Towns and Cities

Competing for survival

Angus McIntosh

• Publisher: Taylor & Francis
• Year: 2003
• ISBN:
  9781135811310
• Edition: 1
• Topic: Architecture
• Subtopic: Urban Planning & Landscaping

The last fifty years have seen dramatic changes in towns and cities. People have moved out of central urban areas, retailing has moved out of towns and jobs have also declined in city centres, particularly with the growth of business and science parks.
With the continuing decline of the manufacturing sector and the re-shaping of employment in the service sector, a new force will increasingly dominate urban development, the meritocratic elite. The meritocratic elite are those able to develop and use information technology to generate productivity and wealth. Where they wish to live will increasingly influence future urban development.
Towns and Cities - Competing for survival suggests that as public and private corporations continue to downsize, outsource and re-engineer themselves, an increasing amount of expenditure and employment growth will lie with the leisure sector. Herein lies one of the solutions to the decline of towns and cities.
Town planners and economists have continually displayed a lack of understanding of these developments and have not anticipated the forces which cause urban change. As the global econonmy, combined with changes in transport and information technology increasingly dominates our lives, local and national governments need a new agenda for the 21st century. If they fail to rise to this challenge many of our town and city centres will continue to decline and may not survive.

CHAPTER 1
The forces of change and the intransigence of ignorance

Fundamental changes in national economies across the world are having an increasing impact on the future of cities. There is growing evidence that market forces, and their impact on land use, are accelerating the decline of many mature towns and cities. The demand from alternative land uses alone generated by natural market forces may not be sufficient to arrest this decline. In other locations there is excessive demand for land and new development. A significant number of developers and investors in urban property, together with politicians and urban planners, continue to indulge in reflex reactions to these changes, rather than fully examine, understand and implement policies which anticipate these trends. At the end of the twentieth century, towns and cities should be seen as businesses, yet how many towns and cities have a coherent strategic business plan?

In 1970 Alvin Toffler prophetically wrote a book entitled Future Shock. He argued that: ‘Unless man quickly learns to control the rate of change in his personal affairs, as well as society at large, we are doomed to a massive adaptation breakdown.’ As the years pass since Toffler first published his book, we have become increasingly aware that we are in the eye of a hurricane of economic change. There are three dominant forces affecting economies throughout the world which have accelerated the need for greater competitiveness and improved productivity, which, in turn, are having an impact on urban change.

Financial deregulation swept across the world over the last two decades. It started in the mid 1970s in New York with the government removing restrictions on financial organizations and their movement of capital, both nationally and internationally. Financial deregulation came to the City of London in the mid-1980s and has now moved to other countries across the world; towns, cities and countries now compete for finance and investment monies.

Corporate change has also accelerated over the last decade in both the public and private sectors. In the public sector this has been epitomized by the privatization of corporations previously ‘owned by the taxpayer’. Great Britain pioneered much of this change with the privatization of assets including council houses, public utilities and transport systems. In parallel with this privatization programme, there has been a programme of corporate change in the private sector: emanating from the United States of America during the recession of the early 1990s, corporate re-engineering, downsizing and delayering (the process of removing a strata of management) have now become catch phases.

As will be discussed in Chapter 5, both financial regulation and corporate change have created increasing pressure for competition, but this competition has been accelerated by a third dominant influence. Information technology has now become so influential in the lives of individuals, corporations and governments that it is impossible to ignore. Referring to technology generally, Toffler prophetically said in 1970:

Advancing technology tends to lower the cost of manufacturing more rapidly than the cost of repair… since we can anticipate further technological advance. More improvements coming at ever shorter intervals, it often makes hard economic sense to build for the short term rather than the long term…as change accelerates and reaches into more and more remote corners of the society, uncertainty about future needs increases. Recognising the inevitability of change, but unsure to the demands it will impose on us, we hesitate to commit large resources for rigidly fixed objects intended to serve unchanging purposes.

A full generation after Toffler made this comment, many towns and cities remain hesitant to seriously plan ahead. Rather than anticipate urban needs 25 years from now, towns and cities are being swept along by the impact of technology. In 1993 Professor Patrick Minford of Liverpool University echoed this theme when he said: ‘Technologies which once took decades to transfer to poorer countries can now be instantly transferred through multinationals.’

The impact of technology in areas of the globe previously called the Third World is dramatic. Towns and cities in Great Britain are competing for jobs with these emerging countries. Here in essence is the problem with the growing use of computers and information technology. Towns and cities around the world, in particular in the mature countries such as Great Britain, will change out of recognition over the next 50 years, but most towns and cities are not yet prepared for this change; they do not have a coherent strategy for the future.

