{Music}
NYU President Andrew Hamilton: Ladies and gentlemen
 welcome to you all.
For a wonderful evening,
a wonderful evening
that's now what, two weeks?
 After we all heard the most
 marvelous piece of news.
That Paul Romer had been awarded
 the 2018 Nobel
 Prize in Economics.
Two weeks since then and
we are still partying,
we are still celebrating,
if I have my way
  we will continue
  celebrating at least until
 the next 2019 Nobel
 Prize is awarded.
 It's gonna be a
 year of celebration,
 but much more
 importantly than that,
  it's a year of
  celebration of NYU
a celebration of the
Stern School of Business.
 And of course Paul's role as
  the founding head of the
  Stern Urbanization Project,
 which he began in 2011
and of course it's
very much a celebration
 of the NYU Marron Institute
 for Urban Management
  and the role, the critical
  role, that Paul played
  in the development
  of that institute.
 And we're celebrating
 so much tonight,
 but especially we're
 celebrating Paul Romer
 and the impact of his
 work, his scholarship,
 his research, it's research
 that all of you know well,
 it's research that takes, at
 least from my perspective,
  a very optimistic
  view of the world
  and the role of economies
  and particularly the role
 that technology, and knowledge
 generation can play in growth
 and in enhancing human
 wealth and prosperity
 and so we have an opportunity
 now to hear from Paul
 in this very intimate setting.
 Now I have one
 question for the Dean,
  where is the roaring fire
  that we were all promised
  (audience Laughs)
in this fireside chat but
certainly fire safety precludes
 that coming forward.
 But before we,
before we move to Paul and Raghu
  in conversation, let me
  say we celebrate economics
  at NYU tonight as
  well, we celebrate
an outstanding
department of economics
  in the faculty of
  arts and sciences,
 we celebrate an outstanding
 group of economists
 here in NYU Stern
 School of Business.
 We celebrate the fact that
 Paul is the 6th NYU economist
  in the past 20 years to be
  celebrated and recognized
 by the Nobel Prize
 and so there's much
 to enjoy this evening
 especially the conversation
 of Raghu and Paul.
 But before we move to that
 may I call on Bill Berkley,
 the chair of the NYU
 board of trustees.
  Bill will you come
  and say a word?
Berkley: Welcome to all of you.
 So Peter Henry called me up
 and said "there's this guy
 in California, named Romer who
 we really need to get here"
  and I said "okay
  what does he do?"
and he said "he studies cities"
 and he said "but he
 comes from California
 do they have cities?"
  (audience Laughs)
and Peter said "that's
why we'll get him here"
  (audience Laughs)
and Paul came in
 and Peter and Paul and
 I sat down and talked
and it was a really
interesting conversation
because Paul was only half
interested in being in New York
  and he thought well maybe
  it'll be interesting.
  But he had so many
  interesting things to say
 it was so exciting.
 And for those of you
 who may know Paul,
 he is not politically
 correct at all
  (audience Laughs)
 but he is always
 direct to the point
  and never minces his words
 but he's an
 extraordinary person;
Good, kind, thoughtful, but
he's grounded in fact and truth.
  So I thought when
  we got him here
that immediately upon
him coming to New York,
 he would get a Nobel
 Prize right away
for being so smart to come here.
  (audience Laughs)
 but in fact I was disappointed
  that it didn't
  happen right away.
  And over the years I've
  gotten to know Paul a bit
  he's wonderful, more
  creative, more thoughtful
  than I ever dreamed and
  he is real addition to NYU
  and it's been a wonderful
  thing to have him,
 so Paul from all of
 us who've been around
for many years, congratulations.
 Thank you so very much for
 being a part of our university
and of the Stern School;
we couldn't be prouder
of what you've done and
we couldn't be happier
  that you're a part
  of what we do.
 Thank you very much.
 (audience applauds)
Gillette: Good afternoon
  I'm Clay Gillette,
 I'm the director of
 the Marron Institute
 of Urban Management.
 I've got some really
 large shoes to fill,
 I come from the law schools,
 thank heavens there's
 no Nobel Prize in law,
 takes all the pressure off.
  (audience Laughs)
  It's more than a privilege
  to be able to participate
in this event to
recognize and celebrate
 the accomplishments
 of Paul Romer,
 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
 in effect questioning
 and advancing
the very idea of the university.
Paul has long advocated
merging the theoretical
 and abstract insights
 of traditional
 academic research
 with real world needs.
A marriage to which he assigned
a designation Pasteur's quadrant
 more specifically he saw a
 function for the university
 in addressing the critical
 challenges of urban living.
 By wedding the academic to
 the practical, Paul believed
 that the university could
 work with cities to improve
  the opportunities
  to urban residents
  both here in New York
  City and around the globe.
 Paul believed that by assuming
 a role in applied work,
 NYU could not only
 make the worlds cities
 more prosperous, safer
 and more inclusive
 but also could better
 position its scholars
  to understand how
  urban areas work.
 When Paul took on the
 director role at the
Marron Institute back in
2013 he put his vision
for applied work 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
 affect positive social change.
 Paul's mantra that the work
 of the Marron Institute
 should be measured
 by the impact it has
 not simply by it's
 fiscal sustainability,
remains the guidepost of
the universit-- of the,
 certainly of the university,
  but even more so
  of the Institute.
  I can think of no greater
  testament to Paul,
than to recognize how successful
academics, were willing
  to migrate to New
  York and to change
 the way they thought
 about their own roles
both in the universities
and society at large,
in order both to work with Paul
 and to help
 implement his vision.
 So on behalf of the
 faculty, the research staff,
 and the administrative staff
of the Marron Institute
of Urban Management,
it is my great pleasure
 to congratulate Paul in
 this tremendous achievement.
 Of course Paul could only
 have implemented this vision
 with the generous and wisdom,
 with the generosity
 and wisdom of someone,
  a friend of the university
  who was willing to gamble
that Paul's ideas could
be put into practice.
  Fortunately for all of us,
  Paul found that partner,
  in Donald Marron a life
  trustee of the university
 and the founding donor
of the Marron Institute
of Urban Management.
