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The End of the Suburbs: Where the American Dream Is Moving by Leigh Gallagher
Airbnb, big-box store, Burning Man, call centre, car-free, Celebration, Florida, clean water, collaborative consumption, Columbine, commoditize, crack epidemic, East Village, edge city, Edward Glaeser, extreme commuting, helicopter parent, Home mortgage interest deduction, housing crisis, Jane Jacobs, low skilled workers, Mark Zuckerberg, McMansion, Menlo Park, mortgage tax deduction, negative equity, New Urbanism, peak oil, Ponzi scheme, Richard Florida, Robert Shiller, Robert Shiller, Sand Hill Road, Seaside, Florida, Silicon Valley, Steve Jobs, Stewart Brand, the built environment, The Death and Life of Great American Cities, Tony Hsieh, transit-oriented development, upwardly mobile, urban planning, urban sprawl, Victor Gruen, walkable city, white flight, white picket fence, young professional, Zipcar
In Perris, California, owners of ranches: “Another Skinny, Abandoned Horse Found in Inland Empire,” Los Angeles Times, September 16, 2011. In Atlanta, the city’s outer suburban ring: “Real Estate Expert Dubs Area ‘Ring of Death,’” wsbtv.com, June 2, 2011. In December 2011, one foreclosure “heat map”: Alexander Soule, “Feds Consider Changes for Seized Foreclosures,” Westchester County Business Journal, January 23, 2012. The economist Edward Glaeser: Edward L. Glaeser, Harvard University and the National Bureau of Economic Research, “Rethinking the Federal Bias Toward Homeownership,” Cityscape: A Journal of Policy Development and Research 13, no. 2 (2011): 5–37. Also see “Ed Glaeser on Why Cities Matter,” video produced by CEOs for Cities, December 27, 2011. Glaeser points out that by pushing people toward single-family homes at the expense of higher-density types of living (since most single-family dwellings are owner-occupied while most multifamily dwellings are rented), the mortgage interest deduction encourages people to buy bigger homes, farther away from urban centers, which has a number of negative implications: it diminishes productivity; it increases commuting distances, energy expenses, and therefore level of damage to the environment; and, by increasing the physical distance between the rich and poor, Glaeser suggests it might also increase the social distance between them, reducing levels of empathy.
Across the nation, everything from store retail chains to sports stadiums to corporate headquarters to young families have been moving into cities and leaving the suburbs behind. • • • To see that cities are resurgent centers of wealth and culture, all you need to do is set foot in one. Or you can simply set foot in a bookstore. A litany of volumes have come out in the past few years praising cities and urbanism, titles like Richard Florida’s popular The Rise of the Creative Class: And How It’s Transforming Work, Leisure, Community and Everyday Life and The Great Reset: How the Post-Crash Economy Will Change the Way We Live and Work; Aerotropolis: The Way We’ll Live Next by John Kasarda and Greg Lindsay; The Great Inversion and the Future of the American City by Alan Ehrenhalt; and Edward Glaeser’s love letter to cities, Triumph of the City: How Our Greatest Invention Makes Us Richer, Smarter, Greener, Healthier and Happier.
But the birth rate for this group is especially low; the 2011 figures showed birth rates for women ages twenty to twenty-four hit their lowest rate ever recorded, 85.3 per 1,000 people. Besides, no one is suggesting that this group is going to rush entirely to the center of big cities. The right urbanized suburbs will do the trick just fine for many in this generation. “We don’t hate the suburbs, we just hated to be bored—or boring,” says Gen Y expert Hira. Indeed, the economist Edward Glaeser points out that when it comes to the younger generation, there is little distinction between city and suburb if all needs and services are within walking distance. “If they can walk everywhere and there’s tons of stuff that they can walk to, then it’s a city.” Even, he says, if it happens to be an urbanized neighborhood in a suburb. The question is whether the boom in those walkable, urban-style developments in the suburbs will be enough.
activist fund / activist shareholder / activist investor, affirmative action, Albert Einstein, Andrei Shleifer, barriers to entry, Berlin Wall, colonial rule, Daniel Kahneman / Amos Tversky, double entry bookkeeping, Edward Glaeser, en.wikipedia.org, endowment effect, European colonialism, experimental economics, experimental subject, George Akerlof, income per capita, invention of the telephone, Jane Jacobs, John von Neumann, law of one price, Martin Wolf, mutually assured destruction, New Economic Geography, new economy, Plutocrats, plutocrats, Richard Florida, Richard Thaler, Ronald Reagan, Silicon Valley, spinning jenny, Steve Jobs, The Death and Life of Great American Cities, the market place, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, Thomas Malthus, women in the workforce, zero-sum game
Just look at jointly written academic papers: Gaspar and Glaeser, “Information Technology and the Future of Cities.” Since the 1980s: Gaspar and Glaeser, “Information Technology and the Future of Cities.” “She was dissatisfied”: Jane Jacobs, The Economy of Cities, p. 51. The business guru Michael Porter: Michael Porter, “Clusters and the New Economics of Competition,” Harvard Business Review 76, no. 6 (November–December 1998): 77–90. A group of four economists: Edward L. Glaeser, Hedi D. Kallal, Jose A. Scheinkman, and Andrei Shleifer, “Growth in Cities,” Journal of Political Economy 100, no. 6(December 1992): 1126–52. Nor is this the only: Gianmarco Ottaviano and Giovanni Peri, “The Economic Value of Cultural Diversity: Evidence from US Cities,” NBER Working Paper 10904, November 2004, available at: ideas.repec.org/a/oup/jecgeo/v6y2006i1p9-44.html.
Whatever that is, it seems to be something that tends to be in greater supply the bigger a city gets. Ed Glaeser, the Harvard-based economist who specializes in the study of cities, crunched numbers from across the United States and found that Gross’s findings about New York apply to most large cities: While average earnings are higher in larger cities, the cost of living is higher yet. As a rule of thumb, each doubling of city size raises wages by 10 percent but raises prices by 16 percent. So what is going on here? Why do people live in tiny apartments in places like Manhattan, panicking over mortgage payments or rent, when they could instead have a spacious home in Rock Island? They could sell up and move to a sprawling ranch out in the wilderness, or to a cheap city such as Detroit, where they could pick up a house for sixty thousand dollars.
The sociologist Mark Granovetter: Mark Granovetter, “The Strength of Weak Ties,” American Journal of Sociology 78, no. 6(May 1973): 1360–80, www.stanford.edu/dept/soc/people/faculty/granovetter/documents/TheStrengthof WeakTies.pdf. 7. THE WORLD IS SPIKY The World is Spiky: I stole this delightful title from Richard Florida’s article with Tim Gulden in The Atlantic, October 2005. “Our dollar looks the same”: Daniel Gross, “The Value of a New York Dollar,” New York, November 6, 2006. The bottom line: Gross, “The Value of a New York Dollar.” Ed Glaeser, the Harvard-based economist: Edward Glaeser, “Are Cities Dying?” Journal of Economic Perspectives 12, no. 2(spring 1998): 139–60. “Who needs a network?”: Jeff Jarvis, “Points to Forbes,” blog posting, www.buzzmachine.com/2007/04/23/points-to-forbes. “Great are the advantages”: Alfred Marshall, Principles of Economics, eighth ed. (London: Macmillan, 1920), book 4, chapter 10, www.econ lib.org/LIBRARY/Marshall/marP24.html.
The Locavore's Dilemma by Pierre Desrochers, Hiroko Shimizu
air freight, back-to-the-land, British Empire, Columbian Exchange, Community Supported Agriculture, creative destruction, edge city, Edward Glaeser, food miles, Food sovereignty, global supply chain, intermodal, invention of agriculture, inventory management, invisible hand, Jane Jacobs, labour mobility, land tenure, megacity, moral hazard, mortgage debt, oil shale / tar sands, oil shock, peak oil, planetary scale, profit motive, refrigerator car, Steven Pinker, the market place, The Wealth of Nations by Adam Smith, Thomas Malthus, trade liberalization, Upton Sinclair, urban sprawl
Huber and Mark P. Mills. 2000. “How Cities Green the Planet.” City Journal (Winter) http://www.city-journal.org/html/10_1_how_cities.html. 50 Ed Glaeser. 2011. Triumph of the City. How our Greatest Invention Makes Us Richer, Smarter, Greener, Healthier, and Happier. Penguin Press, p. 201. 51 David Owen. 2009. “Is Locavorism Good for the Environment?” http://www.davidowen.net (September 9) www.davidowen.nethttp://www.davidowen.net/david_owen/2009/09/is-locavorism-good-for-the-environment.html.His more detailed argument can be found in David Owen. 2009. Green Cities. Why Living Smaller, Living Closer, and Driving Less are the Keys to Sustainability. Riverhead Books. 52 For a more detailed discussion of these issues, see Ed Glaeser. 2011. Triumph of the City. How our Greatest Invention Makes Us Richer, Smarter, Greener, Healthier, and Happier.
Kautsky further observed that the individuals most likely to leave the countryside were “propertyless labourers, and of these the unmarried” and that it was “not simply the physically strongest, but also the most energetic and intelligent” that migrated (p. 224). 39 Mario Polèse. 2009. The Wealth and Poverty of Regions. Why Cities Matter. University of Chicago Press, p. 139. See also Edward Glaeser. 2011. Triumph of the City. How our Greatest Invention Makes Us Richer, Smarter, Greener, Healthier, and Happier. Penguin Press, p. 7. 40 Mario Polèse. 2009. The Wealth and Poverty of Regions. Why City Matters. University of Chicago Press, p. 140. 41 Edward Glaeser. 2011. Triumph of the City. How our Greatest Invention Makes Us Richer, Smarter, Greener, Healthier, and Happier. Penguin Press, p. 70. 42 Ben Worthen. 2010. “A Dozen Eggs for $8? Michael Pollan Explains the Math of Buying Local.” Wall Street Journal (August 5) http://online.wsj.com/article/SB10001424052748704271804575405521469248574.html For another acknowledgement of this fact by an organic food supporter, see Jeffrey Kluger. 2010.
And yet, as observed by commentators whose basic argument parallels that of defenders of high-yield farming, thriving cities are not an environmental problem, but rather the best means to lighten up humanity’s impact on nature. To quote the applied scientists and policy analysts Peter W. Huber and Mark P. Mills, the skyscraper is “America’s great green gift to the planet” for it “packs more people onto less land, which leaves more wilderness undisturbed in other places, where the people aren’t. . . . The less real estate we occupy for economic gain,” they add, “the more we leave undisturbed as wilderness. And the city, though profligate in its consumption of most everything else, is very frugal with land. The one thing your average New Yorker does not occupy is 40 acres and a mule.”50 In the words of economist Edward L. Glaeser, “residing in a forest might seem to be a good way of showing one’s love of nature, but living in a concrete jungle is actually far more ecologically friendly . . .
A Pattern Language, active transport: walking or cycling, car-free, carbon footprint, congestion charging, David Brooks, edge city, Edward Glaeser, Enrique Peñalosa, food miles, Frank Gehry, Guggenheim Bilbao, if you build it, they will come, Induced demand, intermodal, invisible hand, Jane Jacobs, meta analysis, meta-analysis, New Urbanism, peak oil, Ralph Waldo Emerson, Richard Florida, skinny streets, smart cities, Stewart Brand, the built environment, The Death and Life of Great American Cities, transit-oriented development, Upton Sinclair, urban planning, urban renewal, urban sprawl, walkable city, white flight, white picket fence, young professional, zero-sum game, Zipcar
Andres Duany, Elizabeth Plater-Zyberk, and Jeff Speck, Suburban Nation, 7–12. 18. Edward Glaeser, “If You Love Nature, Move to the City.” 19. Owen, 2–3, 17. 20. Peter Newman, Timothy Beatley, and Heather Boyer, Resilient Cities, 7, 88. 21. Ibid., 92. 22. John Holtzclaw, “Using Residential Patterns and Transit to Decrease Auto Dependence and Costs.” 23. “2010 Quality of Living Worldwide City Rankings,” Mercer.com. 24. Newman, Beatley, and Boyer, 99. STEP 1: PUT CARS IN THEIR PLACE 1. Dom Nozzi, http://domz60.wordpress.com/quotes/. 2. Ralph Waldo Emerson, “Experience” (1844), quoted in Cotton Seiler, Republic of Drivers, 16; Walt Whitman, “Song of the Open Road” (1856). 3. Seiler, 94. 4. David Byrne, Bicycle Diaries, 8. 5. Patrick Condon,“Canadian Cities American Cities: Our Differences Are the Same,” 16. 6. Ibid., 8. 7. Witold Rybczynski, City Life, 160–61. 8.
“NYC Biking Is Up 14% from 2010; Overall Support Rises.” transportationnation.org, July 28, 2011. Berreby, David. “Engineering Terror.” The New York Times, September 10, 2010. Betz, Eric. “The First Nationwide Count of Parking Spaces Demonstrates Their Environmental Cost.” The Knoxville News Sentinel, December 1, 2010. Branyan, George. “What Is an LPI? A Head Start for Pedestrians.” ddotdish.com, December 1, 2010. Brooks, David. “The Splendor of Cities.” Review of Triumph of the City by Edward L. Glaeser (New York: Penguin, 2011). The New York Times, February 7, 2011. Brunick, Nicholas. “The Impact of Inclusionary Zoning on Development.” Report of Business and Professional People for the Public Interest, bpichicago.org, 2004, 4. Buiso, Gary. “Marty’s Lane Pain Is Fodder for His Christmas Card.” The Brooklyn Paper, December 12, 2010. _____. “Safety First! Prospect Park West Bike Lane Working.”
This has certainly been the case in San Francisco, where headhunters for companies like Yelp and Zynga (the social-gaming developers who created FarmVille) actively use urbanism as a recruiting tool. “We’re able to attract creative and tech talent because we are in the city,” acknowledges Colleen McCreary, Zynga’s head of human resources.31 Ultimately, though, it would seem that urban productivity has even deeper causes. There is mounting evidence that dense, walkable cities generate wealth by sheer virtue of the propinquity that they offer. This is a concept that is both stunningly obvious—cities exist, after all, because people benefit from coming together—and tantalizingly challenging to prove.● This hasn’t kept it from the lips of some of our leading thinkers, including Stewart Brand, Edward Glaeser, David Brooks, and Malcolm Gladwell. Speaking at the Aspen Institute, David Brooks pointed out how most U.S. patent applications, when they list similar patents that influenced them, point to other innovators located less than twenty-five miles away.
Think Like a Freak by Steven D. Levitt, Stephen J. Dubner
Albert Einstein, Anton Chekhov, autonomous vehicles, Barry Marshall: ulcers, call centre, Cass Sunstein, colonial rule, Edward Glaeser, Everything should be made as simple as possible, food miles, Gary Taubes, income inequality, Internet Archive, Isaac Newton, medical residency, Metcalfe’s law, microbiome, prediction markets, randomized controlled trial, Richard Thaler, Scramble for Africa, self-driving car, Silicon Valley, Tony Hsieh, transatlantic slave trade, éminence grise
Robinson, “Finding Eldorado: Slavery and Long-Run Development in Colombia,” NBER working paper, June 2012. 75 THE SALT-SENSITIVITY THEORY OF AFRICAN-AMERICAN HYPERTENSION: This section is based on author interview with Roland Fryer as reflected in Stephen J. Dubner, “Toward a Unified Theory of Black America,” New York Times Magazine, March 20, 2005. We are also grateful for the excellent article by Mark Warren in Esquire, “Roland Fryer’s Big Ideas” (December 2005). See also: David M. Cutler, Roland G. Fryer Jr., and Edward L. Glaeser, “Racial Differences in Life Expectancy: The Impact of Salt, Slavery, and Selection,” unpublished manuscript, Harvard University and NBER, March 1, 2005; and Katherine M. Barghaus, David M. Cutler, Roland G. Fryer Jr., and Edward L. Glaeser, “An Empirical Examination of Racial Differences in Health,” unpublished manuscript, Harvard University, University of Pennsylvania, and NBER, November 2008. For further background, see: Gary Taubes, “Salt, We Misjudged You,” The New York Times, June 3, 2012; Nicholas Bakalar, “Patterns: Less Salt Isn’t Always Better for the Heart,” The New York Times, November 29, 2011; Martin J.
Lyons, A Treatise on Electromagnetic Phenomena and on the Compass and Its Deviations Aboard Ship, Vol. 2 (John Wiley & Sons, 1903). Thanks to Jonathan Rosen for pointing out this idea. 32 CONSIDER A PROBLEM LIKE SUICIDE: For a fuller treatment of this topic, see Stephen J. Dubner, “The Suicide Paradox,” Freakonomics Radio, August 31, 2011. We are particularly indebted to the broad and deep research of David Lester, as well as multiple interviews with him. We also relied heavily on David M. Cutler, Edward L. Glaeser, and Karen E. Norberg, “Explaining the Rise in Youth Suicide,” from Jonathan Gruber (editor), Risky Behavior Among Youths: An Economic Analysis (University of Chicago Press, 2001). Various reports from the Centers for Disease Control and Prevention and the National Vital Statistics System were very helpful; see also Robert E. McKeown, Steven P. Cuffe, and Richard M. Schulz, “U.S. Suicide Rates by Age Group, 1970–2002: An Examination of Recent Trends,” American Journal of Public Health 96, no. 10 (October 2006).
Dubner, “100 Ways to Fight Obesity,” Freakonomics Radio, March 27, 2013; Pablo Monsivais and Adam Drewnowski, “The Rising Cost of Low-Energy-Density Foods,” Journal of the American Dietetic Association 107, no. 12 (December 2007); Tara Parker-Pope, “A High Price for Healthy Food,” The New York Times (Well blog), December 5, 2007; Cynthia L. Ogden, Cheryl D. Fryar, Margaret D. Carroll, and Katherine M. Flegal, “Mean Body Weight, Height, and Body Mass Index, United States 1960–2002,” Advance Data from Vital and Health Statistics 347 (National Center for Health Statistics, 2004); David M. Cutler, Edward L. Glaeser, and Jesse M. Shapiro, “Why Have Americans Become More Obese?” Journal of Economic Perspectives 17, no. 3 (Summer 2003). 108 CONSIDER A 2011 TRAFFIC ACCIDENT: See Josh Tapper, “Did Chinese Laws Keep Strangers from Helping Toddler Hit by Truck,” The (Toronto) Star, October 18, 2011; Li Wenfang, “Hospital Offers Little Hope for Girl’s Survival,” China Daily, October 17, 2011; Michael Wines, “Bystanders’ Neglect of Injured Toddler Sets Off Soul-Searching on Web Sites in China,” New York Times, October 11, 2011.
The Great Reset: How the Post-Crash Economy Will Change the Way We Live and Work by Richard Florida
banking crisis, big-box store, blue-collar work, car-free, carbon footprint, collapse of Lehman Brothers, congestion charging, creative destruction, deskilling, edge city, Edward Glaeser, falling living standards, financial innovation, Ford paid five dollars a day, high net worth, Home mortgage interest deduction, housing crisis, if you build it, they will come, income inequality, indoor plumbing, interchangeable parts, invention of the telephone, Jane Jacobs, Joseph Schumpeter, knowledge economy, labour mobility, low skilled workers, manufacturing employment, McMansion, Menlo Park, Nate Silver, New Economic Geography, new economy, New Urbanism, oil shock, Own Your Own Home, pattern recognition, peak oil, Ponzi scheme, post-industrial society, postindustrial economy, reserve currency, Richard Florida, Robert Shiller, Robert Shiller, secular stagnation, Silicon Valley, Silicon Valley startup, sovereign wealth fund, the built environment, The Wealth of Nations by Adam Smith, Thomas L Friedman, total factor productivity, urban decay, urban planning, urban renewal, white flight, young professional, Zipcar
., “To: Detroit, From: Pittsburgh,” Washington Post, March 22, 2009, retrieved from www.washingtonpost.com/wp-dyn/content/article/2009/03/12/AR2009031202480.html. 19. Belinda Lanks, “The Incredible Shrinking City,” Metropolis, April 17, 2006. 20. Tom Leonard, “US Cities May Have to Be Bulldozed to Survive,” Telegraph, June 12, 2009. Also see Edward L. Glaeser, “Bulldozing America’s Shrinking Cities,” New York Times, June 16, 2009, retrieved from http://economix.blogs.nytimes.com/2009/06/16/bulldozing-americas-shrinking-cities. 21. For a history of planned shrinkage and benign neglect, see Deborah Wallace, A Plague on Your Houses (London: Verso, 2001). 22. My team and I have conducted a wide variety of research on this point. For our city and regional findings, see my “Worsening Unemployment,” Atlantic, July 3, 2009; “Unemployment’s Geography,” Atlantic, June 5, 2009.
Richard Florida, Who’s Your City?: How the Creative Economy Is Making Where to Live the Most Important Decision of Your Life (New York: Basic Books, 2008). 5. Richard Florida, Who’s Your City?: How the Creative Economy Is Making Where to Live the Most Important Decision of Your Life, Canadian edition (Toronto: Random House Canada, 2008). 6. Kelly Evans, “Why College Towns Are Looking Smart,” Wall Street Journal, March 24, 2009. 7. I provide figures on these trends in Richard Florida, “Town, Gown, and Unemployment,” Atlantic, May 20, 2009, retrieved from http://correspondents.theatlantic.com/ richard_florida/2009/05. 8. Edward L. Glaeser, “How Some Places Fare Better in Hard Times,” New York Times, March 24, 2009. Chapter 12: Death and Life of Great Industrial Cities 1. Robert Pirsig’s classic Zen and the Art of Motorcycle Maintenance: An Inquiry into Values (New York: HarperPerennial Modern Classics, 2008); Matthew Crawford, Shop Class as Soulcraft: An Inquiry into the Value of Work (New York: Penguin Press, 2008); Richard Sennett, The Craftsman (New Haven, Conn.: Yale University Press, 2008). 2.
., The Brookings Institution, December 2009. 12. Edward L. Glaeser, “How Some Places Fare Better in Hard Times,” New York Times Economic blog, March 24, 2009, retrieved from http://economix.blogs.nytimes.com/2009/03/24/how-some-places-fare-better-in-hard-times. 13. The one other type of place that my research shows does well with this demographic is great college towns near the heart of megaregions such as Austin, part of the Dal-Austin megaregion; Boulder, part of the Denver-Boulder megaregion; and Raleigh-Durham in Char-lanta. Andrew Strieber, “Starting Out: The 10 Most-Popular Cities for First-Time Job-Seekers,” Careercast.com, May 2009, retrieved from www.careercast.com/jobs/content/ten-best-cities-college-graduates-jobs-rated; Florida, Who’s Your City? 14. Roughly between eighteen and twenty-nine years of age at the time the survey was carried out.
The Metropolitan Revolution: How Cities and Metros Are Fixing Our Broken Politics and Fragile Economy by Bruce Katz, Jennifer Bradley
3D printing, additive manufacturing, Affordable Care Act / Obamacare, British Empire, business climate, carbon footprint, clean water, cleantech, collapse of Lehman Brothers, deindustrialization, demographic transition, desegregation, double entry bookkeeping, edge city, Edward Glaeser, global supply chain, immigration reform, income inequality, industrial cluster, intermodal, Jane Jacobs, jitney, Kickstarter, knowledge economy, lone genius, Mark Zuckerberg, Masdar, megacity, Menlo Park, Moneyball by Michael Lewis explains big data, Network effects, new economy, New Urbanism, Occupy movement, place-making, postindustrial economy, purchasing power parity, race to the bottom, Richard Florida, Shenzhen was a fishing village, Silicon Valley, smart cities, smart grid, sovereign wealth fund, the built environment, The Death and Life of Great American Cities, the market place, The Spirit Level, Tony Hsieh, too big to fail, trade route, transit-oriented development, urban planning, white flight
Jim O’Grady and Jonathan Bowles, “Building New York City’s Innovation Economy” (New York: Center for an Urban Future, 2009), p. 4. See also Baumol, Schilling, and Wolff, “The Superstar Inventors and Entrepreneurs,” p. 9. 11. Ibid. 12. Ibid., p. 16. 13. Jim O’Grady and Jonathan Bowles, “2009 Index of the New York City Innovation Economy,” Center for an Urban Future, 2009 (www.nycfuture.org/ images_pdfs/pdfs/InnovationIndex.pdf), p. 33. 14. “Engineering a Tech Sector,” Center for an Urban Future, 2007 (www.nyc future.org/images_pdfs/pdfs/Engineering_A_Tech_Sector.pdf). 15. Edward B. Roberts and Charles Eesley, “Entrepreneurial Impact: The Role of MIT” (Cambridge, Mass.: MIT Sloan School of Management and the Kauffman Foundation, 2009), p. 5. 16. Edward L. Glaeser, The Triumph of the City: How Our Greatest Invention Makes Us Richer, Smarter, Greener, Healthier, Happier (New York: Penguin Press, 2011), p. 36. 17.
Wheeler, “Cities and the Growth of Wages among Young Workers: Evidence from the NLSY,” Working Paper 2005-055A (St. Louis, Mo.: Federal Reserve Bank, 2005). Edward Glaeser and David Maré discovered that workers in large metro areas eventually accrued a 33 percent wage premium, which stayed with them even after they left the metro, indicating that being in the metro mix with other skilled people makes individuals more productive. Edward L. Glaeser and David C. Maré, “Cities and Skills,” Journal of Labor Economics 19 no. 2 (2001). 58. See Steven Johnson, Where Good Ideas Come From: The Natural History of Innovation (New York: Penguin Group, 2010), pp. 9–10. 59. “Our evidence thus reinforces the view that policy action should focus on building upon pre-existing comparative advantage.” Delgado, Porter, and Stern, “Clusters, Convergence, and Economic Performance,” p. 6. 60. Richard Pérez-Peña, “Two Top Suitors Are Emerging for New Graduate School of Engineering,” New York Times, October 16, 2011. 61.
Shifting to new energy sources will affect the source of our energy, the cars we drive, the products we buy, the kinds of homes we live in, the shape and location of our communities, and the way we get from one place to another.39 This shift will also drive job creation, as the nation will need scientists to invent, entrepreneurs to take to market, and workers to build solar panels, wind turbines, biomass plants, advanced fuel cells, and other energy-efficient products. Cities and metropolitan areas in the United States are well positioned to continue to be at the center of the nation’s clean economy. Although the densest parts of metropolitan areas (typically, central cities) are thought of as dirty, congested, and polluted, their environmental impact per capita is in fact fairly modest.40 As economist Ed Glaeser has written, “If the future is going to be greener, then it must be more urban. Dense cities offer a means of living that involves less driving and smaller homes to heat and cool. Maybe someday we’ll be able to drive and cool our homes with almost no carbon emissions, but until then, there is nothing greener than blacktop.” But cities and metros are also leading the way on the production side of critical sectors of the low-carbon economy.
Vertical: The City From Satellites to Bunkers by Stephen Graham
1960s counterculture, Berlin Wall, Buckminster Fuller, Buy land – they’re not making it any more, Chelsea Manning, Commodity Super-Cycle, creative destruction, deindustrialization, digital map, drone strike, Edward Glaeser, Edward Snowden, energy security, Frank Gehry, ghettoisation, Google Earth, Gunnar Myrdal, high net worth, housing crisis, Howard Zinn, illegal immigration, Indoor air pollution, Intergovernmental Panel on Climate Change (IPCC), Jane Jacobs, late capitalism, mass immigration, means of production, megacity, megastructure, moral panic, mutually assured destruction, new economy, New Urbanism, nuclear winter, oil shale / tar sands, planetary scale, Plutocrats, plutocrats, post-industrial society, Project Plowshare, rent control, Richard Florida, Right to Buy, Ronald Reagan, Skype, South China Sea, the built environment, The Death and Life of Great American Cities, trickle-down economics, urban decay, urban planning, urban renewal, urban sprawl, white flight, WikiLeaks, William Langewiesche
See his ‘Figures of Destructuration: Terrorism, Architecture, Social Form’, November 2009, available at bratton.info. 67Ibid. 68Darton, ‘Janus Face of Architectural Terrorism’. 69It must be stressed here that there is no evidence that Atta and his colleagues had any way of predicting, let alone planning, the final collapse of the buildings once they had been struck by the two aircraft. 8. Housing: Luxified Skies 1Edward Glaeser, ‘How Skyscrapers Can Save the City’, Atlantic, March 2011. See also his Triumph of the City: How Our Greatest Invention Makes Us Richer, Smarter, Greener, Healthier and Happier, New York: Penguin, 2012. 2Ibid. 3See Richard Florida, ‘The Rise of the Creative Class’, Washington Monthly 34:5, 2002, pp. 15–25. 4Jamie Peck, ‘Edward Glaeser’s City: A Triumph of Economism’, unpublished paper, 2014. 5Glaeser is affiliated with the neoconservative Manhattan Institute, which was a key intellectual player behind George W. Bush’s two presidential tenancies. See Jamie Peck, ‘Economic Rationality Meets Celebrity Urbanology: Exploring Edward Glaeser’s City’, International Journal of Urban and Regional Research, 2016 (forthcoming). 6Paul Goldberger, ‘Too Rich, Too Thin, Too Tall, Vanity Fair, May 2014. 7As well as blocking out light, new towers often create wind systems at ground level that can be uncomfortable and even dangerous to those on the street. 8Lloyd Alter, ‘It’s Time to Dump the Tired Argument That Density and Height Are Green and Sustainable’, Treehugger, 3 January 2014, available at treehugger.com. 9Ibid. 10Samuel Zipp ‘The Roots and Routes of Urban Renewal’, Journal of Urban History 39:3, May 2013, p. 372. 11Walter Gropius, The New Architecture and the Bauhaus, Cambridge, MA: MIT Press, 1965, p. 146. 12Paul Christoph Haacke, ‘The Vertical Turn: Topographies of Metropolitan Modernism’, PhD thesis, University of California, Berkeley, 2011, available at escholarship.org/uc/item/1857736f. 13Fosco Lucarelli and Mariabruna Fabrizi, ‘The Trellick Tower: The Fall and Rise of a Modern Monument’, San Rocco Magazine 5, Fall 2012. 14Sigfried Giedeon, Building in France, Building in Iron, Building in Ferroconcrete, Santa Monica, CA: Getty Center for the History of Art and the Humanities, 1995 . 15Le Corbusier, The City of Tomorrow and Its Planning, New York: Dover, 1987 , p. 280. 16This term comes from the US Citizens Housing Council, 1940.
With urban populations mushrooming and 75 per cent of the world’s population of 11 billion likely to be living in cities by 2050, the stacking of housing will inevitably, as Ed Glaeser argues, be a crucial factor in the future of humanity. Equally clearly, the sprouting of towers for the super-rich that in many cities now constitutes de facto housing policy is a social catastrophe in the making. The parallel transformation of cities discussed here is the material and often dystopian embodiment of the ways in which the current neoliberal version of capitalism continues to concentrate ever more extreme amounts of wealth and resources into the hands of the very few, to be used to sustain speculative dynamics that accentuate this wealth further while severely damaging the lives and life chances of everyone else. Far from unleashing market forces to build up cities in ways that provide affordable housing for all – as in Ed Glaeser’s initially seductive vision – such processes of neoliberalisation are merely allowing cities to be reconstructed into forests of super-tall cocoons, owned and controlled by the super-rich, who might occasionally deign to occasionally even inhabit the structures.
‘Rising toward the stratosphere’, Darton writes, ‘we feel we have broken free of gravity. When that illusion possesses us, it is not long before our ascent finds its opposite number in the terror of the fall.’ 8. Housing: Luxified Skies Building Up to ‘Save’ the City? In March 2011, Harvard economics professor Edward Glaeser wrote a manifesto for the building of vertical cities in the Atlantic magazine.1 Arguably the world’s most influential urban economist, Glaeser playfully invoked the Book of Genesis, citing the builders of the legendary Tower of Babel when they declared, ‘Come, let us build us a city and a tower with its top in the heavens. And let us make a name for ourselves, lest we be scattered upon the face of the whole earth.’ To Glaeser, there is a simple solution to the contemporary impasse combining extraordinary rates of urbanisation, rapid population growth, a predilection for conserving large swathes of older, lower housing stock and crises in the supply of affordable urban housing.
The Big Sort: Why the Clustering of Like-Minded America Is Tearing Us Apart by Bill Bishop, Robert G. Cushing
1960s counterculture, affirmative action, American Legislative Exchange Council, assortative mating, big-box store, blue-collar work, Cass Sunstein, citizen journalism, cognitive dissonance, David Brooks, demographic transition, desegregation, Edward Glaeser, immigration reform, income inequality, industrial cluster, Jane Jacobs, knowledge economy, mass immigration, meta analysis, meta-analysis, Milgram experiment, music of the spheres, New Urbanism, post-industrial society, Post-materialism, post-materialism, Ralph Nader, Richard Florida, Ronald Reagan, Silicon Valley, stem cell, Steve Jobs, superstar cities, The Death and Life of Great American Cities, union organizing, War on Poverty, white flight, World Values Survey
Dave Eggers, A Heartbreaking Work of Staggering Genius (New York: Vintage Books, 2001), p. 129. 2. See Bill Bishop and Mark Lisheron, "Cities of Ideas" (series), Austin American-Statesman, 2002, http://www.statesman.com/specialreports/content/specialreports/citiesofideas/. 3. Edward L. Glaeser and Christopher R. Berry, "The Divergence of Human Capital Levels Across Cities" (Harvard Institute of Economic Research Discussion Paper 2091, August 2005), p. 10, http://www.economics.harvard.edu/hier/2005papers/HIER2091.pdf. 4. Richard Florida, "The World Is Spiky"Atlantic, October 2005, pp. 48–49. 5. Glaeser and Berry, "The Divergence of Human Capital," pp. 10–11. 6. Joe Cortright, "The Young and Restless in a Knowledge Economy" (report prepared for CEOs for Cities, December 2005), p. 30. 7. Edward Glaeser and Jesse M. Shapiro, "City Growth and the 2000 Census: Which Places Grew, and Why" (Center of Urban and Metropolitan Policy, Brookings Institution, May 2001), p. 9, http://www.brookings.edu/reports/2001/05demographics_edward-glaeser-and-jesse-m—shapiro.aspx. 8.
There were fewer weak ties.44 Cities Come Back—with Weak Ties After the disastrous 1970s, when the future of cities seemed bleak, people returned. In the 1980s, housing prices began to rise in the same cities that had experienced drops in the previous decade. New York City gained population. Personal income in cities increased, too, reversing declines in the 1970s. Not all cities added people and income. Edward Glaeser discovered that there was a complete switch in the types of cities that grew. In 1950, seven of the eight largest cities had a higher percentage of people employed in manufacturing than the nation as a whole. By 1990, six of the eight largest cities had proportionally less manufacturing than the country as a whole. The urban revival wasn't led by places that made things, but by cities that produced ideas.
Florida, The Rise of the Creative Class, pp. 273–76. 30. Edward L. Glaeser and Joshua D. Gottlieb, "Urban Resurgence and the Consumer City" (Harvard Institute of Economic Research Working Paper 2109, 2006), pp. 6–9. 31. Paul M. Romer, "Two Strategies for Economic Development: Using Ideas and Producing Ideas," in Proceedings of the World Bank Annual Conference on Development Economics, 1992, pp. 68–69. 32. Joe Cortright, "New Growth Theory, Technology and Learning: A Practitioner's Guide" (U.S. Department of Commerce Economic Development Administration, Reviews of Economic Development Literature and Practice, no. 4, 2001), http://cherry.iac.gatech.edu/REFS/TRP-Ref/cortrightngt.pdf. 33. Ibid., p. 4. 34. Ibid., pp. 4–6. 35. Ibid., p. 2. 36. Jane Jacobs, The Economy of Cities (New York: Vintage Books, 1970), pp. 51–52. 37.
accounting loophole / creative accounting, affirmative action, bank run, banking crisis, Berlin Wall, bonus culture, Branko Milanovic, BRICs, call centre, Cass Sunstein, central bank independence, collapse of Lehman Brothers, conceptual framework, corporate governance, correlation does not imply causation, Credit Default Swap, deindustrialization, demographic transition, Diane Coyle, disintermediation, Edward Glaeser, endogenous growth, Eugene Fama: efficient market hypothesis, experimental economics, Fall of the Berlin Wall, Financial Instability Hypothesis, Francis Fukuyama: the end of history, George Akerlof, Gini coefficient, global supply chain, Gordon Gekko, greed is good, happiness index / gross national happiness, Hyman Minsky, If something cannot go on forever, it will stop - Herbert Stein's Law, illegal immigration, income inequality, income per capita, industrial cluster, information asymmetry, intangible asset, Intergovernmental Panel on Climate Change (IPCC), invisible hand, Jane Jacobs, Joseph Schumpeter, Kenneth Arrow, Kenneth Rogoff, knowledge economy, labour market flexibility, light touch regulation, low skilled workers, market bubble, market design, market fundamentalism, megacity, Network effects, new economy, night-watchman state, Northern Rock, oil shock, Pareto efficiency, principal–agent problem, profit motive, purchasing power parity, railway mania, rising living standards, Ronald Reagan, selective serotonin reuptake inhibitor (SSRI), Silicon Valley, South Sea Bubble, Steven Pinker, The Design of Experiments, The Fortune at the Bottom of the Pyramid, The Market for Lemons, The Myth of the Rational Market, The Spirit Level, transaction costs, transfer pricing, tulip mania, ultimatum game, University of East Anglia, web application, web of trust, winner-take-all economy, World Values Survey, zero-sum game
Washington, DC: Commission on Growth and Development. Achenbach, Joel. 2010. “The National Debt and Washington’s Deficit of Will.” Washington Post, 15 April. Akerlof, George. 1970. “The Market for ‘Lemons’: Quality Uncertainty and the Market Mechanism.” Quarterly Journal of Economics 84:3, pp. 488–500. Alesina, Alberto, and Edward Glaeser. 2006. Fighting Poverty in the US and Europe: A World of Difference. Oxford: Oxford University Press. Alesina, Alberto, Edward Glaeser, and Bruce Sacerdote. 2001. “Why Doesn’t the US Have a European-style Welfare State?” Discussion Paper No. 1933. Cambridge, MA: Harvard Institute for Economic Research. Alesina, Alberto, and Dani Rodrik. 1994. “Distributive Politics and Economic Growth.” Quarterly Journal of Economics 109:2, pp. 465–90. Anand, Sudhir, and Paul Segal. 2008.
At a broad level, the differences between countries with similar average levels of GDP per head and similar economic structures means that actual measured inequality must result from differences in the ways their labor markets and tax and welfare systems operate. These economic institutions clearly embed social and political attitudes. And it has been frequently noted and confirmed that the United States does have a different culture of money making and an admiration for financial success. For example, Alberto Alesina and Edward Glaeser set out convincing evidence on different attitudes to inequality in the United States and Europe.25 Figure 8. America has once before seen today’s extreme inequality. Krugman’s point was that the recent increase in inequality went well beyond the traditional spirit of can-do and aspiration in America. He argues that partisan political choices have contributed substantially to the massive enrichment of the rich, including tax reductions on capital gains and legacies.26 In addition—and I think this is more interesting in terms of the long-term trends—he has argued that social norms, the unspoken agreement in society about what is acceptable, have shifted toward acceptance of excessive reward for the few and a tolerance of the extremes of poverty and wealth.
“Steam as a General Purpose Technology.” Economic Journal 114:495 (April), pp. 338–51. ———. 2010. “The Contribution of New Technology to Economic Growth: Lessons from Economic History.” Revista de Historia Económica/Journal of Iberian and Latin American Economic History (Second Series) 28, pp. 409–40. Csikszentmilhalyi, Mihaly. 1990. Flow: The Psychology of Optimal Experience. New York: HarperCollins. Cutler, David, Edward Glaeser, and Karen Norberg. 2000. “Explaining the Rise in Youth Suicide.” Working Paper No. W7713. Cambridge, MA: National Bureau of Economic Research. Daly, Herman E., and John B. Cobb. 1989. For the Common Good: Redirecting the Economy toward Community, the Environment, and a Sustainable Future. London: Green Print. Dasgupta, Partha. 2004. “Three Conceptions of Intergenerational Justice.” In Ramsey’s Legacy, ed.
