# Survival of the City with Ed Glaeser  | Markus Academy | Ep. 76

https://www.youtube.com/watch?v=irVU4TsXBGU

[00:05] welcome back everybody to another webinar organized by princeton.
[00:09] we're very happy to have ed glaser from harvard university with us.
[00:12] he will talk about survival of the city.
[00:14] ayat it's great to have you with us.
[00:17] it's wonderful to be here marcus thank you.
[00:20] it is one of the authorities on a citizen has recently written a new book.
[00:24] and the book is called the survival of the city and it touches on many aspects.
[00:29] we have learned about the kobe crisis but he has worked for many many decades now.
[00:33] on cities and he will give us his insights.
[00:36] what we can learn before we move to ed i would like to give some opening remarks and raise some questions.
[00:43] because i'm not really an expert in this area.
[00:45] so i'm very happy to learn more about this topic.
[00:49] the book is with his colleague david cutler.
[00:52] and you know it's a pleasure to read and even has an introduction some sentence in german which i pick up later.
[00:59] so i'm of course seeing these days i'm seeing everything in the lens of resilience.
[01:03] and i was wondering you know how resilient our cities and bounce back.
[01:07] I think and has written a lot about Boston.
[01:09] How resilient and how much Boston reinvented itself over the decades.
[01:15] But I was wondering whether the resilience of a city is different depending whether cities is more organically grown from the bottom up or is more designed centrally like from top down.
[01:27] Uh you know like Robert Moses has done this or you have some more you know uh designed centrally like many Chinese cities uh modern cities are more the same central east.
[01:37] Does it make a big difference?
[01:37] So I was wondering and if if it does so it might give us some lens you know how the cylinder autocracy is versus to democracies where it's more bottom-up or it's more from the top down.
[01:50] The other puzzle I have about the zillions and cities it seems like it could be that the countryside is more resilient because it's less specialized.
[01:57] So if you live in in big cities there's more globalization benefits and that leads to more specialization more networks more reliance on others and it might make you more vulnerable and less.
[02:08] resilient so once you have a shock it might be harder to bounce back or not.
[02:11] that's uh it's an open question to me.
[02:14] of course in cities you have more spillovers but also spillbacks and you might have different social norms.
[02:20] so there's a big difference in attitude towards vaccination between you know the cities and the countryside and you know that's a big question.
[02:26] on the other hand and as ed pointed out in his book stratloft fries or silly ear is liberating.
[02:33] so that's because i guess cities make you much more productive and that was at new orleans just liberating you from the king or the duke who was ruling you.
[02:45] and uh that established essentially the citizens of a country to be you know part of a democracy and rule themselves.
[02:54] and um and also there's a big difference between countryside and in the cities about the trust in authorities and i was wondering whether there's something to be said about this and if you trust more authorities does it make you more resilient or less resilient because you
[03:09] also rely on the authorities and don't take the own initiative to make yourself more resilient.
[03:15] but the other big thing which is of course making a core is covet and the book is very much about kovit and you know one consequence might be that we have fewer high-rise buildings people will be afraid of going into lifts.
[03:31] and you know will we move from skyscrapers to more office parks so the whole design of the cities will be different will be more spread out.
[03:38] this is implications for traffic and of course it is famous donut effect which we have heard earlier from nick bloom when he gave his webinar some while back.
[03:48] you know what how water this donut effect essentially the suburbia will benefit a lot while the city centers will struggle.
[03:55] and this would be interesting uh to discuss as well.
[03:59] and finally there is something like smart cities so from earlier blinks and other things uh you know this new sewage was developed and all this well we have something similar from kovit where we
[04:09] have some new hygiene management.
[04:10] involving a lot of digitalization is there a better way of of doing things.
[04:15] along these lines.
[04:17] because you know we move in the digital area.
[04:19] covet was a booster for digitalization.
[04:22] and is it also helping us in some hygiene management comparable to earlier city of plagues.
[04:29] which also helped cities to become more hygienic and control essentially potential outbreaks of diseases.
[04:38] finally coming to some work.
[04:41] and has worked a lot on zoning and i think he's a good proponent to change zoning roles.
[04:47] so it said zooming not zoning and what you know we have this telecommunication as i mentioned earlier.
[04:54] that might have different implications on traffic very different ones.
[04:58] uh might have implication real estate prices and again the sub this do not affect uh the higher prices of suburbia.
[05:04] we see this in where i live in princeton.
[05:06] uh house prices went up significantly.
[05:11] because many people from the cities are moving out to the countryside so a lot of new yorkers move to princeton and it might also have this ease of working from home might also even affect what marriages and couples will be formed that's perhaps a little bit more speculative but it might affect it you know you can work from home you can have a marriage arrangement or between a couple one in the east coast one in west coast is much easier these days than it was before kuvit and it might also balance the gender equality and you might have even more kids because you can live together both working from home that's you know one thing to consider finally i would like to say a few words about mobility and there's some interesting mobility connections when there's the virtual mobility which we're zooming will give us now with telecommunication and all that but this might also lead to more physical mobility for the rich to leave poor neighborhoods and leave or leave a
[06:11] city and leave the pool behind in in neighborhoods.
[06:15] so does the zoo make it easier for the rich to leave and is there more segregation possible because we don't have to cram into disabled zone essentially?
[06:25] and what's about social mobility uh can it be more easily promoted if the rich can leave very easily the poor is very hard to impose taxes but more generally we can also see with this new technologies we can see a competition among the cities so enhance competition among the cities and is this good or is this bad it's a big question i have.
[06:45] it might improve the governance so if you have less freedom and you compete much more with other cities so you might do not do crazy things because otherwise the rich taxpayers might leave your city but it might also be bad that you have not so much tax revenue to do some social programs or social mobility programs so that there's a balance to be stuck and i don't know which way the pendulum will go.
[07:07] so overall i would uh you know a lot of questions i think it's
[07:12] a fascinating topic and it will be extremely important topic.
[07:16] i should also mention that the projection is that you know out of the 10 billion people we will be soon 80 will have live in cities.
[07:23] so we really have to understand that.
[07:26] so that's you know what we will learn today to get the and hint what's will be the future like.
[07:31] so let me now move to the poll questions you answered.
[07:36] so will covet 19 affect the cities differently than 9 11.
[07:39] and i have to say this was never happened before.
[07:43] the answer is 100 percent.
[07:46] and nobody said no out of the respondees.
[07:49] and there were quite a number of respondees so that's quite striking.
[07:53] so what cities will be heard most by the double shock of zoom in covet will it be mega cities metropolitan areas are mid-sized and the answer is 48 35 and 17.
[08:07] and the third question was what share of the u.s labor force will be working remotely in three to five years is below.
[08:13] ten percent ten to twenty percent or above twenty percent and the answers were four percent forty three percent and fifty three percent.
[08:23] so that's essentially maturity things it will be more than 20.
[08:28] working from home across the whole labor force which i know a lot of factory workers and they can't work from home.
[08:34] but it's also quite striking so we're looking forward uh to at glazer's presentation the survival of the city.
[08:41] he's trying to work with the david cutler who is a health economist so it's a nice combination to cover the kobe crisis and add the floor as us or the digital floor as us remotely of course.
[08:54] good having you with us thanks again for doing it thank you marcus thank you.
[08:58] thank you for having me on and thank you all of us for for joining me this this morning um.
[09:02] let me start with uh the wrong uh.
[09:07] let me start with the um.
[09:13] with the long history of of pandemics in
[09:16] cities so cities have long done absolutely amazing things but there are also demons that come with density and assuredly the most terrible of these is contagious disease is pandemic.
[09:28] this is something that cities have lived with for a long time.
[09:32] the first of our recorded pandemics in cities occurred in 430 uh bce.
[09:37] let me see if this okay this should work now uh slideshow.
[09:43] when plague came play came to athens.
[09:47] now if you think about athens of the 5th century bce it was really doing all that you could possibly imagine that a city could be doing to create breakthroughs in the arts in politics and in economics right.
[10:01] this is a city where collective genius gave us amazing things in philosophy and mathematics in architecture in drama.
[10:07] they created the study of history itself and of course it's a pioneering democracy led by this character pericles.
[10:14] now the very success of athens
[10:16] engendered the rivalry of Sparta.
[10:19] Military, largely agrarian.
[10:22] It landed power.
[10:24] Pericles wasn't going to roll over and so the Peloponnesian War was on.
[10:29] Pericles' strategy was to summon the Athenians behind the walls of the city.
[10:33] And you can see some of those walls in this in this rendering of the of the of how the city might have looked.
[10:39] Um, but to summon the Athenians and their Attic allies inside the walls to trust in those walls to keep out the Spartan hoplites, the enemy warriors, and to send forth the Athenian fleet to ravish the shores of the Peloponnesian peninsula.
[10:51] As military strategy was perfectly sound, the walls did indeed keep out the hoplites.
[10:54] But while walls can keep out warriors, they can't necessarily keep out a virus or a bacteria.
[10:58] And so that's exactly what happened.
[11:03] Some form of disease entered in through Athens's port of Piraeus.
[11:07] Because of course, then as now, cities are the nodes on our global lattice of transport and travel.
[11:11] They are the ports of entry for goods, for people, for ideas, and for viruses.
[11:17] and it seems to have ravaged the city.
[11:19] through cities one of the two athenian fathers of philosophy fathers of history was there and he really recounts a city that's gone amok in which people live only for the day because they do not expect to live to see tomorrow perhaps one-fourth of the city's population died over a two-year period.
