Harvard Book Store; WGBH Forum Network; Triumph of the City: Richer, Smarter, Greener, Healthier, and Happier

Tonight on behalf of Harvard bookstore and Harvard University's Rapoport Institute and the Tolman Center I'm excited to introduce EDWARD GLAESER to discuss his latest book Triumph of the city in memorable and convincing fashion. Glaser reveals the overlooked successes within city life. He deftly explores the historical and geographical threads that create an economic heartland out of our major metropolitan areas. Closer highlights Cambridge as a skilled city that reinvented itself into a knowledge oriented interest industry after the decline of its candy industry. After reading Glazers book The New York Times reviewer quote walked away dazzled by the greatness of cities and fascinated by this writer's nimble mind close quote. EDWARD GLAESER joined the Harvard University Economics Department in 1992 and is the current thread and Eleanor gim professor of economics is a senior fellow at the Manhattan Institute and a contributing editor to City Journal. Without further ado. Ladies and gentlemen please join me in welcoming Edward Glaeser. Thank you thank you all very very much for coming I can't tell you how grateful I am that you were

able to take take time out to miss the battle between Watson and the Jeopardy Jeopardy champions to actually come come talk talk with me about about my book. I also just really want to thank Harvard Book Store for doing as I have spent many happy hours here and far too or not far too much by far too little money relative to what I what I should have out of books but I certainly have a large number of non cashed in credits for those for the discount the discount things that are sitting around my my home and I certainly love the you know vagueness and connection with the community that this bookstore certainly certainly has at the heart of my book lies a paradox. And the paradox is that we live in an age in which communication and transportation costs a vanished away to nothingness. We lived during an era in which it is effortless to tell a communicate any part of the globe where we could all sit at home in some sylvan spot and connect with people anywhere. There's no obvious reason why we actually have to

cluster next to each other in cities and yet we do. And yet we choose proximity. Just recently more than half the world moved into moved into urban areas we crossed that 50 percent percent line in America after going through some very tough times in the 1700 cities are back in centers of enormous productivity centers of innovation centers of cultural change places that are marked by fun as much as by productivity and this is this is a remarkable thing that we that we are experiencing. You know if the rest of the country was as productive as the New York metropolitan area our GDP would rise by 43 percent. The gulf between between urban metropolitan productivity and productivity elsewhere in the country is so is so large cities also come back at places of pleasure as as well as fun and those are also things that I talk about as I talk about it in the book. I think the reason why and that's I think the central theme of the book The reason why cities remain so important is that what globalization and new technologies have done is they've increased the returns to being smart. They've

increased the returns to new ideas. They've increased the returns to knowledge because today we no longer play on a completely local playground because we actually have a new idea we can sell it. On the other spot of the world we can make it someplace else we can connect with everyone throughout the planet. And because of that knowledge is more important than ever. Well. We How do we get smart at our heart. We are social species that gets smart by hanging around other smart people. We come out of the womb with this remarkable ability to sop up information from the people around us. Everyone in Cambridge knows this I think. I think this should not be a surprise to anyone of you that's what this city does and always has done. It's what my employer Harvard is supposed to do when it works well right is to connect smart people who learn from one another right. We faculty members like to pretend that we have something to do with a learning process but let's be honest I mean what's mostly going on is that smart students are educating each other just by being next to each other and just by learning from one another and in some sense that the most the reason why you know these these new ideas face to face contact is so

important is that face to face contact is most important for communicating complicated ideas. Anyone who teaches knows that the hard part of teaching is not knowing your subject matter it's not repeating words that you read on the page. It's knowing whether or not your audience gets it. It's knowing when that the students that you're talking to actually understanding what you what you're getting. I find it almost impossible to do that long distance being via tele communicating device of some form unless I can actually have some sense about the facial expressions of the eyes of the people that I'm communicating with. I certainly find it almost impossible to have a meaningful conversation that can can't communicate anything really complicated face to face contact in cities is also particularly important because of the incredibly important happenstance learning. Think about a young worker who goes to work at the Harvard bookstore goes to work at Google and goes to work at Goldman Sachs. What they learn is only to certain extent what happens in their actual training sessions. That's a relatively minor portion of the human capital that they're going to accumulate. The important stuff is what they're going to be picking up by

looking at people around them things that were never being intended to teach. But in fact it picked up because they were there because they were in the maelstrom of events and if you it's no accident that in fact the most technologically sophisticated industry in America right is actually the most also the most famous example of geographic concentration that Silicon Valley which of all the industries in the world has the ability to connect across space young software engineers need to be there. They want to be in the center of the action physically because that's where they learn how to be successful over the long over the long run. Now the success of cities is even more obvious in the developing world. It's even more obvious in places like Mumbai and Shanghai and Bangkok where cities are providing a path out of poverty into prosperity. It's obvious right now in the streets of Cairo where it feels as if almost the whole future of the world is held in the balance as to what's going on on a city streets. It's been called the Facebook revolution of course. And in a sense it is no one can deny the important role that that technology played in making that revolution occur. But you wouldn't be able to

top it Mubarak just by blocking him on Facebook. You know you actually had to put people on the street to push change. And that's the sort of remarkable thing that we're seeing is that while there were earlier periods in which declining transportation actually create costs created the travel days of the 1970s. Today we're in a world in which new technologies are actually making face to face contact and cities more vital than ever to get a sense of this arc. I'd like to actually just take us back a little bit in history and have some sense about how we got here and what change I'm going to tell this this story a little bit through the through the lens of Boston since we are actually in Greater Boston since we've been since we are here although in the book I also tell it through the stories of Detroit and New York and I reference those as well. Boston of course has a almost 400 year year old history. It it's formed as all of America's older colder cities are on a on a waterway every one of America's 20 largest cities in 1900 was on was on a major waterway from the oldest like Boston in New York which were on spots where the river meets the sea to the newest Minneapolis at the

northernmost navigable point on the Mississippi St. Anthony's falls. Boston has a problem from its inception right. It forms without a natural comparative advantage right the climate New England is just too close to the climate in Old England to have any natural commodity like tobacco or sugar that can be shipped across. And because of this lack because the city formed for you know the desire for you commies like to call it like to differentiate consumer cities from producer cities it clearly wasn't a producer city since it didn't have an obvious production advantage. Now I think Winthrop would have talked about the you know the ability to it taint eternal salvation as being something different that consumption. But just accept that as you know the economist's way of making everything that's. That's divine and soaring somewhat pedantic but it forms without any obvious comparative advantage and so century after century Boston has to struggle to figure out how it can cover its you know how it can cover its needs how it can cover its needs by imported key imported manufactured goods.