Why Nudge?: The Politics of Libertarian Paternalism by Cass R. Sunstein
Affordable Care Act / Obamacare, Andrei Shleifer, availability heuristic, Cass Sunstein, choice architecture, clean water, Daniel Kahneman / Amos Tversky, Edward Glaeser, endowment effect, energy security, framing effect, invisible hand, late fees, libertarian paternalism, loss aversion, nudge unit, randomized controlled trial, Richard Thaler
A number of relevant sources can be found at Resources, INUDGEYOU.COM, http://www.inudgeyou.com/resources (last visited Dec. 5, 2012). 32. See CHANGING BEHAVIOURS: THE RISE OF THE PSYCHOLOGICAL STATE (Rhys Jones et al. eds., 2013). 33. A positive answer is vigorously defended in SARAH CONLY, AGAINST AUTONOMY: JUSTIFYING COERCIVE PATERNALISM (2012). Negative answers are defended in RICCARDO REBONATO, TAKING LIBERTIES: A CRITICAL EXAMINATION OF LIBERTARIAN PATERNALISM (2012); Edward L. Glaeser, Paternalism and Psychology, 73 U. CHI. L. REV. 133 (2006); and Joshua D. Wright & Douglas H. Ginsburg, Behavioral Law and Economics: Its Origins, Fatal Flaws, and Implications for Liberty, 106 NW. U. L. REV. 1033 (2012). 34. See THALER & SUNSTEIN, supra note 9, at 252. 35. For one example, see Paul Rozin et al., Nudge to Nobesity I: Minor Changes in Accessibility Decrease Food Intake, 6 JUDGMENT & DECISION MAKING 323, 329 (2011). 36.
REV. 1033 (2012); on the underlying issues, see Bruce Ian Carlin et al., Libertarian Paternalism, Information Production, and Financial Decision-Making (June 6, 2012) (unpublished manuscript), http://faculty.fuqua.duke.edu/~sgervais/Research/Papers/LibertarianPaternalism.WP.pdf. 6. MILL, supra note 2. 7. Id. 8. Id. 9. Id. 10. See JOHN Stuart Mill, Utilitarianism (1861), for a version of this argument. Related discussion can be found in Edward L. Glaeser, Paternalism and Psychology, 73 U. Chi. L. Rev. 133 135–42 (2006), which emphasizes the ability of those in the private sector to balance relevant values and to incorporate new information. 11. Mill, supra note 2. 12. Id. 13. See Cass R. Sunstein, Impersonal Default Rules vs. Active Choices vs. Personalized Default Rules: A Triptych (SSRN Elec. Library, Working Paper No. 2,171,343, 2012), http://ssrn.com/abstract=2171343, at 21–24. 14.
For a helpful and somewhat skeptical discussion, see Hunt Allcott & Michael Greenstone, Is There an Energy Efficiency Gap?, 26 J. Econ. Persp. 3 (2012). It is clear that more research is needed on this topic. FIVE Soft Paternalism and Its Discontents 1. See Ry. Express Agency v. New York, 336 U.S. 106, 112–13 (1949) (Jackson, J., concurring). 2. Id. 3. F. A. von Hayek, The Constitution of Liberty 155 (1960). 4. See Edward L. Glaeser, Paternalism and Psychology, 73 U. Chi. L. Rev. 133, 149 (2006). 5. See Sarah Conly, Against Autonomy: Justifying Coercive Paternalism 7–8 (2012), for the suggestion that nudging can be both manipulative and ineffective, thus giving us “the worst of both worlds.” 6. See Glaeser, supra note 4, at 151. 7. For an interesting discussion of public reactions to overt and covert nudges, see Gidon Felsen et al., Decisional Enhancement and Autonomy: Public Attitudes Toward Overt and Covert Nudges, 8 Judgment and Decision Making 202 (2013). 8.
affirmative action, Andrei Shleifer, Berlin Wall, British Empire, Broken windows theory, carbon footprint, Celebration, Florida, clean water, congestion charging, declining real wages, desegregation, diversified portfolio, Edward Glaeser, endowment effect, European colonialism, financial innovation, Frank Gehry, global village, Guggenheim Bilbao, haute cuisine, Home mortgage interest deduction, James Watt: steam engine, Jane Jacobs, job-hopping, John Snow's cholera map, Mahatma Gandhi, McMansion, megacity, mortgage debt, mortgage tax deduction, New Urbanism, place-making, Ponzi scheme, Potemkin village, Ralph Waldo Emerson, rent control, RFID, Richard Florida, Rosa Parks, school vouchers, Seaside, Florida, Silicon Valley, Skype, smart cities, Steven Pinker, strikebreaker, the built environment, The Death and Life of Great American Cities, the new new thing, The Wealth of Nations by Adam Smith, trade route, transatlantic slave trade, upwardly mobile, urban planning, urban renewal, urban sprawl, William Shockley: the traitorous eight, Works Progress Administration, young professional
The Warhol Economy: How Fashion, Art, and Music Drive New York City. Princeton, NJ: Princeton University Press, 2007. Cutler, David M., and Edward L. Glaeser. “Are Ghettos Good or Bad?” Quarterly Journal of Economics 112, no. 3 (Aug. 1997): 827-72. Cutler, David M., Edward L. Glaeser, and Karen Norberg. “Explaining the Rise in Youth Suicide.” Chapter in Jonathan Gruber, ed. Risky Behavior Among Youths: An Economic Analysis. Chicago: University of Chicago Press, 2001. Cutler, David M., Edward L. Glaeser, and Jacob L. Vigdor. “The Rise and Decline of the American Ghetto.” Journal of Political Economy 107, no. 3 (June 1999): 455-506. Cutler, David M., and Grant Miller. “Water, Water Everywhere: Municipal Finance and Water Supply in American Cities.” In Corruption and Reform: Lessons from America’s Economic History, Edward L. Glaeser and Claudia Goldin, eds., pp. 153-84.
Stephen’s Green, Dublin 2, Ireland (a division of Penguin Books Ltd) • Penguin Books Australia Ltd, 250 Camberwell Road, Camberwell, Victoria 3124, Australia (a division of Pearson Australia Group Pty Ltd) • Penguin Books India Pvt Ltd, 11 Community Centre, Panchsheel Park, New Delhi—110 017, India • Penguin Group (NZ), 67 Apollo Drive, Rosedale, North Shore 0632, New Zealand (a division of Pearson New Zealand Ltd) • Penguin Books (South Africa) (Pty) Ltd, 24 Sturdee Avenue, Rosebank, Johannesburg 2196, South Africa Penguin Books Ltd, Registered Offices: 80 Strand, London WC2R 0RL, England First published in 2011 by The Penguin Press, a member of Penguin Group (USA) Inc. Copyright © Edward Glaeser, 2011 All rights reserved LIBRARY OF CONGRESS CATALOGING-IN-PUBLICATION DATA Glaeser, Edward L. (Edward Ludwig),———. Triumph of the city : how our greatest invention makes us richer, smarter, greener, healthier, and happier / Edward L. Glaeser. p. cm. Includes bibliographical references and index. eISBN : 978-1-101-47567-6 1. Urbanization. 2. Cities and towns—Growth. 3. Urban economics. 4. Urban sociology. I. Title. HT361.G53 2011 307.76—dc22 2010034609 Without limiting the rights under copyright reserved above, no part of this publication may be reproduced, stored in or introduced into a retrieval system, or transmitted, in any form or by any means (electronic, mechanical, photocopying, recording or otherwise), without the prior written permission of both the copyright owner and the above publisher of this book.
Environment and History 8, no. 4 (2002): 475-88. Gaspar, Jess, and Edward L. Glaeser. “Information Technology and the Future of Cities.” Journal of Urban Economics 43, no. 1 (Jan. 1998): 136-56. Gelzinis, Peter. “Commissioner Connecting: Neighbors Notice as Hands-on Meaasures Take Root in Neighborhoods.” Boston Herald, Aug. 22, 2007, News. Geolytics Neighborhood Change Database 1970-2000 Tract Data Short Form Release 1.1, CD-ROM. (Brunswick, NJ: Geolytics, 2002. Gergen, Christopher, and Gregg Vanourek. Life Entrepreneurs: Ordinary People Creating Extraordinary Lives. San Francisco: Wiley, 2008. Geyl, Pieter. The Revolt of the Netherlands 1555-1609. London: Cassel, 1932. Gibson, Campbell. “Population of the 100 Largest Cities and Other Urban Places in the United States: 1790 to 1990.” U.S.
13 Bankers: The Wall Street Takeover and the Next Financial Meltdown by Simon Johnson, James Kwak
Andrei Shleifer, Asian financial crisis, asset-backed security, bank run, banking crisis, Bernie Madoff, Bonfire of the Vanities, bonus culture, break the buck, capital controls, Carmen Reinhart, central bank independence, collapse of Lehman Brothers, collateralized debt obligation, commoditize, corporate governance, corporate raider, Credit Default Swap, credit default swaps / collateralized debt obligations, crony capitalism, Edward Glaeser, Eugene Fama: efficient market hypothesis, financial deregulation, financial innovation, financial intermediation, financial repression, fixed income, George Akerlof, Gordon Gekko, greed is good, Home mortgage interest deduction, Hyman Minsky, income per capita, information asymmetry, interest rate derivative, interest rate swap, Kenneth Rogoff, laissez-faire capitalism, late fees, light touch regulation, Long Term Capital Management, market bubble, market fundamentalism, Martin Wolf, money market fund, moral hazard, mortgage tax deduction, Myron Scholes, Paul Samuelson, Ponzi scheme, price stability, profit maximization, race to the bottom, regulatory arbitrage, rent-seeking, Robert Bork, Robert Shiller, Robert Shiller, Ronald Reagan, Saturday Night Live, Satyajit Das, sovereign wealth fund, The Myth of the Rational Market, too big to fail, transaction costs, value at risk, yield curve
Quoted in Eric Lipton and Raymond Hernandez, “A Champion of Wall Street Reaps Benefits,” The New York Times, December 13, 2008, available at http://www.nytimes.com/2008/12/14/business/14schumer.html. 58. U.S. Census Bureau, Housing Vacancies and Homeownership, Table 14, available at http://www.census.gov/hhes/www/housing/hvs/historic/index.html. 59. Edward L. Glaeser and Jesse M. Shapiro, “The Benefits of the Home Mortgage Interest Deduction,” Tax Policy and the Economy 17 (2003): 37–82, available at http://www.jstor.org/stable/20140504. 60. Edward L. Glaeser, “Attack of the Home Buyers’ Tax Credit,” Economix Blog, The New York Times, November 10, 2009, available at http://economix.blogs.nytimes.com/2009/11/10/attack-of-the-home-buyers-tax-credit/. The paper he cites is Denise DiPasquale and Edward L. Glaeser, “Incentives and Social Capital: Are Homeowners Better Citizens?” (NBER Working Paper 6363, January 1998), available at http://www.nber.org/papers/w6363.pdf; compare Tables 2 and 4. 61.
This ethos may have something to do with the important place of independence and self-reliance in the constellation of American values. Or it may be the product of various government policies designed to encourage homeownership. There may also be an element of truth to this idea; homeownership is generally thought to create positive externalities, since homeowners are on average more likely to devote effort to improving their communities. After reviewing other empirical studies and doing their own analyses, Edward Glaeser and Jesse Shapiro conclude: [T]here is a limited body of evidence suggesting that homeownership creates positive spillovers for near neighbors. Homeowners do appear to be more active citizens. They vote more. They take better care of their homes. Houses that are surrounded by homeowners are worth a little more than houses that are surrounded by renters.59 However, much of the positive effect of homeownership is due not to ownership itself, but to other factors that differentiate owners and renters.
The Center for Responsible Lending found that subprime borrowers ended up paying the equivalent of 1.3 percentage points of interest more for loans obtained through mortgage brokers than they would have paid borrowing directly from a retail lender.19 The city of Baltimore sued Wells Fargo, alleging that the company systematically targeted minority borrowers through such policies as offering bonuses for steering borrowers who would have qualified for prime loans into subprime loans instead.20 According to Shaun Donovan, secretary of housing and urban development, 33 percent of subprime mortgages in New York City went to borrowers who could have qualified for conventional loans.21 These examples demonstrate that unscrupulous brokers and lenders, armed with dense fine print, can induce consumers to choose products that are not in their best interest.
The Price of Everything: And the Hidden Logic of Value by Eduardo Porter
Alvin Roth, Asian financial crisis, Ayatollah Khomeini, banking crisis, barriers to entry, Berlin Wall, British Empire, capital controls, Carmen Reinhart, Cass Sunstein, clean water, Credit Default Swap, Deng Xiaoping, Edward Glaeser, European colonialism, Fall of the Berlin Wall, financial deregulation, Ford paid five dollars a day, full employment, George Akerlof, Gordon Gekko, guest worker program, happiness index / gross national happiness, housing crisis, illegal immigration, immigration reform, income inequality, income per capita, informal economy, Intergovernmental Panel on Climate Change (IPCC), invisible hand, Jean Tirole, John Maynard Keynes: technological unemployment, Joshua Gans and Andrew Leigh, Kenneth Rogoff, labor-force participation, laissez-faire capitalism, loss aversion, low skilled workers, Martin Wolf, means of production, Menlo Park, Mexican peso crisis / tequila crisis, new economy, New Urbanism, peer-to-peer, pension reform, Peter Singer: altruism, pets.com, placebo effect, price discrimination, price stability, rent-seeking, Richard Thaler, rising living standards, risk tolerance, Robert Shiller, Robert Shiller, Ronald Reagan, Silicon Valley, stem cell, Steve Jobs, Stewart Brand, superstar cities, The Spirit Level, The Wealth of Nations by Adam Smith, Thomas Malthus, Thorstein Veblen, trade route, transatlantic slave trade, transatlantic slave trade, ultimatum game, unpaid internship, urban planning, Veblen good, women in the workforce, World Values Survey, Yom Kippur War, young professional, zero-sum game
Gaither, and Eric Schulman, “The Price and Purity of Illicit Drugs: 1981-2007,” Institute for Defense Analysis for the Office of National Drug Control Policy (http://www.whitehousedrugpolicy.gov/publications/price_purity/price_purity07.pdf. , accessed 08/08/2010). The analysis relating gas prices and housing draws from Edward L. Glaeser and Matthew E. Kahn, “Sprawl and Urban Growth,” NBER Working Paper, May 2003; and Census Bureau, American Housing Survey of the United States, 2007 and 1997 editions (found at http://www.census.gov/hhes/www/housing/ahs/nationaldata.html, accessed 08/13/2010). The comparison of urban patterns in Moscow with those of other cities draws from Alain Bertaud and Renaud Bertrand, “Cities Without Land Markets, Location and Land Use in the Socialist City,” the World Bank, Policy Research Working Paper 477, June 1995, in Journal of Urban Economics, Vol. 41, No. 1, January 1997, pp. 137-151. 11-12 When Prices Misfire: The anecdote about incentives and births in Australia comes from Joshua Gans and Andrew Leigh, “Born on the First of July: An (Un)natural Experiment in Birth Timing,” Journal of Public Economics, Vol. 93, 2009.
,” New York Times, February 14, 2000; and Dan Hammermesh, “Time to Eat: Household Production Under Increasing Income Inequality,” American Journal of Agricultural Economics, Vol. 89, No. 4, November 2007, pp. 852-863. 77-78 La Joie de Vivre: The impact of higher taxes and stronger unions on working hours in Europe is discussed in Edward Prescott, “Why Do Americans Work So Much More Than Europeans?,” Federal Reserve Bank of Minneapolis Quarterly Review, Vol. 28, No. 1, July 2004, pp. 2-13; Alberto Alesina, Edward Glaeser, and Bruce Sacerdote, “Work and Leisure in the U.S. and Europe: Why So Different?” NBER Working Paper, April 2005; and Olivier Blanchard, “The Many Dimensions of Work, Leisure, and Employment: Thoughts at the End of the Conference,” comments on papers presented at the Rodolfo DeBenedetti conference on “Are Europeans Lazy, or Are Americans Crazy?” Portovenere, Italy, June 2006. Data on the impact of time use on happiness is from Ronald Inglehart, Roberto Foa, and Christian Welzel, “Social Change, Freedom and Rising Happiness,” Journal of Personality and Social Psychology, Internet Appendix (at www.worldvaluessurvey.org/wvs/articles/folder_published/article_base_106/files/trends.doc, accessed 08/16/2010); “Measuring Leisure in OECD Countries,” in Organisation for Economic Co-operation and Development, op. cit.; and Alan Krueger, Daniel Kahneman, David Schkade, Norbert Schwarz, and Arthur Stone, “National Time Accounting: The Currency of Life,” Princeton University Department of Economics Working Paper, March 2008. 79-86 The Price of Women: Data on the popularity of polygamy through history found in Walter Scheidel, “Monogamy and Polygamy in Greece, Rome, and World History,” Princeton/Stanford Working Papers in Classics, June 2008; Theodore Bergstrom, “Economics in a Family Way,” Journal of Economic Literature, Vol. 34, 1996, pp. 1903-1934; and Gary Becker, A Treatise on the Family , enlarged edition (Cambridge, Mass.: Harvard University Press, 1993), p. 81.
NBER Working Paper, May 2005; and Timothy Brown, “A Monetary Valuation of Individual Religious Behavior: The Case of Prayer,” University of California Berkeley Working Paper, September 2009. The relation between religious attitudes and people’s opportunities in the secular world is discussed in Jonathan Gruber and Daniel Hungerman, “The Church vs. the Mall: What Happens When Religion Faces Increased Secular Competition?” NBER Working Paper, July 2006; Jonathan Gruber, “Pay or Pray? The Impact of Charitable Subsidies on Religious Attendance,” NBER Working Paper, March 2004; and Edward Glaeser and Bruce Sacerdote, “Education and Religion,” NBER Working Paper, 2001. 185-188 What Does It Cost?: Maimonides’ comment on circumcision is found in Moses Maimonides, The Guide for the Perplexed, translated from the original Arabic text by M. Friedlander, 2nd edition (Charleston, S.C.: Forgottenbooks. com, 2008), pp. 646-647. The description of the mystic religion of Pythagoras is in Bertrand Russell, A History of Western Philosophy (London: Routledge, 1991), p. 51.
3D printing, Airbnb, Asian financial crisis, bank run, banking crisis, barriers to entry, Basel III, battle of ideas, Berlin Wall, Big bang: deregulation of the City of London, Bretton Woods, BRICs, British Empire, business process, capital controls, Capital in the Twenty-First Century by Thomas Piketty, Carmen Reinhart, Celtic Tiger, central bank independence, centre right, cleantech, collaborative consumption, collapse of Lehman Brothers, collective bargaining, corporate governance, creative destruction, credit crunch, Credit Default Swap, crony capitalism, currency manipulation / currency intervention, currency peg, debt deflation, Diane Coyle, Downton Abbey, Edward Glaeser, Elon Musk, en.wikipedia.org, energy transition, eurozone crisis, fear of failure, financial deregulation, first-past-the-post, forward guidance, full employment, Gini coefficient, global supply chain, Growth in a Time of Debt, hiring and firing, hydraulic fracturing, Hyman Minsky, Hyperloop, immigration reform, income inequality, interest rate derivative, Intergovernmental Panel on Climate Change (IPCC), Irish property bubble, James Dyson, Jane Jacobs, job satisfaction, Joseph Schumpeter, Kenneth Rogoff, labour market flexibility, labour mobility, liquidity trap, margin call, Martin Wolf, mittelstand, moral hazard, mortgage debt, mortgage tax deduction, North Sea oil, Northern Rock, offshore financial centre, oil shale / tar sands, oil shock, open economy, peer-to-peer rental, price stability, private sector deleveraging, pushing on a string, quantitative easing, Richard Florida, rising living standards, risk-adjusted returns, Robert Gordon, savings glut, school vouchers, self-driving car, sharing economy, Silicon Valley, Silicon Valley startup, Skype, smart grid, smart meter, software patent, sovereign wealth fund, Steve Jobs, The Death and Life of Great American Cities, The Wealth of Nations by Adam Smith, too big to fail, total factor productivity, Tyler Cowen: Great Stagnation, working-age population, Zipcar
Firms have responded to the threat of Chinese imports by increasing their productivity through adopting better information technology, higher spending on R&D and increased patenting.597 So opening up the economy and boosting competition more generally are vital for innovation and growth in Europe. Wherever the demand for innovation comes from, it tends to be supplied in cities. Jane Jacobs, a great American urbanist, pointed this out in the 1960s.598 More recent research by Ed Glaeser of Harvard University documents this. In his masterful Triumph of the City: How Our Greatest Invention Makes Us Richer, Smarter, Greener, Healthier and Happier, he explains how most innovation takes place in diverse, densely populated cities, where people are forever interacting with each other and experiencing new things.599 “We are a social species and we learn by being around clever people,” he observes.600 “Cities have long sped this flow of ideas. Eighteenth-century Birmingham saw textile innovators borrow each other’s insights – and gave us the industrial revolution… Physical proximity allows the free flow of goods, services and ideas – and this powers the collaboration that creates everything from Ford’s Model T to Facebook, and economic growth too.”
title=File:Gross_domestic_expenditure_on_R%26D,_2000-2010_%28%25_share_of_GDP%29.jpg 595 http://www.oecd.org/site/innovationstrategy/45183382.pdf 596 http://www.oecd.org/site/innovationstrategy/45184357.pdf 597 Nick Bloom, Mirko Draca and John Van Reenen, “Trade Induced Technical Change: The Impact of Chinese Imports on Innovation and Productivity”, CEPR Discussion Paper No. 1000, 2011 http://www.voxeu.org/article/who-s-afraid-big-bad-dragon-how-chinese-trade-boosts-european-innovation 598 Jane Jacobs, The Death and Life of Great American Cities, Random House: 1961 599 Edward Glaeser, Triumph of the City: How Our Greatest Invention Makes Us Richer, Smarter, Greener, Healthier and Happier, Macmillan: 2011 600 http://www.ft.com/cms/s/0/d6074404-48f5-11e0-af8c-00144feab49a.html 601 http://www.economist.com/news/business/21581695-city-leaders-are-increasingly-adopting-business-methods-and-promoting-business-mayors-and-mammon 602 Alfred Marshall, Principles of Economics, 1890 603 Pierre Azoulay, Joshua Graff Zivin and Bhaven Sampat, "The diffusion of scientific knowledge across time and space: Evidence from professional transitions for the superstars of medicine", NBER Working Paper #16683, January 2011 604 Benjamin Jones, "The burden of knowledge and the ‘death of the renaissance man’: Is innovation getting harder?"
Isolating yourself makes you less influential: one study finds that when a prominent researcher moves to another city, their patents are less likely to be cited by peers in their previous city.603 Moreover, innovation today often requires an ever-larger crowd of experts, preferably working nearby. Benjamin Jones of Northwestern University finds that it takes ever more people to produce new research, a trend he attributes to the increasing “burden of knowledge” associated with rising technological complexity and an expanding knowledge base.604 One reason why Europe is not as innovative as America – in particular, why it has nowhere that rivals Silicon Valley – is that its digital innovators are spread across many locations, where there is not a dense enough network to produce as many new ideas. Ed Glaeser and Matthew Resseger of Harvard University find that in highly skilled areas, city size explains 45 per cent of the variation in worker productivity.605 It’s not just that smart workers choose to live in bigger cities.
The Great Convergence: Information Technology and the New Globalization by Richard Baldwin
3D printing, additive manufacturing, Admiral Zheng, agricultural Revolution, air freight, Amazon Mechanical Turk, Berlin Wall, bilateral investment treaty, Branko Milanovic, buy low sell high, call centre, Columbian Exchange, commoditize, Commodity Super-Cycle, David Ricardo: comparative advantage, deindustrialization, domestication of the camel, Edward Glaeser, endogenous growth, Erik Brynjolfsson, financial intermediation, George Gilder, global supply chain, global value chain, Henri Poincaré, imperial preference, industrial cluster, industrial robot, intangible asset, invention of agriculture, invention of the telegraph, investor state dispute settlement, Isaac Newton, Islamic Golden Age, James Dyson, knowledge economy, knowledge worker, Lao Tzu, low skilled workers, market fragmentation, mass immigration, Metcalfe’s law, New Economic Geography, out of africa, paper trading, Paul Samuelson, Pax Mongolica, profit motive, rent-seeking, reshoring, Richard Florida, rising living standards, Robert Metcalfe, Second Machine Age, Simon Kuznets, Skype, Snapchat, Stephen Hawking, telepresence, telerobotics, The Wealth of Nations by Adam Smith, trade liberalization, trade route, Washington Consensus
Or to put it differently, where will the industrial zones for this type of “industrial” activity be? Cities as Twenty-First-Century “Factories” According to Harvard economist Ed Glaeser, talented people gather in cities because this makes them more productive. What this means for rich-nation competitiveness policy is straightforward. Human capital and cities are likely to be the foundations of the twenty-first-century landscape of work. Cities are where people meet and form local networks for face-to-face connections and exchanges. They are where people exchange ideas and where competition among ideas plays out. Cities are where most new technologies develop and start-ups flourish. Cities also optimize the matching between workers and firms and between suppliers and customers. In this sense, cities become skill-clusters—or “brain hubs” as Enrico Moretti calls them.
Specifically, the technicalities involved in integrating the Krugman-Venables logic with the Grossman-Helpman logic were first worked out in a paper on the geography of growth takeoffs that I wrote with Philippe Martin from the Paris School of Economics and Gianmarco Ottaviano from the London School of Economics (Richard Baldwin, Philippe Martin, and Gianmarco Ottaviano, “Global Income Divergence, Trade, and Industrialization: The Geography of Growth TakeOffs,” Journal of Economic Growth 6, no. 1 : 5–37). 3. Edward L. Glaeser, “Why Has Globalization Led to Bigger Cities?” Economix (blog), New York Times, May 19, 2009, http://economix.blogs.nytimes.com/2009/05/19/why-has-globalization-led-to-bigger-cities/?_r=0. 8. RETHINKING G7 GLOBALIZATION POLICIES 1. Reported in Pew Research Center article, “Faith and Skepticism about Trade, Foreign Investment,” September 16, 2014, based a poll of forty-four nations, http://www.pewglobal.org/2014/09/16/faith-and-skepticism-about-trade-foreign-investment/. 2.
As numerically minded readers will have already understood, it was exactly this growth gap—plus the inescapable implication of growth compounding—that put the “great” into the Great Divergence after just a few decades. Urbanization The only fact of the first unbundling that is left unaccounted for concerns urbanization. Urban economics has many explanations for the close association between globalization’s first unbundling and rising city size. Among the most compelling is Ed Glaeser’s simple assertion that cities are a way of economizing on communication costs. Cities are where people meet and exchange ideas. As Glaeser put it in a 2009 Economix blog post: “Globalization and technological change have increased the returns to being smart; human beings are a social species that get smart by hanging around smart people. A programmer could work in the foothills of the Himalayas, but that programmer wouldn’t learn much.
More Guns, Less Crime: Understanding Crime and Gun-Control Laws by John R. Lott
affirmative action, Columbine, crack epidemic, Donald Trump, Edward Glaeser, gun show loophole, income per capita, More Guns, Less Crime, selection bias, statistical model, the medium is the message, transaction costs
However, the eﬀect of an unusually large percentage of young males in the population may be mitigated because those most vulnerable to crime may be more likely to take actions to protect themselves. Depending upon how responsive victims are to these threats, the coeﬃcient for a variable like the percent of young males in the population could be zero even when the group in question poses a large criminal threat. 23. Edward L. Glaeser and Bruce Sacerdote, “Why Is There More Crime in Cities?” Harvard University working paper, Nov. 14, 1995. 24. For a discussion of the relationship between income and crime, see John R. Lott, Jr., “A Transaction-Costs Explanation for Why the Poor Are More Likely to Commit Crime” Journal of Legal Studies 19 (Jan. 1990): 243–45. 25. A brief survey of the laws, excluding the changes in the rules regarding permits, reveals the following: Alabama made no significant changes in these laws during the period.
What makes these graphs particularly surprising is that a gun ban should, everything else equal, actually cause nongun suicides to rise simply because at least some (if not all) of those who would use guns to commit suicide would use some other way of doing so. After all, the ultimate public policy goal would seem to be to reduce overall suicides and not just one method of committing suicide. Yet even more perverse results have been obtained. David Cutler, Edward Glaeser, and Karen Norberg have conducted by far the largest study on what factors are related to suicides by juveniles.165 They find some evidence of a relationship between higher gun ownership and suicide, but that relationship not only disappears but is in fact reversed when they include a variable for the rate at which people go hunting. The higher suicide rate is in fact related to the higher rates at which people in certain counties go hunting, not whether people own a gun.
That research provides extremely strong evidence that these questions were answered consistently between 1988 and 1996. See John R. Lott, Jr. and Larry W. Kenny, “How Dramatically Did Women’s Suﬀrage Change the Size and Scope of Government?” University of Chicago School of Law working paper (1997). The relative diﬀerences in gun ownership across groups is also consistent with recent work using other polls by Edward Glaeser and Spencer Glendon, “Who Owns Guns?” American Economic Review 88 (May 1998). The empirical work that will be done later will allow us to adjust for the changes in the reported level of gun ownership that might result from the change in this question. 6. I appreciate Tom Smith’s taking the time to talk to me about these issues on May 30, 1997. 7. Gun owners within each of the twenty-four categories listed in note 2 above may have particular characteristics that cause them to vote at rates that diﬀer from the rates at which other people vote.
Smart Cities: Big Data, Civic Hackers, and the Quest for a New Utopia by Anthony M. Townsend
1960s counterculture, 4chan, A Pattern Language, Airbnb, Amazon Web Services, anti-communist, Apple II, Bay Area Rapid Transit, Burning Man, business process, call centre, carbon footprint, charter city, chief data officer, clean water, cleantech, cloud computing, computer age, congestion charging, connected car, crack epidemic, crowdsourcing, DARPA: Urban Challenge, data acquisition, Deng Xiaoping, digital map, Donald Davies, East Village, Edward Glaeser, game design, garden city movement, Geoffrey West, Santa Fe Institute, George Gilder, ghettoisation, global supply chain, Grace Hopper, Haight Ashbury, Hedy Lamarr / George Antheil, hive mind, Howard Rheingold, interchangeable parts, Internet Archive, Internet of things, Jacquard loom, Jacquard loom, Jane Jacobs, jitney, John Snow's cholera map, Khan Academy, Kibera, knowledge worker, load shedding, M-Pesa, Mark Zuckerberg, megacity, mobile money, mutually assured destruction, new economy, New Urbanism, Norbert Wiener, Occupy movement, off grid, openstreetmap, packet switching, Parag Khanna, patent troll, Pearl River Delta, place-making, planetary scale, popular electronics, RFC: Request For Comment, RFID, ride hailing / ride sharing, Robert Gordon, self-driving car, sharing economy, Silicon Valley, Skype, smart cities, Smart Cities: Big Data, Civic Hackers, and the Quest for a New Utopia, smart grid, smart meter, social graph, social software, social web, special economic zone, Steve Jobs, Steve Wozniak, Stuxnet, supply-chain management, technoutopianism, Ted Kaczynski, telepresence, The Death and Life of Great American Cities, too big to fail, trade route, Tyler Cowen: Great Stagnation, Upton Sinclair, uranium enrichment, urban decay, urban planning, urban renewal, Vannevar Bush, working poor, working-age population, X Prize, Y2K, zero day, Zipcar
When the towers fell [on September 11, 2001], I found myself talking to more neighbors in the days after 9/11 than ever before.”22 Meetup’s appeal is a powerful reminder that bringing people together for social interaction is the true killer app for smart cities. But we are merely writing the latest chapter in thousands of years of urban evolution—the purpose of cities has always been to facilitate human gatherings. While we celebrate their diversity, as economists such as Harvard University’s Ed Glaeser argue, cities are actually social search engines that help like-minded people find each other and do stuff. “People who live in cities can connect with a broader range of friends whose interests are well matched with their own,” he argues in his 2010 book Triumph of the City.23 The big buildings we associate with urbanity are merely the support system that facilitates all of those exchanges. As Geoffrey West, a physicist who studies how cities grow, explains, “Cities are the result of clustering of interactions of social networks.”24 And they are repositories of the civilization and culture that grow from these dealings.
_r=1&ex=1256097600&en=4ed99f1b6f6cb878&ei=5090&partner=rssuserland. 16Fred Wilson, “Meetups,” AVC, blog, last modified April 17, 2008, http://www.avc.com/a_vc/2008/04/meetups.html. 17Whitney McNamara, “Anatomy of A Twitter Bot,” Seamonkeyradio, blog, last modified April 22, 2008, http://smr.absono.us/2008/04/anatomy-of-a-twitter-bot/. 18DIYcity, “DIYcity: How do you want to reinvent your city?,” last modified July 25, 2010, http://www.icyte.com/system/snapshots/fs1/0/5/6/2/ 05625d480d276043326229910d11701abae39965/index.html. 19“About” DIYcity, n.d., http://diycity.org/about. 20John Geraci, interview by author, November 1, 2011. 21Geraci, interview, Novermber 1, 2011. 22Scott Heiferman, “9/11 & us,” Meetup HQ, blog, last modified September 9, 2011, http://meetupblog.meetup.com/post/21449652035/9-11-us. 23Edward Glaeser, Triumph of the City (New York: Penguin Press, 2011), 128. 24Geoffrey West, lecture at Urban Systems Symposium, New York University, New York, May 12, 2011. 25Kevin Lynch, The Image of the City (Cambridge, MA: MIT Press, 1960), 126. 26Mitchell L. Moss, “Telecommunications, World Cities, and Urban Policy,” Urban Studies, December 1987. 27F.
To avoid irreversible climate change, the International Energy Agency estimates that we need to stabilize the concentration of carbon dioxide in the atmosphere below 450 parts per million. At current rates of greenhouse-gas emission, the point of no return will arrive sometime around 2017. After that, global warming of more than 2 degrees Celsius can still be avoided, but it will cost four to five times as much as we extensively retrofit old, inefficient power plants and infrastructure.75 Economist Edward Glaeser of Harvard University sees cities as green alternatives to help stabilize emissions. That makes sense in America, where higher population density would dramatically slash the energy we waste through sprawl. Residents of transit-dependent Manhattan have the lowest per capita carbon output of any American community, argues David Owen in Green Metropolis. But for the newly emerging global middle class, even a Manhattan lifestyle represents an enormous increase in energy consumption.
Aerotropolis by John D. Kasarda, Greg Lindsay
3D printing, air freight, airline deregulation, airport security, Akira Okazaki, Asian financial crisis, back-to-the-land, barriers to entry, Berlin Wall, big-box store, blood diamonds, borderless world, British Empire, call centre, carbon footprint, Cesare Marchetti: Marchetti’s constant, Clayton Christensen, cleantech, cognitive dissonance, commoditize, conceptual framework, credit crunch, David Brooks, David Ricardo: comparative advantage, Deng Xiaoping, deskilling, digital map, edge city, Edward Glaeser, failed state, food miles, Ford paid five dollars a day, Frank Gehry, fudge factor, full employment, future of work, Geoffrey West, Santa Fe Institute, George Gilder, global supply chain, global village, gravity well, Haber-Bosch Process, Hernando de Soto, hive mind, if you build it, they will come, illegal immigration, inflight wifi, intangible asset, interchangeable parts, Intergovernmental Panel on Climate Change (IPCC), intermodal, invention of the telephone, inventory management, invisible hand, Jane Jacobs, Jeff Bezos, Kangaroo Route, knowledge worker, kremlinology, labour mobility, Marchetti’s constant, Marshall McLuhan, Masdar, mass immigration, McMansion, megacity, Menlo Park, microcredit, Network effects, New Economic Geography, new economy, New Urbanism, oil shale / tar sands, oil shock, peak oil, Pearl River Delta, Peter Thiel, pets.com, pink-collar, pre–internet, RFID, Richard Florida, Ronald Coase, Ronald Reagan, Rubik’s Cube, savings glut, Seaside, Florida, Shenzhen was a fishing village, Silicon Valley, Silicon Valley startup, Skype, smart cities, smart grid, South China Sea, South Sea Bubble, sovereign wealth fund, special economic zone, spice trade, spinning jenny, stem cell, Steve Jobs, supply-chain management, sustainable-tourism, telepresence, the built environment, The Chicago School, The Death and Life of Great American Cities, The Nature of the Firm, thinkpad, Thomas L Friedman, Thomas Malthus, Tony Hsieh, trade route, transcontinental railway, transit-oriented development, traveling salesman, trickle-down economics, upwardly mobile, urban planning, urban renewal, urban sprawl, walkable city, white flight, white picket fence, Yogi Berra, zero-sum game
Other works by University of North Carolina professors during Kasarda’s time as a Ph.D. student include Gerhard Lenski’s Human Societies and Power and Privilege, and Hubert M. Blalock’s Causal Inferences in Nonexperimental Research. The interview with Amos Hawley was conducted at his home in March 2008. He died August 31, 2009. Marshall McLuhan’s quote is taken from the first chapter of Understanding Media. The Ed Glaeser reference is to the working paper “Did the Death of Distance Hurt Detroit and Help New York?” by Edward L. Glaeser and Giacomo A. M. Ponzetto. Jane Jacobs’s recollection of Scranton and Wilkes-Barre is taken from Cities and the Wealth of Nations. Raymond Vernon introduced the product cycle in “International Investment and International Trade in the Product Cycle.” Vernon’s quotes are taken from the essay “Economic Sovereignty at Bay” (Foreign Affairs, October 1968). The line “Democracy sacrifices efficiency” appeared in the story “China’s Infrastructure Splurge” (The Economist, February 14, 2008).
They especially favored cities where there was multimodality,” the more forms of transport the better. “Those businesses generate external economies that attract firms which serve or supply them,” like Las Colinas or Louisville’s satellites. “The growing concentration often triggers further improvements in transportation infrastructure—new highways, rail lines, air service—making them even more attractive. And the process reinforces itself,” until these hubs achieve critical mass, as Babylon, Byzantium, Venice, and New Orleans once did. But hubs are also vulnerable to the vicissitudes of new technology. Each of these cities was supplanted by younger rivals as caravans gave way to caravels, clipper ships, and eventually Pan Am Clippers. The Harvard economist Edward Glaeser has documented how the advent of the automobile (and of long-distance trucking) canceled out the geographic advantages of waterfront cities such as Buffalo, Detroit, and Cleveland.
In Amsterdam, home to the world’s first aerotropolis-by-design, Dutch planners have a saying: The airport leaves the city. The city follows the airport. The airport becomes a city. Although Kasarda’s models are more elaborate, the fact remains: the aerotropolis is a city with a center. As such, it represents a return to the way our cities were built and how they produced some of our greatest monuments. We have not built high-rise cities in Manhattan’s mold since the turn of the previous century, when the owners of the New York Central railroad oversaw the construction of a shining “Terminal City” above Grand Central’s tracks buried beneath Park Avenue—thirty square blocks of midtown Manhattan and some of the most prestigious real estate in the world. Cities since then have followed the galactic model of greater Los Angeles and its sclerotic freeways.
The New Urban Crisis: How Our Cities Are Increasing Inequality, Deepening Segregation, and Failing the Middle Class?and What We Can Do About It by Richard Florida
affirmative action, Airbnb, basic income, Bernie Sanders, blue-collar work, business climate, Capital in the Twenty-First Century by Thomas Piketty, clean water, Columbine, congestion charging, creative destruction, David Ricardo: comparative advantage, declining real wages, deindustrialization, Donald Trump, East Village, edge city, Edward Glaeser, failed state, Ferguson, Missouri, Gini coefficient, Google bus, high net worth, income inequality, income per capita, industrial cluster, informal economy, Jane Jacobs, jitney, Kitchen Debate, knowledge economy, knowledge worker, land value tax, low skilled workers, Lyft, megacity, Menlo Park, mortgage tax deduction, Nate Silver, New Economic Geography, new economy, New Urbanism, occupational segregation, Paul Graham, Plutocrats, plutocrats, RAND corporation, rent control, rent-seeking, Richard Florida, rising living standards, Ronald Reagan, secular stagnation, self-driving car, Silicon Valley, sovereign wealth fund, superstar cities, the built environment, The Chicago School, The Death and Life of Great American Cities, the High Line, The Wealth of Nations by Adam Smith, Thorstein Veblen, trickle-down economics, Uber and Lyft, universal basic income, upwardly mobile, urban decay, urban planning, urban renewal, urban sprawl, white flight, young professional
Barro, Determinants of Economic Growth: A Cross-Country Empirical Study (Cambridge, MA: MIT Press, 1997). At the city and regional level, see Jane Jacobs, The Economy of Cities (New York: Random House, 1969); Robert Lucas, “On the Mechanics of Economic Development,” Journal of Monetary Economics 22, no. 1 (1988): 3–42; Richard Florida, The Rise of the Creative Class (New York: Basic Books, 2002); Edward Glaeser and David Maré, “Cities and Skills,” Journal of Labor Economics 19, no. 2 (2001); Edward Glaeser and Albert Saiz, “The Rise of the Skilled City,” Brookings-Wharton Papers on Urban Affairs 1 (2004): 47–105; James Rauch, “Productivity Gains from Geographic Concentration of Human Capital: Evidence from Cities,” Journal of Urban Economics 34, no. 3 (1993): 380–400. 16. The segregation of the highly educated is positively correlated with population size (0.54), density (0.39), the creative class (0.43), and high-tech industry (0.50). 17.
