Has urban architecture declined?

Strolling the streets of Edinburgh, it is hard not to be struck by the beauty and general consistency of the older buildings. It is hard to find post World War II examples where a wealthy Western region has done something comparable. Suburbs have sprung up around the United States, but few of them have architecturally notable exteriors on a consistent basis. There are so many new suburban developments, cannot just one of them be lovely and aesthetically challenging?

What might have gone wrong? I can think of a few possible explanations:

1. Architecture has suffered from the "cost disease." In this context, a rising general level of wages makes quality handwork more expensive in relative terms. In other words, they don't handweave many carpets in Silicon Valley. There may be something here, but then why don't the poorer countries of the world become architectural leaders? And I see home interiors as improving significantly over time.

2. In older times governments at various levels were less democratic. Competition for status within an oligarchy may have upped the incentive to produce beautiful exteriors. This mechanism clearly operated in Renaissance Florence.

3. Perhaps consumers and lenders were less well informed in times past. A nice exterior was a good way to signal the quality and long-term commitment of a business enterprise. Just look what happened to the quality of bank architecture in this country once the FDIC was instituted.

4. Perhaps we idealize times past. The so-called "Royal Mile" is today a leading tourist sight in Edinburgh. In the eighteenth century it was considered "a dark, narrow canyon or rickety buildings, some stacked ten or even twelve stories high, thronging with people, vehicles, animals, and refuse...Sanitation was nonexistent." (That is from Arthur Herman's notable book on Scotland.) We may be co-authors in the beauty of the past more than most people realize.

5. Perhaps contemporary suburban developments will be seen as beautiful by future generations. I'll bet against this one, but we will see.

I am hardly suggesting that architecture is declining in every regard. I love the lights of the Ginza district in Tokyo. And our best stand-alone buildings are no less wonderful than those from times past. But I still wonder why urban architecture no longer yields consistently beautiful urban regions. Anyone who has walked around the major European cities, or even glanced at the Chrysler building, surely has asked the same question. Why is the quality of exteriors declining relative to interiors? Given that nice exteriors are a public good, why were they ever so nice in the first place?