To Get America Growing Again, It's Time to Unleash Our Cities: A Guest Post by Ed Glaeser

Ed Glaeser is an economist’s economist — as smart as they come, driven by empiricism, with something interesting to say about nearly anything. He has just published a new book, Triumph of the City: How Our Greatest Invention Makes Us Richer, Smarter, Greener, Healthier, and Happier. Glaeser argues that cities often get a bad rap even though they are “actually the healthiest, greenest, and richest (in cultural and economic terms) places to live. New Yorkers, for instance, live longer than other Americans; heart disease and cancer rates are lower in Gotham than in the nation as a whole. More than half of America’s income is earned in twenty-two metropolitan areas. And city dwellers use, on average, 40 percent less energy than suburbanites.”

We’re pleased to offer the following guest post from Glaeser on the glory of cities. I hope you find it as enthralling as I did. For the record: Glaeser is the Fred and Eleanor Glimp Professor of Economics at Harvard; among his research topics are the economics of cities, housing, segregation, obesity, crime, and innovation. He writes regularly for the Economix blog. He is a senior fellow at the Manhattan Institute, and director of the Taubman Center for State and Local Government and the Rappaport Institute for Greater Boston.

To Get America Growing Again, It’s Time to Unleash Our Cities
By Ed Glaeser

Worries about the economy and the apparent waning of American dominance have been inescapable of late.? Whether reading about the creation of President Obama‘s Council on Jobs and Competitiveness, his State of the Union address, Hu Jintao’s state visit, general China-envy and anxiety or even Tiger Mom-induced guilt, the message seems the same:? we’re in trouble.? But sticking with China for a moment, it’s instructive to consider what’s behind its incredible development and its increase in competitiveness.? Simply put, China is urbanizing.? China’s cities take in about 17 million new people every year because places like Shenzhen and Shanghai provide a path out of rural poverty. The good news for any anxious Americans out there is that cities and productivity go together everywhere in the world — and of course that goes for the U.S.A. as well.

Cities are at the heart of a competitive and global future, but even though the evidence is all around us, and even though mounds of data stare us squarely in the face (our country would be 43 percent richer if every area was as productive as New York), we don’t seem to get it. We continue to think that economic recovery and growth means building roads to nowhere, and we hobble our cities with silly policies that advance the idea that the only American dream is a white picket fence in the suburbs.?? If we want America to start growing again, we had better unleash our cities.? And there are a few simple truths we need to acknowledge if we’re going to do? that.

