Venezuelan citizens are suffering from a recession, the world's highest inflation rate, and multiple water and power cuts. Carlos Garcia Rawlins / Reuters

A conversation with the scholar Josef Konvitz.

Economists increasingly note that cities are a key driving force of the modern global economy, but urbanism rarely features prominently in the conversation about economic crisis and recovery. In his new book Cities and Crisis, Josef Konvitz—a former head of urban affairs and regulatory policy at the Organization for Economic Co-operation and Development—examines the vulnerability of cities, the limits to existing policies to cope with threats, and the key role cities should play in any economic recovery.

Ultimately, Konvitz argues that cities are indeed at the center of crises in the 21st century. Under-investment in infrastructure, low levels of research and innovation, spiky levels of urbanization, uneven development, and a significant increase in income inequality contributed to the breakdown of the global economy in 2008. To ensure a lasting recovery, new approaches to urban development and policy are required at the regional, national, and global levels.

I spoke with Konvitz, who lives in Paris, about the limitations of current policy, and about how governments can better prepare for future crises by making cities the focus of national and global governance.

Your book puts cities and urbanism at the center of economic crises, not just today, but historically. Tell us more about the role of cities in the long sweep of economic crisis.

The last great economic crisis before 2007 was linked to unmanageable debt levels, speculation, and a collapse of demand in the 1920s. Postwar recessions have been comparatively mild. Since the 1880s, cities have become better protected against recurrent, generic catastrophes: cholera epidemics, devastating fires, sieges and bombardment, as well as destruction caused by floods and earthquakes. We became complacent. Now we face a reversal of what has been a long-term trend to make cities safer.

Just because urban housing markets in some countries led to the housing crisis in 2007-2008, it would be a gross mistake to generalize that there is something fundamentally wrong about modern urban development. Many highly urbanized countries that have been badly affected by the consequences of the global financial crisis were innocent bystanders when the crash began.

Today we are in the post-crisis crisis. Many urbanists adopt either a pessimistic view of cities as dystopian, dysfunctional systems whose growth is the cause of many incurable ills, or focus on cities as beacons of opportunity and innovation that minimize the role of national governments. Instead, we need real policy changes to make cities safer and more resilient given the range of threats to which they are exposed.

You write a lot about uneven development and spiky urbanization. Today, our most advanced, innovative, and successful cities have become increasingly unequal and segregated, with the rich moving back in droves, effectively walling themselves off from the less advantaged. How does spatial inequality link with urban crises? What can be done to address it locally and globally?

Spatial inequality differs from the great gaps between rich and poor in very large, global cities, which get all the attention. The problems of spatial inequality in Glasgow, for example, are linked to environmental factors, the condition of the housing stock, long-term unemployment following de-industrialization, and failed social policies. If more rich people moved into Glasgow, adding to the tax base and increasing spending, things might actually get better. In many places, spatial inequality is endemic. What has changed is the will to do something about it. Physical regeneration is the easier part. Targeting health problems or correcting educational deficiencies are more difficult, and take longer. Managing space better is the imperative. We know what to do, but not how to do it.

A homeless man sleeps on the streets of Athens, Greece, which is facing its sixth year of recession and high unemployment. (Petros Giannakouris/AP)

Widening disparities and the displacement effect of rising property prices can lead to the generation of distressed urban areas, compounding the effects of inequality. It has become too easy in London, for example, to privatize space that ought to be public. New York does not have to grant permission for the construction of some of the world’s most expensive residential real estate, but if it does so, it should also set up early warning systems and modes of intervention to stop a spiral of decline in parts of the city where social and economic change can lead to ghettos. And in the small number of very expensive cities that are often market-makers in the global economy—New York, Tel Aviv, Hong Kong—young people cannot find reasonable accommodation to rent or cannot afford to buy. The street movements in these cities were not led by the poor, but by well-educated, middle-class, young professionals.

Falling household wealth in cities is a sign that urban economies are under-performing. Populist, extremist politicians in many countries exploit the frustration felt by people who no longer believe that life will ever get better. Long commuting times, congestion, oppressive noise, degraded land, etc. are like a tax. The problems of cities do not start with the growth of manufacturing in China. They start at home.

You point out that that our “knowledge of cities is inadequate,” and that it has been that way for a long time. Why do we need to improve our knowledge of cities, and how can that help us avoid crises and generate a broader, more sustainable prosperity?

