Why Hate Firms, Love Cities?

Families, clubs, professions, industries, firms, cities, and states are all important units of economic organization. That is, we coordinate to some extent via all of these units, to achieve mutual ends. But firms and cities make an especially interesting comparison.

First, firms and cities are similar in many ways. They both vary greatly in size, and can be costly for long-time associates to leave. Both tend to be “selfish” in avoiding and excluding those who do not benefit other associates, and thus tend to favor rich folks. People can relate to both kinds of units as investors, suppliers, leaders, and customers.

Second, people tend to like cities more than firms. For example, many movies are love songs to particular cities, yet few movies have cities as villains. Many movies have firms as villains, but few have firms as heroes. Sporting teams tied to cities play in huge stadiums, while teams tied to firms play in local parks.

While people tend to dislike bigger firms more than small ones, cities tend to be bigger than firms, and the biggest cities tend to be the most celebrated. People tend to resent firms more when it is more costly to leave them, yet it tends to be harder to leave cities than firms. So why are cities loved so much more?

One theory is that we related to cities less directly. If a city doesn’t hire you, you can say particular firms wouldn’t hire you. If a city won’t sell you a dress cheap, it is particular firms that wouldn’t sell it. So cities can more easily escape blame. However, a similar argument would suggest that we love shopping malls more than stores, or TV channels more than TV shows. Yet these seem weak effects, if they exist at all.

Another theory is that we often see firms as illicit dominators. We see the employer-employee relation as a dominance-submission relation, because firms give employees orders. Of course customers often give orders to firms, such as to waiters and cab drivers. But perhaps the joy of sometimes dominating does not outweigh the pain of at other times submitting. (And why are landlords seen as dominators, with renters submissives?)

Now cities do often seem to take a dominance relation to their citizens, such as via police, teachers, and rule-bound officials. But people seem to resent this dominance less. Is this because the major is democratically elected? CEOs are also usually elected, its just via one stock one vote, instead of one person one vote. Do people love cities less where local officials aren’t elected? Do people love non-profit firms as much as cities? Color me again confused.

Added 4p: Andrew Gelman says many firms are actually very popular. Alas he doesn’t have comparable data on cities.

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  • AngryKrugman

    It seems to me like people love the products cities produce–restaurants, culture, etc.–not the city government itself. This doesn’t seem all that different from people that may love certain products, but not the firms that produce them (although when they like enough products, they may love the firm, too, see, e.g. Apple). I’m not sure the views are inconsistent.

    • Vaniver

      +1

  • Steve

    (And why are landlords seen as dominators, with renters submissives?)

    This is pretty obvious to anyone who’s ever rented. Renting property is very much like applying for a job: providing references, filling out forms, and waiting for the landlord to decide who he will give the house to.

    Tenants also get given orders, perhaps more often than landlords, and having the landlord barge into their house whenever they like tends to make tenants feel pretty low status.

    Landlords may feel just as dominated as tenants, but few folks have the experience of being a landlord, while many folks have been tenants.

  • sk

    I think this is because city is all about personal life and work is all about, well work.

  • http://rwcg.wordpress.com/ Sonic Charmer

    The individual-firm relationship is like child-daddy. Daddy gives us our allowance, but is an enforcer, reminding us of our responsibilities and of the harsh real world.

    The individual-city relation is more like child-mommy. We may sometimes not like things about mommy but at least she is always there, more omnipresent, and we find comfort in her bosom for all her faults. We will be inclined to look on her bright side. (What alternative is there?)

    Someone having a rough time in life can go for a walk and enjoy the city’s parks or views or whatever, and think ‘what a great city’. There’s no analogous option for when you dislike your job.

    Of course, there are times when people do decide ‘I hate this place!’ about their city. And it appears we find that the most tragic thing of all; the primary emotions are not hatred and spite, but sadness and pity and loss. As you say, few movies have cities as ‘villains’, but there are plenty of pop culture pieces featuring ‘the downfall of’ this or that city. and these do tend to have the flavor of a tragedy, as in a story about a mommy who is addicted to something, fallen on hard times, failing in her job of nurturing, etc. ‘The Wire’ did it for Baltimore. For East L.A. we got a few early 90s pieces such as ‘Boyz N The Hood’. Some Spike Lee films ring these tons regarding New York. The ’70s gave us ‘The Streets Of San Francisco’, and its star detective ‘Dirty Harry’ threw his badge away. Etc.

    We expect daddy to misbehave and rebellion against him is almost expected, a rite of passage. We are more forgiving of mommy, but when she does falter, the hurt is deeper and more personal.