Guns and bibles right those are those are pretty vital for your for your seventeenth century. Boston Boston resident and they're not being made here initially for so you've got to you've got to expand figure out something to export. Well in the 16th 30s Boston operates a sort of a colonial era Ponzi scheme right where each new resident sells basic commodities to each. The older resident sell basic commodities to the newer residents at vastly inflated prices. You know basic stuff food land Woodstock the things you need when you're just coming off the boat and the people are coming off the boat have a little bit of gold which covers their covers a lot that's appropriate enough because of course Ponzi himself is a Bostonian but this fails as Ponzi schemes also fail always fail in the 16 40s. Boston has to look for something new with a flow of immigrants is cut off of course by the by the English Civil War which gives those. Those Puritans an idea that they can attain their own salvation right home in England without having to cross the Atlantic to achieve it. So Boston has to figure out something new and what comes to Boston's rescue is the triangle trade which really

meant this sort of strange mixture with Boston which ship basic commodities down south would stock grain livestock fish lot of fish down to the cash crop colonies they would then ship tobacco sugar cotton to England an English ship manufactured goods to Boston. This occurs purely by happenstance as things and in cities normally do when a when a ship from Barbados comes north during a famine desperately looking for some food and while Boston didn't have much to offer it did have some food and thereby this thing began. So during the 17th century Boston thrived at this as the center of this shipping empire and it thrives based on three things that continue to be the mainstay of cities today. Small firms. Smart people. Global Connections right. This is this is the heart of the pre-industrial city and it means continues to be the heart of successful cities and in the 21st century. But of course other cities are able to pick up on our game there's nothing preventing New York which has a deeper river and better farmland or Philadelphia from doing the same thing. And we've got a tough 18th century when those cities pass new passes playing exactly the

same the same game. You know our merchants get so disgruntled that some revolutionary historians have argued that the war that the war represented the unhappiness of the merchants that our relative economic decline that the revolution represented. What is clear is that the revolution represented the capacity of cities to connect smart people and enable urban mobs to change history as they have just now in Cairo. Right. You know John Hancock wanted to change the British mercantilist policies and wanted to foment a movement that would push that. Sam Adams you know may not have cared that much about these policies but he knew how to conjure a mob right as as many people in the alcohol business know. The combination of the two the two men brought together by Boston's dense dense corridors are able to start this remarkable event of of making America and I think one of the themes of the book that's so important is that there's nothing that drives me crazy or than the notion that cities are somehow or other decaying corrupt and un-American. Right. Cities played a crucial role from the start to the to start today in making America what it is.

And there's no sense in which anyone should ever accept the American dream can only live behind a white picket fence in the suburbs. But. After the tough 18th century Boston manages to reinvent itself yet again in the key technological change the move from smaller ships to bigger ships and this enables a global empire of Commerce that Bostonians are able to take advantage of because again they're smart because they have people with these great shipping and sailing skills both from the high end and the merchants who are able to design this network to the people on the ground who are able to to work to work the ships. This is the age of the China trade. This is the age of trade with South Africa it's the age of whaling right. A great empire that's dominated by the skills that we have and in Boston. And this is an era in which we're exporting remarkable talent much of it that's actually nurtured originally liked by the by the China trade So building the great network that made the wealth of America and the wealth of America's hinterland accessible to the east required extraordinary investments some of them made by

New Yorkers like to wit Clinton and the Erie Canal some of them made by Bostonians like John Murray Forbes A distant relative of course of Senator Kerry's who was made a fortune in the China trade going over his as a young man and being involved in those great healthy healthy enterprises like opium which were of course so central to these fortunes and he took his money and invested it in both abolitionist causes and building railroads he actually built the first railroad that connected to Chicago from the east. Right. Those rails supplemented the water network that already our ready built that actually made America. You know the cowboys couldn't existed without the merchants in Boston or the shippers and in Chicago and you know a fact that I like is that an eight hundred sixteen at the start of this era it cost as much to move goods thirty two miles over land as it did to have them cross the Atlantic. Which is why America perched on the edge of the Eastern Seaboard connected by the lifeline of the Atlantic Ocean. But over the 19th century we built the canals

we built the railroad we made this you know immensely rich hinterland of accessible and Bostonian were a huge part of that. Now Boston in the mid 19th century had another crisis hit it and the crisis was steam right. All that sail specific skills lost their value when you know we moved over to steam and Boston reinvented itself once again this time very much around steam engines right around the rail hub that Boston had become and also around a you know invigorated urban manufacturing process right so the early steps of the American industrial revolution happened in lower density areas because of the advantages of water power because you needed those waterways to power they power they the mills as are steam engines became more powerful you were able to move that stuff into into cities with less need for that vast suburban infrastructure and the industrial city was was born. In some sense the industrial city was a detour I think from what cities are at their heart and I want to sort of take you just momentarily to Detroit to sort of just think about this. If you think

about Detroit one of those you know anal imports one of those great inland waterways in the 19th century. It is again a city of smart people small firms and connections to the outside world. Detroit in 1900 there's a staggeringly close resemblance to Silicon Valley in the 1980s. There's a genius on every street corner. All of which are borrowing each other's ideas or stealing if you prefer supplying them with with finances supplying them with inputs a remarkably fertile competitive entrepreneurial place everyone struggling to come up with a new new thing which in this case of course is the ability to produce a cheap car right a cheap car. And you know Ford does it. But the tragedy of course of Detroit or the tragic loss for the city of Detroit cheap cars did a lot of good for a lot of people but the tragedy was that it transformed the city in a way that was unlike the city's past and unlike the city's future. It moved from having these small firm smart people connections to the outside world to something that looked like Ford's River Rouge plant. Right. Think about the sort of vast scale of River Rouge vast

