Tale of two cities holds lessons for Singapore

Tale of two cities holds lessons for Singapore
Detroit skyline.

CITIES, like all human systems, are enormously complex.

But it was not always so. Until about 12,000 years ago, people lived in small nomadic groups as hunter- gatherers.

Then, during the Neolithic Revolution, agriculture emerged and people began to produce food, instead of just hunting for it.

The nomadic life of the hunter-gatherers began to be replaced by more sedentary societies based in human settlements like villages and towns. Villages and towns grew into cities over time.

The urban milieu became the catalyst for the development of a multitude of new human capabilities. Over time, people were no longer just hunters or farmers. They became builders, craftsmen, businessmen, entertainers, teachers, scholars, and so on.

As inhabitants of towns and cities took on increasingly specialised roles, and as cities grew, social and economic complexity increased.

But the human impulse is to reduce complexity. The complexity that began to emerge in towns and cities created an imperative for a new form of organisation - government - to manage it.

An early, rudimentary form of government was the council of elders, which governed through consensus rather than imposed rules.

But cities evolved, they grew larger and more complex. Furthermore, ambitious rulers began conquering other cities and extending their reach of power.

The challenges of controlling geographically diverse and complex cities demanded a more sophisticated form of urban governance than just the council of elders.

Establishing rules to manage complexity

THE Code of Hammurabi, dating back to around 1754BC, provides clues as to how early civilisation managed urban complexity.

The code comprised some 282 laws covering a variety of subjects. It prescribed punishments for those who flouted it.

Through the code, King Hammurabi maintained political order and managed the complexity arising from the different practices, precedents and norms in the Babylonian empire.

What is interesting is the way in which the code appears to have promoted economic freedom and diversity: the code paints a picture of an economy driven by private property, as the king did not own any land.

The code was an instrument to manage an early form of capitalism. Today, we recognise in it many aspects of the modern economy: the enforcement of property rights, the protection of the weak against the strong, and the use of commodity as money and credit.

The code freed up the economy, which in turn promoted long- term growth.

Literacy, political structures, levels of industrialisation, and per capita income are conventional indicators of economic health.

However, the economists Ricardo Hausmann and Cesar Hidalgo have suggested that the most important predictor of growth is economic complexity, or the diversity of products that an economy possesses.

Countries with the most natural resources tend to have simple economies, as they do not produce unique goods.

Thus, economies that are dependent on a particular kind of export - for example, oil or timber - may do well when demand for these products is high, but fail in the long run because they are not diversified and cannot compete in other sectors.

A case in point is Detroit, a city that built its fortunes on the auto industry. Detroit became highly reliant on the auto industry.

But after World War II, automakers began to move to suburban areas, outside the city proper.

This in turn led to residential movement to the suburbs. From a peak of 1.85 million in 1950, Detroit's population today is less than 700,000, a decline of more than 60 per cent.

Population flight led to a loss of tax base and jobs. Detroit declared bankruptcy in 2013, and its unemployment that year was 23.1 per cent.

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