In 1961 Jane Jacobs published her famous book The Death and Life of Great American Cities and drew attention to the failure of city planning and rebuilding policy in mature cities of America. Jacobs said: ‘This book is an attack on current city planning and rebuilding…on the principles and aims that have shaped modern, orthodox city planning.’ Although this text was widely read and praised, very little appears to have changed. Perhaps this was because the recommendations which Jacobs called ‘Different Tactics’ were unrealistic or difficult to implement practically.

The polarization of wealth within cities remains; urban decay has continued (and in some cases accelerated) and the impasse of city and town planners to solve urban issues is no different after more than 35 years. My contention is that urban planners at a strategic level continue to address the wrong set of issues, particularly with reference to the economic forces of urban change.

Economic theory and urban change

Economic thinking over the last half century has seen a shift in terms of national economic management. John Maynard Keynes, who died just over 50 years ago, developed his ideas out of the Great Depression of the 1930s, but the high level of unemployment and job insecurity of those times has echoes of what is facing industrialized economies today. Keynes failed to recognize that although there was an economic cyclical problem in the 1920s and the 1930s, there was also a structural problem. The growth of the motor car and the use of electricity were already having a technological impact on the need for labour. For instance, telephones, electrified railway systems and the growth of the service sector of the economy were causing significant changes to urban areas before 1939. The interwar period saw the growth of semi-detached suburbia and ribbon development along the new automobile routes, such as the Great West Road on the edge of west London.

In the immediate post-Second World War era, Keynesian economics appeared to answer a number of problems in terms of macro-economic management. However, by the 1970s, doubts began to arise as to whether Keynesian style demand management really had the answer. Keynesian demand management was thought to have contributed to the unnecessary levels of inflation and inefficiency during the first three decades after the war.

From the later 1970s, the pendulum then swung towards the Monetarist view of economic management, which suggested that, rather than Keynesian style ‘demand’ management, economies should be controlled by ‘supply side’ management. This school of thought suggests that lower inflation and greater efficiency (and hence wealth generation) will come from controlling not the demand but the supply of money in an economy. In other words, government should not tell people how to spend their money (or spend it for them) but provide the right conditions for individual and corporate preferences. However, the monetary theory was welded to Keynesian thinking in some respects. An example was the supposed link between unemployment and wage or price inflation. This was developed into the ‘Philips Curve’ concept of economic management, suggesting that there was a trade-off; government could choose higher unemployment or allow greater inflation. However, over time both high unemployment and high inflation ensued, suggesting that the link was not a simple trade-off between these two targets.

By the end of the 1970s Great Britain (and a number of other countries) had entered a period of ‘stagflation’, an era of high inflation with low economic growth, plus an unacceptably high level of unemployment. Keynesian economics fell into greater disregard, yet there was no deep thinking about urban economics, despite the fact that the majority of people worked in urban areas. There is still no clear link between economic theory and technological/ structural change. By the 1980s the disillusionment with Keynesian economics became a political creed. This became a theme in the Mais Lecture given by the Chancellor of the Exchequer in 1984. As Nigel Lawson (now Lord Lawson) reflects in The View from No. 11:

Instead of seeking to use macro (i.e. fiscal and monetary) policy to promote growth and micro policy (of which income policy was a key component) to suppress inflation, the government should direct macro economic policy to the suppression of inflation and rely on micro economic (or supply side) policy, such as tax and labour market reform, to provide the conditions favourable to improve performance in terms of growth and employment.

In other words, by implication, Nigel Lawson believed that a shift towards a monetary policy would enable urban areas to behave more efficiently as they changed structurally, adapted to new technology and, over the longer term, become generators of wealth. Yet the 1980s was also the decade of significant public expenditure indirectly and directly through Enterprise Zones and Urban Development Corporations. The mainly esoteric discussion between Keynesian economics and Monetary economic theory has rarely, if ever, begun to address the problems of structural change within society, and in particular the impact of technology on urban change, which is a theme that I will develop in greater detail later.

In the Liverpool Investment Letter dated July 1996, Professor Patrick Minford suggested that:

Too much stabilisation policy can damage your wealth, particularly when it is strongly biased one way or the other. Post-Keynesian policy tried to scotch recessions and is vilified. Post-Monetarist policy is trying to scotch expansion; its exponents should be kept awake by the vilification they too may come to endure.

At the heart of much discussion has been such concepts as NAIRU, or the non-accelerating inflation rate of unemployment. The suggestion has been made that there is a natural rate of unemployment which prevents inflation moving out of control. Such discussion has rarely addressed the structural and geographical impact of such a policy. It appears to have ignored the fact that some geographical areas may have less than 5% unemployment, yet others suffer more than 20% unemployment. Inevitably, it has been the inner urban areas which have had the highest unemployment. In other words, national economic policy has done little if anything to solve the growing problem of urban decline.

