Urbanization

The risk today is that the world's going to be increasingly divided between people living in hyper connected, hyper successful cities and those that are stuck outside. A lot of different things contributed to Britain voting to leaving the European Union in the election of Donald Trump in the US, but you can't help noticing many of the places most likely to vote for Brexit or Trump were smaller cities and towns, places where many people felt they've been left mind.

I'm really pleased we're going to have a discussion about some of these issues later with two of Bloomberg Economic Star reporters, US Economy reporter Genus Smellick and Jill Ward. Now Jill usually covers the UK, but we've just said it to India to get a taste of something different. After she'd unpacked her bags, I sent her to go find out what the challenges of urbanization look like in

downtown New Delhi. I've been living in Delhi for over a month now and the extreme effects of urbanization have become a part of daily life today. Like many days, Deli's air pollution is the worst out of any city in the world. I'm a commute into work. The view of India Gate is getting more and more obscured by thick smog, which gets especially bad in the winter months. Flight struggle to take off because of bad visibility. The roads are packed and I spend a lot out of

time stuck in traffic jams. Inequality is starkly visible in the slums right next to luxury hotels and palatial homes. The challenge, both in India and across the globe is to build the infrastructure and services necessary to keep pace with rapidly growing urban areas. The Delhi's population, which currently stands at twenty nine million, is forecast to outstrip Tokyo is to become the biggest maga city in the world

in about a decade. Across the globe. Percent of the world's population now lives in urban areas, and that's expected to increase to sixty eight percent by the middle of the century. The concern amongst economists is that if managed badly, urbanization will exacerbate the global divide between the halves and the have nots, leading to social unrest in the US and Europe, city dwellers are already being priced out of

ever more expensive urban housing. For American urbanist Richard Florida, with growing geographic split is the greatest political crisis of our time in a global environment, just being urbanized and having urbanization doesn't mean that you're going to lift all or even many boats, and that what what tends to happen is that you tend to get a very lopsided or spiky or winner take all kinds of urbanizations. We face a new urban crisis of mounting segregation, mounting poverty,

massive concentrated disadvantage. Um. It's incumbent on all of us to wake up to the fact that this geographic divide, this spatial inequality, this geography of has and has not just creating the greatest political backlash and the greatest political crisis of our time. In India, the government is trying to act quickly to keep up with a challenge. Prime Minister in a Render Moody has set a series of

ambitious targets like providing housing for all two. He wants to build sewage and drainage facilities across India and create so called smart cities using technology to help improve urban infrastructure for our Deep Singh Poury, India's Minister for Housing and Urban Affairs, Rapid growth and cities means building on a massive scale over cups of child his office, he told me India needs to build about one Chicago a year. If you look at the history of what happened in

the past, we subjected our urban spaces to neglect. That's putting in mildly. I normally use the word we subjected the urban space to criminal neglect. We we were preoccupied with rural development, with agriculture. Now that's important, but the fact is that today our cities provide for more than two thirds of our GDP of our tax revenues, and this will increase, so you will have more and more

people coming into cities. So you need to build the redeveloped, and you need to build green and you need to build Brazilian structures. Our estimate is that between now and we need to build something like seven to nine million square meters of urban space every year, which means one Chicago every year between now and Can this be done? I don't think that's an appropriate question. You have no

option but to do it. I visited a Flagship's smart city projects, a housing re development for government employees in central Jelly called East to Buy the Guard. It's one of seven similar projects in the capital where fourteen story towers are being built through place two story houses built

decades ago, said to be completed next year. The new apartments will double the amounts of families living on the eight seven eight o'clock to more than four and a half thousand, and they included mentally friendly features like rainwater harvesting and on site waste processing. While getting a tour of the site, I noticed several huge environmental themed paintings on the side of some buildings, like birds, flowers and a yogi surrounded by branches in the middle of the

muddy and dusty construction work. So I guess for the five families that are living here now, they can use over two hundred families living in slums on the site were relocated about fifteen miles away. Huge metal barriers now surround the construction area, and once complete, it will be a gated community. Urban planners and environmental researchers are unimpressed with the project. It's faced several cases in court for

lack of traffic and environmental assessments. It also sits on the Ring Road, which circles the Sindewy Center and is one of the busiest in Delhi. What's more, almost two thousand trees were down on the site while the company building the complex and has planted day ones. Critics say

they're mostly decorative. Building a ten tho space parking lot beneath the buildings will make it difficult to recreate a meaningful green space, they say, and it clicks at risk an important supply of water that's vital in a city that may run out of ground water as soon as the construction is being funded by the sale of commercial space on the site, but Deli's High Court ruled in August that some of it can't be handed over since

questions remain over how water will be supplied and traffic managed. Delhiites have rallied against the project on social media with hashtags like my right to breathe a Deli trees. S os I sat down with Canchy Coli, an environmental researcher at the Center for Policy Research, who pointed out a multitude of issues for the SUP just reeling with water crisis. We are these projects are destroying water sources. That is

