Edward Glaeser on Zoning, Land Use Regulation, and Urban Economics

>> Edward Glaeser: What I love about land use reform is, one, it's about free people and free markets. It's about fundamentally giving property owners the right to do what they want with their own property. That sits with something very deep within my soul. And two, it's good for poor people, right?

It's an area in which if you allow more housing to be built, it means the prices of housing are going to go down for ordinary people. And so it's both progressive and libertarian.

>> Jon Hartley: This is the Capitalism and Freedom in the 21st Century podcast, an official podcast of the Hoover Institution Economic Policy Working Group, where we talk about economics, markets, and public policy.

I'm Jon Hartley, your host. Today, My guest is Ed Glaeser, who is the Fred and Eleanor Glimp professor of economics at Harvard University, where he's taught economic theory and urban economics since 1992. He also leads the Urban Economics Working Group at the National Bureau of Economic Research. He co-leads the cities program of the International Growth Center and co-edits the Journal of Urban Economics.

He has written hundreds of papers on cities, infrastructure, and other topics, and written, co-wrote, and co-edited many books, including Triumph of the City, Survival of the City with David Cutler, and Fighting Poverty in the US and Europe, A World of Difference with the late Alberto Ole Sino.

He received his Ab from Princeton University in 1988 and his PhD in economics from the University of Chicago in 1992. Thanks so much for joining us, Ed.

>> Edward Glaeser: Thank you so much for having me on.

>> Jon Hartley: I want to get back and start with your early life. Where did you grow up?

How did you first get interested in economics?

>> Edward Glaeser: So I grew up in New York City. I grew up in a time in which the city was spiraling out of control in the 1970s, and then it experienced something of a renaissance. I think that experience in New York helped to fuel my lifelong interest in cities.

My interest in economics probably had mostly to do with just wanting to understand the amazing things that were happening around me. But I will tell a very particular anecdote of my first introduction to anything involving economics. I had been, occasionally, when school was out, I'd gone with my mother when I was about ten to her Columbia business school classes.

My mother was going back in her thirties and getting an MBA at Columbia, and she and I started to talk about things. I remember one of the more amazing things in my life intellectually was, she explained, Bertrand, competition to me. It was done in the framework of two people selling shoes, and each one was undercutting each other.

And we got down to the marginal cost of production through doing that. And I just thought, ten-year-old me thought this was just the most amazing thing in the world, that you could have this sort of mental construct to understand how prices worked and the competition could make sure that consumers got a decent deal.

And that was sort of the first time that I had ever thought about economics at all. It was really a sort of seminal moment for me.

>> Jon Hartley: Well, that's incredible. And so you grew up in New York City. You did your undergrad at Princeton, and then you did your PhD at the University of Chicago.

How did your time at Princeton and the University of Chicago inform you in your intellectual journey and becoming an economist?

>> Edward Glaeser: So I would say, I mean, I had some amazing teachers at Princeton. Orly Ashenfelter taught me econometrics with a lot of discussion about wine prices and hot summers predicting it.

Avinash Diksit taught me international trade. Still one of my heroes, John Campbell, wrote one of my recommendations for graduate school. And, you know, John has been my colleague now for about 30 years. So I had pretty amazing people. But I would say that I was sort of slow to figure out what I actually wanted to do.

I mean, I went into economics, like many undergraduates, thinking that this was a pre-Wall Street concentration, a pre Wall Street majo-. And I really expected up to my senior year that I would probably go to Wall Street. But somehow or other, the bug of doing a bit of economic research had gotten around in my head.

So I applied to only three graduate programs, and at the same time, I was interviewing with Drexel Burnham. This very fortuitous thing happened to me, which is the bottom fell out of the stock market in October 1987. And so because of this crash, there wasn't a lot of interest in giving me a really highly-paid job trading bonds at Solomon Brothers.

But the University of Chicago gave me a very nice fellowship, and I thought that sounded like a great place to wait out four years. Now, I didn't think I was necessarily becoming an academic. Although my father taught at Cooper Union, my father has a PhD, so certainly wasn't impossible for me to be one.

But I thought maybe I'm going to go for four years and then go into finance, or maybe I'm gonna go for four years and become a central banker. I don't really know. So that's what happened to me as I was going off to Chicago. Now, I will say within four days at the University of Chicago, I was completely hooked on using economics to understand the world.

And I have never looked back. And that's just a sign of just how powerful this dose of Chicago magic can be. Particularly as delivered by Gary Becker and Bob Lucas, who sort of taught the two first classes in the first year quarter.

And I think above all, it was the sort of magical thing of Gary sort of pushing you to be a creator of theory rather than a consumer of theory.

>> Edward Glaeser: Of teaching to look at the world and to sort of see all these interesting problems and to understand. Your job is to craft a model that makes sense of that. And that was just so exciting, so heady, to understand the sort of creativity that was inherent in economics, that, that has fueled my life ever since.

>> Jon Hartley: That's amazing. And I think applying some of my cultural price theory to problems in urban economics, lawn economics, political economy, I think, has really marked a lot of your great contributions. I'm curious, just thinking back to the University of Chicago, folks like Gary Becker and those that really espoused price theory.

Was there a point in Chicago where you maybe first got very interested in urban economics? I know you also attended the University of Chicago around the same time as your longtime co-author, Joe Gyourko. How did that early zoning work with Joe that really first emerged about 20 years ago?

