Milwaukee seems caught in the middle between successful Midwest cities such as Minneapolis and struggling Rust Belt cities such as Detroit or Cleveland. The city population is stable and downtown housing has been a bright spot, while poor neighborhoods and segregation abound. College attainment on the metro level is above average but entrepreneurial activity isn’t high. How unusual is this situation and what are the prospects for success here?

I don’t think Milwaukee is in an unusual situation at all. You said it; it’s sort of in the middle of the Rust Belt. It’s doing reasonably well given where it could be and where it’s been. It’s had some remarkable leaders like Mayor Norquist. And there are other factors. This city was visionary in terms of its embrace of sewer socialism. There are a lot of interesting things about Milwaukee, which are great.

I think there’s room to move a little more towards Minneapolis, particularly on the education front. I wish I had gotten off the plane and heard more discussion about how we can fix the charter school initiative that was started during the Norquist years, and a little less about the arena, right? Or for that matter, light rail … The difference between a Minneapolis and a Detroit is the skills of the population. It’s not the train. How useful is the monorail in Detroit?

The need to invest in skills, to invest in children — the beauty of having better schools is that it pays off for the kids and for the adults, who are more willing to live in the city. So I really think that’s where I would be focused primarily. What can be done better to upskill the kids growing up in Milwaukee?

Milwaukee ranks about 50th in highway congestion and there hasn’t been traffic growth in a half-dozen years, but the Department of Transportation is expanding highway lanes all over southeast Wisconsin and spending close to $5 billion on these projects. How well spent is that money or could it be better spend on education or other priorities?

There’s something called the fundamental law of highway traffic which is (the number of miles driven on highways) increase roughly one-for-one with highway miles built. If you build it, they will drive it. Now if you can build extra lanes paid for by users, i.e., put in new lanes and make them tolled so they are high-speed lanes during peak hours, and you can pay for them that way, then God bless them. That’s a perfectly reasonable thing to do. But if we’re talking about using general tax revenues to subsidize people to drive more, I’m not so enthusiastic about that.

I think probably the low-hanging fruit in transportation policy in Milwaukee is the buses. There’s an old line that 40 years of transportation economics at Harvard can be boiled down to four words: “Bus good, train bad.” So it shouldn’t be seen as being an intrinsic problem that you don’t have a train system. Buses are flexible. They’re cost effective. They in principle can be socially programmed… But we tend to see buses as the ugly stepchild of American transportation. That’s really unfortunate.

I (suggest) actually embracing a pro-bus agenda to make buses cool. Spend modest amounts upgrading the buses. You don’t necessarily put in streetcars, just paint your buses to make them look better, figure out how to put in a little more personnel so they feel more safe, figure out if you can do social programming — chat rooms in buses. Run trivia contests for the kids, just purely experimental, low-cost interventions that attempt to make the buses exciting. That’s a cheap public transport agenda that could potentially yield big returns — for a lot less than $5 billion or whatever they are spending on highways. My guess is $5 million would go pretty far with buses.

Civic leaders here have identified a cluster of companies specializing in water technology…

There’s that sewer socialism again rearing its head.

So they’ve come together to foster a network of people working in that area, focused in a physical place in a particular neighborhood, the Global Water Center. Universities are involved, seeding research in this area. They’re encouraging the face-to-face interactions that you’ve identified as important. Based on what you’ve seen, how well can these kinds of efforts work as a way for a region to grow economically?

Working on removing contaminants from water with electrocoagulation, Dr. Brooke Mayer of Marquette’s Opus College of Engineering with a student assistant.

Let me give you two different ways of looking at this. One thing we’ve seen was that after the Bayh-Dole Act legalized the use of research funded by federal dollars for commercial purposes — this was in 1980 — there was an explosion of related business activity near the universities that specialized in things with commercial value. If you take that lens to it, you say, well, Milwaukee has all of this water-related knowledge in its learning institutions; let that be leveraged. Let’s make sure that happens.

The other lens is that cities are really bad at playing venture capitalist. And most assuredly, most of the examples of trying to create clusters of a variety of forms have ended in failure. So you probably don’t want to be in the business of having a public official say, “This is our industrial future. We’re about X.” But you do want, if there is a body of knowledge in an area, you want to make sure that there aren’t barriers to turning that into jobs.

When I asked about the benefits of cities, I didn’t mention the environmental benefits, which are turning out to be important as well. How do cities make a difference as greener places to live?

So Matthew Kahn and I have estimated the carbon footprint associated with different parts of the U.S., holding income and family size constant … you see significant differences between urban and suburban living in the U.S. in energy use. And that’s from two primary sources, one of which is transport patterns. Living in the city means you’re driving much shorter distances. In the U.S. statistically, the big (bump) is not about public transportation, outside of New York City, because in fact most urbanites in the U.S. still drive. But the difference is that they’re driving three miles instead of 30, which is a big deal in terms of gasoline usage. The second, of course, is just the size of the housing unit. Apartment buildings are not intrinsically greener than houses are, but they are almost always smaller. The fact that you’ve got a little bit of excess energy in some aspects of the apartment gets dissipated by the fact that you’re typically living in a much smaller unit than you are in a suburban house.

So city living reduces individual carbon footprints, but footprints also vary as you move around the country?

Now this is less of a good thing for Milwaukee: The differences within cities are smaller than the differences across metropolitan areas. The places that are intrinsically green are the places with very benign climates. Coastal California is intrinsically greener than the American Midwest, which tends to require both cooling in the summer and heating in the winter. I think the implication that I’ve drawn from this is that’s why California environmentalists should be incredibly gung ho about building more high rises in coastal California, which is of course the last thing in the world they’re actually in favor of doing.

One last point about this: It’s not that the U.S. changing is going to make some huge difference in terms of carbon emissions, but if the great growing economies of India and China see their per capita carbon emissions rise to that seen in the sprawling United States, global carbon emissions go up by about 130 percent. If they stop at the level of wealthy but hyper-dense Hong Kong, they go up by less than 30 percent. That’s a huge difference.