Speaker 1: Hello, Welcome to the New Economy. I'm Stephanie Flanders, head
Speaker 1: of Bloomberg Economics. Urbanization is high on the agenda at
Speaker 1: the New Economy Forum in Singapore because Mike Bloomberg, as
Speaker 1: we know, has a bit of a thing about cities.
Speaker 1: He thinks they can often succeed where national governments have failed.
Speaker 1: But there's a dark side to urbanization as well, and
Speaker 1: by that I don't just mean the pollution and the smog.
Speaker 1: The risk today is that the world's going to be
Speaker 1: increasingly divided between people living in hyper connected, hyper successful
Speaker 1: cities and those that are stuck outside. A lot of
Speaker 1: different things contributed to Britain voting to leaving the European
Speaker 1: Union in the election of Donald Trump in the US,
Speaker 1: but you can't help noticing many of the places most
Speaker 1: likely to vote for Brexit or Trump were smaller cities
Speaker 1: and towns, places where many people felt they've been left mind.
Speaker 1: I'm really pleased we're going to have a discussion about
Speaker 1: some of these issues later with two of Bloomberg Economic
Speaker 1: Star reporters, US Economy reporter Genus Smellick and Jill Ward.
Speaker 1: Now Jill usually covers the UK, but we've just said
Speaker 1: it to India to get a taste of something different.
Speaker 1: After she'd unpacked her bags, I sent her to go
Speaker 1: find out what the challenges of urbanization look like in
Speaker 1: downtown New Delhi. I've been living in Delhi for over
Speaker 1: a month now and the extreme effects of urbanization have
Speaker 1: become a part of daily life today. Like many days,
Speaker 1: Deli's air pollution is the worst out of any city
Speaker 1: in the world. I'm a commute into work. The view
Speaker 1: of India Gate is getting more and more obscured by
Speaker 1: thick smog, which gets especially bad in the winter months.
Speaker 1: Flight struggle to take off because of bad visibility. The
Speaker 1: roads are packed and I spend a lot out of
Speaker 1: time stuck in traffic jams. Inequality is starkly visible in
Speaker 1: the slums right next to luxury hotels and palatial homes.
Speaker 1: The challenge, both in India and across the globe is
Speaker 1: to build the infrastructure and services necessary to keep pace
Speaker 1: with rapidly growing urban areas. The Delhi's population, which currently
Speaker 1: stands at twenty nine million, is forecast to outstrip Tokyo
Speaker 1: is to become the biggest maga city in the world
Speaker 1: in about a decade. Across the globe. Percent of the
Speaker 1: world's population now lives in urban areas, and that's expected
Speaker 1: to increase to sixty eight percent by the middle of
Speaker 1: the century. The concern amongst economists is that if managed badly,
Speaker 1: urbanization will exacerbate the global divide between the halves and
Speaker 1: the have nots, leading to social unrest in the US
Speaker 1: and Europe, city dwellers are already being priced out of
Speaker 1: ever more expensive urban housing. For American urbanist Richard Florida,
Speaker 1: with growing geographic split is the greatest political crisis of
Speaker 1: our time in a global environment, just being urbanized and
Speaker 1: having urbanization doesn't mean that you're going to lift all
Speaker 1: or even many boats, and that what what tends to
Speaker 1: happen is that you tend to get a very lopsided
Speaker 1: or spiky or winner take all kinds of urbanizations. We
Speaker 1: face a new urban crisis of mounting segregation, mounting poverty,
Speaker 1: massive concentrated disadvantage. Um. It's incumbent on all of us
Speaker 1: to wake up to the fact that this geographic divide,
Speaker 1: this spatial inequality, this geography of has and has not
Speaker 1: just creating the greatest political backlash and the greatest political
Speaker 1: crisis of our time. In India, the government is trying
Speaker 1: to act quickly to keep up with a challenge. Prime
Speaker 1: Minister in a Render Moody has set a series of
Speaker 1: ambitious targets like providing housing for all two. He wants
Speaker 1: to build sewage and drainage facilities across India and create
Speaker 1: so called smart cities using technology to help improve urban
Speaker 1: infrastructure for our Deep Singh Poury, India's Minister for Housing
Speaker 1: and Urban Affairs, Rapid growth and cities means building on
Speaker 1: a massive scale over cups of child his office, he
Speaker 1: told me India needs to build about one Chicago a year.
