Latest / The Capitalism and Freedom in the Twenty-First Century Podcast / Edward Glaeser on Zoning, Land Use Regulation, and Urban Economics

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Edward Glaeser on Zoning, Land Use Regulation, and Urban Economics · The Capitalism and Freedom in the Twenty-First Century Podcast

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>> Edward Glaeser: What I love about land use reform is, one,
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it's about free people and free markets.
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It's about fundamentally giving property owners the right to do what they want with
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their own property.
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That sits with something very deep within my soul.
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And two, it's good for poor people, right?
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It's an area in which if you allow more housing to be built,
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it means the prices of housing is going to go down for ordinary people.
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And so it's both progressive and libertarian.
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>> Jon Hartley: This is the Capitalism and Freedom in the 21st Century podcast,
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an official podcast of the Hoover Institution Economic Policy Working Group,
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where we talk about economics, markets, and public policy.
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I'm Jon Hartley, your host.
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Today, My guest is Ed Glaeser, who is the Fred and
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Eleanor Glimp professor of economics at Harvard University,
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where he's taught economic theory and urban economics since 1992.
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He also leads the Urban economics working Group at the National Bureau of
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Economic Research.
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He co leads the cities program of the International Growth center and
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co edits the Journal of Urban Economics.
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He has written hundreds of papers on cities, infrastructure and other topics,
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and written, co written and co edited many books, including Triumph of the City,
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Survival of the City with David Cutler, and Fighting Poverty in the US and
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Europe, A World of Difference with the late Alberto Ole Sino.
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He received his Ab from Princeton University in 1988 and
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his PhD in economics from the University of Chicago in 1992.
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Thanks so much for joining us, Ed.
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>> Edward Glaeser: Thank you so much for having me on.
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>> Jon Hartley: I want to get back and start with your early life.
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Where did you grow up?
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How did you first get interested in economics?
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>> Edward Glaeser: So I grew up in New York City.
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I grew up in a time in which the city was spiraling out of control in the 1970s,
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and then it experienced something of a renaissance.
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I think that experience in New York helped to fuel my lifelong interest in cities.
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My interest in economics probably had mostly to do with
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just wanting to understand the amazing things that were happening around me.
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But I will tell a very particular anecdote of my first introduction to
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anything involving economics.
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I had been, occasionally, when school was out, I'd gone with my mother when I was
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about ten to her Columbia business school classes.
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My mother was going back in her thirties and getting an MBA at Columbia,
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and she and I started to talk about things.
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I remember one of the more amazing things in my life intellectually was,
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she explained, Bertrand, competition to me.
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It was done in the framework of two people selling shoes, and
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each one was undercutting each other.
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And we got down to marginal cost of production through doing that.
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And I just thought,
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ten year old me thought this was just the most amazing thing in the world, that you
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could have this sort of mental construct to understand how prices worked and
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the competition could make sure that consumers got a decent deal.
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And that was sort of the first time that I had ever thought about economics at all.
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It was really a sort of seminal moment for me.
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>> Jon Hartley: Well, that's incredible.
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And so you grew up in New York City.
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You did your undergrad at Princeton, and
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then you did your PhD at the University of Chicago.
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How did your time at Princeton and the University of Chicago inform you in
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your intellectual journey and becoming an economist?
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>> Edward Glaeser: So I would say, I mean, I had some amazing teachers at Princeton.
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Orly Ashenfelter taught me econometrics with a lot of discussion
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about wine prices and hot summers predicting it.
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Avinash Diksit taught me international trade.
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Still one of my heroes, John Campbell, wrote one of my recommendations for
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graduate school.
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And, you know, John has been my colleague now for about 30 years.
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So I had pretty amazing people.
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But I would say that I was sort of slow to figure out what I actually wanted to do.
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I mean, I went into economics, like many undergraduates,
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thinking that this was a pre Wall street concentration, a pre Wall street major.
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And I really expected up to my senior year that I would probably go to Wall Street.
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But somehow or
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other, the bug of doing a bit of economic research had gotten around in my head.
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So I applied to only three graduate programs,
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and at the same time, I was interviewing with Drexel Burnham.
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This very fortuitous thing happened to me,
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which is the bottom fell out of the stock market in October 1987.
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And so because of this crash, there wasn't a lot of interest in giving me a really
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highly paid job trading bonds at Solomon Brothers.
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But the University of Chicago gave me a very nice fellowship, and
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I thought that sounded like a great place to wait out four years.
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Now, I didn't think I was necessarily becoming an academic.
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Although my father taught at Cooper Union, my father has a PhD, so
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certainly wasn't impossible for me to be one.
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But I thought maybe I'm going to go for four years and then go into finance, or
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maybe I'm gonna go for four years and become a central banker.
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I don't really know.
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So that's what happened to me as I was going off to Chicago.
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Now, I will say within four days at the University of Chicago,
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I was completely hooked on using economics to understand the world.
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And I have never looked back.
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And that's just a sign of just how powerful this
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dose of Chicago magic can be.
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Particularly as delivered by Gary Becker and Bob Lucas,
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who sort of taught the two first classes in the first year quarter.
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>> And I think above all, it was the sort of magical thing of Gary sort of pushing
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you to be a creator of theory rather than a consumer of theory.
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>> Edward Glaeser: Of teaching to look at the world and
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to sort of see all these interesting problems and to understand.
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Your job is to craft a model that makes sense of that.
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And that was just so exciting, so heady, to understand the sort of creativity that
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was inherent in economics, that, that has fueled my life ever since.
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>> Jon Hartley: That's amazing.
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And I think applying some of my cultural price
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theory to problems in urban economics,
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lawn economics, political economy, I think,
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has really marked a lot of your great contributions.
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I'm curious, just thinking back to University of Chicago,
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folks like Gary Becker and those that really espoused price theory.
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Was there a point at Chicago where you maybe first got very interested in urban
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economics?
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I know you also attended the University of Chicago around the same time as your
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longtime co author, Joe Gyourko.
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How did that early zoning work with Joe that really first
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emerged about 20 years ago?
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How did that all start?
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Did that happen at the University of Chicago?
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Did that happen after?
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>> Edward Glaeser: No, no, that happened completely after.
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And we came upon cities in a totally different.
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I came upon cities in a totally different way.
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Joe had been quite a few years earlier than me at Chicago.
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We shared in common one of our mentors in Sherwin Rosen.
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And Sherwin is typically thought of as a great labor economist,
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really just a great economist.
