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Show Notes:
Imagine a world where cities are not just places to live, but dynamic hubs of innovation, specialization, and cooperation. What if the cities of today are shaping the political and economic landscapes of tomorrow in ways we are only beginning to understand? In this episode, we dive deep into the heart of urban development with Ian Goldin, a leading expert on global development and urbanization. Ian is a renowned Professor of Globalisation and Development at the University of Oxford, where he directs the Oxford Martin School and the Oxford Martin Programme on Technological and Economic Change. In our conversation, we discuss the historical evolution of cities, the ways cities drive innovation, and the transition from manufacturing-based economies to knowledge-based economies. Explore the continued rise of major cities, the challenges they will face, the impact of remote work on urban clustering and economic geography, and how cities shape the politics of a country. Discover strategies for creating more accessible and equitable cities, why transport, education, and housing are vital, how urban policies need to change, mitigating climate change impacts through successful urbanization, and more! Tune in to uncover the hidden mechanisms behind urban success and the future of our rapidly urbanizing world with Ian Goldin!
Key Points From This Episode:
- Discover how cooperation, specialization, and innovation drive the evolution of cities.
- Unpack the role of diversity and connectivity in driving urban innovation.
- Learn about the key historical milestones in urban development.
- Impact of the Industrial Revolution on urban growth and specialization.
- Insights into the political implications of urban concentration.
- How cities can successfully transition from a manufacturing-based economy.
- Unpack the unique challenges faced by cities in developing countries.
Quotes:
“The growth of cities has really been a story of enabling increasing specialization so that more and more people could depend on a smaller share of the countryside producing food.” — @ian_goldin [0:01:28]
“Cities are huge incubators of innovation both because of what’s happening internally within them, but also because they’re more connected to other cities and other places around the world.” — @ian_goldin [0:04:02]
“Remote work is not really playing a material role in flattening out the economic geography between cities. It is within cities, because more money is being spent in the suburbs than before, but it’s not between cities very much.” — @ian_goldin [0:13:24]
“Concrete, cement, and steel are major carbon emitters. How are we going to build the cities and infrastructure in the future and half of what we need hasn’t yet been built without greatly increasing carbon emissions? So, this is a massive technological challenge.” — @ian_goldin [0:25:15]
“There are multiple dimensions [to building cities] which are climate-related. It’s important that we start now because we are already too late. But we can’t allow the need for a perfect solution to be the enemy of a good solution or an incremental solution.” — @ian_goldin [0:25:35]
Links Mentioned in Today’s Episode:
Charter Cities Institute on Facebook
Charter Cities Institute on Instagram
Transcript
[INTRO]
Kurtis Lockhart: Welcome to the Charter Cities Podcast. I’m Kurtis Lockhart. On each episode, we invite a leading expert to discuss key trends in global development in the world of cities, including the role of charter cities and innovative governance will play in humanity’s new urban age. For more information, please follow us on social media, or visit chartercitiesinstitute.org.
[INTERVIEW]
Jeffrey Mason: Hi, Ian. Thanks for joining me.
Ian Goldin: It’s a great pleasure, Jeffrey.
Jeffrey Mason: Let’s start off with the framework for thinking about cities that you outline in Age of the City. You have this cooperation, specialization, and innovation framework as the underlying force for what cities do and why we have them. So, can you say a little bit about what each piece of that triangle is about? I think there’s a little bit of a chicken head and egg problem. Do these things emerge and are sustained over time, because of cities or are they more of a consequence of cities? How does that relationship play out?
Ian Goldin: Cities create a virtual circle in which we specialize more, we cooperate more, we innovate more, and therefore cities do better and therefore more people come to them and we build on that. There are any arose, because people specialize. It wasn’t until agriculture was able to produce a surplus and we could store that surplus. That’s why cities arose.
I mean before that you basically had to live on the land because you depended on food. The growth of cities has really been a story of enabling increasing specialization so that more and more people could depend on a smaller share of the countryside producing food. As technology has improved that accelerated, but it wasn’t really until the 19th century that any significant share of the world’s population lived in cities.
I mean even in great cities like Rome which was learning 5% of the world’s population was living in cities because agriculture wasn’t productive enough to be able to sustain people and they weren’t the storage methods and transport methods available for that. By the time we get to the Industrial Revolution and then the acceleration that followed it with increased mechanization of agriculture, increasing ability to intensify production, plus global shipping rising accelerating with steamships and other capacities and of course, some terrible underbelly to this including slavery which allowed mass production of some foodstuffs on the other side of the world. That’s what really led to the rapid ability of cities to grow because a smaller and smaller share of people and often far away would be producing agricultural products for them to consume.
