Alain Bertaud on Cities, Markets, and People

Conversations with Tyler is produced by the Mercatus Center at George Mason University, bridging the gap between academic ideas and real-world problems. Learn more at mercatus.org. And for more conversations, including videos, transcripts, and upcoming dates, visit conversationswithtyler.com. 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?

Ah, yeah, this is a difficult question. I will tell him infrastructure is important, but infrastructure is there to serve people. And just look at people before you look at infrastructure. Infrastructure is there as a tool. Not as a purpose in itself.

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?

You mean making the choice for him?

You can give him a lucrative fellowship at Purdue University.

Yeah.

And he'll be very busy in Indiana, and New York will go along the track it was on.

Well, that will be his choice. Yes, probably I will try to convince him to go to Indianapolis.

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% of central Florence is now Airbnb residences. Does this concern you?

Yes, and this concerns me because normally I will 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, you know, it give access, you know, a refuge, let's say. And Swiss farmers who wanted to expand their field 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 area. You can still buy— foreigners, I think, can still buy properties in Zurich or in Geneva, but they They are not allowed to compete with Swiss farmers in buying land. So I think I have no— let's say 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. And cities are— tourism might be important and interesting, but it's not the essence of city. The cities are the people. If the people are gone from a city, it's not very interesting.

Why are so many contemporary cities depopulating within the core? So 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?

I don't think densities has 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 meter or 12 square meter, there's still some who do, are living now is 120 square meter. So you have a loss of densities. It doesn't mean a loss of population in this sense. You know, New York had the, you know, Manhattan had the density which was, 2 or 3 times higher than it is now, I don't think you can say that Manhattan is depopulated.

But you have yourself moved to Glen Rock, New Jersey, right?

Yes.

What has gone wrong?

In my— how do you say— in my dotage?

In Manhattan, will you find better food on the streets or the avenues?

Ah, in the streets. In the streets, definitely.

Why?

I think you have more specialty restaurants in the streets. And in the avenue, you have more people who just are transient, you know, pass by and are looking for faster food. I think so.

If San Francisco and Oakland had an ideal building code, they would bring you in to write it so there would be more freedom to build. How much would rents be cheaper in the Bay Area? Your intuitive guess?

Yes, yes, it will be cheaper. But how much?

Not much. Why not?

No, how much, you say? How much? You want me to give a figure?

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?

I think that if you build much more, 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.

The YIMBY movement, Yes In My Backyard, Will it ever come about? There's been a lot of force behind the INBI movement over the last year, but not that many concrete victories. Is it simply the case that opposition will be mobilized and the INBIs will lose, or does it have a future?

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 city, and this is what NIMBY is all about, you're freezing cities, the city die, you know, like a human being that you tied in a straitjacket.

But if we look around the world, we don't see that many traditional cities that have overcome NIMBY. So Houston has done it. Warsaw, Poland has done it. There was so much destruction, people were happy to get rid of old communist buildings. But the so-called nice cities, have any of them overcome NIMBY and seen NIMBY win? And if not, why are you optimistic? What will change?

I, huh, maybe I'm not optimistic. I think that maybe in cities where you have the house itself is not your only way of saving, have a better chance of, you know, being yinbi than as soon as the only way, you know, if people perceive that the only way of saving money for their retirement is in their house, you know, their house is some kind of an ATM machine, then they will be, you know, they don't want any competition. I remember in Washington some years ago, there was a letter to the Washington Post. Somebody was saying, oh, is it possible that in Fairfax County they allow more houses where my house has increased in value in the last 5 years by only 5%? So they thought that was a legitimate case. If your house increased only by 5%, then you should stop every other houses so that your house will go. So I think if people consider that this is one of their— in a way, I think it's a question of property rights. We have a system which decrees your property rights within the boundary of your lot or your apartment. You know, you cannot— you see this morning, for instance, in the New York Times, somebody gets fined $15,000 because they install a dryer and a washing machine in a basement. So that's a decrease of property right. And 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. So, you know, this dilution of property right, I think, is a big cause of NIMBY. Or 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 neighbors is doing. You know, you say, "Well, I'm preserving the character of the neighborhood." Well, if the character of the neighborhood has to be preserved in Manhattan, you know, if it was preserved 50 or 100 years ago, there would be no Manhattan.

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?

Right.

