Say “Urban Economics,” and for those familiar with the discipline, Ed Glaeser is the first name that comes to mind. The Harvard professor and Manhattan Institute senior fellow has become an authority on the subject within the academic world and without — his pieces in City Journal and the New York Times’s Economix blog have deployed accessible economic analysis to dispel myths about and highlight the benefits of the city. Glaeser’s latest book, Triumph of the City: How Our Greatest Invention Makes Us Richer, Smarter, Greener, Healthier, and Happier, is a tour of his greatest insights about urban economics, written for a general audience (no math!).
Glaeser, a New York City native from the pre-Giuliani days, is no stranger to the downside of urban life (namely, crime). But he argues that dense concentrations of people enable the quick exchange of goods and knowledge. And knowledge is the most important thing for prosperity: Get smart people together in one place, and you create, in effect, labs for future economic progress. That benefit from face-to-face contact won’t be replaced by telecommunications anytime soon. Glaeser demonstrates this using both theory and wide-ranging historical and global examples.
But cities do more than make us more productive. They allow us to live with a smaller carbon footprint, their social networks help prevent us from committing suicide, and they offer the poor an opportunity for social mobility. Mankind’s best in culture, philosophy, and the arts has always originated in the city. On an appearance on The Daily Show, Glaeser went so far as to joke with Jon Stewart that America’s metropolises were, in fact, the “real America.”
Glaeser spoke with NRO’s Matthew Shaffer about how cities make us more productive and more human. He offers challenges to the economic pieties of all political factions, and explains why the health of our cities will determine our future.
NRO: The important thing about cities, you say, is that they concentrate smart people so they can learn from each other. What kinds of things do you learn that you can’t get from formal education?
Ed Glaeser: This is the essence of what cities do that’s important. It’s wonderful for faculty members like me to think that we produce something useful. But I think almost everyone who goes through even the most august formal education recognizes that there are real limits to what you get out of schools that is actually really productive.
A lot of what is learned is just how to function in a modern entrepreneurial economy. That comes from watching the people around you: watching your boss do things that are smart, watching your colleagues do things that are stupid. This is all sort of a chain, an onrush, of knowledge that is enormously valuable to workers just starting out. But sometimes the learning that is most important involves these chains of new ideas, these creative collaborations that occur so often in cities, from the birth of philosophy, to Ford’s Model T, to Facebook — where there’s some new insight that one person builds on and then another person goes on and produces something else. And because it’s on the cutting edge, it’s not something that anyone’s going to teach in a school. By the time it has gone through an academic curriculum, it has lost the possibility of being a new insight. Or it has almost lost the possibility of being a new insight that can really yield game-changing profits, or game-changing productivity.
There are scores of examples, many of which I talk about in the book. I talk about the inventions of Renaissance Florence and the exchange of ideas that gave us the artistic revolution of the 15th century. I talk about the collaborative creation of the skyscraper in Chicago, in the years after the great fire, where at least a half-dozen great architects worked with one another, borrowed one another’s ideas, and created this enormously productive means of cramming people into a small amount of space. I talk about Ford’s Model T, and about the change and invention in 1960s and 1970s New York that helped the rise of finance in that city.
It’s a telling fact that the debate over the intellectual origins of Facebook only highlights that even in this most long-distance, technologically intensive form of innovation, the influence of near neighbors appears to be quite significant. I like to quote the great English economist Alfred Marshall, who said that in dense clusters, “the mysteries of the trade become no mysteries but are, as it were, in the air.” And it’s that notion of knowledge being in the air that’s really central to what cities do in the 21st century.
NRO: Cities produce these great inventions. But you also call cities themselves great “inventions.” What do you mean by that?
Glaeser: The idea that we benefit by being close to each other is one of the most central insights of our history. The fact that we came together and collaborated is really an incredibly important part of humanity’s path.
But making cities work wasn’t just matter of getting out the idea that if we located close to each other, we’d be able to learn more from one another, trade more with one another. It was actually managing the proximity — if I’m close enough to exchange an idea with you, I’m close enough to exchange a contagious disease. If I’m close enough to sell a newspaper, you’re close enough to rob me. And that, historically, has required management, typically some form of public management — both clean water and safe streets require local governments that actually manage the externalities of density. Learning how to do that helped advance mankind.
NRO: So cities can teach us these good things. But are there bad things and behaviors we can learn as well? Isn’t that the idea behind the belief of a “vicious cycle” or “culture of dysfunction” in the “inner city”?
