People are rethinking cities

National Geographic magazine has an issue on urban development. Seems to be a collectible. Here are some important articles I liked:

To build the cities of the future, we must get out of our cars. It has fantastic pictures by Andrew Moore and Robert Kunzig has done great by summarising the developments walk-friendly cities.

It refers to the emerald city planning guide by Calthorpe Associates. You can download it here.

The cities of the future infographic is super awesome.

The related articles also features one of my favourites: Want to visualize inequality? View cities from above. It features pictures by Johnny Miller. The Johnny Miller website is treasure trove of many such pictures.

The development of Tokyo is documented quite well. 

The photos feature titled This man spends 8 hours every day commuting. He's not alone. is quite good. In my paper How cities Develop I have explored the commute as distance travelled in acceptable commute time. Those insights seem to be bearing out. 

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Buy my books "Subverting Capitalism & Democracy" and "Understanding Firms"

Urban Development problem in India - the lack of proper Development Plan

Recently, I had the opportunity to examine the Draft Development Plan released by Maharashtra State Road Development Corporation (MSRDC). The plan is quite badly designed. Yet, what hurt me more was the fact that this plan was developed for Special Planning Area (SPA) which is not developed as much so the development is almost green-field urbanization. And yet, even when we are given a clean slate we make such primary mistakes in planning. I wrote about the shortcomings in an Article in Moneylife.in titled "How can smart cities be built on dumb development plans?"

I have looked at the population, water demand estimation, power demand estimation, waste estimation, transportation planning etc. On every parameter this plan falls short. Have a read and leave comments.

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 Buy my books "Subverting Capitalism & Democracy" and "Understanding Firms".

The smart cards in smart cities

Everyone is familiar with the oyster card in London and similar cards world over. Singapore has its own ez-link card. Yet, I carry few debit cards, few credit cards, School Access card (for parents), the Museum passes, Office access card, home access card and the works. There are simply too many cards.

Too many cards that I carry SIGH!

How about just 3?

Is it difficult? Not at all. Let us imagine 3 cards. One is your all-in-one Government ID. Second is high-security-access card (HS Card)— used for all debit card / credit card processing/home access and the like. Third is a lower security card (LS Card) — pre-paid cash card, travel, office access and the like.

Well, this system is in fact easier and more cost effective to setup. The service provider (say a bank, home security system) need to do is to add the card number and details present on the face of the card itself to their system and bingo your card can now function as a Citibank, HSBC or Chase or whatever card you prefer. On the back of the card they can stick a little sticker so that I remember what cards option I have. By limiting its access you can control what data the “swiping device” can collect. So one way could be to use photo of the card. Other way would be to simply tap that card — this would allow basic data for shopping say upto $2000/-. A swipe would let you swipe more than $2000 till your limit. A house access would require a tap and pin (say).

Same goes for the LS Card too. In fact all the shops who want to give you “points” and reward your “loyalty” can do so with this LS Card. Anyone wants you to give access can enter this card number in his system and you will have access to it. This could be transport systems including taxis and buses, boats and the works. It could also be your office door etc.

The government ID card can be kept separate because of the legal issues that result in case of mishandling of the card. If some vendor makes a mistake you may lose access to your insurance or something far worse — you may no longer be a citizen. The redundancy allows for the system to be more stable than depending on simply the transaction card.

Who mentioned Apple Wallet or Android Pay?

At its best I would have Apple, Android and mobile phone manufacturers do this. Just by getting my mobile number all the companies can give me access using the phone. I should be able to share basic data with companies wanting to reward me for my “loyalty” just by sharing my phone number and a sms based pin and then it should be easy for the companies to keep rewarding me.

However, I am wary of putting ever more power at the hands of these companies. For one, it seems difficult for these systems to work together at least till now. Therefore, we have cards that are not Apple pay compliant or the shops don’t have terminal for Apple pay. These problems are easily solveable — we simply need a will to do it. It would be beneficial if these companies adopt a universal standard for such operations.

This otta make cities Smart

Now I am not a fan of smart cities focussing on useless tech without convenience. But the smart card concept we discussed above seems to be practical and it should make cities smarter, peoples lives easier.

A city state like Singapore should initiate experiment in this direction. Singapore already has its own payment standard called NETS, formed by collaboration between various banks and adopted by monetary authority of Singapore. Now all cards should be NETS compatible — debit cards, credit cards and yes access cards, transport cards etc. With this in place we will take the first step towards card utopia.

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Buy my books "Subverting Capitalism & Democracy" and "Understanding Firms".

Geoffrey West on corporation and cities onEdge.org

My day was made when I read the edge piece today. Geoffrey West, professor, talks about interesting aspects of Why Cities Keep Growing, Corporations And People Always Die, And Life Gets Faster.

As an investor, company life-cycle represents a lesser-debated frontier. Analysts tend to rely on the accounting view of going-concern. Yet, the permanence we take for granted is a mirage. However, understanding when the decline of the firm comes about is easier said than done. 

