Monday Evening Keynote: Ed Glaeser
Ed Glaeser, Fred and Eleanor Glimp Professor of Economics and chairman of Harvard University's Department of Economics, spoke on the resiliency of cities. Atlanta Fed president Raphael Bostic moderated a Q&A session following the address.
Transcript
Raphael Bostic: Hello. Good evening, everyone. We had good response on the left side of the room. I'm going to give you a shout out over there. Good evening, everyone. All right, this is going to be the third time now: Good evening, everyone. Thank you very much. I trust that everyone enjoyed the sessions this morning, and I hope you found an opportunity to relax and have some fun in the afternoon. I'm really glad to see that pretty much everyone made it back. That's a good thing. It was fun but not too much fun, and that's good.
We're going to have a little conversation before dinner. Let's get right to it. It is my distinct pleasure to be able to introduce Ed Glaeser. He is the Fred and Eleanor Glimp Professor of Economics and the current chair of the economics department at Harvard. I serve as a Harvard overseer and I actually got to go up and visit the department to see how it was evolving. Ed is doing great work as a leader there, taking it through a very difficult time as many of you know. Being in leadership through this COVID era has been an incredible challenge, and keeping the faculty and the students together and keeping that culture strong and solid and positive is no mean feat there. Ed, thank you for your leadership on that.
That's beside the fact that he is a tremendous scholar...prolific. I started about the same time as him. I think he has 40 times more articles than I do. He is truly an amazing scholar, researcher, and writer, and really focusing a lot of his work on the determinants of city growth and the role of cities as centers of idea transmission, and this idea about innovation, agglomeration economies. To try to have an economy that works for everyone, ultimately, is the goal.
He has a series of books. The first one, I'm not sure it was the first one, but I've got four listed here. I've read all of them: Cities, Agglomeration, and Spatial Equilibrium; Rethinking Federal Housing Policy; Triumph of the City; and in 2021 he did a book called Survival of the City: Mass Flourishing in an Age of Social Isolation. I always enjoy listening to Ed talk; I hope you will as well. Please join me in welcoming Ed Glaeser.
Ed Glaeser: Thank you, Raphael. Thank you for those very kind words and for this wonderful invitation. I'm delighted to have the opportunity to talk to you about cities. I'm keenly aware that I am between you and food, so I will do my best to at least keep it lively.
If I began a talk like this in 2019 or earlier, I would almost invariably begin with a slightly older version of this picture. This picture orders the 3,000-odd counties in the United States on the basis of their density level because at their heart, cities are the absence of physical space between people and firms. Cities are density, proximity, closeness. What you can see in the blue line that goes up is the relationship between per capita income levels and density. The densest 10th of America's counties have incomes that are 50 percent higher than the least dense half of America's counties.
This is a correlation that is typically referred to as agglomeration economies, and obviously many things could be embedded in this. This could be the selection of inherently more able people into cities. This could be in fact that there are unobserved attributes, such as a deep port or access to coal mines, that actually both make the place more productive and then pull people to it. Or it could in fact be that being embedded in a maelstrom of economic activity does indeed make you more productive.
We have had forests, massive amounts of paper, massive amounts of often not perfectly identified regressions, that have attempted to take on this topic. I would say that the overwhelming consensus of the urban economics profession is at least 50 percent, say, of this actually reflects the causal impact of place on productivity.
The top line shows something that may be slightly more surprising, which is the relationship between population growth between 2000 and 2010, and initial population density. That's a fairly straight positive line until you get to the densest 10th of the counties, which really does suggest that, whereas Americans at the start of the 19th century were leaving their dense enclaves on the eastern seaboard to populate the empty spaces between the oceans, at the start of the 21st century instead of spreading out we're clustering in.
On top of the rise of cities as places of productivity, there's also the rise of cities as places of pleasure. Dr. Samuel Johnson, famous for his dictionary among other things, famously said that when a man is tired of London, he's tired of life; that there is all in London that life can afford. Many things have happened since the 18th century in London and elsewhere, but in fact Dr. Johnson is still right. London is still a wonderful place to spend a weekend or a decade, in terms of enjoying yourself.
What's happened is that rising incomes, rising inequality, a willingness to pay for high-end urban pleasures, has actually gone up. This has shown up in many cities, watching prices go up more quickly than wages. In the 1970s, you essentially needed to pay people combat pay to get them to locate in New York; 30 years later, they were willing to take a real wage discount. This is also related to the inability to build in these areas, which I will briefly mention later, and has been a major theme of my work over the last 25 years, but we do in fact see this heightened willingness to pay, which is part of the rest of urban success in the post-industrial world.