How did that all start? Did that happen at the University of Chicago? Did that happen after?

>> Edward Glaeser: No, no, that happened completely after. And we came upon cities in a totally different. I came upon cities in a totally different way. Joe had been quite a few years earlier than me at Chicago.

We shared in common one of our mentors, Sherwin Rosen. And Sherwin is typically thought of as a great labor economist, really just a great economist. But his contribution to the Rosen Roback model to thinking about spatial equilibrium is really a seminal contribution in urban. And Sherwin was a really important part of my life.

I was probably less close to him than I was to my other three advisors, though actually the other four. There's Bob Topel. I was not closer to Bob Topel than I was to Joe, although I admire Bob greatly. And Bob was probably the most empirically oriented of my advisors.

The other three were Eddie Lazear, who was a very precious person in my life. And if anything, my modeling style looks more like Eddie's than it does like anyone else. Eddie, Gary, Sherwin, Bob Topel, and of course, Josiah Schengler.

>> Jon Hartley: And that was your committee?

>> Edward Glaeser: That was my committee.

Let me see. I give it to Eddie, Bob Sherwin, Gary and Jose. And Jose was really my doctor's father. So Gary was like this intellectual bright light that I spent the rest of my life sort of trying to work to. But in terms of the person who invested me in a daily basis and just made me the scholar that I am today.

No one did more for me than Jose, and I just owe him an unending gift, I mean, I owe all of them an unending gift. But Jose just really, really invested. And it was really, to a certain extent, Jose, that pushed me toward cities in different ways.

The first kind of subtle way was when we were starting to do research in our second year. Jose encouraged me to take urban as a field rather than, I did labor as a field, and I'd already gotten that done. But to do urban as a field instead of theory.

Because Urban had its exam earlier in the year, and so we could get done with that and pivot to doing research. So that's what got me to do urban as a field. I studied with Matt Kahn in that field. And then we started working on the paper of ours, which became growth in cities, which was really motivated by something totally different in the air at the University of Chicago, which was interested in the new growth theory.

Which was the idea that another of Jose's students, Paul Roemer, had sort of developed the model where, because of, you could get increasing returns. That is compatible with competition through externalities, particularly the externality of knowledge. Bob Lucas's paper on the mechanics called it human capital externalities. And it was Bob Lucas's on the mechanics of human capital, which actually then led back to Jane Jacobs.

And led back to thinking about cities as places where people learn from people around them. The interesting irony about this is this process of human capital externalities and learning, like I was experiencing as a student, that very phenomenon, as I learned about it, right? It was precisely because these ideas were in the air in Chicago.

And with that, we then put together our paper, growth in cities. Andrei Schleifer entered into the fray, Andre was not an official advisor of mine. But he continued to be an intellectual partner of mine for 37 years later. And we wrote this paper to try and test between different theories.

And we tried to organize theories that would emphasize large scale. And we call those Marshall arrow roamer externalities. And ones that would emphasize having lots of small firms. And we called those porter, and some of them were Jacobs. And we sort of tested between these theories, and we had a paper in which sort of growth seems to be very oriented towards places that had lots of industrial diversity and lots of little firms.

And those facts still kind of seem to be true. Especially the sort of small firms which I think now think of as entrepreneurial human capital. But that was really the paper that got me started. And then I was hired at Harvard was Harvard was looking to hire an urbanization.

And I was told, well, if you're labor, nobody has any interest in hiring you at Harvard, but if you're urban, we got a slot for you. So, heck, who was I to turn that down? I mean, I had offers from other places who were happy to take me as a labor economist, but the Harvard thing seemed to work.

And I came to Harvard, I was told, the job is an urban. And I think with that little bit of nudging, I realized urban was this field with incredibly great questions and not enough talent working on it. So there were some great people in urban when I came in.

I don't wanna in any sense suggest that there weren't really wonderful people for me to look up to, whether or not they were Ed Mills or Jan Bruckner or will strange or Robert Hemsley. I mean, wonderful people, but there weren't enough relative to just the caliber and importance of the problems.

And so it felt to me like this was an intellectual arbitrage opportunity in which if I went into finance, there were thousands of people working on this narrow set of questions. Whereas if I go to urban, boy, the world's my oyster.

>> Jon Hartley: Great, yeah, I'm surprised that there was even an urban field exam back in at that time.

I don't think many departments have urban field exams now, I could be wrong.

>> Edward Glaeser: It was the hangover of the first wave. So there was a whole bunch of Federal and Ford Foundation funding on urban topics in the late 60s, early 70s. And this kind of created urban as a field.

And so George Tolley was the one who taught the urban class, and as the exam, George had been a big grant receiver for the University of Chicago in his day. And that was the thing that sort of created urban in the sixties, seventies. But in those days, it was a field that was driven more by the presence of outside funding than it was about sort of deep engagement with the topics.

And there were some mistakes that were made. So two of my mentors at Harvard, John Meyer and John Kane, used a whole lot of resources when John Meyer ran the NBER in the 1970s to create the urban simulation model, we've now moved to stuff like that today. I think now we're teched up in a way that Steve Redding can do this magic and it works out, and we have the computing power.

We did not have the computing power to do this in 1975, and yet the NBR threw a lot of resources at it and it just didn't work out.

>> Jon Hartley: It's amazing, and also I feel like the insight to look at Sherwin Rosen's work and Rosen Roebuck model that I feel like it took a long time for the Rosen Roebuck model to become really appreciated.

