Podcast Transcript: Edward Glaeser on Will Cities Survive After COVID

This is an edited transcript of our podcast episode with Edward Glaeser, first published on 19 November 2021. Edward Glaeser is Professor of Economics at Harvard University. He is perhaps the world’s leading expert on cities. In this podcast we discuss how pandemics impacted cities across history, why tech revolution didn’t end cities, factors that drive gentrification, and much more. While we have tried to make the transcript as accurate as possible, if you do notice any errors, let me know by email.

Introduction

Bilal Hafeez (00:00:00): 

Welcome to Macro Hive Conversations With Bilal Hafeez. Macro Hive brings you the best analysis to successfully invest in markets from crypto to equities to bonds. For our latest views, visit macrohive.com. 

It’s been quite a week in markets with all the talk of high inflation, bond yields have only moved a few basis points over the past week. And equities have been resilient. Instead, it’s the FX and crypto markets where all the action has been. The Euro has stumbled and is now trading with a 113 handle and crypto markets have been smashed. Both Bitcoin and Ethereum are down almost 20% from their recent highs. We’ve updated our crypto metrics and find that long-term HODLers have started to sell. And this could be an ominous sign. For our full take, you can read the article on the Macro Hive website. I’d urge you to keep following our crypto work especially at times like this. The other report you should keep a regular eye on is our weekly market tracker which comes out on Mondays. And this week it had flagged that the Euro was the market to watch which turned out to be correct. So, keep an eye on that report at the start of each week. Elsewhere, this week we looked at the latest academic work on how to trade inflation regimes. We featured a piece by former podcast guest, Alberto Gallo, on how to construct an Anti-Goldilocks portfolio and we give our take on which ETF sectors are best to own in this current environment.  

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Now onto this episode’s guest, Edward Glaeser. Edward is professor of economics at Harvard University. He is perhaps the world’s leading expert on cities. He’s published extensively on cities and the evolution over the last 30 years. He’s author along with David Cutler, of the recent and excellent book: Survival of the City: Living and Thriving in an Age of Isolation. Edward leads the Urban Economics Working Group at the NBER and co-leads the Cities programme at the International Growth Centre. He’s also a member of the American Academy of Arts and Sciences, and the National Academy of Public Administration. On to our conversation. 

So welcome, Edward, to the podcast. It’s great to have you on. 

Edward Glaeser (00:02:57): 

Thank you so much for having me on. It’s great to be here. 

Bilal Hafeez (00:02:58): 

I must say I really enjoyed your book, the Survival of the City. It was really sweeping in its scope. And I learned a huge amount from the book. And hopefully through our conversation, listeners will be able to get a flavour of the book as well. So congratulations on such a good book. 

Edward Glaeser (00:03:13): 

Thank you so much. It was a great pleasure to write. And it’s hard not to be both excited and worried about the state of cities in 2021. 

Who is Edward Glaeser? 

Bilal Hafeez (00:03:21): 

Absolutely, yeah. And before we jump into the meat of the conversation, I always like to ask about the background of my guests. So what did you study? Which university did you start off? Was it inevitable you would end up in economic and end up focusing on cities? What’s your origin story in your path so far? 

Edward Glaeser (00:03:37): 

I grew up in New York City in the 1970s. My mother was in finance. My father was a curator at the Museum of Modern Art in architecture and design. And so perhaps it was inevitable that I became an economist who studied cities. I was also deeply, utterly fascinated by the ups and downs of New York during the perilous decade of the 1970s, where crime rates exploded and the city teetered on the edge of bankruptcy. I went to college at Princeton, and then I went to graduate school at the University of Chicago, both of which were great experiences. 

But it was really at Chicago that I became an urban economist, in part because at that time period, there was a real interest in the new growth theory as led by Paul Romer and Bob Lucas. And it was Lucas who really made the connection between the knowledge spillovers that had been at the heart of Romer’s model of endogenous growth. So, the fact that we get increasing returns at a society wide level because there’s all these things that we create, which are ideas which empower everyone else. And then Lucas said, “Boy, this reminds me of Jane Jacobs, Economy of Cities, from 1968. And how she talked about how there were these connections in cities where people learn from each other and new inventions were created by combining old ideas.” That led back to urban and so that that was the background that I had when I started working on cities because it was very much inspired by this sense that cities were not just about transportation problems or housing supply. But they were also in some sense the linchpin of larger economic forces, the creative spark for so much of humanity’s success. 

Bilal Hafeez (00:05:04): 

And you went and stayed in academia. You didn’t go off to become an urban planner in the private sector or join government in some form to try to change cities? 

Edward Glaeser (00:05:13): 

Nope. I never had a real job. I never really thought I’d be good at one. I love my work. And I love teaching. I love advising. I love the creative process of writing articles and writing books. I’ve been very blessed by my ability to engage with policymakers throughout the globe, and felt as if I’ve had some impact on them while sitting completely in an academic alcove. One way to think about is usually I think that basically all I’ve got to tell a policy maker, I can tell him within an hour, so there’s no need for them to hire me full-time. They just need… If I could get an hour with them, I’m pretty much at the limits of my knowledge. 

What defines a city? 

Bilal Hafeez (00:05:44): 

That’s great. No, that’s great. And now, I’d like us to talk more about cities. The first thing is just definitions. What is a city? How do you define a city in Europe? I think there’s one definition. A city is a place that has a cathedral and something like that and certain population size, but is there a formal definition of the city? 

Edward Glaeser (00:06:00): 

As an economist, I think of urbanity or city-ness as being the absence of physical space between people. Cities are at their heart density, proximity, closeness. And so it’s a continuum, not a sharp break. And people can live a quasi-urban experience all the time. I mean, America is full of suburbanites who can go home and sleep in a relatively low density environment, and then go throw themselves into the maelstrom of downtown Chicago or downtown New York during their workdays. And so they’re experiencing a hybrid urban existence. And of course, there are different models of urbanism. Whereas cities are always shaped by the transportation technology in the era in which they formed, both micro shape of cities, what the street feel like, but also how many cities there are. So, if you think about the Rhineland or traditional western Germany, which is dotted with these midsize cities, all of that is reflecting this mediaeval time period, which transportation costs were incredibly high. And so you needed all these little towns that were close to the farmland throughout, and you have a network building up till you finally get to the thing that was the formal city, which as you quite correctly say, the traditional mediaeval definition was, you had to have a bishop there. 

The bishop made the city. It was the cathedral that made the city. But that was fairly up on the urban hierarchy. And so that’s very different from let’s say, the mega cities of Asia or South America, which grew up in an era dominated by the automobile where you could have just one large mega city basically dominating the urban infrastructure or the urban frontier, because there’s no need to have these little towns which are close to the individual farmland. 

How have pandemics impacted cities across history? 

Bilal Hafeez (00:07:31): 

Okay, yes. And you talk about social proximity. And of course, that brings us to the pandemic now, where social distance has become a big issue. And in the book, you talk a lot about the role and impact of pandemics on cities and the growth of cities. Can you elaborate a bit more by some of the history here that provides some context of where we are today? 