Dr. Geoffrey West points to yet unpublished (and still being verified) work that says firms scale sub-linearly. In other words as firms get bigger, they become less profitable and they eventually perish. Compare this with cities (which he discusses before firms) that grow super-linearly. In other words as cities get bigger, they become more beneficial for its inhabitants. So then, should investors stop companies from growing? And how should one view the increase in scale. 

I think as investors it highlights a very important and much neglected area.

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My book "Subverting Capitalism & Democracy" is available on Amazon and Kindle.

The question of Cities

Post the Economist debate on Cities, we have a series of fabulous articles on the topic. Let me quickly share a few of them right away. First article, Are mega-cities too big? comes Klaus Desmet and Esteban Rossi-Hansberg. The second article comes from Ryan Avent titled "Why we live in cities?". Other reading includes Richard Florida's book Who is your city? Another includes report from UN Research institute for Social Development titled "Development and Cities". Finally some of my thoughts are captured in the my ebook How Cities Develop.

There is a general agreement on cities being the drivers of economic growth. However, there is much debate about whether cities should be large or small, how they grow, etc. Let me highlight some important issues with respect to cities.

Cities are efficient providers of infrastructure
Investments make sense when they are used by more people. Cities have effective administration because they have piece-meal property - in other words they are dense. These piece-meal property affords economies of scales and better return on infrastructure like drainage, water supply, power etc. It is, therefore, clear why some cities like Detroit are encouraging people to shift out of far-flung suburbs into concentrated city center.

Cities help deploy capital efficiently
Cities allow for specialization and therefore interdependent service opportunities. Away from the city, multi-skilling is essential. City dwellers may get help if their car breaks down, away from the city you may need to know basic break-down procedures yourself. Same goes for food. Cities allow you to buy meals from restaurants etc. so that those expert in cooking and concentrate on cooking food. Thus a city, in effect, comprises core workforce, ancillary workforce and support services. Core workforce related to basic income generating opportunity - in Detroit -it would represent automobile company workers. Ancillary workforce represents those workers that feed into auto firms - like stationary provider, photo-copying machine providers and workers thereof. Further there are workers for support services like restaurants, hair-dressers, etc. This specialization creates far higher productivity and hence better returns on capital.

Cities as hotbed of ideas

On a social level, cities are breeding ground for ideas. The let diverse people mix and therefore create an environment where ideas can breed. The new knowledge economy, therefore, depends on efficient cities and thrives in such environments. Now we can see the conflict between efficient capital deployment and idea generation functions. One needs specialization and homogeneity while other needs generalization and diversity. It is here that cities are likely to break down.

Over past two decades, IT infrastructure has allowed idea-generation function to move online. As the next generation, the digital natives (1), take over, we will see cyber-cities forming for idea generation functions. Further, the capital efficiency too is driven by ideas and hence possibly moving towards cyber-space. 

DESIGN OF CITIES
Design of cities is more landmark-oriented rather than flow oriented. The word "settlement" connects better with access than with landmarks. However, we look at landmarks and try to connect them based on estimates of future population. Don't be fooled by what seems like flow-based design - it isn't the driver of design decisions.

City is a flow of different variables. It is a flow of people to and from workplaces to and from houses. It is a flow of utilities across the sprawl. It is a flow of water, food and essential goods to different areas and evacuation of sewage, drainage and other effluents away from it. However we do not design cities based on efficiency of these parameters, rather we select a location and then try to service it with these amenities.

Rome v/s Las Vegas
The contrast between flow-based design and landmark based design is evident when you contrast Rome and Las Vegas in a simplified way.

Rome had a population of 1million around 10-3BC. At that time it still had a natural gravity driven water system that provided water no only to homes but also to street fountains and the like. There was also a well-designed drainage system. Though, Rome is not a purely flow-based design, it still comes close.

The old Las Vegas on the other hand is landmark based design. There is no business for it to exists in the middle of the desert and away from every amenity possible. Subsequent developments have tried to overcome its shortcomings. Yet, to date, its survival depends on the depleting Lake Mead created by the Hoover dam.

Balancing income and affordability determine the sprawl

Let us assume a person with a specific sum of money. She can, theoretically, buy large tracts of lands away from income generating opportunities. If she has to buy land in the city, in close proximity to income generating opportunities, she can buy very little even after leveraging future incomes. We can imagine a spectrum of affordability, from this maximum land without income opportunities to the minimum space purchasable by leveraging future income. Now the sprawl of the city depends on how geographically spread the affordability spectrum is. It is limited by time and not distance. Thus the geographical sprawl is equal to distance that can be travelled within acceptable commuting time. Hi-speed metros and maglev trains tend to increase the distance within alloted time.

The principles of Acceptable commute distance and acceptable commute time is essential in design of cities and development of sprawl.

Superimposing flow and landmarks measures real estate value
We can draw up monetary value of city's real estate by super-imposing flow and landmark characteristics. Landmarks with high flow are most valuable pieces of real estate in the city. I have distilled some of these thoughts in my "Affinity factor model" for cities.

Some of these ideas have been discussed in my free ebook How cities Develop. You can download it from Scribd by clicking on the link above.

Notes:

(1) Digital Natives refers to children born after 1990s who are far more comfortable with technology than current workers.

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My book "Subverting Capitalism & Democracy" is available on Amazon and Kindle.