« Freakonomics Radio

337. How to Build a Smart City

2018-06-07 | 🔗
We are in the midst of a historic (and wholly unpredicted) rise in urbanization. But it's hard to retrofit old cities for the 21st century. Enter Dan Doctoroff. The man who helped modernize New York City — and tried to bring the Olympics there — is now C.E.O. of a Google-funded startup that is building, from scratch, the city of the future.
This is an unofficial transcript meant for reference. Accuracy is not guaranteed.
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If you'd like to listen to free economic radio without ads the place to do that is sticker premium five dollars a month and you can get a free month trial by going to stick your premium dot com and use a promo code freak. You also get access to all our bonus. Episodes and you'll be supporting our show to that sticker premium, dot, com, promo code freak banks of other predictions. The Pandit have gotten wrong in recent decades, when the most compelling has to do with cities, cities we're supposed to die out the proliferation of the automobile and that everyone would move to the suburbs, never come back. The decline of urban manufacturing the city itself would decline and then there's all the crime and noise and pollution and chaos cities are known for who on earth would ever want to live in any city, as it turns out
just about everyone, we're in the middle of an historic and wholly unpredict rise in urbanization? It's happening here in Amerika and all over the world. One problem, many of our cities are old means, are not exactly optimized for the twenty first century and is not so easy to retrofit an entire city, so about building a new city for the twenty first century and beyond from scratch army. Is to use technology to really redefine urban life in the twenty first century. Today, uneconomic radio look The city of the future, with a man who's been rebuilding New York City for the past few decades, man, some people call a modern day, Robert Moses, controversial master builder of decades past? I think if somebody says it in meaning that they got a lot done. Then I think it's a compliment. I think if somebody says oh, you did
a lot of top down planning and you displaced lots of people. Then it would be an insult. It would also, I think, not be true along the way he learned the central paradox of successful cities. The question is: how do you actually manage supply and demand a conversation with the mightily, credential urbanists dandy, drew off. Take a sea get comfortable, that's what he did. I am sitting lean and back and smoking a cigar
from W and Y see studios. This is freakin comics radio, the explores the hidden side of everything. Here's your host, Stephen Gardner, if you happen to live in New York City, as I do, there's a name. It's been routinely popping up her few decades now always attached to interesting and often controversial projects, Shirt Dan backdrop. It don't worry, you haven't heard of doktor off is not quite a household name, but his fingerprints are all
over the biggest city in the United States, who grew up in Michigan, became a new Yorker. Quite reluctantly, it just wasn't his kind of place, but he settled in in his wife started raising their family. Here he worked in investment, banking and private equity, seemingly just another money harvester from the provinces who finds the urban riches too good this went on for years and along the way. I came up with this crazy idea that New York to host the Olympics and eventually that that idea became a bit of a movement it drew. The attention of Might Bloomberg with the time was just an ordinary billionaire agenda and on think was even seriously thinking about running for mare, but he joined our bore gave some money. Michael Bloomberg, wasn't seriously think him out rang from air much less being air which
you may know also describes the arc of our current president. Donald Trump run for president apparently started out as a means of enlarging the Trump Brand Bloom run for Mare, New York City was apparently his of enlarging Bloomberg LP the financial information company, the made him rich, but voters. Well, voters are funny animals,
Bloomberg, while short on charm, had a certain peel smart self made fiercely pragmatic and he spoke his mind, often to the detriment of the people you speaking about. It was the opposite of a career politician and then the twin towers were obliterated in the September. Eleventh terrorist attack listen. Two months later, MIKE Bloomberg was elected. New York's one hundred eighth mare now what Bloomberg political neophyte facing a recovery of unknown dimensions invaded some other neophytes to help and when he unexpectedly one right after nine eleven, he asked me to join him in city hall, and so I became deputy mayor for economic development and
rebuilding Dan Doktor off did that job for six years. He then asked me to go run his company, which I did for seven years, Bloomberg LP when Bloomberg was finally done being mare in two thousand thirteen after squeezing out a third termed spite preexisting to term limit he considered running for president. He considered some other things too, but then, to the surprise of many, he went back to Bloomberg LP and when he decided who want to come back to the company I laughed and of a tremendous
patient chip with him, but decided I just didn't wanna, go back to being his deputy mayor anymore and formed a company with Google called sidewalk labs in that's where doktor off can be found today, as ceo of sidewalk labs, whose mission is our mission is really to use technology to redefine urban life in the twenty first century, and we want to do it by literally building, city or a district of a city, and we have chosen Toronto to do that. Ok, let's back up to before Dan Doktor off, was unknown quantity, so you were for many years obsessed with the idea of bringing the Olympics the Summer Olympics to New York City and you toil the first in obscurity for a while spending a lot of your own money, recruiting a lot of people to your cause. You got some leverage over time.