 (audience applauds)
so I am
 I am doubly honored in
 that I get to present
 Don, who will
 introduce Paul to you.
  Don thanks for all
 everything you done.
 - Thank you my friend
  very much
 They worried about me so they
 gave me what to say (laughs)
  (audience Laughs)
  - [Clay] They did
  that for me too
  (laughter)
 Marron: I want to start out by saying
 that for me getting involved
  with NYU has been an
  extraordinary experience.
I really learned about it early
  from Marty Lipton
  and John Sexton
and then when I saw Bill Berkley
and the young man who's
running the place here,
Andy Hamilton I thought
 this is really a great
 place to be involved.
  And in the course of that
  they came to me and said
 they wanted to start a school
 for the study of cities
 and they asked me
 if I would lead it.
  By the way that's code for
  saying finance it (laughs)
  (audience Laughs)
 but I also thought,
 as I thought about it,
 I'm very lucky, I grew
 up in New York city,
 didn't have so many
 things when I started
  and I really owed
  the city a lot.
  And then along comes Paul,
  who gets a Nobel Prize
 for showing economic growth
 in the discovery of new ideas
leads to sustained improvements
 in human prosperity and
 nowhere is that more apparent
when you combine the
distinguished resources that you
with a very vibrant city
and so that combination
is really great.
 Now, keeping Paul was
 hard, he got this job
 and we got to know each other
 and then I had lunch
 with him one day
  and I said "you know this
  book I'm just reading
 called The Seven
 Principles of Physics,
it's only seven chapters
and seven things,
the first one is on relativity,
  the second one is
  something else, on and on"
 I said "I can kind
 of understand it Paul
 but for our next seven lunches
 can we start out with you
explaining each chapter
and all the math"
he said "I would love to do it"
by the end of the second
chapter, he'd left
 to go with the
 World Bank (laughs)
  (audience Laughs)
 and I said "hey Paul
 what's happened to the
 rest of the chapters?"
  well to his credit
  when he got back,
 the first thing he said to me
 was "we'll do the other five".
  Now it hasn't happened yet
 because our lunch last week
 was we talked about
 the Nobel Prize
 and somehow that was
 more important, Paul,
 than the other five
 chapters of this book.
  We shared a big agreement
  on two important things;
  cities are engines
  of innovation,
 economic prosperity
 and opportunity.
It's a place where
ideas both come and grow
 and flourish and are executed.
And the second thing is,
universities in general,
but research university
at the level of NYU
  combined with all
  of these things,
  can improve the
  life in the cities
 and that's really what this
 urban institute is all about.
 What we can do to combine
 academics with the real world
 sorry I shouldn't--
 I'll put this away
  academics with the
  commercial world
  in order to provide a
  better life for everybody.
  And we're doing it, we're
  working with the MTI,
 the MTA to improve bus
 service in Brooklyn,
 I'm not sure it's worked yet
 but don't tell-- (laughs)
  (audience Laughs)
 Tackling air pollution
 in Mexico City,
  the growth in Ethiopian
  cities, which is the place
  that you're in, I may not
  know where Ethiopia is,
but I'm sure we're doing
a good job helping them.
 And what's really interesting,
 working in criminal
defense and things with
correction departments,
  and I wanna show you what
  and impact this has made
 on the family, Angela.
Where is Angela?
She's a brilliant star professor
 that we got from
 California, invited my wife,
 who's a super accomplished
 person; five great careers,
 to go with her to the
 one place you probably
 would really not
 wanna go; Sing Sing.
 She came home one night and
 said "I'm going to Sing Sing"
 I said "what'll you
 do there?" (laughs)
  (audience Laughs)
 So they went to Sing
 Sing and came back
 and she was very impressed
 with what was going on there
 and very, very
 impressed with Angela.
  That's a very good example
  of the talent we have.
  Well with all that
  what I want to do
is say Paul Romer is an
extraordinary person.
  He's a man of thought, of
  action, of sensitivity,
of caring he has all the
elements of a great man
  now crowned by the
  Nobel Committee
 which we knew that all
 along before, Paul,
 so congratulations.
  So I introduce Paul Romer
  and I also introduce
  the Dean of the Leonard
  N. Stern School; Raghu Sundaram.
 Dean, nice to meet you
 and we look forward
 to whatever's gonna
 happen from here.
 (audience laughs and applauds)
Dean Raghu Sundaram: Thank you Don and
good evening everybody.
 So, Paul is everything
 that the speakers
 who came before said,
 but he's also in,
I think they touched upon this,
 is also having an incredibly
 interesting career
 that's taken unusual paths.
 We'll explore all of that
 in the conversation to come.
  But first, I think there's
  only one other person
 I recognize in this
 room who would know
 what it feels like
 to win a Nobel Prize,
 so how has your life changed
 in the last two weeks?
Professor Paul Romer: If I may, let me just go
 back and fill in one detail,
  because there's I think
  there's a nice story about
what were the incentives
and kind of compensation
  I got for working with Don
  and the Marron Institute?
 And the single most
 important thing was that Don,
 really kind of steeled up
 his courage and was nervous
 about this but finally
 said to me Paul,
 could I introduce you to a
 friend of Katy's, his wife,
 and I go okay well, sure and
 Don and Katy were worried
 'cause we went to a restaurant
 that was very noisy,
  was a little hard to hear
 but the woman he introduced
 me to and I hit it off
just instantly.
 One of the funny
 parts of the story is
she was dating someone very
kind of important in New York City,
 and very wealthy and
 she asked a friend
 she'd learned where I
 live, where I have a house,
  and she asked a friend
  you know what should I do?
 And the friend said go
 with the real estate.
  (audience Laughs)
(laughs) So through Don and NYU
 I'm now part of a partnership
 with the love of my life.
Then, when I went to
the World Bank on leave
  there is this kind
  of conversation
 which went like, well
 while I'm on leave,
can I keep the house? (laughter)
 and can I keep the
 girlfriend? (laughter)
  and the part she likes is
  the order there (laughs)
  (audience Laughs)
So we're in New Yorkers you know
 you gotta ask about
 the real estate.
But Don, it was
really a wonderful,
unexpected side benefit,
 of the friendship with
 Don and his wife Katy.