Should the scale be moved up or moved down? What would give us a better outcome?

I think it should be moved up.

And what do you think would happen then?

Then the people who want in will have more say. If you keep it at the street level, I think the people who control it are the people who are living there, and they are against everybody who wants to move in, by definition.

I have 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 Second Avenue line, that was sort of 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?

I think that's one of the most terrible things, you know, the destruction of the transit system. You know, 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. And, you know, 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. So you have to maintain the transit system in the same way as you maintain, you know, the sewer system and the water system. I think that the destruction, you know, the lack of maintenance the attention which has been given to the subway is equivalent of lead in the water in Flint or things like that.

Why is the Moscow subway so wonderful?

Because Stalin built it.

Like everything else Stalin built, right?

He had a taste for architecture, you have to recognize it.

Now 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?

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 would 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 ask to have a planner decide it, and it will be also a cash expenditure. You know, in a market city, it's a price of land which finance the development of new building automatically. You don't— it is developers who realize that the land is expensive and therefore they can build more. Who are asking the planners, please let us build an office building there or something. If you are in a socialist country, you know, like I have seen China before the reform, or Russia at the time I was 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 states, this is a net cash expenditure. To replace a low building by a high building is a cash expenditure that the city has to pay. And where in a market economy, of course, it is done automatically in a certain way. You know, 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.

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.

Yes, normally, yes. But You see what happened with Amazon in New York not so long ago was an interesting— Now, I don't know if I should talk too much about that, but, you know, I think Amazon did a terrible— 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 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 job for all sorts of income at the same time. You cannot, you know, in the same way as you should not exclude poor migrants from coming from 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. You know, 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. Now, on one hand, On the 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 effect 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. So you cannot have an increase in job 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.

How well does the current version of Shanghai work?

I—

As a city.

As a city, I think it— It works relatively well in the sense that, you know, the Chinese even— well, I say up to 4 years ago when I still could get a visa to go to China. And, you know, up to 4 years ago, I think that the Chinese at the local level understood market better than Mayor de Blasio. I tell you, it's a low bar. And, you know, why? Because they were interested in the, you know, in the GDP of the city. Now, it has also some drawback. Many mayors in China told me, "I'm the CEO of this city." And in a certain way, it created certainly also some problem 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 wanted to develop, you know, they had a high-tech industry, they were doing flat screens. 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 in a relatively small city. Because, so the mayor say, the only way we can expand this is to have very good education and good environment. So 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.

How well does Shenzhen, China work as a city? And that's from basically nothing, right?

Right. Something that people forget about Shenzhen, the history of Shenzhen. Shenzhen, may I tell a little story?

Absolutely.

You know, I was in Shenzhen probably in the What, in '84, '85 maybe. And the city of— at the time, it, you know, it was basically not a fishing village, but it was a small town. It has 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 say, we want to build a city of 5 million, and would you finance infrastructure? And I did the back-of-the-envelope calculation. I said, 300,000 to 5 million? Are you kidding? You know, try to do a city of a million and a half, maybe 2 million, we'll consider infrastructure. This is completely out of the question. So Shenzhen is now 12 million people. So that's one skeleton in my closet. And but what people forget about Shenzhen, a lot of people think that Shenzhen was built the way Brasília was built or something, you know, the government decided let us 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 job, they are going to have salaries which is commensurate with their skills, and their employers will be will be able to increase their salary or decreasing 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, 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 refuse where bold enough in a way to, or confident enough to say, we don't need the big ice ball. You know, we can, we are confident in our own skill and we can make it. There are some books actually, there is a novel called Northern Girl, which is written by a Chinese who came from the north and semi-skilled or unskilled, and she tells the story of, it's a novel, but I think it's 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 will stay all your life in the same job. And then people realize that if they were relying on their own energy, they could do better than that. So it's really the success of Shenzhen is really the creation of the first labor market in China.

Will America create any new cities in the next century, or are we just done?

Cities need good location. This is a debate I had with Paul Romer when he was interested in charter cities, and he had, 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. Maybe with the Road and Belt, maybe the opening of Eastern Asia, you know, the Central Asia, maybe the opening, you know, of the ocean route on the northern, you know, 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 are that many very good locations.

Or Greenland, right?

Yes, yes, yes.

What is your favorite movie about a city? You mentioned a work of fiction. Movie. I'll nominate Escape from New York.