You got in the Bloomberg administration. You were first reluctant to take that job because you thought would curtail your olympic activity, but might glimmered persuade you that actually would give you leverage you got delayed. He wanted to be two thousand. They got pushed to two thousand and twelve olympics. You pursued you pursued, you pursued you travel, The world did everything you could. Finally, you were New York was voted, the? U S: city in the bed then ultimately lost out in the in the Irish Sea and the International Olympic Committee vote sounds pretty not a dozen in our economy to be dismissive of the Olympics himself, but was the olympic bit on some level kind of a stocking worse to rebuild New York's,
de whether the Olympics came here or not, and is it possible that New York perhaps benefited more from the bid for the Olympics and all the infrastructure and related benefits that it produced? Then it would have benefited from actually hosting it. I wouldn't describe it as a stocking horse. I would say that that was always part of a strategy that I was sort of the offer amp from the strategy that you know the Olympics could be the catalyst to getting things done, that people been talking about for generations, but never were able to muster the political will or financial resources actually do, and you could look at successful examples in the asked as to how they use the deadlines at the bidding for the Olympics were more likely hosting the Olympics created sort of an imperative in a city, so Tokyo and nineteen sixty four built the subway system around it
in Barcelona and ninety. Ninety two did an amazing job of recovering from being a step: child timber dread under Franco for decades
and revitalizing the city you're, leaving out the counter examples like Athens, but I mean it's not quite a science of what kind of region will benefit from and that all depends on the planning and it depends on the economic resources and other things. But I convinced myself that where New York was in its development cycle, having that kind of catalyst could be a really important thing and we use the deadline of the olympic decision to get massive rejoining done in time, etc, etc. Now the second question you asked was: are we better off having now one and there? I think the answer is no, because I think we could have used another seven years of deadlines to get more stuff done. Perhaps imagine our subway today if we got well, sir, I know it. I think that might have had a real impact right. We could have argued look all these people are coming. I think it could have been a deadline to getting, for example, congestion pricing done, but at the end,
the day in much of what we wanted to do as part of the olympic plan. That was redeveloping the waterfront. You know in Brooklyn or queens or the whole west side of Manhattan or the high liner regeneration. Coney Island in higher Alarmin flushing areas? It has been largely ignored for a long period of time got a big boost from the fact that we did the Olympics. I love you to give me Dan in just a minute or two what you would consider the best accomplishments of the Bloomberg administration well in my area, I think we fundamentally redefine the economy and land use of New York for literally than much of the next century
I think the rebuilding of the World Trade center site and lower Manhattan has to rise to the top of that list, because it was an emotional financial, physical imperative, the legacy of parks all over the city of other. That's the high line, Brooklyn Bridge Parker Fresh which is a huge part built on a dumping, Staten, island or lots of others. I think, will be an important legacy. How should a city like New York or any city address the paradox that, if you're successful, you'll never inevitably becomes expensive, and then Those cities become unaffordable for a lot of people, so there ve been historical government interventions like rent control and rent stabilization, which are raised in the eyes of economists, nearly always a terrible idea that they create perverse incentives and they lead to dilapidated housing. Sir,
and so on. On the other hand, your administration promoted this somewhat more market based eighty twenty solution, market level, verses, subsidize, and that seems to sort of, should be working, but not anywhere near to the satisfaction of affordable housing advocates. If you look it's what I'd call success cities it is that where there is a lot of demand and the population is growing, which I, by the way, I think is the mark of a successful city, I knew detracting customers. People want to come the question that I thank you. oh, is this: how do you actually manage supply and demand more effectively? You want more people to come. I dont think you wanna have slow that down, because cities can either go to ways and go up where they go down. You're not smart enough to ever manage it so that you can kind of keep things completely and balance so really becomes a question of how do you produce more so
I and there's really only two things that you need in order to do that you need land for people to build on, and you need money in order to subsidize it for people at all income. Apples, we saw that right from the very beginning of the Bloomberg administration. We believe the city was gonna, grow and that's why, at a time when we had no money, we created what was to be calm, and billion dollar, affordable housing program that produced a hundred and sixty five thousand units of affordable housing, which basically means subsidized housing. The question is that when you look back Ghana did we do enough, and the answer is no. We let demand get out ahead of supply. It was really a market timing issue and what would ended up happening? Was we
keeping things more or less in balance for the first five or six years of the Bloomberg administration, we were coming in the growth that prices more going up, that dramatically. Homelessness, in fact, was starting to come down. Then what happened was the financial crisis, the city actually in part, because a lot of the other economic Development initiative bounced back dramatically faster than ordinarily would have been the case. In fact, the city recovered faster than the national average for the first time following a financial panic crisis or bust. Yet when you have a financial crisis, financing largely slows grinds to a halt, and so there was a big pause in terms of the production of affordable housing.
