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Civic Bulletin
No. 40 March 2006
Making Cities Skilled
Edward L. Glaeser
Director, Taubman Center for State and Local Government; and Director,
Rappaport Institute for Greater Boston
John F. Kennedy School of Government, Harvard University
MR. STEVE MALANGA
I’m a Senior Fellow at the Manhattan Institute and a
contributing editor of City Journal.
Throughout history, cities that have been centers of great
learning have usually also taken their place as economic powerhouses.
Here in America, economists have long noticed that educated
cities—that is, cities with a greater percentage of knowledgeable
and skilled residents—have fared better economically
than their unskilled counterparts, but the exact relationship
between these forces hasn’t always been well understood.
If anything, the debate over the role that skilled workers
play in a city’s success has become more heated and a
bit more confusing in recent years. That’s largely because
a professor at Carnegie Mellon in Pittsburgh by the name of
Richard Florida has dazzled the public policy world with his
theory that skilled workers want to live in places that are
hip, cool, bohemian, and gay-friendly, among other things.
To make cities an economic success—you’re laughing,
but this is accepted wisdom right now—the good professor
has told mayors and economic-development officials that they
need to attract the creative class with fancy lifestyle amenities:
for instance, by building bike paths, because, of course,
we all know that skilled workers all bicycle; by hosting rock
festivals, because the new generation of skilled workers see
themselves as the rock stars of the business community; and
by redeveloping their downtowns into trendy food and entertainment
districts dotted by artist studios, independent bookstores,
and live music venues, or what we used to call when I was
in college, “bars with bands.”
Part of what has made these ideas such a success is that
they have partially absolved public officials of the tough
choices of governing. Professor Florida, for instance, tells
mayors that they often don’t understand what the creative
class really wants. For instance, mayors have spent so much
time obsessing about the quality of their school systems when,
it turns out, much of the creative class is single and really
cares more about bars with bands. Mayors and governors also
ought not to worry so much about things like high tax rates
that are driving business away, since apparently, the creative
class really doesn’t care that much about taxes.
Into this debate strides Professor Glaeser to bring some
common sense to the discussion, though it is common sense
backed up by the weight of impressive research. The director
of the Taubman Center for State and Local Government at Harvard’s
John F. Kennedy School, Professor Glaeser has, through a series
of studies, traced the importance that skilled workers play
in the economies of cities and what cities should do to attract
and retain them. Drawing on his own work and that of others,
Professor Glaeser warns policymakers that these workers still
care deeply about what we all care about, such as the quality
of a school system. He tells us that while they don’t
migrate exclusively to the lowest-tax communities, they still
seek fair and balanced taxes, and, above all, they expect
safe streets. After the frills and embellishments of the Florida
agenda, Professor Glaeser urges a return to basics. It’s
my pleasure to present to you one of the most distinguished
observers of urban economy, Professor Ed Glaeser.
PROFESSOR EDWARD L. GLAESER
Thank you very much. I’ve been a big fan of the Manhattan
Institute for almost fifteen years, and it’s a special
pleasure to be able to try to discuss my ideas in this august
gathering.
Let me start with the economic approach to cities. Economists
define cities as “the absence of physical space between
people and firms.” As such, the attraction that cities
have is their power to reduce transportation costs. It’s
important that we interpret the concept of transportation
costs broadly. In the old days, it was transportation costs
for goods; today, it’s transportation costs for people
and, even more important, transportation costs for ideas.
After all, what is the magic of New York if not the ability
of people’s ideas to hop from one person to another to
fuel productivity, invention, and reinvention? Cities grow
when people want to be near other people in that city or to
something else that’s near that city. This simple framework
helps us make sense of a great deal of America’s urban
history.
Almost all our cities in the seventeenth and eighteenth centuries
formed to eliminate the transportation costs for moving goods.
There were ports, places where the river met the sea, places
that had a real comparative advantage in moving goods. There
were seaports and, later, railroad hubs; then there was the
self-reinforcing growth of industry—the cycle where manufacturing
firms located around an initial port in an initial downtown.
Certainly, this is the case of New York, starting as early
as the 1820s, when industries such as sugar refining, textiles,
and publishing came and were the dominant industries in the
city in the first half of the nineteenth century to take advantage
of New York’s role as a commercial hub. Indeed, as late
as 1950, seven out of the eight largest cities in the U.S.
were fundamentally manufacturing cities, including New York.
They had more manufacturing than the U.S. did as a whole.
By 1990, that would change: six out of the eight largest
American cities would be under-concentrated in manufacturing.
In an earlier era, water transport was much cheaper than moving
goods by land. I’m always struck that in the classical
era, it was cheaper to move goods from one end of the Mediterranean
to the other than to move goods seventy-five miles over land.