Edward Glaeser (00:07:50): 

Oh, cities and pandemic or cities and disease have an ancient history. Probably 10,000 years old in fact. Many things happen when we’re close to one another. There are lots of positive things. Cities enable trade, normal exchange, labour markets. They enable the flow of ideas, what the great economist Alfred Marshall was writing about when he wrote that in dense clusters, the mysteries of the trade become no mystery, but are as it were in the air. But they also enable bad things to happen. They create traffic congestion, or they enable criminal activity. But the most terrible of the demons of density is contagious disease, is the fact that when people are close to one another, it’s easier for them to transfer a virus or bacteria. And of course, because cities are the nodes on our global lattice of transport and trade, they’re the places which diseases enter first. And so it was in New York City when tourists returning home from Italy brought in COVID-19. And so it was in Athens in 430 BCE, when some ship brought in plague from outside. I mean, we start the book with Athens, which is the first well-documented urban plague, but I should make it clear that people believe that disease came around with the first permanence, human settlements. That the Paleo historians of disease are fairly convinced that there were all sorts of things that came to human beings once we started basically living in dense settlements with animals close by. 

None of that do we have through the written record. That’s all through various genetic studies. But that’s almost assuredly true. But the mystery that I certainly can’t take a firm stand on as I’m certainly not a historian of the Bronze Age, but it strikes me as being a possibility that one of the things that was involved in the Bronze Age collapse of about 3000 years ago was that could have had a pandemic play some role in it as well. But the thing we know is in 430 BC, plague entered Athens through the port of Piraeus. We know we have a great description of that, because Thucydides was there and the history of the Peloponnesian War is full of this harrowing description. And if you remember, the backstory for this is that 5th century BCE Athens is doing all that you could possibly hope a city could do. It is connecting brilliance. It is enabling these chains of creativity and philosophy and architecture. It’s giving us democracy itself. It’s giving us history itself between Herodotus and Thucydides. And it’s giving us drama. It’s just giving us an amazing amount of human creativity. And the backstory for the plague is that all of the Athenian success militarily, financially, culturally, leads to a rivalry with the Sparta. 

Sparta and Athens go to war. Pericles has a cunning plan, which is he’s going to summon the Athenian people behind the walls, and then send out the superior Athenian fleet to harass the Peloponnesian coast. Perfectly good plan militarily, but what he didn’t count on is even though the walls could keep out the Spartan hoplites, they couldn’t keep out the bacteria. And so the disease comes, it ravages the city. Maybe a quarter of Athens population dead in two years, quite devastating, certainly relative to COVID-19. 

The city soldiers on for another quarter century, but in some sense, it never really recaptures its glory days of before 430BC. And it slowly moves from being the New York of the Mediterranean world, to maybe being the Boston, to maybe being a Cambridge Mass of the Mediterranean world and it goes on as educated curiosity in the Roman Empire. And then for about five centuries after that, plague seems relatively quiescent. In the 2nd century CE you end up with a Plague of Cyprian which is not all that devastating to the Roman Empire. 

One of the themes that comes out of the history of plagues in cities is the impact of plagues, like other natural disasters, is always mediated by the strength of civil society when the plague hits. So when a plague hits a country that’s already at war, like Athens in 430BC, it can be destabilising, as indeed it was. When it hits the Roman Empire at its height in the 2nd century, a lot of people die, but the system is basically stable. When it comes again in the 3rd century, you already have a fair amount of chaos, it’s much more destabilising. When it comes again in the 6th century, when Justinian, the Eastern Roman Emperor is trying desperately to re-establish the Pax Romana, Mediterranean world, it’s catastrophic. 

So, at that moment, is you have this last ditch attempt of Rome to reconquer Italy, to reimpose the Pax Romana, Mediterranean world. And then at that moment, 541 CE, Yersinia pestis, the Black Death itself strikes Constantinople. Again, absolutely devastating. And all hopes of this are dashed away and the Eastern Roman Empire’s presence in Italy ceases to be a possible source of peace and unification, but they become just another warring band who’s causing mischief in this. And the next two centuries of plague really plunges Europe into darkness that will last at least half a millennia. So, that’s our darkest moment of what plague can do to cities. 

For most of the past 650 years, though, our urban world has been much more robust. Certainly from 1350 to 1918, 1919, lots of people died in the mediaeval Black Death. But those who remained were richer, because land in a world of subsistence agriculture determines the amount of wealth. And when your population drops by a third, it’s terrific to think about it, the amount of land left is pretty good and the people who remain are rich. And so, in some sense, the wealth that comes out of the Black Death in the 14th century helps fuel the urban renaissance to the 15th century because people increase their demand for luxury goods during that century and that helps the growth of cities like Florence and Bruges. And then for most of the 500 years after that, cities have been relatively robust. The 19th century in the early age of globalisation was also an age of plague. In the early 19th century, yellow fever was completely destructive in terms of the American cities in eastern seaboard. After 1817, cholera emerges. Wave after wave’s devastating. But our cities continue to grow partially because people were poor enough that they were willing to put up with a health risk. But also because cities came together, and they invested huge amounts in things like sewers, and aqueducts. And they figured out the regulations that would go with them. They figured out the science. 

Think about Dr. John Snow and the Broad Street Pump figuring out how cholera works, the waterborne nature of disease. And it was an amazing period, which in some sense, the strength of the institutions in the 19th century really held. And really, in the book, in the third chapter, we tell this story that this is a hinge of history, where governments ceased to be pretty much just agents of death, which is the overwhelming function of the 18th century government is basically just to kill its enemies. And in the 19th century, governments, particularly the governments of cities start actually being agents of life. And it’s through sewers, that cities actually start saving people and governments start saving people. And that enables our cities to become much more robust and to survive this wave of globalisation and disease. 

Bilal Hafeez (00:14:28): 

You mentioned even in the earlier period, how if a society was stable, it was able to respond much more effectively against these pandemics. And in the more recent period, cities have stepped up and built sewers and so on. Can we look more deeply into what types of institutions matter? Is it that you need a strong city authorities? Is it municipal? Is it provincial? Is it national level? I mean, is there some magic formula here or not? Obviously not but… 

Edward Glaeser (00:14:56): 

There’s not a magic formula, but I think it depends very much on the nature of who’s actually responsible or who has the capacity to deal with the health risks. So in US, it is completely about ground up cities, ordinary citizens, former mayors, doctors coming together. And we tell a couple of these stories in New York about Dr. Steven Smith, who’s the entrepreneurial doctor who goes out and measures all the spread of disease in poor neighbourhoods in New York, and then builds the case for having a Metropolitan Board of Health. So that’s a very ground up thing. In the UK, it’s always about central government. One of my favourite passages in the book is Disraeli speech on how the Thames has become the Stygian pool. Disraeli, at his finest in terms of his oratory and their basil get in the building of London sewers, that’s a national government responsibility, just because the nature of the British government is just so much more centralised. Looking forward, there’s a lot of stuff that cities can do, but many of the most important steps in the 21st century are likely to be national. 

So, if you think about two things going forward that are really national in scope, one of which is pre-emptive research about vaccines or diseases of the future, cities can’t handle that. Cities aren’t supposed to be running their own national institutes of health. And secondly, whatever we think is going on in terms of international alliances, to try and monitor and deal with the spread of disease, stopping this disease from spreading before it happens, that’s a national or even a global thing. So in some sense, the role of national government is much larger today than it was in the 19th century. 