that I think when supply and a man got out of whack, as someone has been in business alot before and after your political time home, I guess grubby or corrupt or unworkable. Is politics compare the two business in New York City. The amount of so called grubby ness was, I think, minimal, pretty much the only time that we had a real problems, with certain exceptions to this was when somebody from the state legislature actually got involved here, a good story of of grubbing nesses. Beside the reason, the waterfront in Brooklyn after World WAR to New York City literally lost almost all of its manufacturing, and so The waterfront, which had the spectacular views of Manhattan across the river, have essentially been abandoned. So it was, you know, dilapidated
orbs and warehouses and factories, and so we decide we're going to turn it into one of the more desirable parts of New York Fit first or of a twenty first century economy, so we worked on this rezoning for about two years. This is while I was bidding for the Olympics. I've literally on the day before the vote. In the city council, I arrived back from Korea where I was lobbying for votes and I called in the city hall cause. There was a snag in our rezoning. It turns out that the state representative, the veto Lopez from the district, had his hand, and what he wanted was a million dollars for a day care centres that I think his girlfriend had. Some involvement in
and literally after midnight called the head of the agency that oversaw sort of day care. manners woke him up in the middle of the night. I'd never actually talk to him. Before I said you don't know me, but I need a favor. Can I count on for the million dollars for this day care center. He said gradually, yes, and we got the deal done yet. Sometimes there were just like insurmountable obstacles. They usually occurred at the state level. The politics there really can be awful at one point, I think the New York Times counted up in something like thirty five legislators had been convicted of various crimes that included the speaker of the
he stayed assembly as well as the Senate Majority leader, and, let's not forget governors Elliot Spit, sir. Of course we are. We had Elliot's bitter too, and so we try to avoid the state honestly as much as possible, but sometimes we just couldn't avoid em. A good example of that was the stadium on the West side of Manhattan as part of the olympic bid. As part of the Hudson yards plan, we propose a stadium over part of the rail yards at her on the west side, and we just couldn't find a way to get around the state legislature, and eventually this really one guy who was the speaker of the assembly who has been confirmed, did of corruption, blocked it without a vote, and did it further lots of reasons, none of which, I am sure will ever know, including the fact that he had a cosy relationship with Madison Square Garden, which opposed it made resort of went on and on and on
coming up after the break? What cities should and should not do to keep corporations happy? Providing they sort of incentives was like giving a crack of city. Officials can and cannot predict the future. I will confess, see that right away what Dan Doktor off is working on now the building literally moves- and the real meaning of the pilot city, he's helping build in Toronto. Our purpose here is to demonstrate how the common a nation of innovation and urban design can fundamentally then the curve and quality of life.
It's coming up right after this damn doktor off started his New York City life as just another banker who then got obsessed with bringing the Olympics to New York. then joined the Bloomberg administration to help Europe recover from the nine eleven attack who then paired the recovery effort with the olympic dream to dramatically reshape the New York that exists today. One of his projects at the moment is a new cultural centre on the West side of Manhattan called the shed of which doktor off its chairman and president shared I'm just curious about the the whiteness of white. Why New York City need another arts complex you?