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But his contribution to the Rosen Roback model to thinking about the spatial
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equilibrium is really a seminal contribution in urban.
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And Sherwin was a really important part of my life.
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I was probably less close to him than I was to my other three advisors,
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though actually other four.
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There's Bob Topel.
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I was not closer to Bob Topel than I was to Joe, although I admire Bob greatly.
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And Bob was probably the most empirically oriented of my advisors.
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The other three were Eddie Lazear, who was a very precious person in my life.
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And if anything,
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my modeling style looks more like Eddie's than it does like anyone else.
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Eddie, Gary, Sherwin, Bob Topel, and of course, Josiah Schengler.
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>> Jon Hartley: And that was your committee?
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>> Edward Glaeser: That was my committee.
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Let me see.
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I give it Eddie, Bob Sherwin, Gary and Jose.
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And Jose was really my doctor father.
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So Gary was like this intellectual bright light that I spent the rest of my life
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sort of trying to work to.
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But in terms of the person who invested me in a daily basis and
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just made me the scholar that I am today.
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No one did Did more for me than Jose, and I just owe him an unending gift, I mean,
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I owe all of them an unending gift.
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But Jose just really, really invested.
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And it was really, to a certain extent, Jose,
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that pushed me towards cities in different ways.
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The first kind of subtle way was we were starting to do research in our
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second year.
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And Jose encouraged me to take urban as a field rather than,
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I did labor as a field, and I'd already gotten that done.
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But to do urban as a field instead of theory.
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Because urban had its exam earlier in the year, and so
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we could get done with that and pivot to doing research.
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So that's what got me to do urban as a field.
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I studied with Matt Kahn for that field.
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And then we started working on the paper of ours, which became growth in cities,
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which was really motivated by something totally different in the air at
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the University of Chicago, which was interested in the new growth theory.
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Which was the ideas that another of Jose's student, Paul Roemer, had sort
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of developed the model where, because of, you could get increasing returns.
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That are compatible with competition through externalities,
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particularly the externality of knowledge.
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Bob Lucas's paper on the mechanics called it human capital externalities.
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And it was Bob Lucas's on the mechanics of human capital,
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which actually then led back to Jane Jacobs.
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And led back to thinking about cities as places where people learn from people
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around them.
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The interesting irony about this is this process of human capital externalities and
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learning, like I was experiencing as a student,
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that very phenomenon, as I learned about it, right?
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It was precisely because these ideas were in the air at Chicago.
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And with that, we then put together our paper, growth in cities.
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Andrei Schleifer entered into the fray, Andre was not an official advisor of mine.
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But he's been continues to be an intellectual partner of mine for
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37 years later.
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And we wrote this paper to try and test between different theories.
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And we tried to organize theories that would emphasize large scale.
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And we call those Marshall arrow roamer externalities.
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And ones that would emphasize having lots of small firms.
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And we called those porter, and some of them were Jacobs.
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And we sort of tested between these theories, and
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we had a paper in which sort of growth seems to be very oriented towards places
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that had lots of industrial diversity and lots of little firms.
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And those facts still kind of seem to be true.
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Especially the sort of small firms which I think now think of as entrepreneurial
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human capital.
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But that was really the paper that got me started.
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And then I was hired at Harvard was Harvard was looking to hire
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an urbanization.
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And I was told, well, if you're labor, nobody has any interest in hiring you at
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Harvard, but if you're urban, we got a slot for you.
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So, heck, who was I to turn that down?
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I mean, I had offers from other places who were happy to take me as a labor
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economist, but the Harvard thing seemed to work.
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And I came to Harvard, I was told, the job is an urban.
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And I think with that little bit of nudging, I realized urban was this field
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with incredibly great questions and not enough talent working on it.
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So there were some great people in urban when I came in.
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I don't wanna in any sense suggest that there weren't really wonderful people for
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me to look up to, whether or not they were Ed Mills or Jan Bruckner or
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will strange or Robert Hemsley.
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I mean, wonderful people, but
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there weren't enough relative to just the caliber and importance of the problems.
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And so it felt to me like this was an intellectual arbitrage opportunity in
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which if I went into finance,
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there were thousands of people working on this narrow set of questions.
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Whereas if I go to urban, boy, the world's my oyster.
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>> Jon Hartley: Great, yeah, I'm surprised that there was even
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an urban field exam back in at that time.
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I don't think many departments have urban field exams now, I could be wrong.
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>> Edward Glaeser: It was the hangover of the first wave.
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So there was a whole bunch of Federal and
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Ford Foundation funding on urban topics in the late 60s, early 70s.
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And this kind of created urban as a field.
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And so George Tolley was the one who taught the urban class, and as the exam,
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George had been a big grant receiver for the University of Chicago in his day.
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And that was the thing that sort of created urban in the sixties, seventies.
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But in those days, it was a field that was driven more by the presence of outside
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funding than it was about sort of deep engagement with the topics.
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And there were some mistakes that were made.
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So two of my mentors at Harvard, John Meyer and John Kane,
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used a whole lot of resources when John Meyer ran the NBER in the 1970s to
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create the urban simulation model, we've now moved to stuff like that today.
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I think now we're teched up in a way that Steve Redding can do this magic and
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it works out, and we have the computing power.
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We did not have the computing power to do this in 1975, and yet
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the NBR threw a lot of resources at it and it just didn't work out.
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>> Jon Hartley: It's amazing, and
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also I feel like the insight to look at Sherwin Rosen's work and
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Rosen Roebuck model that I feel like it took a long time for
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the Rosen Roebuck model to become really appreciated.
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I think in part thanks to your own contributions,
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but just myself learning it a few times in class,
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it's such a brilliant and almost simple framework.
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But yeah, I feel like over time, it's taken a while for
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some of these things to become a bit more appreciated, including,
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I think, just zoning and land use regulation and its role in home prices and
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home price growth, which is soaring in US coastal markets,
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almost all Canadian real estate markets, and many other urban real estate
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markets around the world, whether it's a, say, London or in, say,
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Israel or elsewhere, it's truly a relatively global phenomenon.
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There's some, I think, exceptions to some supply constrained markets and
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prices, residential real estate prices soaring as a result.
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Look at Japan or Houston or elsewhere, but I'm just curious.
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I really want to follow this whole zoning story because it's
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really amazing to me how it emerged roughly, say, 20 years ago.
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I don't know if, I think that's first roughly appeared.
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And here we are today in 2024.