walls closing the plant out from the outside world and also the fact that Ford's genius enabled people with relatively little formal education to be enormously productive which is great which is a great thing that Ford was unable to it was able to do that. And yet the downside of this is that Detroit became a very unskilled city at least by formal education. Right. 11 percent of Detroit's population today has a college degree which is enormously low number certainly relative to two. To Boston and really to the country which is more like twenty seven point five percent. And this change proved something that was made very very difficult when the manufacturing model failed as it did everywhere. So Boston thrived for 80 90 years as a manufacturing city. But the decline in transportation costs hit Boston just as much as it hit Buffalo or Detroit or New York. Right. That in fact if you were about making cheap standardized products you could make them more cheaply somewhere else other than our colder older cities. Once transportation costs became low enough so manufacturing moved it moved out to the suburbs it

moved to right to work states. It moved across the ocean to places with cheaper labor. That's a process that's not changing right in terms of producing standardized goods it's very very hard to imagine how places like Boston are ever going to be cost efficient in terms of in terms of doing that. And these this exodus the industrialization was an enormously difficult challenge for cities like Boston to face. And if you think back to Boston in the 1970s in the era of busing in the area of inner air of unemployment it's hard to imagine it now but a great majority of the city's housing stock was priced in one thousand eighty at less than the physical cost of construction. Right it costs the cost of the houses had fallen down it wouldn't pay to rebuild them right. That that number by the way is 90 percent in Detroit today 90 percent of the houses in Detroit today if they failed out it wouldn't pay to it wouldn't pay to rebuild them. New York in the 1700s where I grew up was it was enormously hard hit by the deindustrialization the largest industrial cluster in the in the post-war U.S. was not automobiles in Detroit. It was the garment industry in New York.

The garment industry in New York was slab hammered destroyed by by the decline in transportation cost by the move of these jobs elsewhere. And yet some of the cities managed to come back and others did not. And the argument that I make in the book is that what made the difference for urban revitalization was smart skilled entrepreneurial people and that cities like Detroit and our federal government erred severely in privileging physical investment in declining places over investment in people and in some sense the great tragedy of Detroit was not that the city declined it was going to decline its model was troubled cities rise cities falsies have shots all the time. The tragedy is that they decided to fix it with building new buildings and a monorail that glides over essentially empty streets. Right. The whole market declining cities is they've got plenty of structures relative to people and relative to the level of demand. You don't need a monorail if you don't have a problem driving around the city doesn't make any sense. OK I know what Detroit

needed was better schools for its children but Detroit needed was that every child growing up in the city needed the opportunity to be safe. The opportunity to actually cumulate the human capital that would have enabled them to be successful somewhere else. Now Boston and other more educated cities had an advantage they were able to reinvent themselves once again this time from manufacturing cities to cities that are capitals of the information age. Now Boston for very odd reasons right. In part because John Winthrop saw you know feared some great Jesuit conspiracy and saw the need to invest in education as a bulwark against the kingdom of the anti-christ I think that's his exact words conveniently of course the Jesuits have helped Boston in two ways educationally one of which is by producing their own first rate college and secondly by scaring the wits out of John Winthrop. But you know Boston has this this has this long standing

fetish fetish for education and it's proven to be enormously valuable. Right. I mean it proved enormously valuable when Arthur D little of MIT set up his consulting. Lab 100 years ago it proved to be enormously valuable when Ned Johnson took over fidelity and started making a fetish of research in infidelity proved to be enormously valuable when and Wang started making his computers in the 19 in the 1980s and it has proven to be enormously valuable in biotech today. And you know if you look at the stories of the firms that enabled Boston to come back it shows again the remarkable ability of cities to connect diverse people who bring together different skills different insights and play off each others ideas. So think about Boston Scientific right this strange combination of jhana Beale perfectly sensible entrepreneur smart guy visionary leader of the corporate sense with Itzhak bent off right. It's inventor of slender slender Ronie inventor of this model of the expanding Big Bang I think it is I'm not sure I've never understood exactly what this is but more importantly the guy also invented a steerable

catheter. Right. And these two people this very strange you know very brilliant inventor and this very standard entrepreneur are connected by Boston. I can tell a similar story about you know what happens with the with the rise of Medtronic in in Minneapolis a sort of smart people being being connected and this is what brings Boston back. This is what brings New York back as well New York has this added advantage of having this culture of entrepreneurship that's generated by its its garment industry. So if you look at the variables that predict the ability of cities to come back to older colder cities come back not as more powerful than educate. Look at the share of the population with college degrees in 1070 it's an enormously powerful predictor of which cities have managed to turn themselves around. On average if you look across metropolitan areas today as the share of the area's population with a college degree increases by 10 percent the average wages rise for the average wages of an average person rise by 8 percent. Holding their skills constant holding their years of education constant. Right. This is you know being around smart people just makes you more productive.