dealing with it. We should. We're talking about a construction project that is increading increasing both dust as well as UM, you know, impacting air quality and our city that is actually needs more green spaces bots for both for public use as well as you know, mitigating impacts of both

pollution as well as heat. UH. These projects, you know, land up replacing those with ornamental trees and landscape gardens which have we serve no purpose both with us when it comes to air pollution management as well as UH reducing heat particulars, these are acute problem in the city which these projects are actually aggravating more than mitigating. So we need we need the development in the city, or need development or re development the city that helps you

address these problems rather than aggravate these problems. The albums Planners I spoke with about the project, agrieved that Delhi needs more development, but perhaps done in a more inclusive way, one that takes into account the context of the rest of the city. In India, housing hasn't kept paceful population

growth and environmental issues have lagged. According to Samia Gluliyani, who leads work on sustainable development at the World Bank, that means that the clients of economic returns that could come from urbanization haven't been fully realized. Urbanization has helped alleviate poverty in India, she says, but it's more and more people rise above the poverty line. They're landing in

a pool that's vulnerable and not quite middle class. Yet the rich, meanwhile, are getting richer, while for the pours of the poor, non monetary aspects of poverty have actually risen. Many don't have access to basic services like housing, education, and health. That said Enrico Already at the University of California, Berkeley, points out that india Is huge informal housing sector at least allows poor Indians to get close enough to job

dense urban areas to benefit from the economic opportunities. India also makes it hard to develop new housing formal new housing, but then On the other hand, there's a lot of informality in the housing factory in India that circumvents that. Islam as being one extreme case, but there are there are all sorts of intermediate housing arrangement between Islam and

formal legal housing development. The solution to the challenges of urbanization, economists say lies in devolving power more locally and promoting inclusivity, and there has been some success in that regard. In Shiwa, a city in northern India where the taps were in dry this summer, the state government has embarked on a set of reforms to move the water system from the state managed authority to the city itself, which could prove a step in the right direction in the future. Latch

Wals depend on how Birth and Cities has managed. Said, the only way we can really fix our problems is by acting locally. We've revitalized cities from Pittsburgh to Birmingham by foraging local public private partnerships and getting to work to make our cities better. We need a better science of city. It's a big shift, but I think we're there.

So I've brought Jill Ward up here to Dubai with me and We're sitting in Bloomberg's Dubai A newsroom and we're going to be joined by our US economy reporter, Gina Smilik, who is sitting in our Boston office, and she's taken a particular interest in the rise of cities over the last year or two. Even as she's covering the federal reserves, she's also been interested in how urbanization and growth of cities has been feeding into not just economic growth in the US, but also inequality. So, Gina,

thanks for joining us. You've been looking at the US picture. I want to tell us how you got interested in cities and their potential impact on the economy. Yeah. Absolutely so. I think that two main things got me interested in cities.

First was just that I read a lot of economic research, and this became a major strain starting a couple of years ago of inquiry for a couple of different researchers, including Enrico Moretti over it UC Berkeley, just this idea that cities are both these areas that foster intense productivity,

really dynamic economies, fast progress, and real creativity. But at the same time, because that density can be sort of prohibitive if it's cost prohibitive for folks to move there, they can also foster in equality, and so he started looking at those issues and I was quite interested in

that line of research. And then the election happened, and I think that really brought home for me, and I think for a lot of people this idea that the cities in America were just diverging entirely, both socially and economically from the rest death country. And I think you can see that really clearly if you look at a voting map, because the cities are just often sort of

dots of blue and oceans of red. And also, I think it was just interesting that we had sort of this national conversation around the election where we realize that you're even sort of the society you hang out in and the things you eat and the things you watch on television are different in cities than they are relative to sort of the more rural areas like where my my parents still live and where I grew up, and

so that I think that was really interesting. It made me very interested in how the sort of urbanization of America is reshaping how our economies work in the twenty one century. I think that's really interesting because it's something we've come up against in the UK as well. We had years and years of thinking of the great problem cases being those big old inner cities, whether it was Detroit or in the UK it would have been some of the old mining towns, or Sheffield or sort of Manchester.

And then those cities have actually had a lot of development and people have moved back into the city and we've sort of thought, okay, good, that's that that regional problem has been somewhat helped. But in the meantime, there's all of these towns that have sort of fallen by the wayside, that haven't had that kind of regeneration, and

yet the gap between them has grown even more. Now. Jill, you've I mean, you've got an interesting experience because until a few weeks ago you were living in North London, one of the more gentrified bits of London, if I'm allowed to say that, and then you've you're now in in Delhi, which is slightly different from the Mumbai is where everything is completely crazy and on a very wide, on a crazy scale of frenetic activity in India. But I think Delhi probably comes close certainly a big contrast

with London. Those some of those relocations that you were we were hearing about in the in the program. You know, quite a different feel to the regeneration that we've seen in places like Pittsburgh. So, yeah, Delhi is a bit less crazy than Mumbai, I suppose, in the sense that there's actually quite a lot of green space in the