Bilal Hafeez (00:16:21): 

One of the threads that run through your book is this idea that we will get pandemics in the future that this is not a once in a century type event. We’re going to get versions of this continuously going forward. 

Edward Glaeser (00:16:31): 

We certainly believe that. We think we were pretty foolish over the past 20 years to ignore SARS, MERS, H1N1, Ebola that all of these were warning signs that this could happen, and we blindly ignored it. If we treat this as being a one-off event that whenever we get done with this thing, we’re done with it. We can ignore this in future, that just seems like it would be an incredible piece of folly. We’ve got to recognise that this is an indicator that tells us that a globally connected world means that a disease that starts anywhere can spread anywhere. And we’re very unlikely to be free of pandemic risk in the future unless we make investments to make sure that this is much less likely. And given the trillions and trillions of dollars that this pandemic cost us is worth investing. It is not some foolish thing. This was incredibly costly event on every dimension. 

Why are people healthier in cities than in rural areas? 

Bilal Hafeez (00:17:15): 

Yeah, that’s true. One of the interesting things I read in your book was this idea of the health in general of cities versus rural areas that people who live in cities tend to be healthier than people in rural areas or outside of urban areas. And that also applied to people from different socio-economic groups as well from my understanding. 

Edward Glaeser (00:17:32): 

At a macro level, this is true. And this was certainly not true historically. So in 1900, there was about a six-year life expectancy gap for a boy born in New York City relative to a boy born in the rest of America. Meaning that that boy could expect to live six years less. The same life expectancy gap existed in between Shakespeare’s London and the rest of England in the Tudor era. Over the past 100 years, cities have become much healthier, and for most of the past 20 to 30 years, the average urbanite has had a health advantage. The average New Yorker, maybe two years over the rest of America, which is amazing turnaround. In terms of younger people, that difference is pretty easy to see where that’s coming from. It’s lower numbers of motor vehicle accidents, and lower suicide, which is pretty interesting. In older urbanites, it’s a little bit harder. We’re not exactly sure. I mean, we have tonnes of hypotheses. There’s more socially connected. They walk more. They’re just selected into living into cities. You select healthier people. All of those are possible. But there hasn’t been a paper, which to my mind has conclusively proven it. But certainly, we’ve gone from the era in which cities are unhealthy to the era, in which cities are healthy as long as we don’t have pandemics. 

The second fact is within cities, there are enormous gulfs in life expectancy between rich areas and poor areas. Just a 10-year gulf between the parts of New York that are rich and well-educated and the parts of New York that are poor and not well-educated. Much of that has to do with behaviour. Meaning that it’s smoking, it’s obesity. It’s a number of things that people do. And consequently, it’s not… 

Everyone can get behind the idea that we’re going to have more public health availability for poor people. And if we think that this is about information or education, I certainly believe this thinking that the risks of health among the poor require even more commitment to education for poor urbanites. But I’m too much of a libertarian to be confident that I want to fight obesity by telling people they can’t enjoy tasty things. 

Bilal Hafeez (00:19:27): 

Well, nudge economics where you have little nudge, even that’s too much. Is it? 

Edward Glaeser (00:19:32): 

I think we want to be open to mild interventions, but it’s a nudge that says, “If I have a whole bunch of workers coming into my office, I’m going to put the healthy stuff ahead of the unhealthy stuff”, I’m totally fine with that. And things that go on in the school rooms that are like that are totally fine. But how you’re going to get a nudge that’s going to move millions and millions of urbanites into eating salad instead of eating fried chicken, that’s hard. And fried chicken is just bloody tasty. I feel the temptation killing myself. 

Why is there large inequality within cities? 

Bilal Hafeez (00:19:59): 

I mean, one of the things about cities are… You said that the income divide within cities are so large. And you think that how can a city like New York with so much wealth, not just raise the standard of living of the poorer parts of New York or London or Paris or wherever you may say? Because when you think about this at a global scale, you have rich countries, poor countries, and you think, how can I raise the poor countries and that seems quite intractable. Then you say, “Within a country, there’s east of the countries richer than the centre of the country or something.” And that seems quite intractable. But then when you bring us up down to a city, you think, surely that should be easier to raise these levels. I mean, why is there this large gap between the rich and the poor? 

Edward Glaeser (00:20:39): 

Well, there’s Plato who wrote in the Republic that every city of whatever size is in reality two cities. One city of the rich, the other city of the poor, and they’re perpetually at war with one another. The cities are inherently equal, because they are fun places to be rich. And they are less hellish places to be poor, because cities attract the poor with better social safety net with the ability to find economic opportunity, with the ability to get around without having cars for every adult. All of these things mean that cities will continue to be magnets for poor people, and they should never apologise for that. They should never apologise for the fact that are attracting people with the promise of a better life. 

However, I think one of the things that’s come out clearly in the past 10 years in the work of my colleague, Raj Chetty and his co-authors in their Opportunity Atlas, is that cities are not doing a good job of turning poor children into middle-income adults, which in some sense, is the thing that makes urban inequality tolerable that as long as cities are providing this up escalator… And they are for adults. Adults who come to cities experience faster wage growth. So it’s not that they are not providing some of that, but the kids grow up… 

Particularly, I haven’t seen an equivalent for non-US cities. So this is a particular American fact. But it’s clear that American cities are really not doing a good job for kids of poor parents. You see this in terms of dense metropolitan areas versus less dense metropolitan areas. You see this in terms of dense areas within cities, relative to less dense areas within cities. You see significant breaks in upward mobility right at the edge of central city school districts. 

So right outside the central city school district, you’re much more likely to be a middle-income person. You have a substantial jump up on the income distribution, and you’re significantly less likely to be incarcerated as an adult in jail or prison as an adult. So really, our central city school districts in our cities themselves are failing these poor children. And so, when I think about the health issues that exist between rich and poor, I think it is all tied together as a cocktail of failing to care for the poor children of cities. And that feels like it’s to me, along with fighting pandemic, the most important task ahead is to make sure our cities once again, become places for outsiders, not just places that protect those who already have resources. 

Importance of education 

Bilal Hafeez (00:22:35): 

We’ll come back to the pandemic in a moment, I just wanted to carry on on this line. So is it that there’s a lot of de facto segregation between the rich and the poor and so you end up with a two-tier system where you have the better schools in the richer side of the town and less good schools on the other side and better hospital care and medical care? Is it that stark, or is it something more? 

Edward Glaeser (00:22:55): 

It’s less clear in the UK where the public schooling options are going to persist. In the US, typically, middle-income parents have left the central city entirely. They’ve gone to suburban school districts, which are much better in terms of at least test score outcomes than the urban school districts. And that’s an odd thing about the American school system that we’ve linked where you live to the quality of school that you get. And consequently, there’s a huge incentive to create these little enclaves outside of this. It’s also true that our cities are quite segregated. And the experience of segregation among adults appears to be much less severe than the experience of segregation among the poor. We know this from cellphone data now. That if you look at adults who, they live in a low-income area, they wake up, lots of them go to work in higher-income areas. Most of them go to work where they are around rich people and places where there’s economic opportunity, and so many of them managed to move somewhat up on the income distribution. By contrast, if you think about a poor kid, the poor kid, they’re waking up in a segregated area. They’re playing with their friends in the segregated area, and then they’re going to a segregated school. They’re experiencing much less of a mixing that’s in the city. And in some sense, their life is much more like living in a rural village, rather than living in a fully big city. So that’s, I think, at least part of the answer of why our cities seem to be much better for grownups than they appear to be for kids. And of course, the experience is hyper charged for African Americans who remain highly segregated in American cities. And that’s one of the great… The great crimes of urban America is that they’ve been so segregated by race for so long. 