Glaeser: Essentially, cities make us more human, because we are fundamentally a social species that acquires insights from the people around us. So cities create waves of innovation in crime just as they create waves of innovation in Renaissance art.
The important takeaway is that it requires a set of systems that work well to manage that. And sometimes, in the case of crime, it requires a very serious public intervention to make cities livable again. I should stress, there also are a large number of relatively private cities in the U.S. — the Woodlands, for example, which I discuss in the book — that require a central manager. But in the case of the Woodlands, the central manager is a private enterprise, and that certainly can work as well.
NRO: It’s intuitive that cities make us richer, smarter, and greener. But you also say they make us happier and healthier. A New York Times map of U.S. happiness and contentment has become a big Internet meme this week. It shows the Midwest as happier than Manhattan. Is that map wrong?
Glaeser: No. It is absolutely true that within the U.S., there’s no sense in which people in Manhattan say they are happier than people who live outside the city. But it is also true that people who live in Manhattan are less likely to commit suicide. So if you look at extreme events of depression, those are rarer in Manhattan.
What I mean when I say “happier” is that if you take the broader sweep of human civilization, it is certainly true across countries that urbanization (and the path toward development that urbanization makes possible) is associated with happiness. So across countries, urbanization is associated with more happiness, even controlling for income.
And in the majority of countries, people who live in cities are more likely to say they are happy than people who live in rural areas. But that is not actually true in the United States. There’s an economic concept called the spacial equilibrium, which says that you expect people in the U.S. to be relatively equally happy across the space — or, to be more precise, relatively equally satisfied in some real sense — because if there was a free lunch in terms of happiness across geographical space, people would take it, since people are mobile. So in the U.S., you shouldn’t expect people to be much happier in cities. But in the broader societal change, in places where you haven’t actually reached a developed urban system as in the U.S., cities are still offering a significant advantage over rural areas for many people.
NRO: You’re known as being pretty laissez-faire. But does that change for cities? What are the major areas in which urban policy requires a departure from laissez-faire?
Glaeser: Now, I’m a Chicago School Ph.D., so it’s not as if my natural instinct is that the government will fix everything. But it is impossible to grapple with the problems of urban America without acknowledging that you require a state. And the attempts to, say, fix clean water in the 19th century with subsidized private providers proved completely inadequate. The core areas of the urban externalities, the negative things that come from density — be they contagious disease, crime, congestion — demand a robust state, or, as I suggested in the case of the Woodlands, a robust private manager. But a private manager would need to be one who has an interest in looking after everything.
I just don’t think, and I don’t know many people who do think, that there’s a private solution for crime. I mean, sure, we can hire guards, but we need the legal system, for goodness’ sake, and we need a certain number of police on the beat to keep our cities safe.
And I think those of us in developed countries have forgotten about how difficult it is to provide water in developing countries, and how incredibly devastating the consequences are from water-borne disease, or disease transmitted by mosquitoes that breed in fetid water. Water requires some form of public management. It’s not an area in which you can just trust — Mumbai cannot trust private water provision to eliminate bouts of contagious diseases. The state must do something. Now that might involve private provision under public management. But this is an area in which, as much as I believe in a limited state in many areas, we do need public intervention.
NRO: What are the most significant anti-urban policies on the books right now?
Glaeser: First, the madness for building infrastructure in low-density areas. The stimulus package had about twice as much spending per capita in low-density states than in high-density states. I don’t see the justification for that.
It’s not quite clear why we need publicly subsidized highways. The research of economist Nathaniel Baum-Snow that found that each highway that cut into an urban core reduced the city’s population by 18 percent relative to the metropolitan area. It’s not the business of government to be trying to shuffle people around, or to give people a subsidized free lunch for driving where they want to drive.
Likewise for the home-mortgage interest deduction (HMID). It’s hard to see how it could possibly make sense in the wake of the great housing convulsion of the last decade for the federal government to be bribing people to leverage themselves to the hilt to bet on the vicissitudes of housing. The HMID in a sense does just that. It also encourages people to get bigger homes and to borrow more, and to move out of urban apartments into suburban homes.
Now, I see nothing wrong with living in suburban homes. I live in one myself. The question is whether it makes any sense for the government to act as if it’s its job to bribe Americans to stop being urban renters and become suburban homeowners. And I can’t see why people shouldn’t be free to choose the location that fits their needs.