Speaker 1: If you look at the history of what happened in
Speaker 1: the past, we subjected our urban spaces to neglect. That's
Speaker 1: putting in mildly. I normally use the word we subjected
Speaker 1: the urban space to criminal neglect. We we were preoccupied
Speaker 1: with rural development, with agriculture. Now that's important, but the
Speaker 1: fact is that today our cities provide for more than
Speaker 1: two thirds of our GDP of our tax revenues, and
Speaker 1: this will increase, so you will have more and more
Speaker 1: people coming into cities. So you need to build the redeveloped,
Speaker 1: and you need to build green and you need to
Speaker 1: build Brazilian structures. Our estimate is that between now and
Speaker 1: we need to build something like seven to nine million
Speaker 1: square meters of urban space every year, which means one
Speaker 1: Chicago every year between now and Can this be done?
Speaker 1: I don't think that's an appropriate question. You have no
Speaker 1: option but to do it. I visited a Flagship's smart
Speaker 1: city projects, a housing re development for government employees in
Speaker 1: central Jelly called East to Buy the Guard. It's one
Speaker 1: of seven similar projects in the capital where fourteen story
Speaker 1: towers are being built through place two story houses built
Speaker 1: decades ago, said to be completed next year. The new
Speaker 1: apartments will double the amounts of families living on the
Speaker 1: eight seven eight o'clock to more than four and a
Speaker 1: half thousand, and they included mentally friendly features like rainwater
Speaker 1: harvesting and on site waste processing. While getting a tour
Speaker 1: of the site, I noticed several huge environmental themed paintings
Speaker 1: on the side of some buildings, like birds, flowers and
Speaker 1: a yogi surrounded by branches in the middle of the
Speaker 1: muddy and dusty construction work. So I guess for the
Speaker 1: five families that are living here now, they can use
Speaker 1: over two hundred families living in slums on the site
Speaker 1: were relocated about fifteen miles away. Huge metal barriers now
Speaker 1: surround the construction area, and once complete, it will be
Speaker 1: a gated community. Urban planners and environmental researchers are unimpressed
Speaker 1: with the project. It's faced several cases in court for
Speaker 1: lack of traffic and environmental assessments. It also sits on
Speaker 1: the Ring Road, which circles the Sindewy Center and is
Speaker 1: one of the busiest in Delhi. What's more, almost two
Speaker 1: thousand trees were down on the site while the company
Speaker 1: building the complex and has planted day ones. Critics say
Speaker 1: they're mostly decorative. Building a ten tho space parking lot
Speaker 1: beneath the buildings will make it difficult to recreate a
Speaker 1: meaningful green space, they say, and it clicks at risk
Speaker 1: an important supply of water that's vital in a city
Speaker 1: that may run out of ground water as soon as
Speaker 1: the construction is being funded by the sale of commercial
Speaker 1: space on the site, but Deli's High Court ruled in
Speaker 1: August that some of it can't be handed over since
Speaker 1: questions remain over how water will be supplied and traffic managed.
Speaker 1: Delhiites have rallied against the project on social media with
Speaker 1: hashtags like my right to breathe a Deli trees. S
Speaker 1: os I sat down with Canchy Coli, an environmental researcher
Speaker 1: at the Center for Policy Research, who pointed out a
Speaker 1: multitude of issues for the SUP just reeling with water crisis.
Speaker 1: We are these projects are destroying water sources. That is
Speaker 1: dealing with it. We should. We're talking about a construction
Speaker 1: project that is increading increasing both dust as well as UM,
Speaker 1: you know, impacting air quality and our city that is
Speaker 1: actually needs more green spaces bots for both for public
Speaker 1: use as well as you know, mitigating impacts of both
Speaker 1: pollution as well as heat. UH. These projects, you know,
Speaker 1: land up replacing those with ornamental trees and landscape gardens
Speaker 1: which have we serve no purpose both with us when
Speaker 1: it comes to air pollution management as well as UH
Speaker 1: reducing heat particulars, these are acute problem in the city
Speaker 1: which these projects are actually aggravating more than mitigating. So
Speaker 1: we need we need the development in the city, or
Speaker 1: need development or re development the city that helps you
Speaker 1: address these problems rather than aggravate these problems. The albums
Speaker 1: Planners I spoke with about the project, agrieved that Delhi
Speaker 1: needs more development, but perhaps done in a more inclusive way,
Speaker 1: one that takes into account the context of the rest
Speaker 1: of the city. In India, housing hasn't kept paceful population
Speaker 1: growth and environmental issues have lagged. According to Samia Gluliyani,
Speaker 1: who leads work on sustainable development at the World Bank,
Speaker 1: that means that the clients of economic returns that could
Speaker 1: come from urbanization haven't been fully realized. Urbanization has helped
Speaker 1: alleviate poverty in India, she says, but it's more and
Speaker 1: more people rise above the poverty line. They're landing in
Speaker 1: a pool that's vulnerable and not quite middle class. Yet
Speaker 1: the rich, meanwhile, are getting richer, while for the pours
Speaker 1: of the poor, non monetary aspects of poverty have actually risen.