  • Cities are people, not structures. All the subsidized building in the world is never going to bring back a single Rustbelt burg.? Cities only succeed if they have enough smart, entrepreneurial people.? The best predictor of which older, colder cities came back from the doldrums of the 1970s is the share of their citizens with college degrees in 1970. Boston reinvented itself? by connecting scientists, like the decidedly freaky Itzhak Bentov (who invented both diet spaghetti and the steerable catheter) with entrepreneurs, like the decidedly un-freaky John Abele (who turned Boston Scientific into an innovation powerhouse). Minneapolis is the wealthiest Midwestern metro area because its smart people make smart companies like Target and Medtronic. Being near smart people matters: people’s wages typically rise by about 8 percent as the share of their fellow urbanites with college degrees goes up by 10 percentage points.
  • Cities succeed because they make smart people smarter. Michael Bloomberg was able to make billions in information technology because he knew exactly what Wall Street traders wanted.? And he only knew what they wanted because he had been one himself. Cities enable us to crowd-source ideas — even when we have no idea what we’re looking for. All the ugliness over Facebook’s founding should remind us that new ideas are always collaboratively created, and that both the deepest and the most serendipitous interactions are still face-to-face. Cities are more important than ever because globalization and new technologies have increased the returns to being smart, and we get smart by being around other smart people.
  • Small firms are beautiful. Fifty years ago, the economist Ben Chinitz wondered why New York was doing so much better than Pittsburgh.?? He argued that huge companies, like U.S. Steel, had killed off any spirit of local entrepreneurship, while New York’s garment industry was a breeding ground for small start-ups.?? He was right, and places with big firms have done quite badly over the past 50 years, while places with small average firm sizes have tended to have plenty of job growth. Pittsburgh — blessed with plenty of education — is now looking a lot better, but there are plenty of places that still reflect the insights of Chinitz.? Detroit, for example, was the most innovative place on the planet in the early 1900s when it was a haven for small start-ups that supplied each other and financed each other and stole each other’s ideas.? The city became synonymous with stagnation when it came to be dominated by three vast car companies.
  • Schools, schools, schools. Chicago and New York have fantastic restaurants because new eateries are constantly opening, competing and closing.? But imagine how awful eating in Manhattan would be if every meal was provided by a vast, bureaucratic public food system. Taste would be as rare as trans fats.?? And yet that’s what we settle for when it comes to our children’s educations in our urban centers — we’ve handed America’s future over to lumbering public monopolies.? Unsurprisingly, this is why so many of the well-to-do either flee the city or send their kids to private schools, compounding the education crisis and widening the divide between the haves and the have-nots.? We need a school system that harnesses the urban advantages of competition and innovation.? We’ve already seen that charter schools can work wonders in cities, but do far less in suburbs.
  • Build, baby, build. Cities like New York and San Francisco thrive because they’re productive and fun, attracting millions of people over the years with the promise of one of the great urban gifts: upward mobility.? But increasingly, they’ve become unaffordable to the ordinary people that drive their innovations.?? If a city has plenty of brilliant people, then give them space to live and work. Don’t enact byzantine zoning codes or hand vast, architecturally undistinguished neighborhoods over to preservationists. There is no repealing the laws of supply and demand, and if successful cities don’t build they become expensive, boutique cities that are inaccessible to mere mortals.? When New York City was building more than 100,000 new housing units a year in the 1920s, housing stayed inexpensive. New York construction dropped dramatically from the 1950s to the 1990s, and prices rose accordingly. Chicago’s sea of cranes on Lake Michigan helps explain why average condo prices in the New York area are more than 50 percent more than condo prices in the Chicago area.? In this case, the city has much to learn from the Second City.
  • Smart environmentalists love skyscrapers. Henry David Thoreau‘s sylvan lifestyle led him to destroy more than 300 acres of prime woodland (courtesy of an accidental forest fire he sparked).? He would have done much less harm if he had lived in Boston.? Big-city living means less driving, and smaller urban apartments use little energy.? Electricity use is about 88 percent higher in the average single-family detached home than in the average apartment in a big building.? Simply put, there’s nothing greener than blacktop.
  • Stop subsidizing suburbs. We don’t need housing and highway policies that push people away from our productive cities.? Brown economist Nathaniel Baum-Snow found that every new highway built into a city reduced that city’s population by 18 percent. Our pro-homeownership policies, including the financial fiascos of Fannie Mae and Freddie Mac, implicitly push people out of urban apartments into suburban homes. The great housing bust reminds us that the government shouldn’t be bribing people with the Home Mortgage Interest Deduction to bet everything on the swings of the housing market.
  • Unleash successful cities, but don’t prop up cities in decline. Per capita output in Minneapolis is twice as large as in Flint, Michigan. We shouldn’t push people to stay in less productive areas.? The children pushed out of New Orleans by Katrina ended up having much better test scores than the kids who stayed.? And vast infrastructure projects make particularly little sense in declining areas, since the hallmark of declining cities is that they’ve already got plenty of infrastructure relative to people.? Detroit never needed a monorail to glide over essentially empty streets.? Great cities can shrink and still be great.
  • Get Over Jefferson. America is, remarkably, still held captive by a Jeffersonian ideal of yeoman farmers and country living.? The rest of the world, however, is not.? The rising powers of the developing world are seizing their urban futures — cramming smart people together, creating gateways for ideas, and building platforms for the serendipitous fortunes that proximity can provide.? Gandhi may have thought that India’s future was in its villages and not its cities — but India today is proving the great man wrong.
  • The world is flat — except for the brilliant peaks that we build together in our cities.?? Let’s continue to innovate and grow our species’ greatest invention here at home.? We may rediscover a little bit of our swagger while we’re at it.

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  1. Boris says:

    I loved living in cities, until I had kids.

    That’s when you discover that suburban living has some significant advantages over city living. In particular, reasonable outdoor play space is much easier to find. I can let my 3-year-old run around in the yard and look out the window every so often, and it all works. That sort of thing is impossible in modern American city.

    It’s possible to get that sort of effect in a city setting if residential units are built around courtyards and you don’t build up too much (3-5 stories tops). But that negates a lot of the greenness factor too.

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  2. JoshuaM says:

    (our country would be 43 percent richer if every area was as productive as New York)

    If only every city exported as much inflation as new york…

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  3. john says:

    I have doubts about most of the “facts” presented here, but few facts of my own to refute them at the moment, let’s just say some of them don’t pass the basic “smell” test.

    Be that as it may, the one thing which seems inarguable to me is that, income levels etc. being equal (or even scaled), quality of life is lower in the cities and lower on the coasts, coastal cities being the bottom of the barrel.

    I’ve repeatedly discussed job opportunities with friends in the big coastal cities. When I expressed concern and dismay at the low salaries relative to cost of living these folks who are great fans of cities will reply without intentional irony “you can’t expect to maintain your present lifestyle!”