I understand are not exactly a performing arts fiend at least now at the origin of it actually dates back to when we re planned the West side of Manhattan, which we did and in two separate part one part of it was in West Chelsea in the core of it was to save the high line. The second part was to build, what's called Hudson yards witches this area on the Far West side of Manhattan, and we decided at the intersection of the high line and Hudson yards. We wanted to have a cultural institution. We set too standards for one who should be, unlike anything else in New York, which is hard Khazars, twelve hundred cultural institutions in New York, secondly, that it should play a role and keep
New York on the leading edge culturally in the world, and so we vengefully had an insight about the role of technology and the role that is playing and reshaping the cultural ecosystem that led us to conclude that what New York Need was a completely different kind of institution, one that would be the most flexible, both programmatic Lee and physically re. So this is a building that China can be reconfigure like a transformer, something s. It's exactly right. It's like a transform. It's really remarkable the building literally moves, and it will open up march. Twenty ninth as what retargeting two thousand nineteen and it may be one of the largest cultural start. Ups of all time in the ceo phoning Alex Boots, ran for many years. The Manchester International Festival, which again is unusual in that it takes place or took place at least all over city, not inset, theatres, from what I
can gather the shed seems to be a sort of in a profession Wise guerrilla operation, in a way right, it's got a lot of the experimental ism of the experimental arts movement with Canada, the juice and leverage of a big city like New York, that's a great way of saying it in another way of expressing as a cultural festival every day, because there's multiple spaces that can be reconfigured that can accommodate virtually any cultural discipline and they look our basic view, whether it with respect culture, whether its with respect to city building. Is nobody smart enough to predict the future? So you can not plan to the detail or even or the gross level? What's gonna happen in the future? Instead, what you can do is create the infrastructure that might be fixed
it might be digital might be some ground rules, etc that enable people to project their own ideas and innovations onto it. As taste, technologies trends begin to change. I think that is a very different notion of a cultural institution as well as city building. I find it and I mean zero disrespect by this, but I find it interesting that of all the things that attract people to New York City. These days, outsiders, visitors, the high line, is among the most popular. It was proposed to be turned into this. You know public park and strolling Erin, you were not a big supporter of it, not that you are so hard against it, but it's just Striking reminder illustration: I guess to me the head you and your folks around
Who were obviously doing this central infrastructure planning? You couldn't have possibly predicted that something like that and his humble as the high line for God's sake in its an abandoned freight line, would turn into this thing. That has so much appeal. I'm just curious what kind of lesson that taught you When I came in the city hall, the high line was really one court decision away from being torn down, and the Giuliani administration which had preceded us was really intent on re, down, because the landowners who own land under the high line really were really pressuring the Giuliani administration to get rid of it and it there are some of us in the administration immediately saw what the two young guys who had basically kept it alive saw, which is that this could be a beautiful park and a manatee. I will confess
I didn't see that right away, but the key point is: is it you? Don't you seize opportunities, as you see them and as they evolve, and if your flexible enough to do that, then ultimately, you can create something. That might be amazing. I mean that the paradox in that is, flexibility is not a hallmark of government. Is it well generally is not because government is really hard and is getting. Anything done often takes extraordinary effort, but it should be on some level a hallmark of government. At the same time, you have to have a sense for what you want to do, and so you have to combine sort of this openness with her determination to get things done, or else nothing ever happens. One of the principles that we always operated with is it look we're a competitive entity in New York and whether we were competing with law.
