- Good morning, welcome to New York
University. We are delighted to host this
press conference for Paul Romer here at
Stern to honor his research. My name is
Beth Murray and I'll be emceeing our our
morning. Just to understand the agenda, we
are going to start by hearing from the
university's leadership: our President,
our Provost the Dean of the Stern School
and the director of the NYU Marron
Institute of Urban Management. We will
then hear from Paul Romer. After that I
will facilitate some questions from the
press in the room, and we also have press
online on the phone and perhaps over
social media. So why don't we get started
right away, I would like to invite our
president Andrew Hamilton.
- Thank you
very much indeed and ladies and
gentlemen it's my pleasure to welcome
you all on this wonderful morning, this
very special morning for NYU the NYU
Stern, but especially for Paul Romer and
Paul let me on behalf of the entire NYU
community, wish you our warmest
congratulations on this marvelous
recognition of your work. I think if I
may, let me also express my
congratulations to the co-winner of the
Nobel Prize in Economics, Bill Nordhaus
and for me it's a pleasure because today
we celebrate one of my current
colleagues winning the Nobel Prize and
Bill Nordhaus is one of my former
colleagues at Yale I was a professor at
Yale and Bill is even a former Provost
of Yale as am I, so it's a great pleasure
to see that, and let me just say that in
selecting doctors Romer and Nordhaus, the
Royal Swedish Academy of Sciences has
recognized economic research that is in
its essence an optimistic view
of the power of economic theory. Paul's
work in particular centers on economics
as it applies to real life, and it
teaches us that technology is something
that we can and should harness for the
collective good. Indeed in one of his
most famous papers on the micro
foundations of growth
theory and that's been cited more than
25,000 times, he states that the enhanced
speed and ease of communication, sharing
and collaboration that comes with
improvements in technology that can and
is enabling faster progress on key
social challenges, and it allows great
minds throughout the world to contribute
to that advancement no matter where they
reside. Let me say, while I mentioned the
world, Paul Romer has been one of the
strongest supporters over many years of
NYU's engagement with the world, our
global network of sites and campuses
around the world, and Paul himself spent
an extended period at NYU Shanghai
teaching undergraduates there and really
was one of the reasons why the
relationship between NYU Stern and NYU
Shanghai is so strong today. We are
particularly pleased that the
recognition of NYU Stern is taking
place today, but also Paul's
involvement with the NYU Marron Institute
of Urban Management. His role in
both of these institutions, his role
in the Academy and in the economics
community, clearly illustrate the value
and the power of fundamental economics
research in enabling us all to plan for
a better and a more sustainable future,
especially in cities but also far beyond
them. Let me say that dr. Romer is the
sixth NYU economists in the past 20
years to be honored with the
Nobel Prize, and thanks to their
excellence and the work of many others
in the economics departments of NYU
Stern and of the Graduate School of Arts
and Sciences, I'm very proud to say that
NYU is one of the top-ranked
schools for economics in the world.
He's the only NYU economist to my knowledge
that has created his own app for the
purpose of helping to provide more than
1 billion answers to homework problems
from students and schoolchildren around
the world, so you can see Paul is
committed to to his economics
research furthering our understanding of
the world and the impact of economic
growth, the positive impact of economic
growth in the world, but he's also a
great teacher,
utterly committed to ensuring that
students around the world received the
benefit of his wisdom, and so let me
finish by saying how very pleased we are.
This is not only a recognition of Paul
Romer and his excellence, it's also a
recognition of why we must continue to
invest in fundamental research to help
us understand the impact of
technological innovation on the world
and Paul Romer's work is among the finest
in the world and it's wonderful to see
it recognized today. So congratulations.
- [Beth Murray] I'm delighted to invite NYU's Provost,
Katherine Fleming, to the podium.
- Thank you very much, it's lovely to be here in
a room in which Professor Romer gave one
of the most remarkable lectures I've
ever heard.
I'd like to say that Professor Romer
really represents what we would like to
think of as being distinctive of NYU's
approach to the social sciences, an
applied way of thinking about the social
sciences, his thought about economics
is relevant to real people as well as
simply to experts, which is not to imply
that experts aren't real people, but we
all know many of them and know that at
times there can be a divide between the
way that they think about things and the
way that that thought is translated into
action in the world. That is very much
not the case with Paul Romer's work. He
is one of the most deeply thoughtful
people I know about how to make the
world and the city in which we live here
far better places and we're very
grateful to him for that, and as an
administrator I also would like to add
that quite unusual for a scholar of his
stature, he has shown a huge commitment
to the administration of the university
in his direction of the Marron Institute
of Urban Management and indeed in his
creation of that institute as something
truly truly distinctive
in the NYU and social science landscape,
and I'm very grateful to him for that as
well. It's such a pleasure to be here.