  • Adam M

    Or it might be that we see firms as competitors and cities as cooperators. That makes firms seem more threatening, somehow. Similarly, a church is good, but the Church is bad.

  • Keith

    It seems that 1) agents of the firm have more power over employees than agents of the cities, that 2) agents of cities have incentives that are on average more aligned with people, compared to agents of firms

  • Miley Cyrax

    This works on two levels.

    1. Going day to day in your city life you see more people of lower socioeconomic status than yourself (thus making you feel better about yourself) whereas at the firm chances are you deal regularly with people higher status than yourself and are subordinate to their whims.

    2. When people imagine denizens of the city, they think of a wide, diversified range of peoples. On the other hand, when they imagine members of a firm, they think greedy rich white men, who in the current Zeitgeist are the most evil people in all of history.

  • Sid

    Could it have something to do with the fact that you live in a city and not live in a firm? That could also kind of explain why people romanticize houses but not workplaces.

  • Khoth

    Maybe it’s because despite some superficial similarities, firms and cities are completely different?

    • http://bur.sk/ Viliam Búr

      Exactly.

      If my city told me how I have to spend 8 hours each day, I would hate the city with passion. But all my city wants from me is cca $20 a year in taxes. It does not significantly influence my daily life. Generally, I just ignore my city, or more precisely, use its services without thinking too much about it.

      • http://un-thought.blogspot.com/ Floccina

        What city just taxes citizens $20 a year. BTW renters really pay the property, not the Landlord.

        Also:
        Do you hate the firm that you work for? Also do you like your job?
        Do you like the city that you live in? Also do like the Government of the city that you live in?

        I am just curious.

      • Doc Merlin

        Most cities have a large percent of your expenditures in sales taxes as well. Where do you live!

    • ShardPhoenix

      Yes.

    • http://www.clubtroppo.com.au Nicholas Gruen

      Yep, I think you hit the nail on the head there Khoth. I like Robyn’s many twists and paradoxes, but this one’s a bit strained methinks.

  • http://rudd-o.com/ Rudd-O

    People “love” symbols of the state / families more than firms because they have been indoctrinated by their politicians / families that they must unconditionally love and obey their leaders / parents, and they were systematically punished when they rebelled against state authorities / their parents.

    The answer is staring you right in the face, Robin.

  • http://rudd-o.com/ Rudd-O

    Also, note the staple doublethink in the language of the indoctrinated:

    “All politicians are corrupt, but we couldn’t live without a government”.

    “My parents and brothers abused me a lot, but I love my family, I couldn’t live without them”.

  • jb

    My theory:

    A city is a tribal group that you voluntarily join. Because you voluntarily join it, your brain feels the need to rationalize that. So it creates an emotional bond, to retroactively justify your decision.

    Firms pay you, and as we know, people feel less good about activities they perform when they’re paid to do them, vs. activities they do out of charity. Your brain doesn’t have to rationalize your involvement in the firm, so it doesn’t engender the same emotional attachment.

    Just yesterday, I traded my car in for a new one. I had had the old car for 9 years (4 w/no payment) and I was surprised at how emotional I felt over leaving it in that parking lot. I felt guilty that it was dirty, I felt wretched for abandoning it to an unknown fate, and I was sad that I couldn’t financially justify not trading it in. Over time, because I gave my time, money and energy to keeping it running, my brain found ways to rationalize this charity by creating an emotional bond.

  • http://www.clubtroppo.com.au Nicholas Gruen

    A city is also a cosmos, whereas a firm is a taxi – in Hayek’s terms. We like the concatenation of human idiosyncrasies over many many generations and their working into the local geography. Firms aren’t like that. They’re utilitarian, and reflect a single mind (even if that mind is the hive mind of a collective).

    And like the guy above said – cities don’t boss us around or act like they own us.

  • Doc Merlin

    They see firms as the management and city as the culture and amenities, not the city government.

  • http://hanson.gmu.edu Robin Hanson

    Many responses said we think of cities as A, and firms as B, and we like A better than B. But few bothered to say why we think of firms and cities this way. For example:

    AngryK and Doc, why do we focus on products for cities but management for firms?
    sk, why are cities about personal life but firms about work? People work in cities and their personal lives are heavily aided by firms.
    Sonic, why are firms like dad but cities like mom?
    Adam, why are firms competitors and cities cooperators?
    Miley, why think of greedy rich white men for firms but not cities?
    Rudd-O, why are we indoctrinated more to love city than firm symbols?