center of the city. Um, it's kind of shaped like a doughnut in terms of the center is very green, and then once you get to the outskirts, starting at the Ring Road which circles the city, it gets much more built up. We were talking about the this regeneration or the redevelopment plan that you've been engaging with. You know, it's quite quite a different feel from the equivalent thing that you might have, certainly in the UK, where that the developers would be forced to have a certain amount

of affordable housing and be a little bit inclusive. There's no no pretense to inclusion in this place, is there. Absolutely so. It will be a gated community and there were actually about over two thirty families living in slums on the site before they started construction in that have just been relocated to kind of the southwest outskirts of

the city. About fifteen miles away. So that's been one big criticism when I speak with economists, architects, even urban planners who say, really, this, this could be an opportunity to lead to better integration in what is actually a really prime location for Delhi, but instead it will be gated.

And I guess that's one of the things, Gina, that's really striking in the US context, and I've seen Richard Florida, who writes a lot about cities, has talked about this and some of the other researchers that you were talking about it is that it's I mean, cities are a cause of inequality, but that's primarily because housing is such a source of inequality that once you have the kind of success of in a city, the thing that happens is it becomes incredibly expensive for some of the people

who used to live there to be there, and then you've got this increasing wealth inequality. You know, is it controls on building houses that's that's driving that partly? I guess, yes, absolutely. I think there's sort of a large and growing literature that says, really, our zoning regulations and this idea of not in my backyard, you know, we like conclusive growth, but as long as it doesn't you know, obstruct our

site line to the nearest local landmark. UM. I think those sorts of policies have really fostered some of these problems that we're having, and you can see it so much in the aggregate data in the US. You know, what we've seen is folks with college degrees are just flooding into cities. Folks without them just it's completely cost

prohibitive there. They're staying point where they are. And when you think of cities as increasingly the areas where all the opportunity is from an economic standpoint, I think that is going to be increasingly problematic as we assuming these trends continue, that's going to be increasingly problematic for inequality both and income and in wealth over the next couple

of years and decades. Do you get the sense, Jill, that there's a lot of that, there's a lot of thinking around this in in Delhi or other Indian cities, because you know, it certainly has been it's been a college industry that I've noticed over the last few years people talking about cities as the new drivers of growth and city governments being more important than country national governments

and it's certainly in Europe. People have done a lot of thinking and the US about what makes for a successful city and how can you have a have the full range of people living in a neighborhood rather than having the kind of segregation that we've sometimes had in the past. Is there any of that in India or do you feel it's it's hellmell for growth no matter what?

So there is a lot of thinking around in equality in India UM and I think one of the big problems that came up when I spoke with economists for this story was this issue of governance UM and in Delhi specifically, you kind of have overlapping jurisdictions that makes it very hard to plan for infrastructure that you need

to keep up with its rapidly expanding population. So that kind of a big theme that came out of my reporting that it hasn't been able to keep up in India and that's why you haven't been able to get as much out of urbanization as you could have compared to other countries in the region, UM, compared to China, for instance. I mean, where do you see this going? Geno? I mean, is it something city governments have been quite vocal in America, they do have a bit more power,

maybe more ability to plan than some other cities. Do you see a lot of conscious efforts to engage with this in city planning or is it just are they too constrained by local interests and some of the planning restrictions that you talked about. I think there is a growing recognition in the US that this is a problem, and there are certainly some towns in regions that are really making an effort to make sure that they grow in a more inclusive way. One good example all of

that is the Triangle in North Carolina. The Triangle area so sort of that Raleigh Durham Chapel Hill region is really making an effort to expand its transit network in a way that will kind of keep home prices a little bit more evenly spread so that people have access

to the economically vibrant areas there. So those those local initiatives are happening, I think they aren't happening fast enough to counter the rapid run up in prices that we've seen in metropolitan housing markets, and so I think this is going to be one of those problems that most folks you talked to will say is going to get

worse before it gets better. I mean, it's certainly we've talked about in these podcasts, we've talked about inequality, and we've had also been doing some studies for the for the New Economy Forum on how inequality is feeding into economic policy around the world, and it does. It feels like the urbanization story provides a kind of mirror image of what has happened globally with with incomes that you've had a big fall in in poverty and in many

ways urbanization. The fact that the world has now got more than half of the population living in cities is a sign of the success of economic development, but it's equally shown up all of the rising inequality that's that's happened at the same time. It just seems like looking around the world, whether it's in India or in the States, we know how to make cities reflect all of our

inequalities and the flaws in our economic model. But I can't point to that many cities that have managed to use urbanization as an engine for for approving the structure of their economy make it more inclusive. Maybe that's one of the things that they will find the solution to in their conversations at the New Economy Forum. We shall see in the meantime. Genus Panic and Jill Ward, thanks very much for joining me. Thank you, thank you, thanks

for listening to The New Economy. Today's episode was reported by Jill Award with help from Genus Malick and editor Lucy Meekin, with special thanks to Uni Krishnan. It was produced by Magnus Henriksson. Francesca Levy is the head of Bloomberg Podcasts.