I think in part thanks to your own contributions, but just myself learning it a few times in class, it's such a brilliant and almost simple framework. But yeah, I feel like over time, it's taken a while for some of these things to become a bit more appreciated, including, I think, just zoning and land use regulation and its role in home prices and home price growth, which is soaring in US coastal markets, almost all Canadian real estate markets, and many other urban real estate markets around the world, whether it's a, say, London or in, say, Israel or elsewhere, it's truly a relatively global phenomenon.

There's some, I think, exceptions to some supply constrained markets and prices, residential real estate prices soaring as a result. Look at Japan or Houston or elsewhere, but I'm just curious. I really want to follow this whole zoning story because it's really amazing to me how it emerged roughly, say, 20 years ago.

I don't know if, I think that's first roughly appeared. And here we are today in 2024. And just the other week, former President Barack Obama was at the Democratic National Convention talking about why we need land use deregulation. And I'm just curious what your thoughts are on that whole intellectual journey of really, I think being among the first academics and really the first to, in the public sphere really kinda beat this drum that, the reason why home prices are skyrocketing in many of these places.

Coastal real estate markets in the US or elsewhere has to do with the fact that new housing isn't being built and it has something to do with those land use regulations. I'm curious, what has that journey been like for you? And I mean, maybe it sounds like being like, I don't know, having to beat the drum and repeat yourself many times over, but now we see the whole so called NIMBY movement.

A lot of people have jumped onto it. Interestingly, the Democrat Party in the US has, I think, been a little bit more amenable to picking it up than, say, Republicans. And maybe that's because there's less vested interest in the side of the Democratic Party and smaller fraction of the Democratic Party members are homeowners.

But then you also look north to, say, Canada, where Canadian Conservative Party leader Pierre Poilievre has taken up the idea of withholding federal infrastructure funds for municipalities that aren't growing their housing stocks. So in Canada, it's very much emerged from, I guess, the more conservative side of things.

I'm curious, are you. Surprised at all that zoning and land use regulations has hit sort of national federal politics? Did you ever think it would get here, or did it at many times feel like it was kind of an impossible goal?

>> Edward Glaeser: Yeah, sure, I'm surprised. I'm surprised and kind of amazed.

That's right. I mean, my feeling about, I often get asked, are you disappointed by the limitations on the success of the movement? I think exactly the opposite. When I started working on this, there were, like three libertarian economists who thought zoning was important and nobody else did. And now you've got a whole movement.

When you see a dog playing chess, you don't ask how he'd do against Bobby Fischer. There's a quote that dates me. No, totally. Now, I wanna set this scene a little bit as to how my life with zoning happened. First of all, I want to make it clear, like, I did not invent this topic.

Bob Elixon wrote his masterpiece in 1975, helping us understand the law around land. Larry Katz did his work with Ken Rosen on land use controls in California starting in the 1970s. So there were unquestionably papers that looked at different aspects of this. And so we were not unique.

That being said, it was a pretty barren landscape when we entered into this. I mean, Larry's career was based on human capital, labor markets. He had not spent his life doing land. And there were papers, but there were relatively few. I got interested in this issue and just give a little bit on this.

Starting in the late 1990s, actually, I think it was 1999. I was put on Harvard's University physical planning committee just after I got tenure. And the outgoing president, Neil Rudenstein, was very keen to build a contemporary art museum designed by the great architect Renzo Piano on a site that Harvard owned right on the Charles River.

Now, this museum, which would be an architectural glory and a business draw for Cambridge, would unfortunately slightly mar the view of one middle-level employee at a public radio station, okay? This mid-level employee was fairly effective at organizing, I don't know, 14 neighbors. And single handedly, they were essentially able to stop Harvard from doing this.

And the whole thing eventually died when Neil left, and his successor was not interested in doing it. I was amazed by the power of just a very small number of people to do something that you would have thought was strongly against the interest of the community as a whole.

And that was the first thing that started me thinking about this. Then I went on leave in the year 2000, 2001. I had just gotten divorced. And this was my way of sort of getting out of town. And I went down to Washington for the year. But I struck up a deal with Wharton, where I would come to Wharton one day a week, sometimes two, I guess, but mostly just one.

And during that time, I discovered one of the great intellectual partnerships of my life and one of my favorite people in the whole world, your former mentor, Joe Jerko. And Joe and I, because we're both Sherwin Rose people, we think the same way. We think using Chicago price theory, we think using the Rosen-Roback model.

The core insight of our paper was if it costs a whole lot more to buy something than it costs to build something, than something screwing up this market. All of our early papers were about this was basically using the Chicago price theory thing, which is we can figure out how much it physically costs to build a unit.

Why doesn't it cost that much to buy a unit? Well, the only possible reason is we've got something that stops people from putting up more units. So this was done in our 2005 Journal of Law and Economics paper, where we just said, look, the marginal cost of adding an extra unit in New York City is just the next floor.

So it doesn't require more land, it doesn't require more stuff. And we actually have lots of good estimates of how much it costs to build an extra floor. And so it's that basic Chicago price theory thing. Going back even earlier, we had a paper, I think, in the Cato Regulatory Journal in 2002 that focused on the value of land if it sits under a new house, versus the value of land if it extends an existing house.

Exactly the same logic, right, where if land seems to be worth a lot when it sits under an existing house, which means take the value of the total house, subtract the physical construction cost, and look at what's left. If that land cost ten times as much as just land that extends a lot, then it must be something else that's giving that land value, which is the right to have a house on it.