  Okay so on to more
  serious matters
Sundaram: The question, what
 does it feel like
to be a Nobel Laureate?
 I think everyone in this
 room would like to know that,
  (laughter)
  how has your life changed?
Romer: Yeah,
 well I have to reassure you
that there's a kind of a buffer
at home if you're worried,
in my press conference,
I said something like
well economists, if
we're gonna be the umpires
of the fact business
we can't take the field
  and score a goal and I
  got home and Caroline said
 "Paul you don't have
 umpires in soccer"
  (laughter)
we actually have four
dogs and there are times
 when, she's an
 extremely good writer;
 she published a book this year
that you should all read
called Proust's Duchess.
but, we have four dogs
and sometimes she has to
 speak to me the way
 she speaks to the dogs
 it's like "Paul put
 that metaphor down"
  (audience Laughs)
 and you can see why I get in
 trouble with metaphors so.
 But anyway, she helps
 keep me a little bit
grounded you know yeah.
(chuckles) There was a
reporter who said to me,
 I was talking on the phone,
 and he said "you're so young
 to get the Nobel Prize"
 I said "wait a minute
 are we on the record,
 can I quote you"? (laughter)
 he said "yeah" so I yelped up
 "this reporter says
 I'm really young"
after the phone call was
done, Caroline came down
 and like "Paul, now we gonna
 have to talk about flattery
 (laugher) and that people
 will manipulate you (laughs)
 so anyway, there's a
 check, checks and balances,
  there's also thing
  funny feeling that
 you know I'm the same person,
but yet a lot of things
are suddenly different
  and I think that,
  somebody else said "Paul
  you have a new first name,
it's Nobel Laureate Paul Romer"
 so those first names
 Nobel Laureate,
 those are not really me,
 those mean I got a new role
  and so there's things
  that come with that role.
 And I'm mindful of those but,
 it's important to keep track
  of what those are, I mean
  those responsibilities
are about this broader endeavor.
 The science, and the
 discovery, the prize
 so who knows, oh Don actually,
 do you know what Einstein got,
 oh I probably told you this,
 what Einstein got
 the Nobel Prize for?
 It wasn't relativity, you
 know this amazing discovery,
 because the Prize
 has this restriction
 that has to be for
 practical advantages.
  And they weren't
  sure if relativity
 would turn out to ever
 have any practical utility.
  (audience Laughs)
 It turns out that
 relativistic clock corrections
are part of what make GPS work,
so now it's very practical.
 But the photoelectric effect
 was his other discovery
 that they gave him.
  So the Prize from Nobel,
  emphasized this notion of
 practice that is like,
 I can't remember who
 attributed Pasteur's
 quadrant to me but I didn't,
 oh it was Clay, I
 didn't invent that,
  it was actually a
  dean at Princeton,
 - [Clay] (speaks indistinctly)
  - Well. (laughter)
But, it is I think a
really important insight
 and there was a unique
 feature of the U.S. university
with the land-grant act,
  the moral act to credit
  the land-grant university
  so, I think there's
  still lots of room for us
  to push the margins and
  adapt this very productive
 institution which is part of
 this really noble endeavor
  and keep using it to make
  progress going forward.
 So I got a new role,
 but I'm the same guy,
 I was three weeks ago.
Sundaram: Okay then let me
 ask you this question,
 Bill spoke about your candor
 which I've always
 found very refreshing.
- Yeah.
- Is Nobel Laureate Paul
Romer watching his words
  a little more carefully
  than Professor Paul Romer?
  (laughter)
Romer:  I'm trying (laughs)
  (audience Laughs)
  and I've got you know good
  advice at home so yeah
  (laughter)
yeah no, you have to
take, the role involves
 some responsibilities,
so yeah.
Sundaram: So onto the Prize itself,
the academy cited your
contributions, and I'm quoting,
 for integrating technological
 innovations into long run
macroeconomic analysis.
 If you had to summarize
 the most important insights
 of your research from
 that period, the 80's
 and how it changed economics,
 for a general audience,
  how would you express it?
Romer:  So one way that I
 would try and say it
 for a general audience
 is to emphasize
 the importance of imagination,
 it's very easy to get caught
 up in an implicit model
that the world is the way it is
 because that's the
 only way it could be
 and it really can't
 be very different
 and I think the reality is
 just completely the opposite.
If you look forward there's
just all kinds of possibilities,
 all kinds of things
 we couldn't possibly
have discovered yet, and
so that has a kind of,
I think this optimistic
 and you know kind of
 empowering sort of
  vision about, what
  the future will be
is something that we'll
decide, will make it.
 It has another effect
that I think is a little
bit less comfortable
 and that makes it a little
 harder to really take on board
 because if where we're
 going to end up is
 the effect of
 innumerable decisions
 and you know
  choices that could
  go in every level
  in a different direction,
 what that means is
 where we've arrived at
 has no real rhyme or reason,
 it's just one damn thing
 after another and here we are
 and so the wide open
 possibilities also means that,
  it's hard to kinda get
  the kind of meaning about
  about well the world is
  just the way it should be,
 it's the way it has to be,
 it's the way it's always been.
 It's like well you know the
 world is a bunch of things
 and people did it and,
  but i think the real
  message of all of this is
 we should be mindful
 of the possibilities
  and we should use
  imagination to think about
  the things that
  we don't yet know,
 we haven't yet seen
 but that could be.
  And if we do that and
  arrange our institutions,
and our laws and our
systems to keep allowing
 some of those imagined
 possibilities to be realized
 then, we'll keep this amazing
 story of human progress
  going for as far into the
  future as you can imagine.
  I was a physics major and,
as an undergrad,
  my son, who's kind of into
  science fiction, and I
 used to have this argument,
 he thinks that humans will
 get out of the solar system
when the sun blows up in
like 13 billion years.
I think we're toast
after 13 billion years.
 So you know, the long
 run has a cap T on it,
  but you know for the next
  several billion years
 you know I think it
 could be a great ride.
