Why Cities Exist

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The richest country in the world is Qatar which looks like this. The second richest country is Luxembourg which looks like this. The third richest is Singapore which looks like this.

The commonality between these three is that each of them has more than 90% of their population living in cities. The three poorest countries—the Central African Republic, the Democratic Republic of the Congo, and Burundi—each have urbanization levels below 50%. Comparing the wealth of African countries and the urbanization levels of African countries, the maps are nearly identical.

This is not to say that cities automatically create wealth or wealth automatically creates cities, but there is a direct correlation between the two. Although, it seems strange that humans would choose to live in cities—living costs are higher, air quality is worse, surroundings are more crowded, crime is more prevalent, and disease is more easily spread. If the population of the world spread itself out evenly, every single person would have 5 acres to live on, but we don’t.

We live in a world where half the population lives on just 1% of the land. 54% of the world population now lives in cities, and that’s significant. 55 years ago, only half that lived a city life.

The urbanization of the world is changing the world, but why do cities even exist? Humans were originally hunter-gatherers. They scavenged for food and often didn’t live in a set place—similar to how many animals live—but then in about 10,000 BC we learned to farm.

The domestication of plants allowed humans to finally settle down in one singular place and establish a long-term home, but farming was nothing like it is today. The humans of the era lacked technology and expertise. The first archeological evidence of plowed fields—a process that greatly improves crop yields—doesn’t appear until about 3000 BC.

It took thousands more years for farmers to successfully domesticate animals like the ox to pull a plow. When humans first began farming, nearly every individual had to farm in order to make enough food to live. One person’s work essentially produced one person’s food, but through time as technological advancements occurred, progressively each individual was able to make more and more food.

Thanks to that, farmers today each feed 155 people. The process has also become so efficient that only one acre of land is now needed to feed one person, but back in the early days of farming, once technology had advanced to the point where one person made more than one person’s food, for the first time ever, there were some people who didn’t need to farm, and that fact changed humanity. If that had never happened, we would all still be living in ancient history.

The surplus of food and the development of cities really went hand-in-hand. It had never before been possible for humans to live in dense urban conglomerations because they needed land to farm, but these extra people freed from farming were able to work jobs other than farming which led to languages, literature, science, and really all the technological advancements that made our modern world. The spatial patterns of humans really happen quite naturally.

Enough people are each making their decision on where to live that, in aggregate, humans are going to live in the best places to live. There’s a sort of process of natural selection that happens as billions of humans each pick their optimal place to live. Nothing is manufactured about where people live and numbers back this up.

You see, cities tend to stay at the same rank throughout history. In 1800 the largest city in Europe was London. Today, the largest city in Europe is still London.

In 1800 the second largest city in Europe was Paris and it too remains second today. Cities grow, but those that were large in the past tend to stay large, at least without external influence. Cities don’t just change ranking on their own, they change rank if something else changes.

Hong Kong, for example, changed rank when a change in sovereignty to Britain drew people in while with San Francisco the discovery of natural resources, particularly gold, increased growth rates while with Washington DC, the coming of a new industry, the US Government, changed the rank. If you were to just put a pause on all activity but humans moving, rankings would hypothetically stay exactly the same, but that’s not even the best evidence for how natural the existence of cities is. According to US Census Bureau, the largest city in the US is New York with 8.

5 million urban residents then the second is Los Angeles with 4 million—roughly half as many as New York—then third is Chicago with 2. 7 million—roughly a third—then Houston at 2. 3—roughly a fourth—then Phoenix at 1.

6—roughly a fifth. Each city’s size is almost exactly determined by the largest city’s size divided by it’s rank. It is uncanny how closely city sizes in countries follow this distribution.

It’s not just with the US. Germany’s largest city, Berlin, has 3. 5 million residents, then Hamburg has 1.

8 million, almost exactly half, then Munich has slightly more than a third at 1. 4 million, then Cologne has just a bit more than a forth at 1 million, then Frankfurt has almost exactly a fifth at 700,000. Now, there are anomalies—mostly countries with recent rapid population growth—but in a large number of countries, the ranking of cities can be determined by this law, but what’s significant is what else can be determined with this law.

If you take a book and rank the frequency of words it follows this distribution. If you take a stadium of people and rank them by income, it follows this distribution. If you take the sounds a dolphin makes and rank them by frequency, it too follows this distribution.

This link between a distribution found in nature and the size of cities helps prove something—cities are natural. Humans will, given time and technological advancement, always form into cities. The existence of cities can really only happen when the plusses outweighs the minuses.