Bilal Hafeez (00:24:27): 

Yeah, that’s true. And in terms of schooling then, does that suggest that there’s a need for some school reform? And at what level is this? At a very young age or is that high school? Or do we need to be more innovative about the types of schooling? 

Edward Glaeser (00:24:41): 

Yes. And certainly, much of the literature suggested that very early investment has high returns. But we’ve had head start for 50 years report kids. We’ve had interventions, which it’s not that they don’t achieve anything. I think the best work on head start suggests that it’s actually done something, although it certainly hasn’t been as transformative as the original studies from the 1960s looking at Perry Preschool and the Abecedarian programme suggested, but it’s helpful. And we can certainly do more for pre-K. Reforming traditional K–12 is incredibly hard. There are entrenched interests. 

I’ve been on the outskirts of this battle for 15 years, 20 years. I was on the advisory panel for the domestic branch of the Gates Foundation only. And the ability to get schools to change, especially if you’re hoping to create a national transformation, the federal government has a lot of difficulty influencing these fairly hyper local institutions. And so it’s very, very hard to move the needle on this. Where I’ve come down is I certainly wish anyone who would fight for school reforms in their own districts, well, I certainly am 100% on their side. But if we want to do something that’s a national transformation, I think we need to do something that sidesteps the institutions that currently exist. 

In the book, we call for things like experiments like providing vocational training that wraps around traditional schooling. So this is training people to be programmers or plumbers on weekends, on the summer, after school. Using existing school infrastructure, competitively providing it. There’s no reason why you can’t let the trade unions compete to provide this schooling. There’s no reason why you can’t allow for profit companies to compete or local community colleges compete. 

The beauty of vocational training, as opposed to a more holistic, what a lot of high school does, is you actually know what you’re trying to get. Whereas when we’ve got years nine through 12, part of the whole problem is nobody agrees on what you want to actually train these kids to do. So it becomes very hard, especially once you move away from math and science. This was a huge problem with the race to the top initiative. Everyone was arguing about whether or not the common core for history and literature was bringing terrible values into our schools, or whatever it gets involved in American culture wars. Whereas luckily, the ability to do plumbing or electronics is relatively free of cultural argument. 

The same thing is true of programming. And you can measure whether or not someone is a capable plumber or a capable programmer at the point of graduation. And so you can pay for performance. So you don’t have to… So, if we’re going to have a for profit company that’s going to train them, I’m not as afraid as I am in other contexts, because you can have an independent agency measure whether the kids learn programming. And then you only pay the company for teaching them if they actually learned it. So it’s relatively safe. 

Bilal Hafeez (00:27:10): 

Have you seen examples of this happening in certain cities across the US? 

Edward Glaeser (00:27:14): 

Oh, there’s certainly plenty of examples of functional vocational programmes. This exact thing, I loved a programme that existed in Cambridge, which was trying to train kids to become entrepreneurs. It’s called the Possible Project. It occurs… Again, it’s one of these wraparound programmes. They start off trying to learn how to sell stuff on eBay and then move… That’s largely philanthropic. But it still has this, “We’re not going to mess around with the schools itself. We’re going to go outside. We’re going to go after school, and we’re just going to try and teach them something useful.” 

What led to the urban renaissance of the 1990s? 

Bilal Hafeez (00:27:45): 

Yeah. And if we can go back to the pandemic, at least, if I step back, and look at the last 100 years, you had a process of de urbanisation, so to speak, and people moving away from cities. But then it seemed like you had from the ’90s onwards, the process of people moving back into the city, and cities just looking better across the US. What were some of the factors behind this? And of course, Silicon Valley is, I suppose, held up as the example of renaissance of the city why this process happened with this move back into cities. 

Edward Glaeser (00:28:16): 

Let’s take it from my childhood, which is the ’70s, which is the Nader for urban America. They’re all of America’s older, colder cities. And some of the older cities that aren’t cold even look like they were headed for the trash heap of history. It’s not just New York, but two jokers put up a billboard on the highway leading Seattle in 1971, asking the last person to leave the city to please turn out the lights because just as no one could imagine a Detroit with a smaller General Motors, no one could imagine Seattle with a smaller Boeing. And Boeing had been cutting back on the number of jobs. And so, that was a catastrophe for urban America. It was tough in I remember London in the early ’80s too. I mean, it was also pretty grey. 

This was mostly about de industrialisation. The largest industrial cluster in the United States in the 1950s was not cars in Detroit. It was making garments in New York City. And this was hammered by globalisation. Just hammered. These were highly expensive labour’s and they could not compete with the clothes being made in cheaper parts of the world. Hundreds of thousands of jobs disappeared. Now, slowly, cities reinvented themselves. Some part of that was visible in the ’80s. Although the ’80s also had the crack epidemic, which made it feel as if cities weren’t entirely moving back. And it really wasn’t until the 1990s that the urban renaissance was beginning to become more evident. 

I think of this as being fueled by a couple of things. One of which is the increasing demand for high information industries, most important of all finance. I mean, at its height, 42% of first quarter payroll in the island of Manhattan was being paid for by finance and insurance. It was that dominant. And that shouldn’t surprise us. There’s no industry in which being a little bit smarter, makes you incredibly richer faster than finance. And so, the advantages of being close to other traders was just a tremendous allure. And so, New York’s comeback was very much built on innovation in finance and built on the demand for proximity. And it’s both things are going on. It’s both sort of traditional trading activities. But it’s also there’s this like, sometimes I liken it to the chain of brilliance that gave us Florentine art in the 15th century where Brunelleschi figures out the basic mathematics of linear perspective, making two dimensional spaces seem three dimensional. He passed it along to Donatello, who puts it in low relief sculpture. He pass it on to Masaccio, who puts it in painting. Lots of new ideas come out of that, you get Botticelli, Filippo Lippi. 

Well, think about Fischer Black coming up with the basic mathematical approach to finance. It’s not just Fischer Black, it’s a bunch of… We can do the chain that starts with Friedman–Savage, moves through Sharpe, moves to Harry Markowitz, and then Fischer Black carries it in person to Wall Street. That quantitative approach to finance then enables the young Michael Milken to sell high-yield debt. Because he convinces investors that these things carry enough return to offset the risk. That high-yield debt then enables the young Henry Kravis to engage in larger and larger leveraged buyouts, like RJR Nabisco, which increases this extra set of things. 

