David Miller
by David Miller
Fri Jan 30th 2009 at 11:00am UTC

The Rise of D.C.

After the inauguration here, my wife joked/hoped that Oprah would be buying a home in D.C. In that vein, Joel Kotkin offered a really interesting piece in the WAPO highlighting the D.C. Metro’s ‘coronation’ as the undisputed power broker among U.S. metros.

Kotkin directly states his thesis: “For more than two centuries, it has been a wannabe among the great world capitals. But now, Washington is finally ready for its close-up.

While D.C. has been growing in stature (in terms of population, wealth, tech, and lifestyle) for the last 20 years or so, our current economic crisis and the submission of other great power centers has put the District at the ‘height of its power.’ From Kotkin,

No longer a jumped-up Canberra or, worse, Sacramento, it seems about to emerge as Pyongyang on the Potomac, the undisputed center of national power and influence. As a new president takes over the White House, the United States’ capacity for centralization has arguably never been greater. But it’s neither Barack Obama’s charm nor his intentions that are driving the centrifugal process that’s concentrating authority in the capital city. It’s the unprecedented collapse of rival centers of power.

This is most obvious in economic affairs, an area in which the nation’s great regions have previously enjoyed significant autonomy. But already the dukes of Wall Street and Detroit have submitted their papers to Washington for vassalage. Soon many other industries, from high-tech to agriculture and energy, will become subject to a Kremlin full of special czars. Even the most haughty boyar may have to genuflect to official orthodoxy on everything from social equity to sanctioned science.

At the same time, the notion of decentralized political power — the linchpin of federalism — is unraveling. Today, once proudly independent — even defiant — states, counties and cities sit on the verge of insolvency. New York and California, two megastates, face record deficits. From California to the Carolinas, local potentates with no power to print their own money will be forced to kiss Washington’s ring.

Kotkin goes on to explain that D.C. is ready for this moment with a huge talent base and a great amenity-driven metro. He also argues that those of us who live here will benefit from this concentration of power in D.C. via greater opportunities and rising real estate values. Although I may benefit from this personally, I have great concerns about what this will mean for innovation, growth, and entrepreneurship (sustainable growth) in the U.S. Any thoughts?

9 Responses to “The Rise of D.C.”

  1. Phil Says:

    Mr. Kotkin is high. It’s funny how rich areas of the country are coming hat in hand asking the Feds for money, i suppose. A bit of comeuppance, as it were. but what happens when the Feds tell them to drop dead? You think they stay?

  2. Buzzcut Says:

    Uh… this isn’t a good thing. It goes to show the growing power of the federal government.

    I can’t seem to find the link, but Arnold Kling linked to a study showing that the ‘burbs of DC are now THE highest income areas in America. They have no real industry. They’re where government workers sleep at night.

    This has real consequences for the so called stimulus. With all the federal spending in there, it is essentially stimulating an area that already has very little unemployment and lots of people who are already overpaid.

    Yeah, that will work.

  3. Publius Says:

    I completely agree with Buzzcut. Federalism is a good thing. It allows for the dynamism and personality that we all enjoy. “The legitimate object of government is to do for a community of people whatever they need to have done, but can not do at all, or can not so well do, for themselves – in their separate, and individual capacities,” said Abe.

    The same should be said for federal government. Let the cities do all they can on their own. Let the states do all they can on their own. Let the federal government undertake only what is left over.

  4. CTC Says:

    I live in DC and benefit by being a consultant for the government. But, I agree with the sentiment expressed by other posters. Having a huge influx of power and economic activity around here because of an expanded government is not really the best thing.

    I do, however, quibble with Buzzcut a bit. DC has a little more non-government industry than some think. Marriott, Volkswagen USA, Hilton (soon to be) are headquartered here, for example.

    But, the overall point remains valid.

  5. Michael Wells Says:

    The Times today ran an analysis about “progressive federalism”, where the national government allows states more freedom to innovate, like the California emissions standards or state attorneys general joining in lawsuits, etc. The Bushies actually were much more devoted to centralizing power in D.C.

    So that’s a rebuttal about government. As far as the American overall power center, the Wall Street financial debacle has definitely weakened NYC’s centrality. And Detroit hasn’t been a serious player for decades. But rather than state capitols, I’d still look at LA and NYC as centers of power.

  6. hayden fisher Says:

    Progressive federalism; let’s define its roots: Hamilton + Teddy Roosevelt. I’ve been positing that we’re headed towards this type of governmental evolution for almost a year on this blog. We need to stop looking at government as bad vs. good. The world has become increasingly complex, the advent of the internet, e-mail and electronic light-speed information transfer have truly quantum-leaped us into a new era. When it comes to finance, yes, we need central banks and nationally if not globally integrated monetary policy. We need flexibility AND STABILITY in the market. Uniformity promotes efficiency, we need this on the national security and defense level as well as the fiscal regulatory level. Do we want the federal government as a source of innovation? Of course not. But it can do a much better job of fertilizing the soil so that the entrepreneurs can grow their businesses and create new products and services responsive to our newfound needs.

    As for the power of states and cities, I disagree. Cities are much more powerful than they’ve ever been as density and place grow in prominence. The concept of regionalism is equally essential to prosperity. Yes, revenues are down, across the board. Yes, some municipalities and states will need treasury assistance. We’re in the worst economic collapse since the ’30’s, what would one expect! But the long-term outlook is much different. Income taxes are at all-time lows and more cuts have been initiated, that equals less federal revenue and more consumption, ie, more sales, real estate and other local and state taxes to be collected in the future; more money being decentralized. In the interim, hopefully we’re laying the groundwork and governmental infrastructure necessary to support the next economic era.

    Is the stimulus plan full of pork? Of course it is, especially from the House, these are local politicians bringing back the bacon for their districts; the Senate version will be better. But lots of that spending is on education and infrastructure too. In any event, we could argue the stimulus plan all day but with regard to the overall transformation of government, the effects and consequences have been misconstrued and misstated and the necessity seemingly lost upon some.

  7. Eric Says:

    Innovation coming from Washington? Ha. That’s like teaching a hippo to dance.

    “sanctioned science”???? Damn, does that send a chill down my spine.

  8. Buzzcut Says:

    Do we want the federal government as a source of innovation? Of course not. But it can do a much better job of fertilizing the soil so that the entrepreneurs can grow their businesses and create new products and services responsive to our newfound needs.

    Sorry, I just think that that is delusional at best. What incentives do bureacrats have to innovate? Your ideas totally ignore who runs the government and what incentives they have. Risk taking is simply not rewarded in any way, and with no risk-reward link, how exactly is there going to be any innovation?

    The most frightening thing about all this is that entrepreneurs are actually abandoning real projects and looking at how they can slant their businesses to profit from the “stimulus”.

    My buddy has an IT business, and he’s looking at how he can get a cut of the “stimulus”, instead of going out and finding real customers.

    Like I said, frightening.

  9. Jack Says:

    Just another person taking a shot at DC. DC has for the past 65 years been the most powerful in the capital in the world and while Obama coming into office has focused more attention on the city recently we werent some outpost in the middle of nowhere before.

    The reason DC has the highest incomes is because it is the highest educated metro area in the country both in terms of bachelors degrees and advanced degrees. The suburbs are technology capitals (MD with biotech and VA with IT) with more technology workers than the SF area. So while the Fed. govt might be a huge presence in and around the metro area, it is by far not the only thing.

    The city also has a great quality of life (parks, museums, sporting events, culture, etc).