And one of the ways that we know how this works is it's not as if you immediately get higher wages when you come to a place like Boston. What happens is your wage profile slopes upward. You get you get higher wages over time which is compatible at least with the view that what the cities are doing are enabling the learning skills. They're acting as forges of human capital. They're also of course skilled workers are also acting as entrepreneurs they're making other people more productive by figuring out how to make them more skilled and those cities that have a tradition of entrepreneurship have also benefited I've also managed to excel as as cities of the of the information age. And you know if this is the comparison say of of natural resource base cities which develop very large firms like U.S. steel that were very counter to a culture of entrepreneurship those places have done very poorly relative to places with very small average firm sizes. And one of the arguments for Detroit for New York's resilience is the garment industry was huge but it was filled with small operators It was a

stepping point for thousands of little guys to get started in the business of being an entrepreneur. In the book I tell the story of a Lefcourt remarkable builder who created more skyscrapers than anyone else did in New York prior to the great great crash. He got his start in the garment trade you got to start because he could at the age of 25 buy out his boss with a relatively limited amount of capital actually didn't really get it started going to try to get a real start shining shoes and selling newspapers. But once he moved from that he got he got to starting in the garment trade center while the guy behind Cher's and Lehmann and then Citibank. His father was in the garment industry. His father was a garment entrepreneurs as well like these these skills seem to be something that's passed down as as people are self-employed tend to have self-employed. Tend disproportionately to have self employed children as well. And I think reminds us of the fact that you know when we talk about skills education shares the population with college degrees is you know is an easy measure it's a census measure. But the most important skills that happens that have nothing to do with what you learn in school as much as it pains me as a college teacher to admit it right. I mean important skills are the intangible things which are picked

up from people around you and that's what what makes cities what makes cities so special. And based on this we've seen this you know remarkable rise of of cities in the in the US remarkable rise of skilled cities like like Boston that look in many ways despite the recession as healthy as they've ever been and I think as America looks forward as we look forward to some form of economic renewal that economic renewal is not going to come from you know hiring lots of guys to put in infrastructure in the middle of low density America. It's going to come from being smarter. It's going to come from having new ideas it's going to come from out thinking. The other places on the planet and the way that we get smart is being around other smart people and our schools are part of this and there's no question I think that investing in human capital is as important as anything that America can do in investing our children is is as important as anything can do anything American do can do but it also depends on our cities depends upon smart people being together and innovating in our urban areas. But as important and as successful as cities are in America the biggest action in urban life

of course today is not in America it's in the developing world it's in India it's in China it's in South America it's in the places where cities are just transforming cultures overnight. Gandhi who of course you know we all correctly revere But Gandhi was incredibly wrong on this of course. You know Gandhi had had a at a line which is quote in the book about the future of India being in its towns and villages not in its not in its cities. He wasn't right. The future of India is in its cities right and I think that's that's absolutely obvious today that in fact you know India is not going to offer a brighter future for its children if it stays in rural poverty. And in fact cities like Mumbai and Bangalore and and Delhi are the places that are allowing India to transform itself. And there you know getting vs getting the urban policies right in India and China are in some sense the biggest questions of the 21st century. You know one of the things that troubles me as I look around as as I listen to discourse on the cities of the developing world is how often people look at the problems the very real problems of these areas

and just wish that these cities would go away. They look at the poverty that exists in a place like Mumbai and they say oh my goodness this is a friend as things shouldn't we just you know block growth of Mumbai because these people's lives are so tough. You know their lives are tough and poverty is always around us. But those people are there for a reason. OK. And there's a lot to like about urban poverty by which I mean there's not a lot to like about poverty ever. But the fact that those poor people are living in cities is not a sign that cities are screwing up. It's actually a sign the cities are succeeding because cities don't make people poor. Cities attract poor people and they attract poor people with a promise of economic opportunity in the U.S. they attract poor people with the opportunity ability to get around without a car for every adult. One study of mine that I discuss in the paper. Look at the impact of building subway stops building rail stops on poverty and local neighborhoods. Well you build a subway stop in lots of these lots of cities throughout the country. Poverty rates in adjoining areas went up OK. Does that mean there's anything miraculous and terrible about subways that are making people

poor. Of course not. OK it's about the silliest thing I could imagine right. It's that people who actually don't have a lot of money are able to afford a car for every every person in their area. They actually choose to locate near a subway stop as a sign at a subway stop is doing something good. The sign in subway stop is providing something valuable right. The same thing is true of the favelas of Rio de Janeiro the same thing is true of the of the slums of Mumbai. They have a future. The people who move these areas have a future that they could never have in the rural northeast of Brazil because there they are connected they're connected to the outside world. There's a future for them there that could never exist in rural poverty and as tough as urban life can can be and as tough as life in the favelas favelas are easy. The people have chosen to be there for a very understandable reason. And the key is to make their lives better not to somehow or other wish that we would could all but go back to some pastoral existence because there's no future in the stagnation of a poverty. Cities bring change. And in the poorest places of the world changes what they need. They do not need status they do not need to

go back to millennia of poverty and vast levels of infant mortality. That is not meant to deny that when you cram a lot of people into a very small area there are problems. There are downsides of density there what economists call externalities. If I'm close enough to exchange an idea with you face to face I am unfortunately enough close enough to infect you with something. I don't worry I'm actually quite healthy right now but if I'm close enough to you know I hand you a book I'm actually also close enough to rob you which is something I'm also not planning on doing. But this these costs of the costs of proximity are real and they require public intervention. They're not something that the free market makes go away. And I think there's a reason why people in New York or Boston are considerably fonder of government than people living in Montana. Right they need government more. They always have. Right. And that's that's a very real thing that the book you know the book addresses and I talk about a number of the great challenges but congestion crime and. Crime and

clean water and clean water is in a sense the most important job of any city government and it's in some of the greatest failure of the of the Indian The Indian cities today. Clean water. You reflected enormous investments by American cities. If you go back to 1900 there was a debate between a private and public response to the problem of of water in the US. And in in New York of somewhat unholy combination of Aaron Burr and Alexander Hamilton I make it clear eyed by enormous respect for Alexander Hamilton but this was not his finest hour. Burr and Hamilton Hamilton went along with burrs idea that they were not going to produce public water works there's great demand for this in the wake of the cholera epidemics that it's swept through not cholera would mean yellow fever in the in the 1790s that swept through American cities in that in that era so both New York and Philadelphia were continuing to respond. Considering the spawns Philadelphia spent the money put in public water works under Latrobe it worked quite well. The Burr Hamilton combination came up with this idea of a subsidized