Similarly, you have, again, based on the quantitative information revolution finance, you have Lewis Ranieri and mortgage-backed securities, which are also a revolution that’s happening at about the same time. And so finance just gets much bigger because it becomes much less of a mystery, and that the data is there behind. Bloomberg is part of this, although Bloomberg is a cross-industry leap of imagination. He starts in finance, he starts in Salomon Brothers. And he takes the knowledge he’s learned at Salomon Brothers to start with essentially an information technology company and to create a related thing. And so that’s part of the cities comeback is this productive side. But then on top of it, it’s the comeback of cities as places of consumption as well as production, places of pleasure as well as productivity. And so this is about the urban ability to create fun, it’s about urban restaurants, it’s about the urban ability to share common fixed costs, like museums or entertainment venues. And as the world became better educated and richer, quite frankly, they were willing to spend more for urban pleasures. They were willing to spend more, they’re willing to put up with this more. And as their time became more valuable, they wanted to live in Tribeca, rather than northern New Jersey. So there was a desire to be close to things. And I think those things were a set of the items that came together to fuel their income back. 

Why didn’t the tech revolution end cities? 

Edward Glaeser (00:32:27): 

Now, you raise Silicon Valley, which is I love that example because when I started in this business… And it’s come up, of course, again, in 2020. There was a prevailing narrative associated with Alvin Toffler and the third wave, that all this information technology would make face-to-face contact and the cities that enable that contact obsolete. And yet if that were true, why is it that the most famous example of geographic clustering in the 1990s was Silicon Valley, was the industry which had access to by far the best staff. Prior to 2020, Google didn’t send everyone home, Google brought everyone together, they tried to put foosball tables everywhere. So they would view it as being like a leisure place where you could spend 24 hours a day, seven days a week being next to each other. And the reason for that is quite clear that they believed that face-to-face contact was part of innovation. That this is how we get smart by being around other smart people. And that’s why people are willing to pay so much to be in the midst of Silicon Valley. That’s why companies were willing to stay there. And again, the returns to creativity was so hyper charged over the last 40 years, that any edge that creates more creativity was worth paying for. And proximity was one of those edges. I think that’s ultimately what drove a large part of the urban renaissance. And that’s what makes me, at least looking forward, relatively sceptical about their view that the past year and a half on Zoom means that all of a sudden offices are going to disappear. 

Will the Zoom revolution change cities? 

Bilal Hafeez (00:33:47): 

Let’s talk bit more about the Zoom revolution then. Because there was this view, or is this view that this will change how we live. Certainly if you look at property transactions and house prices, there’s so called donut effect where people have moved out central towns more to the outskirts. Not necessarily moving to the complete rural areas, but there’s been some movement there. So, there’s some of that going on. Like you said, I guess this is more theoretical. But you’ll think that if more things can be done through Zoom, then perhaps staff may still work together in person. But maybe you don’t need to have physical meetings with your clients, you can do that over Zoom. Which takes out a large amount of cafes, restaurants and services, this kind of movement, or people or transport that supports all of this. I mean, those are some things that come to my mind about how we could see some more permanent effects. How do you think about these effects? 

Edward Glaeser (00:34:40): 

I think there are certainly things that the Zoom revolution has made real. I think it is certainly true that I believe and hope there are many sort of low-level business meetings, which can take place over Zoom instead of flying for three hours each direction to make those. I really hope that that’s true. And I think that there will be, for many people hybrid work will be part of reality. I think the view that says, “Oh, this means that all of our high information technology industries are all going to send everyone home, and they’re just going to Zoom in.” That seems laughable to me. I cannot think of some young hungry Silicon Valley start-up which is going to say, “Oh, you know what, we don’t ever have to come into the office again, let’s just do it.” 

Now, I do think it’s entirely possible that they will say, ” You know, we can meet with our VCs or our clients, or our lawyers over Zoom. And we all really love skiing, so let’s move to Vail.” Or, “We all really love lower taxes, and so let’s move to Austin.” Or, “We really love surfing and move to Honolulu.” So they’ll still then come into the office, but they’ll come into the office in a different metropolitan area. And so that I think, is certainly a real phenomenon. And I think it means in some sense that the global competition for talent has just gotten hotter, because it’s easier for global talent to move. 

The impact on the office market, I think unquestionably it’s a downward drop in demand. I can’t… It’s not that in any sense that I’m arguing that it’s. But in markets like London or New York, at least once we get through this, that doesn’t lead to large scale vacancies, that leads to lower rents. Let’s say we have a 20% decline in demand, you’re starting at $80 a square foot, then you end up with a price of $64 a square foot. And someone’s going to be willing to rent for that was previously priced out of Manhattan. So that’s all right. Maybe some of the low-end stuff, classy, commercial transfers into residential, but I don’t see this as being sort of some colossal skyscraper vacancy world. 

Now, in the lower end of the markets, in the places which started at 20 bucks a square foot, the Buffalos, the Detroits, the Clevelands, there, it could be much more catastrophic. So there could very well see large scale vacancies. And the problem is that the vacancies spiral. Because you don’t have people coming into the office, you have reduced demand for all of the other services which then take care of providing things for them. 

Bilal Hafeez (00:36:45): 

Yeah, I understand that. Just at a more personal level, we set up our company Macro Hive a few years ago. We had an office to start with, then we went remote during the lockdown. And as soon as the restrictions lifted, we’ve gone back into an office. And the reason for that is one is we did miss that face-to-face interactions. I was finding there was often these frictions that would occur because people weren’t able to build a rapport up with each other in the normal way. So you end up with these kind of funny frictions that pick up. Then also Junior, younger people, is much harder to train younger people. Because the way it works in most places it’s like an apprenticeship model almost. You learn through osmosis and you turn around and say something and it’s so hard to do that if you’re doing this remote. 

Edward Glaeser (00:37:24): 

Absolutely. Right. We really see this in the data. And there’s this paper by Carlos Daboin and José Morales-Arilla, they look at new hirings for remotable and non-remotable jobs. And if you look at the time series, so the jobs that can’t be done remote, early stages of the pandemic, employment crashes, new postings on Burning Glass technologies crash. By the summer of 2020, they’re both back up again, maybe a little bit low. For the remotable jobs, finance, all the high-end things, their employment is steady, people are still working. New postings crash and they’re down for a solid year until April 2021 before they come up. 

I sort of factoid of this is even though Microsoft tells us their programmers are just as productive, when they’re from home in terms of at least the number of jobs they’re managing to get through. Overall Burning Glass postings for programmers were down 40% between February 2020 and December 2020. Huge decline in hiring people for these jobs. I think it’s exactly right. We’re used to training people through some form of face-to-face connection and it’s much harder to do that over Zoom. 

I mean, I can work with colleagues that I’ve known. David Cutler and I wrote a book together over Zoom. David Cutler and I have worked together for 30 years. We know each other extraordinarily well, I have no idea how to inspire a 19-year-old to be excited about mathematical economics over Zoom. That’s an incredibly hard thing to do. And we’ve seen this, I mean, the data on teaching, like K–12 education over Zoom it’s just a disaster. It’s just an absolute catastrophe. 

Actually a related point, I mean, this is your domain. For so long, we’ve heard about how the education sector is going to be disrupted by online courses, MOOCs, and so on. And we’ve had this whole year of remote teaching. I have children, and it was not a pleasant experience to have them taught remotely and it’s been great for them to go back. Which makes me quite sceptical of this whole tech is going to disrupt or the whole education model. I mean, where do you stand on this? 

Edward Glaeser (00:39:19): 

I am with you on this. I have a not to engage in flagrant self-advertising, but at least I’m advertising a product that’s free. I do have a course called CitiesX that’s on edX. And I urge anyone who wants to see 187 videos of me interviewing people and me talking about my own cities. God, please go ahead and take a look at them. But that is no substitute for a real education. It is a fun film course that you can do, which is basically it’s more like a podcast almost. 