Paul, my sincere congratulations. We're
thrilled, we're thrilled to have you at
NYU and as a colleague, thanks so much.
- [Beth Murray] Next I'd like to invite Raghu Sundaram, the Dean of the NYU Stern School of Business.
- Thank you all and good morning. This
is obviously a wonderful day for all of
us, for NYU, for Stern but most of all I'm
delighted for Paul. I first met Paul in 1988,
the year that I joined Rochester's
Department of Economics as an assistant
professor. Paul was just on his way out
of Rochester, he was going back to
Chicago. Only five years out of his PhD
then, Paul was already a legend. All the
traits that define him today, his fierce
independence, his innovativeness his
iconoclasm, his attitude of always being
respectful of tradition but never
deferential, all those traits were
already present in abundant measure when
I first met Paul those thirty years ago.
Paul came to Stern in 2010 and that was
actually my first reconnection with him
after I'd met him in '88. He came to Stern
in 2010, where he set up the Urbanization
Project, in which amongst
other things they study the way the growth of
cities can be harnessed to advance
global progress, and how to shape
urbanization itself to better the life
of humankind. Paul's contributions to NYU
have not only been in the form of
research or, as Provost Fleming mentioned,
in administration. Our students have also
been huge beneficiaries both of his
teaching in the classroom and of various
experiential projects which they've been
used to work around the world.
My congratulations again Paul, we're
thrilled for you.
- [Beth Muray] I'd like to now introduce Clayton
Gillette, the Director of the Marron
Institute of Urban Management and the
Max E. Greenberg Professor of Contract
Law at New York University School of Law.
- Thank you and thanks to everybody for
being here. It is more than a privilege
for me to be here with Paul Romer and to
introduce him to you. We're all aware
of Paul's contributions to the world of
economics, but Paul has also been a
visionary with respect to the role of
the university in modern society.
Paul has long advocated merging the
theoretical insights generated by
traditional university research with
real-world needs. More specifically, he
saw a role for the University in
addressing the critical challenges of
urban living. By marrying the academic
with the practical Paul believed that
the University could work with cities to
improve the opportunities available to
urban residents both here in New York
City and around the globe. What's more, by
taking on applied work, Paul believed
that NYU could not only make the world's
cities more prosperous, more inclusive
and safer, but also better position at
scholars to improve our fundamental
understanding of urban areas. When Paul
took on the role of Director at the
Marorn Institute of Urban Management in
2013, he put his vision for applying
urban research into practice. To this day,
the Marron Institute remains dedicated to
Paul's vision, working with cities and
other jurisdictions to improve the
delivery of public services and to
effect positive change. I can think of no
greater testament Paul than to recognize
how successful academics from around the
country we're willing to migrate to New
York to change the way they thought
about the roles of both the University
in the larger society and their own
roles within the within the University,
in order to have an opportunity both to
work with Paul and to help fulfill his
vision. On behalf of the faculty, the
research staff and the administrative staff
of the Marron Institute, 
it is my great pleasure both to
introduce Paul to you, and to congratulate
him on his tremendous achievement.
- [Paul Romer] There'll be other
opportunities to talk about the ideas,
their policy significance, I thought it
might be more helpful today to talk a
little bit about the personal side of
what it means to be a scientist, because
the real value of these prizes is in
celebrating the the enterprise. So after
doing some very pure kind of ivory tower
type research on growth, I started to
think about how this could translate
into policy, so I wrote a paper about
bringing back some elements into
government support for PhD students that
were in the previous Defense
Authorization Act that was passed during
the Sputnik era but those elements had
been lost in more recent rounds of
funding. So there were some congressional
staffers who got interested in that
paper, they reached out to me, I started
meeting with them,
from both both Republican Democratic
sides, and we eventually converged on a
bill that would bring back this kind of
fellowship program, and they had a
Democrat and a Republican to sponsor it
in the Senate and then a Democrat and
Republican to sponsor it in the House, so
I was in Washington and then woke up on
the morning of September 11th, 2001 and
realized that the press conference
wasn't going to happen. You know,
sometimes the time isn't right. Sometimes
things happen that just don't
go your way and so you've got
to take another path. This was
at a time when I was actually very
discouraged about the lack of engagement
with some of these ideas within the
economics profession. So part of why I
started the company that President
Hamilton referred to is
I saw that there was going to be no
opportunity to do anything in science
policy in the United States, and I had to
go figure out something else to do, and
so I focused on education. Then,
let me go back in time and tell you
another story. When I first arrived
at University of Rochester, I
think in my first year but we could go
back and see, there was a Nobel Prize
that was awarded to George Stigler.