private producer. The Manhattan water company was Burr's idea Hamilton Hamilton went along with it. How would you convince the federal a city council of New York which is not prone to go along with with the borough of of of Tammany of you know the leader of Tam there Tammany Hall opponents. He convinced them that by building public water works they would be lame selves on for burdensome taxes as that was the exact word that Hamilton used burned them some taxes. And instead they subsidize the Manhattan water company and subsidized that water company by giving it the ability which is a rare ability to operate as a bank. OK so what resulted Berg got his bank in the Manhattan water company operated. It didn't produce much clean water and it did a little but really not very much it certainly doesn't seem to have actually done any any of a job what it's supposed to do. It did prove to be a very successful bank though it is in fact still with us its name is JP Morgan Chase. And you know it's a long standing success. But New York didn't get clean water in till it invested in the Croton aqueduct until it actually spent an enormous amount of money on those types of investments were critical in stopping cities from being killing fields at the start of the 20th

century a boy born in New York City could expect to live seven years less than aboard born elsewhere in the country. OK today lifespans in places like New York and Boston are higher than the national average. That didn't happen by chance that happened with large investments in the most important of these investments were water were waterworks at the start of the 20th century. Cities in the US were spending more on water than the federal government was spending on anything except for the Army and the post office. This was an enormous undertaking. Of course urban health was also created by by something that I've called. Self protecting urban innovation and of course the famous example of that as Dr. SNOW of London who actually used the information that was generated by the cases of cholera around him to figure out the source of cholera. As the father of the epidemiology in cities often have the ability to create through you know the provision of knowledge the solutions to their own their own problems. The case of water required an engineering solution. But there are some problems some of the urban problems that actually need economics as well as engineering so congestion is one of those. Now

we've tried to build our way out of congestion for a long time but it doesn't work and it doesn't work for something that The Economist something that economists yield around Tom at Turner called the fundamental law of traffic congestion which is that vehicle miles traveled. OK. The amount of time cars are on the road rises roughly one for one with the amount of highways and roads built. OK. And if you build more roads more cars are going to drive on them which means that any time you just try to build your way out of the traffic problem you just get more driving. The solution for this of course as any economist would tell you and there are some in in the room is you gotta price things. You actually can't give stuff away or else they get abused. OK. So you know it's sort of like New York and Boston are running. Soviet style trance transport system. And by that I mean of course that in the old Soviet Union they used to underprice goods they used to give out food for way below prices and then like queues clear the market right so the people would stand long periods on line. Well that's kind of how a crowded city street works is that the price is set at zero and people wait on wait on line forever.

On the other hand it places like London and Singapore that have moved to a more rational system where we actually charge people for the social cost of their action. Traffic has substantially or has substantially declined and congestion congestion works. I'll skip the story of crime now which is a more which is more difficult one but it's certainly true that part of making the cities of the world livable has been has been dealing with a significant crime problems. The result of these changes the result of these investments in creating a healthier cleaner safer city is that cities are allowed to be their advantages as places of pleasure have become as obvious as their place. Advantages of places of productivity and we when we think about the comeback of Boston and New York over the past 20 years it's only partially about the fact that they are engines that make us you know more productive. It's also because cities are fun. It's also because the same power of innovation and competition that actually you know works in terms of of the software companies also works for restaurants. OK. It's because that same ability of people to learn from one another and create new ideas also creates excitement in the arts one of the stories that I tell in the

book is about the sort of intellectual maelstrom in 16th century London where where Marlowe and Shakespeare and kid and all of these you know brilliant playwrights stole ideas from one another and borrowed from one another and did something absolutely magnificent and in the history of humankind right this sort of sort of collective creativity which you know made London more fun. Part of the reason of course that could work is that cities have enough scale to cover the fixed costs of things like theaters and museums which is another urban advantage and that scale of course unable cities to provide more specialized products right. I mean you can get four different types of Indian food within three blocks of this store right from different different regions. Whereas in low density places you end up you can end up eating something that's vaguely called continental cuisine. I'm not I'm never exactly sure which continent this is but but it is clear there's not a lot of specialization in one particular form of eating. The downside of urban success of course is that cities have also become

expensive. Too expensive in fact and this is unavoidable in a sense if you don't allow supply to keep up with demand. So the way I frame this in in the book is that much of the much of what I know about cities much of it was in the book owes owes a great deal to the wisdom of the great Jane Jacobs who knew cities because she walked their streets and had just tremendous insights about how cities cities worked but she did from my perspective make a mistake and her mistake was being opposed to building up she was actually right about the high rise the high rise buildings of the of the of the public projects. But I think she was wrong about opposing building up when it was privately developed and voluntarily done. And the reason why I think she was wrong about this is that I think she did was in fact misled by her ground level observation shows she noticed that old buildings were cheap and new buildings were expensive and this led Jacobs to conclude that the way to keep space cheap was to actually stop any building of new buildings and to allow you know the

old buildings to remain. Well that's not how supply and demand works. OK if you actually have demand for an area it grows because a city is productive because a city is fun. You've actually got to supply more units you've actually got to supply more space. Otherwise the city becomes a boutique town affordable only to the to the you know to the world's wealthy and this is the kind of thing that I'm terribly afraid is can be happening in cities like New York and Boston. Right is that in fact without building we actually don't make the city inclusive to new people. Look at Jane Jacobs own beloved Greenwich Village right. It was a place when she was there that was affordable to people like her at the start middle income people who that what the heck middle income person is able to afford a townhouse in Greenwich Village today. Right it's been protected it's been preserved it's been kept old right and it now cost five million dollars as an as an entry point for a home right the way that you provide affordable housing is by building up right in a dense area. This is the cranes of Chicago keep Chicago affordable by building large not large amounts of residential space. And that's you know I think some of the more controversial things that I have had to say and in the book but I also in fact

think that there are places in which we've gone too far with preservation and I'll just talk briefly about this that you know I revere the older buildings of our cities and I love nothing more than when I'm reminded of the past of a place by observing and touching its architecture. But cities are not meant to be museums. OK. Cities need to change. And I also think some of the most interesting pieces of cities is when there's a dialogue across centuries between new architects and old architects. And I think it's you know absolutely vital that we allow our cities to change and we allow new genius to express itself in granite and concrete as well as allowing the geniuses of the past. This is a challenge for older areas like Cambridge and Paris and London but I think it's a challenge that needs to be met and needs to be met somewhere in the sensible middle not with either radical tearing down of older areas but not with a complete desire to favor the past at the expense of the future. Because if we're going to allow our children to afford to live in these places we're actually going to need to provide the space for them to for them to live.

