Do Free Markets Favor the City? Book Review

Triumph of the City: How Our Greatest Invention Makes Us Richer, Smarter, Healthier, and Happier

By Edward Glaeser

The Penguin Press | 2011 | 400 pp. | ISBN 978-1-59420-277-3

Ethan Goffman

Edward Glaeser is an economist with a true love for urban living and a deep concern for the environment. His new book, Triumph of the City, is stuffed with anecdotes, examples, unexpected outcomes, and elegant solutions to conundrums of city living in locations ranging from Houston, Detroit, and New York to Bangalore and Shanghai. Glaeser often depends on two assumptions widespread among economists: government intervention can have harmful, unexpected consequences, and free market solutions, often based on simplicity, tend to work best. Yet, however powerful and revealing these ideas, Glaeser at times slights the corollary, that if governmental solutions have unintended consequences, so too does the free market: solutions to problems of sustainability depend on a complex interplay between government and the private sector.

Like Jane Jacobs, Glaeser sees cities, with the agglomeration of highly educated people they attract, as the true drivers of a society’s wealth and success. He also considers them as conduits of opportunity for the poor, who flock from rural squalor to build a new life; slums are therefore not blights but the first steps toward economic success. And cities, in their concentration of humanity, in being a laboratory of technological innovation, represent an opportunity to lessen environmental destruction. For these connected reasons, cities are our best chance to advance both the environmental and social aspects of sustainability.

Take tall buildings as a prime example. While preservationists may want to limit them and preserve the historic inner city, Glaeser considers the skyscraper as crucial in the fight against sprawl, with its long commute times, wasted fuel, and carving up of the environment. If building is limited in the core city, only the wealthy will live there, while the poor are pushed to undesirable neighborhoods. By contrast, numerous tall buildings bring down housing prices while preserving space elsewhere—Manhattan’s Central Park, for instance, is made possible by the density on the rest of the island. Still, New York has not always encouraged density; a city like Chicago, Glaeser explains, which has encouraged building along the waterfront, is able to keep housing prices far lower (it’s important to remember, though, that Chicago is a sprawling city with plenty of land available). Glaeser is even more critical of height restrictions in such cities as Mumbai “because they handicap the metropolises that help turn desperately poor nations into middle-income countries.” Glaeser far prefers China’s taller new metropolises. And the path developing countries take is critical to the future of the planet; they simply cannot copy the high-sprawl, auto-dependent model of the West.

Glaeser follows David Owen in commending life in dense cities as the only solution to environmental devastation. As he does with the preservationists, Glaeser criticizes a simplistic, nostalgic environmentalism that equates life in “natural” settings, such as farms and forests, with preserving a healthier planet. He also criticizes building roads and providing parking as solutions to traffic congestion; rather, he argues, congestion pricing is the singular solution. People need to pay the price of the goods they use, and car lanes and parking spaces are part of that price. He exclaims that the “government’s job is to allow people to choose the life they want, as long as they are paying for the costs of that lifestyle. Yet today, public policies strongly encourage people, including me, to sprawl.” (Like Owen, Glaeser, when he had children, chose to move to the suburbs.) For Glaeser, plentiful roads, the home mortgage interest deduction, and poor urban schools are prime causes of sprawl, all of them largely government caused. The low gas tax is also a prime villain, an example somewhat rare in Glaeser where absence of a policy is often the solution. It’s notable that a high gas tax interferes with “normal” market mechanisms by imposing a cost on an externality, the environmental damage caused by extraction and burning of fuel.

Glaeser also argues that policies to help the poor attain affordable housing generally backfire. Rather, allowing unrestricted building is, for him, the best way to create cheap housing. He explains that “New York increasingly restricted development and tried to make up for the lack of private supply with rent control and public housing. This strategy failed miserably, as it has throughout Europe.” By contrast, in Houston, which lacks a zoning code, the “freewheeling growth machine has actually done a better job of providing affordable housing than all of the progressive reformers on America’s East and West coasts” (much more about this next week.) Of course, as Glaeser points out, Houston’s freewheeling policies spur extremely sprawling, car-dependent, unhealthy growth. Further, it is government intervention in the construction of roads and infrastructure that make this possible. Yet such thinking can turn one against all planning, when the real problem is bad planning. Government interference, it seems to me, is inevitable; otherwise, there will be no new endeavors. Construction of both roads and public transportation, for instance, depend upon eminent domain; otherwise, a single property owner can block all progress, good or bad. (Some extreme preservationists and environmentalists might find this stagnation a good thing, as it would block more harmful projects—such as highways—than helpful projects).

Yet another area in which, Glaeser argues, government interference has backfired and led to environmental harm is land preservation in California, notably in the San Francisco Bay region, which spurred environmental reviews of new projects throughout the state. However, it’s preferable for people to live in the temperate California climate, where heating and cooling are minimal; “While limits on California’s growth may make that state seem greener, they’re making the country as a whole browner and increasing carbon emissions worldwide.” Specifically, people kept out of California end up in the sun belt, using tremendous amounts of air conditioning. Glaeser’s logic is good as far as it goes, but I wonder if good policy couldn’t both protect California’s environmental treasures and allow people to settle there, albeit in more compact formations. Los Angeles, for instance, is particularly notable for sprawl and car-dependency. Furthermore, if Texas has bad policy that allows unhealthy growth, isn’t that Texas’ fault and not California’s? And California’s environmental laws often act as a model for the nation, spurring better environmental practices elsewhere.

Glaeser, then, while a knowledgeable, and nuanced thinker, leans a bit much toward market solutions. Not always; he does argue that, for developing countries, “success above all reflects decent political institutions and investment in education.” Does he then expect those “decent political institutions” to merely get out of the way and let the free market work? The trick is to get government to do what it does best and the market to do what it does best. It’s easy to say this, but getting the details right is where the real work begins—and Glaeser’s clever, at times unorthodox, arguments are thoughtful stimulation for further discussion.

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Ethan Goffman is Associate Editor of Sustainability: Science, Practice, & Policy. His publications have appeared in E: The Environmental Magazine, Grist, and elsewhere. He is the author of Imagining Each Other: Blacks and Jews in Contemporary American Literature (State University of New York Press, 2000) and coeditor of The New York Public Intellectuals and Beyond (Purdue University Press, 2009) and Politics and the Intellectual: Conversations with Irving Howe (Purdue University Press, 2010). Ethan is a member of the Executive Committee of the Montgomery County (Maryland) Chapter of the Sierra Club.