Ryan Avent discussing the urban decline from the point of view of disruptive technologies
Lee’s disruptive technology post offers us a glimpse at an explanation. When a metropolitan area has an old, successful, established industry as its economic driver, that area builds its infrastructure and institutions around that industry. These institutions are likely to be unwilling and unable to accomodate and support growth industries. We can think about legislators in a Rust Belt state who fight to protect old industries even when the protections they seek would undermine growth industries. Or banks in old manufacturing centers that are reluctant to invest in start-ups with sharply different practices from the old giants.
I tend to think this is important. I would take a further step back as well and ask “why is all is there some much institutional capital to being with.”
For example, nimble high tech firms famously have rather flat bureaucracy. The lack of many layers of management and hence institutional capital allows the to adapt more quickly to changes in the market.
However, most firms and government are not organized this way. There are large managerial structures, strict protocols for operation, quasi-feudalistic territorial disputes between managers and departments.
My sense as that these are all essentially anti-corruption mechanisms. When it is difficult to measure the individual contribution of each of an organizations parts then those parts will tend towards corruption unless placed under strict management or rigorous protocols.
To that end, I wonder whether or not a key to urban vitality is the ability to measure the effectiveness of individual public service operations. To the extent better measurement is available less bureaucracy is necessary and the community should be more able to adapt.