Edward Glaeser (00:39:46): 

Then it is a podcast are wonderful. And it’s a great thing that… But it’s not the same thing as an actual school course, that is taking someone who’s maybe not always terribly motivated. But still getting them to feel like this is an important thing for them to do, creating a social atmosphere where people teach each other. All of these things occur in a functioning real in live classroom, and they don’t occur online. 

Edward Glaeser (00:40:06): 

And it’s my experience with children was the same as yours. I mean, even though when they did go back, they’re supposed to do a magnificent job of actually keeping on teaching them. But all the fun was gone. And so even if you’re working hard to create the educational experience, like the joys of just ordinary in-person connection get taken away. And in some sense, that’s one of the greatest sureties of the long run success for cities. Is that people’s hunger to be back together, live and to connect with each other in person is just so strong. 

What led to the growth of Silicon Valley? 

Bilal Hafeez (00:40:34): 

Actually just going back to Silicon Valley, Silicon Valley has been held up. It’s always gets held up. I mean, Europe, for the last 20 years, people have talked about we need to create Silicon Valley in Europe, somewhere in the UK or somewhere like that. 

Edward Glaeser (00:40:45): 

Silicon Glen, Silicon Alley, Silicon Roundabout, perhaps. Yeah. 

Bilal Hafeez (00:40:49): 

Yeah. Silicon Roundabout in Old Street. You’re right. Yeah. But when I look at Silicon Valley, I mean, one question is why did Silicon Valley happen in the US? I mean, what was it about Silicon Valley that made it so special? And now it seems like lots of tech companies are moving to Austin, so is this the end of Silicon Valley? So just your thoughts on those two. 

Edward Glaeser (00:41:05): 

The likely outcome in Silicon Valley is the prices might get slightly lower, but people still want to be there. And it’s not going to be… I mean, Silicon Valley has tremendous natural assets. It has an enormous bulwark of very, very smart people in a very, very valuable industry in there. It’s buoyed by many great educational institutions, both Berkeley and especially Stanford have been absolutely central for it. So it’s early days, it benefited. So, if you look at the long run history of Silicon Valley, it starts with Federal Telegraph before World War I, which becomes very closely affiliated with Stanford, and that it benefits greatly through US Navy contracts. Then through the work of Fred Terman at Stanford, who works as a kid at Federal Telegraph. This then becomes part of the Stanford machine and Stanford Industrial Park, is sort of his brainchild after World War II to bring people like Shockley to form Shockley Semiconductor. Then there’s this fortunate thing that Shockley while enormously brilliant is also has absolutely abhorrent views on lots of things and manages to repel all of his talented people. Which is, in some sense, ideal from seeding a thing. You attract all these geniuses to work with you and then you immediately repel them, and they form their own little companies. 

So Silicon Valley is this amazing story. But I don’t think… If you just think about the climate advantage that it has, I mean, it’s most of America just isn’t nearly as nice to live in as Silicon Valley. And it’s very hard to undo those things. So if you tell me that Silicon Valley is going to be a little bit cheaper, and maybe its total domination of American tech is going to be a bit smaller in 20 years, I find that entirely plausible. You tell me that Silicon Valley is going to become a wasteland. That’s I find that… I don’t believe that that’s in the cards. 

Bilal Hafeez (00:42:36): 

Yeah, I think the challenge is it’s so tempting, often extreme event like the pandemic to think that the world is going to change, cities are going to change radically. But then when you look at things in reality or just historically, it just isn’t clear that the great cities will suddenly lose their advantage here. 

Edward Glaeser (00:42:52): 

Yes. And there even are countervailing forces. For example, in the case of Silicon Valley, what Zoom enables you to do is actually commute in from longer and longer distances, because you might only go in two to three days a week. Currently, you’re putting up with an hour commute. Now, maybe you been put up with a 90 minute commute, because you’re only going to go in Tuesday, Thursday, and you’re going to work Monday, Wednesday, Friday from home. So it may… There’s some forces which means you’re going to relocate in Silicon Valley. But there are some people maybe even more willing to relocate on its outer edges. And of course, the other thing which I have long argued against, I still argue against, but it protects Silicon Valley from disaster is they’ve so under built housing relative to the level of demand. That all of the adjustment will occur on the price margin rather than the quantity margin. That it’s when you have $8 million starter homes, maybe those turn into $6 million starter homes but they don’t get abandoned. And that’s a difference from let’s say, Detroit, which in 1950, was arguably the most productive place on the planet. 

Now, as opposed to Silicon Valley, Detroit became productive during a period in which nobody said no to large amounts of housing construction. And they were building lots of highways, which enabled people to commute in from new suburbs. So they built a massive amount of housing. And as Detroit stumbled, that housing then became a millstone around his neck. Because in some sense, it had way too much housing relative to the amount of demand and so that you had vacancies which became a huge part of the problem. 

Factors that drive gentrification 

Bilal Hafeez (00:44:13): 

And this urban planning, it keeps planning restrictions and so on, keep coming up when people critique cities. And it comes into the conversation about gentrification, where you have these poor areas, suddenly, you get this influx of middle class people that take over and prices go up and you push poor people out. I mean, this is a process of gentrification… I suppose the first question is, is it necessarily a bad thing, gentrification? And then the second question, I suppose, is what causes gentrification? 

Edward Glaeser (00:44:40): 

I think your comments basically pointed at the, tell us the second one. You know you’re in a city where there’s lots of demand for space, you’re not crafting other forms of space. And so middle-income people look for places that look like bargains, which causes them to look into poorer places. In the book we tell this about the story of Boyle Heights, which is the Latino community in Los Angeles with an amazing history. And it’s been currently this scene for some of the toughest battles over gentrification. 

I think in a normal healthy city that was building enough housing, there be plenty to like about gentrification. I mean, the existing people who live there are benefiting from work more demand for their merchandise, there’s more demand for their labour. The problem is that if you’ve got this really constrained supply of housing, gentrification immediately comes with significantly higher rents for anyone who wants to live in this area. And so old businesses that used to live there face this tremendous pressure to either figure out some way to increase their profits or they need to get out. And so it becomes much more of a conflict that needs to be, because you have this limited amount of housing. Where’s a world that says, “Look, when the prices in Los Angeles as a whole aren’t going up, because we’re allowing so much new housing, now we’re going to get bit of mixing between different communities.” That’s not a bad MO world. It’s specifically when it comes with this view that like, what gentrification means is that everyone’s going to be priced out, and you’re not going to be able to live where you used to live. That becomes a much more problematic phenomenon. 

Bilal Hafeez (00:45:59): 

Why are there so many restrictions on planning in these areas? Is it because the incumbents or the people who have the nice stock of housing just want to maintain the value of their house? Or is it genuine reasons, environmental factors, preservation of nature, and those sorts of things? I mean, what was it that causes this? 

Edward Glaeser (00:46:18): 

I would say that both of those theories are not projectable by the data. So if you had a completely selfish view of humanity that said, “What’s going on?” Is the existing homeowners, don’t want to see the price of their houses going down. And they don’t want any inconvenience from new construction, and they’ve got no way to benefit from new construction. So they only see the downside for themselves. And then they act in a totally selfish manner to block new housing. That view is compatible with the data. 

