Economics of Place

In several previous posts, I've mentioned books that touch on both economics and geography. Among these are works by Jane Jacobs and, Nature's Metropolis by William Cronon. As mentioned before, Cronon's book reminded me of the concepts of time utility and place utility and the addition of value. Now Chicago Fed economist Bill Testa has put up an interesting post about the transformation of the Chicago economy.

In Hog Butchers No Longer, Testa talks about what has changed about the Chicago economy; what makes it different from the rest of the Midwest; and why it will remain important to the region, despite these differences.

There are some important points connecting Testa's post with Cronon’s book (as well as others). Testa references the capital concentration (both private and public) that made and continues to make Chicago a desired location, both for business and for the new workers that staff the city's changing economy. In a sense, the workers are going where the jobs are, but they are also consumers of services once they arrive. Those services are one reason they seek to work in Chicago. The services go beyond basic needs. They include cultural and recreational opportunities. Those opportunities are due in part to where Chicago is (thus place utility), but they also are a result of the concentration of capital that came about because of Chicago’s economic evolution. Chicago's evolution was marked by building transportation infrastructure and by developing certain financial markets. These developments both were facilitated by accumulated capital and, in turn, allowed more capital (including human capital) to be accumulated and reinvested in such a way as to make the city more desirable. By first servicing the agricultural region and then the manufacturing region that was the Midwest, Chicago grew into the service center it is today.

How is this usable for the classroom? Again, as we know, students learn a subject better if they are given context. In this case, by looking at Chicago (or other cities for that matter), students can see how economic change can lead to growth and new opportunity. Or by contrast, they can see how failing to adapt can stifle growth. Students can also discover how resources can shape the opportunities of a society, a country or a region. These resources can take the form of natural resources, human resources, or capital resources, but they all can build on one another if properly developed.

Your views are welcome and appreciated.

Posted by TSchilling at 8:13 PM Comments (0)