Even as the US climbs slowly, almost painfully, out of the economic crisis, the American “way of life” may be undergoing a fundamental shift. Suburbanisation has been the single most important dynamic influencing American life over the last six decades. It affected everything from the economic and environmental landscape to social and political life. It determined what consumers purchased and where they purchased them, what high-schools their children attended and which radio stations they listened to.
Yet, there are signs that the super-cycle of suburbanisation is now coming to a close. If this happens, it will radically change America. In turn, it will change the “dream life” that millions around the world, including in India, have aspired to for the last century.
In 1910, 26 million people lived in major US metropolitan centres, while 66 million lived in rural areas or very small towns. Over the next century, however, the proportions steadily shifted in favour of metropolitan areas. By 1950, a majority of the population lived in large urban agglomerations; today, around 84 per cent of the total population lives in metropolitan areas.
In the initial decades, urbanisation was driven more by growth in the central cities. Since the late 1940s, however, urban expansion has been driven entirely by suburbs. Indeed, the populations of many central cities declined as families moved out to the suburbs. By the beginning of the 21st century, 63 per cent of metropolitan populations lived in suburbs. A few urban cores such as Manhattan and Boston have experienced a revival from the 1990s on, but the growth of urban sprawl in places like Houston, Phoenix and Las Vegas has meant that suburban expansion has continued to be the dominant theme.
The initial phase of suburban growth predates the automobile. The coming of steam-driven railways and electric street-cars (trams) changed the transportation dynamics of urban centres in the second half of the 19th century. Still, these innovations were essentially public transit systems, and they continued to force concentration around nodes such as train stations. The crucial change came, actually, with development of the automobile. Even so, automobiles would not have had their transformative impact on American life if not for two crucial additional factors — one sociological and one related to government policy.
The most important manifestation of the latter was the highway-building frenzy that began with the administration of Dwight Eisenhower in the 1950s. With some justification, the Eisenhower Inter-state Highway system has been called the largest public works project in history. Today it includes 74,000 km of roads that are built and maintained with tens of billions of dollars of state and federal funding. This fiscal support for urban infrastructure, combined with cheap oil, effectively subsidised people to move to suburbs.
At the time that Eisenhower was building his highways, a generation of war veterans were trying to get married, produce children and set up homes. Real-estate developers like Arthur Levitt saw this as an opportunity and bought out farmland at the periphery of major cities. They then mass-produced large numbers of cheap houses. Cheap land and mass production meant that Levitt was able to sell relatively comfortable modern homes for $8,000 in 1950 (about $65,000 in today’s prices). Furthermore, the Federal Housing Administration guaranteed 95 per cent of mortgages, and the GI Bill allowed for no-down-payment loans for veterans. No wonder there was a suburban boom.
Note how this process is self-reinforcing. As people moved out, municipal revenues stagnated in the old urban core. This meant that deteriorating urban services in downtown areas pushed out more people. Meanwhile, the expanding suburban population could use its growing political clout to demand more public spending on highways and other urban infrastructure for the suburbs. The expansion of urban infrastructure was fiscally very expensive, but America’s powerful mid-century economy could afford it. By the end of the 20th century, some suburbs had spread so far from any urban core that they were given a new name: “exurbs”.
Today, however, these very dynamics, both financial and sociological, have gone into reverse. Concerns about the state of US federal, state and municipal finances have grown sharply. In August 2011, ratings agency Standard & Poor’s downgraded the credit rating of 11,000 municipal issues following the downgrade of the federal government. In November 2011, Jefferson County, Alabama, filed for bankruptcy, the largest such filing in US history. At the very least, this means that the United States will not be able to afford further expansion of urban infrastructure for many years. Indeed, American city managers will be forced to recognise that urban services are much cheaper to supply in a concentrated urban form.
Meanwhile, the structure of American society is also changing rapidly. In 1950, households based on married couples accounted for 78 per cent of all households. Single-person households accounted for less than 10 per cent. Over the following 60 years, however, the institution of marriage went into steep decline in America. The latest census data shows that married couples accounted for only 48 per cent of households in 2010 and that their share is rapidly falling. In contrast, the single person household now accounts for 27 per cent of households.
The residential requirements of this new social structure are drastically different from those of the traditional family. The single individual, for instance, is likely to prefer an easily managed apartment and close proximity to bars, restaurants, hospitals, shops and friends. The implication of the above sociological and fiscal dynamics is that the future trajectory of American cities is towards increased density. Some old city-centres will revive even as new hubs will emerge.
Interestingly, this shift will take place just as India is building out its own highways and is effectively encouraging its cities to sprawl out like ribbons along these roads. I am not arguing that Indian cities should not grow — that is inevitable during rapid urbanisation. However, it may be less wasteful if we encourage urbanisation to remain concentrated around urban nodes (for instance, by investing in the railway network). That way, we could directly move towards building the dense, post-modern cities of the 21st century.
The writer is Deutsche Bank’s Global Strategist
