More Liberalism – More Prosperity?

This post was authored by We Are Capitalists

The Misleading Claim: Within state lines, Democrats run the most economically successful regions. Clearly, their policies must be superior!

The Reality:
In every major election, we’re confronted with colorful maps showing small but densely populated areas of blue lost in a sea of rural red. This, it would seem, lends credence to those who claim Democrats manage modern and successful economies, such as cities, while Republicans are mostly relegated to backwards, old-fashioned, small towns. But it’s more complex than that.

What’s true is that Democrats run the 10 most dangerous cities in the country. [a] [b] And per a Brookings Institute study, Democrats also control 9 of the 10 worst offending cities in terms of income inequality [c] They run the 10 poorest cities in America [d], and have run every other major city in America that turned into “a center of poverty.” [e] [f] What’s ALSO true, however, is that they run most of the SUCCESSFUL cities as well.

So what’s going on here? Are they doing a good job of managing the economy or a bad one?

It turns out, Democrats don’t just run good cities or bad cities, they happen to run almost ALL of our cities, good AND bad. Matter of fact, Democrats “currently control city hall in 90 percent of the nation’s largest cities.” [g] That’s why they can turn up anywhere in the statistics, whether they be good statistics or bad ones. And that’s why it’s technically true for them to claim that they run the most successful regions. But let’s examine how this circumstance came to be.

There are two key points to understand:
1. There has been a gradual exodus from cities by conservative voters.
2. Cities are, by nature, almost always more economically successful than their rural neighbors, regardless of the local politics and in spite of which party is running them.

Twenty-two years ago, half of the 12 largest U.S. municipalities in America had a Republican mayor. By 2014, none did. [h] This is but one result of the exodus. “This divide between blue city and red countryside has been growing for some time. Since 1984, more and more of America’s major cities have voted blue each year, culminating in 2012, when 27 out of the nation’s 30 most populous cities voted Democratic.” [i] “In many metropolitan areas, more conservative white voters have fled for suburban and exurban communities over the past half-century.” [j] “We have seen a migration of the most conservative white people farther away from the city,” says Ruy Texeira, a Democratic political demographer at the Center for American Progress. “This pattern is very, very consistent across metro areas of the United States.” [j] “As middle-class residents moved out of cities and immigrants and young people replaced them, the (Republican) party lost its grip on population centers.” [h]

The cause of this exodus seems to be a fascinating link between preferences over population density and party ideology. “There’s a self-selection for people that choose to reside at higher density,” says Robert Lang, an urban affairs professor at the University of Nevada. [j] In an analysis of voting data from the 2012 presidential election, it was found that “98% of the 50 most dense counties voted for Obama and 98% of the 50 least dense counties voted for Romney.” [k] Further analysis showed there existed a crossover point (800 people per square mile) where population density above said point had Americans voting majority Democrat and below said point had them voting majority Republican. Specifically, when below 800 people per square mile, there is approximately a 66% chance that someone will vote Republican. When above 800 people per square mile, there is approximately a 66% chance that someone will vote Democrat. [k] Of course, it’s not ONLY that certain types of people are attracted to denser areas. “Once there, they have a greater demand for infrastructure, including public transportation. That makes them more responsive to pro-government positions — and the party that embraces them.” [j] But never the less, density appears to be the strongest factor influencing the exodus of conservative-minded voters who prefer the less congested residential neighborhoods of surrounding suburbs, while commuting into the city only to work, or entirely abandoning the city altogether and living solely in rural areas.

This is the great characteristic of cities. They allow a populace to concentrate commerce in one commercial sector while enjoying it (from a distance) back home, outside the city. You get the benefit of the corporate job that came with the expanding city-economy without necessarily having to live next to the undesirable skyscraper, factory, or parking garage, etc. This is the symbiotic relationship of cities and suburbs, and it’s partly why conservative mind-sets, who particularly value the so-called “American Dream” of having a home, a back yard, cars, and an opportunity to send their kids to higher performing schools, take up residence in the suburbs as opposed to the city. Meanwhile, the city, on paper, is where the job was created and where the commerce took place.

Cities, as confirmed by a 2012 Credit Suisse report on urban development, generally have better per-capita GDP’s than rural areas. [L] This fact has to do with the nature of cities.

Consider, for instance, the effects of commercial zoning laws. A sky scraper can employ thousands of people in dozens of offices. Had it not been a sky scraper, however, and instead been an ordinary 2 floor office building, that same acreage of land would have had much lower potential, with the capacity only to employ a few dozen people and attract far fewer corporate tenants. Urban zoning allows for the skyscraper and therefore attracts economic investment that wouldn’t necessarily be welcome in suburbs or small towns.

Another reason cities are less susceptible to the dangers of detrimental economic policy is because their large and diverse populations give them an abundance of skill sets. Per a joint Columbia University and National Bureau of Economic Research study entitled, “The Comparative Advantage of Cities,” data from 270 US metropolitan areas, 22 occupational categories, and 21 manufacturing industries, confirms that “cities are skill abundant and specialize in skill-intensive activities.” [m] This is one reason why, when researchers broke down government data on American GDP by state and by hour, in most cases, “the more urban the state, the more productive it was on average.” [n]

To be clear, this is not a Democrat phenomenon or even an American phenomenon, it’s an URBAN phenomenon, and it’s present all around the world. Per the same Credit Suisse report referenced earlier, “Urbanization continues to represent one of the most significant drivers of growth for the global economy. …Typically, as the share of a country’s urban population rises by five percentage points, there is an associated gain in per capita economic activity of 10%.” [L] It continues; “Efficiencies of high density populations employed in higher value industries collectively generates higher productivity in urban areas, as illustrated by USA state level data showing the pattern of economic output per hour worked versus the rate of urbanization. It appears that Americans, who live in heavily urbanized states are up to 50% more productive than those who live in more bucolic states. Furthermore, significant cost savings are realized on transportation by concentrating manufacturers and service providers together with their end customers. …As a direct consequence, higher urbanization rates are equally associated with greater investment in technology, research and development.” [L]

Population density and other factors correlate strongly with a trichotomy in residential preference, contributing to the regional political divides found in the United States. The result is Democrat heavy urban areas, Republican heavy rural areas, and a blend of each found in the suburbs. Couple this with the fact that urban areas, despite some notable exceptions, have inherently superior per-capita GDP’s and higher rates of productivity, and you see how people can misinterpret the data and suggest progressive policies had resulted in economic achievement. Rather, cities are successful because they are skill abundant, can scale up to focus on specialized tasks and create jobs which otherwise would lack sufficient demand to exist, can fit more people, businesses, and careers in smaller spaces, can deliver more packages, if domestically, can deliver them with less fuel and in less time, and most importantly, cities generally exist near hubs of trade and transportation, keeping them commercially attractive even in the face of burdensome taxation. THESE are the reasons why economic growth occurs in urban areas. Democrats, on the other hand, merely haven’t moved away from urban areas at the same rate as conservatives, resulting in the disproportionate demographics we see today. That doesn’t mean Democrats get to claim credit for the successes of cities, however.















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