Edward Glaeser - Cities, Terrorism, Housing, & Remote Work

Dwarkesh Patel introduces Edward Glaeser, chair of Harvard’s Department of Economics and author of influential work on cities. Glaeser says the show’s name, The Lunar Society, pays homage to one of his favorite moments in urban innovation, Birmingham in the 18th century.

Asked what advice he would give Elon Musk about the first cities on Mars, Glaeser expects demand for urbanism there to be relatively limited. His principle is that transportation costs dominant in a city’s founding era determine both its micro-shape and its macro future. Mars cities will be limited by the likely prohibitive cost of traveling to and from Earth, and he jokes that everyone will drive a Tesla in a car-oriented settlement.

He recommends a flexible plan like New York’s 1811 grid, which lets entrepreneurs change land use over time. Planners should place a few bets on necessary infrastructure and let the city evolve organically.

Usually, the best way is to put more trust in individual initiative than central planning

Patel notes that since 9/11 many terrorist groups have wanted to harm cities, yet Western countries have largely avoided attacks killing thousands. Glaeser says he does not know, but offers two points. Attackers’ objectives matter: even for the 9/11 terrorists, he says, the end game was to effect change in Saudi Arabia or the Middle East, not to kill urbanites. And cities are now better protected.

His central argument is that concentrating activity has two defensive effects at once. It creates symbolic targets, and he calls the twin towers about as clear a symbol as one could find. It also creates defensible space, since towns originated as walled settlements, and the walls that brought people together for collective defense are, in his account, the ultimate reason towns came about.

Both effects have played out over 20 years. After 2001 New York ramped up anti-terrorism efforts and assembled a large group, as London had earlier. His example of reuse is that London’s congestion-pricing cameras were the same ones used against Irish terrorists. He concludes the country has been fortunate and cities have shown strength in protecting themselves.

Patel notes that ancient empires such as Rome, Athens and Sparta were nearly synonymous with their capitals, while nobody speaks of a “Washingtonian Empire.” He asks whether there is a Coasian explanation.

Glaeser answers with history specific to English offshoot colonies. Because founders recognized that a capital attracts excess goodies taken from elsewhere in the country, they often located it in a remote place. He links this to the Hamilton musical’s “The Room Where It Happens”: part of the deal was moving the US capital to a relatively remote Virginia location rather than Philadelphia or New York, to protect the South from assets flowing north. Canberra and Ottawa fit the same pattern.

In places with centuries of history, a capital that did not start as the largest city became so because rulers saw their business as taking wealth from elsewhere to make it great. He cites French leaders and Paris, and calls the French Empire as synonymous with its capital as the ancient empires were.

He then offers Moscow, St. Petersburg (transcribed as “St. Peter’s”) and Beijing as cases to test. Beijing is perhaps a little less synonymous with China than Rome was with its empire, possibly because China is so big and Beijing’s share of its population relatively small. Even so, he says, it is more so than Washington is with the US.

Patel asks whether Glaeser bets on renewal or continued decline after a city loses an industry or suffers bad governance. Glaeser says the answer depends on the outcome measured. At a one-year horizon housing prices show wickedly large momentum; over five years or more they show very significant mean reversion. Population instead shows enormous persistence on the downside.

His example is Detroit, which he says was the most productive place on the planet in 1950 until shocks in transportation technology made it a much worse place to make cars for the world. Its population takes about a century to respond because housing is sticky.