Ana Ariño, Diego Puga, Diego Soroa and Elena Herrero-Beaumont
The Rafael del Pino Foundation and the ICE Economic Review, published by the Ministry of Industry, Trade and Tourism of the Government of Spain organised, on 4 October 2021, the live dialogue through www.frdelpino.es entitled "Metropolis. The future is already the present" on the occasion of the publication of the ICE monograph of the same title.
The event took place according to the following programme:
Secretary of State for Trade
Dialogue "The challenges of metropolises in the world to come", with the participation of:
Director of corporate strategy at Acciona and former vice-president of strategy in New York City Economic Development Corporation
Professor of Economics at CEMFI and member of the Spanish Government's Advisory Council on Economic Affairs.
Co-founder and CEO of rise.works and cuantics.com
Co-founder and director of ethosfera.org and member of the editorial board of Ethic (moderator).
On 4 October 2021, the Rafael del Pino Foundation organised the dialogue "Metropolis. The future is already the present", with the participation of Ana Ariño, Director of Corporate Strategy at Acciona and former Vice President of Strategy at the New York City Economic Development Corporation; Diego Puga, Professor of Economics at CEMFI and member of the Spanish Government's Advisory Council on Economic Affairs; and Diego Soroa, co-founder and CEO of rise.works and cuantics.com.
Ana Ariño: In the current context, cities are assuming more and more leadership when the challenges are increasingly complex. For example, the challenge of inequality, where cities are clear engines of growth, or that of sustainability, where cities are responsible for 75% of CO2 emissions, mainly buildings and transport. Cities have to manage on a day-to-day basis and anticipate the future, shaping it. The opportunities are great, the challenges very complex. Cities take on more leadership, but not always with more budget and flexibility of action.
Diego Puga: The world is becoming increasingly urban. Cities are increasingly important as an engine of innovation and production. But they change over time and the successful ones are the ones that reinvent themselves again and again. Understanding this process of change, both individually and collectively, is important.
Diego Soroa: In this context it is necessary to incorporate diverse perspectives, learn from successful experiences and take risks in these times of uncertainty. In these times of exponential change, this ability to create images of the future is especially relevant to avoid undesirable futures and to take advantage of relevant experiences. It requires foresight skills that we do not have. They are especially relevant in light of the technologies that affect our realities. The main vectors that determined the design of cities are changing. We now have flying cars and horizontal lifts, so the combination of possible scenarios is enormous (autonomous cars, energy autonomy, ...). If we don't make those kinds of bets, we are going to fall behind the cities we are competing with.
Ana Ariño: Ed Koch, former mayor of New York, said that New York is where the future comes to rehearse. It forces us to reflect on what the future is going to be like and how we want to anticipate it. You have to have that vision to anticipate, not just react to what's coming. Cities can be very different, big, small, rich, poor, but, in reality, there are only those that have a project for the future and those that do not. If there is no such vision and no such projects, the engine of city councils and cities cannot function effectively.
Diego Puga: Cities are environments with a great variety of individuals living and interacting in compact spaces. This has both positive and negative effects. The positive effects would be, for example, the frequency and variety of face-to-face interactions, facilitating the transmission of information and the generation of new ideas. There are also negative effects, from traffic congestion to pollution. The city we want to imagine is one that promotes the benefits of density while trying to mitigate the downsides. There are characteristics of cities, to which we have become accustomed, that may seem inevitable to us and which, perhaps, are not. In the past, there was a time when cities were places of decay and filth. In the mid-19th century, young people in cities had a life expectancy ten to twelve years lower than in rural areas. In fact, life expectancy in cities, both in Europe and the United States, only surpassed that in rural areas after 1930. Today, cities are no longer synonymous with disease and, for the future, they need not be synonymous with traffic jams and pollution either. The pandemic has forced us to experiment with measures that we would have been more hesitant to play with. For example, we have allowed pavements to gain space over asphalt, pedestrians to gain space over cars. With this, we have seen cities become more pleasant. For this to be sustainable in the medium and long term we have to have imagination about what characteristics we want from cities, but also how to achieve this. I am sceptical about the idea of the fifteen-minute city, where everything is done in the neighbourhood and the city becomes like a village. But if this happens, the city loses its appeal. What allowed the great metropolises to emerge are transport technologies that allowed the place where we live not necessarily to be the place where we work and consume.
