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On Thursday, October 28, Ed Glaeser joined Markus’ Academy for a lecture on “Triumph of the City: The Future of Urban Life and Work.”  Glaeser is the Fred and Eleanor Glimp Professor of Economics and the Chairman of the Department of Economics at Harvard University, where he has taught microeconomic theory, and occasionally urban and public economics, since 1992. He has served as Director of the Taubman Center for State and Local Government, and Director of the Rappaport Institute for Greater Boston. He has published dozens of papers on cities economic growth, law, and economics. In particular, his work has focused on the determinants of city growth and the role of cities as centers of idea transmission. He received his PhD from the University of Chicago in 1992. His books include Cities, Agglomeration, and Spatial Equilibrium (Oxford University Press, 2008), Rethinking Federal Housing Policy (American Enterprise Institute Press, 2008), Triumph of the City (Penguin Press, 2011), and Survival of the City: Mass Flourishing in an Age of Social Isolation (Penguin Press, forthcoming in Fall 2021). Introductory remarks by Markus Brunnermeier.

Watch the full presentation below. You can also watch all Markus’ Academy webinars on the Princeton BCF YouTube channel.

Executive Summary

  • [0:00] Introductory Remarks. Glaeser’s new book, “Survival of the City”, poses many of the questions about resilience of cities, as well as the differences between the countryside and more urban areas. The book also addresses Covid, and the fear of high rises due to fear of disease spread. This could suggest that the “donut effect” will occur, where city centers struggle, but suburbs thrive. There may also be greater digitalization, including developments in hygiene management. There may also be effects on where people live, how people commute, and how people develop relationships. Virtual mobility could lead to physical mobility for the rich, and lead to a lack of social mobility.

  • [8:56] Cities often do amazing things, but density can cause problems, especially when it comes to the spread of disease. In 430 BCE, the Plague of Athens hit and destabilized the successful democracy during the Peloponnesian war, as much of the city died over the course of a few years before Sparta eventually won the war. Some plagues did not destabilize the government such as the Antonine Plague of the second century, but other plagues such as the Cyprian Plague or Justinian’s Flea had a more destabilizing effect, where there was little resilience and greater problems. Resilience depends on the governance and leadership structure during these challenging times.
  • [15:04] For most of the last seven centuries, cities have been more resilient to disease. Cities invested in ways that made them healthier, though there was greater tolerance for higher death rates; they built infrastructure like sewers and aqueducts to prevent disease. These were expensive programs, but pigouvian taxes encouraged compliance. 
  • [19:38] In early 2020, the Covid-19 crisis began mainly in urban areas and connected cities. However, by November, it had spread everywhere; somewhat surprisingly rates were lower in the densest parts of New York City than they were in less dense areas of the city, due to the lack of trips and possible points of viral spread for those able to work remotely. Urban weakness before the pandemic was apparent, with cities being good for the wealthy but not doing enough for poor people, creating barriers for living in these urban spaces. Data shows that more dense metropolitan areas have less upward mobility, especially close to the center of the city. Cities that build more stay more affordable than those who do not.
  • [29:57] Regulation can be a key factor in affordability. These can also cause housing bubbles, as seen in the period leading to 2008; in San Francisco, there were large fluctuations in price, even with no real change in annual permits. However, in Atlanta where there were no regulations, prices remained relatively constant, whereas the quantity of housing soared and fluctuated wildly. Housing net worth restrictions mean that there was massive housing price appreciation, and past generations who bought in early could appreciate wealth, but young people find it harder to buy in. This can contribute to a lack of social mobility. 
  • [35:34] The lack of social mobility caused problems during Covid pandemic. Service industries have been a good source of income for less skilled workers, but those jobs can disappear once they are seen as dangerous. Mixed beliefs as to whether Americans will return to in-person work.
  • [37:48] The pandemic will affect industries differently. With the advent of technologies such as the internet or cars, many believed that in-person work as we know it would be unnecessary. Interactions are seen as too important because that is how innovation occurs, so in-person work has been standard. However, some areas do not require in person work, which suggests that joblessness will persist in rural areas. Although many companies have shifted to remote work, it means that people are not promoted when working remotely.
  • [45:35] Remote work may cause greater inequality. Highly educated people are more able to work remotely. However, this may allow for global talent to have more opportunities due to higher mobility. 
  • [46:51] Future of cities depends on medical response. If shock lasts, cities will struggle. Even if it does not, commercial space is more vulnerable than residential spaces, and remote continue nonetheless. Large cities will see decreased demand and slightly lower prices, but smaller cities may see vacancies and emptiness due to lower demand.