Impose public ownership to reduce corruption??

A superb interview of Ed Glaesar. Truly, urban economics would have been into its old age without him. Thanks to him it is still youthful and actually getting younger by the day.

Glaesar points to five books on urban development/cities one should read.

The second book (Plunkitt of Tammany Hall By William L Riordon) is about this political organisation called Tammany Hall which played a major role in New York politics. The book is an account of one its members called George Washington Plunkitt.  Tammany Hall was known for providing decent public services despite presence of graft. This was quite a change from the other city practices:

Cities require government. There is a huge externality when you crowd people together in dense urban areas. There are costs associated with crime, disease, infrastructure and traffic congestion. There is a reason why people in New York like government more than people in Montana: they need it more. But because they need government they also reveal the weaknesses of the public sector. This is particularly obvious in the developing world today, where municipal governments are so tragically unable to provide decent services. Tammany Hall is a place that, after [its mid-19th century leader, William] Tweed, seemed to be all right at providing services – although there were a lot of transfers that went along with them to Tammany Hall’s friends. Plunkitt reminded us of how challenging it was for America to come to a place where there was a modicum of honesty in our municipal governments.

Infact Glaesar wrote a paper based on this arguing for public provision of municipal services. What is even more surprising is earlier people advocated public ownership of these services as private services were seen as corrupt!!!

Using Plunkitt, you argued in one paper that support for public ownership of municipal services, such as waterworks, was prompted by the corruption once associated with private ownership.

Public ownership is one of the ways that people historically tried to deal with the corruption within our cities. Now privatisation is seen as the solution. But certainly the private provision of things like street sweeping were a bonanza for corrupt politicians during the Tweed regime. Politicians would award the contracts, the services would be badly performed, and money would flow back to the corrupt politicians who handed out the contracts. Having public services obviated the need to award contracts to private companies, which essentially made it more difficult to steal.

This is a very live issue in the developing world. The question is whether the public failures in the developing world should prompt the provision of things like water services from purely private providers. Or are we afraid of creating exactly what happened in New York in the 19th century, where a lot of money was paid out of the public purse with little actual provision of services?

I was not really aware of this. Public ownership was seen as a way to get rid of corruption in private delivery of services…Uually it is the other way round where privatisation is seen as a way to get rid of corrupt and inefficient public services…

Then the fourth book (The Urban Transportation Problem By John Robert Meyer, John Kain and Martin Wohl) has some nice lessons for India (and others).  He points to 40 years of research in Harvard which says buses are good and trains are bad.

Let’s talk about The Urban Transportation Problem. A recently deceased colleague of yours from Harvard wrote it. You’ve called John Meyer the father of transportation economics. What can we learn about cities from reading this book?

Today we think about the extension of economics into other fields in the context of psychology and economics, or law and economics. Transportation economics was an early attempt to merge wisdom from multiple fields. This book marries economics with engineering. It’s a great example of how two fields can be brought together to add tremendous insight to an enormously important issue, which is how to provide transportation in a dense urban core.

The most striking conclusions were that unless drivers pay the full cost of driving, urban roads will always be congested and that at all but the most extreme densities buses, with dedicated lanes, are better than trains. There is an old saw that 40 years of transportation research at Harvard can be summarised by four words: bus good, train bad.

The book shows why old NY had narrow roads and new NY has broad roads:

And car worse?

 Cars do create the biggest environmental challenges, but they are particularly well suited for low-density living. Meyer, Kain and Wohl were focused on higher density areas, which are rarely ideal for private automobiles.

But the book is so much more than a discourse on cars, buses and trains. It’s a central book in the history of transportation economics and it’s a central book in the history of cities. And its central contention is that the transportation technology, which is dominant when a city is built, shapes the city itself. For instance, the older parts of New York are filled with narrow streets that date to an era of pedestrianism. And the newer areas have wider streets that were built when wheeled transportation, such as streetcars and overhead railroads, became dominant. So cities are always structured around the transportation technology that exists in the era in which they are built.

 It’s a brilliant examination of the changes that were happening in the American city as the car replaced public transportation. And it’s filled with information about how transportation shapes city life. For instance, John Kain, one of the co-authors, made the case that African-Americans were suffering because of the distance they lived from their jobs. The book demonstrated that transportation is integral to thinking about cities.

Superb…this narrow vs broad streets applies to most cities…Old Delhi is narrow streets and New Delhi has broad roads. Same reason should apply here as well..

Excellent interview..

Somewhere down the line I think the quicker we move towards understanding and planning for cities, the better it is. It is like the trade theory.

  • Trade Theory said countries trade based on comparative advantage
  • New Trade Theory refined this to industries based on increasing returns to scale
  • New New Trade theory further says it is firms which trade within industries. So research should look at firms instead…

Similarly we focus on countries to understand how people live. Hence research and policy looks at macro aspects of the country. If India is shining people must be well-off, living well etc. But people live in cities and villages with each being different. This brings further complexity into the entire development. One needs to make policies which help design better cities and scale them for future growth. Country focus alone is unlikely to be very effective…

One Response to “Impose public ownership to reduce corruption??”

  1. Some clarifications on Delhi’s Bus Rapid Transit System (BRTS) « Mostly Economics Says:

    […] is something which is shared by Edward Glaesar (the leading urban economist) as well (see this post as well for more […]

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