Casablanca.

Casablanca.

Because, you know, you know why Casablanca? Because it's a, it's a city. I mean, you don't see, you don't see the city very much in the movie, but you see people coming in. And, uh, well, some want to get out too, but, uh, but you see people coming in and, and it's kind of a refuge, you know. It's, uh, so that's, that's what I find interesting about it.

Now, 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?

I'm bearish.

Why?

You don't create city by just putting concrete.

But Brasília worked. It's not perfect. Yeah, it's a city.

Yeah, but it's a city of bureaucrats.

But I'd rather live in Brasília than NEOM.

The people who went to Brasília were not the same people who went to Shenzhen. You know, they were moved, I would say, even manually, militarily from Rio de Janeiro. And yes, and the taxpayer of Brazil paid for Brasília entirely. Nobody in his right mind would decide to live in Brasília just by choice, you know. And, you know, it's one of the worst performing cities. It's not just my taste. I mean, it's a worst-performing city. If you look at the number of deaths of pedestrian per 10,000 people, it has a world record. If you look at the segregation by income, the poor living at 30 kilometers of the city with not very good transport system, and the rich living entirely in the center. It is one of the worst record in the world in any measure you can have. But of course, it's a World Heritage City. And, you know, for the 50-year anniversary of the city, I was invited by the committee of celebration, say, and I told them, but did you read what I wrote about Brussels? And they say, yes, we want to have several points of view. So you see, they are tolerant.

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?

A lot more restaurants and bars and maybe barber shops.

Barber shops?

Yes, I mean, not so tiny.

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. So 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?

Politics. You could say the same thing about France, by the way. Paris, you know, 12 million. The next city, well, I'm from Marseille, we claim we are the next city, 1 million. The people from Lyon claim it too, but the next city is about 1 million. So you go from 12 million to 1 million. I think you cannot change this. You cannot have a plan where you say, oh, 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 secondary city, you are so much penalized that, you know, so unless you change the system, you know, the political system, you decentralize, you know, for instance, French decentralization, uh, you know, which was done, what, in the '70s, '80s, has not resulted in a change in the pattern of cities. You know, Paris is still dominant and growing. And look at Russia also, the only city which is really growing is Moscow. And I think it reflects a political system. And no, I don't— I think that planners trying to spread let's say, cities without a change in the political system or even the culture. Maybe centralization is a culture. I mean, in the case of my country, France, I think centralization is a cultural aspect. It's not only political.

Your own background coming from Marseille rather than from Paris—

I will not brag about it normally.

But no, maybe you should brag about it. How has that changed how you understand cities? Ah, because Hayek's characterisation—

I'm very tolerant of messy cities.

Messy cities?

Yes.

Why might that be, coming from Marseille?

You know, when I was, you know, when we were school children in Marseille, we were used to a city which has, you know, really there's only one big avenue, the rest are streets which were created locally, you know, the vernacular architecture. And In our geography book, we had this map of Manhattan. And our first reaction was, the people in Manhattan must have a hard time finding their way because all the streets are exactly the same. And in Marseille, we oriented ourselves by the angle that the street made with another. And some were very narrow, some very, very wide— well, not so wide. But some were curved, some were, you know— And that's the way we oriented ourselves, and we thought Manhattan must be a terrible place. We must be lost all the time.

Now, in the middle of all of these conversations, we have a segment known as Overrated Versus Underrated. So I'm gonna 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, Medellín, Caracas?

I have not seen the detailed numbers, but my gut feeling is that it's overrated.

Why?

Because cable cars, you know, I used to do a lot of skiing, and I know how much a cable car can carry, and it's not that much.

Le Corbusier, overrated or underrated?

Ah, as a writer, he's underrated. As an architect, well, more or less. As an urban planner, of course, he's grossly overrated.

And what's your best Le Corbusier story?

Ah. My best— well, you know, I met Le Corbusier at a conference, you know, in Paris twice, at two conferences. And he was a— 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 and, you know, in the world? He was not a very modest man. 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 way. You know, he was a very bitter man in spite of his success and his— and I think that his bitterness is shown in his planning in some of his architecture.

Port-au-Prince, Haiti, overrated or underrated?