  (audience Laughs)
Sundaram: (laughs) So, talking
 of those possibilities
 and you talked about
 progress and possibilities,
  in the later phase
  of your research
 you emphasized urbanization,
 Don mentioned this,
 Clay mentioned this,
 urbanization as a fundamental
 engine of economic growth
and as the strategy
that different
countries should follow
as part of the catch up growth,
  now what lead you to
  this thought process and,
Romer: Yeah
Sundaram: Can you talk us
through the whole idea?
Romer: You know one of the
 problems with memory
 is that you can
 construct stories and
 you know I should go back
 and really check the facts,
  you can sometimes
  get it wrong so
 this is a little bit
 of a fable I guess
 and we'd have to crosscheck
 against the actual steps.
 Because of an
 initiative at US AID,
it was organized by Angus Deaton
 who's another
 Nobel Prize winner.
 But a group of us as academics
 were brought in to AID
  to you know raise
  some new ideas.
  And Angus remembers well,
  and I remember well to,
 Angus' reaction 'cause
 I wrote a short paper
  and gave a presentation
  about building a Hong Kong
 for Africa, saying,
 you know Hong Kong
has actually been very,
 has had some good
 side effects in China,
and should we do that in Africa?
  Angus, if you know Angus,
  he's got it you know,
  Angus let me know exactly
  what he thought about
 the optics and the
 appearance of this suggestion
but somehow out of that,
but he remembered it,
 and you know, it's been fun
 to stay in touch with him.
 But somehow out of that I just
 got thinking more and more
 about well so why
 did Hong Kong work?
 And what's generalizable about
 it, I was very influenced by
 oh this is actually
 after I came to NYU,
but by visiting Shenzhen
when I was at Shanghai.
Shenzhen is this amazing story,
 Shenzhen were a city state,
 it has the fastest growth of,
 you know just beats Singapore
 and Hong Kong hands down.
 But, and there were
 other colleagues,
 including my thesis advisor,
  Ed Glaeser, who
  many of you know.
Who were taking these
same notions about ideas
 and applying them to cities
 and because of
 those abstract ideas
  and then the experience in
  some of these city states,
 my sense was we could
 really take seriously
what Glaeser says which
is cities make us smart
and we need to let
everybody have a chance.
 And here then I just borrowed,
 say I just stole from Ed,
then I stole from Solly,
 and solly says "we
 just have to make room
 for the people who
 wanna go to cities"
 because they want
 the chance to learn
so it was that kind of
hunch that lead me to--
oh there's another thing
 there was an analogy
 that I was struck by,
 when I was thinking
 about science policy
  which was the development
  of chemical engineering
 as a whole new school,
 it was MIT introduced
 but also as a kind
 of a profession and
 a set of principles
 for organizing these
 complex processes
and converting them
from the lab environment
into you know factories.
 So I was asking
 what's the new thing
that we should you know
have in universities,
 what have we invented
 recently and,
computer sciences are a
real success story here
that came really from
the defense department.
But I was thinking that there's,
 there may be this opportunity
to do something in urbanization
 and the bet I made was that
 at some points in your curve,
part of what you want is
to make things happen.
The way Solly
describes is our output
  was stakes in the ground,
  we don't write reports,
 we don't write
 papers or when we do
 it's gonna be just
 a sideline you know
  that this program
  makes a difference
 if we put the stakes
 in the ground.
 And you wanna make
 an environment where
 that can happen.
 Part of what you do is you
 create a kind of a structure,
  like the institute
  and I always said
  my job was just to
  provide air cover
and there was people like Solly
  and Angela that
  we could recruit,
 who came in and really
 you know took the lead
 in doing these amazing things.
 Oh is Patrick here?
  He's not, okay, well then
  nobody will contradict me;
 I'm pretty sure it was Awasa
 in Ethiopia, not Bahir Dar
but in Awasa there is
like 60 thousand people
 who've moved in and
 are working in jobs
 in brand new factories doing
 mostly garment assembly,
  partly because of the
  work that Solly's team did
to just layout a grid of streets
  and just say to everyone,
 in case we need them, we
 know where the streets are,
 there's private land
 if you wanna come in
 and build factories
 you can do it
  but what the streets, the
  public space do for you,
is give you the backbone
for the connectivity
  that you'll add
  as the city grows.
And if that learning is
about taking advantage
 of connectivity if you don't
 get that two dimensional grid,
that's every pipe, every
wire, every package,
 every persons gonna
 be moving along
 you won't get the same
 kind of interaction
  that you could get later.
And it was so wonderful
to move to New York
 because Bill doesn't
 tell the full story,
 I love power auto I
 like mountain biking,
I thought New York is gonna suck
  (audience Laughs)
but I loved it when I
got here and it's also,
 it really is the model
 for the whole world.
 The 1811 plan that laid out
 the grid of public space
  in the city was
  just essential for
 the density that we now have.
 Alain who's here taught
 me, just look at the blocks
 in Midtown, measure
 the dimensions,
you'll see they're
about 32, 33 percent of
 the land in Midtown is devoted
 to this grid for connectivity
 it's a lot of land, but you
 know, because it's there
we get a lot of this interaction
 that makes all these
 good things possible.
  So I could kind of
  provide, with Don's help,
 kinda like the cover
 you know the air cover
 and we could recruit people
  like, Solly, Alain,
  Angela, and the whole team
  and it's really gratifying
  to go out and see.
 And in Awasa there are like,
 you can go out at see where
  as soon as they've decided
  where a road might go
they just go cut the trees down
 and so you got a
 visible sign of it.
In Columbia, we funded a nursery
 and we're trying to then
 get like children to go out
  and plant trees along
  the arterial road network
 that's being lade out
 just in these fields
 around the cities
so it's very
gratifying to see that.
 It's kinda fun to have
 a role where it's not,
  you know these were not my
  ideas about urbanization.
 But you know to have a hunch
 about where the big picture
 might be and to
 provide an environment
 where then other
 people can go do it,
  and to show the value of
  this stakes in the ground,
  confrontation with
  reality sort of approach.
 It's been, it's really be a,
  it's really been a
  great opportunity.
 I think Angela has probably
 run more RCT's inside prisons
  than anybody in
  the United States,
 I think you may have run
 more than everybody combined
 than anybody else, do you
 know what number you up like?
 - [Angela] Hundreds.