Back before the food surplus there were few advantages to urbanized living and a huge disadvantage—a commute to farming land during a time when walking was for most the only transportation method. Today, the plusses have increased and keep increasing to the point where day by day more and more people live in cities. A major advantage for the existence of cities is the ability for different businesses to locate near each other.

Part of the reason this is advantageous is that people come to cities to find jobs because all these businesses are there and so, if businesses want to hire the best people to be the best, they have to be in cities. It’s a bit of a chicken and the egg problem, but nowadays, different cities tend to play host to different clusters of businesses. For example, LA is a hub for the entertainment industry, Boston is a hub for medical research, Dusseldorf is a hub for the telecommunications industry, and Singapore is a hub for the finance industry.

In addition to the ability to tap into a common labor pool, businesses cluster because they want easy access to other businesses. Telecommunications companies like Vodafone, Deutsche Telekom, and AT&T all exist as direct competitors in Dusseldorf, but the reason they are there is because other companies exist there are well that they can work with. Also in Dusseldorf are companies like Nokia, Google, and LG which each make phones that the mobile service providers might stock in their stores.

By all being in the same place, they can more easily collaborate and therefore they can run their businesses more efficiently. There’s a sort of economies of scale effect when all sorts of companies are all packed together in one place. Now, not every business is in a city because there are plenty of cases where the minuses outweighs the plusses.

You just won’t see a car manufacturing plant in downtown Manhattan because it doesn’t make sense. While there would be advantages such as access to a higher skilled labor pool, proximity to other businesses, and reduced transport costs by being closer to the final market, there are significant disadvantages. Land costs about $38 per square foot in New York so if Tesla, for example, wanted to move their factory to the city it would cost over $200 million in land alone.

The benefits would never outweigh the costs and, in fact, it was this very problem that led to the decline of Detroit. The city was a major center of automobile manufacturing, but eventually manufacturers figured out that they could greatly reduce cost by moving the plants out of the city. Without a major industry to employ individuals, many moved away and the population has steadily declined for the last few decades.

Cities exist because they are efficient. Nobody’s forcing individuals to move to cities, but billions have. Just imagine there were only ten people in existence and one product that each of them wanted to buy.

If they were all equally spread out across this plane, the logical location for a distribution hub would be right in the center. Some individuals would happen to be close to the hub by chance, but overall the product would have to be shipped a large distance to get to every consumer. Now lets say that eight of those ten individuals lived together in a mini-city.

The logical location for the distribution hub would then be right by the city. Shipping for the rural individuals would be slow and expensive but overall the total shipping distance and cost to individuals would be lower. You can see this concept with where Amazon puts their warehouses in the UK.

They could have one enormous warehouse at the geographic center of the country and save some money through economies of scale, but they don’t. They position each of their warehouses near major population centers to reduce the total shipping distance. In our modern context this concept is most easily demonstrated through shipping, but historically individuals had to purchase nearly all their goods at physical marketplaces.

Even just 200 years ago walking was the primary means of transportation. In an hour nowadays we can drive 70 miles while in an hour 200 years ago individuals could walk only three miles so the push to live closer to marketplaces was even higher. This is why suburbanization is a new concept, but still more individuals than ever choose to live in cities.

Division and specialization of labor was crucial to the development of our world. Imagine you made everything you used. You grew your food, you gathered and filtered your water, you built you own car.

Just imagine how long it would take you to build a car from scratch—at least a decade—and yet the average individual in the US can buy a brand new car with the money they earn in about six months. That’s because there are people better at making cars than you. There are some people who focus solely on mining iron then some individuals who focus solely on making glass and so there are thousands of people producing all the different inputs that go into making your car in the most efficient way possible.

Let’s say that you, for example, individually can make a pencil in 60 minutes and paper in 30 while another individual can make a pencil in 30 minutes and paper in 60. In a closed off world it would take each of you 90 minutes to make a pencil and paper, but let’s say you make two pieces of paper, which would take you an hour, and the other person would make two pencils, which would take them an hour, and then you each trade. Neither of you have given up anything, you get exactly what you would have gotten by working independently, but you have each gained time.

This is exactly why trade is beneficial. Certain people are better at making certain things, so by everyone specializing in what they are good at the entire world gets more without giving more. This is how efficiency happens.

Cities make this trade easier which leads to more of it happening and therefore cities are efficient. Humans naturally want to find the path of least resistance and, with our spacial patterns, the path of least resistance is to all live together. Of course rural life will always exist and needs to exist, but if you were to have a hand to pick up and organize every human into the most efficient pattern possible, this is what it would look like.

Cities don’t create wealth and wealth doesn’t create cities, but rather cities make wealth possible. Cities are efficient and efficiency creates wealth, and so people create cities. If you want to create a website, however, there’s no better place than Squarespace.

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