That paper, I will say, I received a lovely note from Thomas Sowell of the Hoover Institution, maybe in 2003, telling me that if we were right, that this was really important, which I treasure that note, but that was how we got started on it. And then we did a whole bunch of work on this around this time period, and then we move in and out on this, and we're still doing, we have a new paper that relates to this.

The reason why this is my favorite policy issue. So one of the beauties of being an academic with some sense of wanting to participate in public policy debate is you get to choose your issue, right? I'm not the chairman of the CA. I don't have to have a view on every policy that comes across.

I get to choose what I want to work on. What I love about land use reform is, one, it's about free people and free markets. It's about fundamentally giving property owners the right to do what they want with their own property. That sits with something very deep within my soul.

And two, it's good for poor people, right? It's an area in which if you allow more housing to be built, it means the prices of housing is gonna go down for ordinary people. And so it's both progressive and libertarian. And why not choose something that leans in both directions in a way, that's in a way that sort of is appealing rather than.

I'm against minimum wages, too, but it's a lot harder cuz there are poor people who actually are helped by minimum wages, although they do screw up labor markets. Again, depends a lot on where and how much. I mean, I think a $20 minimum wage in West Virginia would be insanity.

I think in Seattle it probably does much less damage. But why choose this messy area where I've got a whole lot of difficult distributional issues to deal with versus an area in which the distributional stuff seems to be just as good as the freedom stuff?

>> Jon Hartley: Absolutely, I'm curious, I guess, just to think a little bit out loud here about political economy issues.

I fully agree with you. And it's one of the things that makes, zoning and zoning reform, such an important issue and such a low hanging fruit in my mind. And also, Joe Jerko, for those watching or listening, Joe, I took his real estate markets class at Wharton, and it definitely was by far one of the best classes I've ever taken in my life.

And it's almost kind of, I should say, a hugely eye opening type of class. And just explanation for why is it that these coastal real estate markets are so expensive? But I'm curious, what do you think about the political economy dynamics that makes zoning reform so difficult? Which is it puts the incumbent homeowners against the non-incumbent homeowners, maybe the renters or people that haven't bought a home yet.

And I feel like there's still a challenge where even probably middle class, even like lower middle class individuals who are homeowners would maybe still be opposed to zoning reform just because they're in their mind is some sort of a short run hit to their own home values. And there are a considerable amount of people in the us and around the world who do build their wealth through housing.

And maybe that's not the optimal way to go about it. But I'm curious, what do you think about these political. Economy roadblocks to getting more housing built.

>> Edward Glaeser: So I think that if we are just looking at the smaller the jurisdiction, the more impossible it is to contemplate zoning reform.

There's no way you're gonna walk into a suburban area dominated by homeowners and convince them to do zoning. You're right, for most of them, the value of the home is the most important asset, and anything that promotes affordability is impoverishing them. So you're gonna lose fundamentally. On top of that, I think the natural human fear of change, completely exaggerated, right?

But I think in terms of people think that this new housing development is gonna do terrible things to their neighborhood, and it almost never does. But that adds on it in terms of making it hard. The larger the jurisdiction, the more likely you are to have some support.

And actually, we see this in a statistical sense in the job market paper of Clemence Tricote, who shows that when smaller jurisdictions get merged into bigger jurisdictions in France. You end up seeing more building in the small, formerly smaller area that's now part of a bigger area. I experienced this in the US in the sense that big city mayors typically do want to reform themselves.

They've got a lot of renters they want to take care of. They've got business owners who don't want to pay that much. They've got, they've got bankers, they've got developers. They've got lots of people who want to build. So those are an area in which you can just talk to them, try to figure out ways to make things better.

The larger the states are actually where I think the most important action is. If you ask me where the frontline battleground is for zoning, it is in the California state legislature. That is where the decisions are gonna be made that are gonna make the biggest decisions. The biggest impact on housing in the biggest and most important housing market in some sense in the world.

And then once you get to the federal government. I have been speaking with people at HUD since the Clinton administration about these issues, and they have always wanted zoning reform. They have always wanted less local zoning, which I think explains why President Obama is saying, this is why many Republicans are happy to say they'd like to see less red tape in building.

But the problem is the mismatch between their desire, because they do see the downsides of this with the sort of real difficulties of the federal government influencing hyper local land use regulation. Especially since it really has to run through the state legislatures, which is why I like this idea of tying federal funding to infrastructure.

That goes to the states to making meaningful change on the housing front.

>> Jon Hartley: That's fascinating. You're absolutely right that states have this power preemption where they can attempt to compel municipalities to enact zoning. And I think you're absolutely right. It's one way to overcome these sorts of political economy issues.

There's this other idea that you've written about quite at length, which is getting, say, a federal government to require, or I guess state governments could do this as well, to varying degrees. That your federal government withholds infrastructure funds or some sort of federal benefits that the municipality gets if they do not hit some sort of a housing growth target.

This is something that's actually being proposed in Canada. And Pierre Polyev becomes prime minister about a year from now. It's a huge part of his platform and something that he will undoubtedly do or attempt to do. You've written quite a bit about this in the US and how the US federal government should do this.

Can you explain a bit more what you mean by housing supply growth requirement? And also having heard a bit about the debates here, what should that optimal housing supply growth target be? Some people might think, well, isn't that a bit top down? What's the right number and how would you monitor it and so forth?

