How Cities Collapse

Cities have several natural advantages on villages and the countryside, all deriving from their high population densities. With many people living in close proximity to each other, cities are ideal for trade, industry and commerce. Cities also provide services and luxury goods for capitalists and land owners to enjoy. This makes cities dynamic wealth generating, as well as wealth consuming, entities.

When cities generate more wealth than they consume, cities grow. With more wealth generating individuals, cities grow even more. However, when cities turn increasingly to consumption, growth become difficult and eventually impossible. What happened in Rome is a good example of this. It started out as a liberal haven, with industry and commerce free of interference from the state. But Rome's ability to produce laws and soldier rather than goods and services meant that Rome had a shortcut to wealth. They could simply steal whatever they wanted through conquest and taxation. In doing this, Rome went from being a dynamic hub of trade to a decadent cesspool of entitlement and consumption. Two hundred years after its peak, with a population of one million people, Rome was reduced to a provincial town of a few thousand.

This pattern of growth followed by decay happens repeatedly through history. Currently, the city of Detroit has been in decline for decades. Chicago and New York look like they will follow shortly. The reason being that these cities have stopped being production hubs for goods and services. Consumption financed through money printing and empire has replaced their productive capacities.

The mechanism at play is that of evasion. When producers see that they are no longer being properly paid for their goods and services, they stop sending their production to the cities. Egypt was an important provider of goods to Rome. When Egypt stopped sending goods to Rome, that spelled the end of Rome. Whenever there is a great imbalance between production and consumption, production dries up, forcing people to leave the cities in order to find productive work for which they can trade with other producers. Those who fail to make this transition suffer greatly.

With consumption now increasing dramatically relative to production in the US, large US cities are likely to see social unrest as goods and services dry up. Productive people will disappear into a parallel economy with little to no taxation, and foreign producers will demand dramatically more US dollars for their production. Those on welfare will soon see their purchasing power decimated. That will prompt them to riot and loot whatever stores remain open. Then they will head for the country sides like swarms of locusts. Those not out of harms way by then are unlikely to get through the upheavals unscathed.

Locust

By Charles J Sharp - Own work, from Sharp Photography, sharpphotography, CC BY-SA 4.0, Link