Diego Soroa: The pandemic has been an opportunity for simultaneous worldwide experimentation with new forms, technologies and realities. One of the clear conclusions is that it is possible to work remotely. This pandemic context has forced us to create new images of what our routine could be. We are now at the beginning of the curve of non-mobility technologies, such as videoconferencing, which we really started to use no more than two years ago. We now have them as the normality of everyday life and we are still at the beginning. We still start from the perception that there is no substitute for physical contact, but that is an assumption that may have to be revised in a few years' time. Now our physical experience is limited by our sensory experience, but we are seeing that all the senses are being amplified by technology and it could be that being together at a distance, through technology, is a more complete experience than being physically together. If that is so, the advantages we see to proximity should be distributed between the physical and the technological. The pandemic has opened the door to that doubt, to that possibility.
Ana Ariño: Some of the trends and factors that attracted talent and people to New York have not disappeared, they are still there. Now what we are seeing is that hotels have closed temporarily because there is not so much demand, many people are still working from home. The question is whether those trends are going to continue or reverse. The percentage of remote jobs being advertised in the US has increased threefold, from 2% to 6%. That's a very big increase, but it's still a very small percentage of the total number of jobs that can be done 100 percent remotely. Google and other companies are now saying two or three days a week in the office. This is a major shift from what has been done, which can have a major impact on the distribution of where people choose to live at the metropolitan level, but not so much that they choose to move elsewhere. This opens up opportunities for medium-sized cities. Competition to the London, New York has increased.
Diego Puga: For the time being, telework will be present in hybrid mode and therefore will not affect the balance between large metropolises and other territories as much. Staying at home while teleworking can make the day seem longer. But, in the medium term, not going to work, not interacting with colleagues, clients, customers, suppliers, means that all those unplanned interactions that are where the best ideas, the innovation, come from, are lost. Although in the short term productivity may not fall, or even increase, in the medium term it suffers. This is true at both the individual and company level. A hybrid mode, where two or three days go to the office and two or three days work at home, is going to be the most common. If this is the case, it does not change the decision whether you want to be in a big city or a small place. Rather, it will change the weight given to being close to work. For some people it will be living in the suburbs and being in a place with more space, closer to nature, but for other people it might be living in leisure areas, in very central neighbourhoods with a lot of life. This will shift more the balance between cities, where cities with more attractive features will win, and the balance between neighbourhoods in the same city, because people will say they no longer need to be so close to the office. We are likely to see an increase in demand in more leisure neighbourhoods.
Ana Ariño: If you look at what the big tech companies in New York have done during the pandemic, it confirms that investment in the office and in face-to-face work is still a central part of their strategy. New York's experience suggests that if you put intentionality, dedication and coordination of the different agents and resources that make up an ecosystem, in a cycle of ten years or a little more you can go from being a city like New York was in 2008-2009, where it was very difficult for a start-up to get funding, while now it is the second largest ecosystem of technology companies in the world. New York made a very strong commitment to attracting talent, to making the city a place with a high quality of life and a friendlier place to live. It made a series of urban interventions to differentiate itself from other cities, to try to reduce housing costs, to provide parks for citizens. It relied heavily on its strengths, on the industrial fabric it already had, on the sectors in which New York was strong, to create a system of innovation around that. It relied on its international character, on the fact that it is a city that is very open to immigration, which is an advantage it has over Silicon Valley. The same could be done in Spain. Madrid already appears in the top 6 of emerging innovation ecosystems. Barcelona, Malaga and the Bilbao area also appear. Now there is an opportunity with European funds, with public policies that seem favourable, such as the law on startups. Spain has to leverage its strengths and try to be very creative in attracting talent, which is what cities compete for.
Diego Soroa: In Spain we have an exceptional opportunity to attract talent precisely because of the opportunity to work remotely. People prefer to be in a context that is culturally and climatically friendlier. We have a very strong advantage here because of the possibility of attracting remote workers. Then there is the possibility of attracting attractive investments or audacious projects. This is where we have an opportunity if we can make a difference at the regulatory and legislative level. But we must be pessimistic when we seek to replicate successful formulas in other contexts, for example, the Guggenheim effect that so many cities have tried to replicate. This success responds to a situation and to audacity, which is what we should try to copy, these bets for transformation. Cities can position themselves as brands to compete on the international scene and there are some that are doing so without complexes, with bold and radical approaches.
Diego Puga: Spain is in a very good situation in some of the elements on which New York has relied, for example, a very pleasant environment in which to live. Here we have a very good starting point. But there are other aspects, such as the attraction of talent, international, national and local, where the situation is more complicated because this is part of a system of excellent universities, which New York has, and also the openness to immigration. In Spain we come from a historical context in which we had a deficit in university education that we have covered, but we have designed a system to cover the quantity deficit, but not the quality deficit that we have right now. There is even a certain reluctance to talk about excellence or differentiation between universities, as there is in other countries. We have tried to guarantee equal opportunities by promoting uniformity, but this does not allow us to promote excellence in universities. It is more effective to have a system in which universities differentiate themselves, giving more resources to those who achieve excellence, and having a generous public scholarship system that allows students to study at the best universities regardless of where they come from. There are more and more Spanish university departments that are internationally excellent, but they are so in spite of the system.