Romer: Hundreds, of RCT's I
 mean and this is just
small differences and
things you do in prisons
 that might for example reduce
 the use of, what they call,
segregation which really
is solitary confinement.
  And if you give the people
  in the prisons a chance
to actually use these
experiments and learn from them
 they can come up with
 discoveries that can reduce it
in a given prison and
so it's a different mode
of doing research, kind
of empowering others
 but it's tool which then
 unleashes a lot of benefits.
 So that's the kind of
 the recent trajectory
  that I'm really
  so pleased about.
Sundaram: So we'll get back to the
  trajectory in a second,
  by the way I think by RCTs
 you mean Randomized
 Control Trials right?
Romer:  Yes, yeah, yeah, yep
Sundaram: for those who--
 Okay, so I did want
 to ask you one thing
at the beginning of
the last thing you said
 you'll have to do to
 do some fact checking,
 I'm going to bring you back
 to an issued that you've
 expressed strong opinions on.
How do we, Terry
provides us a framework
for understanding data,
  but data is very important
  to validate theories
 and understand the world,
 how do we get policy makers
 to pay attention to theory
 and to facts in formulating
 policies for more than
 is being done now.
  - Yeah, well one thing
  that's slightly off topic,
 but I do emphasize a lot is
 the main function of theory
 is to help us imagine
 new possibilities,
 like its logically consistent
if the following thing happens,
 so it could happen
 and it should broaden
 our sense of the possibilities
 and that's what the
 growth theory did.
 But you never know
 what actually happens,
 like math, logic, theory,
 that never proves anything.
  Like a fact always trumps
  the theory and the logic
 and you'd know what
 is actually possible,
 what's there now, what
 could be there by trying it
so the facts are just the things
 that ultimately rule
 in this business.
  Look the track record of
  science, it's frustrating,
it's slow it's you kind
of one step forward,
  one step back and
  two steps forward,
 but if you look at just the
 last couple hundred years,
the effect that science
has had on our lives,
I mean how much longer we live,
 how the things we
 have access to it's,
it works pretty well so
as frustrating as it is,
 you know we just in
 some ways we aught to
just understand and
preserve what's working.
 And then the other thing
 I've become more mindful of
is when I went to the World Bank
  it was just after
  the Brexit vote.
  And I interpreted
  the Brexit vote
is at least in part, a
bunch of people who said
  "if the economists are
  for it we're against it."
  (audience Laughs)
 and, you know, the
 economists reaction was well
the people are are wrong
to which I always say,
 you know we believe
 in democracy right,
 so you can't just say
 that they're wrong
  and I think it was a sign
  that economist had really
 overstepped, we hadn't been
 careful about separating,
 we have expertise
 about some statements
about here are the facts and
here are some conjectures about
 if you do X then you'll see Y
  but we can't tell you
  what a society should do,
 we can't tell you what right.
There's a different process
that people use to resolve that.
 And by sometimes being
 a little incautious
about saying if X then
Y means you should do X,
I think we undermine our
legitimacy a little bit,
 so one of the obvious, easy
 strategies in this is just be
rigorous and disciplined
with ourselves about
you know live up
to our standards
about integrity about
facts and you know admit
 when you're wrong it's just a
 central part of this process.
 Other things too, put
 your name on something
  and don't believe anything
  if there isn't somebody's
name on it and their reputation
on the line in case it's wrong.
 And if it's wrong, it doesn't
 have to be a career ender,
 it's a you know it's
 a knockdown little bit
but you know they accept
it and you move on.
  But there's a whole
  bunch of trends right now
 about towards like
 wouldn't it work if we
just had anonymous
science and I don't know
 we got a couple hundred years
 of this thing that works
and some evidence that anonymity
 isn't turning out so well so.
 So anyway I think there's lots
 we can do to just maintain
 our internal standards
 and be patient.
That's a part of my view on this
  is you just gotta be a
  long-run guy so you know.
 I mean a billion years I
 can't get everybody excited
about that but a couple
hundred you know.
Sundaram: So let me ask you
 a final question
 before we turn it over to
 the audience for questions.
 You've had by any standards
  a very unusual
  career trajectory.
 You began as an
 undergraduate physics
 then switched to economics,
 went back to Chicago.
 Your PhD work revolutionized
 the study of macroeconomics
  with your emphasis on
  technological innovations
  being endogenized
  then you became
 a tech entrepreneur yourself
  then you moved to New York
  got into urbanization,
 there's a brief foray
 in the World Bank.
  What can you tell us about
  the way your career path
 has taken and what you'd like
 to share with us about it?
Romer: I've, let me just
 make one point,
 which I think is
 not well understood,
  there's a striking
  parallel between my career
and Bill Nordhaus' my co-winner.
 Bill worked on this, he had
 the same kind of naivete
and worked on the same, exactly
the same problem I worked on
 as a PhD student,
 like okay technology,
 we should understand
 something about this,
  people do it let's
  figure it out.
Bills been very generous
what he said was
 "well I was working on these
 problems, I worked too hard
  and then Romer came along
  and he solved them."
  I don't actually think,
  in terms of like integrity
  and process and
  fact I don't think
  that's what the facts show
  I think what happened was
Bill was making
progress on a trajectory
 very much like the one I
 followed but he wasn't getting
 reinforcement at that time,
 it just wasn't the right time.
And so I just benefited
from you know some,
 just some luck of the timing.
 I was working on these
 kind of I was looking
 nobody can predict the future
 so I wasn't predicting
 what was coming,
 we're in the midst of
 the Volcker recession
 and the, you know the
 wake of stagflation.
 I was just looking at
 history and kind of sounded
 like the village
 idiot, "hey everybody
it's getting better and better,
why are you all so pessimistic?"
 And then, the PC gets
 introduced in the year I'm,
 I was taking my first job and
 the tech revolution takes off
 so I just benefited from just
 sort of the timing in a way
that nobody could have
forecast so it's related
 to this remark
 about you got a role
  the singling out somebody
  to play that role
 is much more
 determined by chance
than I think we usually
give it credit for so
 You don't want to overstate
 what any one individual does.