Then, or LOS Angeles or Jersey City, to be honest in a week can make policy that puts us at a competitive disadvantage. Let me ask about that competition between withered, our way cities or near cities. You and the Bloomberg administration made it a point to change policy and stop throwing out of money at firms or institutions that threaten to leave the using that kind of standard financial incentive. But I'm curious what effects that zero sum competition has each area, because you know some dimensions, I'd. Imagine the competition is healthy. Re, on the other hand, firms and institutions can and do game the system and basically skim a bunch of taxpayers money for their own purposes. So, what's the best way to balance that end still incentivize firms and institutions to be where they can do the most good, our view
as a financial incentives to lure companies or more importantly, keep them was almost always a fool's era. We did a lot of work when we first came in the economy with just on its back now we are facing enormous budget deficits of the easy temptation would have been to bribe companies to stay or bribe companies to come we met with sea egos of companies all over the country and all over the world. In addition to in New York, we analyze their cost structures in great detail and eventually what we concluded was companies are gonna, do what's in their economic interest over the long run and that providing these sorts of incentives was like giving a crack, but the crack was ultimately going to affect the dealer more than the user, and so it just didn't make a lot of sense, and so we just stopped
instead, the way we compete was based on our natural strength, which we thought we could enhance, and our number one natural strength was that New York had been a haven for people from all over the world, and I was sort of this optimistic sense that produces incredible energy, that attracted companies to New York, and we ought to build off of that. Most places have some sort of competitive advantage, but they gotta be honest about what it was, and so that for us, was really what the strategy became. It's really interesting see places that have had a good turn around. I think of Pittsburgh, which you know is a hard core industrial manufacturing, natural resources, city and it took awhile But now they are, you know the capital of autonomous vehicle research. They built up a lot of industries. It were totally unrelated to what they had been known for. I think we're safe
yet more and more as people recognize that they again have to build off their competitive strength. So what was Pittsburgh competitive strategy? Melon was a pretty good r and D. Melon was like the biggest component of it, and I think the city and the university in the not for profit sector can work together to develop a strategy. Indianapolis did the exact same thing around sports, for example, and health care, so you gotta be Trudy yourself. That's one of the things that I consistently preach to leaders in cities around the count and around the world in our cities, are like people or maybe like companies. They have purse Nowadays they have strengths and weaknesses in you know how hard it is to change your own personality, it's hard to change cities personally, but that doesn't mean you can't you know of structure On your strengths and structured around your weaknesses,
cities, unlike people, dream companies can be, as we noted earlier, difficult to retrofit, not just physically all those buildings, all that transportation and energy infrastructure, but also psychically and culturally and economically, which is why doktor of concluded would be really interesting to start the city from scratch into doesn't fifteen. He teamed up with Google to create a company called sidewalk labs, and our mission is to really help to redefine urban life, in the twenty first century, combining cutting edge innovation with great urban planning and the way we want to do that is by demonstrate, the world what that can be in a specific place, and so we have chosen Toronto offer variety.
Of great reasons, Gimme a few great reason swell one as they have a remarkable piece of land on their waterfront. The second is that we ve partnered with a governmental entity called Waterfront Toronto, which, for the last fifteen years, has been developing the waterfront, but what's really significant about them is that they are a try governmental agencies of their effectiveness owned by the city of Toronto, the province of area and the national government of Canada. So there's incredible alignment, but beyond that Toronto is a city that has a really kind of rich urbanists tradition. Jane Jacobs, for example, fled New York for Toronto, but they also have a really powerful and growing technology.
Ecosystem and then beyond that there's the dynamics of the city itself at one of the fastest growing cities in North Amerika effect is probably the most diverse large city in the world. But what is actually happening and comes back to some of the conversation we're having earlier is because its growing so fast there, increasing pressures on affordability on mobility and how people get around all that is king, middling, common, lower middle and lower income. People out from Canada, access to employment, which is creating opportunity challenges there so committed to this notion of inclusion. But ironically, because that open has produced the pressures that are making it harder to be inclusive. There very open to new approaches, and so we want to
create a place ultimately of large scale. That can be a laboratory for innovation across or of every urban system, including mobility sustainability building form. And design public space and then even community and social services, and which we leverage technology to fundamentally bend the curve on a lot of those quality of life. Metrics when you say, create a space just to be clear, you are talking about. This is essentially a physical neighbourhood. Your building correct, we think of it as a district, and can you just talk about what would be the most overt?
