A rapid increase in urbanization and the proliferation of megacities are salient trends of global economic development since WW2. These trends will be exploited in this war. Cities are both the center of gravity of modern urban economies and extremely vulnerable to global guerrilla systems sabotage -- the leveraged infrastructure that cities rely upon is the perfect target.
It is therefore important to understand what provides cities their cohesion and why they collapse. In a departure from 4th generation warfare (4GW) theory, this cohesion isn't provided by moral factors but rather economic. A good source of insight into the economic factors that hold cities together, is a post 9/11 report by James Harrigan and Philippe Martin of the Federal Reserve Bank of New York (PDF). Their analysis indicates the following:
- Cities form when aggregation is economically advantageous to both firms and workers.
- A city's size (its population of both firms and workers) is maintained through a market equilibrium, where the benefits of aggregation are balanced with the costs.
- Ongoing insults to this equilibrium, in the form of a terrorist tax, can cause a city to decline (disaggregate). This decline is defined as a transition to a new stable market equilibrium at a smaller size.
A Terrorism Tax
A terrorism tax is an accumulation of excess costs inflicted on a city's stakeholders by acts of terrorism. These include direct costs inflicted on the city by terrorists (systems sabotage) and indirect costs due to the security/insurance/policy/etc. changes needed to protect against attacks. A terrorism tax above a certain level will force the city to transition to a lower market equilibrium (aka shrink). So, what is that level? Here's what they concluded:
- Singular terrorist events (black swans), like 9/11, do not impact city viability. The costs of a singular event dissipate quickly. In contrast, frequent attacks (even small ones) on a specific city can create a terrorism tax of a level necessary to shift equilibiriums.
- In the labor pooling model of city formation, a terrorism tax of 7% will cause a city to collapse to a lower equilibrium. Labor pooling equilibrium reflects the benefits of aggregating workers in a single location. Workers get higher wages and more choices. Firms get stable wages (no one firm can deplete the market) and more candidates.
- In the core-periphery model of city formation, a terrorism tax of 6.3% will push a city to a lower equilibrium. The core-periphery model is based on transportation costs. Firms generate transportation savings by concentrating in a single location next to suppliers and customers. Customers and workers glean the benefit of lower transportation costs by locating near jobs and goods.
Case Study: New York City
The models used above are likely insufficient to fully explain why a city is in equilibrium. However, it is good approximation. As a rule of thunb, a terrorism tax of 10% would be sufficient to push a city to significantly lower equilibriums -- it would cause workers and firms to leave the city for other locations until it ceased to be a target or expensive to defend.
If we apply this model to NYC, the terrorism tax necessary to collapse the city would be $40 billion a year (10% of NYC's $400 billion a year economy). London is $23 billion ($236 billion), Paris is $13 billion ($131 billion), etc. As large as these numbers are, it isn't hard to see how quickly they could mount. For example: the northeast blackout of 2003 indicates that a power loss to NYC costs ~$1 billion a day.