DC: The Anti-Berlin

Moneybox
A blog about business and economics.
Dec. 28 2011 5:31 PM

DC: The Anti-Berlin

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Logan Circle, now incredibly expensive.

Wikipedia photo

Carol Morello and Timothy Wilson write about the DC population growth surge, in which we've grown about 2.7 percent since April of 2010. They note that the city, which once had a terrible image for malgovernment and crime, now "routinely shows up on lists of cool cities where young people gravitate, and it is drawing as many young adults as ultra-hip Austin and Portland."

The fact of the matter is, however, that DC is not ultra-hip no matter how many young people have moved here. That's because in terms of the economics of cool cities, DC is the reverse of Berlin. For starters, though DC and Berlin are both national capitals rather than traditional centers of industry, the DC metropolitan area is the richest in America and has the strongest labor market. But far from being over-built thanks to a glorious past, DC is woefully underprovided with structures in its central city thanks to the Height Act and sundry other curbs on both commercial and residential density. Consequently, while the "fundamentals" of quality of life have improved, the striking thing about DC is how expensive it is. For example, the top ten large American cities in terms of murder rate are New Orleans, St Louis, Baltimore, Detroit, Newark, Oakland, Washington, Kansas City, Buffalo, and Cincinnati of which Washington is the most expensive by far (to say nothing of comparing it to Berlin!) and the schools are sub-par compared to other expensive major cities. Firms and residents, in other words, are paying a significant premium in order to gain access to the unique properties of the DC labor market.

This is good for certain kinds of things. In the eight years I've lived here, one's set of opportunities to get a nice dinner for a large sum of money have expanded rapidly. It's by no means just a place for politicos to move. In fact, if you're interesting in selling any kind of high-margin services then especially given national economic conditions you should strongly consider moving to DC. But by the same token, if you're a semi-employed artist or guitar player it's much more expensive than Philadelphia or Baltimore and still smaller and less interesting than New York City, which has less than one-third our murder rate. If DC ever becomes as safe as NYC and our schoolkids score as well on tests as New York kids, then I suspect Washington's housing costs will rocket past New York's already very high ones. I don't think it's a coincidence that the city was probably more culturally influential during its mid-eighties quality of life nadir than it is today as a richer-but-prohibitively expensive city.

Matthew Yglesias is the executive editor of Vox and author of The Rent Is Too Damn High.

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