The person who first identified this development is my University of Toronto colleague J. David Hulchanski, in “The Three Cities Within Toronto: Income Polarization Among Toronto’s Neighborhoods, 1970–2005,” Cities Centre, University of Toronto, 2010, www.urbancentre.utoronto.ca/pdfs/curp/tnrn/Three-Cities-Within-Toronto-2010-Final.pdf. See also Richard Florida, “No Longer One Toronto,” Globe and Mail, October 22, 2010, www.theglobeandmail.com/opinion/no-longer-one-toronto/article4329894. CHAPTER 1: THE URBAN CONTRADICTION 1. The urban optimists include Harvard University’s Edward Glaeser, Bruce Katz of the Brookings Institution, and the political theorist Benjamin Barber. See Edward Glaeser, The Triumph of the City: How Our Greatest Invention Makes Us Richer, Smarter, Greener, Healthier, and Happier (New York: Penguin, 2011); Bruce Katz and Jennifer Bradley, The Metropolitan Revolution: How Cities and Metros Are Fixing Our Broken Politics and Fragile Economy (Washington, DC: Brookings Institution Press, 2013); Benjamin Barber, If Mayors Ruled the World: Dysfunctional Nations, Rising Cities (New Haven, CT: Yale University Press, 2013). 2.
Zillow Blog, December 30, 2015, www.zillow.com/research/total-housing-value-2015-11535. 17. Gyourko, Mayer, and Sinai, “Superstar Cities.” 18. These data are from Anna Scherbina and Jason Barr, “Manhattan Real Estate: What’s Next,” Real Clear Markets, February 8, 2016, www.realclearmarkets.com/articles/2016/02/08/manhattan_real_estate_whats_next_101995.html. 19. The term NIMBY grew in use in the United States in the 1980s, but some date its origin as far back as the 1950s. See Michael Dear, “Understanding and Overcoming the NIMBY Syndrome,” Journal of the American Planning Association 58, no. 3 (1992): 288–300. There is a rapidly expanding literature on the effects of NIMBYism and land use restrictions on housing costs and urban development. See, Edward Glaeser, The Triumph of the City (New York: Penguin, 2011); Ryan Avent, The Gated City (Seattle: Amazon Digital Services, 2014); Ryan Avent, “One Path to Better Jobs: More Density in Cities,” New York Times, September 3, 2011, www.nytimes.com/2011/09/04/opinion/sunday/one-path-to-better-jobs-more-density-in-cities.html; Matthew Yglesias, The Rent Is Too Damn High (New York: Simon and Schuster, 2012); Matthew Yglesias, “NIMBYs Are Killing the National Economy,” Vox, April 25, 2014, www.vox.com/2014/4/25/5650816/NIMBYs-are-killing-the-national-economy.
The Gated City (Kindle Single) by Ryan Avent
big-box store, carbon footprint, deindustrialization, edge city, Edward Glaeser, income inequality, industrial cluster, labor-force participation, low skilled workers, manufacturing employment, offshore financial centre, profit maximization, rent-seeking, Silicon Valley, Thorstein Veblen, transit-oriented development, Tyler Cowen: Great Stagnation, Veblen good, white picket fence, zero-sum game
The authors attribute this growing gap to increased returns to talent and experience in large cities. Whatever a the level of schooling, an experienced, talented worker gets a far greater return for his ability in large cities than in small cities, and this effect has grown steadily in recent decades. A crucial question is just why these changes have taken place. Both the timing and the nature of the shift suggest that the revolution in information and communications technologies play a key role. And indeed, a number of the studies cited above either assume or speculate that information technology is driving the changing relationship between skills, cities, and productivity. In a paper called, "Did the death of distance hurt Detroit and help New York?" economists Edward Glaeser and Giacomo Ponzetto make this connection explicitly.
Movements in art, philosophy, and science are often associated with cities; Adam Smith, founding father of economics, was a product of the Scottish enlightenment centered in Edinburgh. Technology is little different. Economist Edward Glaeser describes Detroit in the early 20th century as a place where seemingly every block had its own would-be carmaker, tinkering with designs and production processes in constant competition with and awareness of rivals. Even when ideas are formed in isolation, their full development and exploitation requires the assistance provided by urban networks. The McCormick family developed a mechanical reaper in the quiet of agricultural Virginia. But to manufacture and distribute the machines, Cyrus McCormick took the family business to Chicago, to have better access to markets and skilled labor. Cities aggregate these interactions -- between one thinker and another, between inventor and investor, or between seller and buyer -- and therefore help societies build upon themselves.
Each year, local government officials might adopt a planned level of allowable capacity expansion – a budget – that is then used to navigate NIMBY waters. Residents' demands can be accommodated in whatever way the city likes, so long as the net change in potential development meets the budget. If nothing else, the zoning budget plan turns neighborhood groups into adversaries rather than allies in the effort to shape planning decisions – a useful outcome, so long as the groups can be convinced of the general utility of increased development in the first place. Economist Edward Glaeser argues for a variant on this proposal relating to historical preservation designations. NIMBY groups are often quick to seek preservation of properties targeted for development on historical grounds. Sometimes, neighbors are in the right; in the past, rapid development has erased important and beloved structures from urban landscapes.
The Rent Is Too Damn High: What to Do About It, and Why It Matters More Than You Think by Matthew Yglesias
Edward Glaeser, falling living standards, Home mortgage interest deduction, income inequality, industrial robot, Jane Jacobs, land reform, mortgage tax deduction, New Urbanism, pets.com, rent control, rent-seeking, Robert Gordon, Robert Shiller, Robert Shiller, Saturday Night Live, Silicon Valley, statistical model, transcontinental railway, urban sprawl, white picket fence
Instead, the land itself is more valuable largely because permission to build is such a valuable commodity. In his book Triumph of the City, Edward Glaeser discusses the costs of these density restrictions primarily in terms of anti-skyscraper sentiments in classic cities, such as Paris, and with reference to historical preservation rules. But in terms of aggregate impact, these measures are relatively minor. Most Americans live in the suburbs, and by their nature suburbs take up the vast majority of the space in any metropolitan area. Their suburban character is upheld not only by consumer preference but also by draconian central planning measures like Johnson County’s rules against narrow lots or 47-foot buildings. And of course cities have rules, too. Washington, DC, is unusual in having a height act that prohibits skyscrapers downtown by limiting buildings to about 110 feet in height.
Today’s rules still separate residential uses from industrial uses but go far beyond any plausible health concerns. For example, in Johnson County, Kansas, in the suburbs west of Kansas City, it’s generally illegal to build a house that’s over 40 feet tall—except, that is, in RN-2 districts where it’s illegal to build a house that’s over 35 feet tall. Johnson County also specifies what size lot you can build a home on. In one district, a minimum width of 100 feet and an area of not less than one acre is required. In another, the minimum width is still 100 feet but the minimum total area is two acres. In a third, it’s 150 feet and three acres. That’s a lot of rules. And they matter a lot. In a 2005 paper, economists Edward Glaeser, Joseph Gyourko, and Raven Saks used a method called “hedonic price estimation” and found that “generally a quarter acre [of land] is worth about ten times more if it sits under a house than if it extends the lot of another house.”
If we don’t allow tall buildings to go up on that land, people will have to commute a longer distance. The New American Geography There is another option besides denser cities or more sprawling ones: People can just relocate to other cities altogether. And increasingly, that’s what Americans have been doing. If the only way to afford a place in a safe neighborhood in some metropolitan areas is to bear the enormous costs of long commutes, those are just cities with little if any housing that’s truly affordable. The natural choice is to go to the cities that aren’t choked with these problems. As Forbes magazine put it, “It’s no secret that the Southeast and Western United States are booming. The costs of living and doing business there are often cheaper than in big coastal cities.” People have to go somewhere, and by and large they’re going where it’s cheap. That’s why between 2000 and 2010 the Dallas and Houston metropolitan areas each added about 1.2 million people, dwarfing the approximately 500,000 each added by the much bigger New York, Los Angeles, and Chicago metro areas.
The Flat White Economy by Douglas McWilliams
access to a mobile phone, banking crisis, Big bang: deregulation of the City of London, bonus culture, Chuck Templeton: OpenTable, cleantech, cloud computing, computer age, correlation coefficient, Edward Glaeser, en.wikipedia.org, Erik Brynjolfsson, eurozone crisis, George Gilder, hiring and firing, income inequality, informal economy, knowledge economy, loadsamoney, low skilled workers, mass immigration, Metcalfe’s law, Network effects, new economy, offshore financial centre, Pareto efficiency, Peter Thiel, Productivity paradox, Robert Metcalfe, Silicon Valley, smart cities, special economic zone, Steve Jobs, working-age population, zero-sum game
I then go on to list some ways in which we could improve on the current situation by restructuring regional policy in the UK. What makes cities succeed? It is worth starting with some observations about what makes cities succeed and fail. The acknowledged expert on the subject is Harvard academic Edward Glaeser, author of The Triumph of the City.1 He and I have been working along parallel lines on the driving forces behind the economic growth of cities for more than twenty years now and although we have never corresponded, our views appear to have moved in similar directions. Glaeser’s key insight is that cities depend on transport. Historically it has been difficult for land transport to feed large cities which has limited the growth of those cities who do not have access to sea or river transportation. He points out that before vehicles using anything other than animal power, the cost of land transport was thirty times higher than that of transport on water.
Simulations in the US suggest that when applied to the UK, subsidies on this scale could potentially create up to a million new jobs.11 So if there is a will to make the rest of the UK as successful as London it can be done. Other countries Silicon Valley, Boston and in a different way Bangalore are world renowned for their digital economies. But we have shown that there is a range of cities in the US with growing digital economies. The latest group to start to present themselves are the rust belt cities of the Northern mid-west. Detroit might take some time to reinvigorate itself, with unpaid city workers and feral dogs roaming the streets but Chicago, Minneapolis and even Buffalo, famously written off by economist Edward Glaeser, look like candidates for success. And of course Silicon Valley is not the only part of the West Coast to be host to a digital economy – both Seattle and Portland Oregon are already successfully driving Flat White Economies of their own.
‘The economic contribution of the media sector in Glasgow’: Report for the Glasgow Chambers of Commerce April 2014 37. www.ft.com/cms/s/2/ad9ab0a2-9e1e-11e2-bea1-00144feabdc0.html#axzz2Umx03300 38. features.techworld.com/sme/3589108/edinburgh-scale-up-fanduel-rejected-by-80-investors-on-way-to-becoming-1bn-firm/ 39. www.ft.com/cms/s/0/58d74174-7381-11e2-9e92-00144feabdc0.html#axzz3NC4cAj7g 40. www.cebr.com/reports/uk-local-innovation-index CHAPTER SIX 1. Triumph of the City: How Our Greatest Invention Makes Us Richer, Smarter, Greener, Healthier, and Happier, Edward Glaeser, 2011, Penguin. 2. The details are contained in the ‘Report From The Joint Select Committee Of The House Of Lords And The House Of Commons On The Port Of London Bill’: Joint Select Committee, Houses of Parliament. 3. Personal correspondence. 4. I have used England rather than the UK as a reference point here for consistency, because of past changes in the status of Ireland within the UK, and possible future changes in the status of Scotland within the UK over the period. 5.
airport security, anti-communist, Asian financial crisis, bank run, banking crisis, Bob Geldof, Bretton Woods, British Empire, call centre, clean water, colonial exploitation, colonial rule, Edward Glaeser, end world poverty, European colonialism, failed state, farmers can use mobile phones to check market prices, George Akerlof, Gunnar Myrdal, Hernando de Soto, income inequality, income per capita, Indoor air pollution, invisible hand, Kenneth Rogoff, laissez-faire capitalism, land reform, land tenure, Live Aid, microcredit, moral hazard, Naomi Klein, publication bias, purchasing power parity, randomized controlled trial, Ronald Reagan, Scramble for Africa, structural adjustment programs, The Fortune at the Bottom of the Pyramid, the scientific method, The Wealth of Nations by Adam Smith, transaction costs, War on Poverty, Xiaogang Anhui farmers
Another study confirming this result is Paul Collier and Anke Hoeffler, “Democracy and Resource Rents,” Department of Economics, University of Oxford, April 26, 2005. 24.Daniel Kaufmann, Aart Kraay, and Massimo Mastruzzi, “Governance Matters IV: Governance Indicators for 1996–2004.” World Bank mimeograph, May 2005. 25.This section is based on W. Easterly and R. Levine, “European Settlers, Inequality, and Economic Development,” New York University and Brown University, mimeograph, 2005. 26.Edward L. Glaeser, “The Political Economy of Hatred,” Harvard mimeograph, October 26, 2004, http://post.economics.harvard.edu/faculty/glaeser/papers/Hatred.pdf. 27.W. Easterly and R. Levine, “Africa’s Growth Tragedy: Policies and Ethnic Divisions,” November 1997, Quarterly Journal of Economics 112, no. 4 (November 1997): 1203–250; R. La Porta, F. Lopez-de-Silanes, A. Shleifer, and R. Vishny, The Quality of Government,” Journal of Law, Economics, and Organization 15, no. 1 (Spring 1999); A.
Minority European Versus Mostly European Colonies Illiberal Democracy Fareed Zakaria, in his 2003 book, The Future of Freedom, has brought to wide attention the idea of “illiberal democracy.” Why do democracies sometimes produce awful government despite free elections? A big problem with democracy and development, particularly with uneducated voters, is that the politicians could appeal to voters’ gut instincts of hatred, fear, nationalism, or racism to win elections. Edward Glaeser of Harvard had the insight that politicians will promote hatred when it helps achieve other unrelated political goals.26 A politician who wants to avoid redistribution to the poor will preach ethnic hatred toward a poor minority that happens to be ethnically distinct. Thus, for example, rich white leaders in the American South defeated populism in the late nineteenth century by persuading poor whites to hate poor blacks.
On December 24, 2004, the New York Times did a story on China’s textile enclaves. Datang is China’s Socks City, producing nine billion pairs of socks a year, a third of the world’s output. As recently as the late 1970s, Datang was a sleepy rice-growing village of less than a thousand people. People sewed socks in their spare time and sold them by the road in baskets. Ms. Dong Ying Hong worked in the 1970s as an elementary-school teacher at nine dollars a month. She gave up her teaching to make socks at home. Today, she is a millionaire as the owner of Zhejiang Socks. Near Datang, in coastal China, there are other enclaves: Underwear City, Necktie City, Sweater City, and Kid’s Clothing City. Hong Kong investors brought modern technology and designs to Necktie City in 1985; the workers at the initial enterprises soon left to start their own necktie companies.
The Great Inversion and the Future of the American City by Alan Ehrenhalt
anti-communist, big-box store, British Empire, crack epidemic, David Brooks, deindustrialization, Edward Glaeser, Frank Gehry, haute cuisine, Honoré de Balzac, housing crisis, illegal immigration, Jane Jacobs, manufacturing employment, mass immigration, McMansion, New Urbanism, Norman Mailer, postindustrial economy, Richard Florida, The Chicago School, The Death and Life of Great American Cities, too big to fail, transit-oriented development, upwardly mobile, urban decay, urban planning, urban renewal, walkable city, white flight, working poor, young professional
It will not come to Detroit or Buffalo in the way it is coming to Chicago, New York, and Washington, D.C. Some cities will lack the central job base to generate a large-scale affluent urban revival, and will lag behind their more fortunate counterparts by a long period of years, if they ever get there at all. This is the argument of scholars such as Edward Glaeser and Richard Florida, who see an increasing bifurcation between cities economically equipped to regenerate themselves in the twenty-first century and those whose obsolete industrial economies will leave them mired in the downtown blight and exurban outward pressures of an earlier era. They have a point. There is no evidence that Detroit will produce a large cohort of downtown dwellers anytime soon. But despite the unevenness, demographic inversion will apply in more cities than many critics have imagined thus far.
Mayor White once commented that “one reason Houston is affordable is that they don’t have to pay lawyers several extra thousand per lot to go through a zoning.” Despite the existence of informal zoning by other municipal codes, several scholarly studies have pointed to the absence of zoning in its official sense as the main reason the city remained (relatively) affordable even in its most desirable districts during the height of the national real estate boom of the early 2000s. In 2008, the Harvard economist Edward Glaeser published an essay in City Journal that attributed lower housing costs in Houston directly to the absence of official zoning laws and the relative simplicity of the permitting process. “The unavoidable fact,” Glaeser wrote, “is that New York makes it a lot harder to build housing than Houston does. The permitting process in Manhattan is an arduous, unpredictable multiyear odyssey involving a dizzying array of regulations, environmental and otherwise, and a host of agencies.
B1. 13 “When you look at what they were being displaced from”: Larry Davis, quoted in Buntin, “Land Rush.” 14 “If it’s historic”: Spencer Lightsy, quoted in Ellison, “A Neighborhood in Flux.” 15 “Gentrification was never my goal”: Bob Lanier, unpublished interview with John Buntin, 2006. 16 One is LARA: Carolyn Feibel and Bradley Olson, “Mayor Moves on the Great White Way,” Houston Chronicle, January 1, 2010, p. 1. 17 More ambitious was Houston HOPE: Ibid. 18 “redevelopment that’s the opposite”: Buntin, “Land Rush.” 19 One effort that Coleman has supported: Ibid. 20 “Every time one of these little old houses”: Ibid. 21 In a survey conducted early in 2010: Stephen Klineberg, personal interview, April 2010. 22 “multicentered metropolitan region”: Ibid. 23 “If the rich are going into downtown now”: Ibid. 24 “one reason Houston is affordable”: Mayor Bill White, unpublished interivew with John Buntin, January 9, 2006. 25 “The unavoidable fact”: Edward Glaeser, “Houston, New York Has a Problem,” City Journal, Summer 2008. 26 “There are no tools”: Peter Brown, personal interview, April 2010. 27 “As long as they can put forth the required cash”: Tom Diehl interview. 28 “You’ve always loved trains”: Frank Liu, personal interview, April 2010. 29 “You see people buying housing”: Bob Eury interview. 30 “The higher the price”: Frank Liu interview. 31 “They’ve already fallen in love”: Ibid. 32 “pedestrian-friendly atmosphere”: Woodlands promotional brochure, April 2010. 33 “Urban and Sugar Land were not always compatible words”: Sugar Land promotional brochure, April 2010. 34 “Everybody wants that”: David Crossley, personal interview, April 2010. 35 “There will be more transit-oriented real estate”: Ibid. 36 “The people who want to live close in”: Tom Diehl interview. 37 “If I had to take one thing”: Peter Brown interview. 38 “is the most interesting city in America”: Stephen Klineberg interview.
barriers to entry, Berlin Wall, Big bang: deregulation of the City of London, blue-collar work, Bretton Woods, clean water, computer age, Corn Laws, creative destruction, cross-subsidies, David Ricardo: comparative advantage, dematerialisation, Diane Coyle, Edward Glaeser, everywhere but in the productivity statistics, financial deregulation, full employment, George Santayana, global village, hiring and firing, Howard Rheingold, income inequality, informal economy, invisible hand, Jane Jacobs, Joseph Schumpeter, knowledge economy, labour market flexibility, laissez-faire capitalism, lump of labour, Marshall McLuhan, mass immigration, McJob, microcredit, moral panic, Network effects, new economy, Nick Leeson, night-watchman state, North Sea oil, offshore financial centre, pension reform, pensions crisis, Ronald Reagan, Silicon Valley, spinning jenny, The Death and Life of Great American Cities, the market place, The Wealth of Nations by Adam Smith, Thorstein Veblen, Tobin tax, two tier labour market, very high income, War on Poverty, winner-take-all economy, working-age population
Perhaps this example is a little far-fetched, but it illustrates well the point that the ability to ship weightless ‘products’ at almost no cost could boost existing urban centres. Edward Glaeser at Harvard offers another argument in favour of an urban renaissance. He argues that telecommunications may be complementary to face-to-face contact rather than a substitute for it. This means cities will become more important as communications improve in quality and become cheaper. His research indicates two conditions that produce this result. Communications will favour the cities if urban residents use them more than rural residents; and if the value of interaction between people increases, say because the ideas that need to be exchanged become more complex and creative. He and a co-author write: ‘The rise in the New York multimedia industry may be a sign of big cities’ comparative advantage in facilitating the difficult information flows involved in cutting-edge industries ...
., London Frank Field (1994) Making Welfare Work, Institute of Community Studies, London. Robert Frank & Philip Cook (1995) The Winner-Takes-All Society, The Free Press, New York. Jostein Gaarder (1995) Sophie’s World, Phoenix House, London. Bibliography 239 John Kenneth Galbraith (1991; first published 1958) The Affluent Society, Penguin, London John Kenneth Galbraith (1992) The Culture of Contentment, Sinclair Stevenson, London. Jess Gaspar and Edward Glaeser (1996) Information Technology and the Future of Cities, Boston University working paper. Jeffrey Gates (1996) Revolutionising Share Ownership, Demos Arguments no. 8, Demos, London. William Gibson (1984) Neuromancer, Voyager Books, London William Gibson (1986) Burning Chrome, Voyager Books, London. Anthony Giddens (1994) Beyond Left and Right, Polity Press, Cambridge. George Gissing (first published 1891) New Grub Street.
I must also thank Bill Allen, Jane Ashley, Ed Balls, Ruth Ben-Ghiat, Simon Briscoe, Lindsay Fraser, Paul Gregg, Gerry Holtham, Will Hutton, Vinita Juneja, Mervyn King, Denis McShane, Bethan Marshall, Richard Marshall, Bill Martin, Ed Mayo, David Miles, Henry Neuberger, Gus O’Donnell, Trevor Phillips, Penelope Rowlatt, Peter Sinclair, Jamie Stiehm, Raj Thamotheram, Nick Timmins, David Walton, and Martin Weale for helpful suggestions and friendly criticism. Thanks also to Edward Glaeser at Harvard University and Paul Krugman at MIT for providing references and papers. I owe a great debt to The Independent, especially my editor Andrew Marr and his deputy Colin Hughes. The newspaper has not only allowed me to try out ideas, but has also proved a constant source of stimulus thanks to the The Weightless World xxii wonderful people who work there. Anthony Bevins, Yvette Cooper, Matt Hoffman, Andrew Marshall, Hamish McRae, Suzanne Moore, John Price, Polly Toynbee, Roger Trapp and David Walker all — whether they knew it or not — made an important contribution to The Weightless World.
Affordable Care Act / Obamacare, algorithmic trading, Andrei Shleifer, asset-backed security, availability heuristic, bank run, banking crisis, Black-Scholes formula, bonus culture, break the buck, Bretton Woods, call centre, Carmen Reinhart, cloud computing, collapse of Lehman Brothers, collateralized debt obligation, computerized trading, corporate governance, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, Daniel Kahneman / Amos Tversky, David Graeber, diversification, diversified portfolio, Edmond Halley, Edward Glaeser, endogenous growth, Eugene Fama: efficient market hypothesis, eurozone crisis, family office, financial deregulation, financial innovation, fixed income, Flash crash, Google Glasses, Gordon Gekko, high net worth, housing crisis, Hyman Minsky, implied volatility, income inequality, index fund, information asymmetry, Innovator's Dilemma, interest rate swap, Kenneth Rogoff, Kickstarter, late fees, London Interbank Offered Rate, Long Term Capital Management, loss aversion, margin call, Mark Zuckerberg, McMansion, money market fund, mortgage debt, mortgage tax deduction, Myron Scholes, negative equity, Network effects, Northern Rock, obamacare, payday loans, peer-to-peer lending, Peter Thiel, principal–agent problem, profit maximization, quantitative trading / quantitative ﬁnance, railway mania, randomized controlled trial, Richard Feynman, Richard Feynman, Richard Thaler, risk tolerance, risk-adjusted returns, Robert Shiller, Robert Shiller, short selling, Silicon Valley, Silicon Valley startup, Skype, South Sea Bubble, sovereign wealth fund, statistical model, transaction costs, Tunguska event, unbanked and underbanked, underbanked, Vanguard fund, web application
It is true that real prices in many countries did shoot up vertiginously in the years immediately prior to the crisis, but that is the exception, not the rule.7 Add all these things together, and it becomes clear why property is a paradise for students of behavioral finance, the idea that psychology can explain investors’ systematic errors. In a 2013 lecture to the American Economics Association, Edward Glaeser, a Harvard academic, described nine different episodes of property bubbles in the United States, from a land boom in Alabama in 1819 to the skyscraper craze in New York in the 1920s. He revealed a consistent failure to remember a very basic rule of economics: supply and demand. The boom in Alabama in 1815–1819 was driven by the belief that its cotton-growing soil and English demand would deliver endless profits; instead, more cotton was grown, driving prices down and land values with it.
., “Projection Bias in the Car and Housing Markets” (NBER Working Paper 18212, July 2012). 5. Hugo Benitez-Silva et al., “How Well Do Individuals Predict the Selling Prices of Their Homes?” (Levy Economics Institute Working Paper 571, 2008). 6. Figures come from Nationwide’s house-price index. 7. Neil Monnery, Safe as Houses? A Historical Analysis of Property Prices (London: London Publishing Partnership, 2011). 8. Edward Glaeser, “A Nation of Gamblers: Real-Estate Speculation and American History” (NBER Working Paper 18825, February 2013). 9. The leverage-ratio requirement may vary from jurisdiction to jurisdiction. 10. Thomas Hoenig, “Back to Basics: A Better Alternative to Basel Capital Rules” (speech at the Federal Deposit Insurance Corporation, Washington, DC, September 14, 2012). 11. Stephen G. Cecchetti and Enisse Kharroubi, “Why Does Financial Sector Growth Crowd Out Real Economic Growth?”
Sun Young Park, “The Size of the Subprime Shock” (unpublished, 2011). Figures from 2013 supplied directly to the author. 9. Abacus is famous principally for being a transaction that landed Goldman in trouble with the Securities and Exchange Commission. The supersenior tranche in Abacus was not rated, but since AAA is as high as the rating scale goes, it too would have received this rating. 10. Edward Glaeser, “A Nation of Gamblers: Real-Estate Speculation and American History” (NBER Working Paper 18825, February 2013). NOTES TO CONCLUSION 1. Robert Shiller, Finance and the Good Society (Princeton, NJ: Princeton University Press, 2012). Index AAA credit ratings, 49–51, 233–236 AARP Public Policy Institute, report on home ownership by, 139 Abacus, 235 Accenture, 54, 56 Adaptive-market hypothesis, 115–116 Adelino, Manuel, 49 Adoption, SIB program for, 97 Adverse selection, 21, 174, 175, 182 AIG (American International Group), 65 AIR Worldwide, 222, 225 Alabama, land boom in, 74–75 Algorithms, 53–54, 56–57, 62–63, 113, 202, 216–217 Alibaba.com, 219 Allia, 108 Alzheimer’s disease, megafund for, 122 Amazon, 162, 216–217, 219 American Diabetes Association, 102 American Dream Downpayment Act of 2003, 78 American International Group (AIG), 65 American Railroad Journal, 24 American Research and Development Corporation, 150 Amsterdam Stock Exchange, 14–15, 24, 38 Anchoring effect, 137–138 Annuities, 20–22, 139 Apax Partners, 91 Aristotle, 10 Asian debt crisis (1990s), x, 30 Asian Development Bank, 27 Auto-enrollment in pension schemes, 135 Auto-escalation, 135–136 Availability heuristic, 73 Baby boomers, retirement rate of, 125 Bailouts, xi, 35, 65 Bank, derivation of word, 12 Bank deregulation, effect of on college enrollments, 171 Bank for International Settlements (BIS), 224, 226 Bank of America, 98 Banks advantages of, 192–193 bailouts of, xi commercial paper, use of, 185 competition, response to, 193–194 crisis, episodes of, 35–36 in Dark Ages, 11 deposits, xiv, 12–13 equity, 186–187 innovator’s dilemma, 189 leverage, 50, 70–71, 80, 186, 188 liquidity and, 12–14, 185–186, 193 operating expenses, 188 profits of, ix property and, xiv, 69, 75–80 public attitudes toward, ix, xi purpose of, 11–14 raising returns in, 51 repurchase “repo” markets, 15, 185 runs on, x, 13, 185 secured lending, xiv unbanked households, 200 Barbon, Nicholas, 16–17 Basel accords, 77 Basildon, England, 52–53, 58 Bass, Oren, 166, 168 Behavioral finance, 132–138, 208–214 Belinsky, Michael, 103 Benartzi, Shlomo, 136 Benitez-Silva, Hugo, 73 Bernoulli, Jacob, 18 Betting on Lives (Clark), 144 Bid-ask spreads, 55 Big data, xviii, 22, 47, 199, 201, 218, 236 Big Society Capital, 95 Biotechnology, decline in investment in, xii-xiii, 114–115 Black, Fischer, 31, 123–124 Black Monday, October, 1987, 62 BlackRock, 132 Black-Scholes equation, 31, 32, 124 Blackstone, 85 Blood donation, experiment with, 110 Bloomberg, Michael, 98 Bonds attractiveness to investors, 120 catastrophe, 224–227 income, 25 inflation protected, 26 samurai, 27 Book of Calculation (Fibonacci), 19 Bottomry, 8 Brain, reaction of to monetary rewards, 116 Brazil, financial liberalization of, 34 Breslow, Noah, 216, 219 Bretton Woods system, 30 Bridges Ventures, 93 Britain average age of first-time home buyer, 84 average house price, 74 banking crisis, 69 equity-crowdfunding, 154 government spending, 99 life expectancy, 125 peer-to-peer lending, 181 social-impact bonds (SIB), 95–97 student indebtedness, 171 total residential property value, 69–70 Brown, Gordon, 93 Bucket price (okenedan), 40 Bullae (early financial contracts), 5 Bush, George W., 78 Byng, John, 143 Call options, 9–10, 131 Calment, Jeanne, 144 Cameron, David, 95 Cancer megafund.
Britannia Unchained: Global Lessons for Growth and Prosperity by Kwasi Kwarteng, Priti Patel, Dominic Raab, Chris Skidmore, Elizabeth Truss
Airbnb, banking crisis, Carmen Reinhart, central bank independence, clockwatching, creative destruction, Credit Default Swap, demographic dividend, Edward Glaeser, eurozone crisis, fear of failure, glass ceiling, informal economy, James Dyson, Kenneth Rogoff, knowledge economy, long peace, margin call, Mark Zuckerberg, Martin Wolf, megacity, Mexican peso crisis / tequila crisis, Neil Kinnock, new economy, North Sea oil, oil shock, open economy, pension reform, price stability, profit motive, Ronald Reagan, Sand Hill Road, Silicon Valley, Steve Jobs, Walter Mischel, wealth creators, Winter of Discontent, working-age population, Yom Kippur War
Cary, ‘Why do Americans Work so Much More than Europeans?’, Federal Reserve Bank of Minneapolis Quarterly Review (2004). 29. Steven Davis and Magnus Henrekson, Tax Effects on Work Activity (2004). 30. HM Treasury, Public finances databank; ONS, Labour Force Survey, 8 December 2011. 31. HMRC, Income Tax Liabilities, by Income Range, http://www.hmrc.gov. uk/stats/income_tax/menu.htm 32. Alberto Alesina, Edward Glaeser and Bruce Sacerdote, Work and Leisure in the US and Europe: Why so Different? (2005). 33. http://scrapthetax.co.uk/newsshow.aspx?id=3 34. ONS, Labour Market Statistics and Economics and Labour Market Review The data for 2011 cover January to November inclusive. 35. Data from the Department of Work and Pensions, May 2011. 36. Jean-Baptiste Michau, European Unemployment: How Signiﬁcant was a Declining Work Ethic (CentrePiece, 2009). 37.
David Willetts, The Pinch: How the Baby Boomers Took Their Children’s Future – And Why They Should Give it Back (Atlantic Books, 2010). 65. http://www.dailymail.co.uk/news/article-2055497/JEREMY-PAXMANBaby-Boomers-selﬁsh-generation-history.html 66. http://www.telegraph.co.uk/ﬁnance/personalﬁnance/pensions/8840963/ Baby-boomers-are-very-privileged-human-beings.html 67. http://www.telegraph.co.uk/ﬁnance/personalﬁnance/pensions/8840963/ Baby-boomers-are-very-privileged-human-beings.html 132 Britannia Unchained 68. http://www.economist.com/node/15495760 69. http://www.telegraph.co.uk/ﬁnance/personalﬁnance/pensions/8840963/ Baby-boomers-are-very-privileged-human-beings.html 70. http://www.economist.com/node/15495760 71. http://www.ft.com/cms/s/0/7831bd68-6f56-11e1-b368-00144feab49a. html#axzz1paqUyRCO Bibliography Adams, Jonathan, and James Wilsdon, The New Geography of Science: UK Research and International Colloboration (Demos, 2006). Alesina, Alberto, Edward Glaeser and Bruce Sacerdote, Work and Leisure in the US and Europe: Why So Different? (2005). Autor, D., The Polarization of Job Opportunities in the U.S. Labor Market: Implications for Employment and Earnings (Center for American Progress and the Hamilton Project, 2010). Balls, Edward, Euro-Monetarism: How Britain was Ensnared and How it Should Escape (Fabian Society, 1992). Blanden, Jo, and Stephen Machin, Recent Changes in Intergenerational Mobility in Britain (Centre for Economic Performance, 2007).
The result is that our employment market is not an accurate reﬂection of the real demand for skills in the global economy. Distinctions about capability and ability are much more obvious when maths and science are under discussion than when arts subjects are being considered. This makes arts subjects inherently attractive for the wavering student. While many an Oxford classicist still enters the City in London, banks ﬁll the need for mathematical knowledge with foreign quant experts. One banker estimated that only one in eight high-level mathematicians recruited in the City came from the UK.38 This is hardly surprising given that in India and China top executives and bankers are often paid a lot less for doing the same job. The Chief Executive of the ICBC, by market capitalisation the world’s largest bank, based in Hong Kong, earns $235,000 a year while the heads of the Bank of China and CCB earn $229,000 apiece.39 Demand for top French maths graduates remains high, and recruiters openly admit that they only consider Oxbridge in the UK, compared to broader recruitment from France, Germany and Singapore.40 Although science is particularly affected, there is a wider problem with academic attainment overall.
Andrei Shleifer, asset-backed security, balance sheet recession, bank run, banking crisis, Ben Bernanke: helicopter money, break the buck, Carmen Reinhart, collapse of Lehman Brothers, creative destruction, debt deflation, Edward Glaeser, en.wikipedia.org, financial innovation, full employment, high net worth, Home mortgage interest deduction, housing crisis, Joseph Schumpeter, Kenneth Rogoff, liquidity trap, Long Term Capital Management, market bubble, Martin Wolf, money market fund, moral hazard, mortgage debt, negative equity, paradox of thrift, quantitative easing, Robert Shiller, Robert Shiller, school choice, shareholder value, the payments system, the scientific method, tulip mania, young professional, zero-sum game
For example, debt may allow those with irrational beliefs to buy homes, a channel that we emphasize in chapter 8. 9. Edward Glaeser, Joseph Gyourko, and Albert Saiz, “Housing Supply and Housing Bubbles,” Journal of Urban Economics 64 (2008): 198–217, provide the motivation for the use of housing -supply elasticity to generate variation in how bubbly a housing market is. 10. Mian and Sufi, “Consequences of Mortgage Credit Expansion”; Albert Saiz, “The Geographic Determinants of Housing Supply,” Quarterly Journal of Economics 125 (2010): 1253–96. 11. We have on purpose set the y axis labels to match the y axis labels from fig. 6.2. This allows for a direct comparison between inelastic and elastic housing-supply cities. 12. The expansion of credit availability allowed some existing home owners to buy bigger homes, but this represented a small part of the population. 13.
See the following studies for models describing this logic: Michael Harrison and David Kreps, “Speculative Investor Behavior in a Stock Market with Heterogeneous Expectations,” Quarterly Journal of Economics 92 (1978): 323–36; Jose Scheinkman and Wei Xiong, “Overconfidence and Speculative Bubbles,” Journal of Political Economy 111 (2003): 1183–219; and Dilip Abreu and Markus Brunnermeier, “Bubbles and Crashes,” Econometrica 71 (2003): 173–204. 8. The discussion below is inspired by John Geanakoplos, “The Leverage Cycle,” in NBER Macroeconomic Annual 2009, vol. 24, ed. Daron Acemoglu, Kenneth Rogoff, and Michael Woodford (Chicago: University of Chicago Press, 2010), 1–65. 9. This can be confirmed by noting that 100 × $125,000 = $12.5 million. 10. See, for example, Edward Glaeser, Joshua Gottlieb, and Joseph Gyourko, “Can Cheap Credit Explain the Housing Boom?” (working paper no. 16230, NBER, July 2010). 11. Nicola Gennaioli, Andrei Shleifer, and Robert Vishny, “Neglected Risks, Financial Innovation, and Financial Fragility,” Journal of Financial Economics 104 (2012): 452–68. 12. Solow, foreword to Manias, Panics and Crashes. 13. Jon Hilsenrath, “A 91-Year-Old Who Foresaw Selloff is ‘Dubious’ of Stock-Market Rally,” Wall Street Journal, July 25, 2002.
From 1999 to 2001, inelastic cities experienced slightly higher house-price growth than elastic cities. But the real difference occurred during the height of the boom, from 2001 to 2006. House prices rose by almost 100 percent in inelastic cities in these five years. In elastic cities, they rose only 40 percent. House prices increased in inelastic cities by more than twice those in elastic cities. House-price growth during the boom was highly uneven across the country. If the housing bubble caused credit expansion, then we would observe a credit expansion to marginal borrowers only in cities that experienced a housing bubble. In other words, since there was no substantial house-price bubble in the elastic housing-supply cities, we should not observe aggressive expansion in debt in these cities if the pure animal spirits view holds. However, the evidence refutes the predictions of the pure animal spirits view.
Social Democratic America by Lane Kenworthy
affirmative action, Affordable Care Act / Obamacare, barriers to entry, basic income, Celtic Tiger, centre right, clean water, collective bargaining, corporate governance, David Brooks, desegregation, Edward Glaeser, endogenous growth, full employment, Gini coefficient, hiring and firing, Home mortgage interest deduction, illegal immigration, income inequality, invisible hand, Kenneth Arrow, labor-force participation, manufacturing employment, market bubble, minimum wage unemployment, new economy, postindustrial economy, purchasing power parity, race to the bottom, rent-seeking, rising living standards, Robert Gordon, Robert Shiller, Robert Shiller, Ronald Reagan, school choice, shareholder value, sharing economy, Skype, Steve Jobs, too big to fail, Tyler Cowen: Great Stagnation, union organizing, universal basic income, War on Poverty, working poor, zero day
Lipset argues that Americans’ belief in individualism and liberty and their hostility to government are the source of many differences between the United States and other rich countries.1 In the early 2000s, John Micklethwait and Adrian Woolridge, a British editor and writer for the Economist magazine, took a close look at the peculiarities of American politics and political culture. In their book The Right Nation, they conclude that “the United States has always been a conservative country, marinated in religion, in love with business, and hostile to the state.… Americans are exceptionally keen on limiting the size of the state and the scope of what it does.”2 A more recent statement of this view comes from Alberto Alesina and Edward Glaeser, who argue that differences in the generosity of government social programs across the world’s rich nations stem from differing popular views of the causes of poverty. Alesina and Glaeser find that in countries in which a larger share of the population believes people’s effort is the key determinant of their income, government spending on social programs tends to be lower. In nations where people deem luck more important, social program expenditures tend to be higher.3 The United States is among the former.
