 I am absolutely delighted to be here. I'm delighted to be in London. I'm delighted to be here discussing the electric city because I actually love this phrase. It seems to capture the very heart of the dance between technology and the very human magic that actually makes cities work. It captures the connection between the ever changing nature of how we communicate over space, of how we travel, of how we buy and sell, and the most common, the most basic of urban interactions of sharing a meal or a smile of connecting with one another. Let me start, and in this room that I know has so many people who actually do have aesthetic sense, let me start by calling the support of America to make it clear that I have absolutely no aesthetic sense whatsoever, but this is in a sense a portrait of America. What I've done is I've taken the 3,000 odd counties in the United States and I've ordered them. I've ranked them on the basis of density. For cities are at their heart the absence of space between people and companies. Cities are density, proximity, closeness. The bottom line shows the relationship between median family income and density. And what you can see is that the densest 10th of America's counties have incomes that are on average 50% higher than the least dense half of America's counties. This is a common fact economists referred to it as the economics of agglomeration, which Alfred Marshall talked about 120 years ago when he noted that the mysteries of the trade become no mystery but are as it were in the air in dense clusters. In the United States, the three largest metropolitan areas in the country produce 18% of America's GDP, while including only 13% of America's population. The top line shows something that is somewhat more surprising which is the relationship between population growth between the years 2000 and 2010 and initial population density. As you can see, the denser the place was in 2000, the faster it grew until you get to the top 10th. Whereas at the start of the 19th century, Americans were leaving their dense enclaves on the eastern seaboard to populate the empty spaces of the American interior. At the start of the 21st century, instead of spreading out, we're clustering in. Now, the urbanization, the re-urbanization, the revitalization of urban spaces in America, in London, in Paris, in the developed world is nothing relative to what's happening in the cities of the developing world. Gandhi famously said the growth of the nation depends not on cities, but on its villages, talking about India. But with all due respect to the great man on this one, he was completely and utterly wrong. Because in fact, the future of India does not depend on its villages, it depends on cities. It depends on Kolkata, it depends on Mumbai, it depends upon Delhi, it depends on Gargan. It depends upon the places that are providing pathways out of poverty into prosperity, places that are connecting India with the larger world. For indeed, the relationship, and this shows the relationship between urbanization and income in the US, India and China. Again, one refers to the least dense areas, five refers to the most dense areas. As you can see, that positive relationship that I showed in the US is actually much weaker than the relationship between urbanization and prosperity in India and China. These are places that in fact urbanization, being in a city is even more vital for being part of the global economy for succeeding. Now, it is tempting to look at the traumas, the very real difficulties that cities face. And to think that in fact, wouldn't we be better off, despite all this prosperity, if people lived in farms. Sure, it's true that the more urbanized countries, the countries that have more than 50% of their population have on average incomes that are five times higher, but aren't they losing something by all this urbanization? And while certainly it is true that there are demons that also come from density, and we must battle those demons. On net, the right answer is cities. This is self-reported life satisfaction, ranked across the countries of the world on the basis of urbanization. What you can see is that people actually say that they are happier when they're living in urbanized countries. It is not true in the United States that people who live in big cities say that they're happier. After all, what self-respecting New Yorker is gonna tell a surveyor how happy he is with his life. On the other hand, when you look in the developing world, people who live in cities do typically say that they're happier. And it's not just that more urbanized countries are five times richer on average, they also have infant mortality levels that are less than a third. Now, the success of cities in our age is something of a paradox. At one point in time, 30 years ago, all of our older, colder cities, London as well as New York, Buffalo as well as Boston, looked as if they were headed for the trash heap of history. Because indeed, it looked as if the trends of history were going to make urban density obsolete. After all, we live in an age in which it is effortless to telecommute across the planet, in which we could all just occupy whatever a silvan spot appealed to our biophilia and just dial it in. And yet, somehow or other, we've managed to come back to cities. But that wasn't obvious in the 1970s. These are two iconic images from Manhattan and my youth. The lower images, President Ford, New York had been hemorrhaging manufacturing jobs in the 60s and early 70s. The largest industrial cluster in the United States in the 1950s was not automobile production in Detroit, it was garment production in New York. And it was hammered by globalization, accompanying that with social distress, crime, economic chaos. And Ford was telling the city to get its fiscal house in order. The top image shows Jimmy Carter wandering through the wasteland that the South Bronx had become, where it really seemed as if cities were headed back to some sort of a rural past where the weeds would come out of the ground and reclaim the once tall towers of urban areas. It really seemed possible to imagine that that last scene in Planet of the Apes where the Statue of Liberty comes poking up out of the sand that that actually was a real possibility. And yet that's not how history happened, at least not in all cities. And I submit to you that the success of cities in an age in which distance is dead is not an accident because what globalization and new technologies have done is they've increased the returns to being smart. They've increased the returns to new ideas and innovation. This is what electricity has done by enabling us to connect across the world by making the world a more complicated place. And the more complicated an idea is, the easier it is for it to get lost in translation. The more valuable it is to rely on that most basic, most primal, most effective means of communication being in the same room with each other. Because we as a species have evolved over millions of years for having these wonderful cues for communicating comprehension or confusion that are lost when we're not together. And electricity isn't going to rewrite that. It's just going to make those ideas more valuable. It's just going to make the sense of being, the reasons for being in one dense area more important. This reminds us, though, of a central fact. It's not that all cities have come back. This looks at the population growth by the share of the population with a college degree as of the year 2000. It's a subsequent