Page 19 - Delaware Lawyer - Summer 2021

Left to right: Councilwoman Michelle Harlee, Mayor Mike Purzycki and Gov. John Carney at the ribbon cutting for The Cooper, a newly opened apartment complex at the longtime site of Cooper’s Furniture.
• Increasing agglomeration econo- mies generates the greatest pro- ductivity, income and wealth.
• Environmental and climate chal- lenges are more easily managed since dense cities are less re- source-intensive on a per capita basis.
There will be three major challenges that need to be addressed:
• Housing affordability is a prob- lem in virtually every successful city as competition for space in dense areas drives up prices.
• The potential for mega winners at the expense of others poses challenges in equitably distribut- ing the income and wealth of the macro economies.
• Successful dense, diverse com- munities may find themselves in conflict with virtual homoge- neous communities.
For states like Delaware, which has one modest-sized city, but is fairly de- centralized overall, the challenge is to ensure a high quality of life throughout the state so that it can attract talent to sustain its economy, even if the talent is associated with companies based in megacities. A second key is to ensure investment in human capital so that its residents are not viewed as commodi- ties in competition with labor across the globe. Finally, because there is some possibility of winner-take-all kinds of outcomes, Delaware and the U.S. in general must work to ensure an equita- ble sharing of the economy’s output.
NOTES
1. Rosenthal, Stuart S., Strange, William
C., and Urrego, Joaquin A. (January 26, 2021) “Are City Centers Losing Their Ap- peal? Commercial Real Estate, Urban Spatial Structure, and COVID-19,” Working Paper.
2. Harris, Jeffrey E. (April 19, 2020) “The Subways Seeded the Massive Coronavirus Epidemic in New York City,” Working Paper, updated April 24, 2020.
3. Tiebout, Charles (1956), “A Pure Theory of Local Expenditures,” Journal of Political Economy, 64 (5): 416–424.
be severely challenged, and globaliza- tion of remote work might dampen income growth of Delaware remote workers. Unfortunately, the urban de- cline scenario is not the only threat. The following scenario posits the potential increasing dominance of mega cities that extend their reach using digital technologies.
Scenario 3: Policy- and Tech-Savvy Cities Expand Their Reach
Technological innovations such as streetcars in the early 20th century, au- tomobiles in the second half of the cen- tury, and communications technologies in the 1980s and 1990s were predicted to be disastrous for cities. Each of these technologies did in fact create signifi- cant dislocation in cities initially, but ultimately they expanded the size and scope and, in some cases, the density of cities.
Cities have evolved into knowledge and innovation hubs that benefit from face-to-face interaction. As long as those interactions generate significant positive economic and social benefits, technolo- gies that allow remote work simply ex- pand the reach of innovative businesses in accessing labor for non-innovative tasks. This could give rise to increasing dominance of large policy- and tech- savvy cities that provide high quality of
life for the innovative class. Successful cities will have businesses with a global reach in the talent market.
For all cities, the same technology provides flexibility that alleviates expen- sive infrastructure constraints. It lowers peak demand on roads, transit and side- walks for any given level of economic activity. This allows full utilization of existing built infrastructure, leading to higher levels of economic output with lower physical infrastructure costs. The ability to access lower labor costs, while at the same time generating large ag- glomeration economies with lower infrastructure costs, may result in win- ner-take-all growth of policy- and tech- savvy cities.
Not enough time has elapsed to see whether the new technologies will fur- ther feed the growth of large cities as they have in the past, or whether this time it really will be different. If it is not different, there are potential large gains that may be made, but also significant challenges ahead in ensuring that those gains are equitably shared.
This scenario has a number of posi- tive consequences, but also significant potential threats.
• There is little threat of declining urban value or stranded assets, at least in large cities.
SUMMER 2021 DELAWARE LAWYER 17
SAQUAN STIMPSON