New York City thriving
For nearly all of my getting close to forty year career I have heard about the imminent collapse of New York City. Those predictions were largely based on the twin beliefs that cities were part of the past (no longer competitive with the suburbs for middle class and affluent households) and low cost/small government places win. Think again!
New York City has a population of 8.4 million. More than all but eleven states. You read that right: one city (not the metropolitan area, but the city alone) has more people who have chosen to live there than have chosen to live in 39 of the 50 states. And, as we just explored, when it comes to recent college graduates––that nearly every state and region across the country most wants to attract––New York City has an astonishing one of every twenty young professionals in the country choosing to live there.
Why did the prognosticators go wrong? First, as we have explored frequently, central cities are not part of our past but now increasingly the location of choice for many middle class and affluent households––particularly those without school age children. (For more see Alan Ehrenhalt’s “The Great Inversion and the Future of the American City” and/or “The End of the Suburbs” by Leigh Galagher.) One can make a strong case that central cities are now the engines of economic growth and opportunity.
What I want to focus on in this post is why the low cost/small government places will win story line turned out to be inaccurate. The basic reason, of course, are that people (and businesses) want what they get for their money and from government. NYC provides more than eight million residents––from across the planet––the best balance of costs and benefits.
Russell Shorto, the author of the wonderful “The Island at the Center of the World”, deals with the topic in a recent New York Times op ed entitled: “The Source of New York’s Greatness”. Shorto identifies three characteristics that were put in place by its Dutch founders 350 year ago that are central to New York City’s success. Tolerance of those from different backgrounds, free trade and collectivism. Shorto writes:
New York, with its pluralistic, business-savvy and upwardly mobile society, rose to unimagined heights. The concepts of tolerance and free trade both related to a new appreciation of the individual. New York was born alongside the world-historic force of liberalism, a philosophy that prized individual freedom above all else. What is little appreciated, though, is the grounding of individualism in collectivism. It was the Dutch agreement to work together for the common good of holding back the sea that allowed for the rise of prosperity and a society based on singular achievement.
Former NYC Mayor Michael Bloomberg in a terrific Financial Times column tackled the same topic. His explanation for NYC being one of the most prosperous places on the planet:
Many newly successful cities on the global stage – such as Shenzhen and Dubai – have sought to make themselves attractive to businesses based on price and infrastructure subsidies. Those competitive advantages can work in the short term, but they tend to be transitory. For cities to have sustained success, they must compete for the grand prize: intellectual capital and talent. I have long believed that talent attracts capital far more effectively and consistently than capital attracts talent. The most creative individuals want to live in places that protect personal freedoms, prize diversity and offer an abundance of cultural opportunities. A city that wants to attract creators must offer a fertile breeding ground for new ideas and innovations. In this respect, part of what sets cities such as New York and London apart cannot be captured by rankings. Recent college graduates are flocking to Brooklyn not merely because of employment opportunities, but because it is where some of the most exciting things in the world are happening – in music, art, design, food, shops, technology and green industry. Economists may not say it this way but the truth of the matter is: being cool counts. When people can find inspiration in a community that also offers great parks, safe streets and extensive mass transit, they vote with their feet.
As I wrote in a previous post, NYC has the ingredients that increasingly lead to prosperity: “A big city that works; a government that provides quality basic services and amenities; terrific alternatives to driving; density; and welcoming to all. Combine those features with an entrepreneurial culture and you have a place where talent – from across the planet – wants to live and work. And where talent concentrates you get growth and prosperity, not decline and falling income and employment. To get back on the path to prosperity Michigan needs far more – not less – of what New York City has.”
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I have never lived in New York City, but have spent many business related weeks there during my career. One thing I have noticed there is that all of the millennials and knowledge related jobs there seem to create sort of a secondary prosperity even for those who have not been to college and do not work in a knowledge related job. Young professionals tend to use a lot of personal services creating many jobs in restaurants, retail stores, as cab drivers and many other service industries. Many of these jobs are not knowledge based, but they provide opportunity for people to get started. Many of the service providers I met were immigrants who were determined that even if they could not get educated for a knowledge career, they would provide that opportunity for their children.
That is exactly right. Where young professionals are concentrated they spend lots of their disposal income in the neighborhood/community creating lots of retail, hospitality and other personal services jobs. And in a place like NYC lots of those jobs are filled by immigrants. Its the notion that talent is now the high economic multiplier. A role factories use to play.