Once cities start specializing, we see this remarkable rise in incomes. We see the development of specialist professions. I mean very small distinctions between people who basically concentrate on doing a few things well whether it’s a physician on health or whether it’s an artist or whether it’s someone who’s producing other things and that specialization gets better and better. As people become more specialized, they need to cooperate more. They need to cooperate more because they depend more on other people and the cities depend more on supplies. Supplies of food, supplies of water, etc., and trade becomes more and more significant.
Innovation happens, because of that specialization. People thinking about and pushing the frontiers of things that they’re doing repetitively and well, but it also happens, because of the diversity. In other words, people doing different things, learn from each other more quickly, and not only within a city, but between cities. So, trade leads to innovation, because you say, “Ah, those people have invented a wheel. Those people know how to do things differently.” So, you can leapfrog. You don’t have to develop everything yourself.
Cities are huge incubators of innovation both because of what’s happening internally within them, but also because they’re more connected to other cities and other places around the world. This means that people in cities tend to be much more productive than people in the countryside, or villages, or towns. We still see that in the data. If you look at the data on levels of productivity growth for example in the US or around the world, you see cities often double or triple the level of productivity growth.
That then gets reflected in more and more investment into education, into technical equipment, and into other areas you get this virtual circle. From the Industrial Revolution until about the 1980s, this was largely shaped by the availability of natural resources. When you think about where the great cities of the US are, of Britain, of Europe, they are often very related to natural resources so a port near a proximity to a mine, proximity to agricultural areas for example. Those were the things that say, “Okay, this is where the city is going to grow.”
You saw a relatively flat structure so that a city like St Louis would have been 90% of the income of New York, for example. More than cities in the UK, like Manchester, or Sheffield, and others would be 90% of the income of London because they had the resource that was driving them. What’s happened in recent decades is that, that becomes less and less and less significant. Now, St Louis is about 60% of the income of New York for example.
It used to have something like 10% of the top firms in the US. Now, it has 1% up the top firms in the US. So, that process of specialization innovation cooperation is driving concentration. Now, this is being reflected in the politics. If you look at what’s happening in the politics of the US and support for President Trump for example. If you look what’s happening in the UK and the whole Brexit movement. If you look what happening in France and around the world. What we’re seeing is that the world is not getting flat as Tom Friedman suggested where it all, that is The Death of Distance, as Frances Cairncross in her book suggested, but the opposite is happening.
The world is becoming more spiky. Places becoming more important. Despite digital technologies remote work and all of that. The ability to work elsewhere. That’s because the drivers of a knowledge economy are different from the drivers of a manufacturing economy or a resource-based economy. They’re based on basically, where do people want to live and be productive. Particularly, young people want to live. Where can they express their diversity, and gender identity, or in with skills or in the music, if they want to listen to the fashions they want to wear. Increasingly, the answer is we can do it in big cities, but we can’t do it in small towns or the countryside.
What we’re seeing is this rising difference between dynamic places particularly the US, the coasts, and some of the lakeside cities and left behind places. Old manufacturing and resource-based places. That’s shaping the politics, because it’s harder to get to the new places and that’s a whole new dynamism that’s entered into the equation, because of the unaffordability of housing in the new places. The incomes are so high. People are paying such high rents, but also the other things that go with the public transport is much weaker than it used to be, because of the tax cuts and spending cuts. There’s much less investment in public schooling and housing.
We’re seeing people trapped. I believe if we want to understand the politics of division and fragmentation that we’re seeing in our countries if you look at the geography of cities and growth, it provides a big part of the explanation. The lack of flexibility, the lack of ability to get to these new dynamic places. So, I believe it’s very important. I believe we need to understand it. We need to create more accessible cities.
I don’t think that we’re going to be able to transform the spatial geography and say, “Okay, everywhere should be well off.” Because the underlying forces of cooperation, specialization, and innovation are too strong and they’re too positive. In the sense that they will continue to create places which do better and better there are a few places that buck the trend. We see the growth of some places like Cincinnati in the US or Austin Texas, etc. but not everywhere can do that and it’s usually because of a combination of tax breaks and particular circumstances that can’t be replicated across the country.
