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Are you interested in the dynamics of urban productivity?
Our debate today works with the book chapter titled Cities as labor markets – The efficiency of large labor markets is the main cause of ever-growing cities from 2018, by Alain Bertaud, part of the book titled Order Without Design: How Markets Shape Cities.
This is a great preparation to our next interview with Alain Bertaud in episode 430 talking about the need to allow markets to drive urban development.
Since we are investigating the future of cities, I thought it would be interesting to see why cities function primarily as integrated labour markets. This chapter suggests that the while urban areas offer cultural and social amenities, these features are only made possible by a well-functioning workforce with diverse job opportunities.
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Welcome to today’s What is The Future For Cities podcast and its Research episode; my name is Fanni, and today we will introduce a research by summarising it. The episode really is just a short summary of the original investigation, and, in case it is interesting enough, I would encourage everyone to check out the whole documentation. This conversation was produced and generated with Notebook LM as two hosts dissecting the whole research.
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Speaker 1: If you look at an ant colony. You see this incredibly complex, highly functioning structure. There are ventilation shafts, nurseries foraging, tunnels. It looks entirely engineered
Speaker 2: like someone drafted a blueprint
Speaker 1: exactly as if some master architect drafted a blue blueprint. But of course there is no architect. The structure emerges organically from the uncoordinated micro decisions of thousands of individuals just responding to their local conditions.
Speaker 2: It’s an emergent phenomenon.
Speaker 1: Yeah. But when we look at human cities, we suddenly abandon that biological perspective. We assume that because a city is complex. It must require a master planner moving residential zones and transit lines around like pieces on a chessboard. So we’re looking at Alain Bertaud’s Order without design today, and it forces a really uncomfortable question.
Speaker 2: It really does.
Speaker 1: Our large cities, just massive spontaneous labour markets that we need to leave alone. Or does that organic ant colony growth eventually lead to such catastrophic gridlock that planners have to step in and proactively design the space? I look at Bertaud’s work and see a compelling truth. Cities are defined by their unified labour markets and spatial equilibrium really should emerge organically without planner intervention.
Speaker 2: I come at it from a different way while cities are undoubtedly labour markets, we agree there. An entirely unconstrained spatial market naturally leads to catastrophic dispersion when we let the market totally go. Jobs and housing scatter everywhere. Necessitating deliberate active spatial planning. Otherwise, mobility completely breaks down.
Speaker 1: Okay, let’s establish the absolute baseline here. Bertaud’s making a point that upsets a lot of traditional planners. The whole reason a city exists is to be a labour market. That’s it.
Speaker 2: It sounds a bit reductionist.
Speaker 1: It does, but all the romantic stuff, the museums, the cafes, the Broadway shows, none of that exists without a massive expanding pool of jobs to fund it. The productivity of a city stems from what economists call agglomeration economies, which is really just a magic that happens when you cram a lot of smart, ambitious people into one place, so their ideas bump into each other.
Speaker 2: Knowledge Spillovers.
Speaker 1: Exactly. The text uses the example of early spreadsheet software in the 1980s. It started at MIT, spilled over into the rest of Cambridge and then just exploded across entirely different sectors. Because a larger unified labour market generates this incredible wealth, individuals and firms have to be allowed to vote with their feet. They need to find their optimal locations organically without planners trying to artificially dictate where growth should happen.
Speaker 2: I agree that labour markets are vital. Without a functioning labour market, you don’t have a city. But spontaneous market decisions often lead to systemic failure. The text emphasizes a hard mathematical constraint that your ants don’t have to deal with. A labour market is strictly limited by commute time. Specifically the 60 minute limit. If unguided market forces are left entirely to their own devices, they inherently push cities toward what Bertaud calls a dispersed model,
Speaker 1: which we see a lot of,
Speaker 2: right? We see this in US cities and severely in places like Gau Tang, South Africa. This extreme dispersion violently fragments the labour market. Suddenly, a single mom living in the suburbs is spending three hours and taking three different bus transfers just to get to a shift across town. A worker on the periphery can only access a tiny fraction of the city’s jobs within an hour that crushes their productivity. Planners have to do more than just build roads. They have to proactively manage spatial realities to keep jobs actually accessible.
