Sunday, March 28, 2010


I read an article that makes the statement that urban sprawl is and will continue to lead to mega-cities and mega-regions. The author states that these mega-cities will lead to decreased wealth over the course of the next fifty years. The author is not a economist but rather an environmentalist. Which, in my opinion, means he has different value judgements about wealth than an economists does.

This trend toward mega-cities has "helped the world pass a tipping point in the last year, with more than half the world's people now living in cities." The main concerns the article cites is that "the growth of mega-regions and cities is also leading to unprecedented urban sprawl, new slums, unbalanced development and income inequalities as more and more people move to satellite or dormitory cities." The author fails to explain how this will "significantly affect...wealth in the next 50 years." He did say that it leads to an increase inequality between the rich and the poor. But isn't it possible for the gap to increase but for both the rich and the poor to be better off? I think it is. Rich and poor are subjective terms and both parties could experience increase in personal wealth even while the gap increases.

The article reminded me of the "The World is Spiky" article and the chapter on why firms cluster (economies of agglomeration) we read for class several weeks ago. As mega cities emerge, people benefit from the clustering of firms and economies of scale. Choices for goods and services and where to purchase these goods and services increases making people better off. I fail to see why mega-cities such as Hong Kong-Shenhzen-Guangzhou (the world's first mega-city) are a bad thing. I do not see this new type of cities as they do. I do not see rampant uncontrollable urban sprawl that as "not only wasteful" but also adding "to transport costs, increase energy consumption, requires more resource, and causes the loss of prime farmland." Allow the market to function and an efficient allocation of all resources will emerge.

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