NRO: What motivates the craze for suburbia in the first place?
Glaeser: The main heart pumping people into suburbia was our perfectly natural readjustment to the car. America — the world — has always built its spaces around the transportation technology that was dominant at the time. So the oldest parts of the cities are built around pedestrians, and that’s why you have narrow lanes and winding walkways. And you have newer areas that are built around the omnibus and the streetcar and the elevated rail.
In the 20th century, the car dominates, and it dominates for perfectly reasonable technological reasons. The average commute by car in this country is 24 minutes, while the average commute by public transportation is 48 minutes. So the fact that Americans moved to cars is not surprising. And then suburbia is essentially rebuilding the landscape around the car. So that’s perfectly understandable, and if people make choices while internalizing the social costs of their actions, there’s nothing wrong with that.
What is wrong is if the federal government decides that once the majority of Americans become homeowners, it will artificially subsidize that. That’s more of the problem. I think the government has a tendency to be pro-suburban, unfortunately in part because cities have become associated with a single political party and that’s never a good place to be.
NRO: Huge cities like New York will continue to play a big role in the future for obvious reasons. What about midsize northeastern cities like Rochester, Pittsburgh, etc.? Will they continue to decline? And should we let them?
Glaeser: I think some of these will. Overall, the main thing that explains which cities will be able to reinvent themselves is the skill level. The proportion of the population with college degrees as of 1960 or 1970 does a decently good job of predicting urban reinvention. If there’s a second characteristic that matters, it’s average firm size: Places with small firms tend to do better than places with big firms. I interpret this as having to do with the benefits of a local culture of entrepreneurship and innovation.
People want different things out of their cities. One of the glories of America is that we have a panoply of choices of locations. And plenty of people are still going to prefer the conveniences of living in a mid-sized city to living in New York or Chicago, which have hyper-charged productivity, but also have the downside of mass urban agglomeration.
Now, you ask if declining places should be allowed to decline. I think the answer is yes. Not every spot in America needs to be populated with lots of firms. The government has no business encouraging firms to locate, say, in the foothills of the Rockies. And I have trouble seeing that it has a particular reason to bribe firms or people to locate in areas that have become less productive over time. It seems to me that American firms need to be as productive as they possibly can — without the government bribing them to be in less productive places.
NRO: You made reference to the damage done by the political and ideological homogeneity of urban centers. What’s the underlying cause?
Glaeser: It’s funny. It’s an odd thing. At one point in time it wasn’t true. You think about the New York of the 1790s, which managed to have both Hamilton and Burr. But it’s awfully hard to see all that much political competition in cities today.
The root cause is hard to know. But it certainly is sad to me that the places that exhibit the values of entrepreneurship and competition in the most full-throated way — these are America’s cities. These are actually the places where we see the amazing things that happen from private entrepreneurs doing innovative stuff. And yet they tend to be on the political side of the aisle that places less value on that.
NRO: So what are your predictions? What will the most important cities of the 21st century be?
Glaeser: The most important things that are happening in cities are happening in Asia. And the most important things that are happening in Asia are happening in cities. It is hard to imagine a world in which the cities in Asia do not play a wildly outsize role in the future of humanity.
Now, there are two Asian models. There is the reasonably competent but less free model of Chinese cities, where there is a state-managed system. And there is the clearly free but less competent model of cities in India. I would love to see China become more free and to see India become more competent. In the long run, the success of both of those countries depends on changes in both of those areas. India certainly has very heavy lifting ahead of it.
Ultimately, if the public management of India’s cities becomes less of a burden, the genius of Indian entrepreneurship will be able to achieve amazing things.
NRO: There was an idea in the Nineties that telecommunications would eliminate the need for face-to-face business. What did that get wrong?
Glaeser: What it got wrong is that globalization and new technologies have increased the returns for being smart. And we are at our heart a social species that gets smart by being around other smart people. Also, the new technologies made the ideas more complicated, and the more complicated the idea, the more you actually need to be face to face, because it’s so easy for minor but important details to get lost in translation. As a result, we haven’t seen any sort of decline in face-to-face contact. Take Silicon Valley itself, the home of the industry that has the best access to long-distance communication; it is the most famous example of a geographic cluster in today’s world. It was easy to think 15 years ago that we wouldn’t need to locate near one another to be productive. I think it’s very hard to think that today.
— Matthew Shaffer is a William F. Buckley Fellow at the National Review Institute.