Burr then used his own considerable political skills to shepherd a new private water company’s charter through the state legislature. The charter’s key provisions allowed the company to raise $2 million, and use any surplus capital in “monied transactions not inconsistent with the constitution and laws of this state, or of the United States.” This seemingly innocuous provision meant that Burr could do whatever he wanted with the company, as long as it produced some water. He saw more financial and political profit in banking than in water provision. Hamilton had unwittingly created a competitor for his own Bank of New York. The Bank of the Manhattan Company has had more than two solid centuries of success, evolving later into Chase Manhattan and now JPMorgan Chase, but it certainly didn’t solve New York’s water problem.
To save capital that Burr badly wanted for its banking operations, the company used an old well and built an undersize reservoir. The Manhattan Company seems to have broken its promise to bring in clean, fresh water from the Bronx and instead filled its tanks with aqua obscura, water of unknown, questionable origin.
Private water provision works in plenty of places, but it has two potential problems. Consumers can’t easily verify their water quality, which means that suppliers can cut corners without losing sales. And even if a private provider could guarantee clean water, customers aren’t always willing or able to spend enough to make such purity profitable. Both of these issues disappear in a wealthy economy in which people can be counted on to pay plenty of money for drinking water and, generally speaking, providers can be counted on to provide healthy water, especially given the lawsuits they might face if they don’t. But in the age of Hamilton and Burr, even if a prosperous burgher was able to send servants uptown for fresh water, that burgher could be sure that the people in the poorer wards were using cheaper, dirtier, downtown water. Bad water could still kill that burgher or his family, despite their own precautions, because a citywide epidemic could still start in those poor wards, spread by inexpensive, filthy water.
This is what economists call an externality, an impact that one person’s actions have on someone else that doesn’t work through a voluntary transaction. For more than a century, economists have argued that externalities require some form of state intervention, and so it was with water. Since the Manhattan Company didn’t solve New York’s clean-water problem, waterborne diseases kept reappearing. New York City would occasionally lose more than a half percent of its population to an epidemic during a given year, double the death rate in a normal year, as it did during the 1832 cholera epidemic.
Finally, New York City followed Philadelphia and spent millions, as Hamilton had warned, on public water provision. The Croton Aqueduct, built at a cost of $9 million (more than $170 million in 2010 dollars), provided New York’s water after 1842, and that clean water quickly had an impact. After 1860, the mortality rate experienced a remarkable sixty-year decline, from more than thirty deaths per thousand at the end of the Civil War to around ten per thousand during the 1920s.
By 1896, there were almost 1,700 public water systems in the United States, and municipalities were spending as much on water as the federal government spent on everything except the military and the postal service. In Paris, Baron Georges-Eugène Haussmann had used his virtually unlimited authority as the agent of Napoléon III to create a sewage system that still serves the city and attracts tourists to its tunnels.
Economic historian Werner Troesken has done an enormous amount of research, which shows that investments in municipal waterworks significantly reduced deaths from typhoid fever and other diseases. Clean water has even reduced deaths from diseases that aren’t carried by water. Echoing centuryold research on the impact of clean water in Massachusetts, Troesken and his coauthor Joseph Ferrie found that, starting in 1850, lower rates of typhoid fever in Chicago generally went along with larger reductions in other diseases. Deaths from other ailments may have fallen because waterborne diseases were being mistaken for other diseases or because waterborne illnesses were weakening immune systems, which then failed when other ailments attacked them. Whatever the reason, Ferrie and Troesken believe that “the introduction of pure water explains between 30 and 50 percent of Chicago’s mortality decline” between 1850 and 1925.
Clean water came to cities only because of massive public investments in infrastructure. It will take similar efforts, either by government or by suitably subsidized and regulated private companies, to make the slums of Dharavi as free from waterborne disease as the streets of Paris.
Street Cleaning and Corruption
Despite the huge reductions in disease that came from cleaner water, as late as 1901 life expectancy at birth was seven years lower in New York than in the rest of the county, primarily because of the prevalence of infectious diseases. A century ago, America was just as corrupt as many developing countries today, and just as corruption today limits the efficacy of public services in the developing world, corruption made American cities far less healthy in the nineteenth century.
New York got clean streets thanks to a police scandal that temporarily pushed the notorious Tammany Hall machine out of power. There is a lot to dislike in political systems that lodge too little power in local hands, but the right answer isn’t complete autonomy, either. When things work right, multiple layers of government—federal, state, and city—can check each other, especially when different parties hold power at different layers. African Americans in the South wouldn’t have gotten civil rights if the federal government hadn’t intervened in state matters, and New York City got clean streets sooner because a Republican state senator led an investigation of the Democratic city government’s police department.
The rampant corruption detailed in the senator’s ten-thousand-page report would stun even the most jaded reader. When investigators asked the infamous policeman “Clubber” Williams how he could afford his New York townhouse, his Connecticut country house, and his yacht, all on a policeman’s pay, Williams replied that “I bought real estate in Japan and it has increased in value.” That report was the backdrop for New York’s 1894 election, which ousted Tammany Hall and put a Republican businessman, William L. Strong, into the mayor’s office.