“Revisiting Real Social Spending across Countries: A Brief Note.” OECD Economic Studies 30: 191–197. Adema, Willem and Maxime Ladaique. 2009. “How Expensive Is the Welfare State? Gross and Net Indicators in the OECD Social Expenditure Database (SOCX).” Social, Employment, and Migration Working Paper 92. Paris: Organisation for Economic Cooperation and Development (OECD). Alesina, Alberto, Edward Glaeser, and Bruce Sacerdote. 2005. “Work and Leisure in the U.S. and Europe: Why So Different?” NBER Macroeconomics Annual 20: 1–100. Alesina, Alberto and Eliana La Ferrara. 2005. “Ethnic Diversity and Economic Performance.” Journal of Economic Literature 43: 762–800. Alesina, Alberto and George-Marios Angeletos. 2005. “Corruption, Inequality, and Fairness.” Journal of Monetary Economics 52: 1227–1244.
The Condition of Education. Washington, DC: US Department of Education. National Commission on Higher Education Attainment. 2013. “An Open Letter to College and University Leaders: College Completion Must Be Our Priority.” Washington, DC: American Council on Education. Nelson, Timothy J. and Kathryn Edin. 2013. Doing the Best I Can: Fathering in the Inner City. Berkeley: University of California Press. Newman, Katherine S. 1999. No Shame in My Game: The Working Poor in the Inner City. New York: Vintage Books and Russell Sage Foundation. Newman, Katherine S. 2006. Chutes and Ladders: Navigating the Low-Wage Labor Market. New York and Cambridge, MA: Russell Sage Foundation and Harvard University Press. Newman, Katherine S. and Elisabeth S. Jacobs. 2010. Who Cares? Public Ambivalence and Government Activism from the New Deal to the Second Gilded Age.
Streetfight: Handbook for an Urban Revolution by Janette Sadik-Khan, Seth Solomonow
autonomous vehicles, bike sharing scheme, call centre, car-free, carbon footprint, clean water, congestion charging, crowdsourcing, digital map, edge city, Edward Glaeser, en.wikipedia.org, Enrique Peñalosa, Hyperloop, Induced demand, Jane Jacobs, Loma Prieta earthquake, Lyft, New Urbanism, place-making, self-driving car, sharing economy, the built environment, The Death and Life of Great American Cities, the High Line, transportation-network company, Uber and Lyft, urban decay, urban planning, urban renewal, urban sprawl, walkable city, white flight, Works Progress Administration, Zipcar
Seen this way, many of New York City’s neighborhoods aren’t nearly dense enough, particularly if they want to retain even some of the varied architecture and small-scale streets that make cities great. The urban economist Edward Glaeser wrote that simply rejecting denser, taller development creates more problems if the overall number of available homes doesn’t keep pace with population growth. “When the demand for a city rises, prices will rise unless more homes are built. When cities restrict new construction, they become more expensive.” Expensive like San Francisco, where antidevelopment policies have greatly limited new market-rate home building in the hope of preserving affordability. Stunting new residential construction is one of the reasons why housing in San Francisco has become so scarce and thus less affordable to the very people the policy was intended to help. And by limiting denser urban development within city limits, more people are forced to sprawl even farther around the Bay Area, eroding the greenbelt—a recreational oasis that makes San Francisco such an attractive city in the first place.
twelve times the national rate: United States Census Bureau, “Census Bureau Reports 1.6 Million Workers Commute into Manhattan Each Day,” March 5, 2013, accessed August 5, 2015, www.census.gov/newsroom/press-releases/2013/cb13-r17.html, http://www.census.gov/newsroom/press-releases/2014/cb14-r06.html lower per capita energy use: David Owen, “Greenest Place in the U.S.? It’s Not Where You Think,” Yale Environment 360, October 2009, accessed August 5, 2015. three quarters of the nation’s economic: Bruce Katz and Jennifer Bradley, The Metropolitan Revolution: How Cities and Metros Are Fixing Our Broken Politics and Fragile Economy (Washington, DC: Brookings Institution Press, 2013), 1. 1 million people in New York City: City of New York, PlaNYC, 4. nationwide by 2050: United Nations, World Urbanization Prospects, 24. “they become more expensive”: Edward Glaeser, Triumph of the City: How Our Greatest Invention Makes Us Richer, Smarter, Greener, Healthier, and Happier (New York: Penguin Group, 2011), Kindle Edition, Locations 238–41. fewer miles on average than a decade ago: Doug Short, “Vehicle Miles Traveled: The Latest Look at Our Evolving Behavior,” Advisor Perspectives, July 21, 2015, accessed August 5, 2015, www.advisorperspectives.com/dshort/updates/DOT-Miles-Traveled.php.
We invite you to view something you experience every day in ways that you might never have imagined. We hope it inspires city officials, planners, and all other city residents to initiate changes in their cities around the world. The new operating code for streets we reveal in this book is already being translated into projects in global cities, from pocket parks and plazas in Mexico City and San Francisco to pedestrian- and transit-friendly road redesigns in Los Angeles and Buenos Aires, to parking-protected bike lanes in Chicago and Salt Lake City and reclaimed streets for pedestrians near the Colosseum in Rome. If it can happen in New York City, according to the Sinatra model of transportation theory, it can happen anywhere. INTRODUCTION A New Street Code Every city street has an underlying operating code, and no matter how exotic the place, the streets from Melbourne to Mumbai to Manhattan are all failing our cities in exactly the same way.
Fault Lines: How Hidden Fractures Still Threaten the World Economy by Raghuram Rajan
accounting loophole / creative accounting, Andrei Shleifer, Asian financial crisis, asset-backed security, assortative mating, bank run, barriers to entry, Bernie Madoff, Bretton Woods, business climate, Clayton Christensen, clean water, collapse of Lehman Brothers, collateralized debt obligation, colonial rule, corporate governance, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, crony capitalism, currency manipulation / currency intervention, diversification, Edward Glaeser, financial innovation, fixed income, floating exchange rates, full employment, global supply chain, Goldman Sachs: Vampire Squid, illegal immigration, implied volatility, income inequality, index fund, interest rate swap, Joseph Schumpeter, Kenneth Rogoff, knowledge worker, labor-force participation, Long Term Capital Management, market bubble, Martin Wolf, medical malpractice, microcredit, money market fund, moral hazard, new economy, Northern Rock, offshore financial centre, open economy, price stability, profit motive, Real Time Gross Settlement, Richard Florida, Richard Thaler, risk tolerance, Robert Shiller, Robert Shiller, Ronald Reagan, school vouchers, short selling, sovereign wealth fund, The Great Moderation, the payments system, The Wealth of Nations by Adam Smith, too big to fail, upwardly mobile, Vanguard fund, women in the workforce, World Values Survey
Labor Market,” Brookings Papers on Economic Activity 25, no. 2 (1994): 217–72. 15 See Goldin and Katz, The Race between Education and Technology; Lindsey, “Paul Krugman’s Nostalgianomics.” 16 See, for example, Nolan McCarthy, Keith Poole, and Howard Rosenthal, Polarized America: The Dance of Ideology and Unequal Riches (Cambridge, MA: MIT Press, 2008). 17 See Lindsey, “Paul Krugman’s Nostalgianomics,” 10. 18 See, for example, A. Alesina and E. LaFerrara, “Preferences for Redistribution in the Land of Opportunities,” NBER Working Paper 8267, National Bureau of Economic Research, Cambridge, MA, 2001. 19 See Alberto Alesina and Edward Glaeser, Fighting Poverty in the US and Europe: A World of Difference (Oxford: Oxford University Press, 2004), 61. 20 Ibid. 21 Alexis de Tocqueville, Democracy in America (New York: Doubleday, 1959), 53. 22 Robert J. Samuelson, “Indifferent to Inequality,” Newsweek, May 7, 2001, 45. 23 The quote is from a description by Jennifer Hochschild on what her survey respondents believe, from What’s Fair?
Current Issues in Economics and Finance, Federal Reserve Bank of New York, 9, no. 8 (August 2003): 1–7. 6 Kathryn Koenders and Richard Rogerson, “Organizational Dynamics over the Business Cycle: A View on Jobless Recoveries,” Federal Reserve Bank of St. Louis Review 87, no. 4 (July–August 2005): 555–80. 7 Schreft, Singh, and Hodgson, “Jobless Recoveries.” 8 Louis Uchitelle, “Labor Data Show Surge in Temporary Workers,” New York Times, December 20, 2009. 9 Study by the U.K. National Council for Volunteer Organizations and United for a Fair Economy, cited in Alberto Alesina and Edward Glaeser, Fighting Poverty in the US and Europe (Oxford: Oxford University Press, 2004), 45. 10 See, for example, Joe Peek and Eric S. Rosengren, “Unnatural Selection: Perverse Incentives and the Misallocation of Credit in Japan,” American Economic Review 95, no. 4 (September 2005): 1144–66; Takeo Hoshi and Anil Kashyap, Corporate Financing and Governance in Japan: The Road to the Future (Cambridge, MA: MIT Press, 2004). 11 See “A Fork in the Road,” Financial Times, December 11, 2009. 12 See, for example, Clayton Christensen, The Innovator’s Dilemma (New York: Harper Paperbacks, 2003). 13 National Science Foundation, Science and Engineering Indicators, chapter 5, Appendix Table 5–43, National Science Foundation, www.nsf.gov/statistics/seind10/c5/ c5s4.htm, accessed March 10, 2010. 14 Alesina and Glaeser, Fighting Poverty, 19. 15 Talkin’ ’bout My Generation: The Economic Impact of Aging U.S.
If, however, the only difference between the rich and the poor countries is physical capital, the obvious question, posed by the University of Chicago Nobel laureate Robert Lucas in a seminal paper in 1990, is, Why does more money not flow from rich countries to poor countries so as to enable the poor countries to buy the physical capital they need?2 After all, poor countries would gain enormously from a little more capital investment: in some parts of Africa, it is easier to get to a city a few hundred miles away by taking a flight to London or Paris and taking another flight back to the African destination than to try to go there directly. Commerce would be vastly increased in Africa if good roads were built between cities, whereas an additional road would not make an iota of difference in already overconnected Japan. Indeed, Lucas calculated that a dollar’s worth of physical capital in India would produce 58 times the returns available in the United States. Global financial markets, he argued, could not be so blind as to ignore these enormous differences in returns, even taking into account the greater risk of investing in India.
Peak Car: The Future of Travel by David Metz
autonomous vehicles, bike sharing scheme, Clayton Christensen, congestion charging, crowdsourcing, David Attenborough, decarbonisation, edge city, Edward Glaeser, Just-in-time delivery, Network effects, Richard Florida, Robert Gordon, Silicon Valley, Skype, urban sprawl, yield management, young professional
Going to a university located in the centre of a city; enjoying a life which does not depend on the car; staying around for the first job or perhaps moving to another city centre; postponing learning to drive because the need is not pressing, insurance expensive and parking space hard to find; being frugal with money on account of student loan repayments; using a bike or walking for exercise and convenience, and public transport for the bigger distances; finding cheap rail fares through student discounts and online advance booking, bus arrival times via apps and delays from twitter feeds; wanting not to worry about drink‑driving on a Friday night; taking pride in software skills, rather than car mechanics; perhaps even preferring video games such as Grand Theft Auto (‘drive somewhere, shoot something, drive back’) to real‑life driving—all of these factors seem increasingly common in many developed countries and contribute to the decline in driving amongst younger people. There is growing recognition of the economic and cultural importance of cities, even in a world in which digital technologies allow us to be dispersed geographically yet interact continuously. It is in cities that we attain critical mass. Persuasive arguments, both economic and cultural, in favour of cities are articulated by two prominent US academics. Richard Florida maintains that metropolitan regions with high concentrations of technology workers, artists and musicians exhibit a higher level of economic development. This well‑educated ‘creative class’ fosters an environment that attracts more creative people and the businesses where they work. Edward Glaeser emphasises ‘agglomeration economics’, which refers to increases in productivity associated with urban proximity: larger pools of skilled staff to draw upon, suppliers and customers close to hand, and spillovers of technical know‑how so that ideas diffuse rapidly—both through organised discussion amongst those with similar expertise and in gossip.
Many cities are experiencing a central area revival after a period when it seemed that new service sector firms were moving out to isolated offices in edge‑of‑city business parks or to smaller towns further afield. But the tide turned. The desire of people and businesses to interact, both during working hours and after, is bringing them back to the city centre, which performs its traditional role as the place for mixing and matching, working and playing, cooperating and competing. Cities are where agglomeration spurs creativity, innovation, economic energy and cultural vitality. Successful cities For cities to function, their inhabitants have to be able to get around within them, and also to travel beyond. For low‑density cities, the car dominates. But for high‑density cities, there is too little road space for cars and buses, which become slow and unreliable ways of travelling due to traffic congestion. Successful cities are investing in speedy and reliable rail systems, whether above or below ground.
A relatively recent city like Los Angeles, with low density and high car dependency, is very different from the high densities found in Manhattan or Central London where road capacity for the car is limited and much more use is made of public transport. Fifty years ago, when car ownership was low but growing rapidly, it was thought that cities might be adapted to absorb the car. Many US cities went a long way in that direction, as did some Japanese cities, and as are some Chinese cities, with elevated urban freeways and multi-story parking. A number of British cities damaged their urban fabrics and, arguably, hindered their economic development by trying too hard to accommodate the car. Winston Churchill said: ‘We shape our buildings, and afterwards our buildings shape us.’ The same is true of cities. The more attractive and successful cities are those that have pushed back the car in favour of creating space for pedestrians, improving public transport and providing for cycling.
Everybody Lies: Big Data, New Data, and What the Internet Can Tell Us About Who We Really Are by Seth Stephens-Davidowitz
affirmative action, AltaVista, Amazon Mechanical Turk, Asian financial crisis, Bernie Sanders, big data - Walmart - Pop Tarts, Cass Sunstein, computer vision, correlation does not imply causation, crowdsourcing, Daniel Kahneman / Amos Tversky, desegregation, Donald Trump, Edward Glaeser, Filter Bubble, game design, happiness index / gross national happiness, income inequality, Jeff Bezos, John Snow's cholera map, Mark Zuckerberg, Nate Silver, peer-to-peer lending, Peter Thiel, price discrimination, quantitative hedge fund, Ronald Reagan, Rosa Parks, sentiment analysis, Silicon Valley, statistical model, Steve Jobs, Steven Levy, Steven Pinker, TaskRabbit, The Signal and the Noise by Nate Silver, working poor
., “The Association Between Income and Life Expectancy in the United States, 2001–2014,” JAMA 315, no. 16 (2016). 178 Contagious behavior may be driving some of this: Julia Belluz, “Income Inequality Is Chipping Away at Americans’ Life Expectancy,” vox.com, April 11, 2016. 178 why some people cheat on their taxes: Raj Chetty, John Friedman, and Emmanuel Saez, “Using Differences in Knowledge Across Neighborhoods to Uncover the Impacts of the EITC on Earnings,” American Economic Review 103, no. 7 (2013). 180 I decided to download Wikipedia: This is from Seth Stephens-Davidowitz, “The Geography of Fame,” New York Times, March 23, 2014, SR6. Data can be found on my website, sethsd.com, in the section “Wikipedia Birth Rate, by County.” For help downloading and coding county of birth of every Wikipedia entrant, I thank Noah Stephens-Davidowitz. 183 a big city: For more evidence on the value of cities, see Ed Glaeser, Triumph of the City (New York: Penguin, 2011). (Glaeser was my advisor in graduate school.) 191 many examples of real life imitating art: David Levinson, ed., Encyclopedia of Crime and Punishment (Thousand Oaks, CA: SAGE, 2002). 191 subjects exposed to a violent film will report more anger and hostility: Craig Anderson et al., “The Influence of Media Violence on Youth,” Psychological Science in the Public Interest 4 (2003). 192 On weekends with a popular violent movie: Gordon Dahl and Stefano DellaVigna, “Does Movie Violence Increase Violent Crime?”
Steven Pinker, who kindly agreed to write the foreword, has long been a hero of mine. He has set the bar for a modern book on social science—an engaging exploration of the fundamentals of human nature, making sense of the best research from a range of disciplines. That bar is one I will be struggling to reach my entire life. My dissertation, from which this book has grown, was written under my brilliant and patient advisers Alberto Alesina, David Cutler, Ed Glaeser, and Lawrence Katz. Denise Oswald is an amazing editor. If you want to know how good her editing is, compare this final draft to my first draft—actually, you can’t do that because I am not going to ever show anyone else that embarrassing first draft. I also thank the rest of the team at HarperCollins, including Michael Barrs, Lynn Grady, Lauren Janiec, Shelby Meizlik, and Amber Oliver. Eric Lupfer, my agent, saw potential in this project from the beginning, was instrumental in forming the proposal, and helped carry it through.
So why do some places seem to allow the impoverished to live so much longer? What attributes do cities where poor people live the longest share? Here are four attributes of a city—three of them do not correlate with poor people’s life expectancy, and one of them does. See if you can guess which one matters. WHAT MAKES POOR PEOPLE IN A CITY LIVE MUCH LONGER? The city has a high level of religiosity. The city has low levels of pollution. The city has a higher percentage of residents covered by health insurance. A lot of rich people live in the city. The first three—religion, environment, and health insurance—do not correlate with longer life spans for the poor. The variable that does matter, according to Chetty and the others who worked on this study? How many rich people live in a city. More rich people in a city means the poor there live longer.
air freight, anti-communist, barriers to entry, Bay Area Rapid Transit, British Empire, call centre, collective bargaining, conceptual framework, David Ricardo: comparative advantage, deindustrialization, deskilling, Edward Glaeser, Erik Brynjolfsson, full employment, global supply chain, intermodal, Isaac Newton, job automation, knowledge economy, Malcom McLean invented shipping containers, manufacturing employment, Network effects, New Economic Geography, new economy, oil shock, Panamax, Port of Oakland, post-Panamax, Productivity paradox, refrigerator car, South China Sea, trade route, Works Progress Administration, Yom Kippur War, zero-sum game
Third, a proper measure of freight costs over time would have to account for changes in service quality, such as faster ocean transit and reduced cargo theft, and no freight cost index does this. Fourth, a large number of freight shipments occur either within a large company or at prices privately negotiated between the shipper and transportation carriers, so the information required to measure costs economywide often is not publicly available. Edward L. Glaeser and Janet E. Kohlhase, “Cities, Regions, and the Decline of Transport Costs,” Working Paper 9886, NBER, July 2003, p. 4. 7. U.S. Congress, Joint Economic Committee, Discriminatory Ocean Freight Rates and the Balance of Payments, November 19, 1963 (Washington, DC, 1964), p. 333; John L. Eyre, “Shipping Containers in the Americas,” in Pan American Union, “Recent Developments in the Use and Handling of Unitized Cargoes” (Washington, DC, 1964), pp. 38–42.
A trucker can deposit a trailer at a customer’s loading dock, hook up another trailer, and drive on immediately, rather than watching his expensive rig stand idle while the contents are removed. All of those changes are consequences of the container revolution. Transportation has become so efficient that for many purposes, freight costs do not much effect economic decisions. As economists Edward L. Glaeser and Janet E. Kohlhase suggest, “It is better to assume that moving goods is essentially costless than to assume that moving goods is an important component of the production process.” Before the container, such a statement was unimaginable.6 In 1961, before the container was in international use, ocean freight costs alone accounted for 12 percent of the value of U.S. exports and 10 percent of the value of U.S. imports.
So was the city’s Department of Marine and Aviation, which ran the docks; it had waged a bitter and unsuccessful battle to keep the Port Authority from taking over the city’s two main airports in 1947, and it did not want to give up another of its functions. Most of all, city politicians did not want the Port Authority on their turf. City officialdom was convinced that the piers were a potential gold mine, not a badly outdated piece of infrastructure. As Robert F. Wagner, then Manhattan borough president and a member of the city’s governing Board of Estimate, asked later, “The piers were making money; why didn’t they take over the sanitation department instead?” The Board of Estimate rejected the Port Authority’s offer in 1948 and turned down a revised proposal in 1949.15 While New York officials thought they could modernize the city’s piers without the Port Authority’s involvement, the financially troubled city of Newark, New Jersey, had no such illusions.
The Rational Optimist: How Prosperity Evolves by Matt Ridley
23andMe, agricultural Revolution, air freight, back-to-the-land, banking crisis, barriers to entry, Bernie Madoff, British Empire, call centre, carbon footprint, Cesare Marchetti: Marchetti’s constant, charter city, clean water, cloud computing, cognitive dissonance, collateralized debt obligation, colonial exploitation, colonial rule, Corn Laws, creative destruction, credit crunch, David Ricardo: comparative advantage, decarbonisation, dematerialisation, demographic dividend, demographic transition, double entry bookkeeping, Edward Glaeser, en.wikipedia.org, everywhere but in the productivity statistics, falling living standards, feminist movement, financial innovation, Flynn Effect, food miles, Gordon Gekko, greed is good, Hans Rosling, happiness index / gross national happiness, haute cuisine, Hernando de Soto, income inequality, income per capita, Indoor air pollution, informal economy, Intergovernmental Panel on Climate Change (IPCC), invention of agriculture, invisible hand, James Hargreaves, James Watt: steam engine, Jane Jacobs, John Nash: game theory, joint-stock limited liability company, Joseph Schumpeter, Kevin Kelly, knowledge worker, Kula ring, Mark Zuckerberg, meta analysis, meta-analysis, mutually assured destruction, Naomi Klein, Northern Rock, nuclear winter, oil shale / tar sands, out of africa, packet switching, patent troll, Pax Mongolica, Peter Thiel, phenotype, Plutocrats, plutocrats, Ponzi scheme, Productivity paradox, profit motive, purchasing power parity, race to the bottom, Ray Kurzweil, rent-seeking, rising living standards, Silicon Valley, spice trade, spinning jenny, stem cell, Steve Jobs, Steven Pinker, Stewart Brand, supervolcano, technological singularity, The Wealth of Nations by Adam Smith, Thorstein Veblen, trade route, transaction costs, ultimatum game, upwardly mobile, urban sprawl, Vernor Vinge, Vilfredo Pareto, wage slave, working poor, working-age population, Y2K, Yogi Berra, zero-sum game
By 2025, it looks as if there will be five billion people living in cities (and rural populations will actually be falling fast), and there will be eight cities with more than twenty million people each: Tokyo, Mumbai, Delhi, Dhaka, São Paolo, Mexico City, New York and Calcutta. As far as the planet is concerned, this is good news because city dwellers take up less space, use less energy and have less impact on natural ecosystems than country dwellers. The world’s cities already contain half the world’s people, but they occupy less than 3 per cent of the world’s land area. ‘Urban sprawl’ may disgust some American environmentalists, but on a global scale, the very opposite is happening: as villages empty, people are living in denser and denser anthills. As Edward Glaeser put it, ‘Thoreau was wrong. Living in the country is not the right way to care for the Earth. The best thing that we can do for the planet is build more skyscrapers.’ After a ‘stinking hot’ evening in a taxi in central Delhi in the 1960s, the ecologist Paul Ehrlich had an epiphany.
Whole Earth Discipline. Penguin. p. 189 ‘says Deroi Kwesi Andrew, a teacher earning $4 a day in Accra’. Harris, R. 2007. Let’s ditch this nostalgia for mud. Spiked, 4 December 2007. p. 190 ‘people prefer to press into ever closer contact with each other in glass towers to do their exchanging’. Jacobs, J. 2000. The Nature of Economies. Random House. p. 190 ‘As Edward Glaeser put it’. Glaeser, E. 2009. Green cities, brown suburbs. City Journal 19: http://www.city-journal.org/2009/19_1_greencities.html. p. 190 ‘the ecologist Paul Ehrlich had an epiphany’. Ehrlich, P. 1968. The Population Bomb. Ballantine Books. Chapter 6 p. 191 ‘The great question is now at issue’. Malthus, T. R. 1798. Essay on Population. p. 191 Percentage increase in world population graph. United Nations Population Division.
In 2008 for the first time more than half the people in the world lived in cities. That is not a bad thing. It is a measure of economic progress that more than half the population can leave subsistence and seek the possibilities of a life based on the collective brain instead. Two-thirds of economic growth happens in cities. Not long ago, demographers expected new technology to hollow out cities as people began to telecommute from tranquil suburbs. But no – even in weightless industries like finance people prefer to press into ever closer contact with each other in glass towers to do their exchanging and specialising, and they are prepared to pay absurdly high rents to do so. By 2025, it looks as if there will be five billion people living in cities (and rural populations will actually be falling fast), and there will be eight cities with more than twenty million people each: Tokyo, Mumbai, Delhi, Dhaka, São Paolo, Mexico City, New York and Calcutta.
Common Wealth: Economics for a Crowded Planet by Jeffrey Sachs
agricultural Revolution, air freight, back-to-the-land, British Empire, business process, carbon footprint, clean water, colonial rule, corporate social responsibility, correlation does not imply causation, creative destruction, demographic transition, Diane Coyle, Edward Glaeser, energy security, failed state, Gini coefficient, Haber-Bosch Process, income inequality, income per capita, Intergovernmental Panel on Climate Change (IPCC), intermodal, invention of agriculture, invention of the steam engine, invisible hand, Joseph Schumpeter, knowledge worker, labor-force participation, labour mobility, low skilled workers, mass immigration, microcredit, oil shale / tar sands, old age dependency ratio, peak oil, profit maximization, profit motive, purchasing power parity, road to serfdom, Ronald Reagan, Simon Kuznets, Skype, statistical model, The Wealth of Nations by Adam Smith, Thomas Malthus, trade route, transaction costs, unemployed young men, War on Poverty, women in the workforce, working-age population
Nonetheless, it shows the high salience put on development issues. The agreement may be found at http://allafrica.com/peaceafrica/resources/view/00010926.pdf. CHAPTER 11: ECONOMIC SECURITY IN A CHANGING WORLD 263 heavy investors both in R & D: Data on R & D expenditure, investment in knowledge, and tertiary attainment are available from the OECD Factbook 2006: Economic and Social Statistics. 265 seem to be much less likely: Alberto Alesina, Edward Glaeser, and Bruce Sacerdote, “Why Doesn’t the US Have a European-Style Welfare System?” NBER Working Paper Series, no. 8524 (October 2001). Available online at http://www.nber.org/papers/w8524. 265 “Racial discord plays”: Ibid., p. 4. 267 the Iraq War costs: Peter Orszag, Director of Congressional Budget Office, Statement before the Committee on the Budget of the U.S. House of Representatives on the Estimated Costs of U.S.
“Net Social Expenditure, 2005 Edition: More Comprehensive Measures of Social Support.” Organization for Economic Cooperation and Development (OECD) Social, Employment and Migration Working Papers, no. 29, 2005. Alesina, Alberto, and George-Marios Angeletos. “Fairness and Redistribution: U.S. versus Europe.” NBER Working Paper Series, no. 9502, February 2003. http://www.nber.org/papers/W9502. Alesina, Alberto, Edward Glaeser, and Bruce Sacerdote. “Why Doesn’t the U.S. Have a European-Style Welfare System?” NBER Working Paper Series, no. 8524, October 2001. http://www.nber.org/papers/w8524. Alley, Richard. “Wally Was Right: Predictive Ability of the North Atlantic ‘Conveyor Belt’ Hypothesis for Abrupt Climate Change.” Annual Review of Earth and Planetary Sciences 35 (2007): 241–72. American Association of Port Authorities, World Port Rankings, 2005. http://www.aapa-ports.org/industry/content.cfm?
The enormous densities of urban populations mean that pollutants, too, are heavily concentrated, far above the power of nature to disperse the pollutants through harmless flows into waterways and the atmosphere. Therefore, unless pollution is controlled through appropriate technologies and policies, cities can become sites of untold ecological destruction. Also, by bringing millions of people into proximity, cities have long been host to infectious diseases that depend on large populations of susceptible individuals to sustain the long-term transmission of the disease. Moreover, the rising populations of large cities will be vulnerable to other natural hazards, including floods, landslides, and earthquakes. This is especially the case because the world’s cities have been heavily concentrated along the coastlines to take advantage of access to global trade, fisheries, and the amenities of coastal life. My colleagues at The Earth Institute have calculated that roughly 10 percent of the world’s population lives in low-lying coastal zones (within one hundred kilometers of the coast and at less than ten meters above sea level), though such areas constitute a mere 2.2 percent of the Earth’s land area.
3D printing, 4chan, A Declaration of the Independence of Cyberspace, augmented reality, barriers to entry, Benjamin Mako Hill, butterfly effect, citizen journalism, Claude Shannon: information theory, conceptual framework, corporate governance, crowdsourcing, Deng Xiaoping, discovery of penicillin, Douglas Engelbart, Douglas Engelbart, drone strike, Edward Glaeser, Edward Thorp, en.wikipedia.org, experimental subject, Filter Bubble, Freestyle chess, Galaxy Zoo, Google Earth, Google Glasses, Gunnar Myrdal, Henri Poincaré, hindsight bias, hive mind, Howard Rheingold, information retrieval, iterative process, jimmy wales, Kevin Kelly, Khan Academy, knowledge worker, lifelogging, Mark Zuckerberg, Marshall McLuhan, Menlo Park, Netflix Prize, Nicholas Carr, patent troll, pattern recognition, pre–internet, Richard Feynman, Richard Feynman, Ronald Coase, Ronald Reagan, Rubik’s Cube, sentiment analysis, Silicon Valley, Skype, Snapchat, Socratic dialogue, spaced repetition, telepresence, telepresence robot, The Nature of the Firm, the scientific method, The Wisdom of Crowds, theory of mind, transaction costs, Vannevar Bush, Watson beat the top human players on Jeopardy!, WikiLeaks, X Prize, éminence grise
In reality, as Swain tells me, it’s much more benign. Being extra fretful and cautious around a newborn is a good thing for most parents: Babies are fragile. It’s worth the tradeoff. Similarly, living in cities—with their cramped dwellings and pounding noise—stresses us out on a straightforwardly physiological level and floods our system with cortisol, as I discovered while researching stress in New York City several years ago. But the very urban density that frazzles us mentally also makes us 50 percent more productive, and more creative, too, as Edward Glaeser argues in Triumph of the City, because of all those connections between people. This is “the city’s edge in producing ideas.” The upside of creativity is tied to the downside of living in a sardine tin, or, as Glaeser puts it, “Density has costs as well as benefits.” Our digital environments likely offer a similar push and pull.
His work is also described in Anna Abramson and Dawn Rouse, “The Postpartum Brain,” Greater Good (Spring 2008), accessed March 19, 2013, greatergood.berkeley.edu/article/item/postpartum_brain/. living in cities . . . stresses us out on a straightforwardly physiological level: Clive Thompson, “The Ecology of Stress,” New York, January 24, 2005, accessed March 19, 2013, nymag.com/nymetro/urban/features/stress/10888/. makes us 50 percent more productive: Edward Glaeser, Triumph of the City: How Our Greatest Invention Makes Us Richer, Smarter, Greener, Healthier, and Happier (New York: Penguin, 2011), Kindle edition. “the city’s edge in producing ideas”: Ibid. “Density has costs as well as benefits”: Ibid. in June 2011, chess master Christoph Natsidis was caught: Dylan Loeb McClain, “Disqualified by Evidence on a Phone,” The New York Times, June 12, 2011, accessed March 20, 2013, www.nytimes.com/2011/06/12/crosswords/chess/chess-christoph-natsidis-punished-for-cheating.html; Peter Doggers, “Player Caught Cheating at German Championship,” ChessVibes (blog), June 05, 2011, accessed March 20, 2013, www.chessvibes.com/reports/player-caught-cheating-at-german-championship.
Until the summer of 2012, when that myth came crashing down—as the post-’90s youth of Shifang staged one of the most successful environmental protests ever. Shifang is a city in southwestern China. In late June 2012, local party officials announced they would begin building a $1.6 billion plant to process molybdenum-copper alloy. The plan was slated to create thousands of construction jobs in an area that was in distress, because of both the country’s economic slowdown and an earthquake that hit four years earlier. But many locals worried about toxic side effects. Copper plants often produce slag filled with noxious chemicals, including arsenic; many such areas have seen cancer rates soar. Chinese citizens are painfully aware of how rampant development is ruining the countryside. In some industrial cities the air is so foul that people wear surgical masks outside and rivers run in different colors each day of the week.
assortative mating, Atul Gawande, Bernie Madoff, call centre, cognitive dissonance, David Brooks, delayed gratification, Edward Glaeser, epigenetics, Erik Brynjolfsson, estate planning, facts on the ground, game design, happiness index / gross national happiness, indoor plumbing, invisible hand, Mark Zuckerberg, medical residency, Menlo Park, meta analysis, meta-analysis, neurotypical, Occupy movement, old-boy network, place-making, Ponzi scheme, Ralph Waldo Emerson, randomized controlled trial, Ray Oldenburg, Silicon Valley, Skype, Steven Pinker, The Great Good Place, The Wisdom of Crowds, theory of mind, Tony Hsieh, urban planning, Yogi Berra
PLOS One 5, no. 12 (2010); Jonah Lehrer, “Groupthink: The Brainstorming Myth,” New Yorker, January 30, 2012; Greg Lindsay, “Engineering Serendipity,” New York Times, April 7, 2013; Michelle Young, “Googleplex, Mountain View: Designing Interior Spaces at an Urban Scale,” Untapped Cities, January 2, 2012, http://untappedcities.com/2012/01/02/googleplex-mountainview-designing-interior-spaces-at-an-urban-scale/; Paul Goldberger, “Exclusive Preview: Google’s New Built from Scratch Googleplex,” Vanity Fair, February 22, 2013. Another social scientist who has written persuasively about physical proximity as a catalyst for ideas and economic growth is Edward Glaeser, who writes: “The most important communications still take place in person, and electronic access is no substitute for being at the geographic center of an intellectual movement.” Edward Glaeser, Triumph of the City (New York: Penguin, 2011). 10. Sheldon Cohen, “Social Relationships and Susceptibility to the Common Cold,” in Emotion, Social Relationships, and Health, ed.
In every situation Sylvie had deployed her social networks during a period of crisis, but she seemed oblivious—as most of us are—to the way her face-to-face social connections helped her. “I was reading about it, I called my doctor friends, I got together with them, and I got all this information from people I knew,” she told me. I asked who had helped her the most. “Friends,” she replied, without so much as a pause. “I called my good friend Mona, who lives in another city and is married to an oncologist. I then talked to her husband for three hours, even though we weren’t really friends as two couples. She was my friend when I lived in that city, so her husband helped me. And I had Celeste. Celeste helped because she’s totally organized and very businesslike, and she’s a nurse and has been in this medical world forever. And she said okay, you’re going to this doctor, because she’s the best surgeon in town, and you’re going to do this and you’re going to do that.
The second hit would come much later, when these babies were older. 6 Digital Natives Electronic Devices and Children’s Language Development, School Progress, and Happiness Her name was Claudia Aristy and she may well have been headed for a life of inner-city poverty had she not found herself in Bellevue Hospital’s adolescent parenting group in New York. It was 1996; Aristy was just sixteen and she had recently arrived from the Dominican Republic. During a previous visit to New York she had fallen in love with a thirty-year-old man and become pregnant. “So I had come back to New York to live with my baby’s father,” Aristy told me as we chatted in Bellevue’s pediatric day clinic. “And my grandmother decided Bellevue was a safe place where I could get good medical care.” A home-care worker who knew her way around the city, Claudia’s grandmother took the subway to the clinic with her granddaughter the first time. After that, Claudia was on her own.
Economics Rules: The Rights and Wrongs of the Dismal Science by Dani Rodrik
airline deregulation, Albert Einstein, bank run, barriers to entry, Bretton Woods, butterfly effect, capital controls, Carmen Reinhart, central bank independence, collective bargaining, Daniel Kahneman / Amos Tversky, David Ricardo: comparative advantage, distributed generation, Donald Davies, Edward Glaeser, endogenous growth, Eugene Fama: efficient market hypothesis, Everything should be made as simple as possible, Fellow of the Royal Society, financial deregulation, financial innovation, floating exchange rates, fudge factor, full employment, George Akerlof, Gini coefficient, Growth in a Time of Debt, income inequality, inflation targeting, informal economy, information asymmetry, invisible hand, Jean Tirole, Joseph Schumpeter, Kenneth Arrow, Kenneth Rogoff, labor-force participation, liquidity trap, loss aversion, low skilled workers, market design, market fundamentalism, minimum wage unemployment, oil shock, open economy, Pareto efficiency, Paul Samuelson, price stability, prisoner's dilemma, profit maximization, quantitative easing, randomized controlled trial, rent control, rent-seeking, Richard Thaler, risk/return, Robert Shiller, Robert Shiller, school vouchers, South Sea Bubble, spectrum auction, The Market for Lemons, the scientific method, The Wealth of Nations by Adam Smith, Thomas Kuhn: the structure of scientific revolutions, Thomas Malthus, trade liberalization, trade route, ultimatum game, University of East Anglia, unorthodox policies, Vilfredo Pareto, Washington Consensus, white flight
For a sampling of this work, see Samuel Bowles, “Endogenous Preferences: The Cultural Consequences of Markets and Other Economic Institutions,” Journal of Economic Literature 26 (1998): 75–111; George A. Akerlof and Rachel E. Kranton Identity Economics: How Our Identities Shape Our Work, Wages, and Well-Being (Princeton, NJ: Princeton University Press, 2010); Alberto Alesina and George-Marios Angeletos, “Fairness and Redistribution,” American Economic Review 95, no. 4 (2005): 960–80; Alberto Alesina, Edward Glaeser, and Bruce Sacerdote, “Why Doesn’t the United States Have a European-Style Welfare State?” Brookings Papers on Economic Activity, no. 2 (2001): 187–254; Raquel Fernandez, “Cultural Change as Learning: The Evolution of Female Labor Force Participation over a Century,” American Economic Review 103, no. 1 (2013): 472–500; Roland Bénabou, Davide Ticchi, and Andrea Vindigni, “Forbidden Fruits: The Political Economy of Science, Religion, and Growth” (unpublished paper, Princeton University, December 2013). 4.
He found that men who had served in the early 1970s ended up earning about 15 percent less a decade later than men who had never served.15 Columbia University economists Donald Davis and David Weinstein used the US bombing of Japanese cities during the Second World War to test two models of city growth. One model was based on scale economies (decline in production costs as urban density increased), and the other was based on locational advantages (such as access to a natural seaport). Even though the bombing was obviously not random, it created a natural way to test whether cities that had been badly destroyed would remain depressed or bounce back to their original position. The model based on scale economies suggested that cities would not recover after being sharply reduced in size, whereas the locational-advantage model predicted otherwise. Davis and Weinstein found that most Japanese cities returned to their prewar relative size within a decade and a half, providing support for the latter model.16 Economists employ a wide a range of strategies to verify whether the immediate implications of different models are confirmed in the real world, from the informal and anecdotal to the sophisticated and quantitative.
The system was eventually undermined in the 1970s by the growth of speculative capital flows, which Keynes had warned against. But it remained the standard for global institutional engineering. Through each successive upheaval of the world economy, the rallying cry of the reformers was “a new Bretton Woods!” In 1952, a Columbia University economist named William Vickrey proposed a new pricing system for the New York City subway. He recommended that fares be increased at peak times and in sections with high traffic, and be lowered at other times and in other sections. This system of “congestion pricing” was nothing other than the application of economic supply-demand principles to public transport. Differential fares would give commuters with more-flexible hours the incentive to avoid peak travel times. They would allow passenger traffic to spread out over time, reducing the pressure on the system while enabling even larger total passenger flow.
The Globalization of Inequality by François Bourguignon
Berlin Wall, Branko Milanovic, Capital in the Twenty-First Century by Thomas Piketty, collective bargaining, Credit Default Swap, deglobalization, deindustrialization, Doha Development Round, Edward Glaeser, European colonialism, Fall of the Berlin Wall, financial deregulation, financial intermediation, gender pay gap, Gini coefficient, income inequality, income per capita, labor-force participation, liberal capitalism, minimum wage unemployment, offshore financial centre, open economy, Pareto efficiency, purchasing power parity, race to the bottom, Robert Gordon, Simon Kuznets, structural adjustment programs, The Spirit Level, too big to fail, very high income, Washington Consensus
For the role of governance in development, see Daron Acemoglu and James Robinson, Why Nations Fail: The Origin of Power, Prosperity and Poverty (New York: Crown Business, 2012). 10 This hypothesis, often attributed to Joseph Stiglitz, The Price of Inequality, has been the focus of several analyses. See, for example, Michael Kumhof and Romain Rancière, “Inequality, Leverage and Crises,” IMF Working Paper, no. 10/268, 2011). For a critique of this hypothesis, see Edward Glaeser, “Does Economic Inequality Cause Crises?”, New York Times, Economix Blog, 2010. A recent synthesis of the debate is put forward by Till van Treeck, “Did Inequality Cause the U.S. Financial Crisis?”, Journal of Economic Surveys, 10.1111, 2013. 9 Globalization and Costly Inequality137 and the rising income inequality observed over the two or three decades before the crisis would be accompanied by a decrease in consumption and therefore a drop in economic activity.