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And just the other week, former President Barack Obama was at
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the Democratic National Convention talking about why we need land use deregulation.
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And I'm just curious what your thoughts are on that whole intellectual
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journey of really, I think being among the first academics and
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really the first to, in the public sphere really kinda beat this drum that,
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the reason why home prices are skyrocketing in many of these places.
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Coastal real estate markets in the US or
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elsewhere has to do with the fact that new housing isn't being built and
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it has something to do with those land use regulations.
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I'm curious, what has that journey been like for you?
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And I mean, maybe it sounds like being like, I don't know,
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having to beat the drum and repeat yourself many times over,
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but now we see the whole so called NIMBY movement.
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A lot of people have jumped onto it.
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Interestingly, the Democrat Party in the US has, I think,
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been a little bit more amenable to picking it up than, say, Republicans.
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And maybe that's because there's less vested interest in the side of
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the Democratic Party and
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smaller fraction of the Democratic Party members are homeowners.
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But then you also look north to, say, Canada, where Canadian Conservative Party
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leader Pierre Poilievre has taken up the idea of withholding federal infrastructure
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funds for municipalities that aren't growing their housing stocks.
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So in Canada, it's very much emerged from, I guess,
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the more conservative side of things.
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I'm curious, are you [INAUDIBLE].
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Surprised at all that zoning and
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land use regulations has hit sort of national federal politics?
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Did you ever think it would get here, or
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did it at many times feel like it was kind of an impossible goal?
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>> Edward Glaeser: Yeah, sure, I'm surprised.
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I'm surprised and kind of amazed.
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That's right.
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I mean, my feeling about, I often get asked,
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are you disappointed by the limitations on the success of the movement?
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I think exactly the opposite.
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When I started working on this, there were, like three libertarian economists
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who thought zoning was important and nobody else did.
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And now you've got a whole movement.
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When you see a dog playing chess,
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you don't ask how he'd do against Bobby Fischer.
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There's a quote that dates me.
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No, totally.
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Now, I wanna set this scene a little bit as to how my life with zoning happened.
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First of all, I want to make it clear, like, I did not invent this topic.
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Bob Elixon wrote his masterpiece in 1975, helping us understand the law around land.
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Larry Katz did his work with Ken Rosen on land use controls in
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California starting in the 1970s.
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So there were unquestionably papers that looked at different aspects of this.
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And so we were not unique.
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That being said, it was a pretty barren landscape when we entered into this.
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I mean, Larry's career was based on human capital, labor markets.
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He had not spent his life doing land.
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And there were papers, but there were relatively few.
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I got interested in this issue and just give a little bit on this.
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Starting in the late 1990s, actually, I think it was 1999.
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I was put on Harvard's University physical planning committee just after I
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got tenure.
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And the outgoing president, Neil Rudenstein, was very keen to
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build a contemporary art museum designed by the great architect
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Renzo Piano on a site that Harvard owned right on the Charles River.
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Now, this museum, which would be an architectural glory and
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a business draw for Cambridge, would unfortunately slightly mar the view of one
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middle-level employee at a public radio station, okay?
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This mid-level employee was fairly effective at organizing, I don't know,
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14 neighbors.
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And single handedly, they were essentially able to stop Harvard from doing this.
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And the whole thing eventually died when Neil left, and
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his successor was not interested in doing it.
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I was amazed by the power of just a very small number of people to do something
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that you would have thought was strongly against the interest
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of the community as a whole.
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And that was the first thing that started me thinking about this.
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Then I went on leave in the year 2000, 2001.
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I had just gotten divorced.
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And this was my way of sort of getting out of town.
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And I went down to Washington for the year.
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But I struck up a deal with Wharton, where I would come to Wharton one day a week,
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sometimes two, I guess, but mostly just one.
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And during that time,
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I discovered one of the great intellectual partnerships of my life and
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one of my favorite people in the whole world, your former mentor, Joe Jerko.
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And Joe and I, because we're both Sherwin Rose people, we think the same way.
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We think using Chicago price theory, we think using the Rosen-Roback model.
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The core insight of our paper was if it costs a whole lot more to buy something
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than it costs to build something, than something screwing up this market.
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All of our early papers were about this was basically using the Chicago price
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theory thing,
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which is we can figure out how much it physically costs to build a unit.
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Why doesn't it cost that much to buy a unit?
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Well, the only possible reason is we've got something that stops people from
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putting up more units.
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So this was done in our 2005 Journal of Law and Economics paper,
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where we just said, look,
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the marginal cost of adding an extra unit in New York City is just the next floor.
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So it doesn't require more land, it doesn't require more stuff.
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And we actually have lots of good estimates of how much it costs to build
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an extra floor.
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And so it's that basic Chicago price theory thing.
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Going back even earlier, we had a paper, I think, in the Cato Regulatory Journal
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in 2002 that focused on the value of land if it sits under a new house,
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versus the value of land if it extends an existing house.
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Exactly the same logic, right, where if land seems to be worth a lot when it
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sits under an existing house, which means take the value of the total house,
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subtract the physical construction cost, and look at what's left.
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If that land cost ten times as much as just land that extends a lot,
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then it must be something else that's giving that land value,
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which is the right to have a house on it.
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That paper, I will say,
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I received a lovely note from Thomas Sowell of the Hoover Institution,
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maybe in 2003, telling me that if we were right, that this was really important,
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which I treasure that note, but that was how we got started on it.
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And then we did a whole bunch of work on this around this time period,
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and then we move in and out on this, and we're still doing,
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we have a new paper that relates to this.
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The reason why this is my favorite policy issue.
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So one of the beauties of being an academic with some sense of wanting
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to participate in public policy debate is you get to choose your issue, right?
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I'm not the chairman of the CA.
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I don't have to have a view on every policy that comes across.
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I get to choose what I want to work on.
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What I love about land use reform is, one, it's about free people and free markets.
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It's about fundamentally giving property owners the right to do what they want with
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their own property.
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That sits with something very deep within my soul.
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And two, it's good for poor people, right?
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It's an area in which if you allow more housing to be built,
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it means the prices of housing is gonna go down for ordinary people.
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And so it's both progressive and libertarian.
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And why not choose something that leans in both directions in a way,
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that's in a way that sort of is appealing rather than.
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I'm against minimum wages, too, but it's a lot harder cuz there are poor people who
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actually are helped by minimum wages, although they do screw up labor markets.
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Again, depends a lot on where and how much.
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I mean, I think a $20 minimum wage in West Virginia would be insanity.