I'm curious, how does that work out in your mind?

>> Edward Glaeser: So I think one of the differences between Canada and the US is that there is enough funding flowing directly from the federal government to localities that you can actually threaten them through this. In the US, the money all through goes through the states.

So it gives you this intervening layer. And it really has to be that the state legislature of California is threatened by losing their highway funds, that they then take action. And then the state legislature of California, they can do anything they want to localities. They can completely take away the ability of localities to zone.

In fact, in California you already have targets. California has a clear process for allocating housing units to localities. We can obviously debate what those units should be, but they have a process. The question is, what are they gonna do to enforce that? The nuclear option is the so called builder's remedy, which means you just get a get out of jail free card if you're a developer.

And you get to follow the state development regulations instead of the local ones. That's a very powerful tool. We have something similar to that in Massachusetts called chapter 40 B, which means that essentially for communities that are unaffordable. And if you're building something that has enough affordable housing, you can basically bypass the local rules as well.

So that's a very powerful tool for doing this in terms of creating growth targets. I think it's useful to compare this with the last time the federal government tried to bully the states to do something which was back with the minimum drinking age. And being someone who was just on the wrong side of that drinking age in the early 1980s and constantly seeing it go out of reach, I certainly didn't view that federal intervention in a positive light.

So maybe this should give me pause about what I'm proposing but in that case, there was a very clear legislative goal. So it was really easy for the feds to say, just change this, or else with housing, doing it around a legislative thing is a mistake because there's no one rule that makes a difference for housing.

There are a 1000 ways to say no to any project. And saying, you can't have minimum lot sizes that are greater than a quarter acre. What good will that do? They'll come up with a wetlands regulation that says, you can't do this if there's a spotted owl within 1000 miles, you can't do whatever.

There are so many ways that you can turn down a housing project. Anything that goes through the sort of that says we're gonna have a legislative target doesn't work. You need to have a building target. And that building target should really reflect two things, one of which is existing density levels and the second of which is the level of current demand.

And I think in any area in which you have relatively low density and relatively high current demand, that those are places that you should have pretty high quotas. I'm not averse having a system in which wealthy suburbs can buy their way out of this by inducing other places to build.

But you should have some clearly well regulated market that figures out how you trade off one for the other. But I would have sort of a two-factor model to determine these quotas.

>> Jon Hartley: I want to, just before we wrap up on zoning, I want to sort of test your, or just get your thinking in terms of what the history of zoning is like.

How did we get here? And I think a lot of people don't fully appreciate that. Zoning is a historically new phenomenon. And at least Euclidean zoning, which is sort of this idea that you have specific zones for specific land use purposes, was something that kind of came out of Germany in the late 1800s.

And was very rapidly adopted in the US largely in the 1920s. If you look at some estimates. Estimates that roughly 40% of the US population was living in a zone by the end of the 1920s and was much, almost zero at the beginning of the 1920s, early 1910s.

And I'm curious, there was obviously the Euclid versus Ambler Supreme Court decision that was very monumental. And of all people was actually Herbert Hoover as secretary of commerce in the various republican administrations in 1920s, was the one who helped enact a number of state zoning laws. I'm curious what your thoughts are in terms of what in part contributed to the cause of zoning to begin with.

I sort of have a theory or in some, maybe some empirical evidence that says migration in the 1920s had a lot to do with it. There was a lot going on in the 1920s. Economists talk a lot about the 1930s and think a lot about the depression. But 1920s, there was a lot changing, whether it was on the international side of things, sort of thinking about the aftermath of Treaty of Versailles.

Or thinking about immigration laws in the US were changing quite rapidly. And essentially the whole concept of things like passports and the sort of border having a border as we see it today, was largely created in that period. And then you add zoning too. And I feel like these things, both immigration or restriction on migrants from outside the US and restriction on individuals, say moving to your municipality within the US are completely unrelated.

But then would you agree that sort of zoning, maybe that set the seeds for zoning, which didn't necessarily bite till the 1970s and 1980s? You got things like NEPA, which is the National Environment Policy Act, and under Nixon and often its various state components, say CEQA, are often some of the biggest barriers to zoning today.

Is that history right in your mind in terms of the timeline of how zoning got started and started to buy? Before the 1900s, it was largely, if you had a land use dispute, you'd go to a court, you wouldn't have to deal with the zoning board and so forth.

Is that-.

>> Edward Glaeser: I think that history is largely correct. I think one of my favorite books on this is called Zoned American, which you may know by a Penn law professor called Toll, who was writing in 1969. Which creates a particularly readable and enjoyable way of getting some of this history.

It's important to emphasize that land use controls or building regulations are not. Those are actually ancient. So the city of Boston enacts its first building regulation in 1631, which is it bans thatched roofs for fairly understandable reasons, given the fire risk. And of course, there are height regulations in Boston prior to New York's great zoning code of 1916.

Zoning comes out of the same sort of progressive era, progressive movement group of trying to sort of tamp the demons of density, right? There are these unattractive things that come with cities, and you have a bunch of progressive reformers who are eager to make changes on them. Now, they start off mostly focusing on the building.

So there's the various tenement acts that New York passes in the 19th century, and then in the early years of the 20th century, it moves up to sort of large scale zoning. New York's 1916 Zoning Act being, as you say, a sort of a real watershed in terms of this.

You also have the pernicious attempts to zone by race, which occurred during this time period. I think-

>> Jon Hartley: That looks struck down in 1917.