Jeffrey Mason: What do you think are some of the most important considerations for why some studies have kind have been able to make at least into advanced economies from the industrial to a still dynamic thriving to the post-industrial economy? It seems like great population alone isn’t enough if you look at say some of the top 10 largest cities in the US in 1900 or even 1950, right? Some of them are now 30th, 40th, 50th. It’s a really significant shift.
It seems like you might think, right, if you have 800,000, 100,000, a million people living in your city maybe there’s enough of different things going on that that transition might be possible, but yeah, that didn’t happen. A city New York on the other hand, right, it was really, really intense decay for basically three decades. The 60s up to the 90s, and then had a tremendous bounce back. So, why do you think are some cities can successfully navigate this transition while others just seem to have missed the ball?
Ian Goldin: I think large part of the explanation is to do with the transformation of our economies. From manufacturing to knowledge-based economies. You see the growth of Silicon Valley and cities there. What’s doing really well in New York is professional services and technology. Same with Boston and Northeast. If you can attract the right people, then you can do well. But as you say, it’s a vicious circle, because you attract the right people by doing well as well. Investors want to come there and it’s a nice place to live, it’s safe. It’s got the diversity of entertainment and hospitality that young people and other people want.
So, if you’re in a decaying city where crime is rising, where the options are closing down. You get into this downward spiral and it can happen very, very quickly, especially if there are no jobs. The slowing down of investment by the public sector, by governments, as well as in transport really matters. So, you can go to places that are quite near, like say 30 miles away from a dynamic center. These places are suffering massive decay, negative equity on houses, very high levels of unemployment and crime. You ask people why don’t you go to the big city which is only, let’s say an hour’s drive away and they’ll give you all the explanations because I can’t afford a car, because it takes me too long to get there. I’ve got to look after my kids or my elderly parents. I can’t spend my time commuting.
These are all very rational explanations. That I think is a big part of the problem. People can’t afford to be in the dynamic places, and they can’t even afford to get there in the commute. So, some places have managed to buck the trend. It’s interesting the scale of investment that’s happening in Detroit for example. Some places are really beautiful, so they have natural attraction to them, but there’s also some inconsistency which I think will still work out over time.
A lot of the growth has been in desert cities, like Phoenix and Las Vegas and place like that. They have no water and are incredibly hot, so people are living in bubbles of air-conditioned housing transport, offices, etc. and piping water from further deep. Others are in place which are very vulnerable to climate change, like Miami for example. So, how this shakes out in the long term? I’m talking about 40, 50, 60, years’ time is going to be very interesting and I think a bit different to what we’re seeing now.
It is the case that not everywhere can do well in the knowledge economy. We thought that remote work would flatten the place out because people can work from anywhere. But increasingly what we’re seeing is that there’s still clustering happening in the knowledge economy. It has not led to reduction in house prices in Silicon Valley for example, which are even higher than they were pre-pandemic.
It has not led to the flattening out of prices, because I think firms are realizing and I’ve done quite a lot of work on this that you can’t create a culture of work you can’t have breakthrough ideas entirely remotely. So, it’s limited in its application, just the one people who come in a few days a week. That means, you can’t be in another state very easily. It’s different in the North East where the states are close, but you can’t live in say, Texas, or in Hawaii and work in Palo Alto very easily.
That is, I think, leading to a continuing clustering. Remote work is not really playing a material role in flattening out the economic geography between cities. It is within cities, because more money is being spent in the suburbs than before, but it’s not between cities very much. This will continue. Those that have managed to buck the trend are either very lucky that is that they happen to be gateways to wonderful natural environments and people all fled to them and want to stay there.
They have anchor tenants, like those that competed for say that Amazon’s second headquarters, like DC, but not everywhere can benefit from that. If you can, you’re fortunate. But I think most of what we need to accept and that the politicians need to get their heads around and be honest with the public is that there’s not going to be a resurrection of the old – most of their old manufacturing centers in a knowledge world.
Jeffrey Mason: I think that point is particularly important implications for cities in the developing world, because historically urbanization and industrialization have gone together in lockstep, but this trend has broken down in recent decades and especially in say, Sub-Saharan Africa. The break is pretty significant. So, going forward in places that do need to industrialize, right, things do need to be manufactured somewhere. It seems like even if some of the other problems that maybe make these cities not particularly attractive for manufacturing, if some of those get solved it still doesn’t seem like there’s this trend of maybe if we can do business in these places, we’re going to do it in an industrial park or a special economic zone.