The second channel through which inequality can have undesirable effects on economic efficiency is through the “spontaneous” redistribution that it can engender through various social and political mechanisms. A good example of this is the cost of the endemic violence afflicting certain countries or cities. Without any hope of ever joining the middle class, some youth in Brazilian favelas, Colombian poblaciones, and even the poor neighborhoods or banlieues of certain large cities in developed countries will try to make money from criminal activity: theft, assault, kidnapping, drug trafficking. The rest of the population is then obliged to allocate a significant part of their income to security in order to protect themselves. Anyone who has walked through Rio, Bogotá, or Mexico City will have been struck by the walls, bars, and security personnel—often heavily armed—that guard apartment buildings, stores, banks, and company headquarters.
At the macroeconomic level, the disinflation that took place at the beginning of the 1980s re-energized financial markets by eliminating a major source of uncertainty about the cost of and the real return on capital. This disinflation occurred alongside the deregulation of financial market operations, based on re-establishing competition among operators of all kinds and the computerization of markets, and led to the 1986 “Big Bang” of the City in London. The success of these reforms, which could be seen in the impressive development of the City, led to them being adopted first in the United States and then in continental Europe, where they were facilitated by the growing openness of international financial markets. This change was particularly conspicuous in France, where, until the late 1980s, financial mechanisms remained constrained by very rigid regulatory systems based on a few large nationalized banks and the strict regulation of foreign exchange operations.
Sleeping Giant: How the New Working Class Will Transform America by Tamara Draut
affirmative action, Affordable Care Act / Obamacare, always be closing, battle of ideas, big-box store, blue-collar work, collective bargaining, creative destruction, David Brooks, declining real wages, deindustrialization, desegregation, Detroit bankruptcy, Donald Trump, Edward Glaeser, ending welfare as we know it, Ferguson, Missouri, financial deregulation, full employment, immigration reform, income inequality, invisible hand, job satisfaction, knowledge economy, knowledge worker, low skilled workers, mass incarceration, minimum wage unemployment, mortgage tax deduction, new economy, obamacare, occupational segregation, payday loans, pink-collar, Plutocrats, plutocrats, Powell Memorandum, profit motive, race to the bottom, Ralph Nader, rent-seeking, rising living standards, Ronald Reagan, The Bell Curve by Richard Herrnstein and Charles Murray, The Wealth of Nations by Adam Smith, trickle-down economics, union organizing, upwardly mobile, War on Poverty, white flight, women in the workforce, young professional
Sylvia Allegretto and Steven Pitts, “The State of Black Workers Before the Great Recession,” UC Berkeley Labor Center, University of California, Berkeley, 2010, at http://laborcenter.berkeley.edu/pdf/2010/blackworkers_prerecession10.pdf. 30. Patricia Cohen, “Public-Sector Jobs Vanish, Hitting Blacks Hard,” New York Times, May 24, 2015. 31. Noam Scheiber, “Pension Cuts Exempt Police and Firefighters,” New York Times, March 19, 2015; Alyssa Battistoni, “The Dirty Secret of Public-Sector Union Busting,” Salon, February 24, 2011. 32. Alberto Alesina and Edward L. Glaeser, “Why Are Welfare States in the U.S. and Europe So Different?” Horizons Stratégiques, February 2006, at http://www.cairn.info/zen.php?ID_ARTICLE=HORI_002_0051. 33. Ibid. 34. Bonilla-Silva, Racism Without Racists, pp. 25–61. Chapter Seven: The Sleeping Giant Stirs 1. Workers Defense Project, “Build a Better Texas: Construction Conditions in the Lone Star State,” January 2013, at http://www.workersdefense.org/Build%20a%20Better%20Texas_FINAL.pdf. 2.
San Francisco was the first city to pass paid-sick-days legislation, followed by a string of major cities and Connecticut in 2011. But the fight for this basic benefit was nothing short of a political showdown in New York City. After five years of activism and lobbying, the City Council passed a fairly weak version of paid sick days that covered about 1 million workers. Then the WFP ran a progressive slate of candidates for the City Council in 2012, and they all won their seats. As Cantor told me, with the new City Council in place, it took only about three hours to amend the law to cover another 300,000 to 500,000 workers. Three hours compared to three years—that’s the difference electing progressives to office can make in the lives of the working class. The City Council had more than enough votes to pass the measure, but the speaker of the council at the time was Christine Quinn, and she refused to bring the bill to the floor for a vote.
Missouri Jobs with Justice, along with the Fight for $15 campaign, SEIU, and others, fought hard for the $13 minimum wage that the Kansas City council passed in July 2015. The law isn’t perfect, because it includes a young person’s exemption, which allows employers to pay subminimum wage to younger workers. The law also doesn’t have an automatic cost-of-living adjustment. But its passage was significant not only for workers in Kansas City but potentially for workers across the state. When Kansas City passed its law, it created a domino effect: Kansas City County, St. Louis, and the state legislature are all now actively considering minimum-wage increases to at least $13 an hour, despite claiming that they couldn’t do it just weeks before the city council in Kansas City passed its bill. Bolden is motivated by her own experience growing up in a union household.
3D printing, assortative mating, call centre, clean water, commoditize, dematerialisation, demographic transition, Edward Glaeser, extreme commuting, feminist movement, financial independence, Firefox, Frank Levy and Richard Murnane: The New Division of Labor, Home mortgage interest deduction, income inequality, informal economy, Jane Jacobs, John Maynard Keynes: Economic Possibilities for our Grandchildren, knowledge economy, knowledge worker, labor-force participation, late capitalism, low skilled workers, manufacturing employment, mass immigration, McMansion, mortgage tax deduction, new economy, off grid, oil shock, PageRank, Ponzi scheme, positional goods, post-industrial society, Post-materialism, post-materialism, principal–agent problem, recommendation engine, Richard Florida, rolodex, Ronald Reagan, Silicon Valley, Skype, statistical model, The Death and Life of Great American Cities, The Great Moderation, The Wealth of Nations by Adam Smith, Thomas Malthus, Thorstein Veblen, transaction costs, women in the workforce, Yom Kippur War
It is to this new world of work built by folks like Bloomberg and Google’s Sergey Brin and Larry Page that we now turn. 1∗Never mind that with global reserves dwindling, oil is now increasingly dirty and difficult to extract. 2∗Its main purpose at the time? Helping to build the hydrogen bomb—only the single most destructive invention in human history still to this day. 3∗Americans work an average of 25.1 hours per week (averaged across all working-age persons) in contrast to Germans, for instance, who average 18.6 hours. We work over 6 more weeks than the French per year. See Alberto Alessina, Edward L. Glaeser, and Bruce Sacerdote, “Work and Leisure in the U.S. and Europe: Why So Different?” Working Paper no. 11278, National Bureau of Economic Research, Cambridge, Mass., 2005. One Plus a Hundred Zeros Welcome to Your (N)Office If there is any “center” or “downtown” to our new economy (and to Elsewhere, U.S.A., for that matter) it is just off the 101 Freeway in Mountain View, California.
“The dripping box jutting out of the bedroom window joined the TV aerial on the roof as instant fixtures in the American suburban landscape.”11 Partly as a result of artificial cooling, the 1960s became the first decade since the Civil War during which more Americans moved to the South than left it. In the 1970s, that trend would strengthen to the point that twice as many folks moved to Dixie than quit it. As Jones says, “Walk down the street of a Southern or Southwestern city at night, and there’s no one out. All you can hear is the sound of the heat pump on the side of the house; all you can see is the blue glow behind the living-room curtains.”12 Gone were seersucker suits. Southern fashion looked not much different from what was worn in Pennsylvania or Illinois. Sunbelt cities—if you could actually call them cities—were thriving; but they were so low density sprawling and absent any economic center, that they were really more like suburbs connected by freeway arterioles. This air-conditioned-induced mass migration would have enormous consequences for national politics as the South regained the dominant position in federal electoral politics that had been wrested away by FDR’s New Deal coalition.
Artists in New York, in fact, threatened to strike on September 11, 1961, if they did not get concessions from the Fire Department and other city agencies charged with enforcing building codes. (The city’s population, I am sure, trembled at the prospect of its artists going on strike.) They were trapped between business and residential rules. On the one hand, commercial building codes told them they could not stay over or work odd hours in their loft studios; such regulations were meant to protect workers in the sweatshops and other factories, most of which had long since been vacated. On the other hand, residential rules forbade them, officially, from plying their trade at home. The artists of 1961, working in illegal lofts, felt like they were in hiding from building inspectors and anyone who might report them to such authorities. They decried it as a municipal shame on a city that purported to be the capital of art and culture in the Western Hemisphere.
Plenitude: The New Economics of True Wealth by Juliet B. Schor
Asian financial crisis, big-box store, business climate, carbon footprint, cleantech, Community Supported Agriculture, creative destruction, credit crunch, Daniel Kahneman / Amos Tversky, decarbonisation, dematerialisation, demographic transition, deskilling, Edward Glaeser, en.wikipedia.org, Gini coefficient, global village, income inequality, income per capita, Intergovernmental Panel on Climate Change (IPCC), Isaac Newton, Joseph Schumpeter, Kenneth Arrow, knowledge economy, life extension, McMansion, new economy, peak oil, pink-collar, post-industrial society, prediction markets, purchasing power parity, ride hailing / ride sharing, Robert Shiller, Robert Shiller, sharing economy, Simon Kuznets, single-payer health, smart grid, The Chicago School, Thomas L Friedman, Thomas Malthus, too big to fail, transaction costs, Zipcar
Redressing ecological poverty through participatory democracy: Case studies from India. PERI Working Paper Series #36. Amherst, Mass.: Political Economy Research Institute. Available from http://www.peri.umass.edu/fileadmin/pdf/working_papers/working_papers_1-50/WP36.pdf (accessed July 23, 2009). Aguiar, Mark, and Erik Hurst. 2007. Measuring trends in leisure: The allocation of time over five decades. The Quarterly Journal of Economics 122:3: 969-1006. Alesina, Alberto, Edward Glaeser, and Bruce Sacerdote. 2005. Work and leisure in the US and Europe: Why so different? NBER Working Paper 11278. Cambridge, Mass.: National Bureau of Economic Research. Alperovitz, Gar. 2005. America beyond capitalism: Reclaiming our wealth, our liberty, and our democracy. Hoboken, N.J.: Wiley. American Apparel & Footwear Association. 2009. Trends: An annual statistical analysis of the U.S. apparel & footwear industries, annual 2008 edition.
Urban and suburban gardening are burgeoning. Individuals are planting vegetable plots, community gardens are sprouting, and in a number of major cities, efforts to grow healthy organic food for inner-city residents are thriving. Detroit, Milwaukee, and Chicago all have large-scale organizations that are reshaping residents’ food habits. Farmers’ markets, community-supported agriculture, local sourcing by restaurants, Slow Food chapters, school-yard gardens, and related initiatives are on the rise. Practices are expanding from simple vegetable plots to urban homesteading. People are growing mushrooms, keeping bees, and raising livestock. A chicken underground has sprung up in cities with laws against backyard poultry, and urban poultry households stretch from Los Angeles to South Portland, Maine. Backyard livestock has become so popular that some locales have even spawned mobile slaughtering businesses, trucks that move through neighborhoods to kill the animals on-site.
In recent years, the technical feasibility of home production for basic needs such as food, energy, clothing, and housing has grown. Self-provisioning has become one leg of the stool for living smart and sustainably. Sound far-fetched, especially for urban households? The merger of sustainability and self-sufficiency has created an explosion of activity and creativity inside and outside cities. The best known of the trends is food cultivation, through organic gardening, urban homesteading, gleaning, and even a movement to grow fresh food “in small places,” such as crowded city apartments. Urbanites are moving far beyond herbs and vegetables, by planting fruit trees, putting chickens in their backyards, and keeping bees. People are also going off the grid, with solar panels and passive solar design, geothermal pumps, windmills, and wood pellet and corncob stoves. The alternative energy movement is expanding beyond heat and electricity into appliances.
Infotopia: How Many Minds Produce Knowledge by Cass R. Sunstein
affirmative action, Andrei Shleifer, availability heuristic, Build a better mousetrap, c2.com, Cass Sunstein, cognitive bias, cuban missile crisis, Daniel Kahneman / Amos Tversky, Edward Glaeser, en.wikipedia.org, feminist movement, framing effect, hindsight bias, information asymmetry, Isaac Newton, Jean Tirole, jimmy wales, market bubble, market design, minimum wage unemployment, prediction markets, profit motive, rent control, Richard Stallman, Richard Thaler, Robert Shiller, Robert Shiller, Ronald Reagan, slashdot, stem cell, The Wisdom of Crowds, winner-take-all economy
This point is emphasized in Waldron, “Democratic Theory and the Public Interest,” and in Estlund, Democratic Authority. 21. See Joseph Henrich et al., “Group Report: What Is the Role of Culture in Bounded Rationality?,” in Bounded Rationality: The Adaptive Toolbox, ed. Gerd Gigerenzer and Reinhard Selten (Cambridge, MA: MIT Press, 2001), 353–54, for an entertaining outline in connection with food choice decisions. 22. Edward Glaeser, “Psychology and Paternalism,” University of Chicago Law Review (2001): 133. 23. On some of the technical complexities, see Christian List and Robert E. Goodin, “Epistemic Democracy: Generalizing the Condorcet Jury Theorem,” Journal of Political Philosophy 9 (2001): 283–88, 295–97. 24. Ibid. 25. See Surowiecki, The Wisdom of Crowds, 3–4. 26. Condorcet, Selected Writings, 156–57. 27. Even self-evidently arbitrary anchors have significant effects on people’s judgments.
SUNSTEIN OXFORD UNIVERSITY PRESS Infotopia/ !"#$%&'()%#*+)*+#,*'--.%-)/+%0-'*1% CASS R. SUNSTEIN / Infotopia / How Many Minds Produce Knowledge / 1 2006 3 Oxford University Press, Inc., publishes works that further Oxford University’s objective of excellence in research, scholarship, and education. Oxford New York Auckland Cape Town Dar es Salaam Hong Kong Karachi Kuala Lumpur Madrid Melbourne Mexico City Nairobi New Delhi Shanghai Taipei Toronto With offices in Argentina Austria Brazil Chile Czech Republic France Greece Guatemala Hungary Italy Japan Poland Portugal Singapore South Korea Switzerland Thailand Turkey Ukraine Vietnam Copyright © 2006 by Oxford University Press, Inc. Published by Oxford University Press, Inc. 198 Madison Avenue, New York, New York 10016 www.oup.com Oxford is a registered trademark of Oxford University Press All rights reserved.
Overall, statistical groups and interacting groups did about the same. This finding is typical. With respect to questions with definite answers, deliberating groups tend to do about as well as or slightly better than their average member, but not as well as their best members.22 One study does find that The Surprising Failures of Deliberating Groups / 59 when asked to estimate the populations of U.S. cities, groups did as well as their most accurate individual member;23 but in the vast majority of studies, this does not happen.24 Hence it is false to say that group members usually end up deferring to their internal specialists. Deliberating groups and statistical groups often do about equally well (or poorly). For example, no significant differences are found between deliberating groups and average individual performances in numerical estimates involving the number of beans in a jar or the length of lines.25 Another study tested whether deliberating groups were particularly good at telling whether people were telling the truth or lying.26 The individual votes, predeliberation, were 48 percent correct, about the same as the postdeliberation judgments.
Airbnb, airport security, Al Roth, Alvin Roth, Andrei Shleifer, attribution theory, autonomous vehicles, barriers to entry, Brownian motion, centralized clearinghouse, Chuck Templeton: OpenTable, clean water, conceptual framework, constrained optimization, continuous double auction, creative destruction, deferred acceptance, Donald Trump, Edward Glaeser, experimental subject, first-price auction, framing effect, frictionless, fundamental attribution error, George Akerlof, Goldman Sachs: Vampire Squid, Gunnar Myrdal, helicopter parent, information asymmetry, Internet of things, invisible hand, Isaac Newton, iterative process, Jean Tirole, Jeff Bezos, Johann Wolfgang von Goethe, John Nash: game theory, John von Neumann, Joseph Schumpeter, Kenneth Arrow, late fees, linear programming, Lyft, market clearing, market design, market friction, medical residency, multi-sided market, mutually assured destruction, Nash equilibrium, Occupy movement, Pareto efficiency, Paul Samuelson, Peter Thiel, pets.com, pez dispenser, pre–internet, price mechanism, price stability, prisoner's dilemma, profit motive, proxy bid, RAND corporation, ride hailing / ride sharing, Robert Shiller, Robert Shiller, Ronald Coase, school choice, school vouchers, sealed-bid auction, second-price auction, second-price sealed-bid, sharing economy, Silicon Valley, spectrum auction, Steve Jobs, Tacoma Narrows Bridge, technoutopianism, telemarketer, The Market for Lemons, The Wisdom of Crowds, Thomas Malthus, Thorstein Veblen, trade route, transaction costs, two-sided market, uranium enrichment, Vickrey auction, Vilfredo Pareto, winner-take-all economy
We’d also like to thank Iain Campbell, our publisher in the United Kingdom, and his team at John Murray. We’d like to thank the following people who read the manuscript, or parts of it, or who graciously agreed to talk with us about ideas in the book: George Akerlof, Kenneth Arrow, Pierre Azoulay, Seth Dicthick, Frank Dobbin, Ben Edelman, Teppo Felin, Ronald Findlay, Todd Fitch, Margo Beth Fleming, Walter Frick, Joshua Gans, Ed Glaeser, Andrei Hagiu, Matthew Kahn, Judd Kessler, Barbara Kiviat, Scott Kominers, Ilyana Kuziemko, Kevin Li, Roger Martin, Eric Maskin, Dan McGinn, Ben Olken, Joel Podolny, Jeff Pontiff, Canice Prendergast, Paul Romer, Marc Rysman, Peng Shi, Paolo Siconolfi, Paulo Soumaini, Michael Spence, Kendall Sullivan, Morgan Sword, Steve Tadelis, Jonas Vlachos, Ania Wieckowski, and Feng Zhu. Finally, we’d like to thank our families for putting up with our new all-consuming “hobby” of book writing.
Not really practical, no matter how beautiful the math might be.22 Confronting the uncomfortable realities of market misfires would require a different approach and a different style of economics. It was one that treated each type of market—along with its own particular defects and failures—as a largely independent exercise. You would never, for example, build a generic scale model of “City” to try to understand the urban landscapes of Cairo, Mexico City, Amsterdam, and New York. This new generation of economists wasn’t going to abandon models altogether; they were necessary to understand any general issue—if you want to understand traffic patterns in Amsterdam, you would stop well short of building a full-scale model of the city. MIT economist Evsey Domar—who rose to prominence as a mathematical economist in the 1940s and ’50s—drew a comparison to the writing of a novel or play. An author doesn’t observe the minutiae of everyday life when trying to tell a story: it would be pointless and hopelessly boring to sit through life’s many dull moments.23 Rather, “the construction of an economic model, or of any model or theory for that matter . . . consists of snatching from the enormous and complex mass of facts called reality, a few simple, easily-managed key points which, when put together in some cunning way, become for certain purposes a substitute for reality itself.”
But at the time of these early stamp auctions, the telegraph had only just been invented. Out-of-town collectors had to mail in their bids, and auction houses needed to come up with a way of allowing mail-in bids to compete alongside live participants. One stamp dealer, William P. Brown of New York City, described the process they devised: That out-of-town collectors may have equal facilities for purchasing with city collectors, bids may be sent to the auctioneers, Messrs. Bangs & Co., or to William Erving, P.O. Box 3222, N.Y. City, who will either of them represent their bids the same as though they were personally present, and without charge. Thus, supposing either of these parties receives two bids on one lot of 20 and 25 cents apiece, they would start the lot at 21 cents, at which price it would be given to the person sending the 25 cent order, unless some one present advanced, when they would continue to bid, stopping at the limit of 25 cents . . .
The Industries of the Future by Alec Ross
23andMe, 3D printing, Airbnb, algorithmic trading, AltaVista, Anne Wojcicki, autonomous vehicles, banking crisis, barriers to entry, Bernie Madoff, bioinformatics, bitcoin, blockchain, Brian Krebs, British Empire, business intelligence, call centre, carbon footprint, cloud computing, collaborative consumption, connected car, corporate governance, Credit Default Swap, cryptocurrency, David Brooks, disintermediation, Dissolution of the Soviet Union, distributed ledger, Edward Glaeser, Edward Snowden, en.wikipedia.org, Erik Brynjolfsson, fiat currency, future of work, global supply chain, Google X / Alphabet X, industrial robot, Internet of things, invention of the printing press, Jaron Lanier, Jeff Bezos, job automation, John Markoff, knowledge economy, knowledge worker, lifelogging, litecoin, M-Pesa, Marc Andreessen, Mark Zuckerberg, Mikhail Gorbachev, mobile money, money: store of value / unit of account / medium of exchange, new economy, offshore financial centre, open economy, Parag Khanna, peer-to-peer, peer-to-peer lending, personalized medicine, Peter Thiel, precision agriculture, pre–internet, RAND corporation, Ray Kurzweil, recommendation engine, ride hailing / ride sharing, Rubik’s Cube, Satoshi Nakamoto, selective serotonin reuptake inhibitor (SSRI), self-driving car, sharing economy, Silicon Valley, Silicon Valley startup, Skype, smart cities, social graph, software as a service, special economic zone, supply-chain management, supply-chain management software, technoutopianism, The Future of Employment, underbanked, Vernor Vinge, Watson beat the top human players on Jeopardy!, women in the workforce, Y Combinator, young professional
Today 54 percent of the world’s: “World’s Population Increasingly Urban with More Than Half Living in Urban Areas,” United Nations, July 10, 2014, http://www.un.org/en/development/desa/news/population/world-urbanization-prospects-2014.html; Parag Khanna, “Beyond City Limits,” Foreign Policy, August 16, 2010, http://www.foreignpolicy.com/articles/2010/08/16/beyond_city_limits?page=0,0. Cities are incubators of growth: Andrew F. Haughwout and Robert P. Inman, “How Should Suburbs Help Their Central Cities? Growth and Welfare Enhancing Intra-metropolitan Fiscal Distributions,” Federal Reserve Bank of New York, 2004, http://www.newyorkfed.org/research/economists/haughwout/suburbs_help_central_cities_haughwout.pdf. Talent can be more effectively: Edward L. Glaeser, “Cities, Information, and Economic Growth,” Cityscape 1, no. 1 (1994): 9–47, http://www.huduser.org/periodicals/cityscpe/vol1num1/ch2.pdf. Exporting advanced services: Sir Peter Hall, “The World’s Urban Systems: A European Perspective,” Global Urban Development Magazine 1, no. 1 (2005), http://www.globalurban.org/Issue1PIMag05/Hall%20article.htm.
Wells, “Adapt or perish.” CITIES AS INNOVATION HUBS The geographic foci for innovation are almost always cities. Why are cities growing so rapidly even as network technologies allow us to be more distributed, to do more at a distance? Three percent of the world’s population lived in cities in 1800. Today 54 percent of the world’s population lives in cities, and just 100 cities account for 30 percent of the world economy. In some respects, cities have always been drivers of a society’s growth, even when 97 percent of the population lived in rural areas. Empires have always been powered by their cities. Baghdad led the Abbasids to greatness. Rome did the same for the Romans, as did Constantinople for the Byzantines and then the Ottomans. The British colonized and established a chain of cities that linked their empire together, including Cape Town (colonized in 1814), Singapore (1824), and Hong Kong (1842).
Things like knowing exactly when the train will come, being able to go online instead of standing in line to access a government service, and being able to provide real-time feedback that informs how and when city services are delivered. The capability for doing this skews toward very large cities and increasingly involves big data, according to Stephen Goldsmith, a professor and director of the Innovations in American Government Program at Harvard’s Kennedy School of Government. He directs Data-Smart City Solutions, a project “focused on government efforts to use and blend new technologies, big data analytics and community input.” As cities get tech savvy, this effectively means that global centers with lots of money and the capabilities Goldsmith describes (like New York City, Dubai, London, San Francisco, Tokyo, and Seoul) are those likely to build big data applications that are highly appealing to citizens, and this attracts the “next economy” class. Cities that are aspiring to become global hubs, like Jakarta, São Paulo, and Mumbai, need to simultaneously invest in physical infrastructure and the big data applications that often attach to this infrastructure.
Cheap: The High Cost of Discount Culture by Ellen Ruppel Shell
barriers to entry, Berlin Wall, big-box store, cognitive dissonance, computer age, creative destruction, Daniel Kahneman / Amos Tversky, delayed gratification, deskilling, Donald Trump, Edward Glaeser, fear of failure, Ford paid five dollars a day, Frederick Winslow Taylor, George Akerlof, global supply chain, global village, greed is good, Howard Zinn, income inequality, interchangeable parts, inventory management, invisible hand, James Watt: steam engine, Joseph Schumpeter, Just-in-time delivery, knowledge economy, loss aversion, market design, means of production, mental accounting, Pearl River Delta, Ponzi scheme, price anchoring, price discrimination, race to the bottom, Richard Thaler, Ronald Reagan, side project, Steve Jobs, The Market for Lemons, The Wealth of Nations by Adam Smith, Thomas L Friedman, trade liberalization, traveling salesman, ultimatum game, Victor Gruen, washing machines reduced drudgery, working poor, yield management, zero-sum game
See, for example, Sue Kovach Shuman, “At the Market: How to Sniff Out Where Your Garlic Came From,” Washington Post, June 20, 2007, F07. CHAPTER NINE: THE DOUBLE-HEADED DRAGON 189 so cheap as to be essentially free: Marc Levinson, The Box: How the Shipping Container Made the World Smaller and the World Economy Bigger (Princeton, N.J.: Princeton University Press, 2006). In this remarkable book, Levinson quotes economists Edward L. Glaeser and Janet E. Kohlhase: “It is better to assume that moving goods is essentially costless than to assume that moving goods is an important component of the production process.” 189 China and the containers they carry: Joseph Tarnowski, “NONFOODS: HBC/GM: Dueling for Dollars,” Progressive Grocer, September 15, 2006. 189 the vast bulk of them from China: See “About the Port,” Web site: the Port of Los Angeles at http://www.portoflosangeles.org. 190 only one-twentieth of the world’s manufactured goods: Ted.
By Christmas the place had done an almost inconceivable $2 million in sales. FERKAUF pulled a low-margin, low-service, high-turnover, down-and-dirty discount model out of the shadows and onto the cover of Fortune magazine. Many others were to follow. Upstarts such as Two Guys, G.E.M. G.E.X., Zayre, Spartan, FedMart, and Bargain City built sprawling 70,000-to 200,000-square-foot discount stores in New York, Philadelphia, Detroit, and Chicago, and in medium-sized cities such as Canton, Mississippi, and Yakima, Washington. Like Ferkauf many of these operators leased their land and buildings. This freed up capital and made it easy to pick up and move when and where the shoppers did. These stores were free agents without loyalty to any particular community, and they held no loyalty to any particular supplier.
There was a grain of truth to this, but only a grain. Pyrotechnics might draw customers initially, but the low prices kept them coming. The impact of the low-price juggernaut in the post-Sputnik era is difficult to overstate. Discounters shuffled the American demographic, abetting the further decline of already troubled city centers by luring still more customers to the suburbs and beyond. Department stores had for some time felt the pinch of urban flight, but many could at least rely on their suburban branches to sputter some revenue back into their city locations. Typically, these suburban stores were expensively constructed and carried merchandise priced at least as high as downtown stores. Discounters undercut prices at both the urban and suburban locations, and choked off the money flow. And discounters were promiscuous, carrying anything that could be bought cheap and sold in large lots.
In Defense of Global Capitalism by Johan Norberg
Asian financial crisis, capital controls, clean water, correlation does not imply causation, creative destruction, Deng Xiaoping, Edward Glaeser, Gini coefficient, half of the world's population has never made a phone call, Hernando de Soto, illegal immigration, income inequality, informal economy, Joseph Schumpeter, Kenneth Rogoff, land reform, Lao Tzu, liberal capitalism, manufacturing employment, market fundamentalism, Mexican peso crisis / tequila crisis, Naomi Klein, new economy, open economy, profit motive, race to the bottom, rising living standards, school vouchers, Silicon Valley, Simon Kuznets, structural adjustment programs, The Wealth of Nations by Adam Smith, Tobin tax, trade liberalization, trade route, transaction costs, trickle-down economics, union organizing, zero-sum game
Percy Barnevik, Global Forces of Change, lecture presented at the 1997 International Industrial Conference, San Francisco, September 29, 1997, p. 4. 14. This finding is generally confirmed by Daniel Ben-David and L. Alan Winters, ‘‘Trade, Income Disparity and Poverty,’’ World Trade Organization Special Study No. 5 (Geneva: World Trade Organization, 1999), http://www.wto.org/english/res_e/booksp_ e/disparity_e.pdf. It is also supported by Alberto F. Ades, and Edward L. Glaeser, ‘‘Evidence on Growth, Increasing Returns, and the Extent of the Market,’’ Quarterly Journal of Economics 114, no. 3 (August 1999). One argument against free trade 299 bringing growth is that growth was higher during the early postwar decades than it is today, in the age of globalization. But this objection ignores the fact that growth is quicker when huge tariffs begin to come down. Growth is also generally fastest when the starting point is poverty, with any number of opportunities of obtaining a big return on investments, owing to the shortage of capital and disastrous political affairs formerly prevailing—as, for example, after a war.
What we gain by being free to choose everything at home is that this opportunity makes it hard to find any place that feels really authentic, at least on the main tourist routes. This is a problem, but it’s another one of those luxury problems. A man from Prague was sometimes visited by Czech friends who had settled abroad. They deplored McDonald’s having come to Prague, because it threatened the city’s distinctive charm. This response made the man indignant. How could they regard his home city as a museum, a place for them to visit now and then in order to avoid fast food restaurants? He wanted a real city, including the convenient and inexpensive food that these exile Czechs themselves had access to. A real, living city cannot be a ‘‘Prague summer paradise’’ for tourists. Other countries and their populations do not exist in order to give us picturesque holiday experiences. They, like us, are entitled to choose what they think suits them.4 Cultures change, and the greater the number of options, the faster change will be.
Instead, pollution follows an inverted U-curve. When growth in a very poor country gathers speed and the chimneys begin belching smoke, the environment suffers. But when prosperity has risen high enough, the environmental indicators show an improvement instead: emissions are reduced, and air and water show progressively lower concentrations of pollutants. The cities with the worst problems are not Stockholm, New York, and Zu¨rich, but rather Beijing, Mexico City, and New Delhi. In addition to the factors already mentioned, this is also due to the economic structure changing from raw-material-intensive to knowledge-intensive production. In a modern economy, heavy, dirty industry is to a great extent superseded by service enterprises. Banks, consulting firms, and information technology corporations do not have the same environmental impact as old factories.
Top Dog: The Science of Winning and Losing by Po Bronson, Ashley Merryman
Asperger Syndrome, Berlin Wall, conceptual framework, crowdsourcing, delayed gratification, deliberate practice, Edward Glaeser, experimental economics, Fall of the Berlin Wall, fear of failure, game design, industrial cluster, Jean Tirole, knowledge worker, loss aversion, Mark Zuckerberg, meta analysis, meta-analysis, Mikhail Gorbachev, phenotype, Richard Feynman, Richard Feynman, risk tolerance, school choice, selection bias, shareholder value, Silicon Valley, six sigma, Steve Jobs, zero-sum game
., “At the Nexus of Labor and Leisure: Baseball, Nativism, and the 1919 Black Sox Scandal,” Journal of Social History, vol. 36(4), pp. 941–962 (2003) Derickson, Alan, “Making Human Junk: Child Labor as a Health Issue in the Progressive Era,” American Journal of Public Health, vol. 82(9), pp. 1280–1290 (1992) Fitzgerald, F. Scott, The Great Gatsby (Cambridge Ed.), Matthew J. Bruccoli (Ed.), Cambridge: Cambridge University Press (1991) Law, Marc T., & Gary D. Libecap, “The Determinants of Progressive Era Reform: The Pure Food and Drugs Act of 1906,” In: Edward L. Glaeser & Claudia Goldin (Eds.), Corruption & Reform: Lessons from America’s Economic History, Chicago: University of Chicago Press (2006) Nathan, Daniel A., “The Big Fix,” Legal Affairs, http://bit.ly/ON0yDA (2004) Panacy, Peter, “Major League Baseball Finds Its Roots in Progressive America,” Bleacher Report, http://bit.ly/fUpsZ0 (4/11/2011) Pietruska, David, Rothstein: The Life, Times and Murder of the Criminal Genius Who Fixed the 1919 World Series, New York: Basic Books (2011) Riess, Steven A., “Professional Baseball and American Culture in the Progressive Era,” NASHH Proceedings, pp. 40–41 (1975) Rosenberg, Norman L., “Here Comes the Judge!
Landrieu a Prostitute: ‘So We Know You’re Hookin’, but You’re Just Not Cheap,’ ” Media Matters, http://bit.ly/9oqkRW (11/23/2009) “Beck on Landrieu: “We’re with a High-Class Prostitute,” Media Matters, http://bit.ly/6NyzzV (11/23/2009) Begala, Paul, Interview with Author (2011) Begala, Paul, “A Warrior on a Mission in Rush Limbaugh’s Home District,” Huffington Post, http://huff.to/2Z3RaS (11/10/2009) Bureau of Labor Statistics, U.S. Department of Labor, Occupational Outlook Handbook, 2012–13 Edition, Computer Programmers, http://1.usa.gov/Lc3sCX Bureau of Labor Statistics, U.S. Department of Labor, Occupational Outlook Handbook, 2012–13 Edition, Data for Occupations Not Covered in Detail, http://1.usa.gov/PRj1AF Catanese, David, “GOP Poll: Emerson Dominant,” Politico, http://bit.ly/T0q0Yt (4/22/2010) “City Councils,” National League of Cities, http://bit.ly/KqWUNS (u.d.) Conway, M. Margaret, “Women’s Political Participation at the State and Local Level in the United States,” Political Science & Politics, vol. 37(1), pp. 60–61 (2004) Deckman, Melissa, “Gender Differences in the Decision to Run for School Board,” American Politics Research, vol. 35(4), pp. 541–563 (2007) “Echoing Beck, Limbaugh Claims Landrieu ‘May Be the Most Expensive Prostitute in the History of Prostitution,’ ” Media Matters, http://bit.ly/PDenSA (11/23/2009) Eller, Jeffrey, Interview with Author (2011) “Fast Facts,” Center for American Women and Politics, http://bit.ly/hKFGRb (2012) Fox, Richard L., & Jennifer L.
What’s overlooked, though, is that even in business—even in industries with a large N of competitors—feelings of rivalry intensify competitive effort. The rivalry effect has been studied in many arenas, including Scottish knitwear companies, Norwegian groceries, video game producers, and banks. But it’s in the Emilia-Romagna region of Northern Italy that local rivalries are producing economic value in surprising ways. Around the historic city of Bologna, a new, modern industry has sprouted up and managed recently to dominate the $28.6 billion world market—for packaging machinery. This region has earned the nickname “Packaging Valley.” That plastic clamshell your phone charger came in, or the foil blister pack your heartburn pill pops out of, or the six-pack box of bouillon-cube dice in your pantry—there’s a good chance the machine that pressed it came from Packaging Valley.
Scale: The Universal Laws of Growth, Innovation, Sustainability, and the Pace of Life in Organisms, Cities, Economies, and Companies by Geoffrey West
Alfred Russel Wallace, Anton Chekhov, Benoit Mandelbrot, Black Swan, British Empire, butterfly effect, carbon footprint, Cesare Marchetti: Marchetti’s constant, clean water, complexity theory, computer age, conceptual framework, continuous integration, corporate social responsibility, correlation does not imply causation, creative destruction, dark matter, Deng Xiaoping, double helix, Edward Glaeser, endogenous growth, Ernest Rutherford, first square of the chessboard, first square of the chessboard / second half of the chessboard, Frank Gehry, Geoffrey West, Santa Fe Institute, Guggenheim Bilbao, housing crisis, Index librorum prohibitorum, invention of agriculture, invention of the telephone, Isaac Newton, Jane Jacobs, Jeff Bezos, Johann Wolfgang von Goethe, John von Neumann, Kenneth Arrow, laissez-faire capitalism, life extension, Mahatma Gandhi, mandelbrot fractal, Marchetti’s constant, Masdar, megacity, Murano, Venice glass, Murray Gell-Mann, New Urbanism, Peter Thiel, profit motive, publish or perish, Ray Kurzweil, Richard Feynman, Richard Feynman, Richard Florida, Silicon Valley, smart cities, Stephen Hawking, Steve Jobs, Stewart Brand, technological singularity, The Coming Technological Singularity, The Death and Life of Great American Cities, the scientific method, too big to fail, transaction costs, urban planning, urban renewal, Vernor Vinge, Vilfredo Pareto, Von Neumann architecture, Whole Earth Catalog, Whole Earth Review, wikimedia commons, working poor
As presently constituted, our continued success requires the supply of coal, gas, oil, fresh water, iron, copper, molybdenum, titanium, ruthenium, platinum, phosphorus, nitrogen, and much, much more to be available at an exponentially increasing rate. 2. CITIES, URBANIZATION, AND GLOBAL SUSTAINABILITY Perhaps our greatest invention has been the very stage upon which this panoply of socioeconomic interactions, mechanisms, and processes that drive exponential expansion has been played out, namely the city. This is the view expressed by the urban economist Edward Glaeser in his book The Triumph of the City.1 For concomitant with the population explosion over the past two hundred years has been the exponential urbanization of the planet. The city is the ingenious mechanism we have evolved for facilitating and enhancing social interaction and collaboration, two necessary components of successful innovation and wealth creation.
Jane understood this truth more than fifty years ago, and only now are some of the experts beginning to recognize her extraordinary foresight. Many writers have picked up this theme, including the urban economists Edward Glaeser and Richard Florida, but none has been as forthright and bold as Benjamin Barber in his book with the provocative title If Mayors Ruled the World: Dysfunctional Nations, Rising Cities.5 These are indicative of a rising consciousness that cities are where the action is—where challenges have to be addressed in real time and where governance seems to work, at least relative to the increasing dysfunctionality of the nation-state. 3. AN ASIDE: A PERSONAL EXPERIENCE OF GARDEN CITIES AND NEW TOWN Following the destruction wrought by the Second World War in which millions of houses were destroyed, the socialist government in Britain faced a mammoth housing crisis.
THE REMARKABLY REGULAR STRUCTURE OF MOVEMENT IN CITIES The extraordinary diversity and multidimensionality of cities has led to a host of images and metaphors that try to capture particular instantiations of what a city is. The walking city, the techno-city, the green city, the eco-city, the garden city, the postindustrial city, the sustainable city, the resilient city. . . and, of course, the smart city. The list goes on and on. Each of these expresses an important characteristic of cities, but none captures the essential feature encapsulated in the rhetorical Shakespearean question “What is the city but the people?” Most images and metaphors of cities conjure up their physical footprint and tend to ignore the central role played by social interaction. This critical component is captured in a different kind of metaphor such as the city as a cauldron, a crucible, a mixing bowl, or a reactor in which the churning of social interactions catalyzes social and economic activity: the people’s city, the collective city, the anthro-city.