In an era in which water transportation is so much cheaper
than its land equivalent, water was everything. Of the top
twenty cities in 1900, eight were on the Atlantic (generally,
where rivers meet the sea), three on the Mississippi River,
three on the Ohio River, three on Lake Erie, two on Lake Michigan,
and one was on the Pacific. There’s not a single city
that was not tied to a waterway.
Over the twentieth century, this urban landscape built around
manufacturing, transportation costs, and waterways received
massive shocks. There was a massive move to sun and sprawl,
to decentralization of population within metropolitan areas,
a transition across metropolitan areas to places that were
car-based, rather than public transportation–based. These
phenomena should be seen as part of the same basic pattern—the
revolution in transportation costs. In 1900, it was important
to be near the coal mine, near the Great Lakes; in 2000, it
was irrelevant.
In 2000, increasingly, cities are located around places where
smart people want to live rather than around places where
businesses have some inborn transportation cost advantage.
Over the twentieth-century consumer cities have risen as the
primacy of consumer tastes have dominated, rather than producer
cities, and cities are increasingly built around cars, rather
than walking or public transportation, with the prominent
exception of this great metropolitan area. Figure 1 is the
real cost of dollars per ton-mile by rail over the twentieth
century. It’s more than a 90% reduction in the real costs
over the past hundred years. This decrease by rail understates
the real amount that transportation costs have declined, because
it doesn’t even begin to factor in the incredible advantages
created by highways, which allow the disbursement of production
within metropolitan areas away from the old hubs that were
the core of traditional monocentric cities and the rise of
other forms of transport as well.
| FIGURE 1. Declining Transport Costs: Rail |
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Naturally, this decline has been associated with the decline
of manufacturing.
Manufacturing cities declined, unsurprisingly. Manufacturing
suburbanized, as their firms are big users of space, and manufacturing
left the U.S. as a whole. After all, if it’s so cheap
to move goods, why not locate them all in China or wherever
it’s cheapest to produce goods? Even within the U.S.,
manufacturing firms no longer locate near their suppliers
or customers. There is moderate statistical correlation between
the co-location of manufacturing firms that supply to one
another, but it’s a tiny fraction and is unimportant
relative to location based on where relevant workers are.
That is not true of business services, because delivering
their product still involves face-to-face contact, which involves
people’s time. Business firms are still driven by suppliers
and customers, and that is part of New York’s magic.
There is no reason to think that the decline of manufacturing
firms or the exodus of manufacturing from cities is inefficient
or bad. It is a big mistake to think that we’re going
to reinvent cities around nineteenth-century solutions. Accompanying
the decline in manufacturing cities has been the rise of the
Sunbelt, which is part of a more general phenomenon of locating
in places where consumers want to live. Many things are bound
up in this: the ending of disease in the South, the ending
of the pre–civil rights days of the South, and the rise
of air conditioning. But one interpretation is that if the
city of 1900 was located in a place where businesses have
a comparative advantage because of proximity to the coal mines
or the river, in 2000 businesses are in a place where consumers
want to live, which is warm and dry and looks like Las Vegas
or Phoenix. These places are cities, but they’re not
necessarily the cities that we’re used to looking at.
Density, by and large, is associated with decline. New York
is an outlier in this. You’re seeing a general pattern
that people have moved from walking cities and high-density
cities to car-based cities.
This phenomenon has gone on unabated in the 1990s. There
is a relationship between cars per capita across cities in
1990 and the growth of a city between 1990 and 2000. It’s
not hard to understand why cars are so popular. The average
commute by public transportation in this country is 47 minutes,
the average commute by car is 23 minutes, and most forms of
public transportation involve time costs from 15 to 20 minutes.
Think of going to the number four, five, or six subway line
in Manhattan, waiting for it to pick you up, and then walking
from wherever it drops you off to your final destination.
That’s the fixed time cost that’s involved, and
it’s hard to fight against. It doesn’t mean, obviously,
that you should be driving around in a car in Manhattan. That’s
certainly not what we’re suggesting, but we can understand
why car cities have been so popular. It’s foolish to
think that that’s necessarily going away, although it
is also clear that New York, and perhaps Boston and downtown
San Francisco, can survive despite the disadvantage of being
focused around a slower transportation technology.
Let me speak a bit about New York, since I’m here. The
era 1800 to 1900 was spectacular. Between 1900 and 1930, a
lot of the growth was in the outer boroughs and particularly
in the consolidation of Manhattan; since 1940 or so, there
is a decline relative to the U.S. as a whole. Manhattan’s
period of greatest growth was one in which its waterborne
advantage as the world’s port was most important. Despite
the relative decline of New York, it is important to remember
that New York is one of only two of the ten largest cities
in 1930 that did not lose population between 1930 and 2000.
