medical care, government, universities. These were ‘knowledge workers’ who could do their jobs remotely.

And now, big cities face a whole new threat: the world improvers! There is an ideological movement afoot to abandon the big cities in favor of smaller, better organized communities that will presumably be more energy efficient. 

Part of the plan for the ‘Great Transition,’ from fossil fuel to ‘clean’ energy, involves getting people to live in “15 minute cities.” The idea is that people should never be more than a 15-minute walk from schools, work, shops and entertainment.

In order to get everyone concentrated enough to stay within the 15-min. border, we are all supposed to live in simple, functional apartments…eat food grown locally (how this is to be done has never been clarified)…and keep a bicycle available for longer commutes.  

How it will turn out, we don’t know any better than anyone else. But looked at from almost any direction – political, financial, or economic – big city real estate looks like a bad investment.

Regards,

Bill Bonner