Speaker 1: But you’re assuming planners can actually predict where jobs should go to fix that 60 minute limit. Let’s look at the urban village model. This is the urban planner’s absolute dream.
Speaker 2: Oh, definitely.
Speaker 1: The idea is to create self-sufficient small mono centric clusters to reduce travel planners try to perfectly match the number of jobs to the population in a specific zone. Tau highlights the specific example of soul’s five satellite towns. The planners there meticulously balance the projected jobs with the inhabitants, assuming everyone would just walk or bike to their cozy local office.
Speaker 2: The intent was to prevent the exact gridlock we’re talking about.
Speaker 1: Sure, but what actually happened, surveys showed the residents simply commuted into the main, so metropolitan area anyway, and the local satellite jobs were filled by people commuting in from outside. It totally failed. It proves that a worker prioritizes access to the massive unified labour market over the planner’s vision of localized convenience. He can’t put a neat little boundary around economic ambition.
Speaker 2: The sole execution might have been flawed, but the desire to build urban villages is a highly rational response to the very real threat of fragmented labour markets. Look at Britto’s data in Korean cities. A 10% increase in the number of accessible jobs, boost a worker’s productivity by 2.4%.
Speaker 1: Right.
Speaker 2: That isn’t just an abstract number, that’s a raise. That’s better food on the table for a family. If planners don’t attempt to cluster jobs and manage density, the city naturally disperses outward. When jobs scatter randomly across a vast metropolitan area, it becomes mathematically impossible for peripheral workers to reach a critical mass of those jobs within an hour. The agglomeration effect just dies.
Speaker 1: I see why you think that, but let me give you a different perspective. Think of the labour market like a coral reef, tariff specialists, and an array of niche support services. Her optimal job is randomly distributed among millions of other jobs
Speaker 2: because she’s so specialized.
Speaker 1: Yes. The larger, the total pool she can access, the better her chances of finding that highly specialized match. When planners try to artificially cluster jobs or spread them out evenly, they’re basically draining the reef.
Speaker 2: That’s a compelling argument, but she can only access the deep water of that reef if the infrastructure allows her to travel across it in under an hour. If the market naturally disperses both housing and jobs to the point of endless sprawl. She spends two hours in traffic anyway.
Speaker 1: It’s in exactly the planners who force that sprawl. Because individuals are best equipped to make micro decisions about their own employment, we have to look at how planners actively sabotage these individual trade-offs. Planners consistently destroy affordability and mobility by enforcing arbitrary minimum space standards.
Speaker 2: You mean like zoning?
Speaker 1: Yeah, exactly. Look at Paris’s, chambre, Deone. These are tiny nine square meter apartments or Indonesia’s ONGs. These are microscopic living spaces, but they are centrally located. They allow low income workers to trade space for highly favourable location, giving them access to the entire urban labour market. Now contrast that with a catastrophic feeling of South Africa’s 1995 housing program.
Speaker 2: Ah, the post apartheid housing initiative.
Speaker 1: The government with great intentions gave the poor large 400 square meter plots of land and 65 square meter houses, but the mechanism of that policy was devastating. To afford that much land per person, they had to build on the extreme periphery of the city. The math is brutal. If every house takes up a massive chunk of land, the neighbourhood is so spread out. That a bus line can’t physically pick up enough paying passengers to survive,
Speaker 2: it becomes unserviceable.
Speaker 1: It became a poverty trap. The transport costs and commute times completely severed these people from the labour market.
Speaker 2: I’m sorry, but I just don’t buy that. Let me tell you why. The South African example is tragic, absolutely, but you are framing that entirely as a failure of planning, and the free market does not inherently solve this problem.