    Also:
    Keith, what evidence is there for this better incentive alignment?
    Sid, people also dislike the landlord firms that own their housing.
    jb, you voluntarily join firms too. And most are paid to be in a city too.
    Nicholas, firms have lots of idiosyncrasies piled on.

    • Doc Merlin

      “AngryK and Doc, why do we focus on products for cities but management for firms?”

      Two possibilities:
      A)
      Stockholm syndrome? In a job, we actually have some amount of power over company policy. Voting individually, we have roughly zero power over city policy. So we focus on the good instead of the bad?

      B)
      We have a land-king false association bias. We associate issues that are geographically locked with the government? It explains many very odd medieval and ancient beliefs.

    • Edward

      I agree that the relationship between landlords and tenants is perceived by many as similar to the relationship between employers and employees, but one thing to keep in mind is that people are charged very high rents in cities which nullify a lot of the benefits of cities, such as higher nominal wages. The rents seem erratic and irrational to renters, and there’s a good reason… because the majority of rent in cities comes from land value, and that land value is something which the landlord did not create but is simply allowed to own. So most of what you’re paying to the landlord is not a return on his labor/risk involved in constructing the building, but rather you are paying him for his state-granted privilege of exclusive access rights over a particular location. If you have not land, you are essentially paying to exist on the planet.

    • billswift

      >Rudd-O, why are we indoctrinated more to love city than firm symbols?

      Families and cities (governments, in reality) are fundamentally coercive – the indoctrination is to prevent, or at least reduce, rebellion. And most people are stupid enough that it works, most of the time.

  • Ari T

    Maybe cities give you more freedom? Even if it is illusionary. Cities allow all forms of rent-seeking so it might “feel” free for many people. Firms converge to efficiency and slack is detected more swiftly. Also tax illusion? People who pay state don’t realize they’re actually working for it. Besides, for many people city regulation isn’t as daily nuance as their daily employer.

    But people have a special romance with the state, no doubt. States are not “making money” so people get the illusion states are virtuous.

  • orthonormal

    I’m surprised that nobody has mentioned the intentional stance: we treat a firm as an agent, and a city as an environment.

    Main reason: firms have much more salient goals (in general and with respect to each member), and work toward them much more efficiently than cities do.

    It’s worth noting that a nation is an intermediate case, and indeed there we see both celebration of one’s home and distrust of “what (other) nations want”.

  • http://un-thought.blogspot.com/ Floccina

    The people who hate corporations (I recently listened to Chomsky) are often not those employed by the corporation. On the other hand it seems that many people complain about the city that they live in being boring.

    Maybe it is because Corporations are seen as more exclusive than cities. People may resent that they cannot get a high paying job at GM even though they feel qualified. BTW I think that some point in time unions started to be seen as exclusive and this contributed to their decline (that along with the over selling of schooling and more people getting schooling which meant they felt that they deserved more pay than the less credentialed).

    Also corporation make use pay for stuff, we can visit cities for free.

  • Rafal Smigrodzki

    My guess is similar to jb’s: Cities are perceived as the tribe, and humans evolved to at least give lip service to being loyal clansmen. Similar to tribes, cities are territorial organizations, claiming a degree of control over an area. They also provide a place in the hierarchy, even if rather low one for most of us, and a feeling of involvement in governance (through political discussions, partisanship, and voting) similar to what our tribal ancestors experienced in their environment.

    Firms on the other hand are for their customers more like members of neighboring tribes: not a part of the same territorial hierarchy, interacting more fleetingly, through direct exchange of considerations rather than very long term social games typical of intra-tribal relations. The customer is not a part of the hierarchy within the firm, does not feel the sense of belonging, as the communist would say, he is “alienated”. Not surprisingly, most normal humans react to such strangers with suspicion.

    Landlords in this paradigm are more like strangers: They do not allow a social game to be played, the interaction is a trade as between strangers but affecting a person’s home, and therefore may trigger both suspicion and anxiety.

    It appears that again I am an abnormal human, since I see firms as benevolent, and react with extremely negative emotions towards cities. Presumably some social cognition circuitry failed to develop in my brain and thus I evolved into this inhuman state.

    • mjgeddes

      Correct. I can’t understand why Robin keeps expressing puzzlement over the fact that people simply refuse to reduce everything to economic thinking, its all explained by Alan Fiske and his elementary modes of social cognition, here:

      Elementary Modes of Fiske

      mode 1: exchange-based (market pricing and equality matching)
      mode 2: community-based (communal sharing)
      mode 3: authority-based (authority ranking)

      Firms clearly trigger mode 1, cities are triggering modes 2 and 3.