If you look at the food, it's underrated. You know, the culture is underrated. It's a wonderful culture, the Creole culture, you know, is one of the Creole languages, also is extremely rich. It has a lot of poetry. Of course, after the earthquake, it has never recovered, I think. 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, you know, But the city has deteriorated since that time, and the combination of the earthquake, the deterioration also of the environment due to, you know, overpopulation and deforestation. You know, deforestation in Haiti, you know that 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. You know, the poor people then, because the kerosene was so expensive because of the high taxes, were cutting every tree, every bush in order to just to cook. So, you know, this deforestation again was a man-made, but, you know, a systematic political thing.

E-scooters, overrated or underrated? And will they last?

I think they will last, maybe in a different form, but I'm a big fan of e-scooter.

Why are they better than Segway, which did not take off? You only see it in the nation's capital, right?

Because I could see my scooter, bringing my scooter here, folding it, and putting it under my chair. I cannot put a Segway under my chair. Segway is just too big. Too heavy.

The popular music group Limp Bizkit.

I have no— my taste in music, like in literature, stops in the 19th century.

The ideas of Hernando de Soto, putting everything on a property register.

It's an excellent idea, but it's not the only idea.

Are you afraid that it will lead to more regulation, more taxation, more confiscation, and a version in essence of Chinese social credit system if we make everything part of the formal economy in poor corrupt countries?

I think that I don't make such a difference between the formal economy and the informal economy as most people do. My experience is that if you go in a slum, which is, you know, most planners will consider informal, you don't You have a market which works exactly like other markets. You have also expropriation. You have also— so I don't think that registering property in itself will create a bureaucracy which will kill the— you know, again, there are different ways of registering property. For instance, the way It was done in the kampung in Indonesia where, by the way, another skeleton in my closet. In Indonesia, the World Bank participated in financing the kampung 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 give them, you know, you survey their plot, you give them property right. And we insisted with the government, the Indonesian government, that we, at the beginning, we insisted that we will not provide infrastructure unless there was also a program to provide property rights. The Indonesian insisted that this will cost too much. We We did a back-of-envelope thing, and that did cost too much, you know, to have a proper survey, especially there were lots which 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, you know, 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 a water bill, and they would pay the bill. And the bill itself was an address, you know, in order to have a bill, you have an address. The bill was a proxy for a property title. When some people made study about that, they found that a property guaranteed by a water bill was discounted maybe about maybe 10% compared to a formal thing. So you see, I don't necessarily make a— I think property rights are very important, but 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 rights for transactions, and I think those informal property rights could guarantee very fair transactions the same way as formal ones.

Do you love graffiti?

In the proper places.

Why are so many cities in the New World so violent? If you take 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.

Yes.

Europe is relatively safe for the most part. But the New World, almost everywhere, has a higher level of violence. And why is that?

I don't know. I have noticed that. I know it because, you know, I live in El Salvador, but You know, why there is such violence forces in a country like Brazil, I don't know. Is it the history? That, you know, 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 decrease the enjoyment, the efficiency of city, obviously.

What do you think is the part of the world most likely to institute a charter city? Not 50, just one.

The Middle East.

And why?

Because they will have to deal with their refugee problem, and it's not going to vanish, and probably a charter city will be the only way to solve it. Also because the Middle East has a lot of desert, and a charter city, you know, it will be difficult to establish a charter city, let's say, in Bangladesh, for instance, where every land is cultivated. And, uh, but if you have a large piece of desert which has no alternative use, I think it will be a good way of starting, you know, a charter city. And the demand is really the refugees, you know. You, especially in the Middle East, you have a mix of refugees with all sorts of skills, you know, some unskilled but some highly skilled. And that will be perfect for charter city.

Would you care to nominate a specific location for the land speculators in the audience? This is near Wall Street, of course.

Well, certainly not Saudi Arabia, but probably Jordan seems to be, or maybe even part of Syria if, I don't know, if there was some change of government.

Now what about the idea of relocating parts of large cities? So it's often claimed that Jakarta is sinking. It's one of the world's largest cities. It's choked with traffic. And the idea of relocating at least the capital city functions to Borneo, away from Java, is that feasible?