Instant City: Life and Death in Karachi by Steve Inskeep
battle of ideas, British Empire, call centre, creative destruction, Edward Glaeser, European colonialism, illegal immigration, informal economy, Jane Jacobs, Khyber Pass, Kibera, knowledge economy, Mahatma Gandhi, mass immigration, McMansion, megacity, new economy, New Urbanism, urban planning, urban renewal
., 22. 101 developed a master plan for the city: Arif Hasan, Understanding Karachi (Karachi: City Press, 1999), 28. 101 a population of 5.4 million by 1981: Arif Hasan and Masooma Mohib, “The Case of Karachi, Pakistan,” p. 3, from The Challenge of Slums: Case Studies for the Global Report on Human Settlements 2003 (London and Sterling, VA: Earthscan, 2003). 102 539 irregular neighborhoods... 2.5 million people: Interview with Rafique Engineer, March 2010. 103 Doxiadis... had proposed to demolish: Constantinos Doxiadis, Between Utopia and Dystopia (Hartford, CT: Trinity College Press, 1966), 63. 103 “had no tangible results”: Leslie Green and Vincent Malone, “Urbanization in Nigeria: A Planning Commentary” (New York: Ford Foundation, 1972–73), 31. 103 “Chaotic traffic conditions”: Ibid., 14–15. 103 A more recent study: Edward Glaeser, Triumph of the City (New York: Penguin, 2011), 73. 105 “Everybody says land mafia”: Interview with Perween Rahman, March 2010. 105 “Now everybody is a land supplier”: Ibid. 106 “I was designing a hotel”: Interview with Perween Rahman, May 2008. 106 “It was the start of a land grab”: Interview with Perween Rahman, July 2010. 107 “He was a man who would say”: Interview with Perween Rahman, May 2008. 107 grants from the Bank of Credit and Commerce International: Akhtar Hameed Khan, Orangi Pilot Project: Reminiscences and Reflections (Karachi: Oxford University Press, 1996), 49. 107 “I became a state within a state”: Interview with Shamsuddin, March 2010. 108 “They are redundant”: Interview with Perween Rahman, March 2010. 109 “What we do”: Interview with Wahab Khan, May 2008.
He represented a global flow of money and ideas from one instant city to another. Just as McCartt was building an entire upscale neighborhood on new land that was largely segregated from the rest of the city, many proposals in other cities seemed to focus less on improving an existing city than on starting fresh. Officials in Mumbai planned to demolish one of the city’s famous slums to make room for upscale towers. They were actually building an entire satellite city of the metropolis, called Navi Mumbai, or New Mumbai, which quickly grew to a population of two million. At Inchon, South Korea, the port for the megacity of Seoul, developers were planning a new city on a man-made island; an American firm was leading the project. Chinese officials brought in a Chilean planner attached to a London firm to help design a satellite city outside the absurdly growing metropolis of Shanghai.
A NOTE ON POPULATION FIGURES Cities in this book are usually discussed in terms of their metropolitan areas—the central city plus suburbs and other outlying areas linked by commuting. New York, for example, is not described as a city of 8.2 million (the approximate number within the city’s legal boundaries) but as a city of about nineteen million. The metropolitan area is the best definition of a city in the age of the automobile. The United Nations Population Division measures each city as an “urban agglomeration,” which is more compact than a metropolitan area, but both terms encompass the great bulk of a modern city and are used almost interchangeably in this book. When comparing cities, I rely on UN estimates, because they are compiled by the same people using the same methods. UN estimates, however, are ultimately based on national census figures that vary in their quality and timing.
The Vanishing Middle Class: Prejudice and Power in a Dual Economy by Peter Temin
2013 Report for America's Infrastructure - American Society of Civil Engineers - 19 March 2013, affirmative action, Affordable Care Act / Obamacare, American Legislative Exchange Council, American Society of Civil Engineers: Report Card, anti-communist, Bernie Sanders, Branko Milanovic, Bretton Woods, capital controls, Capital in the Twenty-First Century by Thomas Piketty, carried interest, clean water, corporate raider, Corrections Corporation of America, crack epidemic, deindustrialization, desegregation, Donald Trump, Edward Glaeser, Ferguson, Missouri, financial innovation, financial intermediation, floating exchange rates, full employment, income inequality, intangible asset, invisible hand, low skilled workers, low-wage service sector, mandatory minimum, manufacturing employment, Mark Zuckerberg, mass immigration, mass incarceration, means of production, mortgage debt, Network effects, New Urbanism, Nixon shock, obamacare, offshore financial centre, oil shock, Plutocrats, plutocrats, Powell Memorandum, price stability, race to the bottom, road to serfdom, Ronald Reagan, secular stagnation, Silicon Valley, Simon Kuznets, the scientific method, War on Poverty, Washington Consensus, white flight, working poor
Princeton: Princeton University Press. Agan, Amanda Y., and Sonja B. Starr. 2016. “Ban the Box, Criminal Records, and Statistical Discrimination: A Field Experiment.” University of Michigan Law and Economic Research Paper 16-012. http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2795795. Accessed September 20, 2016. Agee, James, and Walker Evans. 1941. Let Us Now Praise Famous Men. Boston: Houghton Mifflin. Alesina, Alberto, Edward Glaeser, and Bruce Sacerdote. 2001.“Why Doesn’t the United States Have a European-Style Welfare State?” Brookings Papers on Economic Activity (Fall): 187–278. Also available as NBER Working Paper No. 8524. Alexander, Michelle. 2010. The New Jim Crow: Mass Incarceration in the Age of Colorblindness. New York: New Press. Alichi, Ali, Kory Kantenga, and Juan Solé. 2016. “Income Polarization in the United States.”
They argued that a farmer thinking of moving to the city was attracted by the wage available in the city, which was substantially higher than the wage he was earning in the countryside. He would leave if his expected wage in the city would be larger; the expected wage is the product of the wage differential and the probability that the worker would find a high-paying job in the city. The farmer was assumed to anticipate both the higher wage and the difficulty of obtaining a job that paid this wage.7 The economists recognized that the effort to transfer into the capitalist sector was neither certain nor swift. It was not enough to move to the city; the aspiring worker had to find a good job. We know that this was hard to do from the massive slums that surround all big cities in developing countries. These slums are full of migrants who came to the city and then failed to find a good job.
The growth of Japan and China accelerated the decline of American manufacturing and the demand for unskilled labor in and around factories. Industrial cities found that people were less mobile than jobs, and urban prosperity was replaced by urban joblessness. Black workers moved to Northern cities to find jobs in the Great Migration, only to find that the jobs had disappeared. The Great Migration, which as noted earlier ended in 1970, did not lead to integrated housing in the North. As soon as Southern black workers appeared in Northern cities, white families began to move out of the cities. White flight was responsible for one-half of the increase in segregation in the 1930s. Prosperous white urban residents continued to leave cities for the suburbs after the Second World War, avoiding newly integrated schools. They were encouraged by the GI Bill and other federal policies that provided generous mortgages for suburban houses and highways for suburbanites to drive to work.
The Cost of Inequality: Why Economic Equality Is Essential for Recovery by Stewart Lansley
banking crisis, Basel III, Big bang: deregulation of the City of London, Bonfire of the Vanities, borderless world, Branko Milanovic, Bretton Woods, British Empire, business process, call centre, capital controls, collective bargaining, corporate governance, corporate raider, correlation does not imply causation, creative destruction, credit crunch, Credit Default Swap, crony capitalism, David Ricardo: comparative advantage, deindustrialization, Edward Glaeser, falling living standards, financial deregulation, financial innovation, Financial Instability Hypothesis, floating exchange rates, full employment, Goldman Sachs: Vampire Squid, high net worth, hiring and firing, Hyman Minsky, income inequality, James Dyson, Jeff Bezos, job automation, John Meriwether, Joseph Schumpeter, Kenneth Rogoff, knowledge economy, laissez-faire capitalism, light touch regulation, Long Term Capital Management, low skilled workers, manufacturing employment, market bubble, Martin Wolf, mittelstand, mobile money, Mont Pelerin Society, Myron Scholes, new economy, Nick Leeson, North Sea oil, Northern Rock, offshore financial centre, oil shock, Plutocrats, plutocrats, Plutonomy: Buying Luxury, Explaining Global Imbalances, Right to Buy, rising living standards, Robert Shiller, Robert Shiller, Ronald Reagan, savings glut, shareholder value, The Great Moderation, The Spirit Level, The Wealth of Nations by Adam Smith, Thomas Malthus, too big to fail, Tyler Cowen: Great Stagnation, Washington Consensus, Winter of Discontent, working-age population
These include Joe Stiglitz, a Nobel prize- winner and a former chief economics at the IMF; Jean-Paul Fitoussi and Francesco Saraceno of the Paris-based Centre for Economic Research; Professor Raghuram Rajan, another former IMF chief economist; Gerry Holtham, a former City fund manager and co-director of the Investment Management Resource Centre at Cardiff University; the American economist Ravi Batra; and Michael Kumhof and Romain Rancière, two IMF research economists.242 The latter, for example, have argued that ‘The crisis is the ultimate result, after a period of decades, of a shock to the relative bargaining powers over income of two groups of households, investors who account for 5 per cent of the population, and whose bargaining power increases, and workers who account for 95 percent of the population (and whose bargaining power has fallen).’243 Although these are the views of a small minority and remain highly controversial, they have prompted an ongoing debate. Reviewing some of the evidence, Harvard economist David Laibson concluded, ‘income inequality was not a major contributor’.244 In January 2011, in a spirited debate at the annual meeting of the American Economic Association in Denver, two economists—Daron Acemoglu of MIT and Edward Glaeser of Harvard took on Chicago’s Raghuram Rajan, with Glaeser concluding that ‘Inequality seems as if it was only a small part of the story.’245 Then in February, in the first attempt at a systematic analysis of the relationship between rising inequality and banking crises, two Oxford academics, including the distinguished economist, Tony Atkinson, concluded that ‘at first sight this does not provide overwhelming evidence for the increase [in inequality] hypothesis’.
See Buchanan et al, Undisclosed and Unsustainable, Centre for Research on Socio-Cultural Change, Manchester University, 2009. 130 Centre for Cities, Cities Outlook, 2009. 131 Centre for Cities, Public Sector Cities, Trouble Ahead, July 2009. 132 Buchanan et al, op. cit. p 22. 133 J Hills et all (eds), Towards a More Equal Society, Policy Press, 2009, p 2. 134 Ibid. p 28. 135 Lansley, Life in the Middle, op. cit. figure 8. 4 A FAUSTIAN PACT In early January 1998, a large group of London traders, fund managers and financiers braved the pouring winter rain to gather at the Mansion House, the grand official residence of the Mayor of the City of London. The group—gathered in the very heart of the old financial sector known as the Square Mile—had been invited to debate the motion ‘This house believes that City salaries are totally fair and justified’. Most of the 200 at the debate would have been amongst the highest paid in the land.
But eight months before the Mansion House debate, the Major government had been ousted by the electorate, and Labour had been returned with a record post-war majority. The City had once been apprehensive about the return of Labour to power. But following the loss of the 1991 election, the Party’s leaders set about winning friends in the City. Members of the Shadow Cabinet, led by the shadow Chancellor, John Smith, toured the dining-rooms of the City meeting senior finance figures in what became known as the ‘prawn cocktail offensive’. Stuart Bell MP even went to New York on a trip paid for by Kleinwort Benson Securities to reassure Wall Street that the financial markets would be safe in Labour hands. In opposition, Tony Blair had, for a time, been Labour’s spokesman on the City while Brown immersed himself in the detail of banking. In power, the political love-affair with the City launched by the Conservatives continued.
The Vanishing Neighbor: The Transformation of American Community by Marc J. Dunkelman
Affordable Care Act / Obamacare, Albert Einstein, assortative mating, Berlin Wall, big-box store, blue-collar work, Bretton Woods, Broken windows theory, call centre, clean water, cuban missile crisis, dark matter, David Brooks, delayed gratification, double helix, Downton Abbey, Edward Glaeser, Fall of the Berlin Wall, Filter Bubble, Francis Fukuyama: the end of history, George Santayana, Gini coefficient, glass ceiling, global supply chain, global village, helicopter parent, if you build it, they will come, impulse control, income inequality, invention of movable type, Jane Jacobs, John Markoff, Khyber Pass, Louis Pasteur, Marshall McLuhan, Martin Wolf, McMansion, Nate Silver, Nicholas Carr, obamacare, Occupy movement, Peter Thiel, post-industrial society, Richard Florida, rolodex, Saturday Night Live, Silicon Valley, Skype, Steve Jobs, telemarketer, The Chicago School, The Death and Life of Great American Cities, the medium is the message, Thomas L Friedman, Tyler Cowen: Great Stagnation, urban decay, urban planning, Walter Mischel, War on Poverty, women in the workforce, World Values Survey, zero-sum game
.: Harvard University Press, 2009), 15–16. 26Safford, Why the Garden Club Couldn’t Save Youngstown, 22, 31–32, 63–68. 27Safford, Why the Garden Club Couldn’t Save Youngstown, 83, 92–95. 28Locke, Remaking the Italian Economy, 134. 29Michael Mandel, “The Failed Promise of Innovation in the U.S.,” Bloomberg Businessweek, June 3, 2009. 30Tyler Cowen, The Great Stagnation (New York: Dutton, 2011). 31http://news.cnet.com/8301-31921_3-20096067-281/peter-thiel-thinks-tech-innovation-has-stalled/. 32Edward Glaeser, Triumph of the City: How Our Greatest Invention Makes Us Richer, Smarter, Greener, Healthier, and Happier (New York: Penguin Press, 2011). 33Richard Florida, The Rise of the Creative Class: And How It’s Transforming Work, Leisure, Community and Everyday Life (New York: Basic Books, 2002). 34Elsa Brenner, “In Westchester County, the Platinum Mile Is Reinvented, Again,” New York Times, January 3, 2012. 35Charles V.
For the better part of the next several decades, right through the Great Depression, the Second World War, and the postwar era that raised Kitty Genovese, answering those questions became one of sociology’s most important projects. Then two things happened. First, in 1961, a transplant to New York City from Scranton, Pennsylvania, published arguably the most important twentieth-century treatise on American community. Jane Jacobs’s The Death and Life of American Cities offered a wholly new understanding of municipal success. Conventional wisdom argued that city problems were driven by the chaos of urban life; but Jacobs thought just the opposite. It wasn’t that cities alienated people from one another; quite the opposite, efforts to clean up the nation’s metropolises were sterilizing their streetscapes. The key to a vibrant city, in her view, was to maintain the familiar relationships that arranged neighborhood routines into an intricate ballet. The challenge was to harness the vitality of neighborhood life without stifling it.
In the spirit of Jane Jacobs, he compared two places that represented, in similar fashion, broadly divergent experiences: Allentown, Pennsylvania, and Youngstown, Ohio. Both cities, Safford determined, had through the postwar years emerged as blue-collar, industrial powerhouses. Moreover—and maybe most important—they had both been defined by similarly high quotients of what James Coleman, and later Robert Putnam, had defined as social capital. But that’s where the similarities seemed to end. When each city’s core industrial foundation began to decay in the 1970s and 1980s—as Allentown and Youngstown’s steel mills, brake-assembly plants, and other factories fell on hard times—the cities headed in different directions.25 Allentown claimed the happier of the two stories. The factory town made the subject of a Billy Joel song avoided the perils that might have befallen a city competing with cheaper steel plants overseas.
What's the Matter with White People by Joan Walsh
affirmative action, Affordable Care Act / Obamacare, banking crisis, clean water, collective bargaining, David Brooks, desegregation, Donald Trump, Edward Glaeser, full employment, global village, Golden Gate Park, hiring and firing, impulse control, income inequality, invisible hand, knowledge worker, labor-force participation, mass immigration, new economy, obamacare, Occupy movement, Plutocrats, plutocrats, Ralph Nader, Ronald Reagan, upwardly mobile, urban decay, War on Poverty, We are the 99%, white flight, women in the workforce, zero-sum game
Some argue that we have less social support and more harried lives than people in comparable nations, at least partly because we don’t want to take the chance that increased social spending and a broader safety net will help “other people,” those slackers and moochers we’ve always feared. In fact, the United States lags behind all industrialized nations when it comes to direct government funding of health care, family leave, child care, and unemployment benefits. In an influential 2004 book, Fighting Poverty in the U.S. and Europe: A World of Difference, Harvard economists Alberto Alesina and Edward Glaeser attributed most of the gap in social spending between western Europe and the United States to our unrivaled mix of racial and ethnic groups and the distrust that engendered. Now, when you add in American social spending on public education, which used to be the highest in the world, as well as employer-provided social supports subsidized by government with tax breaks—health insurance and 401(k)s, to name two big examples—the US welfare state isn’t necessarily smaller than that of a lot of industrialized nations.
Liberals tend to admire him as an urban innovator who did his best to make the city live up to its promise of opportunity for everyone. Conservatives despise him as someone who caved to black “militants,” as well as to white union leaders, and destroyed New York. Some see him as a dangerous naïf rolled by the city he was supposed to govern. Liberal journalist Jack Newfield, who loved him, summed it up this way in a Lindsay obituary in 2000: “Lindsay was great on race, but not so great on class. He lacked a certain empathy for the white ethnic communities of the city. . . . The mayor who wanted reconciliation so deeply accidentally created contention and white backlash.” That could be the epitaph of the Democratic Party somewhere around the same time. We watched from Long Island with optimism as the mayor vowed to unite the city. By the mid-1960s, New York had already become two New Yorks: one for upwardly mobile white-collar workers, and one for the declining working class of every race.
In this new Futurama, the entire world is linked by global highways that cut through oceans, rain forests, mountains, polar ice caps, and even outer space (all traveled by presumably GM-made vehicles). The exhibit culminated in the city of the future, and Futurama seemed to be trying to reassure us that the urban experiment would work out in the end. “Its traditions and its faiths preserved, there is a new beauty and new strength in the city of tomorrow,” the confident narrator told us. And we believed him. At the end of the day my parents, my little brother, and I climbed into a tiny, swaying carriage and rode in an enormous Goodyear tire, a giant Ferris wheel that was, like Futurama, a great big ad. From there, we could see Shea Stadium, the brand-new home of the Mets. We had a panoramic view of the city we loved. Luckily, we couldn’t see the actual future. As the battles of civil rights and the culture wars that ensued grew more violent and bitter, the white working class grew more alienated, more certain than ever that what some called progress was destabilizing the world they had built.
Platform Revolution: How Networked Markets Are Transforming the Economy--And How to Make Them Work for You by Sangeet Paul Choudary, Marshall W. van Alstyne, Geoffrey G. Parker
3D printing, Affordable Care Act / Obamacare, Airbnb, Alvin Roth, Amazon Mechanical Turk, Amazon Web Services, Andrei Shleifer, Apple's 1984 Super Bowl advert, autonomous vehicles, barriers to entry, big data - Walmart - Pop Tarts, bitcoin, blockchain, business process, buy low sell high, chief data officer, Chuck Templeton: OpenTable, clean water, cloud computing, connected car, corporate governance, crowdsourcing, data acquisition, data is the new oil, digital map, discounted cash flows, disintermediation, Edward Glaeser, Elon Musk, en.wikipedia.org, Erik Brynjolfsson, financial innovation, Haber-Bosch Process, High speed trading, information asymmetry, Internet of things, inventory management, invisible hand, Jean Tirole, Jeff Bezos, jimmy wales, John Markoff, Khan Academy, Kickstarter, Lean Startup, Lyft, Marc Andreessen, market design, Metcalfe’s law, multi-sided market, Network effects, new economy, payday loans, peer-to-peer lending, Peter Thiel, pets.com, pre–internet, price mechanism, recommendation engine, RFID, Richard Stallman, ride hailing / ride sharing, Robert Metcalfe, Ronald Coase, Satoshi Nakamoto, self-driving car, shareholder value, sharing economy, side project, Silicon Valley, Skype, smart contracts, smart grid, Snapchat, software is eating the world, Steve Jobs, TaskRabbit, The Chicago School, the payments system, Tim Cook: Apple, transaction costs, two-sided market, Uber and Lyft, Uber for X, winner-take-all economy, zero-sum game, Zipcar
Ben-Zion Rosenfeld and Joseph Menirav, “Methods of Pricing and Price Regulation in Roman Palestine in the Third and Fourth Centuries,” Journal of the American Oriental Society 121, no. 3 (2001): 351–69; Geoffrey E. Rickman, “The Grain Trade under the Roman Empire,” Memoirs of the American Academy in Rome 36 (1980): 261–75. 16. Jad Mouawad and Christopher Drew, “Airline Industry Is at Its Safest Since the Dawn of the Jet Age,” New York Times, February 11, 2013, http://www.nytimes.com/2013/02/12/business/2012-was-the-safest-year-for-airlines-globally-since-1945.html. 17. Simeon Djankov, Edward Glaeser, Rafael La Porta, Florencio Lopez-de-Silanes, and Andrei Shleifer, “The New Comparative Economics,” Journal of Comparative Economics 31, no. 4 (2003): 595–619. 18. Shleifer, “Understanding Regulation.” 19. KPMG, “China 360: E-Commerce in China, Driving a New Consumer Culture,” https://www.kpmg.com/CN/en/IssuesAndInsights/ArticlesPublications/Newsletters/China-360/Documents/China-360-Issue15-201401-E-commerce-in-China.pdf. 20.
Yet despite these difficulties, local, regional, and national governments around the world are beginning to incorporate some of the benefits of the platform model into their daily operations. Perhaps not surprisingly, one of the leading examples is the city of San Francisco, perched at the northern end of Silicon Valley. The city’s Open Data policy, originally launched in 2009 for implementation through the Mayor’s Office of Civic Innovation, is designed to promote the sharing of city data through an open-access portal, the creation of public–private partnerships to facilitate the development of value-creating tools that citizens and companies can use, and the promotion of data-based initiatives intended to improve the quality of life for everyone living in and around the San Francisco Bay area. The city’s data platform, dubbed DataSF, contains a vast array of information about the city, gleaned from both public and private sources, as well as an application programming interface and tips for outside developers who want to use the data to create apps.
They included Neighborhood Score, a mobile app that provides a block-by-block health and sustainability score for every area of the city; Buildingeye, a map-based app that makes building and planning information easily accessible; Project Homeless Connect, which uses mobile technology to help people without shelter find the resources they need to get off the streets and into decent housing; and House Fax, a “Carfax for houses,” that allows homeowners and residents to access the maintenance history of a particular building.12 Ongoing efforts to apply platform thinking to San Francisco city government include a number of other initiatives, including the creation of a single central portal where local businesses can manage all the licensing, regulation, and reporting requirements associated with operating in the city; the Universal City Services Card, which provides a one-stop location for accessing San Francisco services ranging from marriage licenses to golf course discounts; and a partnership with Yelp, the restaurant-rating platform, that will incorporate city health department scores for local eateries into their online Yelp profiles. While San Francisco has advanced the concept of “government as platform” further than most jurisdictions, similar efforts are underway in cities, states, and regions around the U.S. and the world.
Animal Spirits: How Human Psychology Drives the Economy, and Why It Matters for Global Capitalism by George A. Akerlof, Robert J. Shiller
affirmative action, Andrei Shleifer, asset-backed security, bank run, banking crisis, collateralized debt obligation, conceptual framework, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, Daniel Kahneman / Amos Tversky, Deng Xiaoping, Donald Trump, Edward Glaeser, en.wikipedia.org, experimental subject, financial innovation, full employment, George Akerlof, George Santayana, housing crisis, Hyman Minsky, income per capita, inflation targeting, invisible hand, Isaac Newton, Jane Jacobs, Jean Tirole, job satisfaction, Joseph Schumpeter, Long Term Capital Management, loss aversion, market bubble, market clearing, mental accounting, Mikhail Gorbachev, money market fund, money: store of value / unit of account / medium of exchange, moral hazard, mortgage debt, Myron Scholes, new economy, New Urbanism, Paul Samuelson, Plutocrats, plutocrats, price stability, profit maximization, purchasing power parity, random walk, Richard Thaler, Robert Shiller, Robert Shiller, Ronald Reagan, South Sea Bubble, The Chicago School, The Death and Life of Great American Cities, The Wealth of Nations by Adam Smith, too big to fail, transaction costs, tulip mania, working-age population, Y2K, Yom Kippur War
Vincent Millay: “Life isn’t one damn thing after another. It’s the same damn thing again and again.” However, she was reacting to much earlier uses of the line, whose true origins we have been unable to trace. 2. Schank and Abelson (1977, 1995). 3. Taleb (2001). 4. Sternberg (1998). 5. Harmon (2006). 6. Polti (1981 ). 7. Tobias (1993, pp. iii–iv). 8. The role of politicians in spreading stories has been emphasized by Edward Glaeser (2002). 9. Finnel (2006). 10. Colburn (1984). 11. Finnel (2006). 12. Shiller (2000, 2005). 13. Shiller (2000, 2005) identified the biggest national stock price increases around the world in recent decades and undertook a media search for the stories in their respective national news media interpreting the increases. He found that journalists were especially creative in telling stories of why a new era was dawning for the economy of the particular country.
The maximum price for a Denman seven-row style brush was almost seven times the minimum.4 This study reminds us that while we often do search for the lowest price (sometimes aggressively so), we also often do not make our purchases at the cheapest store (sometimes knowingly so). If there are significant differences in prices for the same good in the same city, it should then not come as much of a surprise that different firms pay different wages for what would seem to be exactly the same labor, even in the same city. Early evidence came from a striking table published by John Dunlop. Dunlop was one of that crusty breed of applied economists who want to know how the labor market really works. He was as much at home with union leaders as in the halls of Harvard (where in due course he became dean of the faculty). President Lyndon Johnson made him his secretary of labor.
The position of the bankers was very much like that of the demolitionists. They faced a tough choice. There was a lot of money to be made in packaging and selling off mortgage securities, except that it was difficult to get rid of the super-senior tranche at a price that would make it worthwhile. The choices were either to play the game, and take the risk, or not to enter the market. The dilemma was expressed most vividly by Charles Prince, then the CEO of CitiGroup, in the Financial Times in the summer of 2007: “When the music stops, in terms of liquidity, things will be complicated. But as long as the music is playing, you’ve got to get up and dance. We’re still dancing.”2 There is a simple lesson that comes in loud and clear, not just from the case of the demolitionists and asbestos, but from the collapse of the financial industry. In the case of getting rid of the asbestos, if no one is watching how the asbestos is disposed of, then it will be disposed of in the cheapest way.
Equal Is Unfair: America's Misguided Fight Against Income Inequality by Don Watkins, Yaron Brook
3D printing, Affordable Care Act / Obamacare, Apple II, barriers to entry, Berlin Wall, Bernie Madoff, blue-collar work, business process, Capital in the Twenty-First Century by Thomas Piketty, Cass Sunstein, collective bargaining, colonial exploitation, corporate governance, correlation does not imply causation, creative destruction, Credit Default Swap, crony capitalism, David Brooks, deskilling, Edward Glaeser, Elon Musk, en.wikipedia.org, financial deregulation, immigration reform, income inequality, indoor plumbing, inventory management, invisible hand, Isaac Newton, Jeff Bezos, Jony Ive, laissez-faire capitalism, Louis Pasteur, low skilled workers, means of production, minimum wage unemployment, Naomi Klein, new economy, obamacare, Peter Singer: altruism, Peter Thiel, profit motive, rent control, Ronald Reagan, Silicon Valley, Skype, statistical model, Steve Jobs, Steve Wozniak, The Spirit Level, too big to fail, trickle-down economics, Uber for X, urban renewal, War on Poverty, wealth creators, women in the workforce, working poor, zero-sum game
James Sherk, “Why Did This Union Oppose Higher Pay for Its Members?,” Daily Signal, May 18, 2014, http://dailysignal.com/2014/05/18/union-oppose-higher-pay-members/ (accessed May 12, 2015). 30. Christina D. Romer, “The Business of the Minimum Wage,” New York Times, March 2, 2013, http://www.nytimes.com/2013/03/03/business/the-minimum-wage-employment-and-income-distribution.html (accessed May 12, 2015). 31. See, for instance, Edward Glaeser and Joseph Gyourko, “Zoning’s Steep Price,” Regulation, Fall 2002, http://object.cato.org/sites/cato.org/files/serials/files/regulation/2002/10/v25n3-7.pdf (accessed May 12, 2015) and Sandy Ikeda, “Shut Out: How Land-Use Regulations Hurt the Poor,” The Freeman, February 5, 2015, http://fee.org/freeman/detail/shut-out-how-land-use-regulations-hurt-the-poor (accessed May 12, 2015). 32. See, for instance, Thomas Sowell, Applied Economics (New York: Basic Books, 2004), pp. 97–120. 33.
Yoani Sánchez, “Freedom and Exchange in Communist Cuba,” Cato Institute, June 16, 2010, http://object.cato.org/sites/cato.org/files/pubs/pdf/dbp5.pdf (accessed May 20, 2015). 3. Emberson and Lindstrom, Pursuing Liberty: America through the Eyes of the Newly Free, pp. 165, 167, 175. 4. Quoted in Peter Schwartz, “Cuba’s Boat People, Socialism, and Double Standards,” The Intellectual Activist, Volume 1, Number 14, May 15, 1980. 5. Sánchez, “Freedom and Exchange in Communist Cuba.” 6. Quoted in Michael J. Totten, “The Last Communist City,” City Journal, Spring 2014, http://www.city-journal.org/2014/24_2_havana.html (accessed May 20, 2015). 7. Ibid. 8. Sánchez, “Freedom and Exchange in Communist Cuba.” 9. Frances Robles, “In Rickety Boats, Cuban Migrants Again Flee to U.S.,” New York Times, October 9, 2014, http://www.nytimes.com/2014/10/10/us/sharp-rise-in-cuban-migration-stirs-worries-of-a-mass-exodus.html (accessed May 20, 2015). 10.
The short answer is: freeing human reason unleashes limitless technological innovation. The Liberated Economy A few years ago, one of us (Don) was visiting San Francisco with his wife, Kate, and although they had driven up from Southern California without any difficulty, they were warned by the hotel staff not to bother trying to drive around the city. Searching for parking in San Francisco is like trying to find chastity in a brothel. Anyway, it turns out that there are only about four cabs in the entire city, and on their first outing, Don and Kate found themselves standing around for close to an hour before they could hail a taxi, which was driven by an irritated cabbie who reeked of cigarette smoke. Then they discovered Uber. Within seconds of logging into the Uber iPhone app, Don got a message on his phone: a car was on its way.
3D printing, Airbnb, American energy revolution, assortative mating, autonomous vehicles, Bakken shale, barriers to entry, basic income, Bernie Sanders, BRICs, call centre, Capital in the Twenty-First Century by Thomas Piketty, Clayton Christensen, cloud computing, collective bargaining, computer age, creative destruction, dark matter, David Ricardo: comparative advantage, deindustrialization, dematerialisation, Deng Xiaoping, deskilling, Dissolution of the Soviet Union, Donald Trump, Downton Abbey, Edward Glaeser, Erik Brynjolfsson, eurozone crisis, everywhere but in the productivity statistics, falling living standards, first square of the chessboard, first square of the chessboard / second half of the chessboard, Ford paid five dollars a day, Francis Fukuyama: the end of history, future of work, gig economy, global supply chain, global value chain, hydraulic fracturing, income inequality, indoor plumbing, industrial robot, intangible asset, interchangeable parts, Internet of things, inventory management, invisible hand, Jacquard loom, James Watt: steam engine, Jeff Bezos, John Maynard Keynes: Economic Possibilities for our Grandchildren, Joseph-Marie Jacquard, knowledge economy, low skilled workers, lump of labour, Lyft, manufacturing employment, Marc Andreessen, mass immigration, means of production, new economy, performance metric, pets.com, price mechanism, quantitative easing, Ray Kurzweil, rent-seeking, reshoring, rising living standards, Robert Gordon, Ronald Coase, savings glut, Second Machine Age, secular stagnation, self-driving car, sharing economy, Silicon Valley, single-payer health, software is eating the world, supply-chain management, supply-chain management software, TaskRabbit, The Future of Employment, The Nature of the Firm, The Spirit Level, The Wealth of Nations by Adam Smith, Thomas Malthus, trade liberalization, transaction costs, Tyler Cowen: Great Stagnation, Uber and Lyft, Uber for X, very high income, working-age population
Analyses of modern urban economies reflect this. Economists Ed Glaeser and Matthew Resseger find that skilled cities get more productive as they grow, while other places don’t.4 This link, they posit, seems to be a result of the fact ‘that urban density is important because proximity spreads knowledge, which either makes workers more skilled or entrepreneurs more productive’. Big, skilled places are good at making workers more productive. Workers in places like Silicon Valley earn a hefty wage premium over similar workers in other cities, but new arrivals don’t get the premium all at once. Instead it builds over time: evidence that the city is contributing to the knowledge and employability of the workers within it. Skilled cities have also been the crucible of much of the new sorts of work created over the last generation.
So, as social capital loomed larger within rich economies, it became clear that firms were not the only context in which social capital took on new salience. Its rise also boosted the fortunes of big cities with lots of skilled workers. By the end of the 1970s, deindustrialization and suburbanization had many of the rich world’s great industrial cities on the ropes. Populations were crashing. In 1975, New York City very nearly went bankrupt. Popular cinema was filled with dystopian visions of the urban future, in which street punks ruled the streets of gutted cities. But from the 1980s onwards, a turnaround was apparent in some of those very same distressed cities. Big cities that had retained a sizable population of highly skilled individuals began to thrive, and then to boom. New York City’s population is now as large as it has ever been. San Francisco is an economic powerhouse. Boston is booming.
The New York metropolitan area, which itself reached the 1 million person threshold around 1860, was home to more than 15 million people just 100 years later; its population is just over 20 million today and continues to rise.3 Technology allowed humanity to live in ever-larger cities; which would be impossible without steel and electricity, to say nothing of modern agriculture. But big cities are not just curious side effects of the industrial revolution. They are a technology in and of themselves, without which we would all be much poorer and less productive. Cities thrive and grow because of what economists call increasing returns to scale: the larger a city grows the more productive it becomes. Without increasing returns, cities could not get very big: new arrivals would make the city more crowded and unpleasant but wouldn’t make the local economy more productive. Living standards would fall and people would eventually say to hell with it and move out.
The Right to Earn a Living: Economic Freedom and the Law by Timothy Sandefur
barriers to entry, big-box store, Cass Sunstein, clean water, collective bargaining, corporate governance, corporate social responsibility, creative destruction, Edward Glaeser, housing crisis, joint-stock company, Joseph Schumpeter, labour mobility, minimum wage unemployment, positional goods, price stability, profit motive, race to the bottom, Ralph Nader, RAND corporation, rent control, Robert Bork, Silicon Valley, The Wealth of Nations by Adam Smith, trade route, transaction costs, Upton Sinclair, urban renewal, wealth creators
Marla Dresch and Steven M. Sheffrin, Who Pays for Development Fees and Exactions? (Sacramento: Public Policy Institute of California, June 1997), p. v, http://www. ppic.org/content/pubs/report/R_697SSR.pdf. 90. Ibid., p. 51. 91. California Department of Housing and Community Development, “Pay to Play: Residential Development Fees in California Cities and Counties,” Sacramento, August 2001, p. 2, http://www.hcd.ca.gov/hpd/pay2play/fee_rpt.pdf. 92. Edward L. Glaeser, Joseph Gyourko, and Raven E. Saks, “Why Have Housing Prices Gone UP?”American Economic Review 95 (2005): 329–33, http://papers.ssrn. com/soL3/papers.cfm?abstract_id=658324; and “Sheltered Market,” The Economist, February 10, 2005, http://www.economist.com/finance/displayStory.cfm?story_id= E1_PGRVTSR. 93. J. David Breemer, “The Evolution of the ‘Essential Nexus’: How State and Federal Courts Have Applied Nollan and Dolan and Where They Should Go from Here,” Washington & Lee Law Review 59 (2002): 378–79. 94.
Represented by lawyers from the Institute for Justice, Pagan sued, arguing that the law violated the First Amendment. The city claimed that the regulation merely prohibited conduct: namely, parking a car on the street with a For Sale sign that, according to the city’s police chief, would lead to traffic obstructions as people stopped to look at the car. The court easily found that the law restricted Pagan’s commercial speech rights and rejected the city’s rationalizations. The only evidence the city offered to justify restricting Pagan’s speech was an affidavit by the chief of police, which cited no 201 The Right to Earn a Living supporting proof. Although this seemed like a weak basis for the city’s actions, the city argued that no such evidence was required in the first place. “Instead of actual evidence,” the judges noted, the city “ask[s] us to adopt a standard of ‘obviousness’ or ‘common sense,’ under which we uphold a speech regulation in the absence of evidence of concrete harm so long as common sense clearly indicates that a particular speech regulation will directly advance the government’s asserted interest.”
George Lefcoe, “The Regulation of Superstores: The Legality of Zoning Ordinances Emerging from the Skirmishes between Wal-Mart and the United Food and Commercial Workers Union,” Arkansas Law Review 58 (2006): 842; Ted Balaker, “Ban Wal-Mart, Hurt Families,” Los Angeles Daily News, January 26, 2004; Julian Sanchez, “The Wal-Mart Crusade: Big-Boxing a Mega-Retailer’s Ears,” Reason, March 2006; and RiShawn Biddle, “Sam’s Curse: Will Wal-Mart Superstores Really Devastate the City of Angels?” Reason.com, March 18, 2004, http://reason. com/archives/2004/03/18/sams-curse. 86. Wal-Mart Stores, Inc. v. City of Turlock, 138 Cal. App. 4th 273, 283 (2006). 87. Ibid. at 301. 328 Notes for Pages 161–165 88. Ibid. 89. Ibid. at 303. 90. Minutes of Hanford City Council, March 4, 2003 (on file with author). 91. Minutes of Hanford City Council, April 15, 2003 (on file with author). 92. Letter from Rusty C. Robinson to Hanford City Council, March 4, 2003 (on file with author). 93. Minutes of Hanford City Council, March 4, 2003 (on file with author). 94. Hernandez v. City of Hanford, 41 Cal. 4th 279, 296 (2007). 95. Ibid. at 297 (emphasis in original). 96. Adrian Hernandez’s case bears a striking resemblance to the notorious decision regarding eminent domain in Kelo v.
Second World: Empires and Influence in the New Global Order by Parag Khanna
Admiral Zheng, affirmative action, anti-communist, Asian financial crisis, Bartolomé de las Casas, Branko Milanovic, British Empire, call centre, capital controls, central bank independence, cognitive dissonance, colonial rule, complexity theory, continuation of politics by other means, crony capitalism, Deng Xiaoping, Dissolution of the Soviet Union, Donald Trump, Edward Glaeser, energy security, European colonialism, facts on the ground, failed state, flex fuel, Francis Fukuyama: the end of history, friendly fire, Gini coefficient, global reserve currency, global supply chain, haute couture, Hernando de Soto, illegal immigration, income inequality, informal economy, invisible hand, Islamic Golden Age, Khyber Pass, knowledge economy, land reform, low skilled workers, mass immigration, means of production, megacity, Monroe Doctrine, oil shale / tar sands, oil shock, open borders, open economy, Parag Khanna, Pax Mongolica, Pearl River Delta, pirate software, Plutonomy: Buying Luxury, Explaining Global Imbalances, Potemkin village, price stability, race to the bottom, RAND corporation, reserve currency, rising living standards, Ronald Reagan, Silicon Valley, Skype, South China Sea, special economic zone, stem cell, Stephen Hawking, Thomas L Friedman, trade route, trickle-down economics, uranium enrichment, urban renewal, Washington Consensus, women in the workforce
The Challenges to America’s National Identity (New York: Simon and Schuster, 2004). 27. Alberto F. Alesina, Edward L. Glaeser, and Bruce Sacerdote, “Why Doesn’t the U.S. Have a European-Style Welfare State?” Harvard Institute of Economic Research, Discussion Paper no. 1933, October 2001. 28. Michael Ignatieff, “The Broken Contract,” New York Times Magazine, September 24, 2005, 16. 29. Richard G. Wilkinson, The Impact of Inequality: How to Make Sick Societies Healthier (London: Routledge, 2005). 30. As Christopher Lasch has written, “The mounting evidence of widespread inefficiency and corruption, the decline of American productivity, the pursuit of speculative profits at the expense of manufacturing, the deterioration of our country’s material infrastructure, the squalid conditions in our crime-ridden cities, the alarming and disgraceful growth of poverty, and the widening disparity between poverty and wealth, which is morally obscene and politically explosive as well—these developments, the ominous import of which can no longer be ignored or concealed, have reopened the historic debate about democracy.
Shanghai is being built into the world’s largest metropolis, dwarfing New York, London, or São Paulo. City officials have planned fifty years ahead, meaning that despite its population of twenty-six million (thirteen million locals and an equal number of migrants) and growing, it will not descend into the chaotic sprawl of Latin America’s megalopolises but rather remain in the orderly ranks of cities like Tokyo. Neighborhoods are zoned and color-coded, and millions live in podlike apartment capsules. New districts have sprouted that resemble Swiss villages or British towns to appeal to middle-class Chinese—whose empire imports the world to itself. Shanghai is also the hub of a massive city-region of rising prosperity stretching to Nanjing and encompassing multiple cities of five million people each. Once the city of bicycles, Beijing now seems to have more cars—while bicycles are being recycled.