(The other city that did not lose population in that period
is Los Angeles.) The other eight cities all lost population,
often in big numbers: Philadelphia, down from 2 million to
1.5 million; Detroit, down from 1.6 million to 950,000; Cleveland,
from 900,000 to 478,000; St. Louis, from 821,000 to around
348,000.
I often sense when reading City Journal that there is an
attempt to argue that all cities have in common revitalization
and a future; while I think that New York, Boston, and San
Francisco clearly have a future, it is less clear to me that
they have all that much in common with Cleveland or St. Louis.
It’s less clear that we can predict that those cities
will come back. Of course, the continued strength of New York—its
unique power—has increasingly been in the area of finance.
New York looks more and more like a one-industry town. The
top three-digit industry—that’s three-digit, which
is a very small industry—has 28% of the payrolls in the
latest economic census. The top four industries combined—four
three-digit industries—have 56% percent of the payroll
(a comparable number for Boston would be 37%). This shows
an incredible focus on finance as the engine of the city’s
economy, which is worrisome, especially for people who believe
that industrial diversity is a key element in continuing urban
reinvention and innovation.
The primacy of New York and finance is another legacy. The
port comes out of financing the early investment in shipping
and its continued dominance in New York. It’s because
there is no industry where up-to-date information is more
valuable. There is no other industry where you can make more
money, more quickly, by knowing something quicker than anyone
else does. In that world, the high-density world of Wall Street
is perfect, because ideas cross hallways and streets more
easily than oceans and continents; being in this information
hive of downtown Wall Street is the comparative advantage
of the city. It’s less clear that that will continue.
Wall Street should be seen as the metaphor for what has driven
cities beyond the world of sun and sprawl. What has driven
the cities that have survived, even in the declining region?
Those cities that have survived have reinvented themselves.
They’ve become centers for idea creation, which is the
main focus of my conversation here.
Moving ideas and skilled people has been what made cities
work. It’s no longer about the port; it’s about
the people. Entrepreneurship is part of the equation. I’m
going to tend to use the share of people who have college
degrees as my measure of skill. Understand that this is a
metaphor at best, an imperfect measure of the general level
of skills and entrepreneurship that we’re talking about.
The policy vision that this will tend to push is that if we
have skilled workers, the employers will follow. We should
have an employee-based view of public policy. This is more
generally the relationship between 1980 and 2000, between
the share of the population with college degrees and the growth
of the metropolitan area over the next twenty years. It’s
a fairly pervasive hundred-year pattern, since the occupational
patterns of 1880: the more skilled the occupations in 1880,
the faster the growth of the city in every subsequent decade.
The only time that the statistical significance gets weak
is during the 1930s, which was, in many ways, an unusual decade.
The density of colleges has predicted growth since then.
Schools predict population growth, employment growth, income
growth, and housing growth. Schools are a reliable predictor
of which cities do well and which cities do poorly. You might
think that this is a phenomenon of our most recent information
age, but, surprisingly, it appears to be true in the prewar
era as well. One way to understand this fact is that the major
element of modern urban success is speeding the flow of ideas.
High density has its comparative advantage in facilitating
face-to-face transmission of new knowledge; new innovations
are created in urban areas. There’s great evidence on
patent citations that shows the importance of physical proximity
for speeding the flow of ideas, so patents are much more likely
to cite other patents that are physically proximate, made
by inventors who are physically proximate to one another.
To further confirm the role of cities as forges of human
capital, places where new ideas are created, look at the
massive wage difference between people who live in big cities
and people who don’t, and then look at migrants who come
to those big cities and migrants who leave. There’s no
instance in which a migrant who comes to New York immediately
gets a 30% wage hike, or a migrant who leaves New York receives
a 30% wage decline. Over time, the rate of wages increases
faster in big urban areas, and you accumulate human capital.
When people leave, they appear to take that human capital
with them. Increasingly, idea-oriented industries are over-concentrated
in city centers, so if you look within cities, the industries
that are nearest to the city center are finance, insurance,
and real estate; manufacturing is sprawled farther out. Boston
would be just another declining, cold, manufacturing city
if it weren’t for its preponderance of human capital.
One of the remarkable things in terms of the connection between
human capital and ideas is how different this correlation
is between regions.
If you’re in a cold region of this country, the Northeast
or the Midwest, skills are almost everything. Champaign-Urbana,
Illinois, is doing a little worse than would be expected,
perhaps. Barnstable is doing a little better, but basically,
things are on this regression line. One way to view this is
Las Vegas, with its warm weather and its sprawl, and its low
regulations, without any need for anyone to be smart and figure
out new ways to make the place do well. But look at it. It’s
down there—fantastic growth, no college graduates.
An alternative interpretation of what’s going on here
is that skills in cities are particularly important for reinvention.
