Why Cities Fail

I've been thinking about the nation-level lessons of the great book by Daron Acemoglu and James Robinson, Why Nations Fail, and wondering how you might apply the same kind of thinking to cities. Not all cities of course. We're not talking about tiny, sub-critical-mass cities pretending they can be the next Silicon Valley, or dying one-trick-pony company towns trying to find their next singular raison d'etre. We're talking about cities big enough to have a great, varied, storied, past and potentially equally great future, well past the critical mass required for urban-stellar ignition. We're talking cities with enough of a cohered, but open-ended identity, independent of any functional role in a given economic era, that they can think in terms of becoming the next, best version of themselves rather than their next "job" in the world economy.

If we are headed for a city-state future, and I'm increasingly convinced we are, we have to understand why cities succeed or fail, the way Acemoglu and Robinson figured out why nations succeed or fail. And no, smart-city bullshit ain't it.

I've reached some conclusions.

Why Cities Fail

Asking questions like "what's the next Silicon Valley?" is dumb. It's a functional-utilitarian way of thinking, as though cities were functional cogs designed to plug into a global economic engine in one way. Cities (and nations, and individual humans) that are defined by their current function are fragile. They die when the economic rationale for their current function dies. If your identity was defined by your job, you never really had a real identity.

No, real cities are their own reasons for existing. If it only exists to serve a function in the broader world, it's a town, not a city. What real cities do -- whether finance, or tech, or energy, or governance -- is not who they are. The history of any major city illustrates this. San Francisco was about the gold rush before it was about tech. Seattle was about fur, fish, and lumber before it was about Boeing or Amazon. New York was about textiles before it was about high finance. And all of them are always, first and foremost, about themselves. About their unique psychological identities.

The current global-macroeconomy "job" of a city has only a weak correlation with its essential nature.

In fact, it is cities, not nations, that best fit the formula "Make X Great Again." Great cities are longer-lived than nations and empires. Often they are effectively immortal. When nations experience multiple chapters of greatness, it is usually traceable to chapters of greatness in one or more of their great, immortal cities. Long-lived cities are make-ourselves-great-again engines. They keep finding new ways of continuing the game of being themselves rather than trying to win a particular economic era (ie for you Carseans out there, great cities are infinite-game players).

And greatness is never about the jobs being done at any given time, whether you're talking individuals, cities, or nations.

Paul Graham's article, Cities and Ambition has the beginnings of a better model than finite-game, job-based economic functionalism: cities are about particular kinds of ambition. Which means they are defined by their emergent, anthropomorphized infinite-game-playing psyches rather than their function in the world.

How should you think about ambition? An analogy struck me: ideas are sparks, ambitions are types of fuel. Paul Graham makes the reasonable argument that major cities attract ambitious people and that different cities cater to different types of ambition. Within the US, New York attracts people who want to be rich. Silicon Valley attracts people who want to be powerful. Boston attracts people who want to be smart. I'd add Los Angeles to Paul's list of major, focused-ambition cities: people who want to be famous.

Money, power, intelligence, fame. These are the sorts of things cities choose to be about. Not computers or banks or movies. Or worse, particular kinds of architecture, or look-and-feel aesthetic factors divorced from the ambitions they catalyze, or mindsets they harmonize with. Or worst of all, particular kinds of jobs in those industries.

What's worse than being about steel? Being about cities shaped by particular eras of steel-making. What's worse than that? Being about steel produced in specific ways via specific kinds of jobs being done in specific kinds of buildings by humans living in specific kinds of homes. That's not greatness, that's cancerous functional fixedness.

Ideas grow differently based on the kind of ambition you devote to them. Two kinds of people go to any city: people who bring the appropriate kinds of sparks (ideas) and people who bring the relevant kind of ambition (the fuel). Sometimes the same person might bring both to the party.

There is of course potential for mismatch all around. A money-hungry person might come to San Francisco, meet up with somebody whose idea is really an idea for a good movie rather than a good product, and together they waste time and money trying to grow an idea in the wrong environment with the wrong kind of fuel. When too many of such mismatched types start coming to a city, people complain that the spirit of the city is being ruined or dissipated.

This is the identity pollution failure mode in the 2x2 above, when both ambition-city fit and idea-city fit are poor, and the result is failures that pollute the environment in a particular way, just as unburned fuel in the exhaust of a vehicle with the wrong kind of fuel and/or sparking circuitry pollutes the air. Good cities do identities right, defining them in terms of personality traits rather than superficial markers.

There is a reason big cities are typically also diverse and cosmopolitan. They filter for identity variables that define ambition types and ideation styles rather than visible social identities. Great cities are actually very homogeneous in hidden ways. Just not in the ways that homogeneity-lovers tend to fetishize and cargo-cult, like skin color.

