Thursday, June 24, 2010

Governments and urban development

My recent Mint op-ed that advocated re-development of slums by in-situ multi-storied housing instead of granting property rights has generated some strong (dare I say, bigoted) comments from the extreme-right. Without getting into the merits and details of any government role in slum re-development, the general underlying premise (of these comments) is that once property rights are given, the dynamics of the market will take care of all infrastructure development.

In the circumstances it is only appropriate that we read what one of the most influential urban economists has to say about the same issue. Edward Glaeser has a superb post explaining how cities turned from being "killing fields – places where proximity led to death and disease" (mainly due to the pollution of the water supply) to healthy locations. He claims that far from this happening automatically as cities grew larger and richer, "urban disease was reduced only with massive public intervention". For those advocating reliance on the free-market to address the urban infrastructure challenges, he has this powerful message,

"By 1896, there were almost 1,700 public water systems in the United States, and municipalities were spending as much on water as the federal government spent on everything except the military and the postal service... this spending was only possible because municipal debt markets had matured to the point where cities could borrow vast sums...

Big waterworks weren’t the only example of big government reducing urban disease. In 1896, George Waring attacked the waste on New York City’s streets with a lot of spending and a uniformed corps of cleaners... the downsides of proximity, be they cholera or crime, have never been solved with laissez-faire. Costly, often intrusive public action has often been needed to manage the negative externalities associated with urban density."

And nobody can accuse Ed Glaeser of being a supporter of bureaucratic central planning and not having an understanding of economics!


Anonymous said...

Looks like the academics would never agree on anything.

Anonymous said...

see the paper by david cutler on this.