Alain Bertaud on Cities, Markets, and People (Ep. 76 — Live in NYC)
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Markets, Alain Bertaud likes to say, are like gravity: they exist everywhere. But while urban planners are quite good at taking gravity into account, they tend to ignore market forces entirely in their designs, resulting in city development that too often fails to address the needs of their residents.
Following the release of his recent book, Order Without Design: How Markets Shape Cities, Alain joined Tyler in New York City for a discussion of the politics affecting urban centers, his advice to Robert Moses, whether the YIMBY movement can win, why he loves messy cities, what he got wrong about Shenzhen, why the Moscow subway is so wonderful, whether cities can move, favorite movies about cities, the region of the world most likely to start a charter city, how to reform the World Bank, his top three NYC planning reforms, why Central Park is the perfect size, and more.
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TYLER COWEN: I am greatly honored to be here tonight, of course with all of you, but also with Alain Bertaud, who is one of the world’s great urbanists.
We’ll just jump right in. If you were to meet a 20-year-old Robert Moses before he set out on his career, what would you tell him?
ALAIN BERTAUD: This is a difficult question. I would tell him infrastructure is important, but infrastructure is there to serve people. Just look at the people before you look at infrastructure. Infrastructure is there as a tool, not as a purpose in itself.
COWEN: And if you could send the young Mr. Moses, say, to Indianapolis and away from New York City, to do his business elsewhere, and he would have a happy life, but New York would proceed without him, would you make that choice?
BERTAUD: You mean making the choice for him?
COWEN: You can give him a lucrative fellowship at Purdue University, and he’ll be very busy in Indiana, and New York will go along the track it was on.
BERTAUD: Well, that would be his choice. Yes, probably I would try to convince him to go to Indianapolis.
COWEN: What do you think of the argument that Airbnb is ruining either New York or some other historic cities? If you look at Florence, it appears that about 20 percent of central Florence is now Airbnb residences. Does this concern you?
BERTAUD: Yes. And this concerns me because normally I would say, “Well, so what?” But in fact, it is not the case. I think that this is a case where we have to look at it a bit differently.
It reminds me a bit what happened in Switzerland at a certain time, where to own a piece of land in Switzerland was becoming valuable for a lot of people because it gives access, a refuge, let’s say. And Swiss farmers who wanted to expand their fields, to have some more cows, suddenly were competing with a Russian oligarch.
And obviously, this is not traditional economics. Although I will be rather laissez-faire, I think this is a case where . . . And indeed, the Swiss government put a red line around certain areas. Foreigners, I think, can still buy properties in Zurich or in Geneva, but they are not allowed to compete with Swiss farmers in buying land.
I have not studied Airbnb as much, but I think it’s a case where you have to look at it that way, that you have a competition here, in cities. Tourism might be important and interesting, but it’s not a sense of city. The cities are the people. If the people are gone from a city, it’s not very interesting.
On depopulating city cores
COWEN: Why are so many contemporary cities depopulating within the core? Paris is slightly depopulating. I’ve seen data that Los Angeles and Chicago are slightly depopulating. And Chicago is not about the Russian oligarchs, right? Manhattan would be depopulating if not for new arrivals. Why is that happening? And is that some kind of failure of urban labor markets?
BERTAUD: I don’t think densities have gone down in all those cities. I don’t think, in the case of Paris at least, that it is depopulated. I think that you had a gentrification of central Paris, so people who used to live in 10 square meters or 12 square meters — there’s still some who do — are living now in 120 square meters, so you have a loss of densities. It doesn’t mean a loss of population in this sense.
New York, Manhattan had a density which was two or three times higher than it is now. I don’t think you can say that Manhattan is depopulated.
COWEN: But you have, yourself, moved to Glen Rock, New Jersey, right?
COWEN: What has gone wrong?
BERTAUD: How do you say, “in my dotage”?
COWEN: In Manhattan, will you find better food on the streets or the avenues?
BERTAUD: Ah. In the streets, definitely.
BERTAUD: I think you have more specialty restaurants in the streets. In the avenues, you have more people who are just transient, just pass by and are looking for faster food. I think so.
COWEN: If San Francisco and Oakland had an ideal building code, they would bring you in to write it. There would be more freedom to build. How much would rents be cheaper in the Bay Area? Your intuitive guess.
BERTAUD: Yes. Yes, it would be cheaper. But how much?
COWEN: Not much. Why not?
BERTAUD: No, how much. You say, “How much?” You want me to give a figure?
COWEN: How would you think about the problem? Would it be you would simply get more building and more powerful economies of scale, and rents would go up, but more people would have productive jobs? Or could you actually make life there cheaper again so the poor could move in and be upwardly mobile in economic terms?
BERTAUD: I think that if you build much more, and regulation allows to have a variety of building and building size, you could have a way where the poor outbid the rich by consuming less in a very desirable location. This is what you see sometimes in Paris, by the way.
I think that if you build much more [in San Fransisco], and regulation allows to have a variety of building and building size, you could have a way where the poor outbid the rich by consuming less in a very desirable location. This is what you see sometimes in Paris, by the way.
On YIMBY’s prospects
COWEN: The YIMBY movement — yes, in my backyard — will it ever come about? There’s been a lot of force behind the YIMBY movement over the last year, but not that many concrete victories. Is it simply the case that opposition will be mobilized and the YIMBYs will lose? Or does it have a future?
BERTAUD: I think it has a future. Well, this is what this talk is all about, and your talk, in general. I think people have to understand, to learn, what is implied by freezing cities the way they are. Cities are alive because they change constantly. As soon as you freeze a city — and this is what NIMBY is all about, freezing cities — the city dies, like a human being that you tied in a straitjacket.
COWEN: But if we look around the world, we don’t see that many traditional cities that have overcome NIMBY. Houston has done it. Warsaw, Poland, has done it. There was so much destruction, people were happy to get rid of old communist buildings.
COWEN: But the so-called nice cities — have any of them overcome NIMBY and seen YIMBY win? And if not, why are you optimistic? What will change?
BERTAUD: Ha! Maybe I’m not optimistic.
BERTAUD: I think that maybe, in cities where you have the house itself is not your only way of saving, have a better chance of being YIMBY. If people perceive that the only way of saving money for their retirement is in their house — their house is some kind of an ATM machine — then they don’t want any competition.
