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Edward Glaeser’s Laissez-Faire Urbanism

A Bloomberg essay by the urban doyen Edward Glaeser makes a poor case as to why proposed New York City sea walls should be paid for locally, without federal government support:

New York Can Protect Itself Without Federal Aid - Edward Glaeser

Sea walls are expensive. One recent estimate is that they cost $35 million per mile and require maintenance that costs from 5 to 10 percent of that amount per year. At such a price, protecting the entire mid-Atlantic region would be prohibitively expensive, yet defending New York City would be affordable. A great wall running from Sandy Hook in New Jersey to the Far Rockaways would cost less than $500 million based on that estimate.

Nothing in New York comes cheaply, however, and I suspect that the estimate by the Dutch water-risk expert Jeroen Aerts that it would cost $10 billion to build two barriers — one between Sandy Hook and the Rockaways and a second at the north end of the East River — is far closer to the mark. Aerts himself suggests a $17 billion solution with three great walls, and says that an extra $15 billion might be required in added coastline protection.

Aerts’s total of $32 billion would be roughly half the city’s annual budget. But the costs of Hurricane Sandy also ran in the tens of billions. If the alternative is giving up on lower Manhattan, which has hundreds of billions of dollars’ worth of property and infrastructure, the price looks downright cheap. If the Netherlands can build a wall system that protects an entire country that lies below sea level, then New York City can protect itself.

Who should pay for these defenses? The protected property owners, of course. There is no reason why New York should look to the federal government in Washington for this spending.

The city has the money to pay the bill, and it should champion the principle that we only build sea walls or other barriers when the people who are protected pay for them. This helps ensure that the benefits justify the costs. We don’t want to go further down a path where every hamlet on the Eastern seaboard feels it has a right to federally financed storm protection.

Sea walls may not be the answer, but any solution is sure to require huge public expenditures. This highlights another central point about cities: They need strong, effective governments.

Exit polls found that Mitt Romney, an advocate of laissez- faire economics, received only 29 percent of the votes in big cities, while President Barack Obama, who believes in big government, won 69 percent of urbanites’ votes. That pattern makes sense, since people in vulnerable cities need government more than people in far-flung rural areas do (even though the latter often get more per capita in federal subsidies).

Economist Matthew Kahn of UCLA has studied the death tolls from natural disasters. He found that where governments are more capable, fewer people die. This makes me worry about the fate of cities in the developing world that are just as subject to natural disasters as New York is but have governments far less capable of taking effective precautionary measures. Kahn has predicted that cities will be able to defend themselves against the changes associated with climate change. While I am far less certain about Karachi, I am optimistic enough to think he is right about New York.

For my confidence to be validated, however, New York needs to spend billions to defend its vulnerable real estate. We have to stop denigrating mega-projects and resurrect the spirit of the city’s master builder, Robert Moses. If it does this right, New York can again provide a model of safety amid threatening storms for the cities of America and the rest of the world.

First of all, let’s start by simply accepting Aerts’s numbers for the sake of argument (although my bet is that they are far too optimistic, by half). The argument Glaeser is making is that those that benefit from something — even when it is a large scale regional infrastructure investment — should be the ones that pay for it.

But, who in fact benefits from the protection of New York City? Is it limited to those owning property there? Does it include those living there, but only renting? What about those that only work in the city, who currently are taxed on their income by the city: they would surely be included? And of course, we already accept the premise that visitors to New York pay taxes for hotels and airport fees, and tools to enter or pass through the city on its bridges and tunnels. So we already have a systems where a great number of people — not just landowners — pay for New York’s infrastructure and operations.

Glaeser seems to generalize from the notion that property owners should pay for their own insurance, and winds up thinking of the city as a collection of individually-owned buildings and property. But a city like New York has an enormous civic side, involving streets, parks, infrastructure, transportation, and municipal and regional operations: it is much more than the sum of its properties. We shouldn’t consider NYC just another ‘hamlet’ on the coast. And I don’t quite understand the Romney v Obama dimension of his argument: is he suggesting that protecting NYC is one of Romney’s ‘gifts’ to the urban voters?

I have argued elsewhere that we need to retreat — in general — from the coast, even in southern Manhattan. But I still believe that the benefits of major urban centers on the coast, especially at the mouth of major rivers, will continue to justify us living and working there.

In the final analysis, the value of New York City is non-linear relative to the population and cash flow streaming in: much more comes out of a productive, creative, and growing metropolis than goes in. And those outputs are not just financial, and they are not held only by the property owners. The region, and by extension the entire United States, is enriched by a working New York City. 

Basically, I reject Glaeser’s core argument because he — of all people! — simply does not factor in the miracle of cities’ non-linear productivity. Or perhaps he assumes that these returns aren’t shared widely.

So, any solution for protecting New York City from future superstorms should be a regional one, in which New York City, New York, New Jersey, and the United States all participate, sharing risks, costs, and eventual benefits when the next superstorm’s damage is averted.

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