>> Edward Glaeser: 1917, correct. And I, in fact, tell the sort of, I weave these things together, ending up in Buchanan Worley, which gets rid of the deed restrictions.

But I see it as this sort of progressive era thing to try and make cities better in various ways, some of which is sort of good. I like clean water. I think attempts to create good water systems are probably right, some of which certainly has a decidedly anti immigrant feel or a decidedly anti african american feel.

Poor people tended to live messier lives than is now. And there's a certain amount of middle class people just not wanting to see the poor people or not wanting to live near the poor people. That's part of the progressive thing during the late 19th, early 20th century. This is kind of the world of Herbert Hoover, right?

Remember, Hoover is certainly a Republican, but he really, until the Great Depression, is seen as coming from the liberal wing of the Republican Party. He is seen as being, it's not that there is some clear break between Teddy Roosevelt or even more so, Taft and Herbert Hoover. And this is part of the trying to make cities livable for good, God fearing protestant middle class people were the core of the Republican Party in the 1920s.

And I think that stuck with us. Now I agree that it doesn't feel like it has a huge bite early on, right? In part because you have this wave in the 1920s and then in the 1930s, you have a great depression where nobody's building a whole lot during this time period.

And you have enough really vacant land in the years after World War Two that people like the Levitts really figure out how to mass produce housing. On top of that, you have the car. The car and the highway system just opens up vast amounts of land to areas that are not intensely zoned to begin with,.n areas that are kind of a bunch of farmers who want to sell their land at top dollar to a bunch of crazy developers who are going to buy their potato fields for huge amounts of money.

And so through the 1970s, things work and then they don't, because then you start running out of this open land, and the places that are zoned become more intensely zoned. The one thing that I would add on there, the other kind of important innovations are the rise of sort of citizen protest.

There's a very fine book called Megaprojects by my colleague Alan Al Schauer and David Luberoff, also my colleague, which tells the story about opposition to megaprojects. So think the highway revolts. Think Robert Moses building in New York. Jane Jacobs was engaged in the fight against the lower Manhattan Expressway, one of those fights.

And it's really a story in which community organizers borrow tools that are being built in the civil rights eradic to figure out how to stop the developers. The pioneer on this. And I'm always get upset about this, I mean, I love Jane Jacobs in so many ways, but she is not responsible for stopping Robert Moses from running Fifth Avenue through Washington Square park.

The woman who did that is her name is Shirley Hayes, and she does not deserve to be erased from the annals of history, even though the marvelous misses Maisel decides to present Jane Jacobs as doing all this. But they figure out how to stop, stop these projects. They also figure out how to stop private projects.

And so this sort of thing, which I experienced in 1999 of like one mid level manager at a public radio station, public tv station. Figuring out how to organize this community, to fight this is something that's become, you know, it's baked into the urban fabric now. And this is also about the rise of historic preservation during the fifties and sixties.

Again, lots of positive things about historic preservation, but again, like most things, you've given a tool to the community to say no. You've given an excuse to say no and it makes building even more difficult.

>> Jon Hartley: It's fascinating, the whole history is amazing. And we were talking earlier that Jane Jacobs spent quite a bit of time in Toronto, where I'm from.

And physically where I am today. But yeah, she spent some of her life living in New York as well, and you'd spend time on a panel up here with her when she was still alive here in Toronto. I want to shift a little bit. We're going to get back to cities at the end here.

But another big theme in your research is your work on law and economics and political economy with Andrei Shleifer and Albert Alsina. I'm really interested in some of, I think, your biggest contributions there. The things that really come to mind are things like The Doing Business index, legal origins.

How did those ideas kind of happen? So legal origins has this kind of history with Hayek wrote about legal origins a bit, but I asked Jerome Acemoglu recently on the podcast what his best case for colonial origins or legal origins was. And his argument was that legal origins was too broad and that you could have sort of different implementations of different types of, say, French law in different parts of the world.

And I'm just curious what your thoughts are on the legacy of your research on legal origins. I mean, there's still, I think, many papers being published today on, on legal origins and their long-term effects. But it's interesting how you do have this argument that common law is just more efficient than civil law, I think is really compelling.

And you're seeing certain countries like, say, the UAE adopting common law courts. And I feel like that's certainly is a win for legal origins, and I think it certainly has paid some of the success for UAE's recently resurgent economy. I'm curious, what do you think about when you think about the legacy of your work?

>> Edward Glaeser: So I don't think I deserve. So both The Doing Business report was done by Simeon Djankov and Andre. I have certainly written papers that relate to The Doing Business report. In fact, we have a recent paper in the AER that uses a module from The Doing Business report that tries to understand why procurement practices are so different across space.

But I had nothing to do with the original implementation of The Doing Business report and even legal origins. I co-authored a paper with Andre called Legal Origins. I most certainly did that, as I did a number of papers from that time period. But the original empirical work documenting the impact of legal origins, that's Andre's.

That's really his, not mine. To the extent to which you believe the model in Legal Origins and the history that sort of says that in a country in which in France, fundamentally, the nobles are more afraid of each other and of outside conquest, than they are of the king.

And so they're kind of far more eager to have a strong monarch that's able to protect them in England because of its oceans, because of a number of other institutional details, they're more afraid of the king than they are of each other. They wanted to restrict the power of the king, and that's what that paper is.

