Skip to Content

Lands of Opportunity: Cities and Prosperity

How do you keep them down on the farm after they’ve seen Shanghai? Maybe you don’t want to.

Brent Ryan: You’re an economist interested in themes like the relationships between government regulations and land markets, and between innovation and urban prosperity. In recent years, you’ve also become well known for your work on affordable housing. What are some of the connections among your interests?

Edward Glaeser: Most of my early work was about the effects of geographic concentration of industries in cities — for example, the reasons why wages are higher in cities. Until a decade ago, my work was remarkably free of any focus on the importance of physical structures in the growth of cities. But then I became more involved in land-use issues and came to the view that housing is an important determinant in how cities grow and change. I tried to understand why some places, like Boston and San Francisco, have very high wages but very little housing and population growth, and some areas, like Las Vegas and Houston, have relatively low incomes but relatively high population and housing growth. Those two models are incomprehensible without looking at the physical world and acknowledging that it’s much easier to build in Houston than it is in Boston. So I started out with a focus on the classic economic issues of cities but came to the belated recognition that you can’t understand cities without understanding their physical aspects as well.

Brent Ryan: You’ve just published Triumph of the City, which has the wonderfully wide-ranging subtitle “How Our Greatest Invention Makes Us Richer, Smarter, Greener, Healthier and Happier.” By writing a book about the city as a whole, would you say you’re returning to your early interests? Or exploring the latest of your interests?

Edward Glaeser: I would say it’s trying to synthesize 20 years of work on cities. The book lies on the bed of economic research and statistics, but it’s filled with both history and ground-level observation. Nobody understands cities without actually walking the streets.

Brent Ryan: Two major themes of the book seem to be the idea of megacities — the world urbanizing rapidly — and the idea of prosperity, the notion that cities generate prosperity and innovation. How do cities create prosperity?

Edward Glaeser: You might think that globalization and technology would have made cities largely obsolete, that we would all telecommute from what Alvin Toffler called “electronic cottages” off in the middle of nowhere. But of course the opposite has happened: in fact, cities are healthier, more important, and more economically vibrant than ever. The reason, which is also why I think cities are places of prosperity, is that the most important function of cities is spreading knowledge and promoting innovation. Cities make us smarter. One of my favorite examples is the creation of Renaissance painting in Florence, which starts with Brunelleschi figuring out some of the rules of linear perspective, which he then passes along to Donatello, who puts it in a low-relief sculpture on the wall of Orsanmichele and passes it along to their friend Masaccio, who puts it on the wall of the Brancacci Chapel and passes it along to his student Fra Filippo Lippi, who passes it along to Botticelli, and so forth — each artist riffing on another and figuring out new ways to use this gift to create wonders that the world still treasures. I interpret the murky origins of the skyscraper in Chicago — the debate about the importance of the Home Insurance Building, and the relative prominence of Burnham and then Sullivan’s aesthetic innovations — as being a similar chain of smart people connecting with one another. There’s no great invention that isn’t in some sense collaborative. And cities, by pulling together really brilliant people, as Chicago did in the world of architecture in the years after the fire, are able to create these wonderful things that make all of our lives better.

Brent Ryan: Of course, cities also present some extreme challenges, and you’ve written quite a bit about urban problems and solutions. The US has a number of successful cities, and Boston is certainly one of them. But 50 years ago, Boston’s future wasn’t so bright. I have a book from 1981 that identified Cambridge as the second most steeply declining city in the US. What happened to turn Boston around?

Edward Glaeser: One of my predecessors vehemently insisted that, unless the federal government bailed out the candy industry, Cambridge would never come back. The Boston story is remarkable in its comeback sense, but not remarkable in its broad arc. At the beginning of the 20th century, Boston was an industrial town built around its transportation connections. But with declining transportation costs, industry was able to move to cheaper places. And then the center city was hit by the onslaught of the automobile, which encouraged people to move out.

But Boston came back. I think it’s because there was a countertrend: these same changes in technology increased the value of being smart. The first wave was driven by people associated with MIT — people like Arthur D. Little, who gave us one of the first consulting firms; Vannevar Bush of Raytheon; and An Wang, a computing pioneer. The concurrent development of Route 128 as the place for new technology companies supported the growth. That was followed by the relative stagnation of Route 128, which AnnaLee Saxenian so eloquently dissects in her book comparing Route 128 and Silicon Valley. She argues, and this is something that Boston stills struggles with, that the large-firm corporate mentality of Route 128 stifled growth. And she is empirically right. Places with lots of small firms tend to do much better than places with big firms. Today, Boston’s Suffolk County has one of the largest average firm sizes of any significant county in the country, which is not a good sign. Luckily, our education seems to make up for that difficulty, and we have also benefited from the connections among very smart entrepreneurs. So Route 128 faltered, but financial services and management consulting have grown, and we have benefited from other innovations, such as biotech.