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I think in Seattle it probably does much less damage.
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But why choose this messy area where I've got a whole lot of difficult
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distributional issues to deal with versus an area in which the distributional stuff
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seems to be just as good as the freedom stuff?
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>> Jon Hartley: Absolutely, I'm curious, I guess,
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just to think a little bit out loud here about political economy issues.
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I fully agree with you.
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And it's one of the things that makes, zoning and zoning reform,
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such an important issue and such a low hanging fruit in my mind.
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And also, Joe Jerko, for those watching or listening, Joe,
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I took his real estate markets class at Wharton, and
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it definitely was by far one of the best classes I've ever taken in my life.
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And it's almost kind of, I should say, a hugely eye opening type of class.
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And just explanation for why is it that these coastal real estate markets are so
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expensive?
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But I'm curious, what do you think about the political economy dynamics that makes
23:17
zoning reform so difficult?
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Which is it puts the incumbent homeowners against the non-incumbent homeowners,
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maybe the renters or people that haven't bought a home yet.
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And I feel like there's still a challenge where even probably middle class,
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even like lower middle class individuals who are homeowners would maybe still
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be opposed to zoning reform just because they're in their
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mind is some sort of a short run hit to their own home values.
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And there are a considerable amount of people in the us and
23:50
around the world who do build their wealth through housing.
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And maybe that's not the optimal way to go about it.
23:57
But I'm curious, what do you think about these political.
24:00
Economy roadblocks to getting more housing built.
24:04
>> Edward Glaeser: So I think that if we are just looking at the smaller
24:07
the jurisdiction, the more impossible it is to contemplate zoning reform.
24:11
There's no way you're gonna walk into a suburban area dominated
24:16
by homeowners and convince them to do zoning.
24:21
You're right, for most of them, the value of the home is the most important asset,
24:25
and anything that promotes affordability is impoverishing them.
24:29
So you're gonna lose fundamentally.
24:32
On top of that, I think the natural human fear of change,
24:35
completely exaggerated, right?
24:37
But I think in terms of people think that this new housing development is gonna do
24:41
terrible things to their neighborhood, and it almost never does.
24:45
But that adds on it in terms of making it hard.
24:49
The larger the jurisdiction, the more likely you are to have some support.
24:53
And actually, we see this in a statistical sense in the job market paper of
24:57
Clemence Tricote, who shows that when smaller jurisdictions get merged into
25:01
bigger jurisdictions in France.
25:03
You end up seeing more building in the small,
25:06
formerly smaller area that's now part of a bigger area.
25:09
I experienced this in the US in the sense that big city mayors
25:14
typically do want to reform themselves.
25:17
They've got a lot of renters they want to take care of.
25:19
They've got business owners who don't want to pay that much.
25:21
They've got, they've got bankers, they've got developers.
25:27
They've got lots of people who want to build.
25:28
So those are an area in which you can just talk to them,
25:31
try to figure out ways to make things better.
25:37
The larger the states are actually where I think the most important action is.
25:40
If you ask me where the frontline battleground is for zoning,
25:42
it is in the California state legislature.
25:45
That is where the decisions are gonna be made that are gonna make the biggest
25:48
decisions.
25:49
The biggest impact on housing in the biggest and
25:51
most important housing market in some sense in the world.
25:55
And then once you get to the federal government.
25:57
I have been speaking with people at HUD since the Clinton administration about
26:01
these issues, and they have always wanted zoning reform.
26:04
They have always wanted less local zoning,
26:06
which I think explains why President Obama is saying, this is why
26:09
many Republicans are happy to say they'd like to see less red tape in building.
26:13
But the problem is the mismatch between their desire,
26:16
because they do see the downsides of this with the sort of real difficulties of
26:20
the federal government influencing hyper local land use regulation.
26:25
Especially since it really has to run through the state legislatures,
26:28
which is why I like this idea of tying federal funding to infrastructure.
26:31
That goes to the states to making meaningful change on the housing front.
26:35
>> Jon Hartley: That's fascinating.
26:38
You're absolutely right that states have this power preemption
26:43
where they can attempt to compel municipalities to enact zoning.
26:49
And I think you're absolutely right.
26:51
It's one way to overcome these sorts of political economy issues.
26:56
There's this other idea that you've written about quite at length,
27:01
which is getting, say, a federal government to require, or
27:05
I guess state governments could do this as well, to varying degrees.
27:10
That your federal government withholds infrastructure funds or
27:14
some sort of federal benefits that the municipality gets if they do not hit some
27:19
sort of a housing growth target.
27:21
This is something that's actually being proposed in Canada.
27:24
And Pierre Polyev becomes prime minister about a year from now.
27:29
It's a huge part of his platform and
27:31
something that he will undoubtedly do or attempt to do.
27:37
You've written quite a bit about this in the US and
27:40
how the US federal government should do this.
27:43
Can you explain a bit more what you mean by housing supply growth requirement?
27:49
And also having heard a bit about the debates here,
27:53
what should that optimal housing supply growth target be?
27:57
Some people might think, well, isn't that a bit top down?
28:01
What's the right number and how would you monitor it and so forth?
28:07
I'm curious, how does that work out in your mind?
28:10
>> Edward Glaeser: So I think one of the differences between Canada and
28:13
the US is that there is enough funding flowing directly from the federal
28:17
government to localities that you can actually threaten them through this.
28:22
In the US, the money all through goes through the states.
28:25
So it gives you this intervening layer.
28:28
And it really has to be that the state legislature of California is threatened
28:32
by losing their highway funds, that they then take action.
28:35
And then the state legislature of California,
28:37
they can do anything they want to localities.
28:39
They can completely take away the ability of localities to zone.
28:42
In fact, in California you already have targets.
28:44
California has a clear process for allocating housing units to localities.
28:51
We can obviously debate what those units should be, but they have a process.
28:56
The question is, what are they gonna do to enforce that?
29:01
The nuclear option is the so called builder's remedy,
29:04
which means you just get a get out of jail free card if you're a developer.
29:07
And you get to follow the state development regulations instead of
29:10
the local ones.
29:10
That's a very powerful tool.
29:12
We have something similar to that in Massachusetts called chapter 40 B,
29:17
which means that essentially for communities that are unaffordable.
29:21
And if you're building something that has enough affordable housing,
29:25
you can basically bypass the local rules as well.
29:27
So that's a very powerful tool for
29:30
doing this in terms of creating growth targets.