I remember it was George, and I went into
the Commons room and said something a
little bit disrespectful as people noted,
that you know maybe they just
give the prizes out at random, maybe
that's what they're actually doing. And I
realized when I said that that I had
really hurt a senior colleague that I
admire a great deal, Lionel McKenzie, and
just in an instant I saw that Lionel
had been hoping each year that he might
because he was a very good candidate,
arguably a better candidate than other
people who had gotten the prize for similar
work, that every year he was disappointed
about not getting the prize. So I didn't
have a paper published at this point, so
it was like absurd for me to think this,
but I remember promising myself at the
time, I'm never gonna want to have the
Nobel Prize.
I'm never gonna hope for it, I'm never
gonna expect, it because it can just tear
you up. So what do you do, you face
setbacks, you know you can't get drawn
into the you know the rewards, you
know, what you do is you commit to
something that's larger than yourself,
that's what helps you keep going, and
that sense of belonging means that you
can you can take satisfaction out of a
career, whether or not you happen to be
the one who gets who gets a prize for
it, and this is part of what makes the
University and part of what makes
science special, is it creates this
opportunity we have to commit to
something that will last beyond our
lifetimes, and ideally we'll make the
world a little bit of a better place, and
then just to close the loop I sold this
software company and then started
thinking about what might be
the most important policy thing I could
do because I still couldn't see any way
to do science policy, and I convinced
myself that urbanization was the most
important thing we could do to help
encourage the catch-up growth in the
developing world. And so I started
looking around for some university, I
was that Stanford at the time, but
started looking around for someplace
that was willing to take a take a bet,
try something kind of risky, and so John
Sexton through Peter Henry kind of heard
about my idea it was willing to meet
with me, and John kind of committed we
could you know we could do that here, and
so I came to NYU thinking we'd have a
chance to really do something in
practice it could matter in urban
development and my role at the Marron
Institute was not as a the idea
generator. I wasn't, you know, the one who
originated the ideas that we implemented
there, my job was just to provide air
cover for the people who were actually
doing it, so you can serve in a lot of
different ways, but what kind of
keeps one going and what makes it all so
rewarding is that kind of commitment to
something that's larger than
oneself. So you know, there were bad days,
today's a good day, but you know
you've got to find a way to keep your
focus on what matters in the long run.
Thanks.
 
- [Beth Murray] Just a couple of
housekeeping items as we move to the Q&A,
for those of you in the room, we have mic
runners, in order to ask a question just
raise your hand, and I would ask you to
please state your name and your media
outlet. For those of you who are tuning
in via live webcast. we also have a way
for you to ask questions either through
Twitter @NYUStern or over the phone,
sorry it's on our site but just quickly,
1-800 three two six zero zero one three
internationally 203 702 1000, sorry about
that.
The conference ID is six nine three five
two two eight, so with that can we have a
question from the audience?
- [Reporter 1] (inaudible) of Swedish
television, TV 4 News Sweden, and I'd
like to know what was your initial
reaction when you got to know when you
learned that you were awarded this prize?
- [Paul Romer] Well I think if we explored my
personality deeply we'd explain that
I'm kind of, I lack respect for certain sources of authority,
but my ability to be disruptive is tempered
by my cluelessness, so there were
two phone calls this morning before 6:00
I didn't answer
either of them. I get spam calls all the
time, but I couldn't get back to
sleep so I got up and looked at the
phone and saw it was from Sweden. Now, I
thought that the price was next Monday. I
knew it was always on a Monday, but I
thought it was next Monday, so I called
back thinking that we're trying to do
some like due diligence or something
about you know
somebody else, and then they
asked me if I would accept and well,
I didn't ever want it, but yeah I'll accept.
- [Reporter 1] So how are you going to celebrate?
- [Paul Romer] Well I must say, the other thing
is, you know the moment where I got happy
was when I asked them did somebody else
receive the prize, and they said yes.
Who was it? Oh, Bill Nordhaus. That
was when I got happy because Bill is a
terrific colleague, he's a terrific
person and to a degree that hasn't been
picked up necessarily in that quick
coverage, long before he worked on
climate issues, he was working on the
same questions about the economics of
discovery and ideas about 10 years
before before I started working on them.
So there's a very close intellectual
kind of connection, and I'm really
pleased for for Bill. Okay and then you
had a question I ignored. Oh,
I promised my girlfriend we'd go out to
dinner. yeah.