Brent Ryan: You also write about cities that are not growing but are, in fact, shrinking. So urban growth isn’t inevitable, and you even argue that innovation can be self-destructive.

Edward Glaeser: Sure, it can. Henry Ford’s innovation is an example of that. Detroit in 1900 felt a lot like Silicon Valley in the 1970s. There was a genius on every street corner. And they did this amazing thing: they figured out how to create the mass-produced, cheap automobile. For the city of Detroit, it proved to be a very mixed blessing, because Ford’s solution was to create vast, vertically integrated factories that were in effect walled off from the outside world. Think about the 19th or late-18th century: the things that made cities successful were small firms, smart people, and connections with the outside world. Proximity mattered. Those are still the things that are most important to urban success today. Yet that’s the opposite of, say, Ford’s River Rouge plant, which is walled off from the outside world. Once you create a walled-off, vertically integrated firm, you don’t need to be in a city. So when transportation costs declined, which meant access to the Great Lakes wasn’t important, plants could move to cheaper regions — right-to-work states, or even China. The problem was that Ford created a city that lost the ability to reinvent itself. In Boston, a chain of smart innovators continues to come up with new ideas and build on each other. Even today, only 12 percent of Detroit’s adult population has a college degree, as opposed to the 27.5 percent national average. That’s a real impediment. Urban decline happens. Part of the real tragedy of Detroit has been the mistakes made in trying to fix it, especially the strategy of building structures instead of investing in people. That’s always a mistake. I hate to tell this to an architecture magazine, but I believe very strongly that the real city is the people.

Brent Ryan: Buildings don’t matter?

Edward Glaeser: The buildings of course matter. But the real heart of the city is always the people. Buildings are ultimately about making accommodations and bringing joy to people. But the hallmark of declining areas is having a lot of infrastructure relative to people. In a place that’s declining, it’s almost impossible to imagine that it makes sense to add more infrastructure. Yet the federal government was there, ready to subsidize urban renewal and transportation and to build new structures. So Detroit now has a people mover that glides over essentially empty streets, which is about as nonsensical an idea as you can possibly have. And that makes me angry, because they should have been investing in the children growing up in the city, to help them find success.

Brent Ryan: It’s impossible to talk about cities in this country without also talking about suburbia and sprawl. You’ve written about energy-wasting suburbanites, contrasting them with energy-saving Manhattanites.

Edward Glaeser: I want to make it clear that I’ve been one of those energy-wasting suburbanites for about five years, so I know whereof I speak.

Brent Ryan: And as you’ve noted, it’s a popular choice, one that often reflects a certain economic efficiency.

Edward Glaeser: People make these choices for very understandable reasons. If you want cities to compete and succeed, you need to understand what the suburbs are delivering and figure out why cities can’t deliver something comparable. Why would middle-income Americans choose Houston over New York City? Just run through the numbers. I assume they’re earning slightly more money in New York. But after housing, after taxes, a slightly lower initial income ends up translating to a 50 percent larger after-tax, after-housing real income in Houston. It’s not unusual to find homes in Houston for $150,000 because of its unfettered housing industry. I’m not advocating a full Texas solution here. But you have to understand that the people who are choosing Texas are not crazy, and they shouldn’t be treated as if they were deranged. We should figure out how to make Greater Boston more appealing to them, and one way is cheaper homes.

Brent Ryan: And cheaper housing is one of the principal advantages of sprawl.

Edward Glaeser: Yes, it’s a huge advantage of sprawl. As an economist, I’m not comfortable criticizing any individual’s decision about where to live, but I am very comfortable criticizing government policies that artificially push people away from cities into suburbs. And there are three sets of policies that warrant examination. The first issue is our fetish for home ownership. Approximately 85 percent of single-family detached houses are owner-occupied; they tend to be in the suburbs. And approximately 85 percent of the units in multifamily dwellings, which are the basis of urban housing, are rented. The American Dream dictates that we’re going to have a massive subsidy for home ownership — and I’m talking not just about the home mortgage interest deduction but also Fannie Mae, Freddie Mac, the whole shooting match — which essentially pushes people out of urban apartments and into suburban homes. It’s hard to see why that’s the job of the federal government. There’s a lot of nonsense spread about how this is about creating an ownership society where everyone has more assets. But then why would we structure it as a subsidy to debt? We’re giving people the incentive to take out every ounce of equity they have in a house because they are subsidized based on the amount that they owe. That badly needs to be rethought. The second policy that’s important to examine is our subsidization of transportation, especially of roads. A study by Nathaniel Baum-Snow shows that each new highway that cuts into an urban core reduces that city’s population by 18 percent. But we continue to do this. In the latest stimulus bill, the infrastructure spending was twice as high per capita in low-density states as it was in high-density states. If infrastructure means more roads going into low-density areas, we shouldn’t be subsidizing it. The third issue, and this is the really intractable one, is our schools problem. For so many parents, the education gap between cities and suburbs is huge. And it’s very difficult to figure out how to change that. Again, I’m going to show my economist side on this, but I believe that cities at their best succeed because they have lots of competition and innovation. One possible solution to the schools problem is to encourage more competition. If you think about what makes the restaurant scene in Boston or New York great, you’d have to point to the ability of new entrants to start and then to fail if they’re lousy — that’s what creates overall success. Imagine if you instead handed over all the restaurants in Boston to a single food superintendent.