If it's just a few bureaucrats, yes, of course, why not? But it's more than a few bureaucrats in Jakarta, right? Jakarta, I mean, if we take Jabodabek area, the metropolitan area of Jakarta, now 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, you know, maybe some part of Jakarta, the part which is closer to the sea, you know, the old Jakarta, maybe have to be sacrificed, but certainly moving Jakarta, I think, is impossible, and 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, you know, instead of, you know, involving— 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 You know, 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, you know, from the sea toward Bogor. But I think that, you know, Bangkok had the same problem some years ago, because for the same reason, people were pumping water, the water table, so the the city was sinking. And eventually they managed to stop that. And so Bangkok is still flooded from time to time. It's not quite on the seaside the way Jakarta is. But I think that technology should be the solution for Jakarta. I think that it will be a terrible mistake. Don't forget that Jakarta with all its traffic jam, enormous traffic jam, pollution, and other Jakarta still is much more productive. You know, 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, you know. So there is something about this agglomeration of people 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 Brasília in the middle of Kalimantan.

Now 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?

Well, this is a difficult question.

And would it be harder or easier than moving Jakarta?

I think that institutions 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 doing, still doing, is not useful. I think there are a lot of useful things. But I think that creating a new one, you know, it's a bit like Charter City. Let's say it's Charter World Bank. Yes.

How will self-driving cars change cities?

Ah, you know, I was extremely optimistic about self-driving cars. I remember being invited with Marianès, we were invited at Google twice, and to discuss precisely what will be the impact on cities of self-driving cars. And at the time, Eric Olson, I think, was the head of the self-driving Division at Google, and when we asked him, "When do you think this self-driving car will be operational, you find them in cities?" He said, "Well, I have a daughter who is 10 years old, and I think by the time she's in 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. So 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. Because if you go on Fifth Avenue at 25 miles an hour, which is the speed limit, you know, you need about, if I remember well, 85 square meters of road because of the distance between two cars, because you need a 2-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.

But would the road simply become clogged? So 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 4 or 5 hours every time I wanted a snack, and the roads would essentially become clogged and you couldn't use them. Or is that not the equilibrium?

No, yes, exactly. You will not because you will never get your food if the road is clogged.

But someone will clog the road, right? Or can we only have self-driving cars with congestion pricing?

Yes, of course, we will have congestion. The roads, The road is a finite— within the city, as soon as the city 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 roads. So pricing, yes, is the only way to do it. Yes, probably. So that's why your food, if you ask, if you order your food every 10 minutes, your food is going to be very expensive.

Is there any good argument against congestion pricing for Manhattan?

No. 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 roads. 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 roads, and so you have to price it differently depending on the hours. 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 different part of the city, different price at different time, but also how long you use the road. That mean if you park your car in a private parking, you don't pay anymore. You pay for really the use of the road. I always, I don't think I put it in my book, but I always say that roads, urban roads should be priced like a cheap motel. You know, every 10 minutes you adjust the price depending on the demand and the thing and the location and the day of the week.

How do you feel about congestion pricing for residents in cities? So as you know, the Chinese have a permit system. Hukou system. It keeps people out of cities, but 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 bad idea?

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. It has also, instead of bringing their children, very often they leave their children in the countryside because in the countryside, you know, the school will be free. And 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 from 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 cities 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.

But Chinese cities are not that dense. So 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.

Not because of density, because of deficient infrastructure. Yes, and because of the monopoly of the Delhi Development Authority on land development.

Google Sidewalk Labs is trying to build a smart neighborhood in Toronto. This may or may not happen. For or against?

Well, you know, I have nothing against a real estate operation done by Google in Toronto. I have a problem when they say that on a on a piece of land which is basically the size of Washington Square, they are going to solve housing problem, poverty, transport, pollution. I have a problem with that. I think that the salesmanship, 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 the real cost of, for instance, building a 5-story building in wood, whether it makes sense or not? That's fine. When I visited it, you know, Marianes and I visited it, and, you know, a few months ago, and I see a lot of gadgets. You know, 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 the 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. That's my—

Will facial recognition come to major US cities? I don't mean in the 7-Eleven, but done by the government on public streets.

Yes, I— I am afraid we can't avoid it.

And how will this change cities?

Well, I hope— it depends if we keep tab on our own government. I think it's our control of the government. We cannot avoid— when a technology is invented, you cannot disinvent it.

But why can't we avoid it? So San Francisco passed a law banning facial recognition. We could have the entire country or many parts of it pass such laws.

