America’s cities are, by and large, bad:
The easiest way to see this is to understand the primary reason why they’re so bad: crime. The big benefit of cities for countries is that they’re economic engines of progress due to agglomeration effects: benefits and cost-savings that appear because companies, services, and workers are geographically collocated in them. But agglomeration effects are negatively related to crime.
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But is this causal? Does crime reduce the extent of agglomeration economies? To a major extent, yes, and we know it thanks to a suite of different disasters—bombings, fires, earthquakes, hurricanes, etc.—, to random events that displaced populations—the Mariel Boatlift, Japanese internment, close elections that appointed discriminatory mayors, etc.—, to the historical period known as the Great Migration—the mass movement of African Americans from the southeastern U.S. to the rest of the country’s urban areas.
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The Great Migration accelerated thanks to World War II, when draft- and casualty-related labor shortages allowed Blacks to move from low-skilled to semiskilled jobs en masse, and it accelerated once again with the Supreme Court’s 1948 decision in Shelley v. Kraemer, which forbade neighborhoods from having state-enforced racial covenants—agreements to evict Blacks from certain neighborhoods and to prevent them from buying homes in them. What remained post-Shelley were merely private, much more loosely-enforced agreements not to sell property to members of certain races.
Labor shortages and racial covenants provide us with causal leverage: the former are driven by random deaths and pre-war demographics that are displaced by draft boards; the latter are driven in all sorts of unclear ways and broken due to preferences that are plausibly unrelated to the existence of the racial covenants in the first place. Interesting, no? Accordingly, where African Americans wound up and the occupations they were able to enter there had a large degree of randomness to them.
These facts, coupled with African Americans’ persistent association with violent crime, allow us to leverage their inflows to assess effects on agglomeration economies via crime. We can say ‘via crime’, since a mere racism angle doesn’t fit the data given that other racially distinct but lower-crime demographics that were discriminated against do not seem to lead people—in particular White people, in the phenomenon known as ‘White flight’—to leave from the places African Americans show up, even controlling for socioeconomic status, and because anti-agglomeration effects are particularly distinct for violent crime, which is the type of crime African Americans are associated with, as opposed to property crime.
Cities that received more African Americans during the Great Migration saw larger increases in homicide.
Cities attempted to counter this, and those that received the largest African American inflows increased hiring and funding of police in response.
Nevertheless, the homicide rates increased, violent crime overtook America’s urban centers, and White flight went into full swing, with Whites leaving metropolitan areas in favor of suburbs and new homes further afield. As a result, city total populations and population densities declined and labor productivity became worse off for it.
Agglomeration is about two margins: density and returns to density, and crime is bad for both. We can observe and quantify the costs of crime-reduced density and density returns. The cost of the Great Migration density effects alone is about $888 per year per American, and the effect of the 1960s to early 1990s crime wave is another $392 per capita, but even those are lower bounds, as they’re just the costs we see.
Cities are also arranged worse, leading to tangible and intangible losses. On the tangible side, cities are arranged in strange ways and their architecture is hostile so people can avoid crime; on the intangible side, patents are foregone, nightlife is more limited, police presence has to be greater and more concentrated, segregation is stronger, and NIMBYism—which is suboptimal for policy, as it also harms agglomeration, labor mobility, etc.—is reasonable as a means of exposure control.