[11:34] athens would continue to soldier on for another 25 years in its fight against uh fight against sparta before eventually losing but in a sense the glory of the city was forever dimmed.
[11:46] it would go from being perhaps the new york city of the mediterranean world to being i don't know maybe it's boston then maybe it's cambridge mass right a shadow of its former self uh.
[11:57] now this you know was the first of our of our great urban plagues that we have well documented but it was certainly not the last.
[12:05] it was destabilizing and indeed one of the answers about urban resilience is that plagues are particularly damaging to cities when they set off political catastrophes when they strike societies they're already teetering and so they
[12:18] push them over an edge.
[12:20] the antonine plague that comes in the second century is not destabilizing it.
[12:22] comes during the period of the four good emperors when you know edward gibbon the great 18th century historian wrote that this was about the best time a human being could have possibly lived in history.
[12:34] this was a time in which the roman empire was incredibly stable.
[12:37] perhaps a little bit like new york during 9 11 when a pragmatic consensus had come to come to dominate the city and it felt very robust with respect to that shock and so the plague came.
[12:48] it was a demographic disaster but the urban system of the roman empire continued to soldier on.
[12:54] flash forward to the next century the cyprian plague.
[12:58] this struck a rome that was already a little bit more destabilized and so it had further effects.
[13:03] it was one of the things which weakened the roman empire and weakened its ability to protect the edges of the empire.
[13:09] setting off the stage for the barbarian invasions of the 4th century.
[13:14] but of course the worst of the ancient plagues came in 541 a.d 541 ce.
[13:21] now the back story for that is that the ostrogothic conquerors of the west had been in control of italy for three generations.
[13:29] but the eastern roman empire soldiered on.
[13:32] it was strong.
[13:32] it was mighty.
[13:33] it was led by its great emperor justinian.
[13:35] you can see him.
[13:35] he's the one with the crown.
[13:37] now justinian saw weakness in the ostrogoths.
[13:40] theodore the great had been replaced by his far more mediocre children and grandchildren and so he saw an opportunity to reimpose the pax romana on the mediterranean world and he sent forth his great warlord belisarius.
[13:52] and and he's the other fellow the one without the crown and this mosaic to to reconquer italy and to reconquer the north african breadbasket that fed italy.
[14:01] belisarius was enjoying enormous military success.
[14:02] it really seemed possible in the 530s that indeed this would be an interlude and once again peace and prosperity would come to the mediterranean world.
[14:10] just at that moment the black death yersinia pestis the bubonic plague shows up in constantinople.
[14:18] it is a completely destabilizing event right.
[14:23] Belisarius goes from being you know a conqueror a bringer of peace to being yet another petty warlord squabbling for success in Italy.
[14:33] The Eastern Roman Empire ceases to become a possible transformer of Europe and becomes the much smaller, much more, you know, narrow Byzantine Empire.
[14:42] And in a sense, Europe itself descends into darkness.
[14:45] As for century after century for another 200 years, the Black Death continues to stalk Europe.
[14:50] And in some sense, this is the worst-case scenario.
[14:52] This is a case of minimal resilience because Europe started from a weak place and so the plague struck it, struck it over.
[15:01] Now, for most of the past 700 years, our cities have been more resilient to disease.
[15:03] They've actually been more resilient, typically to disease than they have been to economic shocks.
[15:11] During the 19th century, during this earlier era of globalization, our cities continued to grow despite death rates that were much higher than anything we would tolerate today.
[15:21] Partially because people were poor and partially because cities invested in
[15:24] ways that made themselves healthier.
[15:26] So in the early 19th century, the prime plague was yellow fever.
[15:29] This is a mosquito-borne illness that emerges out of Africa in the 18th century, crosses over to the Caribbean, and then makes its way north to the cities of the eastern seaboard.
[15:38] And you can see there the yellow fever outbreaks in New York in 1807 and 1822.
[15:44] When perhaps three percent of the population died during those years.
[15:48] Uh.
[15:48] So that's a death rate that's about 10 times higher than that of of uh COVID uh 19.
[15:56] Then starting in 1817, cholera emerges in the Ganges Delta.
[16:01] It gets carried over land by the British army in India, then gets carried over land by the Tsar's army in Russia and Poland.
[16:06] It gets carried oversea to London, to Paris, into New York, where it starts to slaughter.
[16:12] As you can see there in 1832, more than five percent of New Yorkers died during that time period, right?
[16:16] An extraordinary death rate, again, that's about 20-fold what we experienced in in 2020, right?
[16:23] Just extraordinary death rates, and yet
[16:24] people continued to come to new york
[16:26] because they were poor and because you could die of hunger in a rural area or you could die of hunger in in ireland
[16:32] and so new york despite the poverty seemed better than that and the same thing was true of london or philadelphia
[16:39] now the cities did manage to invest in ways that made themselves healthier and in some sense that reminds us of how much we should be willing to make willing to pay to make sure that this event this great pandemic is is a one-time affair
[16:53] they invested not because they got the science right but actually because they got the science wrong
[16:56] there were two great schools of thought on disease in the early 19th century one of which emphasized contagion the spread of disease from person to person
[17:05] they were right scientifically but their proposed remedy quarantine proved to be relatively ineffective both because it was poorly enforced and because mosquitoes can travel at least a bit over oversea
[17:16] by contrast the alternative theory miasma which postulated which hypothesized that the disease came out of fetid heirs from swampy lands right
[17:25] this is this theory is wrong medically.
[17:28] but in fact the remedies that it proposed draining the swamp bringing in aqueducts bringing sewers right making the city healthier in a sense right they were the right and they were the right recipes.
[17:38] and so new york built its great crooked aqueduct over the 20s and 30s of the 19th century they built sewers they connected to the water system.
[17:50] and in some sense this is the a hinge of history for government where if you think about for prior to 1800 for hundreds of years pretty much the only thing governments did was to kill people right.
[17:59] sometimes they were killing foreigners and so you liked that but often they were killing their own people.
[18:04] but during the course of the 19th century government started to save lives and that happened in cities like new york like london and it happened through investments in public hygiene.
[18:13] of course it's not just about infrastructure it's also about incentives.
[18:19] and as you can see the quote aqueduct is built in 1842 and for 25 years cholera continues to rage you can see there.
[18:26] 1849 color epidemic my great great great grandfather died in that one um.
[18:32] and the reason was the same problem that we see in water systems in sub-saharan africa today which is the last mile problem.
[18:38] that in fact you build this water system and you expect poor people to pay for connections to the system and they're poor and so they continue to use their shallow wells their boreholes their pit latrines and they continue to get water-borne illnesses.
[18:50] it's not until you have the board of health which itself comes through a citizen movement led by dr stephen smith that actually starts imposing the incentives that landlords need.
[19:02] essentially pagovian taxes for those of you who are our economists uh but they charge landlords who don't connect to the sewer system who don't connect to the water pipes and so this ends up creating the incentives that you need to solve that last mile problem.
[19:13] death rates start coming down.
[19:17] it's not free america cities and towns were spending as much on clean water at the start of the 20th century as our federal government was spending on everything except for the post office in the army.
[19:25] but it was an investment that seems to
[19:27] have been very well worth it for indeed.
[19:29] since the influenza epidemic of 1918-1919 we've had a blessed century where we almost have forgotten the fact that urban density can enable the spread of disease.
[19:39] and then all of a sudden 2020 happened.
[19:43] and in the early days of the plague like in the early days of covet 19 this was a very urban experience for the same reason it was an urban experience in athens in 430 bc.
[19:54] because new york city was the port of entry for tourists returning from italy carrying the disease with them and in those early months it spread disproportionately in the northeast and in connected cities like new orleans, detroit, atlanta.
[20:07] and you can really see this.
[20:08] this is just showing you the relationship in those early months where denser areas were more likely to have the disease.
[20:13] and in those days density probably also encouraged the spread of the disease especially in settlements where social distancing is impossible.
[20:21] this shows the relationship between the share of the population living in a favela across uh brazilian metropolitan areas and the share catching the disease.