This is a figure which gives me particular pain. This comes from a paper that Larry Summers and Ben Austin and I wrote for Brookings about five years ago, focused on the rise of prime-age joblessness. When I was born, in 1967, roughly 1 in 20 prime-age males were jobless. For most of the past 15 years, 15 percent of prime-age men have been jobless. "Prime age" of course is defined as 25-54, which since you've just heard that I was born in 1967, you will also know that I find this definition highly offensive at this point in time. [laughter]
This, of course, is not a spatially neutral phenomenon. You can see pockets of America where more than one in four prime-age men are jobless. This great swath of the eastern heartland that starts down in Mississippi and Louisiana, runs up through Appalachia, and ends up in the cities of the Rust Belt, where there is just massive amounts of prime-age joblessness. The way that this connects with urbanization, with city size, is it's easy to imagine in a place like San Francisco or Boston or New York or London or Paris, that there will be creative entrepreneurs who will figure out, as the entrepreneurs who gave you Google did, what urban service industry can be geared up to use the time of less-skilled people who are living in the area.
But what creative entrepreneur is going to figure out how to use people's time in West Virginia, in eastern Kentucky, in the parts of the world where there aren't people who are willing to pay to get someone to drive for them? That, again, led to a certain amount of urban optimism, and then we ran into this. Plague is an old companion of urban life. If two people are close enough to exchange an idea, they're also close enough to give each other a disease. Cities are the nodes on our global lattice of travel and trade. They are the ports of entry for goods, for people, for ideas, and for viruses.
Our first well-chronicled urban plague is the plague of Athens, 430 BCE. If you think about fifth-century Athens, here is a city that is doing all that you could possibly imagine wanting a city to do. There are chains of collected geniuses in so many fields, from architecture to sculpture to the creation of history—both Herodotus and Thucydides, who began this field, are there—to the amazing trio that are transforming tragedy: Aeschylus, Sophocles, and of course the great Euripides, doing amazing things in terms of drama, to democracy itself. It's an economic powerhouse, it's a military powerhouse. This is what cities can do at their best.
Yet, all of this success excited the envy, the rivalry of their very nonurban opponent, Sparta. Sparta sent a message to Athens to demand that it stand down from its leadership of the Delian League. Pericles, the leader of the Athenian democracy, was not a person to take guff from anyone. In one of the great orations of all time, at least as transmitted by Thucydides, he tells them to go get lost—we could give some suitably western answer to it—and the Peloponnesian War is on.
Now, Pericles has a cunning plan, which is to summon the Athenians and their Attic allies behind the walls of Athens and trust those walls to keep out the Spartan warriors, then send out the vastly superior Athenian fleet to harass the coastline of the Peloponnesian peninsula, trusting in the walls and trusting in the superior quality of his fleet. Militarily, this is a perfectly great plan. The walls hold out the hoplites, the fleet does its business.
Just because walls can keep out enemies, it doesn't mean they can keep out bacteria, and something entered through the Athenian port of Piraeus that laid waste to the city. Thucydides describes a city that has gone amok in which people live only for the day because they do not expect to be alive tomorrow. Roughly one in four Athenians died over a two-year period. That is a death rate roughly 100 times that we experienced for COVID-19.
Athens sort of soldiers on, takes another 23-odd years to finally lose the Peloponnesian War, and it continues as a city, but in some sense its glory is dimmed forever. It declines from being the New York City of the eastern Mediterranean to being the Philadelphia, to being the New Haven, perhaps. [laughter]
Now, for much of the last 650 years, our cities have been much more pandemic-proof. They have certainly, in many cases, seen horrific demographic losses, yet the cities have continued to thrive. These are the death rates in New York over the past 200 years. You can see the early 19th century, while it was an era of proto-globalization, was also an era of proto-pandemic. In the early decades—this is yellow fever, this is a mosquito-borne illness that emerges out of Africa, probably in the 17th century, gets carried to the Caribbean, gets carried to the cities of the northeast, and starts killing people. Cholera emerges in a particularly virulent form in the Ganges delta in 1817. It gets carried along with the British army, it gets carried along with the Czar's army, it makes its way across the Atlantic.