Strong originally wanted to put Theodore Roosevelt in charge of street cleaning, but Roosevelt wanted to be police commissioner instead. So Strong tapped Colonel George Waring, who turned out to be, as Roosevelt said in a rare burst of modesty, “a far better man for his purpose.” Certainly Waring shared Roosevelt’s enthusiasm for unrestrained reform. Waring had gotten his start in sanitation forty years earlier as a twenty-something overseeing the drainage of Central Park. He raised six cavalry regiments for the Union Army, introduced Jersey cattle to the United States, helped develop the toilet, and built Memphis’s sewer system after a series of waterborne epidemics made the city a national cause célèbre. In 1895, this engineer, farmer, and first-rate horseman took charge of New York’s street cleaning.
He immediately became a lightning rod. He went 25 percent over budget during his first year. A political firestorm arose when Waring supposedly called the Grand Army of the Republic “a dammed lot of drunken bums,” roughly equivalent to calling the AARP “a bunch of lazy welfare cheats” today. Waring responded that he had only called the nation’s most powerful lobbying group “pension bummers” and that he wasn’t backing down, even after the New York State Assembly called for his removal. He insisted on seizing vehicles left idle on city streets, creating a “riot in Mott Street” between street cleaners “who were sent out to seize trucks and a mob of Italians who tried to prevent the trucks from being taken.” He stayed up nights planning his department’s response to snowstorms. Even with all the ruckus, the New York Times reported that in his first seven months, “marvels have been done toward the sanitation of the city.”
Waring’s energy, honesty, and competence earned him public support that overwhelmed his detractors. He also had the benefit of a new technology— asphalt. In the 1880s, New York’s st
reets were typically paved with oblong granite blocks laid on a bed of gravel. Sweeping those streets was easier than keeping cobblestones clean, but dirt and dust were still ubiquitous. Slowly, asphalt—a sticky tarlike substance used to bind together small stones and gravel—was adopted for paving streets. When Baron Haussmann built his grand boulevards through Paris in the 1860s, he found that asphalt provided a smooth, manageable surface. By the 1890s, New York City had also turned to asphalt paving. There were numerous charges of corrupt ties between Tammany Hall and the private asphalt companies, but the streets were smoothly paved, making them far easier for Waring’s men to clean.
Waring resigned his post in 1898 to improve sanitation in Cuba at the end of the Spanish-American War, where he caught the yellow fever that killed him, but he left behind a cleaner—and healthier—city. Between 1901 and 1910, New York’s male life expectancy increased by 4.7 years, and the gap between it and the nation’s fell by half. The biggest gains in life expectancy came from reductions in infant mortality, which reflected the spread of medical knowledge, improvements in sanitation, and better hospitals.
Mayor Strong’s administration didn’t end urban corruption in New York. Strong was eventually replaced by a Tammany man, who earned a fortune by creating an ice monopoly in the city. But municipal corruption had become less extreme than in the days of Boss Tweed, as the population became better educated and more politically effective. Typically, corruption decreases as education levels rise, because citizens become less dependent on the informal safety net that machine bosses provide and better able to organize opposition to corruption. But machine politics wouldn’t abate in most American cities until the New Deal brought better bookkeeping, which again showed that multiple layers of government can have positive effects.
The old model of machine politics had local bosses doling out jobs and favors to their constituents in exchange for votes. An immigrant family who supported the machine could rely on help getting a young man a job or aid during a fire or a turkey on Thanksgiving. Those services were provided from city coffers overseen by machine bosses. The New Deal vastly strengthened the federal safety net and weakened the power of local politicians to buy support with occasional handouts. To get money, local leaders had to scrupulously document their cash flows. The era of the boss became the age of the bureaucrat, many of whom followed in the professional path of officials like Colonel George Waring.
More Roads, Less Traffic?
Contagious diseases turn the great urban advantage—connecting people—into a cause of death. Traffic congestion eliminates that advantage altogether by making it too hard to get around in a city. Too much trash turns city streets into a health hazard; too many drivers turn city streets into a parking lot. Providing clean water requires an engineering solution, but providing uncongested streets requires more than just technical know-how. Our streets only become usable when people don’t overuse them, and that calls for the tools of the economist. Driving creates a negative externality, because each driver typically considers only his own private costs and benefits. Drivers don’t usually take into account the fact that their driving slows everyone else down. The best way to fix that externality is to charge people for using roads.
Moving water into cities and sewage out was a vast undertaking, which tested the very limits of engineering know-how. Traffic congestion is also an engineering challenge but a psychological one as well, mainly because each improvement changes drivers’ behaviors in a way that actually offsets the improvement. For decades, we’ve tried to solve the problem of too many cars on too few lanes by building more roads, but each new highway or bridge then attracts more traffic. Economists Gilles Duranton and Matthew Turner have found that vehicle miles traveled increases essentially one-to-one with the number of miles of new highway, and have called this phenomenon the fundamental law of road congestion.