And that sort of explains what follows afterwards. And we wrote a number of institutional papers during that time, coes versus ecosians, the regulation paper in the Journal of Economic Literature. And I'm quite proud of that work, but I don't see of it as necessarily sort of universally making the case for common law as being the only thing that works.

I do think, in general, things that sort of put brakes on the sovereign are kind of desirable things, but there are also inefficiencies that can come around in Commonwealth countries as well.

>> Jon Hartley: Any thoughts on just institutional or institutions in general as being the fundamental cause of growth?

And you wrote a very famous paper with Andre and co-authors.

>> Edward Glaeser: Yeah, I'll take credit for that one, yeah, 100%. I'll own that one. So my view is that most of the time, institutions are fairly malleable and that, in fact, what kind of matters is human capital in terms of the long run performance?

I mean, if you think about sort of Singapore, right? It's not that Singapore, on independence, had amazing level of institutions. They had an amazing guy that they got very lucky with in Lee Kuan Yew, and Lee Kuan Yew took them through this remarkable human capital investment thing, which is amazing.

Similarly, South Korea was a military dictatorship at the end of the war. It wasn't like it had some fantastic institutions, but it did have a tradition of education that ended up working out reasonably well for it as it transitioned to democracy. So I, in general, certainly am on the view that it's not that institutions don't matter, they do.

I just see them as being highly endogenous and not likely to be seen as the right long-term cause of things.

>> Jon Hartley: That maybe growth causes institutional-

>> Edward Glaeser: In many cases, absolutely.

>> Jon Hartley: And I think what's great about that paper is, you know, one of the big institutions things.

And, of course, these things, I think institutions can mean lots of things. But for Jerome, and certainly Jerome's work, obviously, democracy plays a really looms large in that. And I think the point that you make that I think is such a fascinating example, or perhaps counterexample to drone's claims that democracy causes growth in a big way, is that you look at the east Asian tigers, Singapore, Hong Kong, Taiwan, South Korea.

All these countries grew to effectively western living standards or GDP per capita levels by the 1990s, at which point they still hadn't transitioned to democracies quite yet. I mean, some were never, Hong Kong has never really transitioned to being democrat. But just that counterpoint that you can still grow to being effectively a country that's got western living standards under non democratic regimes is kind of like this fascinating counterexample to the argument that at least democracy causes growth and perhaps there's other institutional interactions.

>> Edward Glaeser: I agree with that. I do think there's a lot to like about sort of limiting the expropriatory power of the sovereignty, but there are plenty of non democratic regimes that manage to do that. I mean, the sort of magic of you think about the transition in terms of the glorious revolution in England and the ability of parliament to commit to pay itself back.

Parliament is a very limited democracy in 1700. This is not a, and I think also, I certainly, I think democracy is generally a good system and I think it's a good thing that we have, we have votes. But I think it's not the only thing to look for.

I mean, if you ask me, would I be if you gave me a choice between the Weimar republic and living in the stable Austro-Hungarian empire under Franz Josef, where freedoms were very sacrosanct? I would take the Habsburgs any day of the week. So it's speaking of someone whose father was born in Berlin in 1930 and watched what the excesses of democracy managed to do in Germany and Berlin during his childhood.

>> Jon Hartley: Well, it's interesting, too, the East Asian, I mean, I fully agree. Democracy, I think its role is, I think historically is really more one of redistribution rather than, say, causing just overall growth. But I'm curious, and it's important that we have for that reason of redistribution. But I'm curious, I do hear the Asian Tiger examples come up a little bit more recently, but really in the context of industrial policy.

And some people credit their growth to different forms of industrial policy. I don't know if you have any thoughts or takes on that, given that there's this research and interest in industrial. Policy, nobody seems in my mind to really name it specific industrial policies that work well, but people like to point to it and it's this kind of hot word, hop on where obviously, there's the CHIPS and Science Act and certain non economic foreign policy interests with wine offshore chips away from China.

But I feel it's a different argument than the universal argument that, well, industrial policy is a secret sauce to growth.

>> Edward Glaeser: Okay, so here's my take on industrial policy. When Lee Kuan Yew did it, it was basically human capital policy masking as industrial policy, right, hiding as industrial policy.

What happened is he sort of gradually upskilled his people by starting them off in light manufacturing and then moving them up the scale. And as they built skills, they became more productive, right? Lee Kuan Yew was able to do things. Singapore in general is able to do things that most other countries aren't able to pull off effectively at all.

If you told me that it would be possible to have an industrial policy in the US, that upscale people, I would say that's conceivable to me. Do I actually believe that anything that would come out of Washington would actually do that? No, not in a million years. Getting industrial policy right is incredibly hard, right?

Precisely, because I think the best case for it is it's about upskilling workers and I just don't see any evidence that suggests that America is able to do that. When I look, I have a new paper which looks at road roughness across America. And in many cities that we are able to look at, there's basically no correlation between the subsequent probability of being repaved and how rough the roads are, right?

So we look at road roughness at one point in time. We look over the next eight months, basically most cities. Denver is an exception. But most cities, there's basically no correlation between road repaving and roughness. If we can't target road repaving properly, right, how in the world are we gonna be capable of figuring out some complex industrial policy that achieves something brilliant?

So I think hubris is a great sin. I think having realistic views of what we're able to do as a country is important, and I think we should be focusing on things like, can we actually improve the quality of our infrastructure? Can we improve the quality of our schools?

