Urban Dynamics: Book Review

I finished reading a book on Urban Dynamics, which is a system dynamics model of cities originally by Forrester.

Readings in Urban Dynamics : Volume I
edited by Nathaniel Mass, 1974

Even though I didn't read Forrester's original paper, these readings fill me in about the most important aspects of the model and also resulting controversies. I'm going to summarize most of the articles.

Part One - Overview
Managing Our Cities - Can We Do Better? by John F. Collins
John F. Collins was the former mayor of Boston and afterward became a consulting and visiting professor at MIT, so it's interesting to hear his perspective. His main points are that the problems of poverty, inadequate housing, crime, unemployment, and overcrowded transportation systems in cities do not simply lack money. It is impossible to build a "perfect city" because of the "attractiveness principle" in Urban Dynamics. Basically, a city that is universally more attractive compared to its environment attracts people who move in and overload the city's amenities. Cities therefor need to cater improvements towards its residents and seek to be distinct from other cities so that it's not attractive to everyone. Cities at the time (I don't know about today) were becoming more alike. Instead cities could specialize and become resort cities, manufacturing cities, educational, or educational cities, etc.

System Analysis as a Tool for Urban Planning by Jay W. Forrester
Managerial, urban, and economic systems are nonlinear complex systems. Forrester summarizes the Urban Dynamics model he came up with.

"Nine levels are groups into three subsystems. The industrial sector contains commercial buildings in three categories distinguished primarily by age. Across the center are residential buildings in three economic categories of population. Across the bottom are three economic categories of population...The age of a building tends to determine the character of its occupants. A new commercial building is occupied by a healthy, successful commercial organization that uses relatively more managers and skilled workers than unskilled workers. As the building ages, it tends to house a progressively less successful enterprise with lower employment skills. In addition to the changing employment mix as the industrial building ages, there is a tendency for total employment per unit of floor space to decline. On the other hand, as residential buildings age, there is a tendency for occupancy to increase as well as to shift to a lower economic category of population. One then perceives a condition in which the aging of buildings in an urban area simultaneously reduces the opportunities for employment and increases the population. The average income of the community and standard of living decline."

new enterprise - mature business - declining enterprise
premium housing - worker housing - underemployed housing
managerial professional - labor - underemployed

Forrester recommends reducing slum housing by about 5%/year and putting in incentives for new enterprise. According to his models, in the long run, this will produce a reduction in the underemployed to job ratio and the tax ratio needed.

Understanding Urban Dynamics by Gerald O. Barney
Barney clarifies some subtleties in the model. "The urban system is an example of a 'complex system' - a system whose behavior is dominated by multiple-loop, nonlinear feedback processes."

Forrester's solutions have two criteria : must be lasting (decades) and must increase upward mobility of underemployed.

Forrester's proposal of demolishing slum housing just seems like making a place richer by reducing the number of poor people. In a sense that is the solution because the problem is that there is too high a percentage of underemployed and not enough wage earners to generate tax revenues needed for the city to provide amenities to the residents. However, his solution ultimately benefits the underemployed because attracting new enterprises and jobs increases the number of underemployed that the city can support, and it also improves upward mobility so the quality of life for the city's underemployed is improved.

"In actual practice, [current urban programs] generally have a similar and characteristic development pattern: an initial period of slight improvement and generation of hope, followed within a few years by readjustments within the urban system that result in a loss of gained ground. The net result has been increased concentrations of underemployed, continually decaying conditions, and growing hostility of the underemployed toward the 'System' and toward the 'Establishment' that they think controls the 'System.' Actually...the failure of our urban programs is due not to the control of the establishment, but rather to a collection of feedback processes that are at work within the system and are almost beyond the influence of the establishment."

"Urban renewal (as practiced in the fifties) and the relocation of underemployed in low-rent suburban housing have destroyed communities and transplanted the underemployed to new locations where they are needed and wanted no more than they were before the relocation."

A Systems Approach to Urban Revival by Louis Edward Alfeld and Dennis L. Meadows
They mention the that many people have been migrating to California, and now it is becoming a less attractive place to move to. It's interesting that they said this in the 74 since I'm pretty sure in-migration has continued and still continues although now they really have a massive budget and water crisis.

"Schools and other city services become overloaded, available job opportunities decrease, recreational facilities become crowded, travel becomes difficult, and natural beauty is continually despoiled by an expanding population."

This article then goes into a little bit more technical detail about the urban dynamics model and solution. It depicts the feedback loops with in-migration and housing availability, feedback loops with job availability and migration, and feedback loops with revenue needs, migration, and housing construction.

The Kondratieff Cycle

article from the Donella Meadows archive has a more comprehensive explanation of the causes of the Kondratieff Cycle. According this this account, there is a cause, although it's systemic, and thus there should still be ways to avoid it. There just might not be much the government itself can do in terms of monetary policy.

In a market economy there is no signal to tell the steel industry, for instance, how much steel the world really demands on a long-term basis. There is only one way to find out -- produce more steel and see if it sells. But that takes a long time. Each company has to make a decision to expand, get financing, build a plant, start producing, implement a marketing strategy, and sort out the confusing short-term signals from strikes, trade breakdowns, business cycles, and all the other noise of the economy.

All companies are expanding together, and they are fighting for market share, so each has an incentive to out-expand the others. The result is significant overbuilding, industry-wide, economy-wide, world-wide. It takes decades for the economy to overbuild itself, then to get the message that it has done so, then to believe that message. It takes another decade or two to cut back factories and workforces to the level of production the economy really needs. And since no one knows what that level is, the cutback, like the building phase, goes too far. When that finally becomes obvious, the next upturn of the cycle begins.

The Kondratief cycle is caused by a great lumbering economy, which takes decades to change course, seeking by trial and error for an ever-changing equilibrium point. The government doesn't cause the cycle's downturn, though it usually gets the blame; it also doesn't create the upturn for which it likes to take credit. Even if the economy consisted of nothing but well-run companies making impeccably rational decisions, the cycle would exist. The presence of greedy companies making foolish decisions makes it worse, as does a government trying to spur investment at a time when investment has already gone too far.

Speculative booms at the beginning of the downturn seem to be inherent. There is no real expansion to put money into -- no need for more oil wells or electric plants or steel mills when existing ones are standing idle. So excess money stops going into building the economy and starts going into conspicuous consumption and wild speculation. The stock market loosens its tethers to the real economy and starts soaring, blown up by money with nowhere else to go.