    Everyone derives intangible benefits from their circumstances. Some like a mountain view, or an ocean one, some like hills, some plains, some even enjoy cities, but it is not reasonable to expect that everyone, or even most people, are going to put the very high value on that environment urban boosters do.

    As I see it, on the positive side you typically have (depending on the city):

    Pros:
    Arts venues: symphony, opera, museums, etc.
    Larger and better public libraries
    Better restaurant selection
    Better shopping
    More available jobs

    Cons:
    Poor housing value, small, high cost, poor quality
    Thousands of onerous rules and restrictions
    High crime rate
    Dirt, pollution, etc.
    Noise
    Traffic congestion and general crowding

    Notice that the items in the Pro list are all available to the commuter, while the Cons are most troublesome to the resident. Suburbs seem to have been the solution so far. I don’t know if that is sustainable as cities grow larger.

    Mr. Glaeser seems to be arguing for some reductions in regulatory burden in cities, and I can’t disagree. On the other hand, regulation is an inevitable result of density. If 5 people each live on a square mile of land, they don’t need to be too much concerned what their neighbors do unless they start playing around with nuclear weapons. On 100 acres they have a few more concerns, maybe related to wildfire risks or airborne pollution. Put all 5 on that 100 acres and aesthetic and noise issues begin. Put 5 people in the same elevator to live and everything they do becomes a public concern.

    Beyond a certain point urbanization is incompatible with liberty. Glaeser is right when he talks about “getting over Jefferson” being necessary to his project. Are we really ready to turn our back on liberty, limited government, the constitution and the whole American experiment? I’m not.

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  4. JShaffner says:

    This is an excellent piece and city and country dwellers would be good to look at initiatives the military and aid agencies are launching in urban areas in developing countries.

    The US city is far more advanced than their developing brethren and thus have less initial need to concern themselves with sustainability and local impact (i.e. electrical grid limitations, shipping limitations, personal persecution ect). Philanthropically driven entrepreneurial initiatives are as broad as using previously abandoned industrial facilities as hydroponic farms, to creating hi-tech manufacturing support zones. The great thing is many of these agencies like to publish their projects some to great detail. There is little to stop an enterprising American from poaching and improving on these ideas and then using their relative advantage in resources to grow one of these ideas in our more fertile soil.

    As some agencies our country try to export more productivity, there is no reason an American can’t take it, develop it, grow it…and then likely and sadly outsource it.

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  5. Mike B says:

    I’m living in a city now and I agree it’s a fun and efficient place to live, but I don’t consider it to be sustainable in the long run. Suburbs and the Outer-City is much more family friendly and provides much more space for the person with resources to do their thing. The key is to link Centralized Suburbs with urban cores.

    I grew up in a town where I could walk to a transit station and then take a 15 minute ride into Philadelphia. My town had grid streets and a central business district. The proper planning allowed for all of the advantages of a Suburb combined with all of the advantages of a city. The problem is that in an attempt to make this sort of community increasingly less expensive, latter communities cut costs, building around the private automobile and eschewing central business districts within walking distance of the residences.

    The solution to our land use problems lies in proper planning and centralization, not just cities per se.

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  6. Doc says:

    I am a long-time admirer of Ed Glaeser’s work. As American industry has changed so have its factor inputs. Comparing Minneapolis to Flint or Detroit is comparing industries that process information to industries that process steel and other stuff. Information industries tend to dominate our big successful cities and tend to be more highly paid. The argument about health in the city has a lot of circularity in it. Incomes are higher in cities and higher incomes support better health care as does educaion. It’s not the city per se, it’s the people in it that cause better health statistics. Not to mention that the more rural a population, the more likely it engages in dangerous occupations like farming and logging that are physically debilitating as well as hazardous.

    As for not subsidizing suburbs, we subsidize inner cities as well. The comment about suburbs and children is spot on. A second child on the Upper West Side is a powerful argument for the suburbs. People find their own sweet spot on the urban rent gradient as dictated by their personal production function and relative factor inputs. Let people vote with their feet instead of trying to impose a lifestyle on them.

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  7. John B says:

    “Don’t enact byzantine zoning codes or hand vast, architecturally undistinguished neighborhoods over to preservationists.” Exactly.

    If all city governments followed this idea, the cost of housing and development would greatly decrease and many people of all income levels would be helped.

    Every so often you will read an article about a new plan for development which sounds wonderful and everyone supports it. Near the bottom of the story there is usually a line that says: ” The approval and permit process in expected to take ____years”. By the time it gets approved, it usually bears no resemblance to the original plan and so much time has passed that it no longer makes sense.

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  8. Miguel says:

    “The best predictor of which older, colder cities came back from the doldrums of the 1970s is the share of their citizens with college degrees in 1970.”

    Have you looked at the state of our urban school systems?

    Most of the smart people in our cities were educated in the suburbs.

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