The pandemic has affected different population groups unevenly. Socio-economic status affects the likelihood of catching the virus, the likelihood of contagion, the severity of the disease if there is contagion. Beyond these health inequalities, there are three inequalities that are linked to the economic part of the crisis. It is a different crisis to the previous ones, caused by the impossibility of producing and consuming due to restrictions on mobility and contact. These restrictions affect very differently depending on the sector and occupation. Workers with lower economic status are more concentrated in sectors and occupations that have been more affected by the pandemic. To remedy this, it has worked well to keep schools open in very safe conditions. This has been very important because it has very unequal effects. Those students with more affluent parents, with more educated parents, have fared better because the parents were there to help them with their homework. Those who have not have seen their results fall dramatically. In Spain, this has been mitigated by keeping schools open. A second very important element has been the force majeure ERTEs, which have made it possible to keep labour relations active for the time when the company would be able to move forward. This has worked very well, but for workers who had a permanent contract. Workers on temporary contracts, mostly young people and women, have seen their contracts not renewed. In the end, this crisis has had a greater impact on young people and those with more precarious working conditions than on older generations or those with more stable jobs.
Ana Ariño: Fighting inequality is something that New York can afford, especially in a time of unprecedented sustained growth for more than ten years like it has had before the crisis. A lot has been tried to be done about it because opportunities are very polarised and inequality has increased a lot. There has been investment in education, for example, free nursery schools for three or four year olds, there has been a lot of investment in privately owned affordable housing where the government subsidises its construction in exchange for developers dedicating a percentage of affordable housing to families with certain income difficulties, not only low income families but also moderate income families, such as teachers, policemen, etc. so that they do not have to dedicate 30% or 50% of their income to paying rent. In this regard, there is an affordable housing programme to create or preserve 300,000 housing units. It has also been seen that the most affected by the coronavirus are people living in the Bronx and the least affected are people living in Manhattan, where infections and deaths have been lower than in the rest of New York, despite the fact that it is the densest county. Why? Because in the Bronx they are essential workers who took public transport, who could not work from home, who were perhaps more crowded. In this sense, public infrastructure also democratises the space of the city. The new parks that have been built have been linked to the development of affordable housing in the surrounding areas. City councils have some tools to attack inequality, but it is very important to do so because one of the big challenges and barriers to getting back to the levels of growth that New York used to have is inequality. The opening of a second Amazon headquarters in New York sparked protests, which brought the project to a halt, because it would lead to price hikes and people having to move elsewhere. On the other hand, if we want to scale up education formulas and programmes that really generate alternatives to university, or complementary ones, that are a way for the underprivileged to have opportunities, you need to work with a company like Amazon, that is going to hire 40,000 people, that allows you to plan those investments in education, and with that scale, that allows you to create models that work. There has been another big project in Brooklyn that didn't get the rezoning it was looking for and has also been stopped in this same context. That large projects of this kind are being held up can be a major barrier to growth.
Diego Soroa: There are new inequalities that are being generated by new business models based on new technologies, for example, technology platforms. In the past, cities faced the problem of gentrification, which is the replacement of people who were already there by others with more purchasing power. Now platforms are not only bringing gentrification, but also touristification. There are neighbourhoods in Barcelona or Madrid where regular residents have been displaced by tourists because the platforms have made these domestic spaces available for rent to tourists. Restaurants are also being affected by this new 'tart kitchen' concept. The question is to what extent we will be able to counteract these growing imbalances and inequalities in time. Also relevant are the efforts being made in other contexts in the United States for universal basic income. Beyond the politicisation of these issues, the possibility of taxing robotic forces, artificial intelligence, the algorithm economy, is being explored to try to address these inequalities.
The Rafael del Pino Foundation is not responsible for the comments, opinions or statements made by the people who participate in its activities and which are expressed as a result of their inalienable right to freedom of expression and under their sole responsibility. The contents included in the summary of this conference, written for the Rafael del Pino Foundation by Professor Emilio González, are the result of the debates held at the meeting held for this purpose at the Foundation and are the responsibility of the authors.
The Rafael del Pino Foundation is not responsible for any comments, opinions or statements made by third parties. In this respect, the FRP is not obliged to monitor the views expressed by such third parties who participate in its activities and which are expressed as a result of their inalienable right to freedom of expression and under their own responsibility. The contents included in the summary of this conference, written for the Rafael del Pino Foundation by Professor Emilio J. González, are the result of the discussions that took place during the conference organised for this purpose at the Foundation and are the sole responsibility of its authors.