I remember in Washington some years ago, there was a letter to the Washington Post. Somebody was saying, “How is it possible that in Fairfax County they allow more houses, where my house has increased in value in the last five years by only 5 percent?” They thought that was a legitimate case. If your house increases by only 5 percent, then you should stop every other house so that your house will go.
So if people consider that this is one of their… I think it’s a question of property right. We have a system which decreases your property right within the boundary of your lot or your apartment. You see this morning, for instance, in the New York Times, somebody get fined $15,000 because they installed a dryer and a washing machine in a basement. So that’s a decrease of property right.
At the same time, you increase the property right outside your boundary, but it’s a negative property right. You are allowed to prevent people from building what they want. This dilution of property right, I think, is a big cause of NIMBY. How do we reverse it? I don’t know. Because in a way, it seems very democratic and legitimate to have a say about what your neighbor is doing.
You say, “Well, I’m preserving the character of the neighborhood.” Well, if the character of the neighborhood has to be preserved in Manhattan, if it was preserved 50 or 100 years ago, there would be no Manhattan.
COWEN: Would the political economy work better if building regulations were either done strictly at the state level, or maybe even at the neighborhood or even the street level? As opposed to city and county?
COWEN: Should the scale be moved up or moved down? What would give us a better outcome?
BERTAUD: I think it should be moved up.
COWEN: And what do you think would happen then?
BERTAUD: I think that then the people who want in will have more say. If you keep it at the street level, the people who control it are the people who are living there, and they are against everybody who wants to move in, by definition.
On public transit
COWEN: I’ve another very easy question for you. As you probably know, many of the switches in the New York City subway system date from the 1940s, or sometimes even the 1930s. How are we going to fix that system? If NIMBY is ruling, how do we redo the subways? The 2nd Avenue line — that was started or planned in the early ’70s, and it just now opened, what, a year ago? What’s going to happen with the New York City subway?
BERTAUD: I think that’s one of the most terrible things, the destruction of the transit system. The densities in Manhattan and in New York are such that you can have mobility only if a relatively large number of people are using the transit. Some cities can work very well without transit, like Atlanta probably, or Houston. But that’s not the case in Manhattan. That will not be the case in Paris or London.
You have to maintain the transit system in the same way as you maintain the sewer system and the water system. I think that the destruction, the lack of maintenance, the attention which has been given to the subway is equivalent of lead in the water in Flint or a thing like that.
COWEN: Why is the Moscow subway so wonderful?
BERTAUD: Because Stalin built it.
COWEN: Like everything else Stalin built, right?
BERTAUD: No, he had a taste for architecture, you have to realize.
COWEN: Some of your best-known academic work is about the spatial organization of socialist cities. Why were so many socialist cities so relatively empty in their centers or cores?
BERTAUD: Ah, because according to Marx, land has no value; only labor has value. So if land has no value, and you are in the center of the city, where a lot of people like to live or work, but this land has no value, you are stuck with the existing building. Every time you want to move a building or renew it, you will have to have a planner decide it, and it will be also a cash expenditure.
In a market city, it’s the price of land which finances the development of new building, automatically. It is never proposed or realized that the land is expensive and therefore they can’t build more, or asking the planners, “Please, let us build an office building there or something.”
If you are in a socialist country, like I have seen China before the reform, or Russia at a time in the early ’90s, you need the initiative of a planner to say, “We are going to build something new here.” They will have to compensate not the owner, but the user, to move them somewhere else.
So to the state, this is an innate cash expenditure. To replace a low building by a high building is a cash expenditure that the city has to pay, where in a market economy, of course, it is done automatically in a certain way. In a way, the system is reversed. In a market economy, it’s the planners who are slowing down the transformation, where in a socialist economy, the planners realize that it’s not a very good use of land but cannot find the money to change the land use.
COWEN: If NIMBY is such a big problem, might it not — in some bizarre, second-best regard — make sense to put so much industry in the city center? Because as more growth comes, people will be quite happy to get rid of it.
BERTAUD: Yes, normally yes. But you see what happened with Amazon in New York not so long ago. It was interesting. I don’t know if we should talk too much about that, but I think Amazon had a terrible approach to cities by having them bid for each other because I’m absolutely convinced, being an urbanist myself, that they knew exactly where they wanted to go in advance. So that was a little unfair.
And in a way, there was a grassroots movement against high-income people coming to the city. I found that very disturbing because, after all, high-income people create a lot of jobs for all sorts of income at the same time. In the same way as you should not exclude poor migrants from coming to the city, I don’t see any rationale for excluding high-income people either.
Now, the fact that the city limits so much the construction of new housing — in my book, you see there is a chapter which has a table of New York City zoning, and it shows the incredible limit in the number of dwelling units which can be built, block by block, with completely arbitrary numbers.
On one hand, you have higher-income people coming to the city. On the other hand, the city is blocking the development of new housing and controlling also the size of it, privileging in, in fact, larger houses than the demand. So, when higher-income people come in, yes, certainly it will raise the rent, but not because higher-income people are greedy or whatever. It’s because the city is blocking the supply at the same time. You cannot have an increase in jobs and a freeze in housing at the same time.
So the problem is not the people coming in. The problem is the city refusing to admit that they need to build more housing.
COWEN: How well does the current version of Shanghai work, as a city?
BERTAUD: As a city, I think it works relatively well in the sense that the Chinese even . . . well, I say up to four years ago, when I still could get a visa to go to China.
BERTAUD: Up to four years ago, I think that the Chinese at the local level understood market better than Mayor de Blasio. It’s a low bar, but —
BERTAUD: And why? Because they were interested in the GDP of the city. Now, it has also some drawback. Many mayors in China told me, “I am the CEO of this city.” And in a certain way, it created, certainly, also some problems with pollution, things like that. But I think they were very, very interested in the way cities develop.
I remember in Sichuan, a city of about 600,000 — they had a high-tech industry. They were doing flat screen. They wanted to expand it, but to expand it, they needed top engineers to do the research. It was difficult to attract top engineers from Shanghai or the east coast to go to Sichuan, a relatively small city.
So the mayor says, “The only way we can expand this is to have very good education and good environment. We can, as a selling point — an engineer in Beijing or Shanghai or even Guangzhou will be probably interested to live with his family in an environment where the air is pure, the gardens are well maintained, and the schools are very good.”