- [Reporter 2] (inaudible)
from Italy, can you please
explain how yourl work about the
organization here at NYU relates to
ideas about sustainable global growth?
- [Paul Romer] Yeah that's a fair question.
Can I explain it, well we'll see.
I don't know, I have a conjecture in mind.
The models sometimes help us see
things very starkly. We strip away a lot
of details. When you strip away all the
details, catch-up growth, it's easy to
see why a country like China might catch
up. What's puzzling is that many
countries don't because they literally
don't have to reinvent the wheel, they
can use what's already known to take
advantage of the same technologies that
we use. So the puzzle is what gets in the
way of the flows of knowledge and the
acquisition of skills and so education
is a part of it that, you know, my
family has been kind of committed to, and
I've been committed to as well, but I
became convinced that urban areas or to
use a phrase that a colleague of mine,
Ed Glaeser, uses cities make a smart. What
it is, is cities are the place to go if
you want to learn about the modern world.
So if you take the billions of people in
developing world who can't yet connect
into this chance to learn, cities that
can welcome them, here I'm going to use
the language of my colleague Solly Angel,
who's been doing this work in Ethiopia
and Colombia for example, as a proof of
of what's possible what we need to do is
make room for people who want to move
into cities you know there's billions of
people who want to move into cities and
people who are already in cities who
want to have more space, we've got to
make room for that to take place. So as I
said, I'm not an expert in urban planning
but I saw the opportunity there and came
to NYU because NYU was the kind of
scrappy, risk-taking sort of place that
was willing to try something like this
and through the Marron Institute and the
work of Solly, you know I think we have a
chance at showing people that this is
doable, the same thing that New York City
did in 1811 that contributed to the
significance and success of New York
as a city, Solly and his team have been
doing in Awasa and 
Bahir Dar in Ethiopia and and in
Montería in Colombia, and I'll be
going back Ethiopia in the next month or
two, I told you I was clueless, sometime
in the next two months. I'm going
back to Ethiopia  just see about
the the progress there. So if we can give
people a chance to do what they want to
do, which is just move in and connect
with this world of opportunity, with this
chance to learn, we can really make a
difference in what the quality of life
is like for billions of people.
Did I explain it? Good.
- [Reporter 2] Hey, Sandra from 10 cents, so first of all the
Nobel Prize actually recognized your
work which contributes 30 years ago, so I
mean nowadays do you see the knowledge
or idea has been created by some new
ways because of the maybe new technology,
the other thing is that the President
says that you are committed to NYU
Shanghai as well so I want you to
maybe comment on China's innovation
mechanism what surprises are, or what's
the new challenge. Thanks.
- [Paul Romer] You know the saying in English so what
have you done lately? you know I
think one way to interpret, well that was
worked 30 years ago,  what are
you doing lately?
China is a very interesting example of
this model I was describing of making
room for urban development that then, and
and these urban centers are the hubs
that connect you to the rest of the
world, so it's often coastal urban
development that provides opportunities,
so I wanted to experience that kind
of the period of transition in China
directly, and of course I wanted to
support this very bold initiative that
NYU had taken to try and establish a
kind of this connected network version
of the University that nobody's been
able to make work so far, but I think and
NYU's doing actually a very good
job of it. So it was a great
experience I spent this the fall
semester several years ago teaching
in NYU Shanghai. I think it was
another part of your question I forgot
- [Reporter 3] (inaudible)
- [Paul Romer] Well you know, to be honest I've been
really disappointed that we just haven't
had the kind of political environment
where we could think about
speeding up the technological progress
and doing something as bold as we did
when like it's like, okay let's invent
computer science, you know, that was a
good thing to do in an earlier period
United States we invented chemical
engineering and schools of chemical
engineering, so I've been a little
disappointed that the government hasn't
been able to take a lead on anything in
technology policy, but you know you have
to take the long view on these things. In
terms of connections, the surprise that
emerged out of this work on growth is as
follows. I was trying to understand why
his growth speeding up over time. It
wasn't just even though resources are
scarce we're maintaining growth. Growth
was getting faster and faster as Andy
alluded to in the the party quoted from
my work. What's driving this is that
we've got more people connected with
each other all working to learn new
things, so it isn't just that we stand on
the shoulders of giants, it's we're part
of a very big team, and the bigger the
team gets, the faster progress we can
make together. So this work that seemed
like it had nothing to do with trade, I
think actually provides a much deeper
justification and rationale for why
globalization is so so important and
again I can't point to direct
consequences of that, although people are
much more attentive since I worked in
the early 80s on things like
international property rights and
property rights and how the property
rights now get incorporated into trade
agreements, so there's certainly you know
some awareness and some recognition of
these issues, but I think what we need to
all keep in mind is that globalization
is not just about trading stuff, you know,
because we got enough stuff here and you
know people in other parts will have
their own stuff.