The other view is that they are acting to preserve the sense of neighbourhood, the sense of community. They’re taking into account the local environment and they’re fighting for the common good, or at least the good of their place. That view is also not projectable by the data. And the answer is almost assuredly it’s a bit of both. And human beings are wonderful at hiding their own selfish motives from themselves, by wrapping them up with a… Certainly I’m guilty of doing such things. 

The one thing on the environment that I would stress is that California preventing housing is nothing but harm to the environment. That because of this amazing climate, California houses use much less carbon than other parts of America. And it’s about the relatively in mild Januarys and relatively mild Julys. And so when you don’t build in Silicon Valley, when you don’t build in L.A., you inevitably build somewhere else in the US. And you’ll inevitably build someplace that’s going to have much more carbon intensive lifestyle. So as you turn off the spigot outside of Silicon Valley, the spigot goes on in a little bit more fully outside of Houston, or outside of Phoenix, in places that are muggy, or hotter, or colder and require much more electricity or gas usage at different times during the year. 

Bilal Hafeez (00:47:49): 

And one thing that we all think about in the economics field is productivity, productivity puzzle that we’ve had for so many decades. It seems like why isn’t productivity going up? But if you look at cities, they seem to have very high productivity compared to rural areas. And so one question, why do cities have higher productivity? And is it possible to use those lessons for rural areas or not? 

Edward Glaeser (00:48:11): 

I mean, economists call this agglomeration economies. And there are at least three explanations for this. One of which is, it’s actually just proximity to other businesses that create extra productivity. In its simplest form, that’s just about reduced transportation costs, although it’s possibly transportation costs are lower not just for goods, but also for people and for ideas even. But there are other explanations. So in the 19th century, we think that cities were more productive in part because the productivity made the city. So you have a place that has a better port, you have places that have access to coal mines, like Pittsburgh, and so the city attracts businesses. 

The third explanation is it’s about selection, you have businesses or people who are more productive that opt to locate in cities. And the answer is it seems to be, after 30 years of research on this, we think it’s a little bit of both. That in fact, it’s not just all selection. Because if we’re all selection, why would these businesses be paying the high amount of commercial real estate prices if they are to be in downtown New York or downtown Chicago, if there was nothing about Chicago or New York that made them more productive. so that. And also, we know, it’s not all selection, because when workers come to New York, or Chicago or Madrid, they see faster wage growth when they get there. So the same workers, we can compare them when they were in a low density area, in a high density area, and their wages are growing up more quickly, in a high density area. In the long run, the difference between cities like Detroit, and cities like Seattle or New York after the 1970s, was really about human capital. It was really the cities that were well-educated, ended up doing well. The cities that were poorly educated did not. And it’s not as if the Detroit of 1960 didn’t have amazing skills. They did have amazing skills, but they were not general. They were very automobile specific. And when… That it was filled with people who quit high school to go work on the assembly line. And they knew how to make cars at GM or Ford really well, but if those jobs disappeared they didn’t know how to do anything else. Where Seattle, Seattle engineers wanted to have kids who are well-educated, and Seattle schools did remarkably well. And so more than 50% of Seattle’s adults have college degrees, about one in seven or something like that. Detroit’s adults have college degrees. And so, there’s a huge difference in terms of the educational background, which in turn reflects the industrial background. And that’s a lesson that can be taken for low density parts of America. Typically, you see the low density parts of America that do well are places like college towns, which… Or even in low density parts of America, you had large productivity boost of being associated with various forms of skilled clusters within colleges. 

The other thing which made a difference for cities in the post 1970 world was about entrepreneurship. In 1960, the economist pension it’s compared New York and Pittsburgh. And note that New York was more resilient than Pittsburgh was even then. He argued that this was a legacy of New York’s focus on garments, which was an industry in which anyone with a good idea and a couple of sewing machines could get started. Very weak economies of scale, very few barriers to entry. And so, it was a mother of entrepreneurship. And those entrepreneurs went out to do lots of other stuff. They went on to found movie studios, they went on to found banks, they went on to build skyscrapers. And that entrepreneurship, in some sense, was something that New York could draw on when the garment industry faltered. By contrast, Pittsburgh had US Steel, which train company men not entrepreneurs. And so those company men were great again, it’s about specific versus a more general scale. Well, they were great at solving logistics problem for US Steel but when US Steel faltered, they didn’t know what else to do. 

Bilal Hafeez (00:51:25): 

And I’ve seen some academic literature in the UK around how transport systems within cities are very important. For example, in the UK, what you find is some of the more prosperous cities have great internal transport systems. But the least prosperous cities tend to have quite poor transport systems. So that skip from one side to the other is quite difficult. Have you also found that in the US, or is that something that comes up in the literature that- 

Edward Glaeser (00:51:48): 

It does come up in the literature. It’s not obvious that… I mean, the prevalent fact in terms of the US over the last 70 years is that older cities built around public transportation have done relatively poorly relative to cities built around the car. And that’s not necessarily because the public transportation was problematic, but just Americans have moved to car-based living, particularly in the Sun Belt. And that’s been what’s happened. So it’s very hard drawing from that saying that what you need is better transit systems in cities. Because they left the cities that had better transit systems moved to cities that have better cars. And the transit systems that were built after 1973, there were, I think, six of them that were funded in part by the Federal Highway Aid act of 1973. Those transit systems have done helpful things for connecting poor people into the life of the city. But they also have been extremely expensive, and have not been a magic secret sauce for urban resurgence. I mean, I don’t think anyone thinks that that’s come out of that. And so I think with transit, we want to continue to be incredibly cautious. So while I want to fully embrace the value of connecting the entire city, and making sure that we don’t have enclaves that are separated from one another. I want to also simultaneously embrace an assiduous use of cost-benefit analysis, anytime we’re talking about spending multiple billions of dollars to create any sort of a transit system. 

Bilal Hafeez (00:53:03): 

Yeah, those budgets tend to run over quite a lot as well. 

Edward Glaeser (00:53:05): 

They do. And America is very bad at spending in expensive infrastructure. It’s not something we’re very good at, so. 

Three recommendations for helping cities 

Bilal Hafeez (00:53:11): 

And then now, if you were a platonic dictator of the US… The word dictator keeps coming up all the time, for some reason in US these days. Let’s say you were platonic dictator, what are two things would you try to implement to make cities work better? 

Edward Glaeser (00:53:24): 

Well, I think unquestionably, I would be focused on the education front above all. I mean, if you focused on… And maybe the most important thing is providing upward mobility for poor kids. That’s about training, that’s about recognising that we currently have this work. If you gave me full dictatorial powers, I would do more with K-12 than I suggested in our earlier discussion. Because if you suddenly give me ability to… But if I’m restricted by the current set of institutions, I would do more around school. 

I would certainly do more to eliminate barriers to entrepreneurship, particularly for entrepreneurship for the poor. So it’s an outrage in the US, that the entrepreneurs, the rich is so much more lightly regulated the entrepreneurship for the poor. In the sense that if you want to start your internet phenomenon, in your Harvard college dorm room. They’re basically no regulators who looked over your shoulder until you’ve got a billion users. Whereas if you want to start a grocery store that sells milk products, five blocks away, you’ve got 15 permits, you have to sell your first drink. 