The costs of not doing this are particularly large of course in the developing world where Mumbai as you know had an extraordinary extraordinarily tough land use regulation for forever and I think one of the reasons why this is so important is that there's nothing greener than blacktop and I think I'll end on I just got two things I want to I want to know one of which is is just tell a quick story about about a young Harvard graduate 944 that some of you may know but there was a young Harvard graduate a friend in 1844 who went for a walk in the woods outside of Concord. They did some fishing and the fishing was good because they hadn't been much rain lately but when they came to cook the chatter the flame if the wind flicked the flames to the nearby tall grass and fiery conflagration started by the time the fire the inferno ended. More than 300 Prine acres of Concord woodland had burned to the dust. OK this was an extraordinarily destructive moment in Concord in Concord history. The young the young Carver graduate course was Henry David Thoreau the

modern secular saint of environmentalism. Who did far more harm to is his local environment than anyone I can think of who lived in Boston during the same time period. The reason that I tell this message is not to be mean to Thoreau who is of course a wonderful writer that we all learn from. But in fact because there's a deeper lesson here we are a destructive species. If you love nature stay away from it. Right. I know this myself I do a lot more harm to nature when it now that I live in a suburb than I did when I lived three blocks away from here. And this is you know there's statistics on this about that the significant difference in carbon emissions between cities and suburban areas and I think this is another reason why we should cherish why we should cherish our cities. I want to end on one just last point which is that there is actually also a policy point of this book. It's a book that celebrates cities but it's also a book that's a challenge and it's a challenge to the mistaken view that you know America needs anti-European policies that America only exists in its suburban homes. It's a challenge the view that we need to subsidize the heck out of homeownership. I did I have I'm very happy that the president in the in the

budget called for a reduction in the mortgage interest deduction and the housing finance reform plan count called for reduction Freddie Mae and Freddie Freddie Mac subsidies because we need this subsidizing homeownership I've been told I'm running out of time so I'm going to go over there quickly subsidizing homeownership means pushing people out of urban apartments as of urban homes and that doesn't. Any sense whatsoever we should also rethink. And I give the president lower marks for this. His fetish for transportation infrastructure. OK. We do not need more roads and low density areas the stimulus package spent you know is spent infrastructure spending two to one on our least dense areas than on our most dense areas. That makes no sense to me either right. There's no reason why we need to be subsidizing people to go outside. Each new highway that we came into a city in the postwar period reduced its its population by 18 percent relative to the metropolitan area. OK these are these are forces for for the urbanization and most importantly we need to rethink our local school system. In some sense the you know the greatest incentive for many parents like myself to move outside of cities is to get a different school system for their for their children. There's no reason why cities can't have uniformly good schools the same powers of competition and innovation that work in

the private sector can work for for schools as as well. But we need to have reform in this. Right there's a sense in which we've what we've done with schooling is if we decided to handle handle food by giving all restaurants in Cambridge or Boston over to a single food superintendent would operate canteens and deliver us exactly what we want to eat on a on a daily basis right. Unsurprisingly the rest of the restaurant quality would be awful. In that case right restaurants are good because there's constant competition constant innovation. You know the great success that we've seen in from many of the more nimble schools suggest that you know reform along this area is appropriate. So let me end by by Thank you very much for coming in. Thank you very much for your attention now I have some time I guess for a few questions but I guess I've probably got about five minutes for questions but thank you. Thank you again. No I don't think there's I don't think there's an optimal size for the size of size of the city and I don't think that that there's a you know and let me just be clear about about what I'm advocating at least in terms of policy. Right. It's

not that I'm advocating that any person should change their lifestyle because of what I'm suggesting. What I'm suggesting is that we should unleash unleash our cities that we should stop you know pushing people outside of them and stop overregulating them and start thinking about how to deliver better schools for the children in urban areas. So I mean I think there are people who don't want to live in skyscrapers or never will and God bless them and that's that's just that's just fine in terms of the optimal size and size to depend so much on the culture on the economics of the of the area on the transportation technology that's that's available. You know if there's a if there's a lesson about optimal size here it's more that there are you know the difference between there's an option between building up and building out. Right. And there are lots of times where building up makes a lot more sense than building out from many many perspectives. So that's and that's I think the strongest thing that I would say on this and again we're not trying to subsidize building up we're just trying to eliminate the barriers that stop that stop building up. You know it's there clearly is a need for a mixed model here. I mean I think I think it's you can't argue that in a city

like Detroit that public education as it currently is working is you know doing its job for the children. I mean I just can't see how one can possibly look at the current model and the then think that it works and the overwhelming evidence from decades of work of thinking that if you just throw more money at the problem it works that's a nonstarter. And that's just a not a you know we've had 30 years of evidence on this suggesting that that doesn't work. On the other hand you know there are a lot of charter schools that have proven to be remarkably successful. These are things that are highly publicly managed and a lot of them aren't but that's exactly the point. Right I mean is that that it's not as if every restaurant that opens is is good. I mean a lot of them fail and they close and that's and that's the way that the way that the market the market works. I think you need to be careful about where you think this will work I think you need to highly regulated. I think a lot of it can happen within the within the public system I'm not in any sense suggesting a deregulated thing we're going to roll rely on the free market to educate our children in a completely private matter I'm I'm just arguing that in many areas our public school systems are not