It reminds me of the Japanese in the 16th, 17th century. They banned firearms because they thought that it was unfair for somebody with good swordsmanship to be killed by somebody with an arquebus who had no skills. And so they managed, because they were an island, very well controlled, to keep the technology out for some years, and then Commodore Perry came with, you know, I don't think you can disinvent technology. I don't think, you know, if the, you know, you could say you could have a law which prevent the government from having cameras run by government, but then you will have cameras run by department store, and you will see that the police have access to it. Eventually they will, uh, so you cannot disinvent it. The, the only way we can control it to preserve our freedom is, is through precisely the, 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, your personal files fed by by the picture taken in the street.

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?

Ah.

Topic dear to your heart.

Lawyers.

Lawyers, why?

Yes. When I was hitchhiking, you know, when I was a student, I was hitchhiking all over Europe. And obviously sometimes there would be an accident. You know, a hitchhiker will be hurt. It will never occur to anybody to sue the driver. And sometimes, you know, I took a hike in cars where the driver was completely drunk. I mean, this happened. But it would have never occurred to my parents if I had died to sue the driver. And I think that came slowly. Probably from the United States. And as soon as, you know, you are not— 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, you know, all sorts of things, that the guy is smoking and you have inhaled the smoke or something like that. And or that the guy dropped 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. I think it's, you know, again, we will see that not only, I think, for— we'll see that for mountain climbing also, I think. You know, there is a tendency before, you know, I have a lot of friends who died in avalanche. It would have never It never occurred to anybody to sue the village or the mountain where the avalanche took place. And now it's a common thing. I see recently, you know, in Italy there was a hiker who was alone. He got lost. The family now is suing the entire region because they thought that they didn't look for him fast enough. You know, there were tens of helicopters, but they, you know, they say they didn't look at him fast enough. I think that as soon as you have a liability like that, you destroy any initiative, personal initiative, like some, you know, hitchhiking was a form of freedom, which was very interesting.

And 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?

Being born in 1939, I was brought up during the war. Comfort, I knew that you could adjust your comfort to whatever is available and you don't die from it. Then the other advantage and for my wife and I was that we graduated at the time of decolonization, and a lot of countries were absolutely desperate for people who were just, you know, the minimum skill you have when you just get out of university. You know, in my book, I talk about even I was not graduated in Algeria, 2 years after independence, I was inspector de l'urbanisme, you know. I was 25 years old. Nobody now graduating from any school would be inspector de l'urbanisme, not that I wish him to be inspector de l'urbanisme, at 25 years old. So, you know, this idea that you graduate from a Western university at the time of decolonization, this gives you an opportunity. When I arrived in Chandigarh, you know, I was 23. I had taken a year off. From the École des Beaux-Arts, and I arrive at the office of Pierre Jeanneret at Chandigarh, and I say, you know, I'm looking for a job. He give me a job, like, right away, you know. Okay, it was 60 rupees a month, but, you know, it was a job. And now, a Frenchman going to Hyderabad and say, I'm looking for a job, I'm 23 years old, nobody will take him seriously. I mean, he will be kicked out of the office right away.

But so were other people born in 1939, right? So what is your unique skill? No?

Not that many. Not that many. And my parents were not thrilled, I tell you. I was born 3 months before the war started. But yes, OK, then we go back. My father had a cult of travel. He had traveled a lot himself. And he always, you know, he would bring me when I was 13, 14 years old, he would go for his business to Italy, for instance, to Parma, Bologna. I was 12 years old, I guess. He would give me a map of the city. He would 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. And so I will spend the day with my map going around. And then in the evening, my father will say, okay—

this was a paper map, right? Not GPS.

It was a paper map. There was no GPS. He said, you know, you enter this church there. What did you see on the west side, you know, on the west of the, you know, on the left of the entrance? So I better remember that Tintoretto was there, you know, because So my father always told me, you know, when you travel, you don't look enough. Every time he traveled a lot, he said, I've not looked enough. I've not looked enough. And this was ingrained in me all the time. And he gave me— now, another comparative advantage was to marry Marianes. You know, there are not many women when we had this nice job with the City Planning Commission in New York in '68, '68, yes, '69. And I told her, well, there's this opening for a job as urban planner in Sana'a, Yemen. And she says, great, let's go. You know, I don't know, you know, again, I don't know of any woman who would have done that with such enthusiasm. You know, I didn't have to prod her or anything. She was as enthusiastic as I was.

