City Journal Winter 2014

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Winter 2014
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Edward L. Glaeser
Wall Street Isn’t Enough « Back to Story

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What campus kicked off the financial industry in NYC?
The Hearst building is a great example of how we can preserve the past while increasing density.

I'm also disappointed that the big Vornado projects at 15 Penn Plaza and the Port Authority Bus terminal are on hold because they can't find financial clients willing to pay extremely out of this world prices in the current market. It's ashamed they couldn't outfit those towers for biotech labs, or electronics companies or housing for people making less than $700k a year, etc... What about mixed use? Do the Hong Kong thing and build a 5 story mall with 50 stories of offices, schools and labs over that, a 20 story hotel atop that, then some restaurants and night clubs atop that.
The Van Nuys-Chatsworth corridor in the San Fernando Valley must likewise diversify from it's primary industry.
and as the silicon valley myth has gone bust only enforces the Late Dr Jacobs argument...it hasn't created anything but Facebook in years.
I agree with your conclusion, we need to diversify. I also agree, in spades, with your comment about over-regulation that seems to exist just for the sake of regulation. There is a reason why the southern cities are growing faster than NYC, a much more business friendly environment. To keep our city thriving, we need to pay more attention to those who would create diverse employment, and less to those who wish to stifle it.
To commentor B. Davis:

As long as New York's republican mayoral candidates are socially progressive, they will continue to have success in the city's political climate. This is what separates - and isolates - our GOP from the rest of the nation.
The statistics cited for Detroit (population decline of 39% since 1950, 25% since 2000) are more indicative of movement from city to suburbs then decline of the metropolitan region overall. The Detroit metropolitan area's population hasn't changed by more than 5% since 1970 (and is 40% higher than it was in 1950). It's not growing as many other urban areas are, but it's not shriveling.
New York's preeminence as a financial center rests on the laurels of its past. The back offices of most of the big banks have left the city, along with their jobs. Now, it is only the support personnel for the movers and shakers that are left in the city. And when (as will eventually happen) these movers and shakers get tired of New York, then the decline of New York's financial sector will begin.

New York has made a wise move in its bet on a new science complex. But need there be only one complex? The more that highly educated people concentrate in the city, the more likely it will be that the products of the future will be born here.

But the City needs the help of NY State - something which is often hard to get, given the antagonism of upstate towards NYC. It may take a generation for the City's bet on science to bear fruit. Yet, the state may kill this bet with excessive taxes to pay for the needs of upstate residents. If this tendency can be overcome, then maybe, NYC stands a chance to THE city where fortunes are made....
An interesting essay. New York is a difficult place to govern, a 50 member municipal council, Mayor, Borough Presidents that are not much more than cheerleaders. As for the economy, even the financial industry has slowly been hollowed out as back operations are moved to the cheaper suburbs (Paine Webber/Weehawken as one of many examples).

For those who remember, New York was going straight downhill under its last Democratic Mayor, back in 1989. Since then Republican Giuliani and Republican/Independent Bloomberg have managed to steer the city through some very difficult times. I fear a return to past policies that would have destroyed the city when the mayoralty goes back to the Democrats.
I would add a consideration that is touched upon, but not elaborated. One reason for New York's (and Boston's, and Philadelphia's) diversity, historically, has been our openness to immigration, and to the fact that most immigrants arrive in major port cities. Over the first 200 years or so of our development as an economy, we welcomed immigrants, saw them as a resource, as an addition to our economy. And their arrival cities benefited from that openness.

One reason, I would argue, for the continuing diversity of new York's economy, then, was that steady stream of immigrants, who brought (and can continue to bring) new skills, new visions, and new energy to the city. And help prevent an over-concentration of economic activity in a single sector.

My own professional life has, for the past 25 years, been spend in one of the classic single-industry cities in the U.S.--Gary, IN. It has certainly suffered from the lack of economic/industrial diversity of which Dr. Glasener writes. But that lack of diversity is itself a result, not the ultimate cause, of other forces.
An interesting article. It is rare to find an economist who preaches that government should get out of the way. But that is what New York needs. But New York also needs more housing and less barriers to building more housing and probably some investment in faster transport to bring more housing within a certain time radius. It is a complex problem but, from the perspective of someone who bought their first apartment in 1976, NYC is in a lot better shape now than it was then. Arguably it is in too good shape.