Most national statistics are based on aggregate units as large as states, regions, or national territories. Urban economies spread over many jurisdictions, making it difficult to know what is happening at the sub-national level. For macro-economists, cities are a kind of “black hole”: They know that what goes on in cities affects innovation, but they don’t know how. Even mayors do not know how much is spent or invested by all parts of government in their jurisdictions. Yet management experts still peddle the idea that cities should be run like a business, with a business model.

We have to act now, with existing tools and data. Remember that the best studies of the Great Depression only began to appear in the 1950s. Rather than waiting for a recovery that in any case will not lift all boats, many cities—impatient with national governments—are creating and valorizing specific local assets, investing in good design and environmental remediation, strengthening education at all levels, and improving health care and access to it. But many cities are still in a passive mode. And when a recovery does come, they will struggle.

You write that “cities, as economic motors, need two critical inputs—innovation and infrastructure.” Lots of people invoke Keynes on the need for more infrastructure spending as a way out of economic crisis. But certain kinds of infrastructure like roads and highways spread us out, while other kinds create the density required for innovation. Tell us more about what the public and private sectors can do to ensure that we get infrastructure right.

In the 1920s and 1930s, a backlog of overcrowded, unsanitary housing, under-developed mass transit systems, properties without electrification or connections to sewer systems—the legacy of rapid industrialization—shaped an agenda for investment-led reform in the Great Depression. There is no comparable agenda today. There is a huge funding gap between the more than $50 trillion needed for infrastructure by 2030 and the amount being spent—and that is without taking into account the cost of coping with climate change.

Great projects have dynamic effects, precipitating changes throughout urban regions that are all but impossible to model in advance because no one can anticipate their impact. Projects are often sold on the basis of the number of construction jobs or new housing starts that will follow. This narrow approach to cost-benefit analysis would have led the Victorians to conclude that a major sewer system for London was too expensive. By the same token, bridges and tunnels linking New York and New Jersey would never have been built a century ago. The test of good infrastructure is whether it makes best use of the density, size, and complexity of cities.

The George Washington Bridge, connecting New York and New Jersey. (Mel Evans/AP)

Look at Le Grand Paris Express: 68 new stations for an automated subway on 200 kilometers of track at a cost of 24.7 billion euros over 15 years, three new metro lines, between 250,000 and 400,000 new housing units to be built near the new stations, and over 100,000 new jobs in suburban cities better connected with each other and the center of Paris. The rate of return, through higher per capita income, spending, and higher corporate profits, makes this a wise investment with a one-hundred-year horizon. Cash-rich, the private sector can act fast when government with a vision sets the strategic framework for the urban future.

For years, the public sector has been waiting for the private sector to invest. The big builders and operators are waiting for government to lead. Until the factors such as complex regulatory procedures and the lack of capital budgets that have held down infrastructure investment in recent years are addressed, calls for increased spending, which already echo in electoral promises, are likely to remain unanswered.

It’s no secret that urbanists like to promote urban policy. You make the very important point that “specific urban policies framed around urban objectives matter less to the development of cities than other fiscal and sectoral policies which were drafted with other objectives in mind.” Tell us more about what you mean here.

Cities were largely autonomous in the 19th century, guided by local elites and reliant on local taxes. Depressions and two world wars, which wiped out bourgeois capital and overwhelmed local governments, made the centralization of policy-making and taxation inevitable. As a result, cities were increasingly regulated by laws and through budgets for education, natural resources, transport, working conditions, health, etc. Policies specifically focusing on urban issues became a kind of residual. Urban policies are more about costly problems associated with disadvantage than about growth and opportunity linked to trade, research and development, small business, etc.

De-industrialization, the infrastructure crisis, and rising inequality are problems in their own right, but they are also indicative of shortcomings in how governments struggle to intervene to improve the conditions of life in cities. The example of water shows how things can go wrong: Think not only of lead in the water supply of Flint, but also of severe problems of water management in Spain, the American West, Mexico, or India. Even well-run cities with vibrant economies can become hostage to problems that got out of control.

You talk a lot not just about economic crises, but of the role of cities in natural disaster and other crises. You point to the staggering risks coastal cities face from rising water levels and fiercer storms brought on by climate change. Tell us more about what can be done to mitigate these huge risks in many of the world’s biggest and most important cities.