29:35
I think it's useful to compare this with the last time the federal government tried
29:40
to bully the states to do something which was back with the minimum drinking age.
29:44
And being someone who was just on the wrong side of that drinking age in
29:48
the early 1980s and constantly seeing it go out of reach,
29:52
I certainly didn't view that federal intervention in a positive light.
29:56
So maybe this should give me pause about what I'm proposing but
30:00
in that case, there was a very clear legislative goal.
30:05
So it was really easy for the feds to say, just change this, or else with housing,
30:09
doing it around a legislative thing is a mistake because there's no one rule
30:14
that makes a difference for housing.
30:16
There are a 1000 ways to say no to any project.
30:19
And saying,
30:19
you can't have minimum lot sizes that are greater than a quarter acre.
30:23
What good will that do?
30:23
They'll come up with a wetlands regulation that says,
30:26
you can't do this if there's a spotted owl within 1000 miles, you can't do whatever.
30:30
There are so many ways that you can turn down a housing project.
30:34
Anything that goes through the sort of that says we're
30:37
gonna have a legislative target doesn't work.
30:39
You need to have a building target.
30:41
And that building target should really reflect two things, one of which is
30:46
existing density levels and the second of which is the level of current demand.
30:50
And I think in any area in which you have relatively low density and relatively
30:56
high current demand, that those are places that you should have pretty high quotas.
31:02
I'm not averse having a system in which wealthy suburbs can buy their way out of
31:07
this by inducing other places to build.
31:09
But you should have some clearly well regulated market that figures out how you
31:14
trade off one for the other.
31:17
But I would have sort of a two-factor model to determine these quotas.
31:22
>> Jon Hartley: I want to, just before we wrap up on zoning, I want to sort of test
31:26
your, or just get your thinking in terms of what the history of zoning is like.
31:32
How did we get here?
31:33
And I think a lot of people don't fully appreciate that.
31:37
Zoning is a historically new phenomenon.
31:40
And at least Euclidean zoning, which is sort of this idea that you have
31:44
specific zones for specific land use purposes,
31:48
was something that kind of came out of Germany in the late 1800s.
31:52
And was very rapidly adopted in the US largely in the 1920s.
31:58
If you look at some estimates.
32:00
Estimates that roughly 40% of the US population was living
32:05
in a zone by the end of the 1920s and was much,
32:09
almost zero at the beginning of the 1920s, early 1910s.
32:14
And I'm curious, there was obviously the Euclid versus
32:18
Ambler Supreme Court decision that was very monumental.
32:22
And of all people was actually Herbert Hoover as secretary
32:28
of commerce in the various republican administrations in 1920s,
32:34
was the one who helped enact a number of state zoning laws.
32:39
I'm curious what your thoughts are in terms of what in part contributed to
32:44
the cause of zoning to begin with.
32:46
I sort of have a theory or in some, maybe some empirical evidence that says
32:50
migration in the 1920s had a lot to do with it.
32:53
There was a lot going on in the 1920s.
32:55
Economists talk a lot about the 1930s and think a lot about the depression.
32:58
But 1920s, there was a lot changing,
33:01
whether it was on the international side of things,
33:05
sort of thinking about the aftermath of Treaty of Versailles.
33:10
Or thinking about immigration laws in the US were changing quite rapidly.
33:16
And essentially the whole concept of things like passports and the sort
33:22
of border having a border as we see it today, was largely created in that period.
33:28
And then you add zoning too.
33:29
And I feel like these things, both immigration or
33:32
restriction on migrants from outside the US and restriction on individuals,
33:38
say moving to your municipality within the US are completely unrelated.
33:43
But then would you agree that sort of zoning, maybe that set the seeds for
33:47
zoning, which didn't necessarily bite till the 1970s and 1980s?
33:51
You got things like NEPA, which is the National Environment Policy Act,
33:57
and under Nixon and often its various state components,
34:01
say CEQA, are often some of the biggest barriers to zoning today.
34:06
Is that history right in your mind in terms of the timeline
34:09
of how zoning got started and started to buy?
34:11
Before the 1900s, it was largely, if you had a land use dispute,
34:15
you'd go to a court, you wouldn't have to deal with the zoning board and so forth.
34:20
Is that-.
34:21
>> Edward Glaeser: I think that history is largely correct.
34:23
I think one of my favorite books on this is called Zoned American,
34:27
which you may know by a Penn law professor called Toll, who was writing in 1969.
34:33
Which creates a particularly readable and
34:35
enjoyable way of getting some of this history.
34:37
It's important to emphasize that land use controls or building regulations are not.
34:43
Those are actually ancient.
34:44
So the city of Boston enacts its first building regulation in 1631,
34:49
which is it bans thatched roofs for
34:52
fairly understandable reasons, given the fire risk.
34:56
And of course, there are height regulations in Boston prior to New York's
35:00
great zoning code of 1916.
35:03
Zoning comes out of the same sort of progressive era,
35:07
progressive movement group of trying to sort of tamp the demons of density, right?
35:13
There are these unattractive things that come with cities, and
35:17
you have a bunch of progressive reformers who are eager to make changes on them.
35:23
Now, they start off mostly focusing on the building.
35:26
So there's the various tenement acts that New York passes in the 19th century,
35:31
and then in the early years of the 20th century,
35:34
it moves up to sort of large scale zoning.
35:37
New York's 1916 Zoning Act being, as you say,
35:40
a sort of a real watershed in terms of this.
35:44
You also have the pernicious attempts to zone by race,
35:47
which occurred during this time period.
35:49
I think- >> Jon Hartley: That looks struck down in
35:51
1917.
35:52
>> Edward Glaeser: 1917, correct.
35:56
And I, in fact, tell the sort of, I weave these things together,
36:00
ending up in Buchanan Worley, which gets rid of the deed restrictions.
36:05
But I see it as this sort of progressive era thing to try and
36:10
make cities better in various ways, some of which is sort of good.
36:16
I like clean water.
36:17
I think attempts to create good water systems are probably right,
36:21
some of which certainly has a decidedly anti immigrant feel or
36:25
a decidedly anti african american feel.
36:28
Poor people tended to live messier lives than is now.
36:31
And there's a certain amount of middle class people just not wanting to see
36:34
the poor people or not wanting to live near the poor people.
36:36
That's part of the progressive thing during the late 19th, early 20th century.
36:43
This is kind of the world of Herbert Hoover, right?
36:46
Remember, Hoover is certainly a Republican, but he really,
36:49
until the Great Depression,
36:51
is seen as coming from the liberal wing of the Republican Party.