[20:28] as of june 2020. the villas are in
[20:30] formal settlements where it's pretty
[20:31] much impossible for you to separate
[20:32] yourself from another person and so the
[20:34] second feature of cities which are
[20:36] defined by their density manages to to
[20:38] encourage the spread of disease
[20:40] in the same sense that in an urban area
[20:42] it is easier to exchange an idea face to
[20:44] face it's easier to sell a newspaper
[20:46] it's easier to do anything that requires
[20:48] human proximity also means that it's
[20:50] easier to spread illness
[20:53] this shows the relationship between the
[20:54] population living in slums and the share
[20:56] having the disease again in the early
[20:58] months the remarkable serological work
[21:00] of a nuke milani who
[21:02] looked at the blood of mumbai's slum
[21:04] residents as of july 2020 finds that as
[21:07] of that month more than one half of the
[21:09] residents of some slums in india already
[21:12] had been exposed to covert 19 already
[21:14] had covert antibodies remarkably the
[21:16] death rates were fairly low during that
[21:18] time period in those slums because slum
[21:20] dwellers tended to be young
[21:22] and they tended to be thin
[21:24] now by november this was a
[21:28] quick question of course marcus it could
[21:29] be that the numbers were not correct no
[21:32] because in india there's a lot of
[21:33] misreporting a lot of death especially
[21:35] in slums are not reported in the
[21:36] statistics
[21:38] it is true although you would have
[21:39] thought given that 50 of the population
[21:41] you would really see it in the overall
[21:42] death rates more than you did
[21:44] and the overall death rates just didn't
[21:45] go up that high i would but i agree with
[21:47] you marcus i would put no weight on the
[21:49] number of deaths allegedly due to covet
[21:50] i think that's that's completely uh
[21:52] unmeasurable but um in those days you
[21:55] didn't really see in the early days a
[21:56] huge spike in in overall death rates as
[21:58] well in mumbai
[22:00] thank you the um
[22:01] uh so by november
[22:03] 2020 uh the the disease is spread
[22:06] everywhere because in fact you know an
[22:08] airborne pandemic as we saw in 1918 1919
[22:10] it can get everywhere right it's not
[22:12] like a waterborne pandemic where is if
[22:13] you've got your own well if you've got
[22:15] your own septic system you're not going
[22:17] to get the waterborne pandemic in
[22:18] airborne pandemic it depends on behavior
[22:21] and somewhat remarkably in cities like
[22:23] new york that behavior meant that in
[22:26] fact the densest parts of the city were
[22:27] the ones that were least likely to get
[22:28] the disease at least in the early months
[22:30] this shows the relationship between
[22:32] covet cases per capita again this would
[22:34] be as of about may 2020
[22:37] in different parts of of new york city
[22:39] and as you can see
[22:41] the areas of manhattan or brooklyn
[22:42] heights the areas that have the tallest
[22:44] buildings are the areas that have the
[22:47] lowest case rates by contrast it's the
[22:49] bronx
[22:50] okay it's staten island it's the outer
[22:52] areas of queens where covid was more
[22:54] prevalent
[22:55] there's no
[22:57] real mystery here although it does seem
[22:58] to suggest that people aren't spreading
[22:59] the disease through air conditioning
[23:01] units very much
[23:02] this is explained very well by behavior
[23:04] this shows the change in trips as
[23:07] measured by cell phone records is
[23:08] produced by safecraft and it is
[23:10] remarkable that this is the first
[23:11] pandemic in which we can actually see
[23:12] people's behavior we can see people's
[23:14] mobility and you can see that the
[23:16] biggest reduction in the number of trips
[23:18] is in these inner areas right whereas
[23:20] the least reduction occurred in the
[23:22] outer areas now this isn't because the
[23:24] people living in manhattan were smarter
[23:26] right it's because they were luckier
[23:28] it's because they weren't in essential
[23:29] industries it's because they were in
[23:30] industries where you could telework and
[23:32] this just shows the change in the trips
[23:33] relative to the share in essential
[23:35] industries and the share in trips
[23:36] relative to the share who are working in
[23:38] occupations that enabled them to
[23:40] telework as coded by the dingle and name
[23:42] in 2020 right and you can see there's a
[23:44] strong correlation between both of these
[23:47] this just shows the change in trips as
[23:49] opposed to the change in cases and our
[23:51] estimates and i'm just putting you up
[23:53] these these regression tables to show
[23:54] that we did run regressions with lots of
[23:56] controls and place fixed effects i don't
[23:57] want you to particularly focus on them
[23:59] our punchline number is that a 10
[24:01] reduction in trips during this area was
[24:03] associated with a 20 reduction in the
[24:05] number of cases so behavior was really
[24:07] very strongly linked to these disease to
[24:09] the disease during this time period
[24:11] now
[24:12] the
[24:13] coming of plague to our urban world
[24:16] feels to me scarier than
[24:19] 911 did and again this is apropos your
[24:21] your first question marcus
[24:23] in part because what it felt to me like
[24:25] this pragmatic consensus that had merged
[24:27] out of a very difficult time for cities
[24:29] in the 1970s when de-industrialization
[24:32] had led cities to the brink of
[24:33] bankruptcy and cities had responded by
[24:35] electing these very pragmatic mayors who
[24:37] put you know quality of life and
[24:39] delivering sort of centrist middle of
[24:41] the role road goals ahead of everything
[24:43] this is really unraveled in part because
[24:46] it seems that urban success hasn't been
[24:47] doing a very good job of flowing to
[24:49] everyone
[24:50] so cities have always been places of
[24:52] inequality they've become more unequal
[24:54] lately but you know it was plato who
[24:56] wrote that every city of whatever size
[24:58] is in reality two cities one a city of
[24:59] the rich the other city the poor and
[25:01] they're perpetually war with one another
[25:02] cities should never apologize for their
[25:04] inequality they attract rich and poor
[25:06] people they attract rich people because
[25:08] they're pretty fun places to be rich at
[25:09] least prior to covet they attract poor
[25:11] people because they have more social
[25:13] safety nets they have a stronger social
[25:14] safety net because they have up they
[25:16] have opportunities for for service
[25:17] sector jobs because they have the
[25:18] ability to get around without a car for
[25:20] every adult but urban inequality is only
[25:22] tolerable when cities continue to do
[25:24] their historic function of turning poor
[25:26] children into rich adults and we have
[25:29] increasing evidence that they're really
[25:30] failing to do that
[25:31] our successful cities are becoming
[25:33] permanently unaffordable and this in a
[25:34] sense reflects the triumph of insiders
[25:37] who erect walls that prevent outsiders
[25:39] from building new housing and finding
[25:40] their own place in the city
[25:42] and finally of course the deep
[25:43] unhappiness over policing and mass
[25:45] incarceration which in a sense is the
[25:47] incomplete triumph of urban safety
[25:50] so the left-hand side here shows the
[25:52] relationship between per capita gdp and
[25:55] population density across america's
[25:56] metropolitan areas there's nothing
[25:58] surprising about this this is a
[25:59] well-known fact this is something
[26:00] economists call agglomeration economies
[26:02] uh and it's been documented in little
[26:04] literally hundreds of papers and it's
[26:06] not just that cities boost your wages
[26:08] they actually appear to boost wage
[26:09] growth for adults who come to those
[26:11] cities so this was found in an original
[26:12] paper of mine published in the journal
[26:13] of labor economics in 2001 and in a
[26:15] paper using much better data in a much
[26:17] more convincing fashion by dilroca and
[26:19] puga and the review of economic studies
[26:20] in 2016
[26:22] but
[26:23] opportunity atlas data prepared by raj
[26:25] chetty and his co-authors shows that in
[26:28] fact places with more population density
[26:30] have less upward mobility what this data
[26:32] does is it looks at a generation born
[26:34] between 1978 and 1983
[26:36] using essentially complete irs debt
[26:38] records they then link these children
[26:41] with their adult earnings and with their
[26:42] parents incomes and so you're able to
[26:44] see where the children end up when they
[26:47] are adults in the income distribution
[26:49] if they come from
[26:51] parents who are in the at the 25th
[26:53] income percentile who are poorer than
[26:54] three-fourths of americans in 1980.