The economic history of Boston shows that there have been
at least five periods of reinvention, when this city has undergone
a major shock and looked as though it was finished. But time
and time again, smart people figured out some new thing to
do. The crucial thing, obviously, is that you have smart people
and that they want to stay there—and that they don’t
immediately respond to a negative shock by moving on to the
next city. Boston has an advantage because it’s the first
consumer city in America, as opposed to New York City, which
was settled by Dutch tradesmen. Boston was settled by people
who wanted to be there fundamentally for consumption reasons;
as such, they didn’t leave immediately.
The key to reinvention is to keep skilled people from leaving.
That brings us to the actual policy issue: How do you make
cities skilled? If skilled people are so important, how do
you keep skilled people in your city? How do you create this
engine for urban reinvention? The biggest problem with the
skilled base is how permanent this is across space. There’s
an 89% correlation between the share of college graduates
in 1960 and 1990. That’s almost a perfect fit. That tells
you that very few cities have been able to break their historical
destiny in this regard. It’s awfully hard to change what
you have. The biggest trend over the past twenty to thirty
years has been the tendency of skilled cities to become more
skilled.
Historically, a big problem for many cities has been that
being good at manufacturing meant that they were less-skilled
places, so cities such as Philadelphia and Detroit tended
to attract huge numbers of unskilled people, which can be
a real difficulty for the city later on. The fact that a city
was good at doing something for less-skilled people—though
it was great in 1950—was terrible in 2000, at least for
urban success.
Figure 2 shows the relationship between the percentage of
adults with college degrees in 1980 and the growth in percentage
of people with college degrees from 1980 to 1990. To the cities
that have, more has been given. This same effect appears in
the 1990s in Figure 3; if anything, it’s gotten even
stronger. The more skilled the place was initially, the more
skilled it has become over time. This makes it hard for the
Clevelands and the St. Louises of the world to break what
they have. One reason for this is that skilled people within
the firm have gotten more important. Skilled entrepreneurs
used to hire unskilled workers. Think Henry Ford: maybe not
skilled in terms of a B.A., but by any reasonable definition,
a very skilled guy. He provided tens of thousands of jobs
for relatively unskilled people. Bill Gates—again, not
a skilled person by this measure; clearly, the measure is
problematic—provides thousands of jobs, but jobs that
are focused on high-skill areas. This is one reason to think
that skilled people are increasingly sorting with other skilled
people and decreasingly providing jobs for unskilled people.
The evidence seems clear.
| FIGURE 2. The Divergence of Human Capital |
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| FIGURE 3. |
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If you look at the relationship between the average share
of workers in an industry who have college degrees and the
average share of managers in the industry with college degrees,
or the average share of professional workers in that industry
with college degrees, that number was about 35% in 1970. It
has risen to over 50% in 2000, so there’s been an increased
tendency across industries and firms for skilled people to
work in the same industries and firms. Figure 4 shows the
relationship between the share of managers with college degrees
in 1970 and the share of workers with college degrees in 1970,
and Figure 5 shows that same relationship in 2000: 1970, less;
2000, more.
| FIGURE 4. |
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| FIGURE 5. |
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| FIGURE 6. |
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We also see this effect in wages. In general, the wage effect
of living around skilled workers has gotten larger. A substantial
increase occurs between 1970 and 2000, but the effect has
been almost double for college graduates than it has been
for high school dropouts. The wage increase for living around
other college graduates is much stronger now for college graduates
than it is for high school dropouts. That was not true in
1970. If you want to understand why initially skilled cities
have become more skilled, it’s right there in the wage
data in the labor market: if you are a college graduate, the
premium from living around other skilled people has gone up
over time, and, as a result, college graduates or other skilled
people have moved into skilled cities. Figure 6 shows the
stunning correlation between the share of the population with
college degrees and wages across cities. This graph looked
much flatter in 1970. Today, if you want to understand how
rich a city is, you need only look at how many college graduates
it has.
Before we get into the Florida bashing, let me say that Richard
is sometimes right on: he generously cites my own research
for providing the basics for arguing that skills are important.
But there are two basic questions. Before we even get to the
debates with Richard, the first question is: Should you be
industry-based, or should you be people-based? Should you
be providing a Silicon Valley sort of production-based strategy,
or should you be getting smart people and letting them innovate?
The good news is that certain types of industry-based strategies
might help. After all, industry and skills go together.
The bad news is that in the best-case scenarios, the top
bureaucrats of governments still choose losers. I go back
to David Weinstein’s super work in the 1970s and 1980s
on MITI, which was the hero of the Western world. Yet when
you looked at the numbers, MITI chose losers. Over and over
again, MITI chose bad companies—not good, comparable
companies with Japan. If you compare the human capital that
was involved in MITI with the average economic-development
policy in a small city in the U.S., it’s incomparable.