36:54
He is seen as being, it's not that there is some clear break between
36:59
Teddy Roosevelt or even more so, Taft and Herbert Hoover.
37:04
And this is part of the trying to make cities livable for good, God fearing
37:09
protestant middle class people were the core of the Republican Party in the 1920s.
37:15
And I think that stuck with us.
37:17
Now I agree that it doesn't feel like it has a huge bite early on, right?
37:21
In part because you have this wave in the 1920s and then in the 1930s, you have
37:26
a great depression where nobody's building a whole lot during this time period.
37:31
And you have enough really vacant land in the years after World War Two that
37:35
people like the Levitts really figure out how to mass produce housing.
37:40
On top of that, you have the car.
37:42
The car and the highway system just opens up vast amounts of land to areas that
37:46
are not intensely zoned to begin with,.n areas that are kind of a bunch of farmers
37:51
who want to sell their land at top dollar to a bunch of crazy developers who
37:55
are going to buy their potato fields for huge amounts of money.
37:59
And so through the 1970s, things work and then they don't,
38:03
because then you start running out of this open land, and
38:07
the places that are zoned become more intensely zoned.
38:10
The one thing that I would add on there,
38:13
the other kind of important innovations are the rise of sort of citizen protest.
38:20
There's a very fine book called Megaprojects by my
38:23
colleague Alan Al Schauer and David Luberoff,
38:26
also my colleague, which tells the story about opposition to megaprojects.
38:31
So think the highway revolts.
38:33
Think Robert Moses building in New York.
38:36
Jane Jacobs was engaged in the fight against the lower Manhattan Expressway,
38:39
one of those fights.
38:40
And it's really a story in which community organizers borrow tools that
38:44
are being built in the civil rights eradic to figure out how to stop the developers.
38:50
The pioneer on this.
38:51
And I'm always get upset about this, I mean, I love Jane Jacobs in so many ways,
38:54
but she is not responsible for
38:56
stopping Robert Moses from running Fifth Avenue through Washington Square park.
39:00
The woman who did that is her name is Shirley Hayes, and
39:03
she does not deserve to be erased from the annals of history, even though
39:07
the marvelous misses Maisel decides to present Jane Jacobs as doing all this.
39:12
But they figure out how to stop, stop these projects.
39:16
They also figure out how to stop private projects.
39:18
And so this sort of thing, which I experienced in 1999 of like one mid level
39:23
manager at a public radio station, public tv station.
39:26
Figuring out how to organize this community, to fight this is something
39:30
that's become, you know, it's baked into the urban fabric now.
39:34
And this is also about the rise of historic preservation during the fifties
39:36
and sixties.
39:37
Again, lots of positive things about historic preservation, but again,
39:40
like most things, you've given a tool to the community to say no.
39:43
You've given an excuse to say no and it makes building even more difficult.
39:48
>> Jon Hartley: It's fascinating, the whole history is amazing.
39:52
And we were talking earlier that Jane Jacobs spent quite a bit of time
39:57
in Toronto, where I'm from.
39:59
And physically where I am today.
40:02
But yeah, she spent some of her life living in New York as well, and you'd
40:08
spend time on a panel up here with her when she was still alive here in Toronto.
40:14
I want to shift a little bit.
40:15
We're going to get back to cities at the end here.
40:16
But another big theme in your research is your work on law and economics and
40:22
political economy with Andrei Shleifer and Albert Alsina.
40:27
I'm really interested in some of, I think, your biggest contributions there.
40:33
The things that really come to mind are things like The Doing Business index,
40:37
legal origins.
40:39
How did those ideas kind of happen?
40:42
So legal origins has this kind of history with Hayek wrote about legal
40:48
origins a bit, but I asked Jerome Acemoglu recently on the podcast
40:54
what his best case for colonial origins or legal origins was.
40:59
And his argument was that legal origins was too broad and
41:03
that you could have sort of different implementations of different types of,
41:08
say, French law in different parts of the world.
41:11
And I'm just curious what your thoughts are on the legacy
41:14
of your research on legal origins.
41:16
I mean, there's still, I think, many papers being published today on,
41:22
on legal origins and their long-term effects.
41:25
But it's interesting how you do have this argument that common law is
41:30
just more efficient than civil law, I think is really compelling.
41:34
And you're seeing certain countries like, say, the UAE adopting common law courts.
41:39
And I feel like that's certainly is a win for legal origins,
41:44
and I think it certainly has paid some of the success for
41:48
UAE's recently resurgent economy.
41:51
I'm curious, what do you think about when you think about the legacy of your work?
41:56
>> Edward Glaeser: So I don't think I deserve.
41:57
So both The Doing Business report was done by Simeon Djankov and Andre.
42:01
I have certainly written papers that relate to The Doing Business report.
42:04
In fact, we have a recent paper in the AER that uses a module from The Doing Business
42:08
report that tries to understand why procurement practices are so
42:11
different across space.
42:12
But I had nothing to do with the original implementation of
42:15
The Doing Business report and even legal origins.
42:18
I co-authored a paper with Andre called Legal Origins.
42:20
I most certainly did that, as I did a number of papers from that time period.
42:25
But the original empirical work documenting the impact of legal origins,
42:28
that's Andre's.
42:30
That's really his, not mine.
42:33
To the extent to which you believe the model in Legal Origins and
42:37
the history that sort of says that in a country in which in France,
42:42
fundamentally, the nobles are more afraid of each other and
42:46
of outside conquest, than they are of the king.
42:49
And so they're kind of far more eager to have a strong monarch that's able to
42:52
protect them in England because of its oceans, because of a number of other
42:55
institutional details, they're more afraid of the king than they are of each other.
42:59
They wanted to restrict the power of the king, and that's what that paper is.
43:03
And that sort of explains what follows afterwards.
43:07
And we wrote a number of institutional papers during that time,
43:11
coes versus ecosians, the regulation paper in the Journal of Economic Literature.
43:16
And I'm quite proud of that work, but I don't see of it as necessarily sort of
43:21
universally making the case for common law as being the only thing that works.
43:26
I do think, in general, things that sort of put brakes on the sovereign are kind of
43:30
desirable things, but there are also inefficiencies that can come around in
43:34
Commonwealth countries as well.
43:36
>> Jon Hartley: Any thoughts on just institutional or
43:38
institutions in general as being the fundamental cause of growth?
43:42
And you wrote a very famous paper with Andre and co-authors.
