The Black Hole of Big-City Abundance

[Passages]

Megacities may look efficient, but they shouldn’t be the goal
Oren Cass
Mar 24, 2025

I spent the past week in Tokyo and Kyoto at the invitation of the Japan Foundation, meeting with several dozen public officials, business leaders, academics, and journalists. As with my trip last month to Canada, this one had been planned long before the Trump administration began so severely disappointing the liberal-world-order expectations of our economic allies. But to put it politely, that context certainly sharpened the focus of the conversations. I’ll have much more to say about the experience in coming posts.

Today, I want to discuss the problem of Tokyo. It is the largest city in the world, by a lot. It is still growing, even as Japan’s population shrinks. Its ~40 million people (metro area) represent 30% of Japan’s total, whereas New York City’s 20 million people account for 6% of all Americans.

Thanks to liberal building policies, Tokyo is adding housing to accommodate the growth, holding prices in check and encouraging yet more people to move in. “The Big City Where Housing Is Still Affordable,” the New York Times’s Binyamin Appelbaum has written, “remains economically diverse, preserving broad access to urban amenities and opportunities. … As political leaders in urban areas around the developed world grapple with how best to revive their cities in the aftermath of the pandemic, Tokyo offers a template.”

This also sounds like the template for the en vogue “Abundance” agenda. “Housing comes first, man,” Ezra Klein explained to me on the American Compass podcast last week, adding that abundant housing is “a fundamental engine of opportunity and innovation. I talk about the gating of the cities as the true closing of the American frontier.” In a famous 2019 paper, economists Chang-Tai Hsieh and Enrico Moretti estimated that, but for restrictive zoning measures, the average U.S. city would lose 80% of its population while New York City would balloon to eight times its current size. GDP would be trillions of dollars higher. “It’s not so implausible to me,” Moretti told The Atlantic’s Annie Lowrey. “The differences in earnings and labor productivity between the areas that we’re looking at and the rest of the country are so big that if you expand those local economies, you get these big aggregate benefits.”
https://www.understandingamerica.co/p/the-black-hole-of-big-city-abundance

Smart.