City governments did not have the resources that are capable
of picking which industries are going to win.
Cities often focus on growing industries in which they have
no conceivable comparative advantage. How are cities with
incredibly low skill levels and no major universities going
to be serious centers of biotech? Yet you hear over and over
again from small towns throughout the U.S. that they imagine
themselves as the next biotech center. This is an important
cautionary tale for why choosing industries is not great.
In many cases, they don’t even focus on the new industries.
They focus on the old ones: they try to get smokestack industries
or something like shipbuilding. Why would you think that by
focusing on low-skilled, nineteenth-century industries that
you are going to reinvent your city for the twenty-first century?
The hallmark of the modern economy is unpredictability and
innovation, and it argues for letting businesses and entrepreneurs
make these decisions rather than trying to micromanage which
industries you’re going to be good at. This is not to
say that some business-related policies don’t make sense,
such as low taxes and low regulation and things that will
attract entrepreneurs, but micromanaging the industrial side
doesn’t make sense.
From the producer approach, we come to the two visions of
the consumer city, and here is where Richard and I finally
part ways. Both of us tend to think that the important thing
is attracting skilled workers. Let them innovate, let them
figure out how to make a dollar or how to employ people in
the city. The question is, which vision do you like? The Florida
vision is dense, bohemian downtowns, tolerance, arts. It seems
to offer a magic bullet, as was suggested in his speech for
declining cities. It’s popular, partly because it seems
cheap.
A more traditional vision, which I’m fonder of, is safe
streets, quick commutes, and good schools. It favors medium
density over high density. It recognizes that the car isn’t
going away and that most middle-income people are attracted
to the car. This advice is more relevant outside of Manhattan.
It suggests hard work and real government spending, but low
taxes relative to services. Without controlling for percentage
of college education, variables such as index of creative
occupations, the gay index, and patents per capita generally
predict growth, so Richard is right about that. Once you control
for percentage of college graduates, though, all this disappears.
None of these measures has any ability to predict the future
other than that. There’s no way with the data to reject
the view that the number of college graduates, or some reasonable
proxy for skills, is everything. Nothing else appears to predict
anything about urban success.
I think that the key is to focus on people with skills. What
do people with skills like? By plotting the relationship between
density and skill levels we find that the places with the
most skills are middle densities. If Florida were right, the
most skilled people would be living in the densest areas,
which is certainly not what we are seeing.
As for cars and skills, is it true that skilled people are
so enthusiastic about bicycles? New York is an outlier, but
on average, people with skills drive their cars. It’s
one thing for the smart growth people to be enthusiastic that
Boston’s going to reinvent itself as a public transportation–friendly
place. Try convincing a pair of thirty-five-year-old biotech
people from UNC to leave their $350,000 McMansions and their
twenty-minute commutes to come and take the Red Line for fifty
minutes to get downtown. It’s very hard to do that. Skilled
people generally have shorter commutes, but not always.
What else do skilled people like? They live in places with
lower murder rates, and they don’t like crime. The higher
the murder rate, the less the growth in skills between 1970
and 2000. Figure 7 looks at the murder rate in 1975. On the
skill rate today and on the rate of change, there is lots
of room around the line, but in general, crime rates do appear
to matter; running a decent police force has been very important
for revitalizing Manhattan. You don’t get away with a
few coffeehouses if you’re going to have places that
are totally crime-ridden.
| FIGURE 7. The Murder Rate and Growth in Skills 1970-1990 |
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There are very few controlled experiments, but the weight
of the evidence suggests that spending on education, if it’s
effective, is good. Of course, most spending on education
isn’t all that effective, but good schools at least offer
the promise of growing your own skilled workers and attracting
parents who care about good schools for their kids. So it’s
hard not to think that this is significant. You do see this
in terms of location within metropolitan areas. Skilled people
scoot to the sides of boundaries, where they are able to send
their kids to good public schools rather than to bad public
schools. Redistribution and high taxes on the rich clearly
did terrible things to cities like New York during the Lindsay
era, or Boston under James Michael Curley. They tried to run
local safety nets that, though they were going to right the
wrongs of the world on the local level, generally created
disasters, as rich people fled and as the general tax base
declined precipitously. As much as we may want to take care
of our poorest residents locally, it’s a very hard thing
to do because of the mobility of skilled people. We often
make things worse because the skilled people emigrate.
Finally, let’s discuss housing policy. Zoning and land-use
regulations currently keep housing prices artificially high
and restrict urban growth. The past work that I’ve done
with the Manhattan Institute has argued that the rise in housing
prices in Manhattan has been associated with a very different
change from the Manhattan of the 1920s, which built without
limit. That is a problem for the local economy. It doesn’t
necessarily hurt the average skill level, though. This is
a pet policy agenda of mine, to deregulate certain types of
housing construction, restricting housing and actually pushing
prices up, in some cases. The down side is that you don’t
get skilled young people, and if you have the view that having
people in their thirties who are skilled is particularly important,
then artificially pushing up prices is a great problem.