So, I would do a lot to focus on entrepreneurship of particularly poor people in cities and figuring out how to create one-stop permitting. You have one office that makes sure you have things out, you have cost-benefit analysis on what rules you’re going to impose on people. In terms of building, of course, I would protect some historic spaces, but they would be fairly limited. And I would do a lot to make sure that you have a very clear permitting environment. And one that prioritises housing for middle-income or lower middle-income residents in terms of getting those permits speedily through. And then finally, in terms of transportation. There’s an old joke that 40 years of transportation economics at Harvard can be boiled down to four words, bus good, train bad. And so I would be obsessive about figuring out how to, at relatively low costs, get buses that are managing to provide mobility for lower-income urbanites everywhere. So that’s where I’d be focused on, is what can we do with autonomous buses? What can we do with autonomous mini buses? All of which ideally, we lease, some of which maybe we put on dedicated lanes. 

I think in terms of inter-urban transit, I am much more enthusiastic about the idea of high speed buses on dedicated lanes running between cities like Milwaukee and Chicago than I am about bringing high speed rail, which is just incredibly expensive. And the beauty of that dedicated lanes is, if the public transit option doesn’t work, you can use it for something else, you can use it to run trucks, you can use it to do… It’s not a it’s not a dedicated piece of infrastructure. So it just becomes easier for everyone to use. 

Edward’s productivity hacks 

Bilal Hafeez (00:55:39): 

Okay. No, that’s all great. They’re great suggestions. And you can apply this to other countries as well. It’s not just the US that would benefit from all of these is quite generalizable. Now, I did want to ask some personal questions around things off. One was, do you have any personal productivity tips or systems that you use to trawl through all the research that you have to go through? 

Edward Glaeser (00:55:57): 

Other than living by Google Scholar, no. There’s a… I would say one thing, which is I have sorted because I am 54, I talk sometimes about the young person’s way of solving a problem versus the old person’s way of solving a problem. Let’s say for example we are facing an issue of how you deal with a specific econometric conundrum in some form of estimation or prediction. The young person’s problem is you actually go to the internet and try to figure out how this actually works and who solved it. The old person’s problem is, I know somebody I can call who’s handled something similar. So we’re going to call this person and get it to do it for us. And so the network of friends and favours becomes a huge part of one’s productivity. And that’s in an old person’s thing. That’s probably my most important edge in terms of productivity. The vital thing that’s part of that though, is since you know you’re going to ask someone else for a favour, you’ve got to be willing to do favours yourself when asked. So it’s part of respecting that your social network is a really important thing to invest in. 

The other thing that’s really been a huge part of my life, which is hard to duplicate outside of, let’s say, if you’re in proper financial services, is I at least in terms of research world, I only work on things I’m really passionately interested. I mean, I don’t do stuff and that that just makes things a lot easier. I mean, I’m really … And one of the beauties of being in academia is at least in a small part of your life, you can avoid… You can be Peter Pan, you can never grow up. And in some sense, I hope never to lose the curious child part of me, which is a large part of what drives me in terms of research. 

The other thing I could tell you, which is again, an academic piece of advice is and this is a famous Paul Samuel same thing, is you really do want to project a incompetence at administration if you possibly can to avoid anybody. Actually demanding that you could contribute more in committee. I unfortunately as department chair right now, have clearly not managed to convey enough incompetence, but I think there’s a lot to it. 

Edward’s book recommendations

The Death and Life of Great American Cities (Jacobs), Nature’s Metropolis: Chicago and the Great West (Cronon), Regional Advantage: Culture and Competition in Silicon Valley and Route 128 (Saxenian), Framing the Early Middle Ages (Wickham) and Origins of the European Economy (McCormick) 

Bilal Hafeez (00:57:44): 

That’s a good piece of advice. And final question was on books. Have there been any books that have really influenced you over your academic career or even on your personal level? 

Edward Glaeser (00:57:54): 

Hundreds, thousands. The most influential urban book in the 20th century was Jane Jacobs, it is not The Economy of Cities, but The Death and Life of Great American Cities. Which is just a fantastic book about how older style pedestrian neighbourhoods work, and is the first thing that I would read. There are a number of excellent books on particular metropolitan areas that are worthwhile reading. William Cronin’s, Nature’s Metropolis, for example, is a great book about how Chicago came about. And the connection between Chicago and the geography and environment at the American hinterlands. There are great books on New York, there are great books on London, there are great books on Silicon Valley. For example, regional advantage by AnnaLee Saxenian is an excellent book on why it is that Silicon Valley ended up being so much more successful than Route 128, outside of Boston, very much channels chin. It’s about the sort of competitive nature of Silicon Valley during the 1960s. And in fact, quite honestly raises questions about how Silicon Valley has become much less competitive today. And that, indeed, is the real question. Finally, I will just say, in terms of my current obsession, which is understanding the role that played in the plunge into the darkness of second millennium. I want to plug two particular books, one of which is Chris Wickham’s, Framing the Early Middle Ages, it’s 2005. It’s a monster. He also has smaller books than that. But it is just an amazing book, if you want to understand the 400 to 800 period. And the other one is the Origins of the European Economy by Michael McCormick. And that’s a book that’s very focused on what we have on the data side of the European economy from that 400 to 800 period. Both of which are great books, both of which are or should be a monster books. But if you want to confront what we know about plague and collapse during this particularly dark period, they’re both indispensable guides. 

Bilal Hafeez (00:59:43): 

That’s great. Quite morbid reading, but I definitely look out for them. Now, in terms of if people wanted to follow your work. Obviously, I’d recommend people read your book Survival of the City that you wrote along with your colleague, David Cutler, and I’ll add a link to that in the show notes. Are there any other ways people can follow you? 

Edward Glaeser (00:59:59): 

Not really. David has a Twitter handle but I do not. So I don’t really know have anything that I can say in that few characters that’s worth listening to, so. 

Bilal Hafeez (01:00:08): 

So read the book everybody. It’s an excellent book. I would definitely urge everyone to read it and whether people are investors or just have an interest in cities and society I think it’s a fantastic read. So with that, Edward, is great speaking to you. I learned a lot in our conversation, and this was a really enlightening conversation for me. 

Edward Glaeser (01:00:26): 

Great. Thank you so much, Bilal. This was great fun for me. Take care. Bye-bye. 

Bilal Hafeez (01:00:29): 

Thanks for listening to the episode. Please subscribe to the podcast show on Spotify, Apple or wherever you listen to podcasts. Leave a five star rating and a nice comment and spread the word about the show would be super grateful. And once again sign up to become a member of Macro Hive at macrohive.com. We’ll be back soon so tune in then. 

Bilal Hafeez is the CEO and Editor of Macro Hive. He spent over twenty years doing research at big banks – JPMorgan, Deutsche Bank, and Nomura, where he had various “Global Head” roles and did FX, rates and cross-markets research.

(The commentary contained in the above article does not constitute an offer or a solicitation, or a recommendation to implement or liquidate an investment or to carry out any other transaction. It should not be used as a basis for any investment decision or other decision. Any investment decision should be based on appropriate professional advice specific to your needs.)