Urban decline is closely linked to the application of technological change, yet it is extraordinary to reflect that economic theory has almost totally ignored this fact. The growth of affluence, the accumulation of monetary wealth, the improvements in material standards of living and the increase in leisure time are all products of the application of technology in our lives. The impact it has had on structural change will be discussed later in Chapter 3.

The wealth of towns and cities

So, what is a town or city worth? If you bought the town or city in which you live, how much would you pay for it? One of the anomalies of national and local economic analysis is that it is primarily concerned with cash flow; tax revenue and public expenditure.

In 1967 Professor J.R.S.Revell wrote a book entitled The Wealth of the Nation, one of the rare attempts to value government wealth. It is a concept which, even if attempted at a theoretical level, could alter thinking. One might attempt to value both physical property as well as intellectual property (including the quality of education in the population). From the point of view of urban economics, is an urban area gaining in value or diminishing? Without considering such an exercise it is rather like creating a set of company accounts which includes a profit and loss statement without including a balance sheet of assets and liabilities. But that is how the public sector accounts are operated at both a local and national level, until, that is, public assets are privatized. A new procedure is then suddenly adopted, and the value of the assets becomes important in assessing the worth of the organization.

Structural change caused by technological development is an integral part of the changing capital worth of all towns and cities. In the June 1996 Economic Outlook from the Organization for Economic Cooperation and Development it was stated that:

The economies of the OECD are becoming increasingly integrated as a result of technological development and of large increases in flows of international trade, financial capital and foreign direct investment. Many economies in the non OECD are also maturing and their role in international trade and finance is growing rapidly. These developments— which have been described by the term ‘globalisation’—will continue to have far reaching implications for economic policy… Across OECD regions, structural reform has become increasingly important for meeting the challenges proposed by slow output and productivity growth and unacceptably high unemployment rates. Macro economic policies have been able to respond only imperfectly to these problems and, in many cases, the freedom to manoeuvre has been constrained by past excesses or political considerations.

In other words, the OECD is recognizing that technology and the flows of international trade and finance are having an uneven impact. Some areas are benefiting while others are not. National economic policy is frequently failing to recognize or adjust to the impact of ‘globalization’.

By insuring sustainable long term growth, macro economic policy can facilitate structural reforms. At the same time, structural reforms are needed to enhance growth prospects, create jobs and ensure higher living standards.

But it is a failure to identify appropriate ‘structural reforms’ which results in such uneven geographic economic activity. At present many inner urban areas are in decline, while some outer urban areas are prospering.

The town planners, the economists and the politicians

Managing urban change has largely been left to the discipline of ‘urban planning’, but the central mistake of urban planning has been to concentrate on physical planning, with very little understanding of the economics of structural change, and arguably to misuse the word ‘planning’. While the intentions have without doubt been laudable, much town and country ‘planning’ has not been able to ‘plan’ urban change. In 1947 the British Parliament passed the famous Town and Country Planning Act, a revolutionary and visionary all-embracing piece of legislation concerned with urban change. It should perhaps have been called ‘The Urban and Rural Land Management Controls Act’, with an emphasis on management control. In other words, this Act of Parliament and successive acts of parliament, have not fully understood the economic forces of change which have radically (in some cases devastatingly) changed urban areas in Great Britain over the last 50 years.

To plan, according to a dictionary definition, implies a statement of ‘intention, a way of proceeding’. It is economic market forces which cause change, not the town planning system. To use a football metaphor, the manager of the game has been money financing urban development. The players on the pitch have been the investors, developers, architects and occupiers of buildings. The town planner has been the referee, aided and abetted by his assistants (linesmen) who have blown the whistle from time to time, calling offside or foul.

A lack of understanding of the forces of economic change has been illustrated by the various attempts to nationalize land values. Over the post-1945 period we have seen the introduction of the Betterment Levy and, following its failure, the Development Gains Tax and its revised version the Development Land Tax. All these a...

Table of contents

• Cover Page
• Title Page
• Copyright Page
• Acknowledgements
• Preface
• Introduction
• Chapter 1: The Forces of Change and the Intransigence of Ignorance
• Chapter 2: Population Change Yet More Counter-Urbanization?
• Chapter 3: Technology: The Catalyst for Urban Change
• Chapter 4: The Spending Zone for Affluence?
• Chapter 5: Cities: If Not for Work, Then for What?
• Chapter 6: The Future of Cities In an Epoch of Growing Global Competition
• Chapter 7: Property Investment and Its Influence On Urban Change
• Chapter 8: Strategies for the Future
• References