Globalization is about sharing ideas,
sharing things we learn, and that's why
it's worth defending and
protecting.
- [Reporter 4] Congratulations Dr. Romer, I'm
with W radio Colombia. Climate change is
part of-
- [Paul Romer] Columbia University?
- [Reporter] No, country.
- [Paul Romer] Country, okay. Got it. I'm due back for
Montería and Valledupar so you gotta get me an
invitation.
- [Reporter 4] Oh obviously yes, we're
waiting for you there. Climate change is
part of the investigation, so what would
you say to a person with authority or
not, president or not, who denies climate
change?
- [Paul Romer] This really is the essence of
what science can do, is people will make
different value judgments, they'll have
different preferences different
priorities, but what science can do is
provide a statement of the facts,
and science is actually, it's the
most important thing that humans have
ever invented. This community of people
who actually make progress on average
towards towards the fact. And as I
described to my own experience, I mean
it's a kind of bouncy, you know, uneven
kind of process, and people are people,
and you know we're never all that
consistent or well-behaved,
but yet science works, and I think what's
a little bit troubling even though I
remain very optimistic about
technological possibilities is that it
seems as though we're starting to lose
our commitment to the facts. And the
thing about this in a somewhat I think
mostly apolitical context, just think
about the anti-vax movement.
This started with a piece of fraud by a
university researcher, so I think we need
to be mindful of how incredibly
dangerous and compromising it is for all
of us if we look the other way when we
see something like academic fraud. We
just have to have zero tolerance
for this. But the fraud was uncovered but
yet, you know, the anti-vax
movement has as continued to just
propagate. My daughter's a pediatrician
and she was telling me something I think
I knew but to hear it first hand was so
gripping. Her less educated families had
no problem
listening to her as an expert in
vaccinating their children. It was the
better educated families, she lives in
California, and it's the better educated
families who were all skeptical and, you
know, had these crazy ideas about about
vaccines. So I think that it's a it's a
very important time for us to try and
agree and support some process that
establishes the facts, because the
process of better standards of living,
better health, better opportunities, more
equal opportunities, so this process all
derives from some system which figures
out what's true and what's not, and
it's so important to the future that
that that should be I think a very high
priority going forward. It may become,
even though I'm going back to Ethiopia
and still remain very committed to the
power of organization to help people in
developing world, I think we may need to
organize a kind of effort to understand
science, and not, and I mean this
more broadly, my girlfriend is a
professor of French literature and
bristles a little bit when I say
sciences of the humanities don't matter,
but it's the whole life of intellectual
inquiry that the university represents,
that's part of sharpening our ability to
communicate with each other, figure out
what's true, make the logical connections,
disagree with each other
in a way which is respectful but
forceful, all of those things are part of
what the whole university community does,
and they're very important to defend and
protect.
- [Reporter 5] Thank you, (inaudible) from TV Tokyo and
this is a Japanese TV company, my question
is Japan's inflation and the economic
growth are very strong now, so do you
think to continue having economic growth
what should Japan need to do?
- [Paul Romer] One of the reasons
that growth is a
confusing topic for people is there's
two different types of growth. The way I
would teach it, like in the MBA courses
here, would be to say there's something
we call potential output, and it's things
like bringing in new technologies,
raising skill levels, building better
infrastructure, those things steadily
increase potential output over time.
There's a very different set of forces
that can influence whether we remain at
potential output or if we fall below and
have massive unemployment, or, and this
hasn't been a problem recently, but in
the past, or if we go above potential,
which you can do temporarily, but which
in the past at least tended to lead to
inflation. So anytime you ask about
growth you have to be thinking about
well which which kind do I mean. And when
economists say something like
well what will happen if the savings
rate goes up, what will happen to growth
if the savings rate goes up, you have to
ask, you have to say, either well it
depends or do you have to say which type
of growth do you mean? Higher savings
rate can slow down this process of
getting back to full employment, the
potential employment, but more saving,
more investing in the future can
increase potential output over time.
Japan was one of the first countries to
suffer from this problem of very low
interest rates and an inability to use
monetary policy to get back to potential
output, but in the longer run its growth
prospects will be determined by its
commitment to raising skill levels,
bringing in new ideas
and making those kinds of investments
that will keep keep improving the
quality of life, and the trick in policy
is to juggle these two different
imperatives which can call for different
types of policy responses. We joke about
a two-handed answer in economics.