If you look at the death rates, a number like 50 there means that's a number like 5 percent. That's the highest reach. More likely, you're looking at numbers like 2.5 percent are dying during a year. That's a death rate 10 times that of COVID-19. Now, despite these horrific illnesses, people continued to come to cities. New York continues to grow. It's a spectacular period of urban growth, during the 19th century.
Two reasons, one of which is just the enormous economic power of New York during this time period. These cities are doing amazing things, relative to the rural poverty that existed before it. If your option is dying of starvation in Ireland in 1840 or risking cholera in New York in the same kind of year, you think maybe cholera is not such a bad thing to potentially risk. At least you're not going to starve.
There's a second reason, which is slightly more uplifting, which is that during this time period citizens came together and turned their governments into agents of life rather than death. If you think about prior to 1820, pretty much all that governments did in the West was kill people. Now, we may have heroes during this time period. We may think, "Oh, it's wonderful that Frederick the Great had this particularly lively set of letters with Voltaire, and it's wonderful that he embraced these enlightenment ideals," but let's face it. The man's day job was seizing Silesia from Maria Theresa. This is what the guy did most of the time, and occasionally he wrote witty letters.
In the 1820s, governments came together and started to heal people, to make people better. That came from investing in water; it came from investing in sanitation. This is arguably the single most successful thing that governments have done in the history of their existence, at least in terms of making lives better.
It's not just about the infrastructure. The infrastructure—remember, and this is a key point—the infrastructure required financial markets, and those financial markets existed even before there was the wonderful Federal Reserve system that we're all here to enjoy. The markets were critical because they needed to borrow, because the municipalities needed to borrow to make this work (this is Cutler and Miller), because America's cities and towns were spending as much on clean water and sanitation in 1900 as our federal government was spending on everything, except for the post office and the army. It was just an enormous, enormous undertaking.
Of course, it's not just about infrastructure. You can see here in 1842, the Croton Aqueduct opened. I was raised on a story of engineering triumphalism that said New York had been a filthy place, and then the clean water came in, and then all of a sudden everything got better. You do not have to be Jim Stock to do the time series econometrics and notice there's no trend break in 1842. There's no great change that is obvious there.
For 25 years, New Yorkers continued to die of cholera in large quantities. My great, great-great-great-grandfather died in the 1849 cholera epidemic that hit New York. It's not until after the 1860s that you start seeing a demonstrable decline. One possible explanation for this is that New York continued to have the problem that we see in Sub-Saharan Africa today, and I do work on water in Africa, with Nava Ashraf and others, which is the last mile problem. A bunch of wealthy donors in Africa build a water main; they say we expect the ordinary people to pay for the connections. They say a connection costs $1,000, and per capita income is $2,000, and we'd like to skip it, please.
Exact same thing happened in New York. Even though there were several thousand water hydrants that were meant to give free water, carrying water is difficult, paying for the connection is beyond their means, and they continued to use their pit latrines, use their shallow wells, and they continued to die. It's not until 1866 and you have essentially Pigouvian taxes imposed on landlords that you start to see the death rates decline. You can see them decline. It was so successful that it's been a century since we've had a major pandemic in cities, and we almost forgot that this could occur. Then, of course, it happened again.
I'm not going to say very much about health. I'm going to talk much more about the remote work thing that happened afterwards, but I do want to highlight this fact: this just looks at death rates as of the fall of 2022, I think, from COVID across metropolitan areas and the share of the population with a BA or more.
Education is incredibly powerful in explaining many things about cities, but it certainly also explains health. This correlation is 10 times the correlations you would expect, given the micro relationship between skills and mortality. It's just an incredible difference, this fourfold difference in the death rates between the most educated and the least educated places in America.
That, in some sense—when you think about the problems that San Francisco faces or Seattle faces because no one's downtown—this was the upside of that. They seemed to have actually just died a lot less. Many fewer people died of COVID in Seattle than died from fentanyl over the same time period.
All the people not showing up in San Francisco, who maybe saved themselves by doing so, also left ourselves with a huge hangover in terms of our office markets. This is the Kastle Back to Work Barometer. This is a highly selective group. Remember, Kastle Technologies—these are key swipes that let you into fancy office buildings. These are the most empty office buildings we have, and indeed, anything that looks at internet surveys to measure telework, this is likely to be highly biased because of the difference between educated and less educated people and their tendency to use back to work. In May 2020, 68.9 percent of Americans with advanced degrees were working remotely; 5 percent of high school dropouts were working remotely. This was a very elite phenomenon. It's worthwhile that we remember that. But, for these fancy offices, we're back to 50 percent.