 Beyond that I feel like, so
 I was lucky on the timing,
 I think I've just been lucky
 to have a little bit of
  that sense of imagination
  so that I could think
 about doing other
 things in a career.
The typology that this
political scientist did
 at Princeton described
 was a kind of work
 that Niels Bohr does and my
 growth theory was of that
you know of that build.
And somebody just called
that Nobel Prize science
 you know Bohr got one
 and I got one too.
 But then there's
 Edison's style of work
 which is very different and,
  but a lot of the benefit
  comes from the Edison work
 and the stuff I did on like
 the education and technology,
 I think was similar to that.
Then when I came here
for the Marron Institute
 and went to the World Bank,
 it was all about trying to
 then take advantage
 of these benefits
 in this mixed area
 of Pasteur's quadrant
  where Pasteur was working
  on the foundations
of microbiology but also
things like how do we preserve,
 how do we protect the
 vineyards in France,
 how do we keep the food that
 the French Army
 carries from spoiling.
So it wasn't a conscious
strategy but you know
 I ended up kind of
 traversing these three areas
and I think it would be
good both individually
  and organizationally if we
  made it easier for people
 to make transitions, we
 don't lock, block people in.
  In some of the sciences
  now it's much easier to go
 from say biology into like
 a startup, biotech startup,
 and be on an advisory board,
  so this kind of
  iteration between,
 you know the board
 and Edison quadrants,
  in some areas, is easier.
  In social science
  it's a lot tougher
  and even the alternation
  between board and Edison,
  isn't quite the same as
  something like Pasteur's.
So I kind of I guess because I,
it wasn't a trajectory,
 it was a conscious trajectory
 earlier in my career
but it became one when I
was thinking about the,
 coming here to NYU and trying
 to create something new here
 in that Pasteur kind of vein.
And it was part of the,
 you know it was part
 of the conjecture
about going to the Bank as well.
  I wrote John Sexton a note
 'cause he sent me a nice email
and I kinda referred
to the Marron Institute
 and the World Bank and
 was like well you know
  batting 500 is not so bad.
  (audience Laughs)
 and Johns a baseball guy so
Sundaram: I know (laughs)
Romer: he really liked that.
 That's where they
 have umpires right?
Sundaram: Mm-hmm (laughs)
  (audience Laughs)
 Thank you Paul, so we'll
 turn it over for questions,
 to the audience, I think
 we have another 15 minutes.
  There are people with mics
if any of you would like
to ask any questions.
 There are hands at the back.
 - [coodinator] Sorry,
 you got a question?
- [Ronald] Good evening.
  Thank you, this is
  just so wonderful.
My names Ronald Penter,
 I went to business school here
Romer: Okay
Audience: graduated ten years ago.
 I'd like to hear your opinion
 on, I read this article
in The Economist
a few years ago,
 it talked about trends
 related to cities,
  specifically in the U.S.
  that there was this trend
 that you know we went
 through civil reorganization
 back in the 50's and
 all kinds of studies
 and there are stats
 out there that show
 that actually having
 strong city centers
 make us more competitive from
 an economics perspective,
 so I'd love to hear
 your opinion on that
 and aside from that if
 we kind of know that
and have the data how is it
that you see in other countries
where they're kind of I
guess behind the cycle,
but you see that
they're just catching up
 and beginning to
 think about this idea,
so if it's better to suburbanize
if we already kind of know that,
 that's probably not the
 right way to go. Thank you.
Romer: So another dear friend
of mine George Akerlof
 who also got the Nobel Prize,
but was a colleague at Berkeley.
 He and I, wrote a paper that
 was actually kind of fun
 that few people kind of know
 about in the financial sector
which generally was a reflection
of a kind of imagination
 but actually
 slightly darker one,
which is like okay well
given the regulation,
that was available at the time,
  how could you really steal
  a whole bunch of money?
And George came up
with the title Looting:
  The Economic Underworld
  of Bankruptcy for Profit.
 So the imagination
 kinda cuts two ways,
 but George had a saying that
 I love that he picked up
 from railroad
 crossings in France,
 and the English version is,
pay attention, one
train may hide another.
 And it's a pretty good kind
 of thing to remind yourself
 every time you wonder
 what's going on.
 In this move to the suburbs,
 this return back to the city,
 I don't think this is
 fundamentally a story
 about urbanization, I
 think this is a story
 about law enforcement.
 And we had this trend
 in the United States,
where starting in the 1960s
crime went up very substantially
  stayed high for
  a number of years
and then finally started
to come back down.
  And New York City
  and Bill Bratton
  were really on the cutting
  edge of showing people
 that the police can actually
 do something about crime
 for many years people
 thought your job was kind of
 like FEMA when
 there's a hurricane,
 you just show up and
 clean up afterwards,
 and you can't influence it.
 So we've had this big
 increase in crime,
 a high level and
 then this recognition
  that, again, it's
  like technology,
  people can actually
  influence the crime rate.
 So I think that confuses some
 of the underlying dynamics,
you know in the, out to the
suburbs now back to the cities.
 I don't think that's
 a pure reflection of
 just the advantage
 of cities and density
 but it's caused by, I think,
it's a very interesting question
 lots of people have tried to
 ask why has crime come down
 but we really need a
 complete explanation,
  why did it go up and then
  eventually come back down.
 And then to close the loop,
 we're back down at levels of
 crime which were like those
in the 1960's but with much
higher levels of incarceration.
 And so Angela and Mark
 are part of a program
 at the Urbanization Institute,
  Marron Institute, where
  we paid attention to crime
 because it's a very
 important determiner
of the quality of life.
  I used to tell John Sexton
  that "you know who really
 turned around NYU, was Bill
 Bratton, he gets credit"
 just think about the value of
 real estate and the portfolio
 if it weren't for he
 reduction of crime,
 I've heard this
 story about how much
  one fifth Avenue sold for.
I'm told it sold for one
to two million dollars?
 - Less than a million dollars.
 - Less, for the whole,
 every apartment is now
 more than a million so
  (audience Laughs)
  so anyway that just gives
  you a way to calibrate
 how important crime might be.
And it also says a story
about the importance
 of management, do you know
 what's the key to policing?
One key is well you have to
get the police to do their job,
 okay and so that's part of it,
 but then what does it
 mean to do their job?