[26:56] and what you can see here this is across
[26:58] metropolitan areas is the denser the
[27:00] metropolitan area the lower the level of
[27:02] upward mobility people are less likely
[27:04] to to move up these are going to show
[27:06] you effects within metropolitan area so
[27:08] this shows you that dense areas have
[27:10] less upward mobility within those dense
[27:11] neighborhoods have less upper mobility
[27:13] within metropolitan areas and this shows
[27:14] you that the farther that you get away
[27:16] from the central city center that's cbd
[27:18] or central business district that's an
[27:20] urban economic sort of lingo thing um
[27:22] the higher your upward mobility is
[27:24] you're moving from the 38th income
[27:25] percentile up to over the 44th so it's a
[27:27] really fairly steep gradient of upward
[27:29] mobility with distance from the city
[27:31] center
[27:32] and at least one part of this answer
[27:34] appears to be urban schools so this
[27:36] shows you the regression discontinuity
[27:38] just at the edge of the central city
[27:40] school districts and this is average
[27:41] over big city school districts
[27:43] throughout america and you can see
[27:44] there's a jump up of about two uh
[27:46] percent in the adult income distribution
[27:48] right at the edge of this central city
[27:51] school district and on your left-hand
[27:53] side on the right-hand side you see the
[27:55] jump down in your probability of being
[27:57] incarcerated as an adult so this is
[27:58] being in jail or prison as an adult so
[28:00] that's dropping from about 2.8
[28:03] to closer to 2
[28:05] so that's really a fairly substantial
[28:07] drop down in your probability of being
[28:08] incarcerated which really reminds us of
[28:10] just the failure of our school systems
[28:12] to deliver
[28:13] upward mobility for poor urban kids
[28:16] now along with this failure to promote
[28:18] uh
[28:19] opportunity is is the fact that our
[28:22] cities have become increasingly
[28:23] unaffordable
[28:25] this is largely self-cause this is a
[28:27] decision about regulation and one way
[28:30] that you can see that supply forces as
[28:32] well as demand are shaping these high
[28:33] prices is with this graph
[28:35] along the horizontal axis along the
[28:37] x-axis is the amount of new construction
[28:39] between 2000 and 2013 relative to the
[28:41] 2000 housing stock
[28:43] along the y-axis along the vertical axis
[28:45] is the gulf between the marginal cost of
[28:48] buying home the marginal price of buying
[28:49] a home and the marginal physical cost of
[28:51] construction how much it costs to just
[28:53] build a unit and this is physical cost
[28:55] just in terms of the bricks and mortar
[28:57] not assembling the land not the lengthy
[28:59] legal delays it's just the cost of
[29:00] building
[29:02] and so a number three means it costs
[29:04] three times as much in the san francisco
[29:05] metropolitan area to buy a house than it
[29:07] does cost to build a house and what you
[29:09] can see from this graph is the places
[29:10] that build a lot aren't expensive and
[29:12] the places that are expensive don't
[29:14] build a lot there's no repealing the
[29:16] laws of supply and demand there is
[29:17] robust demand for both las vegas and for
[29:20] san francisco but in las vegas they
[29:22] built an enormous amount and so the city
[29:24] stayed affordable despite that that
[29:26] demand which is true of new york city in
[29:27] the 1920s when it's also faced robust
[29:29] demand and they built 100 000 units a
[29:31] year during some years and the city
[29:33] stayed affordable by contrast san
[29:35] francisco los angeles boston new york
[29:37] build much less and so they become you
[29:39] know risk becoming boutique towns
[29:41] affordable only to the wealthy
[29:42] this just shows yes
[29:45] is it mostly because of geography that
[29:47] you know
[29:47] las vegas can expand very easily while
[29:50] in new york city economical uh
[29:52] vertically
[29:53] so
[29:55] geography is non-trivial but there's a
[29:57] lot of power of the regulations as well
[30:00] so this is albert sayez's paper which i
[30:02] published in the quarterly journal of
[30:03] economics in 2011. and i think my view
[30:05] at least is that land use controls are
[30:07] more powerful in geography part of the
[30:09] thing for new york to remember i'll just
[30:11] sort of this is from an old paper mine
[30:12] with joe dirko is as long as you're
[30:14] building housing you can always deliver
[30:16] more housing without using land by just
[30:18] adding an extra story
[30:19] right and so you can calculate the
[30:21] marginal cost of delivering more housing
[30:22] space just by asking what's the cost of
[30:24] the 21 floor what's the cost of the
[30:26] 20-second floor and in that case as well
[30:28] currently housing costs in new york are
[30:30] three to four times higher than the cost
[30:32] of adding that extra floor so that tells
[30:34] you that the regulations are having an
[30:35] impact there so this is the relationship
[30:38] between just the cross-sectional
[30:39] relationship between the wharton index
[30:40] of residential land use regulations and
[30:43] housing housing price
[30:44] and these regulations also play out they
[30:47] also shape how cities experience you
[30:50] know housing bubbles how they experience
[30:51] asset convulsions so um this is san
[30:54] francisco this is our archetype of a
[30:56] highly constrained market and look at
[30:58] the period 1996 to 2006 this is a period
[31:02] which is in some sense the mother of all
[31:03] housing bubbles in the u.s
[31:05] the orange line shows prices right huge
[31:08] price increases huge price drops the
[31:10] green line shows quantities essentially
[31:12] there's no change whatsoever in the
[31:14] amount of building basically they're not
[31:15] building anything in san francisco
[31:17] during this time period by contrast this
[31:19] is um
[31:21] atlanta an uncontrolled city right
[31:24] prices don't change at all during the
[31:25] boom quantities soar up and then crash
[31:28] and so we really shape the way that we
[31:29] experience things and we have much
[31:30] stronger asset market convulsions asset
[31:33] price convulsions in these constrained
[31:34] cities than in the unconstrained cities
[31:36] we've also seen this wealth transfer
[31:38] from insiders to outsiders and i want
[31:40] you to look let's say it 35 to 50 44
[31:42] year olds so these are young people
[31:44] we're comparing 1983 and 2013. we're
[31:47] holding prices constant we fixed it all
[31:49] in 2013
[31:50] so look at what's happened to the
[31:52] housing wealth for
[31:53] 35 to 44 year olds it's at the bottom
[31:55] here at the 50th or 75th or 90th income
[31:58] percentile and flash forward to uh 30
[32:01] years later
[32:02] 50th income percentile it's gone down
[32:04] from 55 000 to 6000. so that's you know
[32:06] an 85 drop
[32:08] 75 percentile going down from 118 000 to
[32:10] 58 000. that's a 50 drop right um even
[32:14] the 90th percentile has drawn down
[32:15] slightly but if you go forward to the 65
[32:18] to 70 year olds you see the other uh the
[32:20] other thing especially at the higher
[32:21] income percentile so 90th percentile
[32:23] from 280 to 440 95th from 420 to 700 and
[32:27] 999 from 942 million right by
[32:30] restricting new construction of housing
[32:32] we've ensured that those people who were
[32:33] lucky enough to own lucky enough to buy
[32:36] when housing was still affordable in
[32:37] places like los angeles in the 1970s
[32:39] they experienced unbelievable housing
[32:41] price appreciation by contrast younger
[32:43] people find it impossible to buy in and
[32:45] this is sort of a larger story that we
[32:46] tell in the book that one of the reasons
[32:48] for americans urban miles is that we've
[32:50] allowed our cities to be captured by
[32:52] insiders who erected rules a variety of
[32:54] different forms which limit both
[32:55] building and new business formation
[32:58] and also lock people in place and so
[33:01] this just shows the persistence of not
[33:03] working rates uh across public use
[33:06] microsample areas so these are different
[33:07] geographies between 1980 and 2010. so
[33:10] many of you may know for example the
[33:12] famous paper by blanchard and katz on
[33:14] regional evolutions that was published
[33:15] in brookings in 1993 i think which
[33:18] showed that high unemployment rate
[33:19] states in 1975 had were not high
[33:22] unemployment rate states in 1985 that
[33:24] people by migrating across space
[33:26] smoothed out these labor market
[33:27] differences this isn't unemployment this
[33:29] is the share of prime aged men who are
[33:31] who are not working which includes out
[33:32] of the labor force but over the past 30
[33:34] years there's been no convergence this
[33:36] correlation coefficient is over 80
[33:38] and the coefficient is greater than one
[33:40] which really tells you that we've locked
[33:41] people in place partially because they
[33:43] can't move to places like new york or
[33:44] los angeles or san francisco because
[33:46] housing prices are so high and after all
[33:48] over 30 percent of prime age men who are
[33:51] not working are living with their
[33:52] parents
[33:53] and of course our third source of
[33:55] dissatisfaction is the massive increase
[33:57] in incarceration now in a sense the
[33:59] safety before you so i can ask some
[34:01] questions can you elaborate a little bit
[34:03] on the political economy of course it's
[34:04] very difficult to undo that because you
[34:07] have huge capital losses for the elderly
[34:08] people and there will be a backlash
[34:11] politically how would you handle this if
[34:13] you were in charge
[34:15] to you know erode essentially people's
[34:17] net worth in housing by making it
[34:20] politically it's enormously difficult
[34:22] marcus i i completely agree with you um
[34:25] i i think it is um typically the easiest
[34:28] the most salient thing for people is
[34:30] they're actually not focused on losing
[34:31] housing well they're focused on the
[34:32] inconvenience of construction for them
[34:34] and so the easiest political fruit in
[34:36] terms of allowing more building is
[34:38] typically in brownfield sites and cities
[34:40] so it's areas that are formerly
[34:41] industrial where you don't have a lot of
[34:42] well-heeled neighbors where you can just
[34:44] upzone so creating as of right zoning in
[34:46] brownfield areas is by far the easiest
[34:49] path forward and it's typically been the
[34:50] one that cities that have wanted to
[34:51] build have done allowing more building
[34:53] in highly developed highly organized
[34:55] residential communities is just a
[34:56] nightmare politically um
[34:58] so that's that's been that's at least my
[35:00] experience so this is the last thing you
[35:01] know so crime rates