Speaker 1: Let’s look at the text data on Dao Tang, South Africa. A massive percentage of workers there face commutes of over 60 minutes without planning interventions. The market naturally banishes the poor to the periphery anyway because central land is simply too expensive. Whether it’s a planner enforcing a 400 square meter plot or the free market pricing, a worker out of the centre, the result is the exact same mobility trap. The poor end up dispersed spending 50% of their income just on transport. I’m not convinced by that line of reasoning because the text specifically notes that regulations like Paris prohibiting new shams, deban. Actively remove the free market mechanism that would allow the poor to stay central. The food carts of Manhattan, the pond Wallas of Mumbai, they thrive in incredibly expensive areas precisely by consuming tiny amounts of land. The market allows that microscopic trade-off planners outlaw it.
Speaker 2: Even if we grant that deregulation allows for denser central living. You are still funnelling millions of people onto fixed infrastructure. You can’t deregulate the physical space a car takes up on a highway,
Speaker 1: which leads to the only legitimate role for the planner if the market dictates where people live and work. The planner’s job is strictly maintaining mobility through infrastructure and pricing like congestion taxes. They should not dictate land use. When planners try to artificially alter city sizes, it’s disastrous.
Speaker 2: That’s a strong claim,
Speaker 1: but it’s backed by the history of cities. It falls what economists call Gira’s Law, which basically means that whether a city has a million people or 10 million. It tends to grow at the exact same proportional rate that proves you can’t just cap a city size from the top down. Look at India’s 1956 policy, which banned new manufacturing in cities over 500,000 people to try and force growth into backward areas to decentralize, right? But it didn’t stop dynamic cities like Mumbai from growing. It just starved them of desperately needed infrastructure investment causing the very congestion we see today.
Speaker 2: That’s an interesting point though. I would frame it differently. There is a glaring contradiction in AL’S reliance on pricing and infrastructure while ignoring land use. He admits that in unmanaged mega cities like Bangkok or Jakarta congestion acts as a massive tax on productivity.
Speaker 1: It absolutely does,
Speaker 2: but here’s the catch. You cannot effectively price, roads, or design transit systems if jobs and housing are completely randomly dispersed. Transit requires density to function mathematically. Road pricing requires alternative routes. Therefore, land use planning and transport planning are fundamentally inseparable. You cannot just lay down pavement after the fact. You cannot have order without at least some degree of proactive design.
Speaker 1: Let’s summarize where we stand. I look at this text and see that the vitality of a city relies entirely on the organic unified labour market. Individuals and firms must be allowed to freely trade off space for location. Asper. Todd demonstrates whenever planners try to engineer spatial equilibrium. Whether through satellite towns in Seoul or peripheral housing mandates in South Africa, they inadvertently destroy density, ruin, mobility, and fracture. The very labour market that gives the city its life top-down. Spatial planning is essentially hubris,
Speaker 2: and my stance remains that while strict dogmatic spatial planning certainly has a flawed history, surrendering the city entirely to uncoordinated market forces ignores the devastating constraints of physical geography. The 60 minute commute limit is an absolute law of urban physics. Extreme dispersion and systemic congestion are the natural endpoints of unmanaged growth, and those forces will ultimately destroy the labour market efficiency you’re championing.
Speaker 1: Looking at the city strictly through the lens of a labour market, challenges a lot of traditional aesthetic urban planning. It forces us to measure success in travel times and job accessibility rather than neat color-coded zoning maps. There is so much more to explore in Britto’s material, particularly regarding the specific mechanics of how different transit networks intersect with these spatial models.
Speaker 2: Indeed, the way a subway line changes real estate behaviour. Compared to a highway is an entirely different, fascinating layer of this book.
Speaker 1: So we leave you to form your own conclusion. If you’re listening to this on your morning commute, stuck in traffic, or waiting for a train, look out over your city and ask yourself, are you looking at a masterpiece of deliberate design? Or you just watching the ants build their colony?
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