Speaker 1: Many don't have access to basic services like housing, education,
Speaker 1: and health. That said Enrico Already at the University of California, Berkeley,
Speaker 1: points out that india Is huge informal housing sector at
Speaker 1: least allows poor Indians to get close enough to job
Speaker 1: dense urban areas to benefit from the economic opportunities. India
Speaker 1: also makes it hard to develop new housing formal new housing,
Speaker 1: but then On the other hand, there's a lot of
Speaker 1: informality in the housing factory in India that circumvents that.
Speaker 1: Islam as being one extreme case, but there are there
Speaker 1: are all sorts of intermediate housing arrangement between Islam and
Speaker 1: formal legal housing development. The solution to the challenges of urbanization,
Speaker 1: economists say lies in devolving power more locally and promoting inclusivity,
Speaker 1: and there has been some success in that regard. In Shiwa,
Speaker 1: a city in northern India where the taps were in
Speaker 1: dry this summer, the state government has embarked on a
Speaker 1: set of reforms to move the water system from the
Speaker 1: state managed authority to the city itself, which could prove
Speaker 1: a step in the right direction in the future. Latch
Speaker 1: Wals depend on how Birth and Cities has managed. Said,
Speaker 1: the only way we can really fix our problems is
Speaker 1: by acting locally. We've revitalized cities from Pittsburgh to Birmingham
Speaker 1: by foraging local public private partnerships and getting to work
Speaker 1: to make our cities better. We need a better science
Speaker 1: of city. It's a big shift, but I think we're there.
Speaker 1: So I've brought Jill Ward up here to Dubai with
Speaker 1: me and We're sitting in Bloomberg's Dubai A newsroom and
Speaker 1: we're going to be joined by our US economy reporter,
Speaker 1: Gina Smilik, who is sitting in our Boston office, and
Speaker 1: she's taken a particular interest in the rise of cities
Speaker 1: over the last year or two. Even as she's covering
Speaker 1: the federal reserves, she's also been interested in how urbanization
Speaker 1: and growth of cities has been feeding into not just
Speaker 1: economic growth in the US, but also inequality. So, Gina,
Speaker 1: thanks for joining us. You've been looking at the US picture.
Speaker 1: I want to tell us how you got interested in
Speaker 1: cities and their potential impact on the economy. Yeah. Absolutely so.
Speaker 1: I think that two main things got me interested in cities.
Speaker 1: First was just that I read a lot of economic research,
Speaker 1: and this became a major strain starting a couple of
Speaker 1: years ago of inquiry for a couple of different researchers,
Speaker 1: including Enrico Moretti over it UC Berkeley, just this idea
Speaker 1: that cities are both these areas that foster intense productivity,
Speaker 1: really dynamic economies, fast progress, and real creativity. But at
Speaker 1: the same time, because that density can be sort of
Speaker 1: prohibitive if it's cost prohibitive for folks to move there,
Speaker 1: they can also foster in equality, and so he started
Speaker 1: looking at those issues and I was quite interested in
Speaker 1: that line of research. And then the election happened, and
Speaker 1: I think that really brought home for me, and I
Speaker 1: think for a lot of people this idea that the
Speaker 1: cities in America were just diverging entirely, both socially and
Speaker 1: economically from the rest death country. And I think you
Speaker 1: can see that really clearly if you look at a
Speaker 1: voting map, because the cities are just often sort of
Speaker 1: dots of blue and oceans of red. And also, I
Speaker 1: think it was just interesting that we had sort of
Speaker 1: this national conversation around the election where we realize that
Speaker 1: you're even sort of the society you hang out in
Speaker 1: and the things you eat and the things you watch
Speaker 1: on television are different in cities than they are relative
Speaker 1: to sort of the more rural areas like where my
Speaker 1: my parents still live and where I grew up, and
Speaker 1: so that I think that was really interesting. It made
Speaker 1: me very interested in how the sort of urbanization of
Speaker 1: America is reshaping how our economies work in the twenty
Speaker 1: one century. I think that's really interesting because it's something
Speaker 1: we've come up against in the UK as well. We
Speaker 1: had years and years of thinking of the great problem
Speaker 1: cases being those big old inner cities, whether it was
Speaker 1: Detroit or in the UK it would have been some
Speaker 1: of the old mining towns, or Sheffield or sort of Manchester.