You got to find that
number of person-hours,
  you got some places
  where crime might happen,
  put the person-hours where
  the crime might happen.
 They call it cops on the dots.
 And you know CompStat
 and all that was just
 making sure you got
 cops on the dots.
But that's a, it takes
some management insight
 to actually carry
 that imperative out
  but if you do it
  you got a lot more
  benefit out of the
  given workforce.
 So this was part of
 the instinct that,
 the management part of
 urban management, would be.
 Part of the conjecture
 about the synergy with
  the Stern school.
I think I've not really answered
the question you were
thinking I would answer
 but my overall message
 is always ask yourself
 what's the other train
 that I'm not thinking about
 when I see a
 unicausal explanation.
 And the other thing
 is use abstraction
  I think a lot of
  people don't think
 of the police chief
 as a management job.
 I think it's the hardest
 management job in the world.
 Anybody here who's a manager
 think about if your employees
 could use lethal force
  (audience laughs)
 your direct reports you know.
It's a pretty hard job (laughs)
  so I think the
  abstraction let's you see
 the commonalities between
 management, different layers
  and then the open
  mind let's you see
that there's often more
than one thing going on.
Sundaram: Anybody else?
Romer:  What somebody
 asked Woodrow Wilson
 how long does it take
 you to write a speech?
And he said "well if
it's a ten minute speech
  it takes me two weeks, if
  it's a 30 minute speech
  it takes me one week,
  and if you want two hours
I'm ready now."
  (audience laughs)
so my answers to these questions
are the two hour answers
I'm afraid, so, yeah.
Sundaram: We have a
 question there Paul.
Audience: I'm wondering
 what your thought is
 in terms of what's the most
 challenging urban issue
 currently facing,
 could be domestically,
 could be globally,
 and what does it take
 to overcome that challenge.
Romer: Yeah.
  So one abstraction concept
  that we get a lot
  of mileage out of
 in economics is efficiency.
  And we mean this
  in a precise sense
 that there's a way that
 everybody could be better off,
 but somehow we're
 not realizing that.
There's a really amazing
inefficiency associated
with this decision to either
stake the public space,
 that you'll use later
 to connect up with,
 or let development happen just
 in a completely unplanned way
 and then try to go in
and get this public
space a few years later.
  Haussmann in Paris
  did some of this
 where they just bulldozed
 buildings and got the avenues.
 But it's politically
 almost impossible
 I don't think we'll
 ever see it again.
 So what we see around the
 world is a number of cities
 that say we're not
 gonna have any growth,
 then they growth anyway
 which is totally disordered,
  and unplanned and then
  they come to organizations
 like the World Bank and say
 we desperately need money
  to try and undertake
  these expensive retrofits
 of a sewer system in
 these unplanned areas.
And what just kills you
is the political dynamic
 that is always to get
 the bank to give money
 to do the retrofit in
 the area is a mess.
  But there's never
  any attempt to say
 let's just go put some
 stakes in the ground,
 where the next round
 of development's
 gonna happen so it isn't this,
so when we need the land
to lay a sewer pipe,
  we've got it, you know the
  public authorities already
 have the land that you'll
 need to do any infrastructure.
 So I think that the
 inefficiency in this
failure to plan,
 literally just put
 stakes in the ground
 like they did here in New
 York those big steel, wooden,
 sorry, stone; those
 big stone posts
 in the intersections
 at the road.
  Or the trees like we're
  trying to do in Monteria.
 You can do this
 without even resolving
 the legal issues of title
 to land, and eminent domain,
  you just kind of set
  everybodies expectations,
this is where, the road
that buses can drive on
 will be whenever we need it.
I've taken to calling it
burning man development
 because it's really like you
 just put stakes in the ground
 and tell people you can't camp
 where this public space is
you can go do anything you want
  in the place that
  isn't public space
  and that's about the level
  of planning you need.
 And the rate of return from
 just doing that is so high
that it makes you almost
wanna cry (laughs)
and this is why the work
in Awasa and Columbia
 is so important because it's
 one thing to say this idea,
 and Solly's been saying
 this idea and Alain and I've
  been talking about things
  like this for decades.
But making, showing it
in practice has a value
 for convincing people
 that just talking
  about it in the
  abstract doesn't.
 So I think if we can
 get the whole world
  to start to think this way
 that there's a way to have
 urban development take place
very like the way that
New York City developed.
 If we can just get the world
 to think about that then,
 20 years 50 years, a hundred
 years, 500 hundred years,
the world would just be
incredibly different.
 If you go look at Wall Street
or Pine down in lower Manhattan
 you see these crappy
 little ugly streets
and they'll be crappy little
ugly streets in a hundred years
and 500 hundred years,
we never gonna fix that.
 But it could all be like
 Fifth Avenue and 42nd Street,
 you know buses, wide
 sidewalks, trees.
 I think people can appreciate
 what an amazing difference
  it might make centuries in
  the future if we just did
 the simple thing of just
 putting stakes in the ground.
We'll just keep pushing on that.
Audience: Hi, are there ideas that
  economists have embraced
that the political
class is kind of missing
 and just not adopting
 but almost all
 smart people like
 you, have supported?
  And if so, what are they?
Romer: Sorry, so are
 there ideas that are,
Audience: Ideas that economists
have embraced,
Romer: Have embraced
Audience: Have accepted and
  there's sort of unanimity
  and yet the political
  class is either unwilling
 or too stupid to embrace them
 and give me one or
 two examples of them.
Romer: Yeah I, my father
 was a politician and,
 politicians are not
 stupid by and large.
They're very
constrained by a process
that they participate in
 but I think we're just
 gonna totally miss the boat
if we start thinking that
we're smart and they're stupid.
 The facts just
 don't justify that.
There may be some things
that we've understood,
  like this urban expansion
  in a public space.
To be honest there's an
enormous amount of work
 that needs to go into
 picking the names
and the words for this.
  Urban expansion is
  starting to replace sprawl
 as the way people are
 talking about cities.
  And it's a huge mind shift
  to get everybody
  talking that way.
  I've been experimenting
  with his burning man idea
because it is something
that many people
 can see in their minds 'cause
 they've seen pictures of this.