It's hard to figure out what happens next on this, because we're not seeing much of a trend coming back. The normal economists' view would be, "Great; demand for this has gone down, prices should go down, and then quantities should come back." But the prices are moving very, very slowly, and it's very, very hard to figure out what's going to happen in the long run.
I think you would have to be an insane techno-optimist not to think that commercial real estate is taking a major haircut, probably in the more productive markets. That means that they do eventually get refilled, but at a much lower price. In the less productive markets, in the places that were closer to the edge of survival to begin with, this could lead to a full doom loop spiral, meaning that the things are empty, this reduces demand for nearby services, and the whole thing spirals out.
In places like New York and San Francisco and Boston, it's worthwhile thinking about the long haul. The long haul looks very, very good for the interplay between technology and cities. Some technologies are centripetal technologies that pull us together; others are centrifugal technologies that push us apart. This is the aqueduct: this is one of the great centripetal technologies of all time, enabling us to come closer. The 19th century was a very centripetal age. We had both the large transportation technologies, like the train, that enabled great cities like Chicago to rise up around the lattice of train transportation. And of course, we had technologies that enabled the cities themselves to grow. Think about street cars, or think about skyscrapers, which are a combination of two technologies: a steel frame to allow building, and of course, the safety elevator, both of which enabled cities to soar to the skies.
The 20th century, by contrast, was largely a centrifugal age, where cars and televisions and radios enabled the dispersal of population, and our cities shrank as a result, especially the ones in the Northeast, especially the ones in the Midwest. One way to think about this is you saw a 90 percent decline in the cost of moving a ton a mile by rail in real dollars. This is before you even think about other forms of moving goods.
For older cities like Detroit or Cleveland, or even New York that had formed based on older forms of transportation like the railroads or like the ships that went into New York's harbor, those advantages became largely obsolete. Consequently, businesses moved to places that made it easier to do business. The work of Tom Holmes shows us how powerful being in a right-to-work state was in getting industrial growth after World War II, and they moved to places where people wanted to live.
By far, the strongest predictor of metropolitan area growth over the 20th century is January temperature. There are multiple things rolled up in that. Warmer places tend to be more pro-business. They also tend to be more pro-building of housing. You don't understand why Atlanta, Dallas, Houston, and Phoenix each added roughly a million people a decade over the last two decades without understanding how much easier it is to mass produce reasonably priced housing for ordinary people in those cities relative to the cities of California or the Northeast.
People also seem to like the warmth. This is from a paper of mine from about 10 years ago which just looks at happiness using the BRFSS data across America. We're basically growing in places where people seem to say that they're happier relative to the places where they say that they're not happier. As someone who's raised three parents in New England, I kind of think it shows a lack of character on the part of America [laughter], but, you know, it is what it is.
In the 1970s, it really seemed as if cities like New York were headed for the trash heap of history. We had these massive tectonic shifts of declining transportation costs. The largest industrial cluster in the United States in the 1950s was not automobile production in Detroit; it was garment production in New York City. The sector was clobbered by declining transportation costs, and the city also chose to embrace highly progressive policies that taxed local businesses, taxed local wealthy people, and then failed to provide safety, and rich people just left. However much redistribution you think should occur in America, and I have no particular views on this that I'm trying to push, trying to do this on a local level is dangerous, because in fact, mobility is just too easy.
Cities did come back, at least some of them did. It's easy to forget now, but in 1971 two jokers put up a billboard on the highway leaving Seattle to ask the last person to leave the city to please turn out the lights. Because just as no one could imagine a Detroit with a smaller General Motors, no one could imagine a Seattle with a smaller Boeing. This was before Amazon, before Microsoft, before Costco, before Starbucks, before a whole set of new businesses oriented around the highly educated workforce of Seattle and brought that city back. Similarly, Cambridge—particularly East Cambridge—was a dying candy manufacturing area. Who could possibly imagine a future there? The areas, the factors that predict which older, colder cities reinvent themselves, are overwhelmingly education. This is education and population growth. I have a similar one for education and earnings.
I think we need to unpack this a little bit, and I'm just showing you two images of urban regeneration, one of which is the Wallace office at Mike Bloomberg's City Hall, which is based on the Wallace office in Bloomberg's company, which is based on the Solomon Brothers trading floor. When you think about trading floors, there's something of an anomaly there. Here, we have some of the wealthiest people on the planet, who in a normal industry would work like university deans that have huge offices. They'd be protected by executive assistants, they'd be enjoying all the perquisites of privacy that their prosperity has made possible. Here, they're doing none of that. They're on top of each other, they're yelling at each other, they're sweating on each other. If Michael Lewis is to be believed, guacamole is flying everywhere.