That was the two handed answer.
- [Reporter 6] Hi, Ethan Wolfman from Yahoo Finance.
You were just talking about how there
may be some fact issues going on
right now. I'm wondering, how do you get
government and politicians to care
what economists and other academics have
to say, to care about the facts and to
look at that when they're making policy?
- [Paul Romer] Well, I went to the World Bank
immediately after the Brexit vote, and
there's an interesting analysis that I
think is very insightful about the
people that they refer to as
somewheres and anywheres, but if you
set that aside, part of the Brexit vote
was a bunch of people saying, these
groups are there somewheres people from
a place, it was a bunch of people saying
you know if all the economists are for
it I'm against it, and so I think we
live in a democracy, so the
voters actually rule at the end, so I
took Brexit as a serious warning that
economists need to think about why we'd
lost our legitimacy with those people.
Had we overstepped in promoting
some value judgments rather than just
the facts? So the very first
step is that we've got to make sure that
we've got our act together
and and we can really claim integrity,
honesty, open disagreement and claim that
we have a process that moves towards the
the facts, and be appropriately humble
about what any one of us really knows
and what we collectively can know, so
that's the very first, that's the very
first step
I don't know how you organize the
political action to help translate that
into into practice, but communicating the
facts can help. There's there are a
number of parents in the United States
who've started to think that a
university education is a waste of time.
If you look at surveys, you know they're
these hotbeds, of you know, liberal kind
of views, or you know protections of safe
space or something. I heard a paper where
they showed that if you just show people
here's how much your average earnings go
up if you get a degree from just the
existing universities the United States,
that fact actually changed minds because
they didn't realize that whatever you
might not like about some of the optics
at a few places, the university is this
transformative experience for young
people so we gotta be sure we're not
like shouting or joining in on a
shouting match, but we need to be
credible and say you know look, let's
just look at what it does to earnings on
average if you get a degree, and I think
I think if we stick to stick to that
approach we'll have done our jobs.
And then, my father was a politician,
there'll be people who are like
political entrepreneurs who figure out
how to mobilize coalition's to get
things done, but that's a different, you
know, that's a different game and I think
we have to be very careful about what
our role is. we're gonna be like
the umpires in the fact business, we
can't go get on the playing field and
try and score a goal too.
- [Reporter 7] Steve Byrnes
with WCBS radio, the local news guy our
newsroom is right around the corner so I
wanted to ask what does it
mean to be in New York when you win this
what is your relationship with New York,
and how has New York influenced your
research?
- [Paul Romer] Well first, economists assume
that people know what they like. It's
just not true. I thought I was gonna hate
it when I moved to New York. I loved Palo
Alto you know and I came here just
because NYU had this great opportunity.
I was smitten with this
when I got here so I had no
idea how much I was going to enjoy the
city. 2, I wish I weren't living here
actually because New York is probably
the most successful city in the world
and the planning approach that it took
starting with this plan in 1811 is the
model that everybody should be following.
And when I say that as somebody from the
United States and from New York, it's
hard you know make sure that people
understand I'm not just being
chauvinistic. I know I always loved Paris
but you know Paris has no real
bearing on how you couldn't make
progress because Paris was this case
where they bulldozed a bunch of bad
planning after you know after it had taken
place and that's just very
costly and it's just not gonna happen
again
but New York is just the proof that if
you just make a little bit of a plan in
advance, amazing things can can come out
of it. So I would be, I was being a little
bit facetious about wishing I
didn't live here. I may not have known
about the 1811 plan if I hadn't
moved here, and there's some
textured you pick up. I try to tell
people that, you know, like sweatshops in
Bangladesh I mean New York was
sweatshops, and you know fires and death
a hundred years ago. So if you're
willing to take the long run, it doesn't
take that long to get from Bangladesh to
what we have now and you
understand that if you walk past the
building where the Triangle Shirtwaist
Fire was. You know, that was a sweatshop
in one of these buildings.
So that was a that was a plus too.
And it's a city that welcomed
millions of immigrants including
from outside the United States, so
you really couldn't I think pick a
better model. So you know how I
sell it? I call it the Burning Man
approach to urbanization
You go stick out where the roads
are gonna be and you just let people
come and sort of do their thing. Burning
Man, oh yeah cool I get it yeah, but it's
really the 1811 plan.
- [Reporter 8] Thank you.
Congratulations Dr. Romer,
(inaudible)
business newspaper based in Seoul, Korea.