      BTW Libertarianism is based solely on mode 1 thinking, that’s why CEV isn’t going to implement Libertarianism (or even little ‘l’ libertarianism, or any form of libertarianism for that matter) as the ideal political system, contrary to what many ‘Less Wrong’ and Singularitarian folks think. Actually Rafal, based on what I have read, I think it is really possible that many LWers,Singularitarians and transhumanists are in fact missing the brain circuits needed for mode 2 and mode 3 thinking, or at the very least, Libertarian ideology has fried these brain circuits ;)

  • M

    Another theory is that we often see firms as illicit dominators. We see the employer-employee relation as a dominance-submission relation, because firms give employees orders. Of course customers often give orders to firms, such as to waiters and cab drivers. But perhaps the joy of sometimes dominating does not outweigh the pain of at other times submitting

    Waitstaff do resent customers, generally speaking.

    Is this because the major is democratically elected? CEOs are also usually elected, its just via one stock one vote, instead of one person one vote.

    People resent firms they work for, not the ones they own, and people who own a lot of stock are generally much more well predisposed to firms in general. When stockholders complain about companies it’s much more similar to how people complain about their governments.

  • John Maxwell

    Dealing with firms provokes “economic mode” thinking, where we feel unsentimental and try to maximize our individual gain. That’s because firms exist to maximize *their* individual gain.

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  • Wonks Anonymous

    Off topic, but I found someone pointing out a strange combination of common preferences that’s usually your bag:
    “Every society has social and legal norms dictating the responsibilities of parents and children, husbands and wives. Canada has decided that medically necessary physician and hospital care is a collective responsibility, while long-term care – the assistance with day to day living that so many of us will either be needing or giving when we get old – is, at least to some extent, the responsibility of an individual or his or her family.

    The status quo makes no sense morally: there is no ethical difference between the the cancer patient’s need for surgery and the Alzheimer’s patient’s need for comfort.”
    So says Frances Woolley at WCI.

  • mobile

    In the Nippon Professional Baseball league (the top league in Japan), most of the teams have both a city and a firm affiliation (for example, the Tokyo Yakult Swallows), though some teams are only identified with a firm affiliation (the Yomiyuri Giants). In the U.S. as well as Japan, major sports teams play in facilities named for firms, and some of these venues are no less loved by their fans than the teams that play there (see Wrigley Field).

    • Doc Merlin

      But there, the naming is seen as a necessary but unhappy side effect of needed more revenue for the team. And teams like Green Bay are lauded for being city government owned.

  • Aaron

    Firms have great power over their employees, and have very opaque decision making apparatus. And in the case of large firms they can drastically and unpredictably devastate communities built around them by closing a plant or business.

    A city as an organization is much less powerful, it can’t close up shop and move, or fire a resident, and the main dominance instruments of the city, police officers, are seen much more as tools of the state (which often is a villain in stories). A city is seen as a loosely collected group of individuals rather than an organization with a distinct will and power structure, and thus much more predictable and much less threatening.

  • http://entitledtoanopinion.wordpress.com TGGP

    I don’t think the Packers are owned by any governmental unit. There is a joint-stock corporation and fans themselves own shares (although the incorporation charter announces that any remaining funds on liquidation will go to charity rather than shareholders).

    mjgeddes, your link gives four modes. And it’s far more plausible that the fried-brain structure precedes adherence to an ideology.

    • mjgeddes

      I know Fiske gives 4 modes, but one of them (market pricing) is just an abstract off-shoot of the basic equality matching mode, so that reduces to 3 fundamental modes.

      And as to politics, I’m afraid it just seems to kill folks’ minds. It’s time to throw out all the ‘isms’ and start afresh… and that includes ‘Libertarianism’.

  • Andy

    I have to say that I like many firms more than cities. For example, the city I live in recently banned plastic bags from stores. That’s pretty annoying.

    Maybe this “liking cities” effect is concentrated to people who live in large cities (NY, etc.)? In suburban areas I can’t see it at all, when you routinely go to a different “city” for work, shopping, or to visit friends you don’t really feel a connection to any of them.

  • Prakash

    It might be too late to pitch in, but let me bring out a few counter examples (to city love, not to corporation distrust)

    In indian movies and literature it is very common for a villager to yearn for his village, but having to live in a city. Songs dedicated to the village are more common, but to cities, relatively less. Songs about cities are always laced with a lot of “Beware”. They rarely have straight compliments, always back-handed compliments.

    I’m not sure if this is because India is relatively new in the process of urbanization.

    Another example of city caution, I found was in ‘Lila’ by Robert Pirsig, in which he calls the big city a beast that slowly devours those within it.

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