succeeding. And there's plenty of evidence that you know lots of innovation is actually helpful in this area. So I mean it's not you know it's not it's not that this is coming from ideology. This is coming from you know what we've actually seen in terms of test scores in terms of of many of the schools. So but you know reasonable minds are free to are free to disagree on this but I mean I think the advantages of innovation are great. Mr. Culberson. You know I I believe above all in spatial neutrality. Right I mean I believe that we shouldn't be taxing one area to benefit another area. I believe that in terms of you know we should be taxing successful areas to get less successful as we certainly should be taxing rural areas to artificially subsidize artificially subsidize cities that is the there's the overriding principle of what I believe and that being said there there is an issue in that different areas need different things. And that's part of the problem when we often try to equalize spending for each different public service. Right so a growing area actually does need new infrastructure. A declining area typically does not. Right. So we need to figure out ways to do this that are either essentially charging the

growing area for the for the infrastructure you know making the growing air pay for it own as indeed Boston did when it you know green the Back Bay right in the Back Bay is paid for in part by that land that's been created by it by draining the areas the local area providing its own paying for its own service. Or you have more equalization across different areas so you know you provide transportation funding for Phoenix and you provide education funding for Detroit. Right I mean that that's sort of that sort of model where you have something that's forms of an equalization. But I there's no there's nothing in nothing in terms of special favor I mean I believe in nothing in terms of spatial favoritism. But I do believe in actually having sensible policies that are you know that do even things out across multiple categories or that use user fees or local charges to make things work. I unfortunately don't see a long run alternative to it. I mean it's not any healthy is not the way I would phrase it. I mean it's not it's not that I you know it's not that I welcomed realisation. We have a tremendous problem in this country right I mean the unemployment rate among people who have college degrees is less than 5 percent the unemployment rate

among high school dropouts is over 15 percent. Right I mean it's an enormous problem this country faces in terms of creating jobs finding employment for those people who have less basic skills. I mean that's one of the solutions to this the long run solution to this is is figuring out ways to invest more wisely and human capital is to make our education system stronger and I certainly believe very strongly in that. That or whatever whatever form of salesmanship you want to use for the Sputnik moment or whatever anything anything that's needed to you know have America recognize that the future of our country depends upon its human capital couldn't be couldn't be more vital. That being said you know it's I think important also to think about ways in which we can ease the employment of those people who have less skills. And I think that's also one reason why I'm bullish on cities. And I think one of the things that that you know this is again the sort of inequality at the local level isn't all bad that there's actually a plus to having rich and poor together and in urban areas and there's no plus to having the artificial segregation of areas in which you have you know all the poor people in one

place and all the rich people in one place so they all look equal when you show up there but it's nothing is providing nothing but separation. And I do think that you know in some sense the great hope is that smart entrepreneurial people at all levels of education will figure out ways to make all Americans more productive in the years ahead and I think that's certainly the hope and I think that actually spatial concentration is one tool for that. But it's not it's not a silver bullet. There's no promise that that will necessarily deliver everything but it it certainly seems wiser to me than the alternative which is to favor you know all the skilled guys in one place and all the less skilled guys in the other place and that's why I like more housing in areas that are full of full of skilled people is to create more opportunities for more people to be around each other and to learn from one another and to provide opportunities for other people. But wait a minute zips along rights as it's law which which I guess the most the easiest way to explain it is that the second largest city is typically is half the size of the first largest city its And the third largest city size typically the size of a third one third the size of the largest largest city. And it's it's from a statistical one of it's highly related to the job

Ratz law for cities which is that urban growth is roughly you know the proportional urban growth is roughly independent initial city size that's another fact that that's that that's that that's those two things are related in a in a mathematical sense. That doesn't mean that city sizes have been growing astronomically over time. Right so your starting point which is that the distribution continues to follow the same statistical distribution but it's marching farther and farther farther farther farther out. Right so we have far more cities of 5 million or more in this world than we did 50 years ago. I mean that's that's pushed out out enormously. And. Of course you know in any urban area there's a balance between the positives of density and the downsides of density and those things are those things are going together and there's a there's a point at which you know it's not obvious that you know we're going to get a hundred million person cities I mean I can't I can't predict that and that's not obviously going to happen so I think your question is is reasonable but I think from any you know if you look across metropolitan metropolitan product right

across the U.S. per capita it's an enormously positive strong relationship between that the size of the Metropolitan if you look across countries of course you know the average GDP for countries that are have more than half of the people in cities is more than five times the GDP of countries that have less than half of the people in cities. That doesn't mean that urbanization is causing prosperity but unquestionably connecting in cities is part of the development the development process. So. You know I think I think the literature favoring the view that you know there's there's a tremendous productivity advantage of being around others other other people is enormously strong. That being said there are lots of smaller cities particularly cities with lots of educated people that manage to be perfectly productive and perfectly successful. And again you know the goal here is not one uniform style of city or one uniform style of life it's to is to allow the freedom that allows different types of areas to grow. And it just doesn't hold back. Our most successful cities either by over regulating or particular the developing world failing to provide the crucially needed public services that are that are part of these part of these areas. If you want to make the case that we should move from the current tax system to a consumption tax

that basically doesn't tax any form of investment. I'm with you for that. OK like most economists I'm I couldn't be more with you to eliminating the tax barriers that that reduced people from investing more. I'm all I'm all on top of that. But why in the world we should privilege one type of savings over all the other makes absolutely no sense to me. How can it possibly make it if your goal is to incentivize savings. Why do it through an incentive that subsidizes borrowing. The size of the incentive scales up with the amount of leverage that you take on it so it's not taking scaling up the value to house the amount of money that you're putting down on the house. You have every incentive to take every penny of equity that you accumulated out of the house and borrow it. What we've seen over the past 10 years in terms of this great boom bust cycle I think suggests that it's absolute madness that we have a government policy that drives our citizens to leverage themselves to the BET de bet to the hilt on housing prices. How can that possibly make sense. Sure it's well to think that might lead to an ownership society. It seems to me just as