I would like to ask you about our
current economy. What's happening now,
there are a lot of recent talks going on
about opening opening up of North Korea.
What do you think this kind of opening
up of North Korea would have effect on
Korean economy? Thank you.
- [Paul Romer] So again, my job
is to just try and describe the facts.
the facts that many people are familiar
with in say, you know, kind of
intellectual progressive circles, is that
if you let a small number of immigrants
come in to a society they can be
assimilated into the society, it grows
stronger, it's character doesn't change.
But if you think about what the
physicists will call it a thought
experiment and you let the rate of
inflow get bigger and bigger, you can see
that there's some logic, some
possibility that if too many people come
in too fast it could undermine the
things that people value in their
existing society. So we need to
understand that even though low levels
of immigration can be accommodated with
really no problem at all, very rapid
rates of immigration could be
destabilizing, and arrangements that
people make to accommodate big flows,
like treating the immigrants as having
different legal rights than other
citizens, can also be very you know very
disruptive. So I think we need to all
understand that this challenge
we're confronting of hundreds of
millions of people who say they'd like
to move
from the place where they currently live
there could well be billions but
at least hundreds of millions of people
want to move, it's not going to be an
easy process to accommodate that, and I'm
generalizing from the South Korean case
to the to the world but I think it's the
same problem we see all over the world. 
Some of you may know I proposed
something called charter cities, which
was a different kind of political
structure for creating places that could
do what New York did before.
I think the verdict on that is it's the
worst idea that that has come along
except for all the others, and people are
now kind of coming back to this idea but
you can think of it as being a little
bit like Hong Kong in the way that it
could accommodate millions of people
from from China. I think there's some
more appreciation that something like
this kind of structure might be
helpful and it's not
a great solution nobody likes it but
um it's like you got asked, well compared
to what? So uh yeah, I don't think I can
say any more than than that. But I
think there should be a plan for
what to do if any economy is facing an
inflow of 10 or 20 million
people. It sounds extreme but it's not a
remote possibility at all, and we need to
really think seriously, what would we do?
There's a lot of indications of things
you can do that are not going to work,
including things that could actually
destroy the political culture in your
country, so I for a period of after I
sold the software company, I was trying
to track what else to do I took flying
lessons, flying a plane, which I love. My
flight instructor once said to me if you
ever find yourself saying to yourself
this will probably turn out okay, land
the plane.
His point was is that when you say well
this will probably turn out okay when
things are starting to deteriorate, you
don't have a back-up plan, and I think on
these issues about migration we don't
have a back-up plan. The United States
doesn't, I mean if there were you just
think about the turmoil in Venezuela
right now you know what if there were
millions of people who need to go
someplace in a hurry out of Venezuela, or
you know violence in Central America, or
you know there's all kinds of things
that could create them large flows like
like Europe has confronted. Nobody's got
a humane, thoughtful plan about how could
we help people who were in such need
without jeopardizing the
social and political systems that we
have. So it's a very important,
practical topic and we need to we need
to think about.
- [Woman] So again, this is a
question from a reporter who's tuning in
to the live webcast,
Steve Matthews at Bloomberg, Dr. Romer
you wrote a paper called "The Trouble
with Macroeconomics," critiquing that
there's too much focus on esoteric
measures. Can you provide an update on
your current views on this paper and the
state of macroeconomics?
- [Paul Romer] When Woodrow Wilson was the President
of Princeton somebody asked him how long
does it take you to prepare a speech and
he said well you know, if it's a ten minute
speech it takes all of all of two weeks, if
it's a thirty minute speech I can do it
in a week.
And if you want two hours, I'm ready now.
So I could give you two hours on
macroeconomics, but I don't think that's
what you want or anybody needs. T that's
a complicated topic, but the way to put
it in the context of this larger
discussion, is that we have to be very
strict with ourselves and our colleagues
and adopt this zero tolerance attitude
for anything that even hints of a lack
of intellectual integrity. And this is
not like fraud like somebody's trying to
fake the data or something but it's a
lack of vigor in pushing to see is, this
really right? Might be my friend, might be
my you know former kind of
colleague, but if I think it might be
wrong, it's my job to say it's wrong and
we gotta do that and we gotta preserve
a culture where that's that's okay,
that's part of the job,
but to do it in a way where we can show
everybody you can disagree very
explicitly and very bluntly but do it in
a way which is respectful of the other
person, and with full understanding that
you could be wrong. And that's the kind
of exercise that I tried to engage in
with that with that paper and what's
interesting is I thought I might have
been wrong, you know, I may have been,
I thought it was too harsh maybe
on macroeconomics. I was again
I was saying exactly why I thought
but I realized that might be wrong.