Alain Bertaud, thank you very much. And I recommend to you all his book, Order Without Design, available on Amazon and those remaining bookstores in New York City. We do have time for questions. There are two microphones. This is question time, not to make a statement. If it is not a question, I will cut you off. We are here to hear our guest. First question at the mic. Yes. And I will take iPad questions as well. Should the largest business city also be the political capital in countries?

I never thought of that. I don't think it matters. I don't know. I will have to— yeah, that's a good question, actually, when you think of it. I never thought of that. You know, it's difficult to imagine Paris not being the capital city, but on the other hand, or is it that the capital city become a business city like, say, Washington, for instance, now expanded much more beyond, you know, if you compare, say, to Canberra or Brasília, it has expanded much more in that. I, you know, I will think about it. Sorry, I cannot answer this.

Next question on this side.

I'm from Indianapolis, Indiana, the first example of the talk. 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. I never comment on city where I've 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 sometimes, and they can develop or stagnate. It's, you know, cities are very much like individuals. We all have the same physiology, but we have different culture, different— but we have also different luck, you know, like being born in 1939. And so I cannot really comment on Indianapolis again because I never comment on cities I don't know.

Next question from the iPad. Quote, when you arrive into a city you've never been to, what and how do you prioritize what to see?

So 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. And I would just walk for hours and just, as my father recommended, look. And with the idea that nothing in the city is random, that if you see a barbershop at a corner, it's because the owner of the barbershop found that it was the best place for his business to be there. And if you see a tall building next to a short building, It has a reason to, and you have to try to understand why it is there. Do not think, you know, one word I hate that the World Bank use all the time in its report is urbanization is haphazard. There's no such thing. Urbanization, you know, is done by people, and they have a very, very good reason for doing it. Sometimes distorted by regulation or something like that, that's true. Discrimination, but you have to understand why this is it. Now, after Google Earth, then it's very different because now I look at an image of Google Earth and I select some neighborhoods in advance that I want to visit, which intrigue me. Why are they there? They seem particularly dense or not dense at all, or, you know, so you— so I will select— I will, rather than going at random, I will select places based on my interpretation of Google Earth.

Next question at this mic.

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? Well, yes, rent control. Sometimes, you know, 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. If you look at— so you have some people who say, well, I don't believe in gravity, and they invent flying carpet. A flying carpet has advantage on an helicopter or a plane that it doesn't pollute, it's more comfortable, it costs nothing, it's land in your backyard. And rent control is a flying carpet. You see, it's as soon as you try to find a solution to affordability, And you look outside the market, all the market work, immediately you end up like somebody who 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. So as soon as you— if you— 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. So you have to establish how many of those people are there, and usually If it is more than 2 or 3 or 4% 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. I don't— what do I mean by that? I mean that if you look for a house, And you have to be on the waiting list on 10 years to go on public housing or to go on inclusive zoning, you know, 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. You know, 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. You know, if you are in rent-controlled house, you will never move because your subsidy is entirely linked. So you have no market, so you have no mobility. The idea of housing is mobility. At different time of our life, we want to move from one type of house to another and 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 that not to look at very poor people, which indeed if they have bad health or bad luck, you know, 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, no job is more indispensable to the life of a city than a schoolteacher. If this schoolteacher cannot get a decent house within, I would say, 40 minutes commute from his school or her school, there's something wrong in your system. And 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 the waiting list. For rent control, the schoolteacher will have to wait for somebody who is under rent control to die, even maybe not because rent control is usually inherited from— So you see, we have to find a solution for this. And the solution is usually Increase 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 what, and its location? User should be able to make trade-off between those three things, and they are able to make it visually. User cannot make trade-off between good fire regulation and bad fire regulation. We don't know how to do that. So I am not, again, it could be that some fire regulation are maybe overdesigned 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. You know, most of our regulations 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 now, if I remember well, is something like 40 square meters or something like that. I'm still metric here. And at the same time, they do not— so 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 affects directly affordability. That means that our schoolteacher will have to live at maybe an hour and a half from his school. And so one way, that means 3 hours. You know, the new proletariat now in cities are not the people who are starving or have no clothes like in the during the Industrial Revolution. The new proletariat are the people who are commuting back and forth 3 hours or 4 hours a day. I've seen case in South Africa, in Johannesburg, where a woman was fully employed at a subsidized house, so she was not poor by any standard, and she had a regular job above the minimum wage, but she was commuting 5 hours a day, their life is ruined. This is the new proletariat. This is, you know, there is no possibility of having a family life. All the advantage of a city disappear if you commute 5 hours a day. So I think that here urban planners or manager of cities, I think, you know, sometimes I use urban planners as scapegoat. I mean, in fact, anybody who is involved in managing Cities, they have a responsibility for that. They should have indicators about this commuting time and standard of housing and affordability. And when this thing deteriorate, they should take responsibility. And the only action they can have, increase the speed of transport, expand it, and increase, you know, let the people decide where they want to live, how much they want in terms of land and floor space. And this should not be regulated.

