Romer responds

Last week I blogged my reaction to Paul Romer’s dramatic proposal to create Charter Cities in the underpopulated corners of the planet.

This weekend Paul responded on his blog:

Chris and I agree that an evolutionary dynamic can lead a vibrant neighborhood but that it can also lead to a dangerous slum with no roads, sewers, safe water, electricity or other utilities.

We also agree that there is a risk associated with new systems. Sometimes they don’t work, as the public housing projects in Chicago demonstrate. Sometimes they work remarkably well. Architecturally similar high-rise buildings in Hong Kong and Singapore provided livable housing for large numbers of working poor in the 1960s and 1970s. (As an aside, Chris and I seem to agree that the key difference between these cases lay not in the hardware or architecture but rather in the supporting rules, particularly those related to crime.)

The challenge that Chris posed to me, one that several others have also suggested, but not as precisely, is how to assess the tradeoff between faster growth and higher risk that the new-system dynamic seems to offer. A related question is who bears that risk.

Read his excellent answers here. He even breaks out one of my heroes, the woman who got me interested in social science and the world, Jane Jacobs.

I’m intending to respond, but it’s 12:30am and I just got back from the office (it’s that kind of week). Replying to someone several times smarter and more experienced than me will have to wait a couple of days. In the meantime, suggestions in the comments box are welcome.

5 thoughts on “Romer responds

  1. Jacobs is one of my heroes, too, and also got me interested in social science and the world. When I read Death and Life of Great American Cities, I was just a qualitative researcher for a market research analyst. Never taken any economics. But when I read that book, it was both like I’d met someone who was like me, and knew more than ever I wanted to be an economist, even though she wasn’t one. It was my first time to read something in social science that wasn’t just a mask for some ideological/political argument.

  2. My feeling is that the concept has radical and brilliant aspects, but is fatally compromised by Romer’s approach – the reality of how city-states have developed, and how communities evolve, and how immigration would work means that the cities would be very likely to fail without much more thought, and more importantly, time. It takes time for cities to develop an identity and economy, even when the rules we can control are right (and that is a really important distinction. Many of the rules that matter, such as social or cultural norms, develop over long periods of time and we cannot simply impose them).

    I explain this all rather better at http://aidthoughts.org/?p=515

  3. The point that I made at Paul Romer’s London seminar was that the city of Bombay and many other Indian cities were like charter cities in the mid 1970’s and they have regressed in the 30 years since. Since, Paul Romer was not familiar with India, he refused to believe me. But, whether Indian cities of the 1970s were like charter cities is an important empirical point to ponder over.

    Poverty was neatly excluded from the cities by the elites. As time passed, the cities disintegrated, precisely because these were gated communities and in a free society you cannot create gated communities. The elites lost power and the people that represented impoverished communities from the rest of the country took over the administration.

    Of course, Paul Romer’s answer to my question in the seminar was very flippant. I took a look at the statistics after the seminar and found that I was not off the mark.

    Further, in recounting the Hong Kong stories, Romer implies causality. Hong Kong led to growth in China. We know very well that there were huge changes afoot in China since the mid 70s. It is quite possible that a society that is transforming in the right direction would allow charter cities to emerge and take advantage of the agglomeration. But it is far from clear that a society that is not transforming will allow such cities to spring up and prosper.

    Roschild’s quote about the traffic jam in the tunnel comes to mind. If you are stuck in a tunnel in a jam for a bit and the other side start moving, you get excited. If the other side keeps moving and you remain stuck, you start getting frustrated. If this keeps happening, at some point you just may ram your car and stop the traffic flow on the other side. This is exactly what has happened to cities across India. Consequently, now everyone is benefiting from the proceeds of growth and there no longer gated communities.

  4. In his TED talk, Romer optimistically states that there are no road blocks to his charter city concept other than a failure of imagination?
    There may some truth to this, but some of the obstacles that would need to be overcome may prove to be so costly that the whole project is called into question.

    There are reasons people don’t live on “unoccupied land.” For example, he points to Africa, where he claims hundreds of millions of people could live in charter cities. He shows a clip of some unoccupied land, but it is a patch of dessert on the coast. How would these people eat or have access to water? I suppose he could argue that in the future desalination will become affordable, but still, what will these people do for work? Also, consider the level of human capital of those immigrating to the charter cities.

    Using Singapore, Hong Kong and Dubai as models is misleading for they all had a unique set of assets/circumstances that has allowed them to thrive. Duplicating those successes in hundreds of charter cities across the world is not likely.

  5. “proposal to create Charter Cities in the underpopulated corners of the planet.”.

    The whole notion of underpopulated areas is utterly anthropocentric and absurd. There are very few such areas remaining where there is adequate room for other species to flourish.

    This whole idea suggests an underlying illusory disconnect between humans and nature. Yes, Dubai has built a city is a desert but its environmental footprint extends like tentacles out across the fertile regions of the world, as with most cities in industrialised countries.