[35:03] you know
[35:04] in new york in the 70s and 80s when i
[35:05] was a kid new york was a profoundly
[35:07] unsafe place it is no longer but our
[35:10] victory over urban crime was paid at a
[35:12] terrible cost we're paid by locking up
[35:14] millions of young men and treated
[35:16] millions of others to you know fairly
[35:18] brutal policing tactics and so this has
[35:20] engendered this you know terrible uh
[35:22] blowback which we experienced in the
[35:24] wake of the killing of george floyd in
[35:26] those protests during the height of
[35:27] covet
[35:28] now these inequities have come up
[35:30] against the fact that covid was also a
[35:33] highly unequal plague it was a highly
[35:35] unequal plague because of what less
[35:36] skilled people do and the rise of the
[35:38] urban service economy
[35:39] so if you go back in terms of the
[35:41] economic implications of plague if you
[35:43] go back to the black death or any time
[35:44] you have a subsistence agricultural
[35:46] economy as long as the plague doesn't
[35:48] lead to political collapse as it did in
[35:50] 541 ce plagues leave the those who
[35:53] remain richer so the black death strikes
[35:55] in 1350 it is a demographic it is a
[35:57] human catastrophe more than one third of
[35:59] europe appears to die but
[36:01] right if one third of europe dies that
[36:03] means land per capita is going up by 50
[36:05] for those who remain and so wages soared
[36:08] in the late 14th century and in a sense
[36:10] you know
[36:11] those higher wages than fueled the urban
[36:13] renaissance of the 15th century because
[36:15] of demand for urban luxury goods
[36:16] flash forward to the influenza pandemic
[36:18] of 1918-1919
[36:20] which we have a wonderful paper on by
[36:22] francois veld of the chicago fed who
[36:24] looks in really close detail of what's
[36:26] happening and the basic answer is you do
[36:28] have a short sharp recession mostly
[36:30] associated with um factories shutting
[36:32] down mines shutting down because workers
[36:34] get sick but as soon as it's done the
[36:36] economy goes comes back and roars again
[36:38] right and and it's largely at least one
[36:41] way of understanding this is demand for
[36:43] durable goods demand for most
[36:44] manufactured goods does not decline
[36:45] during this pandemic right it did not
[36:47] decline during our pandemic which was a
[36:48] great durable goods boom flash forward a
[36:51] century when outsourcing automation has
[36:53] made those you know factory jobs
[36:55] disappear and so the ability to serve a
[36:58] latte with a smile has been an
[36:59] employment safe haven for less skilled
[37:01] workers despite automation and
[37:03] outsourcing right and yet those jobs can
[37:05] vanish in a heartbeat when that smile
[37:07] turns into a source of peril rather than
[37:08] a source of pleasure and that's exactly
[37:10] what happened in the early months of the
[37:11] pandemic together with a whole set of
[37:13] co-authors we were running surveys now
[37:15] this was published in the proceedings of
[37:17] the national academy of sciences this is
[37:18] from april 2020 and you know 45 of small
[37:21] businesses in our uh sample were shut
[37:24] down um 86 percent of people in personal
[37:26] services uh 86 of the business and
[37:28] personal services 70 in arts and
[37:30] entertainment um and so
[37:32] we survived through a massive infusion
[37:33] of federal dollars trillions in the
[37:35] paycheck protection program but it was
[37:36] certainly was an economic dislocation of
[37:38] the first magnitude that particularly
[37:39] struck poor workers were faced with the
[37:41] option of either staying at home or um
[37:44] or or and losing a paycheck or going to
[37:46] work
[37:47] now the big question going forward is
[37:49] are we ever going to go back to the
[37:50] office and nick bloom and i are on
[37:51] somewhat opposite sides of this of this
[37:53] view
[37:54] but certainly in the you know in the
[37:56] short run this comes from castle data
[37:58] these are sort of
[37:59] data from a very select sample of
[38:01] offices that use high-end security
[38:03] systems to castle runs so from the
[38:05] sample you can see that at least sort of
[38:07] in the in the most closed metropolitan
[38:09] areas that's new york jose and san
[38:11] francisco san jose and san francisco and
[38:13] these are you know high-end buildings in
[38:14] high-end cities you know 80 percent are
[38:16] still not back that's very different
[38:18] from the us as a whole so
[38:20] you said that um you know you thought
[38:22] that more than 20 that the poll answers
[38:23] with more than 20 percent of people
[38:25] would not be would be working remotely
[38:26] the current number by the way for the us
[38:28] is 12 according to the bls working from
[38:30] home so according to um
[38:32] the bls only 12 of america is working
[38:34] remotely which just tells you how
[38:36] different these prime office markets are
[38:37] from the average uh american um
[38:40] now this is not the first time
[38:42] that people have thought that
[38:44] information technology was going to make
[38:46] face-to-face contact on the cities that
[38:48] enable that contact obsolete right um
[38:50] there's always been a dance between
[38:52] centrifugal and centripetal technologies
[38:54] and in the 1970s it really looked as if
[38:57] cities were doomed that they were
[38:58] dinosaurs of history and during that
[39:00] period in 1980 the futurist alvin toffer
[39:04] wrote the third wave where he predicted
[39:05] that
[39:06] just as
[39:07] highways and container ships had doomed
[39:09] urban industry like the garment sector
[39:11] in new york and remember the largest
[39:13] industrial cluster in the united states
[39:15] in the 1950s was not automobile
[39:17] production in detroit it was garment
[39:18] production in new york city and it had
[39:20] been clobbered right half a million jobs
[39:22] lost in a decade right by the
[39:24] deindustrialization of our cities made
[39:26] possible by transportation technologies
[39:28] and so he wondered why wouldn't another
[39:30] form of transportation technologies the
[39:32] ability to transport ideas why wouldn't
[39:34] this make urban offices obsolete right
[39:36] totally reasonable hypothesis it's
[39:38] what's on many people's minds right now
[39:40] right won't zoom make face-to-face
[39:41] contact obsolete well for 40 years right
[39:44] for essentially my entire life
[39:46] topless was completely and totally wrong
[39:48] right and he was completely and totally
[39:50] wrong because he he got one effect of
[39:52] remote learning but he missed a second
[39:54] effect which is that what all these
[39:55] technologies did what globalization also
[39:58] did was that they radically increased
[40:00] the returns to being smart they
[40:01] radically increased the returns to
[40:02] innovation and we are a social species
[40:04] that get smart by being around other
[40:06] smart people so this is an image of
[40:08] michael bloomberg city hall which is
[40:10] based on the wallace office of bloomberg
[40:12] llp which is based on the solomon
[40:13] brothers trading floor right trading
[40:16] floors are in a sense an anomaly here we
[40:17] have some of the wealthiest workers on
[40:19] the planet who normally would be
[40:20] enjoying lots of privacy in a closed
[40:22] office but in trading floors they're
[40:24] right around each other and you know you
[40:26] remember early on in the pandemic jamie
[40:28] dimon wanted his traders back on the
[40:29] floor now why are they there why is that
[40:31] so valuable because there's no industry
[40:33] in which knowing a little bit more can
[40:35] make you richer faster than finance and
[40:37] so the returns to proximity are just
[40:39] very very high in that industry and in a
[40:41] sense the high returns to innovation are
[40:43] all to information are also what brought
[40:44] cities back right we literally have
[40:46] hundreds of studies showing us that
[40:47] there's been a rise in returns to scale
[40:49] and cities have catered to that now if
[40:52] we thought that technology was making
[40:54] face-to-face contact obsolete we should
[40:56] wonder why the most famous example of a
[40:58] geographic cluster in the 21st century
[40:59] is silicon valley is the most teched up
[41:01] cluster right why google prior to 2020
[41:04] which of all the companies in the world
[41:06] should be able to send its workers home
[41:07] why it did the opposite right it bought
[41:09] the googleplex it bought a million and a
[41:10] half square feet in downtown manhattan
[41:11] and it's doubling down on more right
[41:13] because google's leaders thought that
[41:15] proximity was how you actually
[41:17] engendered creativity and you know a
[41:19] more complicated world is a world in
[41:21] which it is easier for ideas to get lost
[41:23] in translation
[41:24] anyone who's ever taught knows the hard
[41:26] part about teaching is not knowing your
[41:27] subject material it's knowing whether or
[41:29] not anything you're saying is getting
[41:30] through to your students right and we
[41:31] have these cues for communicating
[41:33] comprehension and confusion that are
[41:34] lost when we're not in the same room
[41:35] with one another right these are just
[41:37] some things which just show you the the
[41:39] connection between density and earnings
[41:40] so this is employees per square
[41:42] kilometer across new york city zip codes
[41:43] this shows that you know wages are going
[41:45] up many times as you get to the denser
[41:47] parts of new york this shows you another
[41:49] way of looking at the persistent
[41:51] joblessness of america so this is um
[41:54] over the past 50 years the share of
[41:55] primage males who are jobless has risen
[41:57] from 5 in 1967 to 15 over the most of
[42:00] the past 10 years and that jobless rate
[42:02] is not spatially neutral it's clustered
[42:04] in a particular region particularly the
[42:06] eastern heartland a region that starts
[42:08] in louisiana and mississippi runs up
[42:09] through appalachia and ends in the rust
[42:11] belt cities and in a sense
[42:13] you know i can always imagine what's
[42:15] what a less skilled person is going to
[42:17] do in new york city in 20 years they're
[42:18] going to be some job and a great service
[42:20] economy for them but i don't know what
[42:22] they're going to do in west virginia i
[42:23] don't know what they're going to do in
[42:24] eastern kentucky
[42:27] and so the success of cities has not
[42:28] been neutral right this rise in the
[42:30] value of information has meant that that
[42:32] skills and density have been complements
[42:35] and we've seen a success of highly
[42:36] skilled metropolitan areas this just
[42:38] shows population growth by county and
[42:40] the share of the population with a
[42:41] college degree as of 2000 right this
