Photo courtesy Paul Romer

Paul Romer: “We have to confront the problem of inequality”

Paul Romer was awarded the prize in economic sciences for his work around knowledge and the economy. Ahead of the 2021 Nobel Week Dialogue on cities he spoke to us about his belief that a better future lies in the idea of creating new cities that are open and welcome to all.

You have previously said that, “the most important invention is the development of the city.” Why do you think this?

The reason the city was the most important invention is because cities facilitate cooperation. If we hadn’t invented cities, we wouldn’t be able to cooperate with large numbers of people like ourselves. It’s this potential for cooperation at scale that explains all of the success that humans have had. As the number of people goes up, the income per capita or resources per capita or standard of living that’s possible goes up. The challenge is to create the conditions where a large number of people can cooperate and all get the benefits from that. Cities let us do that at scale, starting from a hundred people up to nowadays 10 million or so.

How do you think cities will develop in the future? What is important to take into consideration when making decisions about that evolution?

It’s important to remember that there are people who will be affected by current decisions and elections who don’t have a vote – the people who will be born in the future. They’re affected by our decisions, but they don’t have a say. I think it’s useful to have that same kind of mentality about cities.

Most people, when they think about cities, think about the existing set of cities and how they will evolve. Part of what I’ve been trying to encourage everybody to think about is that new cities are still emerging and will continue to emerge. Probably the most important question we can ask about the future of the cities, is what’s the future for these new cities.

Why are you so interested in the development of new, rather than existing cities?

The future for existing cities is in some ways more boring because so many things are already established and would be very hard to change. But with new cities you have more freedom to try other kinds of arrangements. Also when most people then think about the future of a new city they assume that only rich people get to live there. But the new cities that matter are going to be the new cities that let people who have almost nothing move in and live and work there.

The reason I’m so focused on new cities that welcome people who come bringing just themselves is that this is a problem of enormous practical significance. This is not just a matter of science fiction or fantasy. According to the Gallup organisation, there are 750 million people around the world right now who say that they would move to a new country if there were some place that would accept them.

If you imagine new cities that could grow to 10 million people, which is not large by today’s standards, you’d need you need 75 of them to accommodate 750 million people. It’s not inconceivable that the world could develop 75 new cities like this, but it’s a pretty substantial undertaking.

How could we develop 75 new cities that could accommodate that number of people?

Well how did we get the cities we already have? We got the cities that we have because the people who moved there used their talents and their labours to build them. So you need to have a vision of how the people who move to a new city start building it, but starting from ground zero.

And what do you think these new cities would offer that our current cities couldn’t just by growing?

First, they would accept many new residents. Most existing cities won’t do this. Second, what the successful cities would offer are the things that matter most to the people who want to move. You could have lots of different cities offering lots of different things, but the ones that succeed will be the ones that meet the demand that people have.

I suspect based on existing refugee and migration flows, that one of the most important things people are looking for is a place where they will be safe. The second thing that I think they want is a place where they can work – people are ambitious, they want to build things. And finally a place where they can stay for a long period of time, make longer term investments and that will offer opportunity for their children.

You mentioned making decisions now for people who are not able to have a say, like those that are yet to be born. What do you think are the best things we can do with the cities we currently have to ensure a better future for incoming generations?

One of the things that I think all cities and all societies have to confront is the problem of inequality. The thing that first made me think about this idea of new cities was not international migration, but it was living in Chicago and getting to know a woman who lived in public housing there. She was a single mom with two children and I got to understand what it was like for her to live in conditions of high crime. The thing that struck me was that if you’re affluent, you can protect yourself from the threat of crime and the costs of crime. But when you have less income and fewer choices crime is an incredible burden. So these are the kinds of things that I hope, if there were more options of places people could move to, we would see better opportunities in terms of lower crime and better education opportunities.

I just have one last question for you – what is your favourite city?

Maybe it’s because I lived there, but my favourite city now is New York. The thing I love about New York is that it was a gateway that welcomed millions of people who moved there from around the world. They brought nothing but themselves and got their first job in conditions that sometimes were not very attractive. But that was the first step that let them build a better lives for themselves and their children. New York is the demonstration that we can do this. It’s not a fantasy, we just have to do what we’ve done before.

Paul Romer will be taking part in the 2021 Nobel Week Dialogue ‘The Future of the City’. Learn more about the event.

First published October 2021

To cite this section
MLA style: Paul Romer: “We have to confront the problem of inequality”. NobelPrize.org. Nobel Prize Outreach AB 2021. Sun. 5 Dec 2021. <https://www.nobelprize.org/paul-romer-we-have-to-confront-the-problem-of-inequality/>