Speaker 1: And then those cities have actually had a lot of
Speaker 1: development and people have moved back into the city and
Speaker 1: we've sort of thought, okay, good, that's that that regional
Speaker 1: problem has been somewhat helped. But in the meantime, there's
Speaker 1: all of these towns that have sort of fallen by
Speaker 1: the wayside, that haven't had that kind of regeneration, and
Speaker 1: yet the gap between them has grown even more. Now. Jill,
Speaker 1: you've I mean, you've got an interesting experience because until
Speaker 1: a few weeks ago you were living in North London,
Speaker 1: one of the more gentrified bits of London, if I'm
Speaker 1: allowed to say that, and then you've you're now in
Speaker 1: in Delhi, which is slightly different from the Mumbai is
Speaker 1: where everything is completely crazy and on a very wide,
Speaker 1: on a crazy scale of frenetic activity in India. But
Speaker 1: I think Delhi probably comes close certainly a big contrast
Speaker 1: with London. Those some of those relocations that you were
Speaker 1: we were hearing about in the in the program. You know,
Speaker 1: quite a different feel to the regeneration that we've seen
Speaker 1: in places like Pittsburgh. So, yeah, Delhi is a bit
Speaker 1: less crazy than Mumbai, I suppose, in the sense that
Speaker 1: there's actually quite a lot of green space in the
Speaker 1: center of the city. Um, it's kind of shaped like
Speaker 1: a doughnut in terms of the center is very green,
Speaker 1: and then once you get to the outskirts, starting at
Speaker 1: the Ring Road which circles the city, it gets much
Speaker 1: more built up. We were talking about the this regeneration
Speaker 1: or the redevelopment plan that you've been engaging with. You know,
Speaker 1: it's quite quite a different feel from the equivalent thing
Speaker 1: that you might have, certainly in the UK, where that
Speaker 1: the developers would be forced to have a certain amount
Speaker 1: of affordable housing and be a little bit inclusive. There's
Speaker 1: no no pretense to inclusion in this place, is there.
Speaker 1: Absolutely so. It will be a gated community and there
Speaker 1: were actually about over two thirty families living in slums
Speaker 1: on the site before they started construction in that have
Speaker 1: just been relocated to kind of the southwest outskirts of
Speaker 1: the city. About fifteen miles away. So that's been one
Speaker 1: big criticism when I speak with economists, architects, even urban
Speaker 1: planners who say, really, this, this could be an opportunity
Speaker 1: to lead to better integration in what is actually a
Speaker 1: really prime location for Delhi, but instead it will be gated.
Speaker 1: And I guess that's one of the things, Gina, that's
Speaker 1: really striking in the US context, and I've seen Richard Florida,
Speaker 1: who writes a lot about cities, has talked about this
Speaker 1: and some of the other researchers that you were talking
Speaker 1: about it is that it's I mean, cities are a
Speaker 1: cause of inequality, but that's primarily because housing is such
Speaker 1: a source of inequality that once you have the kind
Speaker 1: of success of in a city, the thing that happens
Speaker 1: is it becomes incredibly expensive for some of the people
Speaker 1: who used to live there to be there, and then
Speaker 1: you've got this increasing wealth inequality. You know, is it
Speaker 1: controls on building houses that's that's driving that partly? I guess, yes, absolutely.
Speaker 1: I think there's sort of a large and growing literature
Speaker 1: that says, really, our zoning regulations and this idea of
Speaker 1: not in my backyard, you know, we like conclusive growth,
Speaker 1: but as long as it doesn't you know, obstruct our
Speaker 1: site line to the nearest local landmark. UM. I think
Speaker 1: those sorts of policies have really fostered some of these
Speaker 1: problems that we're having, and you can see it so
Speaker 1: much in the aggregate data in the US. You know,
Speaker 1: what we've seen is folks with college degrees are just
Speaker 1: flooding into cities. Folks without them just it's completely cost
Speaker 1: prohibitive there. They're staying point where they are. And when
Speaker 1: you think of cities as increasingly the areas where all
Speaker 1: the opportunity is from an economic standpoint, I think that
Speaker 1: is going to be increasingly problematic as we assuming these
Speaker 1: trends continue, that's going to be increasingly problematic for inequality
Speaker 1: both and income and in wealth over the next couple
Speaker 1: of years and decades. Do you get the sense, Jill,
Speaker 1: that there's a lot of that, there's a lot of
Speaker 1: thinking around this in in Delhi or other Indian cities,
Speaker 1: because you know, it certainly has been it's been a
Speaker 1: college industry that I've noticed over the last few years
Speaker 1: people talking about cities as the new drivers of growth
Speaker 1: and city governments being more important than country national governments
Speaker 1: and it's certainly in Europe. People have done a lot
Speaker 1: of thinking and the US about what makes for a
Speaker 1: successful city and how can you have a have the
Speaker 1: full range of people living in a neighborhood rather than
Speaker 1: having the kind of segregation that we've sometimes had in
Speaker 1: the past. Is there any of that in India or
Speaker 1: do you feel it's it's hellmell for growth no matter what?