So you see, you had a mayor here who understood really how to attract people and how to grow the city.
COWEN: How well does Shenzhen, China, work as a city? And that’s from basically nothing, right?
BERTAUD: Right. Something that people forget about Shenzhen, the history of Shenzhen . . . May I tell a little story?
BERTAUD: I was in Shenzhen in ’84, ’85 maybe. And the city at the time — it was basically not a fishing village, but it was a small town. It had altogether about 300,000 people. And the mayor of Shenzhen showed a team of the World Bank — I was part of it — a plan, and they said, “We want to build a city of five million. Would you finance infrastructure?”
I did a back-of-envelope calculation. I said, “300,000 to 5 million, are you kidding? Try to do a city of a million and a half, maybe two million will conserve infrastructure. This is completely out of the question.”
So Shenzhen is now 12 million people.
BERTAUD: That’s one skeleton in my closet.
But what people forget about Shenzhen — a lot of people think that Shenzhen was built the way Brasilia was built. The government decided, “Let’s just do this.”
No, Shenzhen was a perimeter. For the first time, Deng Xiaoping said, “We are going to have a labor market. Within this perimeter, people are going to be able to change jobs. They are going to have salaries which are commensurate with their skills, and their employers will be able to increase their salary or decrease it or fire them, depending on what they need.”
So what created the success of Shenzhen was the first labor market in China. And that’s why in Shenzhen, you had people coming from all over China. That’s why many people in Shenzhen are speaking Mandarin and not Cantonese — because this has attracted a lot of people who refused, were bold enough, in a way, or confident enough, to say, “We don’t need the big rice bowl. We are confident in our own skill, and we can make it.”
There are some books actually. There is a novel called Northern Girls, which is written by a Chinese who came from the North, semi-skilled or unskilled. And she tells the story of . . . It’s a novel, but I think it explains exactly the point of view of migrants coming to a city, raised in the context of China, where you had this guarantee of a job, but you would stay all your life in the same job.
And then people realized that if they were relying on their own energy, they could do better than that. So the success of Shenzhen is really the creation of the first labor market in China.
COWEN: Will America create any new cities in the next century? Or are we just done?
BERTAUD: Cities need a good location. This is a debate I had with Paul Romer when he was interested in charter cities. He had decided that he could create 50 charter cities around the world. And my reaction — maybe I’m wrong — but my reaction is that there are not 50 very good locations for cities around the world. There are not many left. Maybe with Belt and Road, maybe the opening of Central Asia. Maybe the opening of the ocean route on the northern, following the pole, will create the potential for new cities.
But cities like Singapore, Malacca, Mumbai are there for a good reason. And I don’t think there’s that many very good locations.
COWEN: Or Greenland, right?
BERTAUD: Yes. Yes, yes.
COWEN: What is your favorite movie about a city? You mentioned a work of fiction. Movie — I’ll nominate Escape from New York.
BERTAUD: You know why Casablanca? You don’t see the city very much in the movie, but you see people coming in. Well, some want to get out, too. But you see people coming in, and it’s kind of a refuge. So that’s what I find interesting about it.
COWEN: As you know, the Saudis are trying to build a new city, Neom. One hears reports they’re ready to spend $500 billion. I’m not sure that’s true. But are you bullish or bearish on Neom?
BERTAUD: I’m bearish.
BERTAUD: You don’t create a city by just putting concrete.
COWEN: But Brasilia worked. It’s not perfect, but it’s a city.
BERTAUD: Yeah, but it’s a city of bureaucrats. You have no choice.
COWEN: But I’d rather live in Brasilia than Rio.
BERTAUD: You know, the people who went to Brasilia were not the same people who went to Shenzhen. They were moved, I would say even [inaudible] from Rio de Janeiro. So yes, and the taxpayers of Brazil paid for Brasilia entirely. Nobody in his right mind will decide to live in Brasilia just by choice. It’s one of the worst performing cities. It’s not just my taste. It’s the worst performing city.
If you look at the number of deaths of pedestrians per 10,000 people, it has a world record. If you look at the segregation by income, the poor living at 30 kilometers from the city with not very good transport system, and the rich living entirely in the center. It is one of the worst records in the world in any measure you can have. But of course, it’s a World Heritage city.
For the 50-years anniversary of the city, I was invited by the committee to celebrate. And I told them, “But did you read what I wrote about Brasilia?”
BERTAUD: And they say, “Yes. We want to have several points of view.” So you see, they are tolerant.
COWEN: What will urban renewal look like in a post-retail world? Let’s say online shopping continues to advance. We have big boxes all over the suburbs now, also in Manhattan. What will we do with the space?
BERTAUD: A lot more restaurants and bars, and maybe barber shops.
COWEN: Barber shops?
BERTAUD: Yes, not that I need it.
On weird city population distributions
COWEN: Here’s a question that’s been bothering me for a long time. I feel only you know the answer. If I think about Ethiopia, it has more than 100 million people, yet its second largest city is only about 400,000 people.
So you have some countries where the distribution of cities follows unusual patterns. Thailand has an income more or less the same as Mexico, but an urbanization rate close to that of Guatemala. Do you have a sense of what accounts for these cases?
BERTAUD: Politics. You could say the same thing about France, by the way. Paris, 12 millions. The next city . . . Well, I’m from Marseille. We claim we are the next city at one million. The people from Lyons claim it too. But the next city is about one million. So you go from 12 million to one million.
I think you cannot change this. You cannot have a plan to say, “Let us develop smaller cities.” If you have this pattern, it’s because you have a political system which gives such an advantage to the major city that this is where people want to go. And if you are in a second-rate city, you are so much penalized.
Unless you change the political system, you decentralize. For instance, French decentralization, which was done in the ’70s, ’80s, has not resulted in a change in the pattern of cities. Paris is still dominant and growing. Look at Russia also — the only city which is really growing is Moscow. I think it reflects a political system.
I think that planners trying to spread, let’s say, cities without a change in the political system or even the culture . . . Centralization is a culture. In the case of my country, France, I think centralization is a cultural aspect. It’s not only political.
COWEN: Your own background, coming from Marseille rather than from Paris —
BERTAUD: I would not brag about it normally.