Brent Ryan: So you argue that suburbia represents a rational choice for Americans faced with conditions that our policies have created. But at the global scale, where some of these policies don’t apply, suburbia also seems to be the choice that people are making. There is sprawl around Brussels and sprawl around Shanghai. What do you think of other world cities, particularly megacities, following America’s lead with respect to its built environment?

Edward Glaeser: Anyone who worries about carbon emissions needs to worry deeply about the future of urban reform in the developing world. Quite honestly, because Europe has a relatively stagnant or declining population, Brussels amounts to a rounding error in terms of the global emissions of the world. But China, India — that’s something else. Right now, China has very little air conditioning and only moderate car usage; that’s going to change as the country gets rich. Many of the great environmental battles of the 21st century will be about urban form in the growing cities of Asia. The really big payoff will come from creating a denser, more sustainable world in India and China relative to the US. That doesn’t get us off the hook — we can’t exert any moral persuasion unless we get our own greenhouse in order.

Brent Ryan: What is leading to this explosion of urbanity across the world?

Edward Glaeser: Cities have always been part of the process of development. We are witnessing a world in which poor countries are becoming rich countries, and cities are helping to make that happen. One of the critical roles that cities play in the development process is that they’re conduits across countries and continents. They enable people from India, for example, to connect with people from Europe and the US. Gandhi may have thought that the future of India was in its villages, but there is no future in rural poverty; the future of India is in its cities because they enable it to be part of the world economy and to export its remarkable human skills. And obviously China is doing the same thing. Of course, these growing megacities face enormous challenges; I’m not trying in any sense to sugarcoat it. If I’m close enough to exchange an idea with you face to face, I’m also close enough to give you a contagious disease. And if I’m close enough to sell you a newspaper, I’m close enough to rob you. Cities need government much more than low-density areas do. They require infrastructure: paved roads; sewers; and, most of all, clean water. That’s an enormous challenge, particularly for weaker governments to meet. We shouldn’t forget that at the beginning of the 20th century, American cities were spending as much on water infrastructure as the federal government was spending on everything except for the Army and the Post Office. It was an extraordinary investment.

Brent Ryan: Some architects and planners are beginning to focus on the ways that design can serve these cities more productively. The slums or favelas that ring these cities, for example, are getting more attention. What are some ways that you think design might be deployed more effectively in those areas?

Edward Glaeser: One of the greatest needs in these very rapidly growing cities is also one of the most counterintuitive: producing nondurable housing. New housing needs to be affordable and environmentally sensitive but built for the short term. If incomes are growing quickly, then that country is going to look very different in 30 years, and it’s almost unimaginable to believe that the housing built today will be appropriate in 30 years. That said, these cities already have richer people and need higher-end housing as well as commercial space. And it’s absolutely crucial that the collective architectural genius thinks about how to make these cities more beautiful, more sustainable, more interactive.

Brent Ryan: You’ve argued that the urban growth that’s occurring is something that we shouldn’t resist but accept. Should we be attempting to shape the growth of these cities in any way, or should we let the market do that?

Edward Glaeser: We do absolutely need to think about shaping them. I just wish that shaping them, in many cases such as India, didn’t mean floor-area ratios of 1.33 — which severely limit average heights and guarantee that office space is extremely expensive and that the city sprawls out. That’s not the kind of shaping that they need. There’s great opportunity for urban planners to be heroes in the growing cities in the world where their services are so badly needed. But they have to recognize these places are going to continue changing.

Brent Ryan: Their designers and planners need to be as agile as entrepreneurs, paying attention to events as they change, and responding quickly and innovatively as they happen.

Edward Glaeser: That’s a great way of putting it. I guess we should now be advising “Go east, young man.” This is a time in which, if I were in your industry, I would want to be in China and India. Extraordinary things will happen there, things that will require a lot of innovation and a lot of thought.