Some Further Thoughts on Moving Silicon Valley to Cleveland

Moneybox
A blog about business and economics.
Dec. 23 2013 9:41 AM

Some Further Thoughts on Moving Silicon Valley to Cleveland

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Joy in Cleveland

Photo by Kimberly Barth/AFP/Getty Images

I got a lot of interesting feedback on my piece about the idea of forcing major Bay Area high-tech firms to relocate to Cleveland.

A lot of the feedback focused on the question of whether Cleveland is really the best place to do this. Here's how I came up with Cleveland. I wanted to pick a "rust belt" that's experienced significant decline, with the thinking being that cities like that tend to have a lot of good infrastructure that's currently underused. Great old buildings that are vacant or cheap, plus buildable land in the central city. Then to further narrow it down, I liked Cleveland and Detroit because they're officially designated hubs for United Airlines and Delta respectively. Then Cleveland ultimately got the nod because I'm a little bored of reading articles about Detroit.

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I'm happy to admit that this was a somewhat arbitrary process but actually that's the point.

The point is that because of the difficulty of adding new housing units and new square feet of office space to either Silicon Valley or San Francisco, the country as a whole is suffering a substantial loss. Individual firms or tech-savvy workers can and do respond to real-estate constraints by simply locating elsewhere. But since the United States of America is a very big country, "elsewhere" encompasses a lot of different places. By spreading out so widely across the country, however, the technology firms and technology workers who aren't in the San Francisco and San Jose metropolitan areas end up denying themselves the substantial economic advantages that come from agglomeration. There's essentially a coordination problem, where a concerted effort to make any one particular place another big hub (in my proposal, by somehow making Apple, Google, Facebook, and Twitter simultaneously all move there) could solve the problem and produce large aggregate gains. The nature of a coordination problem is that it's not actually super-important where you coordinate—there's a strong case for Pittsburgh or for a bigger city like Chicago or for a Sun Belt city like Phoenix or San Antonio—the important thing is to coordinate.

Of course the bottom line here is still that the ideal way to create "more digital technology hubs" would be to build more buildings in the hub we already have. More frequent Caltrain service, more high-density zoning near the stations and urban-style neighborhoods, more redevelopment in San Francisco, blah blah blah. But one way to dramatize the scale of the losses incurred by housing scarcity in the Bay Area is to reflect on how large the gains could be of slightly absurd sounding schemes like picking up a bunch of corporate headquarters and moving them halfway across the country.

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

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