The coastal zone, the space shared by water and land, is the most difficult to manage. Where water and land meet, economic, environmental, and cultural objectives are difficult to reconcile. Because there are competing pressures on a limited and fragile space, priorities must be set, but control rests with too many different authorities, each with its own mandate. Not everyone will get their way. Huge engineering works in London or New York City may be necessary, but are not sufficient. Sometimes the problems are just shifted to another jurisdiction (East Anglia in the U.K. or New Jersey in the U.S.), where governments may have to stop people from building where they want to live, or relocate entire communities.

Adjusting political systems and economic perspectives to account for the rate of spatial change is a major challenge. Risk consciousness should not lead to panic or paralysis. Instead, people need to be trained to cope when disaster hits. Resilience follows when there is a higher stock of social capital, when people of different ages and incomes live near one another, when businesses are rooted in the places where their workers live, and when governments have undertaken a strategic analysis of what needs to be improved.

Over the next century or so, billions more people will move to cities and we will spend hundreds of trillions of dollars building new cities and rebuilding old ones. A troubling situation, which you point out in the book, is that agglomeration and urbanism in many of the most rapidly urbanizing parts of the world are not leading to growth, opportunity, jobs, or development. What can we do to make sure we get this next great wave of urbanization right?

The priority should be to avoid the needless loss of capital stock through disease, drought, natural disaster, war, and corruption. Leadership in urban innovation and policy probably still rests with developed countries in Asia-Pacific, Europe, and North America. There are many useful, even inspiring, initiatives around the world, including in countries with high rates of growth and low incomes. Western countries have no monopoly on how to make societies resilient, but the initiative for global regulation lies with the United States and the European Union.

You also say that cities are key to recovery and long-term prosperity. How can we develop policies and strategies to ensure that cities play their most vital and powerful role?

Governing structures in most countries date from a time when agriculture and extractive industries, and hence rural regions, shaped politics. Short of an overhaul of the relations between national and sub-national governments (as in France) or a remodeling of urban boundaries (as in Denmark), three things can be done: 1) adopt coherent programs that cross existing jurisdictional boundaries; 2) align national and local priorities and budgets, synchronizing timing across budget cycles (probably utopian in the United States); and 3) make a vision of the future seem achievable. Inventing the city of tomorrow calls for innovation in governance. It is striking that in many countries, being a successful mayor is a springboard to the prime ministry or presidency (not in the U.S.).

Drinking fountains at Flint Northwestern High School in Flint, Michigan. (Carolyn Kaster/AP)

You devote an entire chapter to cities and governance. There are so many levels of government—not to mention the private sector, NGOs, urban advocacy groups, and, of course, neighborhoods and citizens—that affect cities and urbanization. What is the appropriate balance of power between international institutions, nation states, cities, and neighborhoods that would help us achieve a broader, shared urban prosperity?

There is no best model for multi-level governance. When a system has become dysfunctional and a brake on growth, it should be changed. Look at France in 2015: A long-dormant project to reduce the number of regions and virtually eliminate the departments was revived and enacted in only five months. The number of regions was cut from 22 to 13. Most of the duplication in function between regions and departments has been eliminated in favor of regions, which now have greater taxing and spending flexibility, and more responsibility for economic development at the sub-national level. The result will be less centralization. At the same time, every urban agglomeration, composed of several municipalities, has had to elect a metropolitan council with its own leader.

The challenge is not to make crises impossible, but to reduce uncertainty. Some problems call for greater centralization, others for greater decentralization, or even more power-sharing at a supra-national level. We need an ethos for inter-dependence, based on an understanding that the risks cities face, which are increasingly cross-border, can only be managed if we co-operate.

You say that we are in the middle of a great economic and urban transformation. But, like me, you are a fan of Jane Jacob’s last cautionary work, Dark Age Ahead. Do you think that this transformation can avoid chronic crises (you write that “crises are the new normal”) and other dysfunctions? Can we come out the other side with better cities and a more inclusive kind of urbanism?

Jane Jacobs often wrote that, because cities generate problems, they are also where innovations to solve those problems are found—innovations that in turn create jobs, lift incomes, and enhance the quality of life. It is almost more important for cities to take up useful innovations than it is for them to direct the power of innovation on themselves. But the problem-solving process seems to have broken down. The longer the crisis lasts, the greater the likelihood that a paradigm shift will become inevitable. The process can be wrenching, but, based on precedent, it takes place well within the span of a generation. Because the last paradigm shift of this order of magnitude occurred between 1880 and 1910, no one today has any experience guiding the birth of a new framework for economic regulation and urban development. We can take hope from history. Urbanization has never been reversed except by force.

This interview has been edited and condensed.

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