likely be leading towards a foreclosure society and it's hardly as if housing is a particularly productive or obvious source of value over the long run. Stocks have historically done much better over the long run in terms of gaining value and housing prices than housing prices have. It's not obvious that housing is a particularly you know fertile form of investment and the way that we structure this this investment particularly odd right. I mean the fact that we you know we scale it up with the size of the house which induces people to build larger houses which doesn't make particular sense in you know an area which any anyone worries about carbon emissions. The two reasons why of course carbon emissions are lower in cities than outside them even holding constant income and family size is less driving in cities and smaller homes. Those are the two big reasons why you have this carbon advantage. Of course the feds are pushing against that by inducing people to buy bigger bigger homes. It's wildly regressive even among home owning households. The work of perturb and Sinai finds that the average benefit to families earning $250000 or more is more than 10 times the benefit accruing to

families earning between 40 and 75000. Seven forty and seventy five thousand dollars. And if you think the point of the thing is to actually maximize homeownership which I'm not sure why we tick you want to do. Given that you know I think people should be free to choose whatever form of home they they want. It's also really poorly designed us to do it because the benefits accrue disproportionately people are going to be buying homes anyway. It's not actually occurring to the middle income people actually on the margin between owning and not owning. And while we're talking about you know subsidizing home ownership let's just sort of remember why this is so anti urban The critical factor is that more than 85 percent of single family detached houses are owner occupied. More than 85 percent of multi-family dwellings in larger and larger buildings are rented. OK there are good reasons for this. When you rent out a single family detached home the renter usually doesn't take very good care of it and typically homes depreciate by 1 percent a year if they're rented out. On the other hand it's often very hard have a lot of co-op or condo owners under a single roof anyone who's ever dealt with a co-op board has got a sense of how difficult it is to get all these owners into one into one thing. You know even with small numbers I have friends who have dealt with their Cambridge co-op

co-op boards for years in various running battles over over various various things. Having one roof one owner makes a lot lot of sense. But if you. When I say that high density multi multi story buildings are naturally rented and low density buildings are naturally own than a national fetish for home ownership is saying pushing everybody out of the high density dwellings and cities into the low density dwellings and suburbs and that just doesn't make any sense to me. I just cannot tell you how much I hope that you know the Tea Party lives up to their push for freedom on this issue and says that you know it's time for America to stop socially engineering and stop pushing you know Americans into a particular lifestyle that you know just happens to be what. What the nanny state wants. So one I think we have time for one. One last question yes or no. Well I think if you if you look at. We first of all the the job of redistribution let's be clear about this. I mean I think

that actually in providing homes and providing restaurants maybe even to a certain extent and in providing at least some innovation education. I think there's a lot to like in freedom and competition. Right there's a lot to like in those things which actually thrive and thrive in cities when it comes to actually taking care of the bottom fifth of the American population. The free market doesn't do that naturally. There's no there's no natural profit imperative which actually takes care of them. They can lift the national economy to a certain extent but you know oftentimes innovations promote inequality or or impoverish the bottom fifth as much as as you know hurting them. I think that's why we should believe in the role of you know as sensible caring state that actually you know does something for the people at the bottom particularly the children make sure that they have some sort of a future. You know in the case of say housing I would much rather have some you know sensible portable form of Section 8 housing vouchers that was more widely widely available than thinking that I'm going to monkey around with this through the home mortgage interest deduction. I mean as I said the mortgages are just as wildly regressive in terms of the proposal that I myself have

made in terms of the home mortgages judge and I've just suggested lowering the upper cap of the deduction from a million to 300000 by 100000 a year which is not something that will affect anybody of the population that you're talking about. Right there's no sense in which that will do anything anything for that for that group. Truth be told is if I was being you know even more unrealistic politically I probably go further than that but I'm with you in terms of of you know Section 8 housing vouchers and doing doing things to take care of the people at the bottom. Buses are a great technology and we want to be smart about that and want to be smart about making sure that people can get around without a car for every every adult. You know as you perhaps of lean I'm also very fond of that other great 900 century. Technology the elevator right also a very good technology when combined with walking. Right this is this is the one thing that beats you know a 25 minute car commute is you know four minute pedestrian walk involving a couple of elevators on every end I think that's a that's a nice thing as well. But you know by all means you know this is this is this is this is critical and it's also

critical to remember that local governments can't take care of redistribution. Right there's there is no natural way in which a city can do its job in terms of taking care of the bottom fifth. Right there's just an end on avoidable logic that if you try to play Robin Hood too strong at the local level that firms and wealthy people just leave. Right we've seen this over and over again that the natural implication that of course is not that you don't want to have any redistribution but you want to have a sensible national policy that actually takes care of people but that doesn't doesn't count on local governments to do that now I'm not saying that I'm not that you should take that urging any local government to do less I'm not doing that but I'm just saying that you know many local government that tried to do this have been hit very very hard by that by the emigration and that's a that's a difficult thing to to deal with and I think it calls for you know I think it calls has calls for us to recognise that if we do care about redistribution has to be done. OK so so the one form of public investment that has been shown uncontrovertible you have a massive impact on urban success is the presence of a land

grant college in the area land grant colleges and this is work by and I'm ready I've also done a little bit following because we really are enormously strongly correlated with success in the modern era. Enormously strong correlated both wages and population growth. Of course we've got our own land grant college here in math here in Cambridge it's called MIT. It's done a remarkable job in terms of generating entrepreneurship in the in the local area but you know try to imagine Minneapolis without the University of Minnesota. Try to imagine you know so many cities are successful without these these colleges and you know this again gets to the question I was asked previously about about public schooling. What's needed here is is you know a hybrid model. You know what's needed here is not some sense that you want we only get private I mean Harvard founded by the state. Right it's not a it's not a private initiative it's a it's a public thing but these these institutions are stronger because they actually also compete with each other because they actually are in a national market where they're where they're competing for each other and there is certainly at the local level a very strong connection between you know say between

between those schools and locals and says at the at the local level. So the compulsory schooling laws certainly did have raising those did in fact have significant impacts on wages and in the areas as well. That's so let me let me end there and again thank you very much all for your for your time.