COWEN: But no, maybe you should brag about it. How has that changed how you understand cities?
BERTAUD: I’m very tolerant of messy cities.
COWEN: Messy cities.
COWEN: Why might that be, coming from Marseille?
BERTAUD: When we were schoolchildren in Marseille, we were used to a city which has a . . . There’s only one big avenue. The rest are streets which were created locally. You know, the vernacular architecture.
In our geography book, we had this map of Manhattan. Our first reaction was, the people in Manhattan must have a hard time finding their way because all the streets are exactly the same.
BERTAUD: In Marseille we oriented ourselves by the angle that a street made with another. Some were very narrow, some very, very wide. One not so wide. But some were curved, some were . . . And that’s the way we oriented ourselves. We thought Manhattan must be a terrible place. We must be lost all the time.
In our geography book, we had this map of Manhattan. Our first reaction was, the people in Manhattan must have a hard time finding their way because all the streets are exactly the same.
On things under- and overrated
COWEN: In the middle of all of these conversations, we have a segment known as overrated versus underrated. I’m going to toss out a mention, and you tell me if you think it’s overrated or underrated. Okay? First, cableways as a method of urban transport, as used in Cali, Rio, La Paz, Mexico City, Medellin, Caracas.
BERTAUD: I have not seen the detailed numbers, but my gut feeling is that it’s overrated.
BERTAUD: Because I used to do a lot of skiing, and I know how much a cable car can carry, and it’s not that much.
COWEN: Le Corbusier — overrated or underrated?
BERTAUD: As a writer, he’s underrated. As an architect, well, more or less. As an urban planner, of course, he’s grossly overrated.
COWEN: And what’s your best Le Corbusier story?
BERTAUD: I met Le Corbusier at a conference in Paris twice. Two conferences. At the time, he was at the top of his fame, and he started the conference by saying, “People ask me all the time, what do you think? How do you feel being the most well-known architect in the world?” He was not a very modest man.
BERTAUD: And he said, “You know what it feels? It feels that my ass has been kicked all my life.” That’s the way he started this. He was a very bitter man in spite of his success, and I think that his bitterness is shown in his planning and some of his architecture.
COWEN: Port-au-Prince, Haiti — overrated or underrated?
BERTAUD: If you look at the food, it’s underrated. The culture is underrated. It’s a wonderful culture. The Creole language also is extremely rich. It has a lot of poetry.
Of course, after the earthquake, it has never recovered. And this is very sad. I don’t know if it will ever recover. I don’t know. It seems that the political system is unable to evolve. It’s probably slightly better than what it was when I was in Port-au-Prince at the time of Baby Doc. But the city has deteriorated since that time. And the combination of the earthquake, the deterioration also of environment due to overpopulation and deforestation . . .
Deforestation in Haiti — at the time of Duvalier, one of the main sources of tax for the government was kerosene. So kerosene was, for the relatively wealthy people, the way of cooking. The poor people, because kerosene was so expensive because of the high taxes, were cutting every tree, every bush in order just to cook. This deforestation, again, was manmade, but a systematic political thing.
COWEN: E-scooters — overrated or underrated? Will they last?
BERTAUD: I think they will last. Maybe in a different form. But I’m a big fan of e-scooter.
COWEN: Why are they better than Segway? Which did not take off. You only see it in the nation’s capital.
BERTAUD: Because I could see bringing my e-scooter here, folding it, and putting it under my chair. I cannot put a Segway under my chair. Segway is just too heavy.
COWEN: The popular music group, Limp Bizkit.
BERTAUD: My taste in music, like in literature, stopped in the 19th century.
COWEN: The ideas of Hernando de Soto — putting everything on a property register.
BERTAUD: It’s an excellent idea, but it’s not the only idea.
COWEN: Are you afraid that it will lead to more regulation, more taxation, more confiscation and aversion, in essence, of the Chinese social credit system if we make everything part of the formal economy in poor, corrupt countries?
BERTAUD: I don’t make such difference between the formal economy and the informal economy as most people do. My experience is that if you go in a slum — which most planners will consider informal — you have a market which works exactly like other markets. You have also expropriation. So I don’t think that registering property in itself will create a bureaucracy which will kill the . . .
Again, there are different ways of registering property. For instance, the way it was done in the compound in Indonesia where — by the way, another skeleton in my closet — in Indonesia, the World Bank participated in financing the compound upgrading, which was basically slum, I mean former villages which had to be provided with infrastructure. And our theory in the bank was that you can do that only if you provide property rights to the people who are living there, whether they are squatters or not.
You just survey their plot, you give them property right. And we insisted with the government — the Indonesian government — at the beginning, we insisted that we will not provide infrastructure unless there was also a program to provide property rights. The Indonesian [government] insisted that this will cost too much. We did the back-of-envelope thing, and it did cost too much to have a proper survey, especially the way lots were extremely small.
So we decided to go ahead and finance it because Indonesia was such a big client, and the World Bank is still a bank. You need to lend money at the end of the day. So eventually, what we found is that when people had infrastructure, they had the water meter, they had water, and they had the water bill, and they will pay the bill. And the bill itself was an address. In order to have a bill you have an address. The bill was a proxy for a property title.
When some people made a study about that, they found that a property guaranteed by a water bill was discounted maybe about 10 percent compared to a formal thing. So you see, I don’t necessarily make a . . . I think property rights are very important. It’s a guarantee that you will not be removed without compensation. But I don’t make necessarily a very strong boundary between formal and informal. I think there can be a lot of property rights which are just there and as effective.
You want property right for transaction, and I think those informal property rights could guarantee very fair transaction the same way as formal one.
COWEN: Do you love graffiti?
BERTAUD: In the proper places.
COWEN: Why are so many cities in the New World so violent? If you take the Arabic world before some of the recent wars, it was quite safe. So much of Asia — not every part, but so much is extremely safe.
COWEN: Europe is relatively safe, for the most part, but the New World almost everywhere has a higher level of violence. And why is that?
BERTAUD: I don’t know. I have noticed that. I know it because I lived in El Salvador. But why is there such violence, for instance, in a country like Brazil? I don’t know. Is it the history? The long shadow of history? I don’t know. Yes, I have no idea. But it’s puzzled me a lot. Because violence in cities really decreases the enjoyment, the efficiency of a city, obviously.
