Monday, November 19, 2007

Unruly City Works Well

I think the economy of big cities is one of under-researched topics in economics, particularly on the positive contribution from otherwise "unruly" features of a city --slums, city dwellers, crowded sidewalk, counterfeiting business, etc.

During this weekend, I am reading the captivating Jane Jacobs' classic, The Death and Life of Great American Cities. I know this is way too late, it has been published since 1961, but her fresh attack on how the then latest urban planning trend (such as Le Corbusier, --the architect, not the mentalist (sic!)) misunderstood city life still sounds relevant even today. It makes a lot of economic sense, too.

Having been reading some of the early chapters, I have a question, perhaps to criminologist: Is the crime record in Jakarta's crowded housing districts (Tanah Abang or Senen area) higher than in the suburbs (Depok, Tangerang, Bekasi), where the so called modern urban housing planning has been heavily exercised? --If the records are neither available nor reliable, a careful observation on Pos Kota will do.

My guess, it isn't. Presumably, high population density and close interaction will produce positive externalities of an informal surveillance system for public order. But maybe I am wrong.


  1. You actually bring an interesting point here.

    High population and close interaction will make people behave themselves, but only when interacting with people of the same group.

    The wildwest areas in big cities of Indonesia are actually safe haven for people of that area. The business owner in Senen market for example, despite being asked for money periodically by local thugs, are actually part of the group, as long as they show a caring attitude towards the thugs. The local thugs will go quite far to protect the shop owners interests.

    The asking for money itself has a deeper meaning than a simple exchange of money vs. protection. The thugs actually feel that they're rightfully entitled to that money simply for being part of the Senen market. That entitlement has its root on expectation of benovelent leader and the relatively less value of money compared to status.

  2. Amitz, if those thugs really protect the shop-owners, they would also do so to the customers,-- who are not in the same group--, because they know that more customers is good for their preys. And wealthy preys are good for them

    So we can suspect that strolling down to Pasar Senen or even Jakarta Kota nightlife is, perhaps, much safer than what we usually assume.

    But again, this is the hypothetical situation, somebody has to go down and get the data.

  3. rizal: maybe because thugs are not economist? :-)

    Seriously, thugs, like many people, are not always rational economic agents. Additionaly, from cross-cultural psychology perspective, thugs in Indonesia are closer to Short-Term Orientation dimension of culture.

    I really hope you're actually not being sarcastic because that sarcasm somewhat indicate that you consider thugs as criminals who live independently of society despite they spend most of their time in that society..

  4. Amitz, of course one doesn't need to be an economist to be rational, in the sense of being consistent in choosing actions in pursuing his/her aim, --that is, for the thugs, higher money payment from the preys.

    I think for one having short term or longterm orientation does not depend on any cultural factor, but the market structure. If you can secure monopoly power, --in other words, you ultimately win the battle of thugs in the area--, the optimum level of payment will be lower than when you are in fragmented competing market, in which you are unsecured for longterm domination.

    Stationary bandits will be more pro growth than roving bandits. And usually, thugs in area like Senen or Tanah Abang fall into the former category.

    And no, I am not being sarcastic. In fact, I consider a thug as a rational economic man, a dynamic intertemporal profit maximizer out of market for security.

  5. rizal,

    When I say thugs, I meant that to be the disorganized local ones. But still, for organized one, I still believe short term orientation culture do have a strong influence over whether they restrict themselves from mugging shops' customers.

    I agree that we're different on how rational thugs are in face of culture.

    But I'm kind of confused when you say how a monopoly lead to lower payment. I think you mean it to be higher payment?

  6. Amitz, sorry for being rather unclear. Let's rephrase it. Any thugs occupying an area is exercising monopoly power of extracting money out "protection" at certain period. There are two kind of thugs, the one that has persistent and ultimate power --think of totalitarian thugs, in centralized market--; and the other less ultimate, prone to other thugs' attack --in other word in fragmented contestable market.

    Enter intertemporal issue here. The former kind of thugs, being sure of sustaining power in the future, will extract the money at lower rate (money/collection), because he needs to have his objects to grow -leading to even higher extraction in the future. On the other hand, the latter would reap the money extraction as much as possible now and give no damn to the objects growth. There is no guarantee that his object's growth (and more money) in the future would belong to him.

    Maybe you want to read A-Not-So-Dismal Science: A Broader View of Economies and Societies, by Mancur Olson, for detail.

  7. A good city in my opinion is a city that can create money for its residents. That's all. No matter what the other aspects may influence. It's so a genuine economic concept, isn't it Rizal?

  8. Anymatters, I would rather to say that big cities are a very important economic asset that an economy has --as obvious at it may seem, not many people think it is, though. And a vibrant city will create its enormous self-generating positive economic externalities, if it has a mixture of land primary uses, frequent streets, different age of buildings (to secure affordability of diversed tenancy/uses), and high concentration of people (Jacobs, 1961). It needs to embrace spontaneity and diversity.

  9. Ok, thanks for the response. Can you tell how much ratio a city should borrow money over its revenue (eg. from property tax) to support its plan? Can it borrow from its residents and pay them risk free interest?