Why are they doing this? Well, for an obvious reason: because in this industry, knowledge is vastly more important than space. There's no industry in which it is easier to make a fortune faster than this one. That's exactly what's happened in cities as a whole: because of globalization, because of new technologies, because of the overall rise and return to skills, we again have thousands of papers documenting knowledge is more important than space, and this is fundamentally why cities came back. If new technology was making face-to-face contact obsolete, then why in the world would Google buy the Googleplex? Why would all these technology companies, prior to 2019, be doing so much to try and make sure that their young workers were next to each other all the time, if they didn't believe that this is how innovation works, if this isn't really how the world works?
As the world gets more complicated, the easier it is for ideas to get lost in translation. Anyone who's ever taught knows the hard part about teaching is not knowing your subject material, it's knowing whether or not anything you're saying—and I mean anything—is getting through to your students. We have these wonderful cues for communicating comprehension or confusion that are lost when we're not in the same room with one other. That's why teaching over Zoom is so catastrophic.
This is a relationship between the share of adults with college degrees and per capita GDP. This is obviously much stronger, again, than the micro relationship would suggest. The work of Enrico Moretti and others suggest that a 10 percent increase in the share of population with a college degree in a metropolitan area is associated with a 10 percent increase in wages, holding your years of school in constant.
My own view is that what Zoom means is more competition for talent, rather than an end to offices. When I think about what this does, I do not think that the likely answer is that all these tech firms are just going to say, "Oh, just never show up again." I think the likely answer is we have some young, hungry tech thing; they're going to say, "Well, why do we have to pay San Francisco rents? Why don't we go to Austin and get away without paying for state taxes? Why don't we go to Honolulu? We can surf more. Why don't we go to Aspen? We can ski."
This seems like the more likely event. I'll give you one piece of COVID-related evidence; this is from Natalia Emanuel and Emma Harrington's paper on this. These are two great researchers, they're former Harvard PhDs. They echo an earlier finding in Nick Bloom's work. They're looking at workers at a major American retailer. They have on-site, they have remote workers doing call center work, just like Nick Bloom's earlier Chinese travel agents. When you send them home, they make just as many calls. No loss, in terms of static productivity, but both papers... Nick doesn't particularly emphasize this, but Nick has exactly the same finding that the magnitude is, if anything, a little larger... the probability of being promoted drops by more than 50 percent if you're not on site. There are huge dynamic losses from not being there.
What it means to be promoted is you get to handle the difficult calls. How would you learn how to do that if you were not there? How would your boss learn that you were any good at doing that if you're not there? This view that being around people helps us to learn from each other, and learning is just incredibly important. Even if you think you can do this in the short run, you can't do this in the long run.
Two more things, then I'll be done: one of which is measuring urban winners and losers. We just took a series of things, price data from FHFA, permit data from the census of construction, earnings and employment from the quarterly census of employment and earnings. We took changes over a three-year period now. We've updated this and we've just created an index of the top 50 metropolitan areas.
A couple of facts that come away from this: January temperature over this time period is very strongly associated with employment growth across metropolitan areas. In some sense, this is the last 100 years on steroids. It's not just about labor supply, because you know what else is happening? The wages are going up more in the warm areas. It's got to be both a supply and likely to be a demand hit as well. Home prices are really plummeting, relatively, in the most educated metropolitan areas over this time period. This must have something to do with the ability to use Zoom, and the ability to not go downtown.
This is my top 50 list: Austin hits the top. Sun Belt tends to dominate the list. I'm happy to go back over this in the discussions. The bottom is actually, oddly, San Francisco, which for most of the past 50 years you would have said is an astounding urban superstar. This has been a very tough time for San Francisco, Washington, DC, as well. The fact that the federal government has often not been back to work has also been particularly problematic, and the typical Rust Belt cities are in the bottom quarter there.
Two last things I want to say, and then I'll be quiet. To me, at least, the urban recommendation is that we've got to become better at fighting for talent. If I were giving this to a group of mayors rather than central bankers, this is what I would be emphasizing. This means safe streets, fast commutes, better schools—a variety of things which would make people actually want to come to cities.
