Cities exist because they provide economies of scale.

Some economic activities cannot be carried out in close proximity to others. Farming for example relies on having the space to grow food, or animals. Mining must be done where minerals exist. Fishing must be done where there are stocks of fish. However being physically isolated has a high cost - the people are away from other people, and from infrastructure. Their opportunities for trade are reduced.

The vast majority of human activity is more productive if it is carried out near other people. People trade with other people, and transaction costs are lower if there are the more people to trade with, and if the people are close by. Someone in the city may be able to find a dozen suppliers for a spare part for their machinery, or a new computer within a few minutes drive. Someone in the country may have to drive for hours for reach a single supplier.

Some people specifically service the rural industries, and they are typically in small and medium towns. However it comes as no surprise then that the vast majority of people choose to live in cities to take advantage of these economies of scale.

In fact how 'developed' a country is, can generally be measured by the size of its cities relative to the rest of the population.

Economies of scale show up in rural areas in other areas too. In spite of the increased transaction costs associated with operating from a remote location it is still frequently more cost-effective to use machines instead of people. A large tractor may be expensive to purchase and maintain (even more so due to remoteness of the farm), but if it can do the work of a dozen people it is worthwhile. It is more efficient to have more people in cities building tractors, some people in towns maintaining them and a farmers working by themselves operating them on farms rather than to employ teams of farm workers pulling plows.

However as cities grow, there are diseconomies of scale as well as economies of scale. Streets become clogged, and moving becomes slow; living space becomes scarce, housing takes up a larger proportion of people's income; and it becomes harder to function. We often hear about how some major city's infrastructure is about to collapse.

Traffic is a good example. "This city can't hold any more people because the streets will become grid-locked and people will be unable to function". If the traffic situation actually became so bad that the transaction costs (being stuck in grid-locked traffic) were greater than the benefits (being close trading partners) then people would simply choose to conduct their business elsewhere. If the alternative to living in the city (moving to a small town, or the outskirts of a city) becomes more cost effective, then people will move there.

The objection to this argument is usually "but that can't happen until the infrastructure is there". It is a silly argument. There are many alternatives - outskirts of cities, small towns close to cities and so on which offer half-way alternatives. It is not something which the government need to involve itself in.

The only concern worthy of government involvement is government involvement itself. If people are free to live where they like, then the market will take care of people's choice. City life, town life or country life is not something which is best controlled or subsidized by the government.