COWEN: What do you think is the part of the world most likely to institute a charter city? Not 50, just one.
BERTAUD: The Middle East.
COWEN: And why?
BERTAUD: Because they will have to deal with their refugee problem, and it’s not going to vanish. Probably a charter city will be the only way to solve it. Also, because the Middle East has a lot of desert. It will be difficult to establish a charter city, let’s say, in Bangladesh, for instance, where every land is cultivated.
But if you have a large piece of desert which has no alternative use, I think it will be a good way of starting a charter city, and the demand is really the refugees. Especially in the Middle East, you have a mix of refugees with all sorts of skills — some unskilled, but some highly skilled — and that will be perfect for a charter city.
COWEN: Would you care to nominate a specific location for the land speculators in the audience? This is Wall Street, of course.
BERTAUD: Well certainly not Saudi Arabia, but probably Jordan seems to me . . . Or maybe even part of Syria if there was some change of government.
COWEN: What about the idea of relocating parts of large cities? It’s often claimed that Jakarta is sinking. It’s one of the world’s largest cities. It’s choked with traffic. The idea of relocating at least the capital city functions to Borneo away from Java — is that feasible?
BERTAUD: If it’s just a few bureaucrats, yes, of course. Why not?
COWEN: But it’s more than a few bureaucrats in Jakarta, right?
BERTAUD: In Jakarta, if we take Jabodetabekjur, the metropolitan area of Jakarta — it’s about 30 million people. Those 30 million people live together, have developed relationship together. You cannot move them. I think it will be much more efficient to look at maybe some part of Jakarta — the port, which is closer to the sea. The old Jakarta might have to be sacrificed, but certainly moving Jakarta, I think, is impossible. It’s not feasible.
What I fear with the new city is that a lot of resources will be taken away from Jakarta and put in the middle of Kalimantan instead of evolving. Again, it’s possible that Jakarta needs some kind of operation, you know, cutting a limb or something. But there are still many areas which are completely viable. The hills toward Bogor, for instance, are completely viable. So it’s possible you could have a translation, some maybe 5 million people moving slightly south from the sea toward Bogor.
Bangkok had the same problem some years ago for the same reason that people were pumping the water tables, so the city was sinking, and eventually they managed to stop that. So Bangkok is still flooded from time to time. It’s not quite on the seaside the way Jakarta is.
I think that technology should be the solution for Jakarta. I think that it would be a terrible mistake. Don’t forget that Jakarta was . . . it’s a traffic jam, enormous traffic jam, pollution, and still is much more productive. The productivity of people working in Jakarta is much, much higher than a city like Bandung for instance, which is rather pleasant to live in.
So there is something about this agglomeration of people who are used to work together with different talents, different things, which make it efficient. I don’t think you can translate, you can move this efficiency in a new Brasilia in the middle of Kalimantan.
COWEN: You’ve worked about 20 years for the World Bank. Let’s say you were put in charge, and you could reform the World Bank any way you wanted. What changes would you make?
BERTAUD: Wow, this is a difficult question.
COWEN: Would it be harder or easier than moving Jakarta?
BERTAUD: I think that institutions like the World Bank are like people. They age, and they deteriorate, and at a certain time, you have to bury them and then build a new one. I’m not saying, by the way, that the job that the World Bank is still doing is not useful. I think there are a lot of useful things. But I think that creating a new one . . . It’s a bit like charter city. Let’s say a charter World Bank.
On congestion pricing
COWEN: Yes. How will self-driving cars change cities?
I was extremely optimistic about a self-driving car. I remember being invited — it was Marie-Agnes. We were invited to Google twice to discuss precisely what will be the impact on cities of self-driving cars. At the time, I recall someone, I think was the head of the self-driving division at Google . . .
When we asked him, “When do you think the self-driving car will be operational and we will find them in cities?” He said, “Well, I have a daughter who is 10 years old. And I think by the time she’s the age of having a driving license, I hope that the Google car will be operational in the city.” So that was about 10 years ago.
BERTAUD: I think that eventually it will come. One of the most positive aspects of self-driving cars is that they will consume much less real estate. You know, if you go on 5th Avenue at 25 miles an hour, which is the speed limit, you need about — if I remember well — 85 square meter of road because of the distance between two cars. Because you need a two-second reaction time.
If you have a self-driving car, you could have a self-driving car within half a meter of each other. So you save on real estate. Urban transport is a real estate problem.
COWEN: But would the roads simply become clogged? I would have a self-driving car, and I’d have a robot that does my shopping for me. So I’d send my self-driving car to Whole Foods every four or five hours every time I wanted a snack. The roads would essentially become clogged, and you couldn’t use them. Or is that not the equilibrium?
BERTAUD: Yes, exactly. You will not because you will never get your food if the road is clogged.
COWEN: But someone will clog the road, right? Or can we only have self-driving cars with congestion pricing?
BERTAUD: Yes, of course we will have . . . The road is finite within the city as soon as it is built. You cannot expand the road system unless . . . well, you can have one or two tunnels from time to time. But that’s about it. So the only way to better use this road is to price it in a way to control demand rather than supply. You cannot expand supply.
You can expand the supply of housing as much as you want. You cannot expand the supply of existing road. So pricing, yes, is the only way to do it. Yes, probably. So that’s why your food — if you order your food every 10 minutes, your food is going to be very expensive.
COWEN: Is there any good argument against congestion pricing for Manhattan?
BERTAUD: What bothers me about the approach is that they are seeing congestion pricing as a new tax on people. It’s not a tax. It’s a way of efficiently using road. If you look at it as a cash cow, it doesn’t work. It doesn’t make sense at all. You have to maximize the use of road, and so you have to price it differently, depending on the hours.
I will even go to the system of Singapore. When you look at the discussion of pricing in Manhattan, we are far from it. Singapore, which now is going to price car — not only a different part of the city, different price at different time, but also how long you use the road. That means if you park your car in private parking, you don’t pay anymore. You pay for, really, the use of the road.
I don’t think I put it in my book, but I always say that urban roads should be priced like a cheap motel. Every 10 minutes, you adjust the price, depending on the demand and the thing. And the location. And the day of the week.
