The first draft of my recent Atlantic essay, “Where the Skills Are,” was almost twice as long as the finished piece. The piece is of course better for being more focused, but there were also many good ideas left to the cutting room floor. Like a good quilter, I stitched together what follows from some of the more substantial scraps.
The conventional view is that cities initially grew up naturally around ports or at the nexuses of trade routes. With the onset of the Industrial Revolution, cities brought together resources, great companies, and large labor forces. Cities have always been important engines of economic growth, but they are assuming an even more critical importance in today’s knowledge-driven innovation economy, in which place-based ecosystems are more important to economic growth than large corporations. The Harvard Business School’s Michael Porter recently told the Clinton Global Initiative that "there is no one U.S. economy but a collection of local economies.” Ensuring that our cities don’t just permit but encourage the sorts of jostling interactions that are the basis of growth is one of the most important challenges our economy faces.
Most people—as well as most economists, urbanists, and urban policy makers—are captivated by the size of cities. Size confers many advantages. Bigger cities have bigger markets. They have more people and more resources to throw at problems.They generate higher densities, which put people in closer physical contact, and which can also increase their energy and resource efficiency. Bigger cities also have higher levels of well-educated individuals that economists refer to as having high human capital. A growing body of research shows that the very high-skill knowledge-based occupations—science and technology, business and management, and arts, design and entertainment—of the sort that are strongly associated with higher wages, higher levels of innovation, increased economic growth and higher living standards, also concentrate in larger cities and metro areas.
But it’s not bigness in itself that matters. As cities get bigger, they get more congested. Something has to occur to counter-balance that clogging of the arteries. I note in my essay how scientists at the Santa Fe Institute have identified the mechanism that underpins city growth and development as an accelerated rate of urban metabolism. In order to offset the costs of congestion and rising housing prices, bigger cities have to do things faster. This partly reflects the highly competitive, fast-paced, “rat race” environment of cities—a side of urban life captured in Frank Sinatra’s famous catchphrase from Paul Anka’s “New York, New York”: "If I can make it there, I’ll make it anywhere."
We’ve known for a while that the cities and metros that attract the most human capital prosper. But brainpower alone only tells part of the story. Bright people matter, but even more key is being able to marshal and focus all that raw intelligence, the ability to inspire disparate groups of people to focus on a common goal, to persuade venture capitalists to underwrite a product and the public to buy shares in your company. Cities are not just containers for smart people; they are the enabling infrastructure where connections take place, networks are built and new innovative combinations are consummated.
This is the Steve Jobs side of cities. Jobs is certainly smart. But being a college dropout, he would not measure up to the standard economists’ measure of human capital. He had the quintessential skills of an entrepreneur—he was a visionary and also a connector and resource mobilizer. When he toured Xerox’s famous PARC laboratory, he saw all the various components of a personal computer waiting there to be put together. He enlisted Steve Wozniak and others to help him with the task, and attracted venture capital that would enable them to do so. What he possesses and what cities enable, in addition to cognitive or knowledge skill, was the critical social or relational skills required for true innovation and creative destruction. Those are very different than mere people skills. The BLS O*Net database defines these social skills as “capacities used to work with people to achieve goals,” and they include coordination, the ability to help develop other people, the capacity to bring people together to reconcile differences, persuasion, and active interest in helping other people, social perceptiveness and developed sense of empathy. These are quintessential leadership, team-building, resource-mobilizing skills, essential for anyone who aspires to launch new firms and build effective organizations.
Cities, especially large cities, are the containers for these social skills, according to an exciting body of research by the University of Toronto economists William Strange, Marigee Bacolod, and Bernardo Blum, the economic geographer Allen Scott of UCLA, University of Maine economist Todd Gabe, and my own team. What’s new and so very interesting about this line of research is that is shows that it is not just the accumulation of knowledge or cognitive ability (or human capital) that drives the growth of cities, but the additional clustering of social intelligence skills as well. This clustering can be thought of as the underlying glue, so to speak, that increases the quality of the combinations and recombinations that drive innovation and economic growth.
The rising importance of social skills has implications for cities’ geography, structure, design, and layout. It suggests we need to revise our views and policies on how to grow cities, given how important we now know connectivity to be. We need to get over the tired city versus suburb debate. Some have been critical of the recent surge in “cityism.” Nicholas Lehman, writing in the New Yorker, points out that for all the talk of a back to the cities’ movement, cities still suffer from a host of problems that make them less than ideal locations for middle-class families; a majority of Americans still make their homes in suburbs, he adds. But a significant part of his disagreement is definitional, as Lehman himself admits. Most writers that hail the resurgence of cities use the words “cities” and “metros” interchangeably. A metro, or a metropolitan area, encompasses not just a center city but its suburban rings; metros’ borders, codified and compiled by the federal government, reflect commuting patterns. We need to stop debating which is better, city or suburb, and start building the stronger, more tightly connected metropolitan areas that are key to our future competitiveness. This task becomes even more important as our metropolitan areas morph into ever large mega-regions, combinations of metro areas like the gargantuan Bos-Wash corridor which is home to 50-plus million people and generates more than $2 trillion in economic output, the Shanghai-Beijing Corridor, and the Mumbai-Bangalore Axis.
While all innovative activity requires interaction, not every kind of it requires interaction at the pedestrian scale. It is undoubtedly true that many high-tech companies have migrated to downtown San Francisco, that New York’s Silicon Alley is attracting gobs of venture capital, and that Google’s downtown New York office is very successful. That said, Silicon Valley—a canonical “nerdistan” where almost everyone drives to work and leading companies organize work in suburban campuses—remains the most innovative place on the planet and it is a canonical, car-oriented area with its leading companies organized around suburban campuses. Music industry types who have relocated to Nashville cite the ease of getting around by car—zipping off to meet for lunch, get to the studio, or go over to a venue to see a new act, as well as its massively lower costs as a big part of its draw over NY or LA. Clearly as cities and metro areas grow larger and larger, car-based suburban models necessarily become less effective, but that does not mean that they cannot work. In fact, the best and most innovative urban and suburban areas are increasingly more similar than different, offering the appropriate scale and function required for interaction, connectivity, and resource mobilization on which innovation and entrepreneurship turn.
Size and density matter. But they are not the whole story. A key, and increasingly neglected element of our cities is the interactions they enable, the networks they give rise to and underpin, and the speed and velocity of connections and combinations they facilitate. Understanding this social side of our cities and metro areas is critical not just to building better cities but to accelerating the processes of innovation, productivity improvement, entrepreneurship and job creation on which our future prosperity depends.