Urban myths

Boston reinvented itself when its manufacturing industries declined. Should cities that don’t manage this be abandoned?
February 23, 2011
Boston rising: the city reinvented itself when its manufacturing industries declined. Should cities that don’t manage this be abandoned?

Few recent proposals to boost growth have gone down as badly as shutting Sunderland. Yet in 2008, the centre-right think tank Policy Exchange was condemned for a publication that appeared to say just that. The idea of encouraging struggling towns to decline further might seem crazy. But behind it lies the work of the American economist Edward Glaeser, whose controversial thinking holds important clues about how to restart Britain’s faltering economy.

Those trying to cobble together a growth plan for the coalition are unlikely to have Policy Exchange’s report high on their reading list, but its argument is more reasonable than it at first appears. Much public money is spent propping up fading towns and cities, like Sunderland or Liverpool. Much better, the report argued, to push development in places where people and businesses actually want to move to or set up shop, like Cambridge or Leeds.

The conclusion angered both sides: the growth areas feared over-development, while Policy Exchange’s director still has an angry letter from Sunderland council framed on his desk. Glaeser himself won similar opprobrium in the aftermath of Hurricane Katrina for arguing against spending billions to rebuild New Orleans—a corrupt city with a grim track record of providing for its poorer residents—in favour of giving flood victims a generous grant to relocate elsewhere. The first loyalty of the state, he said, should be to people, not places.

Yet for someone happy to see cities decline, Glaeser’s research is actually something of an academic love letter to the “magic” of urbanism; a paean now condensed into his first book, Triumph of the City, published in March. Tall, dense, chaotic urban centres, he says, are more innovative, vibrant and environmentally friendly than rural or suburban communities. Even slums are a side effect of urban success, and generally far better for their inhabitants than the squalid villages they left behind.

An intimidatingly clever 43-year-old professor, Glaeser won a place at Harvard’s prestigious economics faculty in his mid-twenties. His research has since attracted widespread academic admiration; George Akerlof, an economics Nobel winner, has described him as “a genius.” But rather than developing abstruse theoretical macroeconomic models, Glaeser’s insights stem from his fascination with the humdrum problems of American urban living; its suburbs and exurbs, traffic and sprawl.

Some cities, such as Phoenix, have grown quickly in the past decade, while others, like Detroit, declined only slowly since the 1950s. Some, like Boston, reinvented themselves as their manufacturing industries died, but others fell into a seemingly irreversible decline. Why, he asks, do some places grow, while others don’t?

His answers have often hinged on simple insights: people like to live in warm places, or where housing is relatively cheap and commuting easy. But his most important contribution is about what he calls the “central paradox of the modern metropolis”: that cities have become more important to growth even as the cost of transporting goods has fallen.

His conclusion is that geography is especially important to the growth of post-industrial economies. In an era in which value stems from combining and recombining ideas in different ways, proximity—or “agglomeration”—becomes much more important as a means to allow creative people to work and learn from each other. Only in cities with a highly educated population does this process of intellectually creative destruction reliably happen.

Recognition of the benefits of clustering, and the spillovers it creates, has already filtered into mainstream policy. Echoes of this approach are visible, for instance, in plans to develop a new “silicon roundabout” in east London. Such policies don’t always create growth—but others can certainly stop it. As Glaeser puts it: “America’s future is now being determined by the whims of local zoning boards that don’t want people living in their highly-productive, pleasant communities.”

This might not sound like much of an insight, but it has radical implications. It suggests that any sensible pro-growth policy approach must liberalise elements of planning laws, and allow development against the wishes of local residents if need be. Rules protecting historic buildings, green belts or limiting the height of skyscrapers should be reduced. New towns should be allowed, too—but around Cambridge, not Middlesbrough.

If this sounds too laissez faire, Glaeser’s work points in more progressive directions, too. Encouraging vibrant cities justifies huge new investment in urban schools or public transport. A radical increase in the quantity of rented housing would help more people move in and out of cities, while stronger mayors and town halls would be justified too, so long as they didn’t end up siding with the forces of nimbyism (“not in my backyard”).

Today, both sides of Britain’s political divide lack a convincing approach to growth. Glaeser provides one for the taking. But his ideas demand an unsentimental attitude, and a willingness to make and remake cities over and over again.