population growth across America's counties. Skilled places succeed, less skilled places don't. That's why the LSE is such an important part of London's fabric. That's why those American cities that had land grant colleges prior to 1940 have done so remarkably better than other cities have in the last 30 years. Boston's land grant colleges, of course, MIT. That's why on average, holding your years of schooling constant as the share of adults in your metropolitan area with a college degree increases by 10%. Your wages go up by 8%. Having skilled neighbors really matters, and it matters today more than ever. And that's what you're looking at here is the relationship between Perk Avenue GDP across metropolitan areas and the share of the population with a college degree. This is the relationship between skill area level skills and earnings in India, China, and the US. All of these things, again, the US has the weakest relationship with these countries. Skills and density, the power of connection to bring new ideas to fuel knowledge is really the future of the world and cities. Now, of course, cities are not just about the skills that are learned at the LSC or at Harvard. They're about the skills that are learned on the street. And there's no skills that are more important to urban success than the talent and inclination to be an entrepreneur. 50 years ago, the economist Ben Chinnitz compared New York and Pittsburgh and noted that New York appeared to be more resilient than Pittsburgh even then. He argued that this was a result of the industrial legacy of the two cities, of New York's great industry, the garment trade, born of the port, which had no effective economies of scale, that any person with a good idea and a couple of sewing machines could get started and see if their future was bright. That was a mother of entrepreneurship, a place where thousands of smart people came and tried out and learned how to do something new. By contrast, Pittsburgh, city of coal, and the Three Rivers, Pittsburgh had steel, US steel, an industry based on economies of scale that no one would venture in if they were remotely sane and tried competing with US steel in this business. Great bread company men. And for the resilience of a city, the well of entrepreneurial human capital, the well of skills that are not just about coming up with a good essay to write, but about seeing new opportunities are really central. And it is remarkable, given how mediocre our measures of entrepreneurship are, that they do such a remarkable job of explaining which cities have managed to be resilient and which ones haven't. This is the relationship between average establishment size, small average establishments are typically thought to be an index of entrepreneurship and subsequent employment growth across metropolitan areas. Small firms, big cities. And of course, how do you engender entrepreneurship? Certainly the government has a major role with infrastructure, but above all, it's about making cities attractive for smart people to come and try their future. It's about having consumer cities that are places that are livable. And indeed, making cities livable is the great challenge of the 21st century, particularly in the developing world. Luckily, the cities of the West have indeed some experience in this. This is the evolution of death rates in New York City. A boy born in New York in 1900 could expect to live seven years less than the national average. Today, life expectancies in New York are almost three years higher than the national average. That didn't happen by accident. The current healthiness of New York reflects a great deal about what's good about cities. Lower level of suicide rates among the young. Lower levels of motor vehicle accidents among the young. But that didn't happen by accident. You needed to battle the demons of density. You need to create clean water. America's cities and towns were spending as much on water at the start of the 20th century as the federal government was spending on everything, except for the post office and the army. Now, of course, cities also need to make themselves affordable. And one of the trends that's perhaps not so beneficial is the relationship between density level and price increases. And we've seen this among a number of different dimensions. This is the relationship between price growth between 1996 and 2012 and initial density levels. The places that had a lot of people per square mile have just gotten more expensive. The challenge of creating affordability of making cities livable not just to the very rich but to middle and lower income people, that's fundamentally a challenge of housing supply. And this is actually the area that Jane Jacobs got it wrong. While in so many ways she was a peerless observer of urban life, she sometimes took her ground level observations too seriously. She looked at old housing and noticed it was cheap and new housing and noticed that it was expensive, which led her to conclude that the way to promote affordable housing was to make sure that no one built any new housing on top of old housing. And yet, of course, that's not how supply and demand works. You need to actually supply new homes in order to our city to become livable. But you need to build, and you need to build up. And indeed, you don't need to look further than Jacobs' own home district of the Greenwich Village Preservation District that she worked so hard to create to see the pernicious effects that can be created by freezing a city in amber. Her own home area, which was affordable to middle income people like herself and her husband in the 1950s when she lived there, now is a place where row houses start at $5 million and hedge fund managers only need apply. This is what freezing a city can do. One of the reasons, one of the many reasons why having an electric city conference is so important is it reminds us of the interplay between cities and the environment. And it reminds us that all those cities run on electricity. They can actually be places to minimize our energy use and actually reduce the harm that we do to the environment. After all, Henry David Thoreau, who was such a great advocate of living around the woods, managed to burn down more than 300 acres of prime Massachusetts woodland by starting a fire while it was out cooking chowders. We are a destructive species. Often the best way to take care of nature is to stay away from it. And indeed, that's exactly what our cities show us. This is from work with Matthew Kahn, where we've cataloged carbon emissions associated with living in different parts of the US, holding income and family size constant. And what you find is dramatically lower levels of energy use from living in dense areas, primarily because of smaller houses and less driving. One way to think about this is if the great growing cities of India and China see their carbon emissions rise to the level seen in the sprawling United States, global carbon emissions go up by 130%. If they stop at the level seen in wealthy but hyperdense Hong Kong, global carbon emissions go up by less than 30%. The Lorax is not a true fable. It's a myth. Building up cities is not damaging to the environment. It minimizes the effect of driving long distances, of building vast homes that use huge amounts of energy. Cities come together in their effect on the environment and on the economy. There are places in which human beings can empower each other by learning from each other and can actually make the planet safer for all of us. Thank you.