Thursday, April 14, 2011
Pg 316-318
Warsh talks about Krugman who had been left out of the field until he took up economic geography. Economic geography was a left out sub-field of economics until the early 90's. Chicago is used as an example, because of it's prestige location it became the central for water travel, and then moved on to be a railroad hub followed by air travel. All of these developments lead to what is now Chicago and all of it's industries. This helped explain growth in certain areas, Krugman had done something important for the field after all.
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A for Sue.
ReplyDeleteWhen Krugman won his Nobel Prize, it wasn't given jointly. The reason was that he had made huge contributions to two fields, not one: trade and geography.
The counterexample to Chicago is Buffalo (my hometown). Both cities exist because they are as far as you can go on the Great Lakes in that particular direction. At Chicago, you take a canal to connect to the Mississippi River system. At Buffalo you took a canal to connect to New York City.
Both cities also became railroad hubs: Chicago was biggest, and Buffalo was second.
But Buffalo never made the transition to airlines. It wasn't for lack of trying: it was the biggest producer of airplanes in World War II. But Bell Aircraft merged with Textron, while Curtiss-Wright was poorly managed, and merged with North American, which became Rockwell International. All moved most of their facilities out of Buffalo.
Chicago surpassed Buffalo in size in 1860. Buffalo peaked out in 1900 as the 8th largest city in the country, but was in the 8th to 11th range from about 1860 to 1930: comparable to Miami, Atlanta, Boston or San Francisco today.
I'm not sure why Buffalo did not follow Chicago. My guess is poor policy in New York State that benefited New York City at the expense of the chain of upstate cities along the Erie Canal: Buffalo, Rochester, Syracuse, and Albany/Troy/Schenectady which all used to be bigger than Salt Lake.
I do know why Buffalo fell further, and faster, than any other rust belt city. It's Niagara Falls! You can't go further than Buffalo on the water. But in the late 1950, a series of canals called the St. Lawrence Seaway opened, connecting Lake Erie to Lake Ontario to the St. Lawrence River to the Atlantic Ocean. Starting in 1959, water traffic started to bypass Buffalo, and Buffalo dropped from 15th biggest in 1950 to 47th biggest in 2010. That's a bigger drop than New Orleans made over that period (which includes Katrina).