I'll highlight a couple of points: the lowest hanging fruit is regulatory reform. Regulatory reform in the housing space that makes it easier to build, and regulatory reform in the entrepreneurship space that makes it easier to start the kind of firms that both provide employment and provide urban fun. It is an outrage in this country that we regulate the entrepreneurship of the poor so much more strictly than we regulate the entrepreneurship of the rich. If you want to start your internet phenomenon, you can have a billion users before any regulator knows you exist. If you want to start your food truck five blocks away, you have 15 permits to go through. This is a huge problem.
Second thing, public safety is not optional. It is a terrible thing that we allowed our police to be abusive towards so many citizens, but the answer is not to defund them. The answer is to manage them better. We want our police to do two things. We want them to provide safety, and we want them to treat every human being with dignity and respect. Do we want a dual mandate? Is that what we want? I think we need a dual mandate for cops, right? [laughter]
Consequently, you actually need to manage for a dual mandate. You actually need to have a clear set of both standards—what gets measured, gets managed—and you want the resources for them carried out. Last thing I'm going to say: fast commutes, congestion pricing: the time is now, and we can target our road repaving better. I have the universe of Uber smartphone data. I can measure road roughness everywhere in America. The fact that you should take away from this, this just shows the break at Chicago of how much roads get rougher, how much speeds go down. This just shows the complete failure to target road repaving. In so many cases, it's not an issue of spending more, it's an issue of spending smarter.
I want to end with this image, and then I look forward to talking to Raphael. Again, I'm very grateful for your attention and the chance to be here. Cities are amazingly resilient places. They've endured much worse than this, they will survive through this, and they will continue to power humanity as they have for thousands and thousands of years. I'm grateful to have the chance to talk to Raphael about them now.
Bostic: Well, thank you, Ed. That was a tour de force. I have to say, I held my breath when you did that leap. [laughter] That was not in the script, and I was...okay, things always seem to happen when I'm on stage.
I also want to say, I forgot to mention in my introduction: if you have questions, please use the app and put them in there. I want to thank Cathy Lemieux, because she took the initiative without me even having to say anything. Kudos to you.
I will start with that question: Great discussion, but what about affordable housing? It's not keeping up with population growth in a lot of places. When I go around to every city in my District, that's the first thing everyone wants to talk about. How does that figure into this?
Glaeser: It's huge. You and I both spend a lot of our lives thinking about housing in different ways. I still fundamentally think the original sin is we've made it far too difficult to permit in our most productive areas. I fear that, while for most of the last 40 years the Sun Belt has been the escape valve and cities like Atlanta made it relatively easy to mass produce new housing, I fear increasingly—even in places like Atlanta—that's not the reality and you have robust demand colliding against fixed supply.
The question is, where do we go from here? I certainly strongly support zoning reform anywhere and everywhere it can happen. Typically, the front lines for this are actually going to be state legislatures because communities are unlikely to upzone themselves on their own, particularly not suburban areas that are primarily bedroom communities. Urban areas, you've got more chance in the big city because you've just got more voices at the table.
We've almost assuredly got to do more than that, because we're never going to go back to producing 100,000 units a year as New York did in the early 1920s. Incidentally, this is not just a static thing that you make it difficult to build. I have a new paper, joint with Joe Gyourko and Bill Kerr and a bunch of other people, that follows up the Goolsbee and Syverson paper on declining construction productivity and argues that what's happened over the last 50 years is that as a result of permitting we have smaller projects. Smaller projects mean smaller firms, smaller firms invest less in technology.
You can see just over the last 50 years, as manufacturing has invested more in R&D relative to sales, construction has invested less. In some sense, we're harming all of America as a result of this, but we have to be creative about a variety of affordable housing policies. Thinking about how to make Section 8 housing vouchers as productive as possible, thinking about how to get LIHTC to work as well as it can—these are all things that should be on the agenda.
Bostic: I'll just add, there's an interesting proposal. Actually, it's a law now here in Florida, called the Live Local Act, where the state has actually done exactly what you said and said, "In any area zoned commercial, you're allowed to build housing by right." It'll be interesting to see how the development community responds to this. It is a way to upzone a geography, and that just passed about a year and a half ago, it got amended, and this is one for folks to watch and that's really good.
Next question, because people jumped in quickly. You got minds working here. This is the question; I'm going to amend it. I'm going to ask it exactly how it is, and then I'm going to say it differently. Can you name three policies or laws most responsible for the extreme inefficiency in US infrastructure investment?