Inequality and instability go hand in hand. Outside Mexico City—and certainly within it—is a country of colonial monuments juxtaposed at every turn with ramshackle slums, with public investment in hospitals and schools an afterthought. The former mayor of Mexico City, Andrés Manuel López Obrador, picked up the slack and built his reputation by creating social and food support programs for the elderly across the sprawling metropolis of twenty million people, almost propelling him into the Mexican presidency in 2006—which he lost by a narrow margin and only after the contest was pushed to the electoral court. As elsewhere in the second world, power in the capital city is tantamount to national power. Obrador took his campaign back to the streets, sponsoring waves of demonstrations in his city to cripple his elected rival, Felipe Calderón.
air freight, Andrei Shleifer, battle of ideas, Bretton Woods, British Empire, business process, business process outsourcing, Carmen Reinhart, clean water, colonial rule, correlation does not imply causation, creative destruction, Daniel Kahneman / Amos Tversky, Deng Xiaoping, desegregation, discovery of the americas, Edward Glaeser, en.wikipedia.org, European colonialism, Francisco Pizarro, fundamental attribution error, germ theory of disease, greed is good, Gunnar Myrdal, income per capita, invisible hand, James Watt: steam engine, Jane Jacobs, John Snow's cholera map, Joseph Schumpeter, Kenneth Arrow, Kenneth Rogoff, M-Pesa, microcredit, Monroe Doctrine, oil shock, place-making, Ponzi scheme, risk/return, road to serfdom, Silicon Valley, Steve Jobs, The Death and Life of Great American Cities, The Wealth of Nations by Adam Smith, Thomas L Friedman, urban planning, urban renewal, Washington Consensus, World Values Survey, young professional
Robinson, Why Nations Fail: The Origins of Power, Prosperity, and Poverty (New York: Crown Publishers, 2012). 6. Edwin G. Burrows and Mike Wallace, Gotham: A History of New York City to 1898 (New York: Oxford University Press, 1999), 122–23. 7. Ira Rosenwaike, Population History of New York City (Syracuse, NY: Syracuse University Press, 1972), 18. 8. Stokes, Iconography of Manhattan Island, 70–78. 9. Quoted in Peter Bernstein, Wedding of the Waters: The Erie Canal and the Making of a Great Nation (New York: W. W. Norton & Company, 2005), 23. 10. Easterly et al. with “A Long History of a Short Block.” 11. Peter Bernstein, Wedding of the Waters, 318–19. 12. Easterly et al., “A long history of a short block.” 13. Edward L. Glaeser, “Urban Colossus: Why New York Is America’s Largest City,” Federal Reserve Bank of New York Economic Policy Review 11, no. 2 (2005): 7–24. 14. Robert Albion and Jennie Barnes Pope, The Rise of New York Port (New York: Charles Scribner’s Sons, 1939), 398. 15.
The Normans had invaded Italy south of Rome and established a monarchy over southern Italy between 1061 and 1091. Before the emergence of free cities, the Normans’ Kingdom of Sicily was one of the richest parts of Europe.13 Its capital Palermo was the largest city in Europe in 1200. But the future belonged to the free cities. Population growth of free cities throughout Western Europe systematically outpaced that of cities under absolute rule. Freedom in a particular region led to the emergence of more new cities, as individuals accustomed to freedom in their original cities came together to form new cities. The statistical results indicate that, on average, a region developed two new cities (of population greater than 30,000) for every century that it had been free of absolute rule—and the already existing cities in free regions grew much more in population than those in unfree regions.14 We see this nowhere more clearly than in Italy itself.
As Greif and Tabellini say, “a legal system would have undermined the clans, an outcome opposed by the elders who controlled the clans and the state that used them.”32 China did not institute a commercial legal code until the empire was collapsing in the late nineteenth century. Cities in China were held back by the lack of cooperation between clans. Clans were responsible for tax collection and educating their members for civil-service exams. Immigrants to the cities remained loyal to their rural-based clans; they did not transfer loyalty to the city. As one scholar says of China in the seventeenth century: “the majority of a city’s population consisted of so-called sojourners, people who had come from elsewhere and were considered (and thought of themselves as) only temporary residents.” As a result, “suspicions were always rife that sojourners could not be trusted.”33 There was no such thing as city self-government in China as there was in the free cities in Europe. The percent of the population living in cities in China remained at only about 3 to 4 percent long after Europe had passed 10 percent early in the Industrial Revolution.
Andrei Shleifer, asset-backed security, bank run, banking crisis, Benoit Mandelbrot, Berlin Wall, Bernie Madoff, Big bang: deregulation of the City of London, Bretton Woods, capital controls, carbon footprint, Carmen Reinhart, Cass Sunstein, centre right, choice architecture, cloud computing, collective bargaining, conceptual framework, Corn Laws, corporate governance, creative destruction, credit crunch, Credit Default Swap, debt deflation, decarbonisation, Deng Xiaoping, discovery of DNA, discovery of the americas, discrete time, diversification, double helix, Edward Glaeser, financial deregulation, financial innovation, financial intermediation, first-past-the-post, floating exchange rates, Francis Fukuyama: the end of history, Frank Levy and Richard Murnane: The New Division of Labor, full employment, George Akerlof, Gini coefficient, global supply chain, Growth in a Time of Debt, Hyman Minsky, I think there is a world market for maybe five computers, income inequality, inflation targeting, interest rate swap, invisible hand, Isaac Newton, James Dyson, James Watt: steam engine, joint-stock company, Joseph Schumpeter, Kenneth Rogoff, knowledge economy, knowledge worker, labour market flexibility, liberal capitalism, light touch regulation, Long Term Capital Management, Louis Pasteur, low-wage service sector, mandelbrot fractal, margin call, market fundamentalism, Martin Wolf, mass immigration, means of production, Mikhail Gorbachev, millennium bug, money market fund, moral hazard, moral panic, mortgage debt, Myron Scholes, Neil Kinnock, new economy, Northern Rock, offshore financial centre, open economy, Plutocrats, plutocrats, price discrimination, private sector deleveraging, purchasing power parity, quantitative easing, race to the bottom, railway mania, random walk, rent-seeking, reserve currency, Richard Thaler, Right to Buy, rising living standards, Robert Shiller, Robert Shiller, Ronald Reagan, Rory Sutherland, Satyajit Das, shareholder value, short selling, Silicon Valley, Skype, South Sea Bubble, Steve Jobs, The Market for Lemons, the market place, The Myth of the Rational Market, the payments system, the scientific method, The Wealth of Nations by Adam Smith, too big to fail, unpaid internship, value at risk, Vilfredo Pareto, Washington Consensus, wealth creators, working poor, zero-sum game, éminence grise
Robinson (2000) ‘Political Losers as a Barrier to Economic Development’, American Economic Review 90 (2): 126–30. See also Daron Acemoglu and James A. Robinson (2006) ‘Economic Backwardness in Political Perspective’, American Political Science Review 100 (1): 115–31. 6 Douglass C. North, John Joseph Wallis and Barry R. Weingast (2006) ‘A Conceptual Framework for Interpreting Recorded Human History’, NBER Working Paper No. 12795, p. 32. 7 Cited in Edward L. Glaeser and Andrei Shleifer (2003) ‘The Rise of the Regulatory State’, NBER Working Paper No. W8650. 8 David Warsh (2006) Knowledge and the Wealth Of Nations: A Story of Economic Discovery, W. W. Norton. Chapter Six: Blind Capital 1 John Major (1999) The Autobiography, HarperCollins, p. 311. 2 Recounted in Andrew Rawnsley (2000) Servants of the People: The Inside Story of New Labour, Penguin Press. 3 Margaret Cook (1999) A Slight and Delicate Creature: The Memoirs of Margaret Cook, Orion. 4 Alastair Campbell (2007) The Blair Years: Extracts from the Alastair Campbell Diaries, Hutchinson, p. 78. 5 Philip Gould (1999) The Unfinished Revolution: How the Modernisers Saved the Labour Party, Abacus. 6 For a good introduction to Brown’s political and economic philosophy, see Simon Lee (2009) Boom and Bust: The Politics and Legacy of Gordon Brown, OneWorld. 7 CRESC (2009) ‘An Alternative Report on UK Banking Reform’, ESRC Centre for Research on Socio-Cultural Change, University of Manchester. 8 See Brown’s foreword in Iain McLean’s (2006) Adam Smith, Radical and Egalitarian: An Interpretation for the 21st Century, Edinburgh University Press. 9 Gertrude Himmelfarb (2004) The Roads to Modernity: The British, French and America Enlightenments, Alfred A.
British bankers took the opportunity afforded by the abolition of exchange and capital controls, globalisation, Britain’s historic strength in financial services and the prevailing free-market ideology to build a position of influence in the British state that was much more formidable than any that had been enjoyed by the trade unions. The City reclaimed ancient privileges to restore its nineteenth-century position as an international financial centre, although this was now built upon proprietary trading in financial derivatives and securitisation. This was the purposeful, positive use of power to achieve a feasible aim – a dominant City of London. Light-touch regulation became as important a mantra to the City as free collective bargaining had been to the unions. Equally, the freedom to exploit tax havens and relieve foreign nationals from their tax obligations was as pivotal to City power as the unions’ insistence on legal immunity from damages in industrial disputes had been to theirs. Just as the unions portrayed themselves as essential to the construction of a Britain in which working-class interests would be enshrined, so the City portrayed itself as essential to a post-industrial Britain in which financial services would be in the vanguard of national wealth generation.
Finance was where innovation and entrepreneurship flowered, Prime Minister Blair and Chancellor Brown jointly proclaimed in a competition with the then Conservative opposition to fête the City of London. The factors that helped financial services – light-touch regulation, low taxes and labour market flexibility – allegedly helped all business. Governments should limit their intervention. Nor should they or society be concerned about City pay that was rising beyond the dreams of avarice because that was merely the price of global success. In the glory days of the boom, Britain was urged to enjoy the spiralling property prices and the rising consumption that came in the wake of the City’s credit creation and wheeler-dealing. Inflation was low. The government’s finances were sound. Employment was on the increase. Big finance ruled and seemed to be delivering.
The Ascent of Money: A Financial History of the World by Niall Ferguson
Admiral Zheng, Andrei Shleifer, Asian financial crisis, asset allocation, asset-backed security, Atahualpa, bank run, banking crisis, banks create money, Black Swan, Black-Scholes formula, Bonfire of the Vanities, Bretton Woods, BRICs, British Empire, capital asset pricing model, capital controls, Carmen Reinhart, Cass Sunstein, central bank independence, collateralized debt obligation, colonial exploitation, commoditize, Corn Laws, corporate governance, creative destruction, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, currency manipulation / currency intervention, currency peg, Daniel Kahneman / Amos Tversky, deglobalization, diversification, diversified portfolio, double entry bookkeeping, Edmond Halley, Edward Glaeser, Edward Lloyd's coffeehouse, financial innovation, financial intermediation, fixed income, floating exchange rates, Fractional reserve banking, Francisco Pizarro, full employment, German hyperinflation, Hernando de Soto, high net worth, hindsight bias, Home mortgage interest deduction, Hyman Minsky, income inequality, information asymmetry, interest rate swap, Intergovernmental Panel on Climate Change (IPCC), Isaac Newton, iterative process, John Meriwether, joint-stock company, joint-stock limited liability company, Joseph Schumpeter, Kenneth Arrow, Kenneth Rogoff, knowledge economy, labour mobility, Landlord’s Game, liberal capitalism, London Interbank Offered Rate, Long Term Capital Management, market bubble, market fundamentalism, means of production, Mikhail Gorbachev, money market fund, money: store of value / unit of account / medium of exchange, moral hazard, mortgage debt, mortgage tax deduction, Myron Scholes, Naomi Klein, negative equity, Nick Leeson, Northern Rock, Parag Khanna, pension reform, price anchoring, price stability, principal–agent problem, probability theory / Blaise Pascal / Pierre de Fermat, profit motive, quantitative hedge fund, RAND corporation, random walk, rent control, rent-seeking, reserve currency, Richard Thaler, Robert Shiller, Robert Shiller, Ronald Reagan, savings glut, seigniorage, short selling, Silicon Valley, South Sea Bubble, sovereign wealth fund, spice trade, structural adjustment programs, technology bubble, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, Thomas Bayes, Thomas Malthus, Thorstein Veblen, too big to fail, transaction costs, value at risk, Washington Consensus, Yom Kippur War
Credit’, Wall Street Journal, 15 April 2008. 64 Economic Report of the President 2007, tables B-77 and B-76: http:// www.gpoaccess.gov/eop/. 65 George Magnus, ‘Managing Minsky’, UBS research paper, 27 March 2008. 66 Hernando de Soto, The Mystery of Capital: Why Capitalism Triumphs in the West and Fails Everywhere Else (London, 2001). 67 Idem, ‘Interview: Land and Freedom’, New Scientist, 27 April 2002. 68 Idem, The Other Path (New York, 1989). 69 Rafael Di Tella, Sebastian Galiani and Ernesto Schargrodsky, ‘The Formation of Beliefs: Evidence from the Allocation of Land Titles to Squatters’, Quarterly Journal of Economics, 122, 1 (February 2007), pp. 209-41. 70 ‘The Mystery of Capital Deepens’, The Economist, 26 August 2006. 71 See John Gravois, ‘The De Soto Delusion’, Slate, 29 January 2005: http://state.msn.com/id/2112792/. 72 The entire profit is transferred to a Rehabilitation Fund created to cope with emergency situations, in return for an exemption from corporate income tax. 73 Connie Black, ‘Millions for Millions’, New Yorker, 30 October 2006, pp. 62-73. 74 Shiller, ‘Recent Trends in House Prices’. 75 Edward L. Glaeser and Joseph Gyourko, ‘Housing Dynamics’, NBER Working Paper 12787 (revised version, 31 March 2007). 76 Robert J. Shiller, The New Financial Order: Risk in the 21st Century (Princeton, 2003). 6. From Empire to Chimerica 1 Dominic Wilson and Roopa Purushothaman, ‘Dreaming with the BRICs: The Path to 2050’, Goldman Sachs Global Economics Paper, 99 (1 October 2003). See also Jim O’Neill, ‘Building Better Global Economic BRICs’, Goldman Sachs Global Economics Paper, 66 (30 November 2001); Jim O’Neill, Dominic Wilson, Roopa Purushothaman and Anna Stupnytska, ‘How Solid are the BRICs?’
Quite apart from the nearly three million lives lost in Japan’s doomed bid for empire, by the end in 1945 the value of Japan’s entire capital stock seemed to have been reduced to zero by American bombers. In aggregate, according to the US Strategic Bombing Survey, at least 40 per cent of the built-up areas of more than sixty cities had been destroyed; 2.5 million homes had been lost, leaving 8.3 million people homeless.37 Practically the only city to survive intact (though not wholly unscathed) was Kyoto, the former imperial capital - a city which still embodies the ethos of pre-modern Japan, as it is one of the last places where the traditional wooden townhouses known as machiya can still be seen. One look at these long, thin structures, with their sliding doors, paper screens, polished beams and straw mats, makes it clear why Japanese cities were so vulnerable to fire. In Japan, as in most combatant countries, the lesson was clear: the world was just too dangerous a place for private insurance markets to cope with.
According to Graham Allison, of Harvard University’s Belfer Center, ‘if the US and other governments just keep doing what they are doing today, a nuclear terrorist attack in a major city is more likely than not by 2014’. In the view of Richard Garwin, one of the designers of the hydrogen bomb, there is already a ‘20 per cent per year probability of a nuclear explosion with American cities and European cities included’. Another estimate, by Allison’s colleague Matthew Bunn, puts the odds of a nuclear terrorist attack over a ten-year period at 29 per cent.82 Even a small 12.5-kiloton nuclear device would kill up to 80,000 people if detonated in an average American city; a 1.0 megaton hydrogen bomb could kill as many as 1.9 million. A successful biological attack using anthrax spores could be nearly as lethal.83 What if global warming is increasing the incidence of natural disasters?
Geek Heresy: Rescuing Social Change From the Cult of Technology by Kentaro Toyama
active measures, Albert Einstein, Berlin Wall, Bernie Madoff, blood diamonds, Capital in the Twenty-First Century by Thomas Piketty, Cass Sunstein, cognitive dissonance, commoditize, computer vision, conceptual framework, delayed gratification, Edward Glaeser, en.wikipedia.org, end world poverty, epigenetics, Erik Brynjolfsson, Francis Fukuyama: the end of history, fundamental attribution error, germ theory of disease, global village, Hans Rosling, happiness index / gross national happiness, income inequality, invention of the printing press, invisible hand, Isaac Newton, Khan Academy, Kibera, knowledge worker, liberation theology, libertarian paternalism, M-Pesa, Mahatma Gandhi, Mark Zuckerberg, means of production, microcredit, mobile money, Nicholas Carr, North Sea oil, pattern recognition, Peter Singer: altruism, Peter Thiel, post-industrial society, Powell Memorandum, randomized controlled trial, rent-seeking, RFID, Richard Florida, Richard Thaler, school vouchers, self-driving car, Silicon Valley, Simon Kuznets, Steve Jobs, Steven Pinker, technoutopianism, The Fortune at the Bottom of the Pyramid, Upton Sinclair, Walter Mischel, War on Poverty, winner-take-all economy, World Values Survey, Y2K
Journal of Educational Psychology, Advance online publication, http://psycnet.apa.org/psycinfo/2010-19348-001. Walensky, Rochelle P., and Daniel R. Kuritzkes. (2010). The impact of The President’s Emergency Plan for AIDS Relief (PEPfAR) beyond HIV and why it remains essential. Clinical Infectious Diseases 50(2):272–275, http://cid.oxfordjournals.org/content/50/2/272.full. Wallis, John Joseph. (2006). The concept of systematic corruption in American history. In Edward L. Glaeser and Claudia Goldin, eds., Corruption and Reform: Lessons from America’s Economic History. University of Chicago Press. Wall Street Journal. (2009). Sarkozy adds to calls for GDP alternative. Wall Street Journal blog, Sept. 14, 2009, http://blogs.wsj.com/economics/2009/09/14/sarkozy-adds-to-calls-for-gdp-alternative/. Warschauer, Mark. (2003). Demystifying the digital divide. Scientific American 289(2):42–47, www.scientificamerican.com/article/demystifying-the-digital/. ———. (2006).
This is exactly what Robert Fairlie and Jonathan Robinson’s 2013 study of laptops in the home shows: If you provide an all-purpose technology that can be used for learning and entertainment, children choose entertainment.34 Technology by itself doesn’t undo that inclination – it amplifies it. Amplifying Power Back in Bangalore, I once hosted a political science professor, whom I’ll call Padma. She was interested in technology and governance. Padma was in the city to study a program that made the municipal government’s finances transparent to the public. A nonprofit group had convinced the government to set up a tool that let anyone with Internet access see how city money was spent. Citizens were able to see, for example, that 5,000 rupees (~$100) was spent repairing a pothole (expensive, but not unreasonable) or that 500,000 rupees ($10,000) was spent cutting down a tree (not likely; a sign of kickbacks). The nonprofit would complain to the government about egregious spending it discovered.
World development indicators and global finance development database, http://databank.worldbank.org/data/home.aspx. World Economic Forum. (2013). The global gender gap report 2013, www3.weforum.org/docs/WEF_GenderGap_Report_2013.pdf. World Health Organization. (2011). Annual report 2011. Global Polio Eradication Initiative, www.polioeradication.org/Portals/0/Document/AnnualReport/AR2011/GPEI_AR2011_A4_EN.pdf. ———. (2014). Ambient (outdoor) air pollution in cities database 2014, www.who.int/phe/health_topics/outdoorair/databases/cities/en/. World Values Survey. (2005). WVS 2005–2006 wave, OECD-split version (Ballot A), www.worldvaluessurvey.org/wvs/articles/folder_published/survey_2005/files/WVSQuest_SplitVers_OECD_Aballot.pdf. ———. (n.d.). Findings and insights, www.worldvaluessurvey.org/WVSContents.jsp. World Wide Web Foundation. (n.d.). Connecting people. Empowering humanity, www.webfoundation.org/about/.
A History of Future Cities by Daniel Brook
Berlin Wall, British Empire, business process, business process outsourcing, call centre, carbon footprint, Celtic Tiger, collateralized debt obligation, collective bargaining, Credit Default Swap, credit default swaps / collateralized debt obligations, Deng Xiaoping, desegregation, Edward Glaeser, Fall of the Berlin Wall, financial innovation, glass ceiling, indoor plumbing, joint-stock company, land reform, Mikhail Gorbachev, New Urbanism, open economy, Parag Khanna, Pearl River Delta, Potemkin village, profit motive, rent control, sovereign wealth fund, special economic zone, trade route, urban planning, urban renewal, working poor
d=67&s =6&mode=transcript. 5 “skyline on crack”: Nick Tosches, “Dubai’s the Limit,” Vanity Fair, June 2006, 156. 5 96 percent of its population: Christopher Davidson, Dubai: The Vulnerability of Success (New York: Columbia University Press, 2008), 190. 5 37 percent are immigrants: “New York (City), New York,” U.S. Census Bureau, last modified January 31, 2012, accessed April 20, 2012, http://quickfacts.census.gov/qfd/states/36/3651000.html. 5 “everyone and everything in it”: John Kasarda and Greg Lindsay, Aerotropolis: The Way We’ll Live Next (New York: Farrar, Straus and Giroux, 2011), 290. 10 five million people move: Edward Glaeser, Triumph of the City (New York: Penguin, 2011), 1. 12 90 percent owned by an Emirati sovereign wealth fund: Charles Bagli, “Abu Dhabi Buys 90% Stake in Chrysler Building,” New York Times, July 10, 2008. 12 “the most abstract and intentional city”: Fyodor Dostoevsky, Notes from the Underground, chapter 2. Chapter 1: New Amsterdam—St. Petersburg, 1703–1825 15 world’s second-largest navy and more merchant ships: Robert K.
In Germany, centuries of movement by peasants to cities winnowed down the number of serfs. Runaway serfs who sought refuge in the cities became free, customarily after a year and a day. The first German free city, Bremen, was chartered in 1186. In Western Europe, free labor was an essential part of the modern city: in the countryside, one was bound by custom and tradition, working the land as one’s ancestors had for generations on behalf of the same noble family one’s ancestors had served. In the city, life was different. Workers did whatever job needed to be done; when they saw better opportunities, they took them. The liberating ethos of the city became embodied in the German expression, “Stadtluft macht frei” (City air makes you free). But in Russia, city air most certainly did not make you free.
., 495. 343 $350 million Rajiv Gandhi Sea Link: “Mumbai on the Growth Path,” Economic Times (Mumbai), January 21, 2010. 343 near-perfect voter turnout: Mehta, Maximum City, 68. 345 most crowded place on the planet: Mayank Gandhi, Secretary (Remaking of Mumbai Federation), interview with author, Mumbai, February 9, 2010. 347 “It cannot be considered a city”: Rousselet, India and Its Native Princes, 6. 348 “the efforts of two international cities”: McKinsey & Company, Vision Mumbai: Transforming Mumbai into a World-Class City (Mumbai: McKinsey & Company, 2003), 10. 348 America’s poorest city: “Cleveland Rated Poorest Big City in America,” Associated Press, September 23, 2004. 348 population of Mumbai island, it found, was in decline: Sharad Vyas, Sukhada Tatke, and Madhavi Rajadhyaksha, “Dense Mumbai Packs 20K Individuals Per Sq Km,” Times of India, April 2, 2011. Chapter 11: Dubai Inc. Proudly Presents the International City™—Dubai, 1981–Present 353 fully 96 percent of the population: Davidson, Dubai, 190. 353 “I want it to be number one”: CBS News, “A Visit to Dubai Inc.,” 60 Minutes, 2008, accessed September 14, 2012, http://cbsnews.com/2100-18560_162-3361753. 354 “a par with the world’s most prestigious financial centers”: Krane, City of Gold, 147. 354 “Make no little plans”: Charles Moore, Daniel Burnham, Architect, Planner of Cities, Volume II (Boston: Houghton Mifflin, 1921), 147. 354 United States taxes foreign-earned incomes above $91,500: Internal Revenue Service, Tax Guide for U.S.
3D printing, Asian financial crisis, backtesting, bank run, banking crisis, Berlin Wall, Bernie Sanders, BRICs, business climate, business process, call centre, capital controls, Capital in the Twenty-First Century by Thomas Piketty, Carmen Reinhart, central bank independence, centre right, colonial rule, Commodity Super-Cycle, corporate governance, creative destruction, crony capitalism, currency peg, dark matter, debt deflation, deglobalization, deindustrialization, demographic dividend, demographic transition, Deng Xiaoping, Doha Development Round, Donald Trump, Edward Glaeser, Elon Musk, eurozone crisis, failed state, Fall of the Berlin Wall, falling living standards, Francis Fukuyama: the end of history, Freestyle chess, Gini coefficient, hiring and firing, income inequality, indoor plumbing, industrial robot, inflation targeting, Internet of things, Jeff Bezos, job automation, John Markoff, Joseph Schumpeter, Kenneth Rogoff, knowledge economy, labor-force participation, liberal capitalism, Malacca Straits, Mark Zuckerberg, market bubble, mass immigration, megacity, Mexican peso crisis / tequila crisis, mittelstand, moral hazard, New Economic Geography, North Sea oil, oil rush, oil shale / tar sands, oil shock, pattern recognition, Paul Samuelson, Peter Thiel, pets.com, Plutocrats, plutocrats, Ponzi scheme, price stability, Productivity paradox, purchasing power parity, quantitative easing, Ralph Waldo Emerson, random walk, rent-seeking, reserve currency, Ronald Coase, Ronald Reagan, savings glut, secular stagnation, Shenzhen was a fishing village, Silicon Valley, Silicon Valley startup, Simon Kuznets, smart cities, Snapchat, South China Sea, sovereign wealth fund, special economic zone, spectrum auction, Steve Jobs, The Future of Employment, The Wisdom of Crowds, Thomas Malthus, total factor productivity, trade liberalization, trade route, tulip mania, Tyler Cowen: Great Stagnation, unorthodox policies, Washington Consensus, WikiLeaks, women in the workforce, working-age population
“Before Blaming the Robots, Let’s Get the Policy Right.” New York Times, February 17, 2014. Brooks, Rob. “China’s Biggest Problem? Too Many Men.” CNN, March 4, 2013. Butler, William. “Women in the Economy: Global Growth Generators.” Citigroup Research, May 2015. Cates, Andrew, Bhanu Baweja, and Sophie Constable. “Globalization’s Challenges.” UBS Research, July 21, 2015. Chatterji, Aaron, Edward Glaeser, and William Kerr. “Clusters of Entrepreneurship and Innovation.” National Bureau of Economic Research, Working Paper no. 19013, May 2013. Chaudhary, Latika, Aldo Musacchio, Steven Nafziger, and Se Yan. “Big BRICs, Weak Foundations: The Beginning of Public Elementary Education in Brazil, Russia, India, and China.” National Bureau of Economic Research, Working Paper no. 17852, February 2012.
One way a turnaround in the economic prospects of France will likely manifest itself is in the emergence of large cities other than Paris. By virtue of their size, countries with a population of more than 100 million will have many large cities, and so the relative size of the second city does not tell me much about the country. To get a sense of which countries in that cohort have dynamically growing regions leading to more balanced growth, I look at the broader rise of second-tier cities—meaning cities with more than a million people. The broad rise of second-tier cities is particularly important for the largest countries because, due to their size, they should be able to generate a number of rapidly growing urban areas. This part of the rule—tracking the rise of second-tier cities—therefore applies mainly to countries in the next two size categories, those with more than 100 million people and those with more than one billion people.
As countries develop, they naturally generate more second-tier cities, so it is also important to compare countries to peers at a similar income level. In the class of countries with an average per capita income around $10,000 and a population over 100 million, Russia is the laggard. Over the last three decades it has seen only two cities grow to a population size of one to five million, compared to ten in Brazil, one of the more dynamic stories in in this class. The most dynamic is Mexico, which has also produced ten cities of more than a million people since 1985, in a national population little more than half of Brazil’s. Mexico is also the only country in this size and income category where many second-tier cities are growing faster than the capital. In recent decades Mexico City has actually lost ground to second-tier cities in share of the total population, which is highly unusual.
The Power of Gold: The History of an Obsession by Peter L. Bernstein
Albert Einstein, Atahualpa, Bretton Woods, British Empire, California gold rush, central bank independence, double entry bookkeeping, Edward Glaeser, falling living standards, financial innovation, floating exchange rates, Francisco Pizarro, German hyperinflation, Hernando de Soto, Isaac Newton, joint-stock company, joint-stock limited liability company, Joseph Schumpeter, large denomination, liquidity trap, long peace, money: store of value / unit of account / medium of exchange, old-boy network, Paul Samuelson, price stability, profit motive, random walk, rising living standards, Ronald Reagan, seigniorage, the market place, The Wealth of Nations by Adam Smith, Thomas Malthus, too big to fail, trade route
Mississippi Valley Historical Review, 34 (Dec.), pp. 367-400. Barsky, Robert, and Bradford DeLong, 1991. "Forecast Pre-World War I Inflation: The Fisher Effect and the Gold Standard." Quarterly Journal of Economics, 106, pp. 815-836. Bayoumi, Tamim, Barry Eichengreen, and Mark Taylor, eds., 1996. Modern Perspectives on the Gold Standard. Cambridge: Cambridge University Press. Becker, Gary S., Edward Glaeser, and Ken Murphy, 1999. "Population and Economic Growth." American Economic Review, 89, no. 2 (May), pp. 145-149. Bernstein, Peter L., 1968. A Primer on Money, Banking and Gold, 2nd edition. New York: Random House. Bernstein, Peter L., 1970. Economist on Wall Street. New York: Macmillan. Bernstein, Peter L., 1996. Against the Gods: The Remarkable Story of Risk. New York: John Wiley & Sons.
Croesus figured he had better withdraw to Sardis and wait until he could gather his allies before attacking Cyrus a second time. Cyrus, aware of Croesus's intentions, hurried toward Sardis, forcing Croesus to face him on the great plain that lies before the city. When Cyrus saw that Croesus had placed his powerful cavalry in the front ranks, he transferred his own horsemen to the camels usually employed in carrying food and equipment. Horses are afraid of camels and cannot stand the sight or the smell of them. The Lydian cavalry was thrown into confusion by the camel charge and the whole Lydian army had to retreat into the city, where they suffered a siege that lasted fourteen days before the Persians finally broke through and claimed victory. The Delphic oracle had got it right again: a mighty empire had been destroyed, but it was the empire of Croesus that fell, not the empire of the Persians.
When asked what he meant, Croesus told them that Solon was "a man I would give a great fortune to see talking with all the tyrants of the earth." Cyrus was so moved by what Croesus told him about Solon's visit that he ordered the fire put out and Croesus untied. As they sat together as friends, Cyrus pointed out to Croesus that the crowd they could see in the distance was "looting [his] city and carrying off [his] wealth." Croesus still had his wits about him, despite all he had been through. "It's not my city or my wealth they are looting," he pointed out. "None of it is mine anymore. What they are looting and leading away belongs to you."" With those poignant words, Croesus fades from view. The most challenging feature of the Croesus story is in its curious intermixture of luck and skill. Croesus was lucky enough to rule a domain on the banks of the Pactolus, blessed by Midas with an apparently endless supply of gold.
The Evolution of Everything: How New Ideas Emerge by Matt Ridley
affirmative action, Affordable Care Act / Obamacare, Albert Einstein, Alfred Russel Wallace, altcoin, anthropic principle, anti-communist, bank run, banking crisis, barriers to entry, bitcoin, blockchain, British Empire, Broken windows theory, Columbian Exchange, computer age, Corn Laws, cosmological constant, creative destruction, Credit Default Swap, crony capitalism, crowdsourcing, cryptocurrency, David Ricardo: comparative advantage, demographic transition, Deng Xiaoping, discovery of DNA, Donald Davies, double helix, Downton Abbey, Edward Glaeser, Edward Lorenz: Chaos theory, Edward Snowden, endogenous growth, epigenetics, ethereum blockchain, facts on the ground, falling living standards, Ferguson, Missouri, financial deregulation, financial innovation, Frederick Winslow Taylor, Geoffrey West, Santa Fe Institute, George Gilder, George Santayana, Gunnar Myrdal, Henri Poincaré, hydraulic fracturing, imperial preference, income per capita, indoor plumbing, interchangeable parts, Intergovernmental Panel on Climate Change (IPCC), invisible hand, Isaac Newton, Jane Jacobs, Jeff Bezos, joint-stock company, Joseph Schumpeter, Kenneth Arrow, Kevin Kelly, Khan Academy, knowledge economy, land reform, Lao Tzu, long peace, Lyft, M-Pesa, Mahatma Gandhi, Mark Zuckerberg, means of production, meta analysis, meta-analysis, mobile money, money: store of value / unit of account / medium of exchange, Mont Pelerin Society, moral hazard, Necker cube, obamacare, out of africa, packet switching, peer-to-peer, phenotype, Pierre-Simon Laplace, price mechanism, profit motive, RAND corporation, random walk, Ray Kurzweil, rent-seeking, reserve currency, Richard Feynman, Richard Feynman, rising living standards, road to serfdom, Ronald Coase, Ronald Reagan, Satoshi Nakamoto, Second Machine Age, sharing economy, smart contracts, South Sea Bubble, Steve Jobs, Steven Pinker, The Wealth of Nations by Adam Smith, Thorstein Veblen, transaction costs, women in the workforce
Now that we can work anywhere, the anywhere we mostly want – at least when we are young – is the densest, most high-rise, most hectic of spots. And we are prepared to pay a premium for it. Cities that encourage tall residential buildings in their centres, like Hong Kong or Vancouver, thrive, while those that insist on low-rise profiles, like Mumbai, struggle. The point is that these are not trends that human beings have chosen consciously as policy. The continuing evolution of the city is an unconscious and inexorable momentum. The same process is continuing all over the world. There is, as Edward Glaeser has observed, an almost perfect correlation between prosperity and urbanisation: the more urbanised a country, the richer it is. If you divide the world into those countries where the majority live in cities, and those where the majority live in the countryside, you find that the former are four times as wealthy, in terms of average income, as the latter.
A mouse burns more energy, per unit of body weight, than an elephant; a small city burns proportionately more motor fuel than a large one. Like cities, bodies get more efficient in their energy consumption the larger they grow. There is also a consistent 15 per cent saving on infrastructure cost per head for every doubling of a city’s population size. The opposite is true of economic growth and innovation – the bigger the city, the faster these increase. Doubling the size of a city boosts income, wealth, number of patents, number of universities, number of creative people, all by approximately 15 per cent, regardless of where the city is. The scaling is, in the jargon, ‘superlinear’. Geoffrey West of the Santa Fe Institute, who discovered this phenomenon, calls cities ‘supercreative’. They generate a disproportionate share of human innovation; and the bigger they are, the more they generate.
The sociologist Jane Jacobs was the first to realise that the density of urban living, ‘far from being an evil, is the source of its vitality’ (in John Kay’s words). In her successful opposition to New York’s city planners with their utopian schemes, she championed the unplanned, organic nature of the cities that people love, in contrast to the sterile spaces of planned cities like Brasilia, Islamabad or Canberra. As Nassim Taleb quips, nobody would buy a pied-à-terre in Brasilia the way they would in London. Today, the most successful cities, like London, New York and Tokyo, are places of fancy food, entertainment, mating arenas (sorry – clubs) and opportunity for the aspiring poor. From Rio to Mumbai cities are the engines of prosperity, the places where people make the transition from poverty to comfort and even wealth. And the ‘death of distance’ engendered by the internet and the mobile phone, far from encouraging people to retreat to isolated idylls in Montana or the Gobi desert, is having exactly the opposite effect.
Finance and the Good Society by Robert J. Shiller
Alvin Roth, bank run, banking crisis, barriers to entry, Bernie Madoff, capital asset pricing model, capital controls, Carmen Reinhart, Cass Sunstein, cognitive dissonance, collateralized debt obligation, collective bargaining, computer age, corporate governance, Daniel Kahneman / Amos Tversky, Deng Xiaoping, diversification, diversified portfolio, Donald Trump, Edward Glaeser, eurozone crisis, experimental economics, financial innovation, financial thriller, fixed income, full employment, fundamental attribution error, George Akerlof, income inequality, information asymmetry, invisible hand, joint-stock company, Joseph Schumpeter, Kenneth Arrow, Kenneth Rogoff, land reform, loss aversion, Louis Bachelier, Mahatma Gandhi, Mark Zuckerberg, market bubble, market design, means of production, microcredit, moral hazard, mortgage debt, Myron Scholes, Occupy movement, passive investing, Ponzi scheme, prediction markets, profit maximization, quantitative easing, random walk, regulatory arbitrage, Richard Thaler, Right to Buy, road to serfdom, Robert Shiller, Robert Shiller, Ronald Reagan, selection bias, self-driving car, shareholder value, Sharpe ratio, short selling, Simon Kuznets, Skype, Steven Pinker, telemarketer, The Market for Lemons, The Wealth of Nations by Adam Smith, Thorstein Veblen, too big to fail, Vanguard fund, young professional, zero-sum game, Zipcar
Journal of Finance 51(3):783–810. Hacker, Jacob, and Paul Pierson. 2010. Winner-Take-All Politics: How Washington Made the Rich Richer—and Turned Its Back on the Middle Class. New York: Simon and Schuster. Hansmann, Henry. 1990. “Why Do Universities Have Endowments?” Journal of Legal Studies 19:3–42. Hansmann, Henry, Daniel Kessler, and Mark McClellan. 2003. “Ownership Form and Trapped Capital in the Hospital Industry.” In Edward Glaeser, ed., The Governance of Not-for-Profit Organizations, 45–70. Chicago: University of Chicago Press. Harbough, William T. 1998. “The Prestige Motive for Making Charitable Transfers.” American Economic Review 88(2):277–88. Harriss, C. Lowell. 1951. History and Policies of the Home Owners’ Loan Corporation. New York: National Bureau of Economic Research. Hayek, F. A. 1944. The Road to Serfdom.
But indebtedness creates a danger for the rm, leaving open the risk that a going concern could be forced into liquidation by its creditors. Governments also have need to borrow, notably when they too are young and at other times as well, when they foresee greater needs ahead. For example, a new city may need to build roads and a sewage system in expectation of a later population in ux, since putting the whole system in place at once is the most e cient approach. It would be sensible for the city government to nance these infrastructure needs by borrowing: the current population of the city cannot a ord them, and they ought to be paid for by the subsequent residents, who will actually use them and be resident in the city when the debt comes due. Governments may also need to borrow during an economic crisis, again in expectation of better times ahead. Yet the indebted government may run into problems, for example if the anticipated future population does not arrive or if the economic crisis lasts longer than expected.
The more important story is the proliferation and transformation of successful nancial ideas. Financial innovations emanating from Amsterdam, London, and New York are developing further in Buenos Aires, Dubai, and Tokyo. The socialist market economy, with its increasingly advanced nancial structures, was introduced to China by Deng Xiaoping starting in 1978, adapting to the Chinese environment the examples of other highly successful Chinese-speaking cities: Hong Kong, Singapore, and Taipei. The economic liberalization of India, which allowed freer application of modern nance, was inaugurated in 1991 under Prime Minister P. V. Narasimha Rao by his nance minister (later prime minister) Manmohan Singh, who was educated in economics at Nu eld College, Oxford University. The voucher privatization system introduced to Russia in 1992–94 under Prime Minister Boris Yeltsin by his minister Anatoly Chubais, following a modi cation of the Yavlinsky plan, was a deliberate and aggressive strategy to transform Russia’s economy.