Skills are particularly critical in cold areas of the country.
The future for dense cities in the twenty-first century is
primarily associated with speeding the flow of ideas and idea-centered
industries. I’m skeptical about the ability to create
various government top-down industry policies that are going
to create that. The answer is to attract smart people and
then leave them be. I am at one with Richard, if what he’s
about is eliminating barriers that stop coffeehouses. That
would be a perfectly reasonable thing to deregulate. But if
you think that you’re going to save a city by quick fixes
such as creating a funky downtown, it’s hard to imagine
it working. All the available evidence suggests that most
skilled people—for example, a thirty-eight-year-old married
couple or a twenty-seven-year-old single person—want
good, cheap schools, fast commutes, and safe streets. These
things do not come cheap or easy.
MR. BOB WEISSBERG: I lived twenty-eight years in Champaign,
Illinois. You’re taking what is essentially a nineteenth-century
concept and moving it forward. My impression is that cities
today, in many cases, have no relationship to what cities
were even twenty-five years ago. I’m thinking about white-collar
counties, for example. I know a bit about St. Louis. If you
go out into the suburbs, what you find is amazing: enormous
amounts of industry and amenities. The same is true in Detroit.
There are also what are now called “rim cities.”
Outside of Chicago, for example, there is an area around the
airport with no population, but with endless office buildings,
hotels, and so forth. But it doesn’t appear on the map.
How do you account for major differences in annexation laws
that cut across the country? In the South, places like Houston
expand crazily because they can annex anything around themselves
without the acquiescence of the surrounding counties. In the
East and the North, you have to get the cooperation of the
people you’re going to annex, and it never happens. There
is all kinds of growth in the South, but it’s not true
growth. It’s growth because places like Charlotte can
annex hundreds of thousands of people and therefore grow.
PROF. GLAESER: The starting point is that the growth
to warmth that I showed you is at the state level, which,
at the very least, should avoid any of this issue in terms
of city definitions. The general rise of the Sunbelt is not
the result of an artificial statistic, such as not counting
the changing urban borders in the right way. All the facts
that I’ve told you are true, at the metropolitan-area
level and at the city level. I’ve been a bit sloppy going
back and forth to some of the graphs that are metropolitan
areas, which are multicounty units that would include the
places that you’re talking about that are on the edges
of the city. Some of them I’ve shown you have been cities,
but none of the results are an artifact of looking at cities
relative to metropolitan areas.
Embedded in your question is the rising importance of the
automobile. Think about Detroit: there are two types of areas
in Detroit. There are places in Detroit that were built pre-automobile,
or built when not everyone had automobiles, and those places
have been hit by two negative things: the rise of the car
and the decline of cold places. Detroit has other places that
feature car-based living outside the area, which have done
well from the automobile but badly on the basis of being.
Those places will do worse than comparable areas in Phoenix
or Las Vegas, but certainly better than central-city Detroit.
We can also do this at the county level, and county boundaries
are also fixed. But it’s a mistake to think that any
of this is a function of changing city boundaries, although
those topics are endlessly fascinating to me as well.
MR. MICHAEL MEYERS: I’m executive director of
the New York Civil Rights Coalition. I wonder if you would
comment on the—and I’m surprised you did not—racial
and economic divide in the cities, particularly with respect
to the 1970s: the mass exodus of the white middle class to
the suburbs, leaving behind a poor, black and Hispanic population
with terrible schools and high taxation. I’d also like
to hear your comments with respect to the new gentry that
are moving in, who are bringing skills with them.
PROF. GLAESER: The New York of the 1970s, which is
the New York in which I grew up, obviously was hit hard. The
decline of manufacturing in the city and the rise of the automobile
resulted in a situation in which the people who couldn’t
afford two-car lifestyles on the urban frontier got left behind
and very badly hurt. It is evidence of why we can’t as
a society count on localities to handle redistribution. They
don’t have the resources, and particularly with sufficiently
mobile populations, they can never really engage in local
redistribution. It has to be a responsibility that we take
to the states or to the federal level. The tragedy is not
that there was a movement to cars but that we didn’t
respond to that movement by recognizing the need for higher
levels of government to step in and take on the responsibilities
that the cities were no longer able to administer.
Bound up in the question was the suggestion that many whites
left because of racial issues. I have looked at the decentralization
of population and employment, and the relationship between
the share of minorities in the center-city population. The
same sprawl occurs everywhere over time. It’s not as
if there was only sprawl in places that had substantial minority
populations downtown. The car was a powerful wrecking ball
coming down on all traditional downtowns, and it—not
flight from racial issues—is the dominant factor.