43:49
>> Edward Glaeser: Yeah, I'll take credit for that one, yeah, 100%.
43:51
I'll own that one.
43:52
So my view is that most of the time,
43:55
institutions are fairly malleable and that, in fact,
43:59
what kind of matters is human capital in terms of the long run performance?
44:04
I mean, if you think about sort of Singapore, right?
44:08
It's not that Singapore, on independence, had amazing level of institutions.
44:12
They had an amazing guy that they got very lucky with in Lee Kuan Yew, and
44:16
Lee Kuan Yew took them through this remarkable human capital investment thing,
44:21
which is amazing.
44:23
Similarly, South Korea was a military dictatorship at the end of the war.
44:27
It wasn't like it had some fantastic institutions, but
44:29
it did have a tradition of education that ended up working out reasonably well for
44:33
it as it transitioned to democracy.
44:35
So I, in general,
44:36
certainly am on the view that it's not that institutions don't matter, they do.
44:41
I just see them as being highly endogenous and
44:43
not likely to be seen as the right long-term cause of things.
44:47
>> Jon Hartley: That maybe growth causes institutional-
44:50
>> Edward Glaeser: In many cases,
44:51
absolutely.
44:53
>> Jon Hartley: And I think what's great about that paper is, you know,
44:56
one of the big institutions things.
44:58
And, of course, these things, I think institutions can mean lots of things.
45:04
But for Jerome, and certainly Jerome's work, obviously,
45:08
democracy plays a really looms large in that.
45:12
And I think the point that you make that I think is such a fascinating example, or
45:18
perhaps counterexample to drone's claims that democracy causes
45:24
growth in a big way, is that you look at the east Asian tigers,
45:29
Singapore, Hong Kong, Taiwan, South Korea.
45:34
All these countries grew to effectively western living standards or
45:40
GDP per capita levels by the 1990s, at which point they
45:45
still hadn't transitioned to democracies quite yet.
45:49
I mean, some were never,
45:51
Hong Kong has never really transitioned to being democrat.
45:53
But just that counterpoint that you can still grow to being effectively a country
45:59
that's got western living standards under non democratic regimes is kind of like
46:05
this fascinating counterexample to the argument that at least democracy
46:10
causes growth and perhaps there's other institutional interactions.
46:15
>> Edward Glaeser: I agree with that.
46:16
I do think there's a lot to like about sort of limiting the expropriatory power
46:20
of the sovereignty, but
46:21
there are plenty of non democratic regimes that manage to do that.
46:25
I mean, the sort of magic of you think about the transition in terms of
46:29
the glorious revolution in England and
46:32
the ability of parliament to commit to pay itself back.
46:35
Parliament is a very limited democracy in 1700.
46:40
This is not a, and I think also, I certainly, I think democracy is generally
46:45
a good system and I think it's a good thing that we have, we have votes.
46:49
But I think it's not the only thing to look for.
46:53
I mean, if you ask me, would I be if you gave me a choice between the Weimar
46:57
republic and living in the stable Austro-Hungarian empire under Franz Josef,
47:02
where freedoms were very sacrosanct?
47:04
I would take the Habsburgs any day of the week.
47:06
So it's speaking of someone whose father was born in Berlin in 1930 and
47:10
watched what the excesses of democracy managed to do in Germany and
47:14
Berlin during his childhood.
47:16
>> Jon Hartley: Well, it's interesting, too, the East Asian, I mean,
47:20
I fully agree.
47:21
Democracy, I think its role is, I think historically is really more one
47:26
of redistribution rather than, say, causing just overall growth.
47:31
But I'm curious, and it's important that we have for that reason of redistribution.
47:36
But I'm curious, I do hear the Asian Tiger examples come up a little bit
47:40
more recently, but really in the context of industrial policy.
47:44
And some people credit their growth to
47:49
different forms of industrial policy.
47:54
I don't know if you have any thoughts or takes on that,
47:57
given that there's this research and interest in industrial.
48:00
Policy, nobody seems in my mind to really name it specific
48:05
industrial policies that work well, but people like to point to it and
48:10
it's this kind of hot word, hop on where obviously,
48:14
there's the CHIPS and Science Act and certain non economic foreign
48:19
policy interests with wine offshore chips away from China.
48:23
But I feel it's a different argument than the universal argument that,
48:29
well, industrial policy is a secret sauce to growth.
48:33
>> Edward Glaeser: Okay, so here's my take on industrial policy.
48:36
When Lee Kuan Yew did it, it was basically human capital policy masking as industrial
48:40
policy, right, hiding as industrial policy.
48:43
What happened is he sort of gradually upskilled his people by starting them off
48:47
in light manufacturing and then moving them up the scale.
48:49
And as they built skills, they became more productive, right?
48:54
Lee Kuan Yew was able to do things.
48:56
Singapore in general is able to do things that most other countries
48:59
aren't able to pull off effectively at all.
49:03
If you told me that it would be possible to have an industrial policy in the US,
49:07
that upscale people, I would say that's conceivable to me.
49:11
Do I actually believe that anything that would come out of Washington would
49:13
actually do that?
49:14
No, not in a million years.
49:18
Getting industrial policy right is incredibly hard, right?
49:21
Precisely, because I think the best case for it is it's about upskilling workers
49:26
and I just don't see any evidence that suggests that America is able to do that.
49:31
When I look, I have a new paper which looks at road roughness across America.
49:35
And in many cities that we are able to look at, there's basically no correlation
49:39
between the subsequent probability of being repaved and
49:42
how rough the roads are, right?
49:44
So we look at road roughness at one point in time.
49:46
We look over the next eight months, basically most cities.
49:48
Denver is an exception.
49:49
But most cities, there's basically no correlation between road repaving and
49:53
roughness.
49:53
If we can't target road repaving properly, right,
49:56
how in the world are we gonna be capable of figuring out some complex
49:59
industrial policy that achieves something brilliant?
50:02
So I think hubris is a great sin.
50:06
I think having realistic views of what we're able to do as a country is
50:10
important, and I think we should be focusing on things like,
50:13
can we actually improve the quality of our infrastructure?
50:16
Can we improve the quality of our schools?
50:18
Rather than thinking we're gonna have some magic around industrial policy.
50:21
If you told me you wanted to be open to some sort of ramped up earned
50:26
income tax credit, maybe even one that is regionally delineated,
50:31
that sort of was larger in high jobless areas.
50:34
I'm open to that, but that's not the same thing as saying, you know,
50:37
what should go in eastern Tennessee.