COWEN: How do you feel about congestion pricing for residents in cities? As you know, the Chinese have a permit system, the Hukou system. It keeps people out of cities. At the same time, many millions of people violate the system, but they pay penalties in terms of benefits and schools for their children. So it’s a kind of congestion tax for a city, connected to the number of people rather than a car. Good idea or a bad idea?
BERTAUD: It’s a terrible idea; the way you see it in the Hukou system is clear. It’s just a tax on poverty because people come to the city to work, and they will pay whatever tax. So you are just paying for being poor. It doesn’t restrict people. Instead of bringing their children, very often they leave their children in the countryside because in the countryside, the school will be free. Then that means, again, that young people who could be integrated in the city much faster if they came as children will come much later.
So, it’s a terrible system as all points of view. I don’t think it’s the equivalent of a congestion tax because it doesn’t prevent people from coming to cities. And actually, the Chinese economy in city is working based on people not having Hukou. If all the people having Hukou were kicked out and pushed back in where they belong in the countryside, the Chinese economy will collapse.
COWEN: But Chinese cities are not that dense. If I’m Chinese and I say, “Well, without the permit system, Beijing would be like Delhi.” And Delhi is, in some basic ways, unworkable in terms of pollution, traffic . . .
BERTAUD: Not because of density. Because of deficient infrastructure and because of the monopoly of the Delhi development authority on land development.
COWEN: Google Sidewalk Labs is trying to build a smart neighborhood in Toronto. This may or may not happen. For or against?
BERTAUD: Well, I have nothing against, say, real estate operations done by Google in Toronto. I have a problem when they say that on a piece of land which is basically the size of Washington Square, they are going to solve a housing problem, poverty, transport, pollution. I have a problem with that.
Again, a bit like the Amazon thing, the salesmanship was terrible. If they were saying, “Look, we are going to do a real estate operation. We are going to monitor what is a real cost of, for instance, building five-story building in wood whether it makes sense or not.” That’s fine.
Marie-Agnes and I visited it a few months ago, and I see a lot of gadgets. They call it smart. I call that gadgets. Some are interesting. Some are probably very interesting, but it is at a stage where it’s only if it’s replicated at a city scale that we will know if these gadgets are really interesting or not. So I think they oversold it, and it’s going to probably blow in their face.
COWEN: Will facial recognition come to major US cities? I don’t mean in the 7-Eleven but done by the government on public streets.
BERTAUD: Yes, I am afraid we can’t avoid it.
COWEN: And how will this change cities?
BERTAUD: It depends if we keep tabs on our own government. I think it’s out of control of the government. We cannot avoid when a technology is invented. You cannot dis-invent it.
COWEN: But why can’t we avoid it? San Francisco passed a law banning facial recognition. We could have the entire country or many parts of it pass such laws.
BERTAUD: It reminds me of the Japanese in the 16th, 17th century. They banned firearms because they thought that it was unfair for somebody who was a good swordsman to be killed by somebody [inaudible] who has no skills. They managed — because they were an island, very well controlled — to keep the technology out for some years. And then Commodore Perry came.
I don’t think you can dis-invent a technology. You could have a law which prevents the government from having cameras run by government, but then you will have cameras run by department stores, and you will see that the police have access to it. Eventually, they will. So you cannot dis-invent it. The only way we can control it to preserve our freedom is through precisely the government using it and having extremely strict rules about how to use it, so that we don’t end up like in China, to have your personal files fed by the picture taking of the street.
COWEN: America is a much safer country than it used to be. And our bus and rail lines are mediocre at best. So why has hitchhiking declined? A topic dear to your heart.
COWEN: Lawyers. Why?
BERTAUD: Yes. When I was a student, I was hitchhiking all over Europe, and obviously, sometimes there will be an accident. A hitchhiker will be hurt. It will never occur to anybody to sue the driver. And sometimes I took hiking in cars where the driver was completely drunk. This happened, but it will have never occurred to my parents, if I had died, to sue the driver.
I think that came slowly, probably from the United States. As soon as you are liable for your passenger . . . And then first, it can be the accident. After, it can be something else. It can be all sorts of things. That the guy’s smoking, and you have inhaled the smoke, or something like that. Or that the guy drops you in the wrong place, and you get mugged, and so you can sue the driver.
So as soon as you do that, you completely discourage this freeloading. We will see that for mountain climbing also, I think. I have a lot of friends who died in avalanche. It will have never, never occurred to anybody to sue the village or the mountain where the avalanche took place. And now it’s a common thing.
I think recently in Italy, there was a hiker. He was alone. He get lost. The family now is suing the entire region because they thought that they didn’t look for him fast enough. There were tens of helicopters, but they say they didn’t look for him fast enough. I think that as soon as you have a liability like that, you destroy any initiative, the personal initiative. Hitchhiking was a form of freedom, which was rare. Interesting.
On the Alain Bertaud production function
COWEN: For our final closing segment, a question or two about the Alain Bertaud production function. What do you feel has been the comparative advantage you’ve brought to your work that has made you successful?
BERTAUD: Being born in 1939, I was brought up during the war. I could adjust. I knew that you could adjust your comfort to whatever is available, and you don’t die from it. Then the other advantage for my wife and I was that we graduated at the time of decolonization, and a lot of countries were absolutely desperate for people where just the minimum skill you have when you just get out of university.
In my book, I talk about even I was not graduated in Nigeria two years after independence. I was inspecteur de l’urbanisme. I was 25 years old. Nobody now graduating from any school will be inspecteur de l’urbanisme — not that I wish them to be inspecteur de l’urbanisme at 25 years old.
This idea that you graduate from a Western university at the time of decolonization — this gives you an opportunity. When I arrived in Chandigarh, I was 23. I had taken a year off from the École des Beaux-Artes, and I arrive at the office of Pierre Jeanneret in Chandigarh, and I say, “Oh, you know, I’m looking for a job.” He gives me a job right away. Okay, it was 60 rupees a month, but it was a job.
Now a Frenchman going to Hyderabad and saying, “I’m looking for a job. I am 23 years old” — nobody will take him seriously. He’ll be kicked out of the office right away.
COWEN: But there were other people born in 1939, right?
COWEN: So what is your unique skill? No?
BERTAUD: Not that many. Not that many. And my parents were not thrilled, I tell you. I was born three months before the war started. But yes, okay. Then we go back. My father had the cult of travel. He had traveled a lot himself. He always will bring me when I was 13, 14 years old. He will go for his business to Italy for instance, to Parma, Bologna. I was 12 years old, I guess.