It’s the days of the big urban manufacturing district seem to be gone in that sense, even if a place can successfully attract manufacturing at scale. So, what does the future then look like these rapidly growing cities in the developing world, where their urbanization story is like different from that of the already rich world?
Ian Goldin: My book, Age of the City which I did with Tom Lee-Devlin, mainly focuses on the advanced economies, but we do have a section on developing countries and look at these questions. I think it’s a massive challenge, 90% of the growth of populations and of economies, so the economic drivers of developing countries are in cities, 90% percent of those are coastal. That’s a big, big issue. So, the countryside is becoming increasingly fragile, because of climate change, extreme weather. People moving into cities and that’s where people go also after conflict and natural disasters. They flee to the cities.
When those cities are coastal, they are increasingly buffeted by the combination of rising oceans saline intrusion, and flooding. That’s one set of issues. Most of these cities, growth is informal settlements, so very poor infrastructure provision whether it’s sanitation and water or roads, power, etc. A lot of ad hoc innovative solutions, but they’re not robust to climate shocks. So, the question is where the jobs going to come from, because the other thing that’s happening which you alluded to is that the jobs of the future are not going to be in the jobs of the past.
Every country that’s in that realized has gone through this bottom runs, middle rungs of the development ladder where you do repetitive rules-based tasks basically come out of agriculture into manufacturing rules-based tasks or services like call centers, the back offices, and that were the growth of Bangalore in India, for example. Back offices are now digital transactions in the cloud. Call centers, I don’t think will exist in ten years time, because there will be a Chatbox increasingly sophisticated.
The service repetitive jobs are disappearing. The manufacturing repetitive jobs are disappearing, because people aren’t putting together pieces of automobile anymore. It’s robots that are doing that. Even garments are now increasingly robotically sewn together. So those repetitive jobs are not going to come out, but big question is demographic. It’s probably going to be good news for a lot of countries in Asia and Latin America, because their labor forces are contracting their fertility rates are below replacement levels.
When you have a contracting labor force and an increasingly aging society, you want your workers to be more productive to support more dependent elderly people. So, complementing workers with automated equipment might be a very good thing. Africa’s got a very different problem its median age is 20. It has a hundred million people coming into the workforce in the next 10 years. It needs jobs. It needs lots and lots of repetitive rules-based jobs.
It’s not only that those are being automated that the ones in agriculture are being attacked by climate change. It’s also that the geopolitics and the transformation of supply chains is moving against Africa, repetitive jobs it’s nearshoring, French shoring, reassuring into the US, into Europe. So, the jobs might come to Mexico, but they’re not going to come to Africa from that process. So, this is a very big question and it’s going to be played out in the cities of Africa in the future as it is in cities elsewhere which I think are going to have a tough time and we talk about some of the options for them.
Jeffrey Mason: Now, if you’re a policymaker. If you try to prioritize everything, you end up prioritizing nothing and this is quite a tough problem that I think you’ve presented. So, from the policymaker’s point of view and particularly in these developing world cities and perhaps also maybe from the perspective of the development community as well, but in your mind, what are the highest priority items to address from an urban policy perspective to make as much of this urbanization as successful as it can be given the constraints and challenges?
Ian Goldin: Yeah. You’re absolutely right. I mean you can’t do everything particularly if you don’t have the resources either the human resources or the financial resources to do it. So, prioritization is absolutely essential of your time, people’s time, and of the scant financial resources you have. I think we need to also remember, it’s not just the local people that have to solve these problems. Climate change is a global responsibility. Africa’s contributed less than two percent of global emissions.
The famous hundred billion dollars from the Paris agreement of 2015 needs to be delivered and we need much more, so institutions like the World Bank and others need to step up to the plate. The shareholders need to step up to the plate. So, we need to understand what the issues are the scale of the challenge that is going to require collective fix or mitigation both globally and locally that national governments are not capable. I think we need to allow different solutions to emerge and there’s a huge talk about this in the book, there’s huge sharing of experience, there’s great alliances of mayors, of city managers, and planners around the world. The C40 and many other alliances of them who learning from each other and that’s great. I think it needs to be applauded.
