By Lucian Smithers, Director of Sales and Marketing, Pocket
At Pocket we have all read ‘The Triumph of the City’ by Ed Glaeser. Glaeser’s views about what makes cities great and how they can remain successful give heavyweight academic substance to Pocket’s belief in delivering starter homes for London’s city makers – you could even say we’re groupies.
So you can imagine our excitement at the prospect of hearing him talk in the UK last month at Warwick Business school’s outpost in the Shard. He was also interviewed in the Guardian, and even better, he popped in to visit Pocket and hear more about our philosophy and business model – we think he liked it!
Glaeser’s work focuses on the power of successful cities. Note the word “successful.” His studies cover huge geographical and historical distances to find the lessons about how great cities have managed to thrive and in some cases come back from the brink. And his visit to London meant he gave some thought to the similarities, and differences, between the UK and our friends across the Atlantic. He pulls out the simplest observations from a huge set of data and experiences, and here are some of the nuggets of genius that we took away for London:
- Productivity and skills are the greatest correlators for successful cities, so we should heed this and cherish the skills that we accumulate in the Capital.
- Small businesses are the key engines of resilience for cities. Over reliance on large businesses and a monoculture of industry is dangerous because, as macro economic conditions change, large organisations may relocate, leaving behind a workforce with very limited skills. Small businesses are more adaptable to changing circumstances. The US comparison is between Detroit and New York. Detroit was over reliant on the car industry and when it became cheaper to move the factories to more cost effective premises, the city collapsed; it was unable to bounce back because the skills base of the city’s inhabitants was just too narrow. The crisis in New York in the 1970s is the opposite story. The city was close to bankruptcy and unemployment was rife because of the over reliance on the collapsing garment industry. Yet it was the smaller businesses that the garment industry consisted of that managed to change and evolve relatively quickly into new businesses that delivered much of New York’s next growth phases. So diversified industries with entrepreneurial flair are to be treasured.
- Different cities need different policies according to Glaeser, based on the failings of federal policies for cities across the US. Cities differ too much to make one set of rules that work for all, they need strong, organised, autonomous (and corruption-free) administrations. Only then can the city be managed according its own unique needs. In the UK, it has become abundantly clear that most of the national initiatives don’t work in London. For example:
- Section 106 deals are delivering “affordable” homes that are valued at over £500k (read recent article in The Sunday Times)
- The numbers of Help to Buy loans are tiny in the capital because the 20% contribution to the deposit cannot buy a London home.
- Starter homes initiative of last year has been recognized as largely economically unviable in the capital.
- Limited housing supply is a key factor affecting the growth of cities in the UK, a big difference with the US. In the US, a relatively homogeneous culture and much freer planning rules mean that citizens will flow to where the work, culture or sunshine is and there are relatively few limitations on this. In the UK we have stronger regional cultural allegiances (despite the tiny distances involved by American standards) and we have limited housing stock in many areas making it prohibitively difficult to move from one region to another.
So what does this mean for where London is now? Well, we should be enjoying the city’s global supremacy because it’s a great place to live. But there are some big warning signs that we shouldn’t take this for granted. The underlying rule of a successful urban environment is that the benefits provided by that environment outweigh the negatives – the crime, the grime, the people, high costs of living etc. etc.
It is becoming increasingly difficult to make your way in London if you’re young and starting out. The transference of wealth that works so well in successful cities doesn’t seem to be working here, with high living costs taking up most of our city makers’ incomes. So the young, educated, skilled and often entrepreneurial workers can’t afford to stay in the capital, sowing the seeds of a future decline of this all important group. As we’ve always said, city makers are important!
Over dinner with Professor Glaeser, we discussed this ‘city maker’ group and their prospects in the big globalised cities of the world, and Glaeser noted that the very people who provide the skills and entrepreneurial flair which give a city resilience have not been properly studied…. so far. Pocket teamed-up with JLL back in 2014 to survey our database of city makers, producing the report The First Rung, which was well-received in London. Pocket’s customer database offers a useful sample which could be used to create a fascinating study to help policy makers in London, and the rest of the world’s Global capitals, understand the importance of our city makers. Watch this space!