50:39
I know there should be a little bit more encouragement for people to work in
50:41
eastern Tennessee, but I have no idea what businesses are going to work there.
50:45
>> Jon Hartley: That's fascinating and certainly, I think too on infrastructure,
50:50
but a lot of implications for how useful, I guess paving roads might be for physical
50:55
stimulus, at least as our existing sort of infrastructure system stands.
50:59
I wanna talk a little bit about crime.
51:01
Any thoughts on recent trends in crime, particularly in coastal urban environments
51:06
like San Francisco, including their causes and consequences?
51:11
>> Edward Glaeser: Sure, so the long arc of this is crime went
51:16
crazy in the US from 60 to 75, right?
51:21
And then it kind of bubbled around for 15 years.
51:26
I wrote a paper in 1999 called, why is there so much crime in cities which seems
51:31
to have coincided perfectly with the decline of crime in cities.
51:36
And in fact,
51:37
I would have said in 2010 that largely reducing urban crime was one of
51:41
the great urban triumphs that had occurred in the sort of post industrial world.
51:46
The fact that New York was much safer than it had been in my childhood,
51:49
the fact that Chicago had gotten safe, all of these were great triumphs.
51:52
Now, at the same time,
51:53
they were triumphs that occurred with far too much mass incarceration and
51:57
far too much maltreatment of ordinary people on the street.
52:00
And we tolerated that for, I guess, understandable political reasons, but
52:05
it still was a terrible thing that we tolerated.
52:08
Now, all of this has blown up over the last ten years in anger over policing, and
52:14
particularly with the horrendous images of the murder of George Floyd.
52:20
And we had this temporary movement,
52:22
which was basically like the police are the problem, not the solution.
52:26
And particularly in progressive cities, San Francisco, Seattle,
52:30
there was a tendency to accept that we were just gonna shut down on policing.
52:34
We weren't good at it.
52:35
The policing was not a thing cities needed to do.
52:37
We were gonna defund the police.
52:39
Well, I can't think of anything more idiotic than defunding the police, right?
52:42
This is an incredibly foolish thing.
52:43
Cities need policing.
52:45
The police may badly need reform and I actually believe strongly.
52:48
It's one of the cases that we make in survival of the city that you actually
52:51
want to measure how the police are doing not just on victimization, but
52:54
how well people are enjoying their interactions with police.
52:57
Are the police treating them with respect?
52:59
Are they actually acting in the way that good public servants should be?
53:02
Because what gets measured gets managed as the great Austrian American,
53:07
Peter Drucker famously opined, but that doesn't mean defunding.
53:12
And I think that there's no free lunch in policing as there isn't anywhere else.
53:18
And if you want the police to both fight crime and treat people with respect,
53:21
you're gonna have to pay more for it, not less for it.
53:24
Whereas this sort of detour that we went the other direction, where the whole bunch
53:28
of people saw the police fund departments as piggy banks, this was just crazy.
53:32
And hopefully we're moving back to that and trying to reclaim the city streets.
53:38
>> Jon Hartley: Final question on here and this is just back to cities in general.
53:42
You've written two excellent books on cities,
53:46
two tour de forces in my mind or two fantastic books in my mind.
53:51
The triumph of the city and the survival of the city and I'm just curious.
53:58
In the future, will cities in your mind be more or less central in your mind?
54:06
Given remote work as a technological advance,
54:09
climate risks the possibility of future pandemics,
54:14
renewed nuclear power fears, and global competition amongst countries.
54:20
Where in your mind, do cities stand in the future?
54:24
Obviously, forecasting is something that economists should never really do,
54:29
or without some humility.
54:30
But I'm curious, where do you see cities going?
54:33
>> Edward Glaeser: Okay, so let's just do geographies on this.
54:36
So in the US, I will still make a case for cities continuing to be important, right?
54:41
It's been 40 years, 44 years since Alvin Toffler wrote the third wave where he
54:46
predicted that cities would empty out as we all just connected in cyberspace for
54:51
39 of those years.
54:52
He was completely and totally wrong.
54:53
Because at least in my interpretation of it, this face-to-face connections are more
54:57
likely to complement electronic interactions than to substitute from them.
55:00
Because globalization and new technologies radically increase the returns to being
55:04
smart and we are social species that get smart vibing around other smart people.
55:08
Yes, it is true, that has been a tough three or four years for cities.
55:10
But I think fundamentally in the US because of this tremendous return
55:14
that we get from being around other people, both the pleasure of it and
55:18
the productivity of it, I'm not counting cities out.
55:22
Now, this is a debatable point.
55:24
You can put your advisor, Nick Bloom and
55:27
I can argue some of this and we can have a thing.
55:31
But if you want to give me sub saharan Africa or India or Latin America or
55:35
any place that isn't the very rich world, all of this stuff is just silly.
55:41
Because cities are the future, right, and
55:44
there's no non urban alternative for Sub-Saharan Africa that looks any good.
55:49
And especially on our global lattice of travel and trade, right,
55:53
the opposite to urban life in Africa tends to be subsistence agriculture.
55:57
That's at far more risk from global warming than anything else that
56:00
goes around.
56:01
So I continue to believe, particularly in the developing world, the future is urban.
56:05
I think working on making the cities of the developing world more humane and
56:09
more productive, safer.
56:11
This is one of the great vocations of the 21st century.
56:13
And certainly, this is where I plan on spending a lot of my effort in whatever
56:17
years I have left on this planet.
56:19
>> Jon Hartley: Well, it's a huge honor to have you on, really.
56:23
I think cities are so essential to growth and I think economic growth,
56:28
what causes economic growth is really, I think the fundamental question
56:33
in economics or one of the most important questions in economics.
56:37
And I think you've done really more incredible work in this
56:42
area than almost any other scholar has in recent decades.
56:47
And so I'm just totally amazed by your thinking and how now it's become so
56:53
mainstream to talk about zoning and land use regulations.
56:58
Really, an amazing opportunity here to talk with you on
57:03
your incredible career and ideas.
57:06
So thank you so much for joining us.
57:08
>> Edward Glaeser: Thank you so much for having me on.
57:09
It was a pleasure.
57:10
>> Jon Hartley: This is the Capitalism and Freedom in the 21st Century podcast,
57:13
an official podcast of the Hoover Economic Policy Working Group where we
57:16
talk about economics, markets and public policy.
57:18
I'm Jon Hartley, your host.
57:20
Thanks so much for joining us.
57:21
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