Those that have thought through the issues need to be supported and the lessons learned adapted for other places. In the end it’s going to depend on how well the economy is doing because everything needs money to be part of a solution. Questions of trade for example and trade access, trade tariffs are very important. Questions of how good is the investment environment in it. Can foreign investors invest? Can local investors or local investors investing in their own economies or are they sending the money out the country, because they don’t want it to be there? Those questions are quite central to the future of these cities.
Cities are the place where the wealthy people live and cities are the place where the poor people live. If the wealthy people are not investing in their own economies, one can’t expect anyone else to. So, there’s a need I think for much greater responsibility across the board from governments and from private citizens businesses, and firms. There’s also needs to be a recognition there’s a lot of city authorities don’t have any power, so the city authorities need to have more power and more capacity, but if they’re going to have that, they always need more money. So, what share of revenue can they raise and where does the revenue come from?
The thing with the informal settlements is they often don’t pay taxes and that leaves developing countries’ cities with a very narrow tax base. You can’t do much with that. So, there’s a multi-spectrum approach that has to be adopted, one has to prioritize, but you need to prioritize within a knowledge of the complexity of the situation you’re in and that’s what we’re trying to do with the book.
Jeffrey Mason: In our conversation in the book and some of your other work, like climate, climate feature is quite prominently in it. Those are big challenges for lots of cities whether they’re coastal and then facing sea level rise or maybe if there’s somewhere inland where drought is an issue, rather there’s all kinds of different climate-related challenges that cities in different places are facing. So, what are some of the most promising strategies for urban climate mitigation that are being deployed around the world? Because we hear these doomsday-type predictions about what’s going to happen to some cities, so it seems like significant action is warranted and is warranted quickly. So, what do you think is most promising?
Ian Goldin: I think what the Dutch have taught us is that if you have enough money and enough planning you can live underwater. A lot of the Netherlands is many meters under below sea level, but they have the money and they’ve been doing it for hundreds and hundreds of years. The challenge now is places that don’t have the money and that’s happening very, very quickly over the next 50 years. I think the first thing is to recognize some of the modeling, what’s happening, which places are vulnerable and not to encourage building in these areas. Here a lot of cities are not doing the right thing, because they’re allowing people to develop on lands which are going to be flooded. So, I think that is very important. The regulatory framework.
Now, the important dimension is insurance. A lot of people are doing the wrong thing because they think they’re going to be bailed out by insurance if there’s a problem. We see now the withdrawal of insurance from California from fires for example. People need to see the implications of their choices. It needs to be reflected in property prices not as intermediated by an insurance market which basically, doesn’t reflect the risks because it’s shared across the whole country.
I think that’s going to be a very strong incentive to manage their risks. I think we need to particularly worry about poor people and the implications because poor people always suffer most. They don’t have the savings. They don’t have the optionality. They can’t just move to another place and they’re stuck there. We saw this in New Orleans, in Hurricane Katrina. The impact was so different according to people’s income levels. We need to take that away. What does it mean? It means that we particularly need to invest public money in protecting people who can’t afford to do that themselves and in terms of where they live, what’s going to happen, how they’re relocated, etc.
Of course, we’re going to need massive investments in some of the basic infrastructure. Desalination of water, fresh water supplies, recycling of water. Concrete, cement, and steel are major carbon emitters. How are we going to build the cities and infrastructure in the future and half of what we need hasn’t yet been built without greatly increasing carbon emissions? So, this is a massive technological challenge. We need to put the responsibility on the industries to overcome it.
So, there are multiple dimensions which are climate-related. It’s important that we start now because we are already too late. But we can’t allow the need for a perfect solution to be the enemy of a good solution or an incremental solution. Let’s get going. Many cities other than doing a lot creating wetlands, creating buffer zones between themselves and the ocean. There are many cities that have 95% recycling for example. There’s many cities that are closing off their leakages. There are many cities that are turning parking lots into vertical farms, so these things are happening. We point to them in the book. I think we need to learn more rapidly.
Jeffrey Mason: Ian, thanks for joining me on the podcast today. I appreciate it.
Ian Goldin: It’s been a great pleasure. Thank you for inviting me.
[END OF INTERVIEW]
Kurtis Lockhart: Thanks so much for listening. We love engaging with our listeners, so please always feel free to reach out. Contact information is listed in the show notes. To find out more about the work of the Charter Cities Institute, please follow us on social media, or visit chartercitiesinstitute.org.
[END]