 It's also my answer
 when people ask me
"well how fast can cities grow?"
 70 thousand people in
 a week, we've done it.
  So it's a solved problem.
That's basically the
numbers for Burning Man.
So we need to be always thinking
about how do we
communicate these ideas
 if our expertise has
 let us see something
 that others don't see.
 And I think this application
 to practical problems
 is an important part of
 sharpening our understanding
  and sharpening our ability
  to explain these ideas.
 The only thing I can say is
 we gotta keep an open mind.
 When I was a PhD student at
 the University of Chicago,
 I really couldn't conceive
 of the fact that I'd end up
  being in favor of
  government plans.
Governments have to make
a plan and go first.
That's why I call it burning man
 'cause it doesn't sound
 very Stalinist or something,
  it's like Dutch planning.
 But you gotta go with the flow
 and if it really makes a huge
  difference, the plan, what
  I call a big simple plan,
if the facts persuade you that,
you gotta tell everybody
well wait a minute
 there is a rule for government
 planning in this activity.
It'll turn out a lot
better if that happens.
  So, as long as we can stay
  flexible and responsive
 to the facts I
 think everybody else
  will eventually follow on.
Sundaram: So one last question?
 Rob.
For those of you who don't
know, our other Nobel Laureate.
  (audience laughs)
Romer:  One of our other
Sundaram: In the room I'll say
Romer: in the room, yeah
Sundaram: In the room
 there's a few Nobel
 Laureate's at Stern.
  - [Rob] This is going
  back a little bit more to
the earlier version of this but,
 I mean one of the things that
 I think I hear from you is
  that we're underinvesting
  in technology
  and is there a way to
  make this a powerful point
  that can move some
  things forward?
Romer: I'm thinking about
 watching my father
 try to work on problems like,
 take a problem like trying to
 improve educational systems,
  I'm really struck
  by how hard it is
  to communicate, for us,
  to somebody in that world,
 but for somebody in that world
 to then communicate to others.
 We need to be mindful
 of the perceptions.
So I've recently been invoking,
 I know my girlfriend
 might shut this down,
 but up until now I've gotten
 away with a car metaphor
  which is we need to step
  on the gas on innovation.
  And I've been saying
  what we really need to do
is just a little bit of steering
and just take over
this amazing innovation
 that the markets and
 the governments do
 and just steer it in a
 slightly different direction.
  I say that partly because
  I've become more and more
 convinced that, that's true.
 That there's huge differences
 in the rates returned
 so a little bit of steering
 could make a big difference.
 I'll give an
 example in a second.
But I also do it partly because
  I don't wanna echo
  the self-serving;
 we're professors, we're
 great, send us money, you know
 'cause it just doesn't
 sound credible.
  So even though I think
  that it would also be good
 to step on the gas, right
 now I think it would be wise
 for us all to think
 about the steering.
 And one example of this is
 the one that really is behind
 the Prize association
 with global warming.
 One of the astonishing
 feats of imagination
 and discovery in the
 United States has been
enhanced oil recovery; fracking.
It's just incredible
what has happened there
and it involves some things like
 the pipeline system that was
 kind of a common carrier,
so small innovators, if
they got more on the gas
 could plug in to the analog
 of the highway system
 so the government
 played a role in this.
 But a lot of individual
 entrepreneurship mattered too.
  That, as impressive as it
  was I just never believed
 when people said we're gonna
 get to energy independence
 in the United States,
 we've done it.
 It's actually not the kind
 of innovation we really need.
Because if we keep finding way--
 oh we've lowered the cost at
 burning more and more carbon,
 it's like oh great (laughter)
it's like that's not the
problem we're facing.
 So if we could steer a little
 bit of that innovation into,
 well photovoltaics has been
 going like gang busters
 but there's still room
 there, wind, but the thing--
 I remember telling
 somebody decades ago,
  we shouldn't have
  a space program,
  my son got really
  mad at me when I,
 I guess that's why I did it,
 dissing NASA, we don't
 need a space program,
 we need a batteries
 program (laughs)
 it would just be incredibly
 influential if we
had better batteries so
if we got more of this
 cleverness going in the
 direction of energy storage
 instead of fracking, people
 could still make money,
 it could be hugely beneficial
 but it would also
 have consequences
 for the whole planet
 that would be certainly safer.
  So I think there's
  a lot of room to
steer and you know, then
we can come back and see
about trying to get more
room to step on the gas.
 Let me tell one other story,
 just 'cause I love it,
 it's so unexpected.
 I'm in the school of the
 communist party in Beijing,
  and the meeting
  is about fracking,
 and there's some wet behind
 the ears young whippersnapper
from D.C. who's kind of
lecturing the Chinese officials
 about why they need to protect
 intellectual property better,
  more effectively.
  And the guy from Conoco
  leans over to me and says
  "you know why the Chinese
  are making so much,
  why they're progress in
  fracking is so much slower
 than the progress in
 the United States?
They have too much intellectual
property protection"
  (laughter)
 so I asked him "well
 what do you mean?"
 and he told me that
 in the United States,
 if you frack a well,
the big issue is what
combination water, sand
 and other things you
 put in your fluid,
 you have to publish
 what you used.
There's some time lag,
but it's not very long,
 you have to publish what you
 used and what the yield was.
 So many different
 firms and individuals,
 who are doing this in
 an area can figure out
 for that local geology
 what's the combination
 of fluids that actually work.
 And it is the kind of example
 I've used many times to say
there's so much room
to invent and discover,
 because if you find out how
 many different combinations
 of fluid can you make
 with a few ingredients
 in different ratios,
 and it's just
 this amazing number
 of possibilities.
 But in the United States we
 force disclosure of what,
 in many places, you'd think of
 as a trade secret, or
 something, a patent.
In China they don't have patents
 but there are a few big firms
 and they just keep proprietary
 what they discover.
So the message there is you
can learn anyplace in the world
 and you gotta keep and open
 mind about our presumptions
  because sometimes
  things turn out
  differently than
  we expect. Thanks
Sundaram: So thank you Paul, thank
 you for a lovely conversation.
 (audience applauds)
