High-skilled workers in small towns are a ‘waste of resources,’ says study

The paper's primary policy points appear to be, using quotes from the paper:

1) CNR workers work better in "cognitive hubs" that specialise in this type of work.

2) "The main culprit of spatial misallocation is the existence of large occupation-specific externalities combined with potential distortions due to land use regulations."

3) Small towns are misguided in trying to lure "tech" to their cities, and should instead find a non-CNR industry to concentrate on that is not already concentrated in a specific city. ("the economics of the problem suggest that, with the appropriate transfers, small industrial cities in the U.S. should attract non-CNR workers and not try to become the next San Jose. The concentration of CNR workers in a few “cognitive hubs” should be encouraged, not scorned.")

4) CNR cities should be subsidizing non-CNR workers outside of the hub, at a UBI (wealth transfer) to non-CNR workers of about $17,000 a year per worker. ("CNR workers, who earn substantially more, end up paying a base transfer of $16,856. One interpretation of this base transfer is that of a 'universal basic income' paid to all non-CNR workers.")

We can distill this further, to:

a. In general, CNR workers work better around other CNR workers due to positive externalities of location. I think this is tough to deny, with SF/the Valley for tech, NYC for finance, LA for entertainment, Shenzhen for hardware manufacturing, et cetera.

b. We should be removing any restrictions that stop this cycle from growing, from land use regulations, to stopping incentives and funding to small towns to create their own 'tech hubs', to just straight paying people to leave the city that are not part of that industry and stay out. It's the latter part of this everyone seems to be latching onto, however it's pretty common in economics to just model incentives as direct quantifiable costs.

This also explains what is happening in the Bay Area right now:

"Otherwise, cognitive hubs might use other indirect means of pushing out non-CNR workers such as, for example, housing supply constraints, zoning restrictions, or a lack of investment in transportation networks to aid commuting. Such efforts can generate occupational polarization across space without Pareto gains for all workers."

Think of it this way (very much simplified):

If cities A and B create are producing 10 units of value each and small towns C, D, E and F are producing 3 each and you relocate all the 'important' (again, simplifying) people to A and B so they produce 20 units of value each while the small towns drop to 1 each you've according to the paper optimized and reduced the waste. After all 43 > 29. But from society's view this is a net loss. It would be much better to see how the small towns go from 3 to 5 each in order to reduce the gap.

Of course this is super simplified and in the end wealth distribution is a complex subject but this paper strikes out for me.

The thing about living in an industrialized country is that raw resource extraction does not employ all that much labour.

It doesn't even matter how you structure your economic system. Even if we install radical socialism, with very heavy emphasis on wealth redistribution, there is still going to be a huge social divide between urban and rural.

We're better off not pretending that up is down, and black is white, and instead dealing with a world where we acknowledge that these differences exist, and will always exist.

> The distinction between Princeton "proper" and otherwise is not between the Township and Borough (which were legally joined for good several years ago), but between Princeton and Princeton Junction, West Windsor, Kingston, etc.

That's exactly what I meant by "proper". As you know, there are a lot of e.g. medical and financial business headquarters in those other towns (including Plainsboro), making the Princeton region quite a business powerhouse.

My point was looking at the size of a town alone is not a good criterion for this kind of thing. You'd have to look at surrounding towns, whether there are nearby universities, what kind of businesses exist in the area, etc. (And whether it has an Institute for Advanced Study :))

This also suggests that an alternative to further entrenching the dystopian morlock vs. eloi divide might be to encourage more town groupings like Princeton's throughout the country. With modern communications, that's much more practical than it used to be. I.e., such regional hubs can fully participate in the global economy even though they're not within major cities, although it would probably be more challenging further from major cities.