Next question at this mic.

Many of the examples in your book, counterexamples, were from New York City, whether it's the affordable housing lottery or trading FAR for, say, benefits like fountains or parks. If tomorrow you stumbled upon a magical genie give me 3 policy recommendations and they shall become law to maximally benefit the citizens of New York. What would they be? I will remove all floor ratio restrictions. I will remove the minimum floor space. 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. You know, it's just a decrease in the revenue. And I think that part of the problem we have in infrastructure is precisely that. So I think that that will be what I will recommend. Now, Does that have a chance to be, you know, again, you ask me something magic here, so I'm answering a magic answer.

A question from the iPad, quote, "I work for Uber. Tell me what you think we're doing wrong," end quote.

I don't think Uber is doing anything wrong. I mean, maybe at the same time, if they don't pay their driver enough, they may run out of driver, but then the market will show us that very quickly. So I think that Uber has increased, again, probably even increased affordability in a certain way because it has made some area of New York which were not, again, accessible to job in 2 or 3 hours suddenly much less. I see only— now, some people say, well, 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% is used by cars. Which are parked full-time, free of charge, you know, so you in the street. So 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 only Uber but Amazon and all things, And so you are blocking. So again, if really the concern is about congestion and traffic, please use a variable space for traffic and not— or pedestrian, by the way, or bicycle, whatever. But parking cars on street is a scandal.

Next question at this mic.

With rising support for just global authoritarianism, is it possible that we could see a 21st century Robert Moses? Why or why not? Well, yes, definitely yes. No, we, you know, we should not, unfortunately, yes, you know, 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. And then of course, yes, Robert Moses will have, you know, I mean It was, I mean, let's say, you know, after all, yeah, institution reacted to Robert Moses and limited, you know, the damage he did, but he did some positive things too. So in fact, it's institution. Yes, you're right, it's institution, and those institutions could deteriorate faster than we think. I am afraid so. We see that now in some country of Europe, and as it could happen here.

From the iPad, should Central Park be larger or smaller?

No, it's just the right size because the important thing of Central Park, the same with, you could say the same as the avenue, are the avenue too wide or too narrow and 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 rights, and they separated what was public and what was private, and that allowed the market to work with a complete symmetry of information. Anybody, even when, say, 85th Street was just a field, everybody knew that it was 86th Street. And they knew whether— so anybody buying a lot there will have a complete symmetry of information. And this symmetry of information in the market is much more important than agonizing whether you know, an avenue should be 30 meters, 35 meters, 25. Eventually we will adjust. If the avenues are a little too narrow, we will adjust to it. We'll put congestion pricing and/or we'll expand the city further. The important thing is to establish, you know, we should not agonize on is it the right— you know, 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 rights long in advance so it cannot be manipulated by people who move streets as they pay politicians or something, or whoever, urban planners, in order to move streets. This is the most detrimental thing which can happen to a city.

Quick last question from this mic. The Rick Burns documentary about New York City, Should that have been longer or shorter?

Sorry, sorry, could you repeat?

The PBS documentary, 15 years ago now, that Rick Burns did about New York, should that have been a longer story or a shorter story?

I don't know this story. Which, sorry?

This is a documentary, but I haven't seen it either, so I guess it should have been shorter. But with that, please all subscribe to the the podcast series Conversations with Tyler. Alain, thank you very much, so much. Thanks for listening to Conversations with Tyler Cowen. You can subscribe to the podcast in iTunes, Stitcher, or your favourite podcast app. And if you like this podcast, please consider rating it on iTunes and leaving a review. This helps other people find the show.