The second question is the effect of skilled people coming
back in to the cities. There are obviously many problems related
to that, which creates a yawning gap in equality in the region,
but it certainly beats the alternative. The cities that have
not had skilled people come back in are in far worse shape
than the cities like New York, which now have resources to
take care of their less advantaged citizens. While there clearly
are tensions associated with inequality in New York, it is
important that we do not respond in the way that occasional
inequality was responded to in the past—by deciding to
declare class or race warfare. Down that path lies urban ruin.
MR. RICHARD VALCOURT: Before retiring, I taught political
science and urban affairs at Hunter College here in New York.
In theory, I agree with much of what you’re saying, but
I have some problems with the practical implementation. Let
me give a couple of examples closer to what is now home for
you in Massachusetts, because I came from that area. Regarding
innovation: Newport, Rhode Island, has done very well in innovating
after the navy took its big ships out of Newport and moved
them south, after which some entrepreneurs turned the city
around and made it a good place for tourists.
But then we have Fall River and what is now known as the
South Coast. Thirty years ago, I was a member of the board
of directors at the chamber of commerce there, and no matter
what we did, it was all to no avail. The city of Fall River,
as well as New Bedford and Taunton, and all those cities never
went anywhere, despite their location, their trained workforce,
and their institutions for learning. But in recent years—and
this is where I might differ with you—you talk about
Boston as a city that has come back alive. In that way, Fall
River and New Bedford have come alive, too, because the suburbs
have expanded, which has changed much of that area. You can’t
buy houses any more in Taunton, which is about thirty or thirty-five
miles from Boston, and the same thing is happening in Fall
River.
But this morning, the Wall Street Journal editorialized
against the city of Fall River and a couple of congressmen
from there, saying that they are shortsighted by not allowing
an LNG plant to be located on the shores of the Taunton River.
That relates to what you were saying about industries moving
into places where they shouldn’t because it’s going
to devastate the community. Sure, we have a need for LNG,
but the problem is being perpetuated there, because Fall River,
after seventy years and the departure of the textile industry,
is finally beginning to grow, thanks to Boston’s expansion
southeastward and southwestward. Now there are other competing
forces that want to locate some sort of industry there. Everything
that you were saying might be right, but when you consider
the implementation, there are many variables that you haven’t
factored in.
PROF. GLAESER: At the local level, there are many
variables that differ from city to city. It’s also true
that urban success is never entirely predictable; it’s
hard to tell when and if a particular city is going to take
off.
Obviously, there are many different wrinkles involved in
different localities. I’m a good friend of the mayor
of Haverhill, Massachusetts, who deals with these issues on
a day-to-day basis and has focused on attracting skilled people
from Boston. Some places have such a poor endowment in terms
of historical artifacts that they’re never going to revive.
But focusing on skilled workers and on how to make the place
friendly for entrepreneurship is a reasonable starting point.
Obviously, everything at a city level has to be on a case-by-case
basis beyond that.
MALE VOICE 1: You mentioned three cities—San
Francisco, Boston, and New York—as places that are not
going to decline, almost no matter what happens. You left
out places that you think are not going to revive. I generally
agree with you. I’m interested to hear in more detail
why you named San Francisco, which has been dominated by tourism
for many decades and has a notoriously low-wage, low-skilled
economy. It had a renaissance in the 1990s with the fabled
“reverse commute,” for which Silicon Valley millionaires
would buy homes in San Francisco and then drive south to work
every day, but that petered out in 2000. Yet housing prices
are as high as ever. San Francisco is actually gaining population
for the first time in many years, and it seems as though it’s
economically bulletproof, no matter how bad the city government
is, how high the taxes are, or how bad the housing market
is. It’s still alive, and it looks as though it’s
going to remain alive for many decades. What do you think
accounts for that?
PROF. GLAESER: First, we can ask about the region
and then we can think about the city within the region. With
the combination of being built during the car era and having
the best climate outside of Tuscany, the fundamentals for
San Francisco are mind-bogglingly good, so we don’t need
to look very far for why this place with a fantastic climate
and enough initial investment of colleges has been able to
do so well in the modern era. The interesting twist has been
downtown San Francisco’s revitalization. It was not obvious
that that was going to happen. I take this as being associated
with a combination of two things, one of which is the consumer
city aspects of San Francisco, and the other, its connection
with the region. San Francisco is doing well, but it’s
not doing all that well relative to the rest of its region.