[42:43] connection between the initial skill
[42:44] level measured by either just the actual
[42:46] skill level and in the start period or
[42:48] the share of the population that's
[42:49] college educated in 1940 or whether or
[42:51] not you have a land grant college prior
[42:53] to 1940 or whether or not you have a lot
[42:55] of congregationalists in your population
[42:56] in 1850 right these are all predictors
[42:58] of urban success whether or not its
[43:00] success is measured by population or
[43:02] success is measured by earnings so this
[43:04] just shows the relationship between per
[43:05] capita gdp and skills this is something
[43:08] economists typically call human capital
[43:09] externalities enrico moretti has been
[43:11] the the you know prime mover on
[43:13] documenting this and a typical fact is
[43:15] that holding your years of schooling
[43:16] constant as the share of the population
[43:18] with a college degree in your
[43:19] metropolitan area goes up by 10 your
[43:21] earnings also go up at 10
[43:22] now what do we know about uh remote work
[43:26] during during a time of covet or
[43:27] beforehand now the best paper on this of
[43:29] course is nick bloom's paper on uh
[43:32] randomizing call center workers in china
[43:34] this comes from a paper by my
[43:36] two students natalia natalia emanuel and
[43:38] emma harrington which look at remote
[43:40] workers in a um in an american online
[43:42] retailer they both find essentially the
[43:44] same things which is that
[43:46] static productivity is unchanged or even
[43:49] improved by going remote right these
[43:52] call center workers become quicker they
[43:54] have less distractions at the very least
[43:55] there's no loss
[43:57] by contrast both of them have the same
[43:58] fact about promotions promotion rates go
[44:01] down by about by more than 50 percent
[44:03] when you go remote now what is being
[44:05] promoted mean you can see this promotion
[44:06] to upper level that's what i'm talking
[44:07] about you can see basically everyone
[44:08] gets promoted to mid-level what is
[44:10] promoted to upper level mean it means
[44:11] you get assigned to handle the difficult
[44:13] calls well how would you learn how to
[44:15] handle difficult calls if you were all
[44:16] by yourself you weren't didn't have
[44:18] people around to listen to how would
[44:19] your boss know that you were good at
[44:20] handling difficult calls if you were
[44:22] remote so all of these learning channels
[44:23] which are so natural when they're face
[44:24] to face are turned off when you're not
[44:26] together
[44:27] this view of
[44:29] face-to-face contact as being about sort
[44:31] of dynamic learning effects is also
[44:33] given credence by what happened to new
[44:35] hires during the pandemic
[44:37] so you can see here this is by jose
[44:38] ramon morales and carlos
[44:41] on the left-hand side is jobs that have
[44:42] to be done live on the right-hand side
[44:44] is jobs that can be done remotely
[44:47] live jobs during the early days of the
[44:48] pandemic employment crashed new postings
[44:51] on burning glass technology also passed
[44:53] so new hires and uh employment both
[44:55] crashed but they both came out came back
[44:57] more or less moving together by contrast
[44:59] remote jobs employment was steady as a
[45:01] rock
[45:02] new hires new postings on burning glass
[45:04] dropped by 40
[45:06] right this is exactly what we see for
[45:07] computer programmers where microsoft
[45:09] tells us that his existing computer
[45:11] programs were perfectly good at
[45:12] programming uh when they went from home
[45:14] but overall new postings for computer
[45:16] programmers on burning glass were down
[45:18] by over 40 percent and there's also a
[45:20] beautiful new paper by uh sonia jaffe
[45:22] and her co-authors looking at
[45:24] collaboration in microsoft showing that
[45:26] there's been a real decline in
[45:27] synchronous communication so this is
[45:29] people actually talking to each other as
[45:30] opposed to people posting things and a
[45:32] real decline in collaboration across
[45:33] distant different groups
[45:35] and of course if you imagine a remote
[45:37] world you're imagining a world that is
[45:38] even more terribly unequal than the
[45:40] world of the past and so this shows the
[45:42] share of the population who were
[45:43] teleworking at the height of teleworking
[45:44] which was may 2020
[45:46] and in that in that month according to
[45:48] bls data
[45:49] 68.9 percent of americans with advanced
[45:53] degrees were working remotely and so
[45:54] this is a world that all of us on this
[45:56] call i presume know knew by contrast
[45:58] only five percent of americans with less
[45:59] than a high school diploma were working
[46:01] remotely fifteen percent of people who
[46:02] are high school graduates were working
[46:03] remotely and so if this is your future
[46:05] it's a pretty terrible one uh for at
[46:07] least equality in the us now i agree
[46:10] strongly with marcus's comment though
[46:11] that even though i really don't believe
[46:13] that hungry tech firms are going to just
[46:15] tell people to dial it in i agree with
[46:17] nick that hybrid work will exist but i
[46:19] think by and large if you think of your
[46:21] sort of you know firm of 15 20 and 30
[46:24] somethings who are really hungry and
[46:26] trying to do something exciting in the
[46:27] technology space do i believe they're
[46:28] really all going to go home to their
[46:30] suburban homes whether or not they're in
[46:31] new jersey and westchester and just dial
[46:32] it in i just can't imagine that that's
[46:34] just not what entrepreneurship ever
[46:35] looks like but do i think they might
[46:37] relocate from silicon valley to veil
[46:40] because they like skiing or austin texas
[46:42] because they like paying lower taxes or
[46:43] honolulu because they like
[46:45] surfing you bet that seems like a very
[46:47] real possibility and so in some sense
[46:49] cities are facing extra pressure
[46:52] extra competition which has both upsides
[46:54] and signs right at its best it does
[46:56] exactly what marcus suggests which is it
[46:58] hyper charges competition and it gets
[47:00] cities to up their up their game at its
[47:02] worst it blindsides cities that are you
[47:04] know just in a very different place and
[47:07] it ends up bleeding toward the sort of
[47:08] death spiral of the 1970s
[47:10] so as i look forward right as we think
[47:13] about the sort of post-pandemic city
[47:15] right so
[47:16] first of all if this shock goes on for
[47:18] another five to ten years right if we
[47:21] think that face-to-face contact is
[47:22] continue to be associated with death for
[47:24] a very long time even because of this
[47:25] pandemic or another one then it's hard
[47:27] for me to be optimistic about cities
[47:29] right that that is a world that is
[47:30] pretty catastrophic
[47:32] i don't believe that that world will
[47:33] happen i hope that our governments do
[47:36] everything that it takes and our book is
[47:38] full of things that we think that it
[47:39] takes to to make sure that this is a
[47:41] one-time event um but there still be
[47:43] shocks partially because of zoom and
[47:44] partially because of the aftermath of
[47:45] this pandemic
[47:47] so i tend to think that it's commercial
[47:49] space that is more vulnerable than
[47:50] residential space so it's certainly true
[47:52] during the pandemic that princeton
[47:53] prices have gone up by more than
[47:54] manhattan prices but manhattan prices
[47:56] have also shockingly gone up and at
[47:58] least when i see around me right young
[48:00] people in cambridge right the hunger to
[48:02] be around other young people to connect
[48:04] with other other uh human beings and to
[48:06] be living life live that hasn't
[48:08] disappeared and so my own bet is the
[48:10] commercial space will prove to be fairly
[48:12] uh will be under more threat than
[48:13] residential space and there will be
[48:15] pressure to reconvert from uh commercial
[48:17] to residential cities are likely to
[48:19] reallocate from the old to the young
[48:21] both because the young are more hungry
[48:22] to meet new people and because the young
[48:23] are more hungry to learn from people and
[48:25] work and remote work will continue
[48:28] global talent has just gotten more
[48:29] mobile and yet there's a dire need to
[48:31] deal with those urban downsides to deal
[48:33] with the lack of upward mobility to deal
[48:35] with high housing costs and so i think
[48:37] this requires cities and states to up
[48:39] their game right this means we need to
[48:40] have smarter government we need to sort
[48:42] of move past tired arguments but more or
[48:44] less government we need to have fewer
[48:46] regulations that bind small businesses
[48:48] or bind builders and especially when
[48:50] dealing with upward mobility we need to
[48:52] experiment and evaluate um i see
[48:54] something very different in terms of the
[48:57] world of the high-end cities and the low
[48:58] end cities going forward so if you're
[49:00] looking at a city like new york or san
[49:02] francisco a 20 reduction in demand for
[49:05] commercial real estate will not show up
[49:07] in large vacancies once we're past this
[49:09] right prices fall
[49:11] but you know price clears the market and
[49:13] so the uh the vacancies don't don't
[49:15] appear in the long run of course we need
[49:16] to get back past the health risk however
[49:19] if you're looking at cities like
[49:20] cincinnati or detroit or cleveland at 20
[49:23] reduction in those houses they can in
[49:25] those in those offices that can lead to
[49:27] large-scale vacancies there will be
[49:28] landlords who will just walk away from
[49:30] their office uh buildings those prices
[49:32] and so in those cases the urban
[49:34] emptiness can just spill over and can
[49:35] reduce demand for other uh other spaces
[49:38] and so i fear that this will be an
[49:39] unequal
[49:41] pandemic an unequal post-pandemic urban
[49:43] society so let me end there and either
[49:45] have a bunch of questions that i should
[49:46] probably be responding to but i want my
[49:48] ultimate message to be optimistic that
[49:50] cities have been doing miraculous things
[49:52] have been enabling people to learn from
[49:53] one another and to do these incredible
[49:55] leaps of imagination since plato and
[49:57] socrates bickered on an athenian street
[49:59] corner and i believe very strongly that
[50:01] the age of urban miracles is not over
[50:03] so thank you again for having me on
[50:05] marcus
[50:06] thanks a lot ed so i think there are
[50:07] tons of questions i have some questions
[50:09] too uh let me first ask you you said you
[50:12] know the plague essentially
[50:14] decimated the population size and the
[50:16] remaining then it was a shortage of