Now, you don't have to do three. If there's one that jumps out at you, or two, that'd be all right. Don't do five, because we've only got 10 minutes. [laughter]
Glaeser: All right. Okay; things I hate about infrastructure investment. [laughter] Things like electric buses, which are part of that. It's not clear if you want to call them infrastructure or not, and I hate buy American rules. Again, I want to echo the conversation earlier, that like China is difficult because of national security issues, but Korea really isn't all that difficult; and we should be inculcating a global fight to do better on this.
We don't even know what's going wrong in terms of much of highway procurement, and there's been a great agenda around this. Leah Brooks, Zach Liscow, and Cailin Slattery have all been fantastic in terms of putting together data. Some part of this is likely to be renegotiation. That's certainly the thing that people talk about most, and putting rules in place that made it very, very hard to renegotiate projects once they're approved is surely part of it, but I basically think we need a procurement agenda on this.
The third thing I'm going to say is how in the world can we be a responsible country and not have embraced cost-benefit analysis for infrastructure? How is this conceivable that we just go ahead with the status quo on this, and don't do more.
Bostic: Even back in graduate school, my friends and I were talking about this cost-benefit thing, and I think there's an open question as to whether we would do it right. In today's environment, if there wasn't a Golden Gate Bridge, would we build the bridge? What's the political economy around that that would get that to happen? I think that's actually a pretty deep question, that you see the challenges that we have doing just baseline infrastructure investment.
Glaeser: I agree. In the 1950s and earlier—and a great book on this is Altshuler and Luberoff. I have a paper on the political economy of transportation that also does this with math. In the 1950s and earlier, almost assuredly, we'd just zeroed out neighborhood complaints excessively, and that wasn't great. Since the 1970s, we've—since at least the highway revolts, and probably earlier—we've done too much to basically allow every neighbor to have a veto and to change the project in any way that they want.
Continuing with the Greek theme, one of the things that Brooks and Liscow find is that our roads have become, over the last 50 years, much more like Odysseus in the Iliad, the man of twists and turns. Our roads have become much more twisty and turny, allegedly because they're trying to respond to community opposition, and this is pushing prices up.
Bostic: Okay; this actually gets to the next question, which is about the road roughness research. You had to rush through that a little bit at the end. The question is, take a few minutes to describe the research, but more importantly, what does it teach us? You talked a little bit almost like a peanut butter approach to repaving and those sorts of things. Are there some simple cues that you could use, that we might advise leaders locally as to how to approach their maintenance of basic infrastructure?
Glaeser: Absolutely. First of all, all of the Uber drivers carry phones. All of our phones have accelerometers, and all of our accelerometers say how bumpy things are. All we've got to do is to get Uber to give us the universe of this from one month. All cities have the possibility of either getting their workers to beam this stuff in, and it could be anonymized, and we can do lots of other stuff. In our case, we're able to do stuff like control for driver-fixed effects, which get rid of issues around the vehicle. But figure out some way to do that.
That data can then be used to figure out things like how much do people dislike bumpiness by showing how much they slow down at the salient town borders. We get from that, then, how different are, let's say, predominantly African American roads, from predominantly White roads. The typical African American, by our estimate, suffers about $320 worth of "bumpiness damage" because of roads being worse than someone living in an overwhelmingly White district. That's primarily across towns, not within towns.
The last thing we do is we show four cities that basically there's no correlation between road roughness and probability of being repaved. That's not driven by the fact that the town is doing some fantastic job of like hitting the downtown areas where it's most crucial. There's no evidence of anything like that. The typical way that they do this is they have a visual-based index, which if you fail the visual index you're supposed to be repaved every year. This is a very usual thing for towns. They've created a mandate for themselves that is just wildly overoptimistic, relative to their capacity. Then when they're not able to hit it, they've got no targeting of the amount that they do.
We did a survey of 180 towns around America. The modal town says they're hitting less than 30 percent of their alleged target. Within that group, nothing. What we're telling them is be realistic about what you can do, then figure out what data you can get to help you to think a little bit about where to be sensible about this. We saw the same thing in earlier research we did on health inspections, where again, there was a rule: everything is supposed to be inspected. Is everything inspected? No. Is there any targeting? No.
It turns out, we ran a contest to figure out a great algorithm where you use Yelp reviews to really target these things. That was very clever and all, and we got all this, but it turns out you get like 90 percent of the way there, they just say, "You know what? Go to inspect the places that failed last year. Okay? That's your algorithm; just do that."