The traffic problem essentially reflects the impossibility of sating the demand for anything that’s free. Roads are expensive to build and valuable to use, yet American motorists seem to think that a right to drive for free was promised them by the Bill of Rights. Soviet Russia used to charge artificially low prices for consumer goods, and the result was empty shelves and long lines. That is basically what happens when people are allowed to drive on city streets for free.
The best way to reduce traffic congestion was dreamed up by a Nobel Prize-winning Canadian-born economist, William Vickrey. Vickrey first pondered the puzzles of public transportation when, in 1951, he joined a mayor’s committee to improve New York’s finances. He was assigned the problem of pricing subways, and he noted that “users of private cars and taxis, and perhaps also of buses, do not, by and large, bear costs commensurate with the increment of costs that their use imposes.” When we drive, we consider the private costs to ourselves of the time, gas, and automobile depreciation, but we don’t usually consider the costs—the lost time—we impose on every other driver. We don’t consider the congestion we create, and as a result, we overuse the highways.
The natural economists’ solution to this problem is to charge drivers for the full cost of their commute—which means adding a fee that charges drivers for the impact that their car imposes on the rest of the road. Vickrey followed up his core insight in the late 1950s in a report on the Washington, D.C., bus system, in which he first advocated charging drivers for the congestion they create. Vickrey’s insight, inspired by the city around him, is another example of self-protecting urban innovation. Decades before E-ZPass, Vickrey recommended an electronic system for imposing these congestion charges, and he suggested that charges rise during rush hours, when congestion is worse.
Decades of experience have proven Vickrey right. Building more roads almost never eliminates traffic delays, but congestion pricing does. In 1975, Singapore adopted a simple form of congestion pricing, charging motorists more for driving in the central city. Now the system is electronic and sophisticated and keeps that city traffic-jam free. In 2003, London adopted its own congestion charge and also saw traffic drop significantly.
So why is congestion pricing so rare in the United States? Because politics trumps economics. Imposing a new fee on thousands of motorists is unpopular, and as a result, millions of hours of valuable time are needlessly lost by drivers stalled in traffic. Vickrey himself died of a heart attack, slumped over the wheel of his car, traveling late at night. I’ve always imagined that he was driving at that hour to avoid congestion.
In America, congestion wastes billions of dollars’ worth of lost time, but its consequences can seem even more severe in the cities of the developing world, where crowding is more extreme and where alternative traffic options, like subways, are typically underdeveloped. Buildings are shorter and consequently more spread out, and that, along with terrible sidewalks, makes the pedestrian option less practical. In cities like Mumbai, congestion can bring the business of urban life to a standstill, which is why fighting congestion is not about convenience; it is a fight to ensure that the city can fulfill its most basic function of bringing people together.
Making Cities Safer
The urban edge in connecting people can be compromised just as much by crime as by congestion. Fear keeps people behind locked doors, cut off from each other and from the advantages of city life. And fear has been an all-toocommon by-product of bringing thousands of people together in a dense urban cluster. Just as urban proximity enables the spread of ideas and disease, it can also enable crime.
For centuries, the threat of urban disorder has pushed citizens to pay taxes and sacrifice liberty in search of safety. The first modern police force was formed in Paris during the reign of Louis XIV, when that city was probably Europe’s largest and certainly filled with violent disorder. Indeed, Paris first became a City of Light in the seventeenth century because the man who ran its police force launched a vast street-lighting project to make the city less dangerous at night.
Willie Sutton said he robbed banks because “that’s where the money
is,” but in most cases, crime means poor people robbing other poor people. Crime victims are more likely to be poor, young, and male—just like criminals. One major reason people join criminal gangs is the promise of protection from other criminals.
In much of the world, crime is disproportionately urban. In 1989, more than 20 percent of people living in cities with more than a million people had been crime victims during the previous year, while fewer than a tenth of residents in towns with under ten thousand people were victims. In 1986, murder rates increased, on average, 25 percent as city populations doubled.
Cities are crime-prone mostly because the poor people who come to cities bring the social problems of poverty, like crime, with them. Cities also encourage crime because urban areas present a dense concentration of potential victims. While it’s hard to earn a living as a thief on a lonely country road, the crowds on a subway provide a plethora of pockets to pick. I once estimated that the financial returns to an average crime are about 20 percent higher within metropolitan areas than outside them.
The city-crime connection also reflects the difficulty of law enforcement in big, often anonymous cities. In the game of Clue, players solve a murder by progressively eliminating all the possible suspects. Real cops often do the same thing, but this process is much harder in cities because there are a lot more suspects to consider. As a result, the probability of being arrested for any given crime drops by about 8 percent as city population doubles.
Triumph of the City Page 13