“There is a near-perfect correlation between urbanization and prosperity across nations. On average, as the share of a country’s population that is urban rises by 10 percent, the country’s per capita output increases by 30 percent. Per capita incomes are almost four times higher in those countries where a majority of people live in cities than in those countries where a majority of people live in rural areas.”

Cities concentrate talent; people working closely together become more efficient and productive. Countries with primarily rural populations report less happiness; the more urbanized a nation gets, the better are its prosperity and happiness. Far from being mere swarms of stultifying poverty, cities around the world are evolving into high-energy centers of creativity and productivity.

“With very few exceptions, no public policy can stem the tidal forces of urban change. We mustn’t ignore the needs of the poor people who live in the Rust Belt, but public policy should help poor people, not poor places.” 

Mid-20th-century American cities grew around huge factories that produced masses of products from a few large companies. Today’s cities rely on smaller, more innovative firms whose productive diversity thrives from the back-and-forth inventiveness of talented people working in close proximity. Policies that prop up failed industrial centers do nothing to relieve unemployment and poverty. 

“India’s poor roads and weak electricity grid make life difficult for big manufacturing firms, which explains why the country seems to be leapfrogging straight from agriculture to information technology.”

The developing world, as it tools up toward prosperity, isn’t simply repeating the history of the West, whose workers went from farms to factories to services. Many Third World countries are simply skipping the Industrial Age and moving straight to the Information Age by grabbing onto the latest technology and building from there.