Just doing a little bit to help places be smart about recognizing they have limited resources, recognize they have limited ability to target it, and use simple targeting mechanisms would be great.
Bostic: We see this in many different contexts. We know that, just in terms of nuisance properties in the city, it's a very small number of parcels that generate most of the problems. If you could just get those 5 to 10 percent of parcels under control, the whole city is now under control, because those things don't happen. You mentioned policing: How do you create a policing strategy that does lean into those things? More importantly, are you collecting the data to notice the nuisance properties? Do you know where that targeting needs to happen? It's simple and hard at the same time. It does require institutional coordination at a city level, and many of them are still learning how to do that.
Glaeser: One of the central lessons of my life about city government is that for most things capacity is more important than policy. The important thing is not having the clever idea, it's having anywhere near the number of people you actually need to implement it.
The Federal Reserve Board gives you a very misleading idea about how much capacity is floating around in government because the Federal Reserve System has an amazing amount of human capacity. A lot of it is in this Board. This is not how city governments operate. They're a small number of people; the mayor can't typically fire them; they're not willing to turn on their computers a lot of the time, so it's really important to think about how we can operate with city governments in the real world that they do, and to help them—to enable them—to do these services which are so critical for the actual functioning of normal people's lives.
Bostic: We could go on like this all night long, because just the types of systems that you see being used in cities. Actually not just cities, even. I was at HUD; when I was there in the 2010s, we still had programs running on COBOL. Now, there weren't actually COBOL programmers at the time so it was a whole challenge.
Anyway, let me move on. Next question: If cities are so important, what will it take for new cities to emerge in the US over the next 50 to 100 years, given that we have all this space that's available?
Glaeser: Well, the California Forever project is trying to build a new city about an hour out of San Francisco. Their critical issue is a new city will emerge if they're able to flip the zoning from agricultural to residential. In their case, it's the zoning issue. There's less of a need to create brand new ones, in the sense that there's a lot of spots where there exist towns already and the towns can grow. We're also less likely to see dispersed cities, so the older the area the less concentrated urban populations are in single, large-mass agglomerations.
Compare Europe, which was an ancient area built during an era in which transportation costs were really high, and it made sense to have these little towns next to all the farmers that were dispersed. Compare that with Latin America, which urbanized in the 20th century when transportation costs were low, where you have places like Mexico City and Sao Paulo. I would expect much of the urbanization that occurs in the US going forward is more likely to be sort of edge-city growth around already thriving metropolitan areas, rather than brand-new cities emerging in the middle of nowhere.
Bostic: This will be the last question, and then we'll let folks eat. Do you think the superstar cities like San Francisco, New York, and Chicago will be overtaken by better run or better managed smaller cities in the coming decades, like Atlanta, San Diego, et cetera?
I would overlay this as well on the—I didn't write Atlanta in here, just for the record. [laughter] It is actually written in the question—the first chart you showed, which showed that the population decreased in the highest density places. There's another narrative on this as well as the issue around the underemployment or the reduction of the employment density among prime-age males. All of that argues for some migratory patterns to emerge. Would you expect those to go to the second and third tier cities, or how do you see all that playing out?
Glaeser: I've long thought that the most dynamic parts of America right now tend to be the Sun Belt cities that combine a relatively pro-business environment with lots and lots of education. That includes Atlanta, which is about as educated as Boston—which, no one in Boston will actually believe when I tell them that's what the census says, but it is in fact true—or Austin, or Charlotte.
This is a simple, two-factor model of economic growth that you want a government that does reasonable things, that's kind of pro-business, and you want really skilled people. This is along with my usual mantra of urban economic management to mayors, which is: attract and train smart people, then get out of their way. Don't try to manage sectors, don't try to do other things beyond that.
I see a lot to like in the "Atlantas" of the world. Whether or not it's size, per se, or having the combination of skills and being relatively pro-business, I'm not sure necessarily that I see a huge advantage in being midsize relative to larger, although the larger that you are the more the burden is on the public sector to deal with the downsides, the demons that come with density, be those contagious disease, traffic congestion, crime, high housing costs.
If you're Singapore, you can manage density at almost any believable size. If you're a really underperforming American city, and we won't say who you are, it's much harder to do that. The downsides of growth become more severe.
Bostic: All right; I've got zeroes on the clock, which means we're done. Ladies and gentlemen, please join me in thanking Ed Glaeser.
Glaeser: Thank you.
Bostic: Thank you. Bon appétit, and we'll see you in the morning.