[50:17] labor and wage rates went up
[50:20] but is it still true in a world where we
[50:22] really want with the knowledge economy
[50:24] and the more people we have the better
[50:26] it is now in the olden days it was more
[50:28] physical work
[50:29] now the other way around there are fewer
[50:31] people and a few ideas and uh
[50:34] completely marcus i i believe that
[50:35] strongly so that that is a state that
[50:36] was a statement about 1350 not a
[50:38] statement about a statement about today
[50:40] although there may be some subsistence
[50:42] agricultural economies in africa where
[50:43] you would see some of that effect but
[50:44] certainly not the u.s it's the other way
[50:46] around i agree with that
[50:47] okay great so then i wanted to ask you
[50:50] you know your analysis is very focused
[50:52] on u.s would you say it's similar in
[50:55] asia including china and in europe or
[50:58] would you say what are the other slight
[50:59] differences there or i would say that
[51:01] you know there are quite dramatic
[51:02] differences how could you speculate a
[51:04] little bit on on that absolutely so so
[51:07] the east asian uh countries have
[51:09] actually particularly sort of korea
[51:11] singapore uh
[51:13] japan have distinguished themselves
[51:14] during the pandemic i mean the fact the
[51:16] fact that they have more competent
[51:17] governments has really shown through and
[51:19] i think
[51:20] any sense of fear about cities just
[51:21] would feel totally out of place in in
[51:24] most of those most of those economies so
[51:25] you wouldn't worry very much about those
[51:27] um
[51:28] european cities have had a more mixed
[51:30] record so european countries have some
[51:32] have functioned better some have
[51:33] functioned worse
[51:35] they often had fewer deaths because at
[51:37] least the northern european countries
[51:38] were healthier going in and so they had
[51:40] stronger health systems and so they had
[51:41] had less of this co-morbid
[51:43] co-morbidities um but i i think many of
[51:47] the same issues are at play europeans
[51:49] tend to be less mobile
[51:51] so the tendency to just leave and go to
[51:53] texas is going to be less pronounced in
[51:54] in european cities right where uh so i
[51:56] would expect a little bit of bit less of
[51:58] this also the sort of fear that
[52:01] progressive local governments will
[52:03] decide to penalize their their wealthier
[52:05] taxpayers and wealthier businesses and
[52:07] create this 1970s death spiral i don't
[52:09] fear that as much in europe just because
[52:10] local leaders have much less power um in
[52:12] the u.s you particularly want to watch
[52:14] at local leaders that sort of decide
[52:16] that it's okay to have very high crime
[52:17] rates because that's going to be our
[52:19] response to defund the police and so
[52:20] we've really got to figure out ways to
[52:22] make sure that we actually keep our
[52:24] citizens safe at the same time we make
[52:25] sure that our police treat everyone with
[52:26] respect and dignity
[52:29] okay then you know there's one question
[52:31] which jeff rose would like to know when
[52:33] is your new edition of the triumph of
[52:34] the city coming out because he's using
[52:36] it for teaching and so many people use
[52:38] it for their urban teaching urban
[52:40] economics
[52:41] you know i saw this book as being the
[52:42] second in that in that vein so it's a
[52:44] very different book it's a book that's
[52:46] much more of the moment
[52:47] but i i rarely have i mean i believe
[52:49] that this will be a trilogy so this is
[52:51] dealing with new york with the us in
[52:52] 2021 and i plan on writing a book that
[52:54] is more focused on developing cities
[52:56] developing world cities which actually
[52:57] had been my focus for much of the last
[52:58] five years before the kobe pandemic
[53:00] struck where i think in some sense the
[53:02] most exciting things that are happening
[53:03] in cities are happening in the
[53:03] developing world
[53:05] and then there's some questions by
[53:06] carlos carpe he would like to know you
[53:08] emphasize very much there's inefficient
[53:10] infrastructure spending in suburbia
[53:12] because it's top down and
[53:13] over-engineered uh and also less
[53:16] resilient that's what it claims would
[53:18] you
[53:18] agree with that that's there's more
[53:20] inefficiencies in suburbia in terms of
[53:22] infrastructure spending than in downtown
[53:24] it's hard to know look i i will strongly
[53:26] agree with him that we have artificially
[53:28] subsidized our suburbs both by the home
[53:32] mortgage interest deduction which is a
[53:34] subsidy for owning rather than renting
[53:36] and there's a very core strong
[53:38] correlation between structure type and
[53:40] ownership type in the u.s so more than
[53:41] 85 of multi-family dwellings has
[53:43] historically been rented more than 85
[53:45] percent of single-family detached
[53:46] housings have typically been owned
[53:48] probably because of the incentives
[53:49] involved in maintenance in the two in
[53:50] the two areas but that means that if
[53:52] you're going to subsidize homeowner
[53:53] you're going to subsidize people to
[53:54] leave their urban apartments and move
[53:55] into suburban homes similarly we have
[53:57] particularly over the past 20 years
[53:59] we've subsidized driving so by paying
[54:01] for more than half of our highway trust
[54:03] fund out of general tax revenues we're
[54:05] basically encouraging people to drive
[54:07] longer distances with these with these
[54:09] tax revenues so um infrastructure per se
[54:12] is a little bit harder for me to tell so
[54:14] the extent to which infrastructure is
[54:15] about the highways yes i believe that
[54:16] that's been subsidized but it's also
[54:18] true that our urban infrastructure is
[54:19] incredibly expensive to build and
[54:21] partially this is the infrastructure
[54:22] equivalent of nimbias in the home in the
[54:25] in home building so in the 1950s we were
[54:27] more like other countries and we did
[54:29] some bad things we built highways
[54:31] through poor areas and we ignored the
[54:33] wishes of the local neighborhoods and
[54:34] that was terrible but it meant that
[54:36] building wasn't that expensive we moved
[54:37] to an area in which just as every
[54:39] homeowner can say no to every new
[54:41] housing project every new homeowner can
[54:43] say no to a any form of subway
[54:45] construction and so our costs are three
[54:48] to four times of competing countries in
[54:50] terms of urban infrastructure in the u.s
[54:51] so we're very bad at building it as well
[54:53] so i like the thrust of his question but
[54:55] i think there's just a lot of things
[54:56] that are going on at the same time that
[54:57] you need to unpack
[55:00] and can you elaborate a little bit i
[55:01] want to push you a little bit into
[55:03] climate change policies is there
[55:04] anything to argue we should live more in
[55:06] cities because it's a more efficient
[55:08] less climate polluting way of uh living
[55:11] oh you bet let me see if i can find my
[55:13] uh my uh
[55:15] well i'll i'll just do it verbally for a
[55:16] second so um
[55:18] you know i i like to make this point all
[55:20] the time this is a point that's made in
[55:22] my paper the greenness of cities and and
[55:24] in triumph of the city uh i i didn't
[55:26] focus on climate change in this book
[55:27] because you know one one source of
[55:28] apocalypse was enough for for for one
[55:30] book i didn't i didn't want to have all
[55:31] the horsemen at once um but as you say
[55:35] you know we are a destructive species
[55:37] and if you love nature it's good to stay
[55:39] away from it uh and you know we we try
[55:41] and our paper we hold income and family
[55:44] size constant and we just find that
[55:45] carbon emissions are a lot lower in the
[55:47] u.s if you live in a dense urban area
[55:48] than if you live outside and that's both
[55:49] because of driving much shorter
[55:50] distances they're taking public
[55:51] transportation and living in much
[55:53] smaller homes so i agree with this point
[55:55] strongly and one way of seeing this is
[55:57] that the great growing economies of
[55:58] india and china see their per capita
[56:00] carbon emissions rise to that scene in
[56:01] the sprawling united states global
[56:02] carbon emissions go up by 130
[56:04] if they stop at the level seen in
[56:06] wealthy but hyperdense hong kong global
[56:07] carbon emissions go up by less than 30
[56:09] so we all have a lot to gain if at least
[56:11] the the cities of the developing world
[56:13] build up rather than building out and so
[56:15] i think that is that is a reason and you
[56:16] know it makes it particularly crazy that
[56:18] we're actually subsidizing our highways
[56:19] rather than taxing them for the carbon
[56:20] missions that they create
[56:23] great then i wanted to come to your
[56:25] ideas you know being together and would
[56:28] like to come to the future of
[56:29] universities and you know how do you see
[56:32] our teaching in 10 years and our
[56:34] research being done in 10 years of
[56:36] course now we have the zoom interactions
[56:38] and all this is not the same as a
[56:40] physical conference
[56:41] but if you project yourself for 10 years
[56:43] in the future how do you think we will
[56:45] teach
[56:46] um
[56:47] i don't think it's you know so i don't
[56:49] know what your experience has been um
[56:52] i i thought that zoom teaching was
[56:54] pretty awful i i thought that my ability
[56:56] to so you know
[56:58] we can deal with old friends and we can
[57:00] deal with research relationships over
[57:01] zoom perfectly well we actually could
[57:03] have done it with a phone too most most
[57:05] of the time so you know in fact david
[57:06] cutler and i wrote this book together
[57:08] we've been friends for 30 years we
[57:09] didn't even zoom we just used calls we
[57:11] and it was it was perfectly perfectly
[57:13] productive but while you know it's easy
[57:15] to manage a a 30-year relationship over
[57:17] zoom i have no idea how to get 19 year
[57:19] olds excited about mathematical
[57:20] economics over zoo right that's just a
[57:22] very hard thing to do and so i cannot
[57:24] tell you how grateful i am and how
[57:25] grateful i think our students are i mean
[57:27] everyone that i talked to for being live
[57:28] again right and how dismal they found
[57:30] the zoom experience and certainly the
[57:32] studies that we've seen of remote
[57:34] schooling have just shown that it's
[57:35] somewhere between absolutely awful and
[57:37] counterproductive so i mean i i just
[57:39] don't think the face-to-face experience
[57:41] is going to disappear anytime uh anytime
[57:43] soon
[57:45] do you think it's more because um
[57:47] you know the teacher and the student
