ME asks [edited a bit]:
How do the small rural communities still manage to exist with decent living conditions? Take for example any small rural village in a country such as Bulgaria or Croatia or South Africa with around 1,000 people. People there are working, have/self-supplied food, water, sanitation facilities, a means of transport/mobility, etc. I often think of cooking programmes where the host visits a small village in Croatia, Sardinia, or Portugal, where people “live off the land/sea” and seem content.
Contrast that life with life in a big city where people pursue economic growth, development, consumerism, and lots of services, using advanced infrastructure and technologies. They are always driving, pushing, competing for more and bigger.
How does the small rural community exist? How are those people content? It seems that people in cities — and national politicians — are never satisfied with their economic situation. They are always quoting economic growth figures, always afraid of recession?
I love this question, as it gets at so many important, but often ignored topics and features of life. Here are some of my thoughts, but they are hardly complete — and maybe not right in your experience — so please add your comments!
- A small community cannot have a large market. There’s just not enough customers for a lot of diversity. So you may have fewer, simpler products on the supply side bought by people who cannot afford much on the demand side. This “village equilibrium” exists at a lower output (~GDP) per person, just as a “city equilibrium” will have a higher output per person, which means more income and thus more spending power and consumption.
- Trade (and internet shopping) will immediately interfere with these two simple equilibria, but that’s been true for millennia, so I’ll ignore it for the moment, because it’s much more important to focus on the differences in culture between the village and city.
- Humans, as social creatures, are always comparing themselves to their neighbors. We call this “keeping up with the Joneses” in the US, but the same is true everywhere. People in the village may be content with a small house, local food and basic consumption of goods that are old, cheap and often repaired. That’s because they do not have that much income but also because their neighbors are the same. When something breaks, there are always people around to fix it, because that’s what they do. People in the cities, in contrast, compete to have the latest and greatest. They have more money to spend and no space for extra stuff, so they consume new things and discard old things at a faster rate. Nobody knows how to repair anything; they hire others to do that work or just toss stuff that breaks.
- In both cases, people may be spending 80-90% of their income on consumption, but that’s 80% of €4,000 in the village and 80% of €40,000 in the city. Both are saving 20% of their money but the “footprint” of their lifestyles differ by a factor of 10.
- Importantly, the people in the village may be happier than those in the city, as long as they feel “respectable” relative to the neighbors. Those in the city may be less happy, because there are some really rich “Joneses” nearby. Media — and now social media– turbocharges relative comparisons everywhere, especially with younger people who do not have so much experience in life and happiness. That’s why they “flee with the circus” or seek the “bright lights, big city” life.
- Friendship and love are the most important things we “consume” and our levels of each depend on how long we live somewhere, how much time we have to “spend” on others, and norms of socializing. In a village where most people have grown up together and time is not so short, people can socialize for long periods of time without spending cash they don’t have. In cities, strangers try to meet via Apps, or while drinking in a bar. Maybe they have 15 minutes to talk, but then they need to go somewhere. Friends don’t just get together to play cards — you can do that ANYTIME– but to go to a show, or go shopping, etc. It’s expensive and inefficient. And just when you think you’ve got a good friend, they leave town for a higher paying job, or a new love.
Economics is not about money as much as happiness, and trying to get as much happiness as we can from our scarce resources (money and time). That’s why, if we take “the fullness of life” into account, it’s possible to understand how “poor” people living in “backwards” villages can be happier than the rich folks living in exciting cities 😉
Great thank you Prof. Zetland! And perhaps – on the contentment aspect, you touched on the emotional support side, the friends and family that are important elements to one’s life. And if you have more of them, this is where your (quality and free) time is spent.
What I just want to add, is that I once heard that the benefit of money, is that it gives you choice. Thus the more you have, the more choices you can exercise. Secondly, people conglomerating – towns, cities – likely necessitates more complexities such as advanced infrastructure, choices of products, higher levels of transport and distribution of goods and services. But should village life become popular, unfortunately we are too many people!
So maybe it is like when you have a tarpaulin sheet, with scattered raindrops. But when you push your finger into an area, there is a rush of nearby raindrops to the indented area. Making it heavier with water, just really affecting the immediate site. More complex, further removed from other raindrops, with specific requirements to remain supported. I need to think a bit more on another analogy – the point is, as there is pressure applied to a site, with linked implications at the site & surrounds.