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Old 01-23-2005, 02:32 PM   #1
The_Q
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Default Externalities and You: Why Do Cities Exist? Part II

I know you've been dying for it so here it is. Part II of the coolest thing I've ever written for this forum. It should be framed and worshipped on a daily basis. Bow, you unbelievers! Bow! Whoops, I let my ego slip. There is a simplified version of this post at the very end.

My last post was written just in order to get those basic economic principles down for the readers who do not know about economics all that much. If you haven't read it yet I would recommend reading it before you start on this one.
http://www.flashflashrevolution.com/...wtopic&t=23314

Externalities: Flea Picking and Shipping

Anyone would have to agree, living in a city is very convenient to everyday life and absolutely wonderful for conducting business, whether it personal or not. Why is it that cities have developed, though? Why is it that they have become so effective at making business and social life so easy?

Why, externalities, of course! Allow me to explain. Somehow it became a trait in our genes or just our behavioral patterns for humans to congregate and socialize. We meet and we tend to enjoy meeting. Social interaction is pleasurable to us (though I don't know why. I just know it is). All I can draw from this is that human nature is economical. The primative ape anticedents benefitted off of the externalities of other apes. One of the most obvious externalities available is that apes need to eat. They spend time (opprotunity cost) finding insects to eat in logs and under rocks to eat (there's your benefit). Unfortunately for apes, the insects have a tendency to climb onto their fur and live on them at times. From this, apes figured that they could keep each other clean and find chow at the same time. The habit of grooming was formed. In order to groom, though, many apes needed to aglomerate. Primative society is born.

As if that wasn't cool enough I'll have to continue. Why do modern cities exist? We were already having a ball picking the bugs off of each other, why did we change? It suited us to. See Jared Diamond's book Guns, Germs, and Steel: The Fates of Human Societies to get the filler. I'm far too lazy to write 500 pages of human history for a simple econ post.

Why do cities exist? Externalities! In most cities there was a natural resource that was beneficial to a certain person or group of people. In silicon valley it was silicon deposits. When that person or people become more successful more people follow to internalize the externalities of both the area and the nearby predecesors. After the first few companies sprang up in Silicon Valley more came to capitalize on the opprotunity of getting cheaper silicon and the added benefit of the other companies to get resources from. The process continues and continues until massive cities are born.

How does this apply to an area that is not business oriented? Let's say that there's a family that settles in a fertile area near Oregon. The land is virgin at the time they get there and a small river flows nearby. These are prime conditions to excel at raising children and starting a community. When more families arrive and the children grow older they begin to settle there too. Now that there are multiple families they don't all have to rely on themselves. One large family might be able to plant more than another and they begin to grow in the field of agriculture (no pun intended). The family that loses their hold on agriculture might switch to blacksmithing as a specialization. In exchange for food, the blacksmith would trade manufactured goods to the farmer.

Specialization has occured and the beginnings of free trade are peeking through into this new community. In time, almost everyone there would specialize in something. Trade back and forth would exist all over the place. The community would continue to grow, assuming nothing disasterous would occur, until they become a city.

And there you have it, my view on cities.

The Really Short Version of What You Just Read

People live together in order too mooch off of each other as much as possible.

Thank you for your time.

Q
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Old 01-23-2005, 02:53 PM   #2
Cenright
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Default RE: Externalities and You: Why Do Cities Exist? Part II

Yeah, People want ease, so even if there are a few negative externalities, they want to stay close to the markets. Also the positive externalities are somewhat more in a city to, because the city has the budget for the streetlights and all those other things.
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