Among the many things wrong with Trump's recent "shithole countries" remark (see this educational takedown tweetstorm if you don't immediately get why the remark reveals a toxic level of ignorance, particularly in the case of Haiti) is a basic misunderstanding of what correlates between identity and political/cultural/economic vitality actually matter. It is idiotic to want people from Norway but not from Haiti. If you're trying to Make New York Great Again, you want both money-ambitious Norwegians and money-ambitious Haitians. If you're trying to make Silicon Valley great again, you want both power-ambitious Norwegians and power-ambitious Haitians. What no city needs is people with the wrong kinds of ambitions and ideas. They'll just fail and end up in the city's underbelly (often drug-ridden slums full of mentally broken people, though sometimes developing world cities, like Mumbai, can have slums that are home to their core ambitions to a greater extent than their high-rises).

Misunderstanding this, and thinking cities succeed or fail due to the superficial look they present at any given time, is a recipe for failure.

In Silicon Valley for instance, you'll sometimes hear the laments that money-minded MBA types are flooding in, trading suits for sweatshirts or VC vests, to play "startup". Not because they care about acquiring power by creating great products, but because they think they can make more money than they could in banking or insurance. And they bring terrible ideas to the party, are disappointed by how they fail and go away nursing deep grievances. If they don't spiral down into the local slum that is.

This gives us a scheme for understanding why cities fail (assuming they are big enough and varied enough in their DNA to be real cities at all, as opposed to cog-towns pretending to be cities). There are two kinds of fit to consider against the environment: ambition-city fit and idea-city fit.

Ambition-city fit is about harmonizing with a long-term regional psychological capital accumulation process. It takes a long history of success bringing a particular kind of ambition to bear on particular kinds of challenges to create an identity for a city. It takes centuries to build up, and it can only be destroyed when entire civilizations collapse. When your kind of ambition is right for a city, it is not seen as ambition at all, but as virtue. When people in a city say somebody is "too ambitious" they often really mean the person has the wrong kind of ambition for the city. There is no such thing as too much of the right kind of ambition. Greed is good in New York, massive platforms with economy-altering gravity are good in San Francisco, wanting Nobel prizes is good in Boston.

It is not immediately obvious why New York is about money, San Francisco is about power and Boston is about intelligence. Probably some mix of historical path dependence, self-selection effects, and self-fulfilling prophecy effects. It doesn't matter why a city develops the psychological profile it does. The point is, it has one, took centuries to develop, and creates severe constraints around what kinds of idea will succeed there.

Ideas themselves, the second ingredient, have a fit to the environment, but idea flows are more transient, and easier to import. They drive shorter-term dynamics like business cycles. When you don't have enough of the right kind of idea for your city, you experience a downturn. When you have too many, you have overheating competition.

If there is ambition-city fit, but not idea-city fit, you end up in a potential energy trap. The city has the economic and psychological potential, but nowhere to direct it. So it slowly starts to decay, like a leaky battery. Unambitious, loss-averse incumbent NIMBYs take over, fetishize the frozen look of a particular Golden Age. And it is game over. They never understood what once made the city great, and through their actions, they ensure it never will be again.

If there is idea-city fit, but no ambition-city fit, you get a theater of ideas that never go anywhere. A cargo-cult situation where you pretend you are about a certain thing but lack the relevant kind of ambition to do more than pretend.

This explains, incidentally, why major big cities driven by envy fail to take on the functional identity of other big cities. It's a different failure mode than small cities. Kansas City, for all its digital ambitions, is just too small in too many ways to be a real city, with a defining ambition. But that explanation does not work for say New York or Berlin. Though they have tech "scenes", they punch far, far below their weight class as cities. Until they find a way to connect their particular ambition energy, their specific kundalini so to speak, to the sector being targeted, they won't succeed (profession of the future: urban-planner yoga teachers helping cities find and connect the right economic chakras to the right startups).

For example, I've heard the argument that the reason New York has limited tech potential is that beyond a certain size, you need to be in Silicon Valley to scale. You just can't hire engineers by the busload when you need to grow rapidly from 10 to 1000 engineers in 2 years. True, but that's a narrow view. A company like Google is able to set up a New York office and staff it.  New York can produce great startups, and host great companies when they're all grown-up. What it can't do reliably is be the place where companies grow between the two life stages. It has the wrong ambition energy for it. Your ambition type determines what sorts of things you can help grow from infanthood to adulthood. In New York, if you want to grow a new kind of bank, you'll probably be able to.

So if New York wants to be as big a tech region as Silicon Valley, it will need to find a way to connect its native money ambition to technology building, which may or may not be possible (New York was once a tech capital too, in the early industrial age, so perhaps it could be again, if blockchains erode its financial industry). Changing the kind of ambition that drives a city takes a civilizational rise-fall cycle usually.

In the coming century, I suspect we'll see lots more cities that are big enough that the succeed/fail question applies. And we'll see a lot more of all 3 kinds of failure. The trick is going to be spotting the cities that are succeeding and picking one with the right kind of idea and ambition fit for you.

What I said in last week's newsletter about riding brain bicycles actually applies to cities as well. A city is not a place, but a social brain. A collective intelligence. A city is great when it has found a unique way of looking out on the rest of the world, and at its own past and future. This manifests as an elan vital -- call it "ambition" if you like. An internal stream of consciousness, a way of riding its own bicycle that has psychological depth to it.

And when a city fails to do that? That's one way (there are many) it can start turning into a real shithole, the way Washington, DC (where I lived, and enjoyed myself, for 3 years) is starting to today.

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