I guess, futuristic elements of the construction of this area. For instance, I assume that a lot of functions that are currently above ground and a lot of cities like freight delivery and trash disposal- those will not be above ground. All of that is true, but I think them thing that will have the most profound impact is: if you don't aloud, Additional vehicles, particularly automobiles into the district. That's all
animal some summoned vehicles, and essentially us that's, are and an ideally much more shared than they are today. So if you begin to do that, the consequences are cruelly profound and a typical north american city, thirty to forty percent of the land, is dedicated to parking or the separation of roadways that these highly dangerous vehicles demand. If you begin to carve most of that back, you can create greater density. You can also, however, dramatically increase the amount of public open space if you can begin to put people very close to open space, and you can figure out ways to whether eyes that, particularly in places like Toronto, where the weather's not so nice a large percentage of the time,
Then maybe you can begin to reconceive space in people's apartments in new ways, which will also be enhanced by enabling people to store a lot of their stuff off site, because with autonomous delivery, it'll be much easier and convenient and you buying that with new approaches to construction like modular construction or perhaps cross laminated timber, then, and begin to meaningfully lower the cost of housing, a combined of lowering the cost of housing with lowering the cost of mobility, which we believe is really possible by as much as fifty percent, and you can begin to see. Cost of living decreases that are meaningfully end of the day,
we'll digits? Now the people who live there? As I understand it, are opting in to a programme to have a great deal of their personal data gathered, because this is a laboratory and you want to learn as much as you can from the date of how people move around and communicate, and so on one interview you gave. You said that the data really shouldn't be used to be commercialize This is a project run by funded by a company Google, for whom commercializing data is its actual is model, so why on earth would we think that these data won't be commercialize and why on earth shouldn't? We think that this entire project is just an extension of Google's already monolithic reach, we're just going to have to demonstrate to people through agreements and gage specific actions that that's not our intent at all and by the way, it's not Google or alphabet and ten at all either. Our purpose here is to demonstrate how that
the nation of innovation, and urban design can fundamentally bend the curve on quality of life and extent data gets used. It's gonna get used for those purposes, but we prove it to people and memorialize that in different ways, and that we will do so. We understand the capitalism, and we will satisfy people over the course of two thousand and eighteen, which is our year to really put the plan together, including privacy and data protection plans. Of our intentions so yeah meet? Look even something I called a virtuous cycle of successful city notes. The objective a city should be to grow, and that is grow. The number of residents grow, the number of jobs grow, the number of visitors
because the marginal revenue of those additional people is greater than the marginal cost and that you can take that net profit We will and reinvested back in quality of life in the city affordable housing and education and safety and social services, and when you that you improve quality of life. More people come perpetuating the virtuous cycle So when can I move their well? If all goes well, you're the first people to people. Move in and maybe five years or so. But then that would be a placed prototype, a lot of the interesting ideas and approaches, but obviously a lot of the systems have to scale into a larger area. This is a project that would take, for
in the twenty years for sure that's Dan Doktor off CEO, sidewalk labs, smaller more about the Olympic bid and rebuilding New York check out his book greater than ever New York's big comeback coming up next time on economics, radio, it's! Finally, here the event you ve been waiting for waiting for for four years. The world CUP is a global eclipse. It's been called the just cast a shadow across the whole world for an entire month. At the same time, everywhere, apart from America, we'll talk about why you? even if your American, even if you hate, soccer or know nothing about it, why you should pay attention to the upcoming men Soccer World CUP in Russia? There's the pageantry at their operate,
I do wonder five eyes ass. If Rinaldo me show some point even win or lose you figure it out and Putin, you think is I say: even there is the beauty of fair play. I think is the combination of running a monopoly that is accountable to not. The point is that there is not a. say again and of course there is the opportunity to disrupt your daily routine, You are in a ball at seven o clock in the morning with a Budweiser society. Friends on that right, Stephen! Didn't yes, but if you in that same bar without same Budweiser and on the television Spain, a plane Portugal, in the opening, grew game of the World CUP. Why are you here for profit? Football fan how to catch World CUP fever its next time,
three economic radios produced by W my C studios and W productions. This episode was produced by MAX Miller with Andy Mildenheim. Our staff also includes Allison. I can very merit Jacob Gregg resolve Ski Stephanie. Temp Harry Huggins get help this week from on your judging the music you here throughout the episode was composed by Luis Gara. You can subscribe to economics, radio, apple, podcast teacher or wherever you get your pockets. You should also check out our arc. I have had for economics, dot com there you can stream or download every episode we ve ever made. You can also read the transcripts and fine links the underlying research. We can all
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Transcript generated on 2021-01-21.