[57:49] actually is so important is much better
[57:50] if it's in person or is it because among
[57:53] the students the discussion you know of
[57:55] the classroom that you know i didn't
[57:56] understand that can you explain this to
[57:58] me or
[57:59] you can just pick up from your fellow
[58:01] students a lot
[58:03] of dimension is more important so marcus
[58:04] i think it's both i've always believed
[58:06] that our students learn from more from
[58:08] their fellow students than from us and
[58:10] so i think that's that's sort of central
[58:12] i often think our job is to get them
[58:14] excited about our topics and then let
[58:16] them figure it out themselves and i
[58:17] think just the issue of inspiring them
[58:19] is um
[58:20] much harder to do uh if you're unless
[58:22] you're you're live now i do think
[58:24] there's a role for like you know if you
[58:25] have highly motivated students who are
[58:27] not able to come to the u.s sure there's
[58:29] a role for zoom i mean it's not like
[58:30] zoom will disappear but it's a it's a
[58:32] distinctly inferior process especially
[58:34] for students who have any problem with
[58:35] motivation it's a distinctly inferior
[58:37] process i think to having being face to
[58:38] face
[58:41] okay thanks a lot uh so let me just
[58:45] pick up some more questions which came
[58:47] in just now
[58:49] so how can we make sure that one bigger
[58:51] city uh that the mega cities are safer
[58:53] in the attacks of kobe than
[58:56] comparing to other natural disasters or
[58:58] let me stretch it a little bit
[59:00] do you fear we will have future
[59:02] pandemics coming up or is what are the
[59:04] biggest shocks we might experience
[59:06] coming in the next i know it's a
[59:08] challenging question but for cities in
[59:09] particular is it really pandemics or
[59:11] could it be some other
[59:13] you know when i'm thinking about deep
[59:15] fakes and things like that we can't
[59:16] verify things anymore they're a big
[59:18] challenge as well but i i don't think it
[59:21] might probably just make the difference
[59:23] between cities and non-cities so i don't
[59:25] think i have any particular expertise in
[59:27] in predicting future pandemics i think
[59:29] it certainly is a risk we certainly have
[59:30] plenty of warning signs before koba that
[59:32] pandemic was real possibility we had
[59:33] sars we had mirrors we had h1n1 um we
[59:36] had ebola um so i think the the view
[59:38] that we're not going to have a new
[59:39] pandemic it seems
[59:40] like a uh
[59:43] seems pollyannish to me um but you know
[59:46] before covert and i think now we're
[59:47] still appropriately worried about risks
[59:49] that climate change can pose for cities
[59:51] more likely from high frequency events
[59:53] relative to the sort of slow rising of
[59:56] uh sea levels but both are worrisome and
[59:58] i particularly worry about cities in the
[01:00:00] developing world that are very bad at
[01:00:01] protecting themselves and you really see
[01:00:03] this you know differential impact of
[01:00:05] natural disaster on highly well-governed
[01:00:08] areas versus poorly governed areas in
[01:00:10] terms of the impact of things like
[01:00:11] earthquakes and there's a great paper by
[01:00:12] matt khan in in the review of economics
[01:00:14] and statistics from 2006 on this and you
[01:00:16] know the fact that i always like to keep
[01:00:18] in my mind is you know two earthquakes
[01:00:20] strike in the same year i think it's
[01:00:21] 2011 haiti in chile haiti is not a
[01:00:23] particularly well-governed place chile
[01:00:25] is a particularly well-governed place
[01:00:26] very few people die in chile you know
[01:00:28] tens of thousands if not hundreds of
[01:00:29] thousands of people die and die in haiti
[01:00:31] and it just reminds you that the
[01:00:32] strength of civil society determines the
[01:00:33] impact of the
[01:00:35] of the onslaught and so i really worry
[01:00:37] about you know natural disasters climate
[01:00:40] change in the developing world where you
[01:00:41] have places that are poor and too often
[01:00:42] poorly governed and how much weight do
[01:00:44] you put on
[01:00:46] the authorities and the trust in the
[01:00:47] authorities versus some social norms
[01:00:50] that you know that just help each other
[01:00:51] out or they think both is equally
[01:00:53] important
[01:00:54] i think it depends on the nature of the
[01:00:56] disease so or the nature of the nature
[01:00:57] of the shock so when dealing with a with
[01:00:59] an earthquake it's got to be the
[01:01:00] authorities and i don't know that it's
[01:01:02] it's trusting the authorities having
[01:01:03] authorities that are trustworthy right
[01:01:05] it's it's really you don't want to have
[01:01:06] a false trust in the authority but you
[01:01:08] know when it comes to actually dealing
[01:01:10] with these massive natural disasters you
[01:01:11] really do need this capable public
[01:01:13] sector i mean there's a line that i'm
[01:01:14] fond of you know as a chicago econ phd
[01:01:17] uh who tends towards the liberty loving
[01:01:19] side there are no libertarians in cities
[01:01:21] or there should be no libertarians in
[01:01:22] cities cities really do have these you
[01:01:23] know needs for coordinated effort and so
[01:01:25] you really do need um you do really need
[01:01:27] government pandemic there's a little bit
[01:01:30] more that you that just civil society
[01:01:31] can do without government so there's a
[01:01:32] little bit more in sort of protecting
[01:01:34] those who get lost that you can do uh
[01:01:36] things like food banks or other things
[01:01:38] like that that small society can do but
[01:01:39] this still with pandemic you know
[01:01:41] whether or not you're thinking about
[01:01:42] large-scale quarantine or vaccine
[01:01:43] efforts or preemptive research that's
[01:01:45] got to be a government and not even a
[01:01:47] local government that's even got to be a
[01:01:48] national government or multi-government
[01:01:50] responsibility
[01:01:52] there's another question which came in
[01:01:54] is do you have any good examples of
[01:01:56] cities which use smarter government
[01:01:57] characteristics you would say to serve
[01:02:00] as a role model for other cities is
[01:02:01] there anything in the city which stands
[01:02:03] out
[01:02:05] um uh
[01:02:06] so the the city level rarely made more
[01:02:09] made the difference it's more the
[01:02:11] country level uh so certainly apart from
[01:02:13] the east asian countries that i've
[01:02:14] talked about i think yesinda ardern did
[01:02:16] a great job in new zealand at least
[01:02:17] early on um and part of the thing that's
[01:02:20] really special about her is she
[01:02:22] embraced testing the asymptomatic which
[01:02:24] is something that lots of economists you
[01:02:25] may you may have written an op-ed on
[01:02:26] this but lots of economists were very
[01:02:28] big on you know if we don't measure this
[01:02:29] thing we're not going to be able to know
[01:02:31] when we can reopen and oddly most of the
[01:02:34] western world completely ignored that i
[01:02:35] mean our you know national institutes of
[01:02:37] health didn't back this up they were big
[01:02:38] on testing the those with symptoms but
[01:02:40] they weren't big on just measuring the
[01:02:42] prevalence of the disease and so you had
[01:02:44] lockdowns in the us early on but then
[01:02:45] you had people undo the lockdowns in
[01:02:47] places like florida and texas without
[01:02:49] any evidence the disease was was gone
[01:02:51] whereas yesinda arden only reopened new
[01:02:53] zealand when she was pretty darn sure
[01:02:54] that disease was gone we really have to
[01:02:56] have the humility to learn and recognize
[01:02:57] that we don't know all the answers going
[01:02:59] in and that's true and pandemic and it's
[01:03:00] true in doing things like trying to
[01:03:02] promote upward mobility for urban kids
[01:03:05] and a quick question about the trust in
[01:03:07] vaccines or the vaccine pickup is very
[01:03:10] different than cities and countryside do
[01:03:12] you think it's
[01:03:13] it's just a different level of education
[01:03:15] which is the main driver is because
[01:03:16] externalities in cities are much bigger
[01:03:18] and hence you you want to
[01:03:20] somehow
[01:03:21] you're more exposed to it
[01:03:22] what's your favorite and and then it was
[01:03:25] somehow different for polio there was a
[01:03:26] much broader the country came together
[01:03:28] and everybody was using polio it was not
[01:03:30] this country a city divide which we
[01:03:33] experiencing now which in general we
[01:03:35] have this huge divide i mean the country
[01:03:37] and the city yes it's tragic and it's i
[01:03:40] mean i've always associated this with
[01:03:41] the politicization of this plague
[01:03:43] which is bizarre i mean there should not
[01:03:45] be a republican or democratic way to
[01:03:47] fight uh to fight pandemic um and it's
[01:03:50] very strange thing that we allow this
[01:03:51] pandemic to become politicized and as
[01:03:53] you say the cleavages show up in
[01:03:55] expected fashion um education is helpful
[01:03:58] uh you know in terms of in terms of this
[01:03:59] so education is a predictor of you know
[01:04:01] vaccine uh prevalence but politics
[01:04:04] really is too and so we really have to
[01:04:06] hope going forward that we embrace a
[01:04:07] more pragmatic centrist view of how to
[01:04:10] deal with these problems
[01:04:12] so thanks a lot and perhaps we always
[01:04:14] stop at the positive note if you could
[01:04:16] design the optimal city and have one
[01:04:18] little thing you implement what would it
[01:04:20] be
[01:04:21] so for me cities are all about freedom
[01:04:24] cities are all about choices cities are
[01:04:26] archipelagoes of neighborhoods that give
[01:04:27] you different options and so if the last
[01:04:29] thing i would want is sort of a
[01:04:30] centrally architecturally designed thing
[01:04:32] that says this is the perfect way to
[01:04:33] live what i love is cities that are
[01:04:35] built over centuries where there are
[01:04:37] lots of different things and where there
[01:04:38] isn't a regulatory straight jacket that
[01:04:39] freezes the city in place
[01:04:41] but i really hope that as we go forward
[01:04:43] the cities of america and the cities of
[01:04:45] the world continue to be places that
[01:04:46] find room for outsiders that find room
[01:04:48] for new brilliance and to shine in ways
[01:04:51] that enrich all of
[01:04:52] humanity thanks a lot it's hard to beat
[01:04:55] and conclude at a higher note
[01:04:57] thanks again and i hope to see you soon
[01:04:58] in the real world and
[01:05:00] keep up your good research thank you
[01:05:02] marcus great to see you thank you for
[01:05:03] including me bye-bye
[01:05:08] you