You know what surprised me is that I
haven't gotten any you know critiques
back that are responsive to the things
the things they said.
 
- [Reporter 9] (inaudible)
- [Paul Romer] What's AFP?
- [Reporter 9] (inaudible) In the shortest amount of time, 
can you give us the high-level view
of why you won this prize, what is
your research really, in the shortest
amount of time, for a general audience if
you would?
- [Paul Romer] Under 10 minutes, that'll
take a month to get ready.
Twain didn't but is thought to
have sent in this submission note about
his manuscript that you know I would
have written less but I didn't have the
time. So the facts are that I was, after a
ten-year gap following Bill's work, I was
kind of alone and starting to ask these
questions about what kind of a good is
an idea? What does it mean to say we
produce ideas or we trade ideas? How is
that different from corn or steel? And
that analysis of the economics of ideas
grew into this understanding of wise
things are speeding up that involves
this more effective teamwork of you know
billions of people all trying to push
forward the frontiers of knowledge,
and it has practical implications
for both globalization and for things
like science policy, policy towards how
we train the next generation of students
so it isn't just an ivory tower kind of
activity, it's a kind of disciplined
inquiry that matters for decisions we
have to make. That was probably twice as
long as you wanted.
- [Beth Murray] Paul, do you have time for one more?
How are we doing?
- [Paul Romer] Sure if you if you'll pick.
- [Woman] Yeah
another one that's coming from Twitter.
This is from Tricia Bisoux at BizEd
Magazine. How do you hope that your
research focus on impacting urban policy
will translate to the business and
economics classroom to influence the
teaching of future business leaders?
- [Paul Romer] I alluded before this notion of scale,
that you think of scales way that
physicists do, like powers of 10 or
something like that. What I discovered in
trying to teach about urban both at
Stanford and here, is that it operates at
a scale which is beyond the scale that
almost anybody who's getting an MBA will
engage. Firms, even the biggest firms,
are not even close to what what cities
are like. So for some students it
was a kind of intellectual inquiry that
they appreciated, and as voters and
citizens it will help, but it to be
honest it isn't the kind of practical
usable knowledge for somebody who is
going to go into business that we
provide in something like an accounting
course or finance courses, so there
are some overlaps in things like
how you how you manage large
organizations but cities are
different enough that they really
deserve their own kind of
inquiry and even training training
courses, and this is part of what the
Marron Institute is doing, is
thinking about the research and the
practical demonstration, here's what you
can do in in a city if you want to
accommodate very rapid inflows. And
it involves a much more laissez-faire kind
of style than is common in most
businesses. What cities need right now is
big plans, like very big plans, plans like
the plan in 1811
which was for a sevenfold expansion of
the built area in New York City. You
can't have a big plan that's also
micromanaging or in a lot of details, it
can't be complicated, so to have big
plans that got to be simple, and you got
to rely on people to fill in a lot of a
lot of the details. And that's
really not the way most, that's not
indicative the kind of problems that
most people in businesses face, so
you explore, you try, and then you make
course corrections.
[Reporter 10] Congratulation on
winning, name is Yuki Chiba from
TV Tokyo so American economy is like
expanding and growing in a fast pace, do
you think it will continue to grow or
is there any risk of economic crisis in
the future?
- [Paul Romer] There's definitely a
risk, I mean there will almost
surely be another financial crisis, we
just don't know when, where it'll start
and what form it will take. But this is a
little bit like you know, in flying the
plane you don't just say well god I hope
the engine never fails. You have
a plan, what are you gonna do if the
engine fails? and we should have a plan
for what we're gonna do when the next
financial crisis hits, and there are
practical lessons I think we could learn
from the last crisis, and I don't see
about it even the tension devoted to
those especially what we've got to watch
is not just the economic consequences of
how we try and stabilize but the
political consequences of a way of
stabilizing which is perceived to be
unfair or inappropriate. But
I guarantee you we'll have another big
big crisis almost surely coming out of
the financial sector somewhere around
the world we just don't know where
- [Beth Murray] I think that's a wrap for now. We'd just
like to say to the media if you have any
additional inquiries, I'm sure you do, my
colleagues in the front here, we're happy
to either kind of take the question or
somehow get some of those questions to
you at some point.
- [Paul Romer] I found I couldn't
keep up on email this morning but I was
on Twitter so @PaulMRomer on Twitter
and I'm also gonna have to go restart my
web server
- [Beth Murray] Well I want to thank
you all for coming particularly on such
short notice we're thrilled to have you
in one last congratulations to Paul Romer.