He will give me a map of the city. He will say, “You have to go there, there, there, there. Here, you probably could have a good lunch. And I meet you tonight at the restaurant with my clients there.” So I will spend the day with my map going around and then in the evening my father will say, “Okay — ”
COWEN: This was a paper map, right? Not GPS.
BERTAUD: Yes, it was a paper map. There was no GPS. He said, “You enter this church there. What did you see on the west, on the left of the entrance?” I better remember that Tintoretto was there. My father always told me, “When you travel, you don’t look enough.” Every time he traveled a lot, he say, “I have not looked enough. I’ve not looked enough.” This was ingrained in me all the time.
Another comparative advantage was to marry Marie-Agnes. There are not many women, when we had this nice job with the city planning commission in New York in ’68, ’68? Yes, ’69. I told her, “Well, there is this opening for a job as urban planner in Sana’a, Yemen.” And she says, “Great, let’s go.” I don’t know. Again, I don’t know if any woman will ever be that, it will be such enthusiasm. I didn’t have to prod her or anything. She was as enthusiastic as I was.
COWEN: Alain Bertaud, thank you very much.
COWEN: I recommend to you all his book Order without Design, available on Amazon and those remaining bookstores in New York City.
AUDIENCE MEMBER: Should the largest business city also be the political capital in countries?
BERTAUD: I never thought of that. I don’t think it matters. I don’t know. That’s a good question, actually, when I think of it. I never thought of that.
It’s difficult to imagine Paris not being the capital city. Or is it that the capital city becomes a business city? Like, say, Washington, for instance, now has expanded much more beyond . . . If you compare, say, to Canberra or Brasilia, it has expanded much more. I will think about it. Sorry, I cannot answer it.
COWEN: Next question, on this side.
AUDIENCE MEMBER: I’m from Indianapolis, Indiana, the first example of the talk.
AUDIENCE MEMBER: Growing up there, I didn’t think it worked very well, but I’d love to know your opinion on how you think Indianapolis, Indiana, works and what you would do to make it work better.
BERTAUD: I never comment on city where I have never been or never worked. So I have difficulties talking about Indianapolis in this case.
I think that every city has a chance, but it’s a chance. I mean it’s luck sometime. They can develop or stagnate. Cities are very much like individual. We all have the same physiology, but we have different culture, different . . . But we have also different luck, like being born in 1939. I cannot really comment on Indianapolis, again, because I never comment on cities I don’t know.
COWEN: Next question from the iPad: “When you arrive into a city you’ve never been to, what and how do you prioritize what to see?”
BERTAUD: Before Google Earth, I will just walk randomly through the city and usually start from the center, and to have a cross-section toward the suburbs. I will just walk for hours. Just as my father recommended, look with the idea that nothing in this city is random.
If you see a barbershop at the corner, it’s because the owner of the barber shop found that it was the best place for his business to be there. If you see a tall building next to a short building, it has a reason, too. You have to try to understand why it is there. Do not think . . .
One word I hate that the World Bank use all the time in a report is, urbanization is “haphazard.” There is no such thing. Urbanization is done by people, and they have a very, very good reason for doing it. Sometime distorted by regulation or something like that, that’s true — discrimination — but you have to understand why the city’s it.
After Google Earth, then it’s very different because now, I look at an image of Google Earth, and I select some neighborhoods in AdSense that I want to visit, which intrigue me. Why are they that way? This seems particularly dense or not dense at all. So rather than going at random, I will select the places based on my interpretation of Google Earth.
COWEN: Next question at this mic.
AUDIENCE MEMBER: The Irish government has introduced rent controls across Dublin to combat increases in rent over the last couple of years. What policy prescription would you recommend as an alternative to them?
BERTAUD: Well, yes, rent control. Sometimes I compare markets to gravity. Gravity is always there. Sometimes you want to counter gravity. The outcome of gravity is not always . . . You want to break it. For instance, you invent airplane, or you invent helicopter or balloon. That means that you understand gravity very well in order to solve a problem.
Some people will say, “Well, I don’t believe in gravity.” They invent a flying carpet. If flying carpet has advantage on the helicopter or a plane, that it doesn’t pollute, it’s more comfortable, it costs nothing. It lands in your backyard.
BERTAUD: Rent control is a flying carpet. As soon as you try to find a solution to affordability, and you look outside the market — how the market works — immediately you end up . . . Somebody will say, “I want to invent an airplane, but I’m going to not take into account gravity.” You know, you don’t want to fly in this airplane.
When there is a problem of affordability — and many cities now have this problem — you have some people who are very poor and cannot afford a standard of housing which is above what is, let’s say, the minimum socially acceptable in the city. You have to establish how many of those people are there, and usually, if it is more than 2 or 3 or 4 percent of the population, you’ll have to adjust what is minimum acceptable, socially acceptable standard.
For the rest of the population, housing should be provided by the market. What do I mean by that? I mean that if you look for a house, and you have to be on the waiting list 10 years to go on public housing or to go on inclusive zoning — the houses provided in New York by inclusive zoning — or you have a lottery inclusive zoning. You have usually 120 units, and you have a lottery. You have 150,000 applicants. This is not serious. Waiting list is not serious. The market should provide. The market means that there are people moving in and moving out.
When you are in a subsidized house, you don’t move. If you are in rent control house, you will never move because your subsidy is entirely linked. You have no market, so you have no mobility. The idea of housing is mobility. At different times of our life, we want to move from one type of house to another and to a different location. If we have a system which ties the subsidy to where we live, we lose this mobility, and it doesn’t benefit anybody else.
My criteria for affordability is not to look at very poor people, which, indeed, if they have bad health or bad luck, the country should take care of them. I have no problem with that, if they have subsidized housing. But if you have, for instance, a schoolteacher — no job is more indispensable to the life of a city than a schoolteacher.
If the schoolteacher cannot get a decent house within, I will say, 40 minutes’ commute from a school or their school, there’s something wrong in your system. It is not rent control and it is not inclusive zoning which will solve the problem, because for each of these solutions, they will have to be on a waiting list. For rent control, the schoolteacher will have to wait for somebody who is under rent control will die, even. Maybe not because rent control is usually narrated from . . .