Reverse commuting is increasing, but the share of population
or the share of employment that’s in the city has actually
been decreasing steadily over the past three decades. What’s
interesting is that the city itself has managed to revitalize
itself, which owes much to the fact that it is an appealing
place for high human capital people to continue to live. It’s
a beautiful city, and it has great natural amenities. In a
world in which increasing wealth means that there are people
who are willing to pay for those amenities and that lifestyle,
the city has done extremely well. It’s a very skilled
city.
You mentioned tourism. Tourism is a great predictor of how
well cities have done over the past twenty or thirty years,
in the U.S. and elsewhere, but not because tourism itself
is a great powerhouse industry, at least outside of Orlando.
In most of these places, tourism is important because it reflects
being a place that people want to come to. There aren’t
many tourists in Cleveland. There aren’t many tourists
in many colder places in the country. There are many tourists
in San Francisco because it’s a beautiful place, and
its revitalization has much to do with its consumer city revitalization.
It’s a luxury good, and as the society gets richer, people
are increasingly willing to pay for luxury goods.
New York has some of that, so some of New York’s revitalization
over the past twenty years—and some of Boston’s,
as well—has to do with the charm of the city, with its
amenities. But New York is much more driven by the economic
advantages of its downtown, of the financial engine that is
at the center of the region’s economy, whereas San Francisco
is a bauble held aloft by the economic vitality of Silicon
Valley. New York is much more of an older city in the sense
that it combines economic health and being a consumer city
in one. But the lesson is, if you don’t continue to induce
rich people to live in Manhattan, or in Williamsburg, the
economic vitality of the city is in a lot of trouble.
MALE VOICE 2: There are many doom-and-gloom stories
about megacities: Mexico City, Calcutta, Beijing. What can
you say about how your framework applies to the gloomy megacities
of the future?
PROF. GLAESER: The big cities of Latin America, which
are the ones that I’m most familiar with, are enormously
fascinating. These cities have always been in poor countries
that were doing a bad job of delivering welfare to their citizens,
which is more observable in the cities. Observers from the
U.S. wander around Rio de Janeiro but not around the traditional
poverty-stricken rural areas of Brazil. People who move to
these cities are not irrational; generally, their lives are
made better by moving to these cities.
Many of these cities are artificially large because they
are the product of government policies that strongly favor
the capital cities relative to the non-capital cities. In
many cases, it’s impossible for businesses to get anything
done unless they are, for example, in Mexico City or Buenos
Aires. Brazil, because of its strong federal structure, would
be an exception. The largest cities in places that are unstable
democracies are 50% larger than the largest cities in places
that are stable democracies that don’t have policies
that favor being close to the center of power.
These places are, in the long run, suffering from exactly
the same transportation cost problems that we are. In all
these places, the car is moving on unabated. Increasingly,
sprawl is going on with much less management than it’s
even getting here. There are many reasons for the public policy
concern that goes along with that. I tend to focus on why
the medium-size cities haven’t been growing more, and
the answer is generally politics and political favoritism
toward the primary city. I would also focus on getting some
management of the inexorable move toward car-based living
in these places.
MALE VOICE 3: A writer for Forbes magazine, Richard
Karlgaard, advocates the arbitraging of high-skill, high incomes
with smaller, lower-cost cities, telecommuting, making a big
income, and living in a place where that big income goes a
longer way. What would your prescription be for cities that
don’t have the natural advantages, other than price,
to attract people to take their big-city incomes to where
they have short or no commutes and other amenities that are
advantages for smaller places?
PROF. GLAESER: I’m assuming that the places you’re
talking about already have relatively safe streets and good
commutes. Beyond that, I would probably focus most on education
for children. I would have an education-based policy for many
of these places. I would also imitate Las Vegas, in terms
of deregulation and having young entrepreneurs come to start
up their macadamia-roasting plant or whatever crazy but brilliant
idea comes along.
You brought up telecommuting. It remains an open question
as to whether information technology is going to be critically
negative for central cities. The right way to view this is
that cities facilitate face-to-face interactions, and electronic
technologies facilitate electronic interactions. Those things
are not always substitutes for each other. In many cases,
they’re strong complements; we’re moving toward
a more interactive society if it’s going to see both
these things. First, people who interact with one another
electronically are also people who interact face-to-face with
one another. Second, over time and space, the rise of the
telephone has been strongly associated with more, not less,
urbanization. Indeed, the pundits 120 years ago were arguing
that the telephone was going to spell the demise of urban
areas—before the greatest run-up in urban areas in world
history. Third, the most famous example of geographic clustering
in the modern age is the industry that has the best access
to all forms of information technology. No place more than
Silicon Valley would have this, but even though they live
in a place that’s lower-density than Manhattan, it is
a very dense place and a car-based city. So there’s no
sense in which information technology is a danger to Manhattan
or to dense places as long as it’s accompanied by good
policies that ensure the continuing desire of skilled people
to live in this region and in this city.
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