The Urbanophile on "Washington" "DC"

Aaron Renn, the Urbanophile blogger, who also writes for the Manhattan Institute's City Journal, has an interesting take, "Hail Columbia! Welcome to America’s New Second City," on Washington now taking on the role of the nation's "Second City," because of the rise in importance and dominance of the federal government over more and more of the nation's economy.

From the piece:

1. Washington has developed a unique prosperity in the modern economy that goes well beyond its traditional recession-proof nature. Cities like Dallas boast “horizontal” success in adding people and jobs. Places like San Francisco boast of “vertical” success in raising per capita GDP and income. But Washington alone among big cities combines the stunning wealth and productivity of a New York with the volumetric growth of a Houston. It is a city simply without peer in America.

2. The scale of Washington now enables it to play with the big boys. In 2000, Chicago’s economy was about 50% bigger than Washington’s. Now it is only 25% bigger. Washington has more people with graduate degrees than Chicago and is on the verge of passing Los Angeles. At current growth rates, the combined Washington-Baltimore region will pass the 10 million population threshold in about 15 years to join the ranks of the world’s megacities.

3. Washington’s wealth extraction model has evolved from simply profiting from federal spending to a form of economic hegemony based on the regulatory superstate. The region may actually take a blow in the near term from fiscal retrenchment at the federal level, but the increasingly intrusive, fine grained control of the federal government over every aspect of American life ensures that the country will continue to pay tribute to Washington no matter what, and means you basically have to play in Washington to make it as an industry in America today.

It's tough with this kind of article in terms of distinguishing between Washington the city and the Washington metropolitan region, which is comprised of not just Washington DC but  also multiple suburban cities and counties. That was a problem also in the recent NYT Sunday Magazine piece on the same general subject "Washington Versus America").

The military and health sectors are two of the most significant economic drivers in the nation. And increase in the federal role in these areas has economic return to the Washington Metropolitan Region.

We don't realize how much this is the case. See "America’s staggering defense budget, in charts" from the Post. 20% of the federal budget is spent on the military.

As the NYT piece pointed out (as did a series in the Washington Post, see the blog entry "Montgomery County's real jobs problem is that it is an adjunct, not a full-fledged, member of the military-industrial complex") much of the metropolitan area's success in the last decade has been driven by the escalation of federal spending on the military generally and "homeland security" specifically--and this largesse by the way has mostly bypassed Washington the city and is spent in the suburbs and elsewhere in Maryland and Virginia.

The military spending tends to be much greater and has more immediate impact. This accounts for the relatively greater success of Northern Virginia vis-a-vis Suburban Maryland.  As this spending falls off (see "Charleston's economy girds for leaner defense budgets" and "Defense budget cuts hit businesses, localities" from USA Today), there is a greater likelihood of economic decline in Northern Virginia especially.

While all that Aaron writes is true, at the same time the primary economic development priority for the "local" Washington is to work to develop a local economy that is not fully dependent on the "federal government" for success. Right now it mostly is--the real estate market is hot because of the law firms, trade associations, contractors, and federal government agencies needing to be housed.

Eventually (post-grand jury duty), I plan to write a kind of review essay on this subject, in the context of the city's recent economic development "plan."  (Also see "One of the stupidest ideas of all time: "trading" the Washington Redskins for the FBI headquarters.")