Speaker 1: So there is a lot of thinking around in equality
Speaker 1: in India UM and I think one of the big
Speaker 1: problems that came up when I spoke with economists for
Speaker 1: this story was this issue of governance UM and in
Speaker 1: Delhi specifically, you kind of have overlapping jurisdictions that makes
Speaker 1: it very hard to plan for infrastructure that you need
Speaker 1: to keep up with its rapidly expanding population. So that
Speaker 1: kind of a big theme that came out of my
Speaker 1: reporting that it hasn't been able to keep up in
Speaker 1: India and that's why you haven't been able to get
Speaker 1: as much out of urbanization as you could have compared
Speaker 1: to other countries in the region, UM, compared to China,
Speaker 1: for instance. I mean, where do you see this going? Geno?
Speaker 1: I mean, is it something city governments have been quite
Speaker 1: vocal in America, they do have a bit more power,
Speaker 1: maybe more ability to plan than some other cities. Do
Speaker 1: you see a lot of conscious efforts to engage with
Speaker 1: this in city planning or is it just are they
Speaker 1: too constrained by local interests and some of the planning
Speaker 1: restrictions that you talked about. I think there is a
Speaker 1: growing recognition in the US that this is a problem,
Speaker 1: and there are certainly some towns in regions that are
Speaker 1: really making an effort to make sure that they grow
Speaker 1: in a more inclusive way. One good example all of
Speaker 1: that is the Triangle in North Carolina. The Triangle area
Speaker 1: so sort of that Raleigh Durham Chapel Hill region is
Speaker 1: really making an effort to expand its transit network in
Speaker 1: a way that will kind of keep home prices a
Speaker 1: little bit more evenly spread so that people have access
Speaker 1: to the economically vibrant areas there. So those those local
Speaker 1: initiatives are happening, I think they aren't happening fast enough
Speaker 1: to counter the rapid run up in prices that we've
Speaker 1: seen in metropolitan housing markets, and so I think this
Speaker 1: is going to be one of those problems that most
Speaker 1: folks you talked to will say is going to get
Speaker 1: worse before it gets better. I mean, it's certainly we've
Speaker 1: talked about in these podcasts, we've talked about inequality, and
Speaker 1: we've had also been doing some studies for the for
Speaker 1: the New Economy Forum on how inequality is feeding into
Speaker 1: economic policy around the world, and it does. It feels
Speaker 1: like the urbanization story provides a kind of mirror image
Speaker 1: of what has happened globally with with incomes that you've
Speaker 1: had a big fall in in poverty and in many
Speaker 1: ways urbanization. The fact that the world has now got
Speaker 1: more than half of the population living in cities is
Speaker 1: a sign of the success of economic development, but it's
Speaker 1: equally shown up all of the rising inequality that's that's
Speaker 1: happened at the same time. It just seems like looking
Speaker 1: around the world, whether it's in India or in the States,
Speaker 1: we know how to make cities reflect all of our
Speaker 1: inequalities and the flaws in our economic model. But I
Speaker 1: can't point to that many cities that have managed to
Speaker 1: use urbanization as an engine for for approving the structure
Speaker 1: of their economy make it more inclusive. Maybe that's one
Speaker 1: of the things that they will find the solution to
Speaker 1: in their conversations at the New Economy Forum. We shall
Speaker 1: see in the meantime. Genus Panic and Jill Ward, thanks
Speaker 1: very much for joining me. Thank you, thank you, thanks
Speaker 1: for listening to The New Economy. Today's episode was reported
Speaker 1: by Jill Award with help from Genus Malick and editor
Speaker 1: Lucy Meekin, with special thanks to Uni Krishnan. It was
Speaker 1: produced by Magnus Henriksson. Francesca Levy is the head of
Speaker 1: Bloomberg Podcasts.