You see, we have to find a solution for this, and the solution is usually increased supply. Now increasing supply means increasing supply by removing absurd regulation. I’m not talking here, by the way, about fire regulation or sanitation regulation. I’m talking about regulation that the consumer can see: how large is a house, how large is the land it is using, and its location. Users should be able to make tradeoffs between those three things, and they are able to make it visually.
A user cannot make tradeoff between good fire regulation and bad fire regulation. We don’t know how to do that. It could be that some fire regulation . . . or maybe over design or something, but I have no opinion on that. But I don’t see that there is any purpose in limiting artificially the amount of floor space, the amount of land in a certain location. Most of fire regulation do that. They reduce floor ratio. That means that they force people to consume more land than they would otherwise. If not, there would be no reason . . .
At the same time, they put a minimum floor space for apartment in New York. If I remember well, it’s something like 40 square meters or something like that times two metric here. They force people to consume more land and more floor space than they will want. At the same time, they reduce the supply of land by not developing enough infrastructure or transport.
We have been talking about the deterioration of transport in New York City — that affected directly affordability. That means that our schoolteacher will have to live at maybe an hour and a half from the school, one way. That means three hours. The new proletariat now in cities are not the people who are starving or have no clothes, like during the Industrial Revolution. The new proletariat are the people who are commuting back and forth three hours or four hours a day.
I have seen cases in South Africa, in Johannesburg, where a woman was fully employed at the subsidized house. So she was not poor by any standard, and she had the regular job above the minimum wage, but she was commuting five hours a day. Her life is ruin. This is the new proletariat. There is no possibility of having a family life. All the advantage of a city disappears if you commute five hours a day.
I think that here, urban planners or managers of cities — sometime I use urban planners as scapegoats — I mean, in fact, anybody who is involved in managing cities. They have a responsibility for that. They should have indicators about these commuting times and standard of housing and affordability. When this thing deteriorates, they should take responsibility. The only action they can have, increase the speed of transport. Expand it and increase.
Let the people decide where they want to live, how much they want in terms of land and floor space. This should not be regulated.
COWEN: Next question at this mic.
AUDIENCE MEMBER: Many of the examples in your book — counter-examples — were from New York City, whether it’s the affordable housing lottery or trading FAR [floor area ratio] for benefits like fountains or parks. If tomorrow you stumbled upon a magical genie and he said, “Give me three policy recommendations, and they shall become law to maximally benefit the citizens of New York.” What would they be?
BERTAUD: I will remove all floor ratio restrictions. I will remove the minimum floor space requirements. And I will make sure that no developer ever gets a holiday on property tax. I think this is too convenient for politicians. It never appears in the budget. It’s just a decrease in the revenue. I think that part of the problem we have in infrastructure is precisely that. I think that would be what I will recommend.
Now does that have a chance to be? Again, you asked me something magic here, so I’m answering a magic answer.
COWEN: Question from the iPad: “I work for Uber. Tell me what you think we’re doing wrong.”
BERTAUD: I don’t think Uber is doing anything wrong. I mean, maybe at the same time if they don’t pay their drivers enough, they may run out of drivers, but then the market will show us that very quickly.
I think that Uber has increased, again, probably even increased affordability in a certain way because it has made some areas of New York, which were not accessible to job in two or three hours, suddenly much less.
Now, some people say they are clogging streets so the traffic has slowed down a bit. Wait a minute here. If you look at the streets of New York — I calculated it in my book — I think something like 25 percent is used by cars which are parked full time, free of charge, in the street.
If you are serious about congestion and the congestion created by Uber, you leave the curb for loading and unloading, and you still have two lanes for circulation. Where in fact, you have now only one lane, and usually you have loading and unloading — by the way, not on the Uber, but Amazon and other things. So, you are blocking. If really the concern is about congestion and traffic, please use valuable space for traffic or pedestrian or bicycle or whatever. But parking cars on street is a scandal.
COWEN: Next question at this mic.
AUDIENCE MEMBER: With rising support for global authoritarianism, is it possible that we could see a 21st century Robert Moses? Why or why not?
BERTAUD: Well, yes. Definitely, yes. Unfortunately, yes. We should not consider that progress is a linear thing. Some of my colleagues even think that the Enlightenment might have been just a fluke in the history of the world, and that within 20 years, we may all be under regimes which are authoritarian. It’s quite possible.
Then of course, yes. Robert Moses will have . . . After all, the institution reacted to Robert Moses and limited the damage he did. He did some positive things, too. In fact, it’s institution. Yes, you’re right. It’s institution. Those institutions could deteriorate faster than we think, I am afraid. We see that now in some countries of Europe, and it could happen here.
COWEN: From the iPad: “Should Central Park be larger or smaller?”
BERTAUD: Ah, no.
BERTAUD: It’s just the right size because the important thing of Central Park, you could say the same as the avenue — have avenue too wide or too narrow? Is the street too narrow, or should the block be longer? It doesn’t matter. What matters was that when they established the grid and when they established Central Park a little later, they clearly established property right. They separated what was public and what was private.
That allowed the market to work with a complete symmetry of information. Even when, say, 85th Street was just a field, everybody knew that it was 86th Street. So anybody buying a lot there will have complete symmetry of information. And this symmetry of information in the market is much more important than agonizing whether an avenue should be 30 meters, 35 meters, or 25. Eventually, we will adjust. If the avenue is a little too narrow, we will adjust to it. We’ll put congestion pricing, and we will expand the city further.
We should not agonize on “Is it right?” We should, of course, try to have the right decision, but we should not agonize on this thing. The important thing is to have very clear property right long in advance, so it cannot be manipulated by people who will move street as they pay politician or something or whoever, urban planners, in order to move street. This is the most detrimental thing which can happen to a city.
COWEN: Quick last question from this mic.
AUDIENCE MEMBER: The Ric Burns documentary about New York City. Should that have been longer or shorter?
BERTAUD: I don’t know the story. Which? Sorry.
COWEN: This is a documentary, but I haven’t seen it either, so I guess it should have been shorter.
COWEN: With that, please all subscribe to the podcast series, Conversations with Tyler. Alain, thank you very much. So much. Thank you all for coming. Again, please buy Alain’s book, Order without Design.