Rather than thinking we're gonna have some magic around industrial policy. If you told me you wanted to be open to some sort of ramped up earned income tax credit, maybe even one that is regionally delineated, that sort of was larger in high jobless areas. I'm open to that, but that's not the same thing as saying, you know, what should go in eastern Tennessee.

I know there should be a little bit more encouragement for people to work in eastern Tennessee, but I have no idea what businesses are going to work there.

>> Jon Hartley: That's fascinating and certainly, I think too on infrastructure, but a lot of implications for how useful, I guess paving roads might be for physical stimulus, at least as our existing sort of infrastructure system stands.

I wanna talk a little bit about crime. Any thoughts on recent trends in crime, particularly in coastal urban environments like San Francisco, including their causes and consequences?

>> Edward Glaeser: Sure, so the long arc of this is crime went crazy in the US from 60 to 75, right? And then it kind of bubbled around for 15 years.

I wrote a paper in 1999 called, why is there so much crime in cities which seems to have coincided perfectly with the decline of crime in cities. And in fact, I would have said in 2010 that largely reducing urban crime was one of the great urban triumphs that had occurred in the sort of post industrial world.

The fact that New York was much safer than it had been in my childhood, the fact that Chicago had gotten safe, all of these were great triumphs. Now, at the same time, they were triumphs that occurred with far too much mass incarceration and far too much maltreatment of ordinary people on the street.

And we tolerated that for, I guess, understandable political reasons, but it still was a terrible thing that we tolerated. Now, all of this has blown up over the last ten years in anger over policing, and particularly with the horrendous images of the murder of George Floyd. And we had this temporary movement, which was basically like the police are the problem, not the solution.

And particularly in progressive cities, San Francisco, Seattle, there was a tendency to accept that we were just gonna shut down on policing. We weren't good at it. The policing was not a thing cities needed to do. We were gonna defund the police. Well, I can't think of anything more idiotic than defunding the police, right?

This is an incredibly foolish thing. Cities need policing. The police may badly need reform and I actually believe strongly. It's one of the cases that we make in survival of the city that you actually want to measure how the police are doing not just on victimization, but how well people are enjoying their interactions with police.

Are the police treating them with respect? Are they actually acting in the way that good public servants should be? Because what gets measured gets managed as the great Austrian American, Peter Drucker famously opined, but that doesn't mean defunding. And I think that there's no free lunch in policing as there isn't anywhere else.

And if you want the police to both fight crime and treat people with respect, you're gonna have to pay more for it, not less for it. Whereas this sort of detour that we went the other direction, where the whole bunch of people saw the police fund departments as piggy banks, this was just crazy.

And hopefully we're moving back to that and trying to reclaim the city streets.

>> Jon Hartley: Final question on here and this is just back to cities in general. You've written two excellent books on cities, two tour de forces in my mind or two fantastic books in my mind. The triumph of the city and the survival of the city and I'm just curious.

In the future, will cities in your mind be more or less central in your mind? Given remote work as a technological advance, climate risks the possibility of future pandemics, renewed nuclear power fears, and global competition amongst countries. Where in your mind, do cities stand in the future? Obviously, forecasting is something that economists should never really do, or without some humility.

But I'm curious, where do you see cities going?

>> Edward Glaeser: Okay, so let's just do geographies on this. So in the US, I will still make a case for cities continuing to be important, right? It's been 40 years, 44 years since Alvin Toffler wrote the third wave where he predicted that cities would empty out as we all just connected in cyberspace for 39 of those years.

He was completely and totally wrong. Because at least in my interpretation of it, this face-to-face connections are more likely to complement electronic interactions than to substitute from them. Because globalization and new technologies radically increase the returns to being smart and we are social species that get smart vibing around other smart people.

Yes, it is true, that has been a tough three or four years for cities. But I think fundamentally in the US because of this tremendous return that we get from being around other people, both the pleasure of it and the productivity of it, I'm not counting cities out.

Now, this is a debatable point. You can put your advisor, Nick Bloom and I can argue some of this and we can have a thing. But if you want to give me sub saharan Africa or India or Latin America or any place that isn't the very rich world, all of this stuff is just silly.

Because cities are the future, right, and there's no non urban alternat-Se for Sub-Saharan Africa that looks any good. And especially on our global lattice of travel and trade, right, the opposite to urban life in Africa tends to be subsistence agriculture. That's at far more risk from global warming than anything else that goes around.

So I continue to believe, particularly in the developing world, the future is urban. I think working on making the cities of the developing world more humane and more productive, safer. This is one of the great vocations of the 21st century. And certainly, this is where I plan on spending a lot of my effort in whatever years I have left on this planet.

>> Jon Hartley: Well, it's a huge honor to have you on, really. I think cities are so essential to growth and I think economic growth, what causes economic growth is really, I think the fundamental question in economics or one of the most important questions in economics. And I think you've done really more incredible work in this area than almost any other scholar has in recent decades.

And so I'm just totally amazed by your thinking and how now it's become so mainstream to talk about zoning and land use regulations. Really, an amazing opportunity here to talk with you on your incredible career and ideas. So thank you so much for joining us.

>> Edward Glaeser: Thank you so much for having me on.

It was a pleasure.

>> Jon Hartley: This is the Capitalism and Freedom in the 21st Century podcast, an official podcast of the Hoover Economic Policy Working Group where we talk about economics, markets and public policy. I'm Jon Hartley, your host. Thanks so much for joining us.