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.