Misbehaving: The Making of Behavioral Economics by Richard H. Thaler
3Com Palm IPO, Albert Einstein, Alvin Roth, Amazon Mechanical Turk, Andrei Shleifer, Apple's 1984 Super Bowl advert, Atul Gawande, Berlin Wall, Bernie Madoff, Black-Scholes formula, capital asset pricing model, Cass Sunstein, Checklist Manifesto, choice architecture, clean water, cognitive dissonance, conceptual framework, constrained optimization, Daniel Kahneman / Amos Tversky, delayed gratification, diversification, diversified portfolio, Edward Glaeser, endowment effect, equity premium, Eugene Fama: efficient market hypothesis, experimental economics, Fall of the Berlin Wall, George Akerlof, hindsight bias, Home mortgage interest deduction, impulse control, index fund, information asymmetry, invisible hand, Jean Tirole, John Nash: game theory, John von Neumann, Kenneth Arrow, late fees, law of one price, libertarian paternalism, Long Term Capital Management, loss aversion, market clearing, Mason jar, mental accounting, meta analysis, meta-analysis, money market fund, More Guns, Less Crime, mortgage debt, Myron Scholes, Nash equilibrium, Nate Silver, New Journalism, nudge unit, Paul Samuelson, payday loans, Ponzi scheme, presumed consent, pre–internet, principal–agent problem, prisoner's dilemma, profit maximization, random walk, randomized controlled trial, Richard Thaler, Robert Shiller, Robert Shiller, Ronald Coase, Silicon Valley, South Sea Bubble, statistical model, Steve Jobs, technology bubble, The Chicago School, The Myth of the Rational Market, The Signal and the Noise by Nate Silver, The Wealth of Nations by Adam Smith, Thomas Kuhn: the structure of scientific revolutions, transaction costs, ultimatum game, Vilfredo Pareto, Walter Mischel, zero-sum game
See also World Bank (2015). 353 repeatedly and rigorously tested: See Post et al. (2008) and van den Assem, van Dolder, and Thaler (2012) on game shows, Pope and Schweitzer (2011) on golf, Barberis and Thaler (2003) and Kliger, van den Assem, and Zwinkels (2014) for reviews of behavioral finance, and Camerer (2000) and DellaVigna (2009) for surveys of empirical applications of behavioral economics more generally. 353 intriguing finding by Roland Fryer: Fryer (2010). 354 The team of Fryer, John List, Steven Levitt, and Sally Sadoff: Fryer et al. (2013). 354 a recent randomized control trial: Kraft and Rogers (2014). 355 Field experiments are perhaps the most powerful tool we have: Gneezy and List (2013). 356 “If you don’t write it down, it doesn’t exist”: Ginzel (2014). 356 his recent book The Checklist Manifesto: Gawande (2010), pp. 176–77. 356 Into Thin Air: Krakauer (1997). 357 99% of the work is done by the choice architecture: Another example is Alexandre Mas who (sometimes collaborating with Alan Krueger) has shown that after labor disputes that go badly for workers, the quality of work declines. See Mas (2004) on the value of construction equipment after a dispute, Mas and Krueger (2004) on defects in tires after a strike, and Mas (2006) on police work after arbitration. One other example of mainstream economists doing research with a behavioral economics bent would be Edward Glaeser (2013) on speculation in real estate. 358 improve our understanding of public policy: See Chetty’s (2015) Ely lecture delivered at the American Economic Association Meeting that I organized in January 2015. In this case you can literally see it by going to the AEA website: https://www.aeaweb.org/webcasts/2015/Ely.php. BIBLIOGRAPHY Agarwal, Sumit, Mi Diao, Jessica Pan, and Tien Foo Sing. 2014.
Journal of Financial Economics 33, no. 1: 3–56. ———. 1996. “The CAPM Is Wanted, Dead or Alive.” Journal of Finance 51, no. 5: 1947–58. ———. 2014. “A Five-Factor Asset Pricing Model.” Working paper, Fama–Miller Center for Research in Finance. Available at: http://ssrn.com/abstract= 2287202. Farber, Henry S. 2005. “Is Tomorrow Another Day? The Labor Supply of New York City Cabdrivers.” Journal of Political Economy 113, no. 1: 46. ———. 2008. “Reference-Dependent Preferences and Labor Supply: The Case of New York City Taxi Drivers.” American Economic Review 98, no. 3: 1069–82. ———. 2014. “Why You Can’t Find a Taxi in the Rain and Other Labor Supply Lessons from Cab Drivers.” Working Paper 20604, National Bureau of Economic Research. Farnsworth, Ward. 1999. “Do Parties to Nuisance Cases Bargain after Judgment? A Glimpse Inside the Cathedral.”
My objective is to explain what my colleagues and I learned along the way, so that you can use those insights yourself to improve your understanding of your fellow Humans. But there may also be useful lessons about how to try to change the way people think about things, especially when they have a lot invested in maintaining the status quo. Later, we turn to more recent research endeavors, from the behavior of New York City taxi drivers, to the drafting of players into the National Football League, to the behavior of participants on high-stakes game shows. At the end we arrive in London, at Number 10 Downing Street, where a new set of exciting challenges and opportunities is emerging. My only advice for reading the book is stop reading when it is no longer fun. To do otherwise, well, that would be just misbehaving. ________________ * One economist who did warn us about the alarming rate of increase in housing prices was my fellow behavioral economist Robert Shiller. 2 The Endowment Effect I began to have deviant thoughts about economic theory while I was a graduate student in the economics department at the University of Rochester, located in upstate New York.
Capitalism 4.0: The Birth of a New Economy in the Aftermath of Crisis by Anatole Kaletsky
bank run, banking crisis, Benoit Mandelbrot, Berlin Wall, Black Swan, bonus culture, Bretton Woods, BRICs, Carmen Reinhart, cognitive dissonance, collapse of Lehman Brothers, Corn Laws, correlation does not imply causation, creative destruction, credit crunch, currency manipulation / currency intervention, David Ricardo: comparative advantage, deglobalization, Deng Xiaoping, Edward Glaeser, Eugene Fama: efficient market hypothesis, eurozone crisis, experimental economics, F. W. de Klerk, failed state, Fall of the Berlin Wall, financial deregulation, financial innovation, Financial Instability Hypothesis, floating exchange rates, full employment, George Akerlof, global rebalancing, Hyman Minsky, income inequality, information asymmetry, invisible hand, Isaac Newton, Joseph Schumpeter, Kenneth Arrow, Kenneth Rogoff, laissez-faire capitalism, Long Term Capital Management, mandelbrot fractal, market design, market fundamentalism, Martin Wolf, money market fund, moral hazard, mortgage debt, new economy, Northern Rock, offshore financial centre, oil shock, paradox of thrift, Pareto efficiency, Paul Samuelson, peak oil, pets.com, Ponzi scheme, post-industrial society, price stability, profit maximization, profit motive, quantitative easing, Ralph Waldo Emerson, random walk, rent-seeking, reserve currency, rising living standards, Robert Shiller, Robert Shiller, Ronald Reagan, shareholder value, short selling, South Sea Bubble, sovereign wealth fund, special drawing rights, statistical model, The Chicago School, The Great Moderation, The inhabitant of London could order by telephone, sipping his morning tea in bed, the various products of the whole earth, The Wealth of Nations by Adam Smith, Thomas Kuhn: the structure of scientific revolutions, too big to fail, Vilfredo Pareto, Washington Consensus, zero-sum game
., Sources of Chinese Tradition: From 1600 Through the Twentieth Century, vol. 2, 507-510. 8 The key events in computer technology were the introduction of the first standardized IBM personal computers and Intel microprocessors in 1983, the addition of a Graphical User Interface (GUI) to the Apple Macintosh in 1984, the Windows GUI by Microsoft in 1986, and the release in 1990 of Windows 3.0, a much improved GUI developed for the IBM 386 computer. 9 See, for example, Edward Glaeser and Janet Kohlhase, “Cities, Regions and the Decline of Transport Costs,” and Nils-Gustav Lundgren, “Bulk Trade and Maritime Transport Costs: The Evolution of Global Markets,” Resources Policy 22:1-2 (March-June 1996): 5-32. 10 Jeffrey Frankel, “The Japanese Cost of Finance: A Survey,” Financial Management 20:1 (Spring 1991). Chapter Five 1 Quoted in New York Times, October 8, 2006. 2 John Naisbitt, Megatrends. 3 Toffler elaborated and popularized the idea of a post-industrial society.
As Smith said: “It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own self-interest.”3 The miraculous efficiency of the market system, taken for granted everywhere today, was far from obvious to half of humanity just a few decades ago, as illustrated by the famous, though probably apocryphal, anecdote about Nikita Khrushchev’s first trip to the United States. The Soviet leader, after visiting some supermarkets in Manhattan and finding them filled with fresh food, in contrast to the empty shelves of Moscow, turned to his host, Vice President Richard Nixon, and asked, “Who is responsible for the supply of bread to New York City? I want to meet this organizational genius.” In The Company of Strangers, a brilliant book about the roots of economic cooperation in the biology of human evolution, the Anglo-French economist Paul Seabright delightfully describes the wonder that market forces ought to inspire: This morning I went out and bought a shirt. There is nothing very unusual about that; perhaps twenty million people did the same.
Until the 1930s, almost no one, especially those in the nerve center of the global economy that was nineteenth-century Britain, believed that politicians could or should do anything to improve or stabilize the workings of the market. The cycles of finance and economic activity were treated as forces of nature, which politicians could no more moderate than they could influence the tides. Even the interventions of the Bank of England to quell panics in the money markets were seen mainly as private matters, motivated by the self-interests of the City of London and British finance, rather than a core responsibility of the state.16 Prime Minister Gordon Brown has described in several speeches a document in the Treasury archives that shows the government’s reaction to Keynes’s early proposal to lift the British economy out of the Great Depression. His advocacy of what would now be described as demand management was dismissed by the permanent secretary of the Treasury in three scribbled words: Extravagance, Inflation, Bankruptcy.17 The view that government had no responsibility for macroeconomic conditions such as unemployment changed gradually after the First World War and was transformed by the collapse of global trade and industry in the early 1930s.
Republic, Lost: How Money Corrupts Congress--And a Plan to Stop It by Lawrence Lessig
asset-backed security, banking crisis, carried interest, circulation of elites, cognitive dissonance, corporate personhood, correlation does not imply causation, crony capitalism, David Brooks, Edward Glaeser, Filter Bubble, financial deregulation, financial innovation, financial intermediation, invisible hand, jimmy wales, Martin Wolf, meta analysis, meta-analysis, Mikhail Gorbachev, moral hazard, Pareto efficiency, place-making, profit maximization, Ralph Nader, regulatory arbitrage, rent-seeking, Ronald Reagan, Silicon Valley, single-payer health, The Wealth of Nations by Adam Smith, too big to fail, upwardly mobile, WikiLeaks, Zipcar
See also the extremely compelling account by Jack Beatty in Age of Betrayal (New York: Vintage, 2007). 5. Pestritto and Atto, American Progressivism, 215, quoting Roosevelt’s “The New Nationalism,” Oct. 1910. 6. McCormick, “The Discovery that Business Corrupts Politics,” 247, 265. 7. Speech of Theodore Roosevelt, April 14, 1906, available at link #2. 8. John Joseph Wallis, “The Concept of Systematic Corruption in American History,” in Edward Glaeser and Claudia Goldin, eds., Corruption and Reform (Chicago: University of Chicago Press, 2006), 21 and 23, available at link #3. Professor Michael Johnston is the dean of corruption studies. His Syndromes of Corruption (2005) captures better the dynamic of corruption that I am describing. While his work is comparative, and addresses the full range of corruption, including quid pro quo corruption, the mechanism he describes in a number of nations is close to the conception of “dependence corruption” described later.
Yet everyone within such an economy is monitoring the gifts given and the gifts in return. And anytime a significant gap develops, the relationship evinced by the gifts gets strained. Against this background, we can understand Washington a bit better. In the days of wine, women, and wealth, Washington may well have been an exchange economy. I doubt it, but it’s possible. Whatever it was, however, it has become a gift economy.59 For as the city has professionalized, as reformers have controlled graft more effectively and forced “contributions” into the open, the economy of D.C. has changed. If the law forbade D.C. from being an exchange economy, it could not block its becoming a gift economy. So long as the links are not expressed, so long as the obligations are not liquidated, so long as the timing is not too transparent, Washington can live a life of exchanges that oblige without living a life that violates Title 18 of the U.S.
And as the lobbying industry grows, D.C. gets rich, too. Nine of Washington’s suburban counties are now listed by the Census Bureau as among the nation’s twenty with the highest per capita income.90 As former labor secretary Robert Reich describes, When I first went to Washington in 1975, many of the restaurants along Pennsylvania Avenue featured linoleum floors and an abundance of cockroaches. But since then the city has become an increasingly dazzling place. Today, almost everywhere you look in downtown Washington you find polished facades, fancy restaurants, and trendy bistros. There are office complexes of glass, chrome and polished wood; well appointed condos with doormen who know the names and needs of each inhabitant; hotels with marble-floored lobbies, thick rugs, soft music, granite counters; restaurants with linen napkins, leather-bound menus, heavy silverware.91 There are many in the lobbying profession, of course, who deplore the state of the industry.
activist fund / activist shareholder / activist investor, Albert Einstein, Andrei Shleifer, asset allocation, asset-backed security, bank run, beat the dealer, Benoit Mandelbrot, Black-Scholes formula, Bretton Woods, Brownian motion, capital asset pricing model, card file, Cass Sunstein, collateralized debt obligation, complexity theory, corporate governance, corporate raider, Credit Default Swap, credit default swaps / collateralized debt obligations, Daniel Kahneman / Amos Tversky, David Ricardo: comparative advantage, discovery of the americas, diversification, diversified portfolio, Edward Glaeser, Edward Thorp, endowment effect, Eugene Fama: efficient market hypothesis, experimental economics, financial innovation, Financial Instability Hypothesis, fixed income, floating exchange rates, George Akerlof, Henri Poincaré, Hyman Minsky, implied volatility, impulse control, index arbitrage, index card, index fund, information asymmetry, invisible hand, Isaac Newton, John Meriwether, John Nash: game theory, John von Neumann, joint-stock company, Joseph Schumpeter, Kenneth Arrow, libertarian paternalism, linear programming, Long Term Capital Management, Louis Bachelier, mandelbrot fractal, market bubble, market design, Myron Scholes, New Journalism, Nikolai Kondratiev, Paul Lévy, Paul Samuelson, pension reform, performance metric, Ponzi scheme, prediction markets, pushing on a string, quantitative trading / quantitative ﬁnance, Ralph Nader, RAND corporation, random walk, Richard Thaler, risk/return, road to serfdom, Robert Bork, Robert Shiller, Robert Shiller, rolodex, Ronald Reagan, shareholder value, Sharpe ratio, short selling, side project, Silicon Valley, South Sea Bubble, statistical model, The Chicago School, The Myth of the Rational Market, The Predators' Ball, the scientific method, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, Thomas Kuhn: the structure of scientific revolutions, Thomas L Friedman, Thorstein Veblen, Tobin tax, transaction costs, tulip mania, value at risk, Vanguard fund, Vilfredo Pareto, volatility smile, Yogi Berra
Richard H. Thaler, Cass R. Sunstein, Nudge: Improving Decisions About Health, Wealth, and Happiness (New Haven: Yale University Press, 2008). 16. Cass R. Sunstein, ed., Behavioral Law and Economics (Cambridge and New York: Cambridge University Press, 2000). 17. Aditya Chakrabortty, “From Obama to Cameron, why do so many politicians want a piece of Richard Thaler?” Guardian, July 12, 2008, 16. 18. Edward Glaeser, “Paternalism and Psychology,” University of Chicago Law Review (2006): 133–56. 19. Told to me by William Sharpe. 20. The first criticism is in Paul Zarowin, “Does the Stock Market React to Corporate Earnings Information?” Journal of Finance (1989): 1385–99, the second in K. C. Chan and Nai-fu Chen, “Structural and Return Characteristics of Small and Large Firms,” Journal of Finance (1991): 1467–82. 21.
Just after World War I, a conservative AT&T statistician and a socialist economist approached Mitchell with a proposal to settle some of their arguments over economic policy by improving the quality of economic statistics.10 The result was the National Bureau of Economic Research, which opened its doors in New York in 1920 and went on to revolutionize the collection, dissemination, and understanding of economic data in the United States. Gross national product was one of the many measurement innovations it spawned. Mitchell exerted a powerful attraction on younger economists. He was a New York City progressive intellectual of the first order, living in a Greenwich Village townhouse, married to a famed proponent of educational experimentation (Lucy Sprague Mitchell, founder of the Bank Street College of Education), and himself a cofounder of the New School for Social Research. When young Austrian Friedrich Hayek arrived in the United States for the first time in 1923, he was shocked to discover that his American peers no longer cared about Fisher or any of the country’s other neoclassical greats.
He just claimed not to find it interesting. It was “particularly unfortunate,” Prais concluded, that Kendall had chosen such markets to investigate rather than something more significant. (Years later, Prais still complained that Kendall’s paper “seems to have become more important than it should be.”) This was the postwar British mindset. Government controlled the commanding heights of the economy, and the markets of London’s City simply didn’t seem all that important. Just as Oxford’s A. D. Roy failed to pursue the portfolio selection theory he unveiled the same year, Kendall soon dropped the subject. If the beguiling idea of a “demon of chance” at work in the market were to resonate, it would have to do so where financial markets mattered—in the United States. Like Prais and Houthakker, Paul Samuelson could immediately see the link between randomness and a well-functioning financial market, but unlike them he cared enough about investing to find it interesting.
Power at Ground Zero: Politics, Money, and the Remaking of Lower Manhattan by Lynne B. Sagalyn
affirmative action, airport security, Bonfire of the Vanities, clean water, conceptual framework, corporate governance, deindustrialization, Donald Trump, Edward Glaeser, estate planning, Frank Gehry, Guggenheim Bilbao, high net worth, informal economy, intermodal, iterative process, Jane Jacobs, mortgage debt, New Urbanism, place-making, rent control, Rosa Parks, Rubik’s Cube, Silicon Valley, sovereign wealth fund, the built environment, the High Line, time value of money, too big to fail, Torches of Freedom, urban decay, urban planning, urban renewal, white flight, young professional
The Audit on Ground Zero Coverage, Raab, Longobardi Trade Shots on Silverstein, Rubenstein, the Port Authority and Lack of Progress,” Columbia Journalism Review, November 19, 2007. 26 Hugh F. Kelly, “The New York Regional and Downtown Office Market: History and Prospects after 9/11,” report prepared for the Civic Alliance, Economic Development Working Group, August 9, 2002, 5. Also see Franz Fuerst, “The Impact of 9/11 on the Manhattan Office Market,” in Resilient City: The Economic Impact of 9/11, ed. Howard Chernick (New York: Russell Sage Foundation, 2005), 62–96. 27 Kelly, “The New York Regional and Downtown Office Market,” 69. 28 Edward L. Glaeser and Jesse L. Shapiro, “Cities and Warfare: The Impact of Terrorism on Urban Form,” Journal of Urban Economics 51 (2002): 205–224, at 222. The policy stimulus behind the steady conversion of buildings to residential use, the so-called 421-g tax incentive program of real estate tax exemptions and abatement, in effect from 1995 to 2006, spurred more than 15 million square feet of conversions, producing 8,225 apartments (rental and condominium units) by the end of 2006.
The optimistic view of downtown’s future was not uniformly shared among economists who considered the impact of 9/11 on the Manhattan office market and the city’s economy. In fact, there was no clear consensus on the full longer-term impact of the terrorist attacks; it was still too early for most who analyzed the data to draw definitive conclusions. Some found reason for optimism in the behavior of firms dislocated from downtown: 80 percent chose to settle in the core markets of downtown or midtown Manhattan (Franz Fuerst). Others found reasons for optimism in the lack of any clear signs of lasting economic damage to Manhattan’s strong historic draw as a prime office location (Jason Bram, Andrew Haughwout, and James Orr). Still others saw no viable economic future for the downtown office district. Writing in 2002, Harvard economists Edward L. Glaeser and Jesse L. Shapiro considered Manhattan’s downtown financial district, even before 9/11, as an “anachronism,” artificially “propped up by government subsidies, most spectacularly in the building of the World Trade Center itself.”
., 657–658, 670 Nervi, Pier Luigi, 35, 480 Neuman, William, 392, 713 Newark Liberty International Airport, 110, 143, 159, 162 New Croton Aqueduct, 97 Newhouse, Si, 698–699, 861n62 Newhouse, Victoria, 214 Newhouse family, 698 New Jersey Marine Development Program, 775n42 News Corporation, 712–713 “A New World Trade Center” (architecture exhibit), 151–152 New York Academy of Sciences, 428, 443 New York Building Congress, 186, 392, 528, 592 New York City. See also specific city agencies, officials, and street names civic groups, 61–62, 88, 144–151 fiscal conditions, 22–25, 762n33 global aspirations, 5–14, 707–708 office rental market, 428–429, 458, 563, 590, 682–683, 824n54 ownership of streets within WTC site, 249 relations between mayor and governor, 76–90, 158, 190–192, 197, 199, 210–217, 413, 419–422, 432, 448, 636, 685, 710, 784n61, 846–847n57 New York City Arts Coalition, 304 New York City Central Labor Council of AFL-CIO, 149 New York City Council, Committee on Lower Manhattan Redevelopment, 302, 348, 429 New York City Department of Building, 533 New York City Department of City Planning (DCP), 64, 66, 142, 201, 247–248, 251–253, 561 New York City Department of Cultural Affairs, 302 New York City Department of Transportation, 291 New York City Economic Development Corporation (EDC), 156, 363, 408, 423, 630–631, 635, 761n26 New York City Investment Fund, 860n45 New York City Opera, 299–300, 302–304 New York City Planning Commission, 56, 64–65, 66, 141, 183–185, 247–248, 366, 761n26 New York City’s Vision for Lower Manhattan (2002; Bloomberg plan), 162–163, 247, 410 New York Fire Department (NYFD), 233, 290, 672 Engine 10−Ladder 10 fire station bronze bas relief, 349f New York New Visions (NYNV): Principles for the Rebuilding for Lower Manhattan (2002), 144–146, 201 New York Police Department (NYPD), 42, 265, 275–281, 286–291, 294, 504, 563, 575, 609, 668t, 696, 718, 800n60 New York State Council on the Arts, 297, 302 New York State Department of Transportation, 109, 111, 291 New York State Energy Research and Development Authority, 818n4 New York State Historic Preservation Office (SHPO), 496 Programmatic Agreement (2004), 499–500 New York State Office of General Services, 459 New York Stock Exchange, 53, 192, 798n41 New York University, 60 Real Estate Institute, 56 9/11 anniversaries, 560, 674 first anniversary, 560 tenth anniversary as goal, 548, 559–561, 567 tenth anniversary opening of Memorial Plaza, 336, 665 thirteenth anniversary, 707 9/11 families ideas about a memorial, 224–229, 306–318, 313f, 321, 322–327, 345, 347f, 368, 676, 805n65, 858n19 press role and, 713 role of activist families, 229–234, 676.
The Better Angels of Our Nature: Why Violence Has Declined by Steven Pinker
1960s counterculture, affirmative action, Alan Turing: On Computable Numbers, with an Application to the Entscheidungsproblem, Albert Einstein, availability heuristic, Berlin Wall, Bonfire of the Vanities, British Empire, Broken windows theory, California gold rush, Cass Sunstein, citation needed, clean water, cognitive dissonance, colonial rule, Columbine, computer age, conceptual framework, correlation coefficient, correlation does not imply causation, crack epidemic, cuban missile crisis, Daniel Kahneman / Amos Tversky, David Brooks, delayed gratification, demographic transition, desegregation, Doomsday Clock, Douglas Hofstadter, Edward Glaeser, en.wikipedia.org, European colonialism, experimental subject, facts on the ground, failed state, first-past-the-post, Flynn Effect, food miles, Francis Fukuyama: the end of history, fudge factor, full employment, George Santayana, ghettoisation, Gini coefficient, global village, Henri Poincaré, Hobbesian trap, humanitarian revolution, impulse control, income inequality, informal economy, Intergovernmental Panel on Climate Change (IPCC), invention of the printing press, Isaac Newton, lake wobegon effect, libertarian paternalism, long peace, loss aversion, Marshall McLuhan, mass incarceration, McMansion, means of production, mental accounting, meta analysis, meta-analysis, Mikhail Gorbachev, moral panic, mutually assured destruction, open economy, Peace of Westphalia, Peter Singer: altruism, QWERTY keyboard, race to the bottom, Ralph Waldo Emerson, random walk, Republic of Letters, Richard Thaler, Ronald Reagan, Rosa Parks, Saturday Night Live, security theater, Skype, Slavoj Žižek, South China Sea, statistical model, stem cell, Steven Levy, Steven Pinker, The Bell Curve by Richard Herrnstein and Charles Murray, The Wealth of Nations by Adam Smith, theory of mind, transatlantic slave trade, transatlantic slave trade, Turing machine, ultimatum game, uranium enrichment, V2 rocket, Vilfredo Pareto, Walter Mischel, WikiLeaks, women in the workforce, zero-sum game
In 1656 he was excommunicated by his Jewish community, who, with memories of the Inquisition still fresh, were nervous about making waves among the surrounding Christians.145 It was no tragedy for Spinoza, as it might have been if he had lived in an isolated village, because he just picked up and moved to a new neighborhood and from there to another tolerant Dutch city, Leiden. In both places he was welcomed into the community of writers, thinkers, and artists. John Locke used Amsterdam as a safe haven in 1683 after he had been suspected of taking part in a plot against King Charles II in England. René Descartes also changed addresses frequently, bouncing around Holland and Sweden whenever things got too hot. The economist Edward Glaeser has credited the rise of cities with the emergence of liberal democracy.146 Oppressive autocrats can remain in power even when their citizens despise them because of a conundrum that economists call the social dilemma or free-rider problem.
Joseph Shusko, Richard Shweder, Thomas Sowell, Håvard Strand, Ilavenil Subbiah, Rebecca Sutherland, Philip Tetlock, Andreas Forø Tollefsen, James Tucker, Staffan Ulfstrand, Jeffrey Watumull, Robert Whiston, Matthew White, Maj. Michael Wiesenfeld, and David Wolpe. Many colleagues and students at Harvard have been generous with their expertise, including Mahzarin Banaji, Robert Darnton, Alan Dershowitz, James Engell, Nancy Etcoff, Drew Faust, Benjamin Friedman, Daniel Gilbert, Edward Glaeser, Omar Sultan Haque, Marc Hauser, James Lee, Bay McCulloch, Richard McNally, Michael Mitzenmacher, Orlando Patterson, Leah Price, David Rand, Robert Sampson, Steve Shavell, Lawrence Summers, Kyle Thomas, Justin Vincent, Felix Warneken, and Daniel Wegner. Special thanks go to the researchers who have worked with me on the data reported in these pages. Brian Atwood carried out countless statistical analyses and database searches with precision, thoroughness, and insight.
The sizes of towns and cities is a good example. It’s hard to answer the question “How big is a typical American municipality?” New York has 8 million people; the smallest municipality that counts as a “town,” according to Guinness, is Duffield, Virginia, with only 52. The ratio of the largest municipality to the smallest is 150,000, which is very different from the less-than-fivefold variation in the heights of men. Also, the distribution of sizes of municipalities isn’t curved like a bell. As the black line in figure 5–10 shows, it is L-shaped, with a tall spine on the left and a long tail on the right. In this graph, city populations are laid out along a conventional linear scale on the black horizontal axis: cities of 100,000, cities of 200,000, and so on. So are the proportions of cities of each population size on the black vertical axis: three-thousandths (3/1000, or 0.003) of a percent of American municipalities have a population of exactly 20,000, two thousandths of a percent have a population of 30,000, one thousandth of a percent have a population of 40,000, and so on, with smaller and smaller proportions having larger and larger populations.59 Now the gray axes at the top and the right of the graph stretch out these same numbers on a logarithmic scale, in which orders of magnitude (the number of zeroes) are evenly spaced, rather than the values themselves.
The Great Leveler: Violence and the History of Inequality From the Stone Age to the Twenty-First Century by Walter Scheidel
agricultural Revolution, assortative mating, basic income, Berlin Wall, Bernie Sanders, Branko Milanovic, British Empire, capital controls, Capital in the Twenty-First Century by Thomas Piketty, collective bargaining, colonial rule, Columbian Exchange, conceptual framework, corporate governance, cosmological principle, crony capitalism, dark matter, declining real wages, demographic transition, Dissolution of the Soviet Union, Downton Abbey, Edward Glaeser, failed state, Fall of the Berlin Wall, financial deregulation, fixed income, Francisco Pizarro, full employment, Gini coefficient, hiring and firing, income inequality, John Markoff, knowledge worker, land reform, land tenure, low skilled workers, means of production, mega-rich, Network effects, nuclear winter, offshore financial centre, Plutocrats, plutocrats, race to the bottom, recommendation engine, rent control, rent-seeking, road to serfdom, Robert Gordon, Ronald Reagan, Second Machine Age, Simon Kuznets, The Future of Employment, The Wealth of Nations by Adam Smith, Thomas Malthus, transaction costs, transatlantic slave trade, universal basic income, very high income, working-age population, zero-sum game
Their educational attainment is and will continue to be much lower than for European nationals, and employment rates are low in a number of countries, especially for women. The persistence or worsening of these problems may produce disequalizing consequences for the societies in question. Moreover, the growth of communities of first-generation immigrants and those of recent foreign-origin family background has the potential to affect attitudes and policies regarding social welfare and redistributive spending. Alberto Alesina and Edward Glaeser have argued that welfare policies are correlated with ethnic homogeneity, which helps explain why the United States developed a weaker welfare state than European countries. They anticipate that growing immigration will undermine the generosity of European welfare states and that anti-immigrant sentiment may be used to dismantle redistributive policies and “eventually push the continent toward more American levels of redistribution.”
The consequences of collapse differed greatly from those of conquest that preserved the scale and characteristics of earlier state structures: whereas the Norman conquest of England preserved or even briefly increased wealth inequality, the fragmentation of a previously very large sphere that had been exploited by a small central ruling class had very much the opposite effect.15 ”MANY OF THE TOWNS OF THAT PERIOD DO NOT SEEM TO US TODAY TO BE PARTICULARLY IMPOSING”: SYSTEMS COLLAPSE IN THE LATE BRONZE AGE MEDITERRANEAN AND THE PRE-COLUMBIAN AMERICAS By the thirteenth century BCE, the eastern Mediterranean had turned into a system of powerful states interconnected by diplomacy, war, and trade: Ramesside Egypt and the Hittite empire in Anatolia were vying for supremacy, the Middle Assyrian empire expanded in Mesopotamia, city-states flourished in the Levant, and the Aegean was dominated by large palaces that managed economic production and distribution. Nobody would have predicted the rapid collapse of this state system in the decades after 1200 BCE. All over the region cities suffered damage or wholesale destruction—in Greece, Anatolia, Syria, and Palestine. Just after 1200 BCE, the Hittite empire failed, and its capital city Hattuša was partly destroyed and abandoned. The important city of Ugarit on the Syrian coast was wiped out a few years later, as were other sites farther inland. Cities such as Megiddo (in the plain of the biblical “Armageddon”) followed suit. In Greece, the mighty palaces were destroyed one by one.
Indeed, the closer they came to this outcome, as the Flemish peasant movement of the 1320s may arguably have done, the stronger the countervailing forces they were bound to unleash.28 ”LONG LIVE THE PEOPLE AND DEATH TO THE WOLVES”: REVOLT IN CITIES AND CITY-STATES What was true of rural revolts applied even more to urban risings. In most historical settings, cities were embedded in vast rural landscapes, their populations greatly outnumbered by the peasantry. Rulers and nobles could draw on soldiers, arms, and resources from surrounding areas to bring rebellious towns to heel. The bloody crushing of the Paris commune in 1871 is merely one relatively recent example. If urban revolts had any prospect of success, it would have been in self-governing city-states whose local elites could not readily fall back on external resources of repression. In chapter 6, ancient Greece served as an early example of military mass mobilization and concurrent egalitarianism.
Alvin Roth, Andrei Shleifer, asset-backed security, bank run, barriers to entry, Basel III, Berlin Wall, Bernie Madoff, Bernie Sanders, Black Swan, blue-collar work, Bretton Woods, Brownian motion, capital controls, Carmen Reinhart, Cass Sunstein, central bank independence, cognitive dissonance, collapse of Lehman Brothers, collateralized debt obligation, complexity theory, constrained optimization, creative destruction, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, crony capitalism, dark matter, David Brooks, David Graeber, debt deflation, deindustrialization, Edward Glaeser, Eugene Fama: efficient market hypothesis, experimental economics, facts on the ground, Fall of the Berlin Wall, financial deregulation, financial innovation, Flash crash, full employment, George Akerlof, Goldman Sachs: Vampire Squid, Hernando de Soto, housing crisis, Hyman Minsky, illegal immigration, income inequality, incomplete markets, information asymmetry, invisible hand, Jean Tirole, joint-stock company, Kenneth Arrow, Kenneth Rogoff, knowledge economy, l'esprit de l'escalier, labor-force participation, liberal capitalism, liquidity trap, loose coupling, manufacturing employment, market clearing, market design, market fundamentalism, Martin Wolf, money market fund, Mont Pelerin Society, moral hazard, mortgage debt, Naomi Klein, Nash equilibrium, night-watchman state, Northern Rock, Occupy movement, offshore financial centre, oil shock, Pareto efficiency, Paul Samuelson, payday loans, Philip Mirowski, Ponzi scheme, precariat, prediction markets, price mechanism, profit motive, quantitative easing, race to the bottom, random walk, rent-seeking, Richard Thaler, road to serfdom, Robert Shiller, Robert Shiller, Ronald Coase, Ronald Reagan, savings glut, school choice, sealed-bid auction, Silicon Valley, South Sea Bubble, Steven Levy, technoutopianism, The Chicago School, The Great Moderation, the map is not the territory, The Myth of the Rational Market, the scientific method, The Wisdom of Crowds, theory of mind, Thomas Kuhn: the structure of scientific revolutions, Thorstein Veblen, Tobin tax, too big to fail, transaction costs, Vilfredo Pareto, War on Poverty, Washington Consensus, We are the 99%, working poor
The tepid response of the profession is documented in Cooke and Flitter, “Economists Display Little Interest in Ethics Code.” I leave it to some future historian to document the deliberations of the Ad Hoc Committee headed by Robert Solow, first convened in January 2011. Instead of carrying out its deliberations in public, as per normal, the AEA committee discussions were themselves secret. 140 Edward Glaeser, “Where to Draw a Line on Ethics,” Economix blog, April 1, 2011, at http://economix.blogs.nytimes.com/2011/01/04/where-to-draw-a-line-on-ethics/. This confession of administrative responsibility for neutralizing conflict-of-interest policies is another example of how neoliberal economists actively push universities such as Harvard in a more neoliberal direction. 141 For the text, see www.aeaweb.org/aea_journals/AEA_Disclosure_Policy.pdf. 142 Davies and McGoey, “Rationalities of Ignorance,” p. 77. 143 Posner, Public Intellectuals. 144 Proctor and Scheibinger, Agnotology.
Leon Festinger and his colleagues illustrated these lessons in his first book (When Prophecy Fails) by reporting the vicissitudes of a group of Midwesterners they called “The Seekers,” who conceived and developed a belief that they would be rescued by flying saucers on a specific date in 1954, prior to a great flood coming to engulf Lake City (a pseudonym). Festinger documents in great detail the hour-by-hour reactions of the Seekers as the date of their rescue came and passed with no spaceships arriving and no flood welling up to swallow Lake City. At first, the Seekers withdrew from representatives of the press seeking to upbraid them for their failed prophecies, but soon reversed their stance, welcoming all opportunities to expound and elaborate upon their (revised and expanded) faith. A minority of their group did fall away; but Festinger notes they had tended to be lukewarm peripheral members of the group before the crisis.
It is all the more poignant when administered through an absentminded procedure. One index is the willful catch-22 character of the official determinations tendered along with the torment: In Colorado, Grand Junction’s city council is considering a ban on begging; Tempe, Arizona, carried out a four-day crackdown on the indigent at the end of June. And how do you know when someone is indigent? As a Las Vegas statute puts it, “an indigent person is a person whom a reasonable ordinary person would believe to be entitled to apply for or receive” public assistance. One person who fits that description is Al Szekeley. A grizzled sixty-two-year-old, he inhabits a wheelchair and is often found on G Street in Washington, D.C.—the city that is ultimately responsible for the bullet he took in the spine in Phu Bai, Vietnam, in 1972. He had been enjoying the luxury of an indoor bed until December 2008, when the police swept through the shelter in the middle of the night looking for men with outstanding warrants.
3D printing, Affordable Care Act / Obamacare, airline deregulation, airport security, Apple II, barriers to entry, big-box store, blue-collar work, Capital in the Twenty-First Century by Thomas Piketty, clean water, collective bargaining, computer age, creative destruction, deindustrialization, Detroit bankruptcy, discovery of penicillin, Donner party, Downton Abbey, Edward Glaeser, en.wikipedia.org, Erik Brynjolfsson, everywhere but in the productivity statistics, feminist movement, financial innovation, full employment, George Akerlof, germ theory of disease, glass ceiling, high net worth, housing crisis, immigration reform, impulse control, income inequality, income per capita, indoor plumbing, industrial robot, inflight wifi, interchangeable parts, invention of agriculture, invention of air conditioning, invention of the telegraph, invention of the telephone, inventory management, James Watt: steam engine, Jeff Bezos, jitney, job automation, John Markoff, John Maynard Keynes: Economic Possibilities for our Grandchildren, labor-force participation, Loma Prieta earthquake, Louis Daguerre, Louis Pasteur, low skilled workers, manufacturing employment, Mark Zuckerberg, market fragmentation, Mason jar, mass immigration, mass incarceration, McMansion, Menlo Park, minimum wage unemployment, mortgage debt, mortgage tax deduction, new economy, Norbert Wiener, obamacare, occupational segregation, oil shale / tar sands, oil shock, payday loans, Peter Thiel, pink-collar, Productivity paradox, Ralph Nader, Ralph Waldo Emerson, refrigerator car, rent control, Robert X Cringely, Ronald Coase, school choice, Second Machine Age, secular stagnation, Skype, stem cell, Steve Jobs, Steve Wozniak, Steven Pinker, The Market for Lemons, Thomas Malthus, total factor productivity, transaction costs, transcontinental railway, traveling salesman, Triangle Shirtwaist Factory, Unsafe at Any Speed, Upton Sinclair, upwardly mobile, urban decay, urban planning, urban sprawl, washing machines reduced drudgery, Washington Consensus, Watson beat the top human players on Jeopardy!, We wanted flying cars, instead we got 140 characters, working poor, working-age population, Works Progress Administration, yellow journalism, yield management
Patent laws have expanded too far by protecting software and business methods.15 Morris Kleiner has calculated that the percentage of jobs subject to occupational licensing has expanded from 10 percent in 1970 to 30 percent in 2008.16 Licensing reduces opportunities for employment, limits the ability of new entrants to create small businesses, and restricts upward mobility for lower-income individuals. By contributing to a reduction in the rate of entry of new firms, licensing is one of the sources of the decline in “business dynamism” noted in the literature cited in chapter 17. Edward Glaeser has called restrictive zoning and land use regulations a “regulatory tax” that transfers wealth from the less affluent to more affluent and promotes housing segregation by keeping poor people away from rich people and that, by inflating housing prices, encourages potential residents to move away from the most productive metropolitan areas to less productive areas, where housing is cheaper.17 All these instances of excessive regulation are relevant to inequality, for they redistribute income and wealth to those who are protected by their copyrights, patents, licenses, and land-use restrictions.
Spurred on by growing family sizes during the baby boom, middle-class parents fled the central city, leaving central cities in which residential segregation in some cities isolated the African American population in what became known as urban ghettoes. The distinction between the city and the suburb can be overdone. Adjectives to describe each exaggerate the differences. Cities can be described as bad (dangerous, polluted, concrete) or good (diverse, dense, stimulating), and so can suburbs (homogeneous, sprawling, and dull vs. safe, healthy, and green).54 In fact, many areas within the city limits closely resemble suburbs, such as Chicago’s bungalow belt, built largely in the 1920s. Within New York City, most of the dwelling units of Queens and Staten Island have front and back yards. Many American cities grew by annexation of surrounding suburbs and even whole counties, and most of cities such as Minneapolis, Houston, Phoenix, and Los Angeles are largely suburban in character.
The impression which this comfort and plenty makes is heightened by the brilliance and keenness of the air, by the look of freshness and cleanness which even the cities wear. The fog and soot-flakes of an English town, as well as its squalor, are wanting; you are in a new world, and a world which knows the sun.27 Bryce was viewing the American city of the mid-1880s in contrast with crowded and sooty English cities of the same era. Others noted the lower density of American cities than in Europe. Adna Weber in 1899 calculated that the population density of fifteen American cities was twenty-two persons per acre as compared to 158 for thirteen German cities. Gradually, between 1840 and 1870, the suburban ideal became based on the virtues of separation rather than physical connections between adjacent dwellings. “The lawn was a barrier—a kind of verdant moat separating the household from the threats and temptations of the city.”28 As the outskirts of cities were developed after 1870, property covenants often required that houses be set back a certain distance from the street and sidewalk.