Among other things, the news that UBS might soon abandon Stamford to return to Manhattan, which Felix Salmon has met with great enthusiasm, is a reminder that taxes aren’t everything. High taxes are definitely a minus. Yet the virtues of density are so great — the productivity advantage, particularly in knowledge-intensive services, and the consumption externalities, among other things — that it can outweigh high taxes, congestion, etc., provided the quality of public services is acceptable. I’d argue that New York city has benefited from a powerful and at least partly (I suspect mostly) exogenous shock, i.e., the sharp decline in crime. If crime plummets and taxes go up by a modest amount and the quality of non-policing public services remains steady, residents might still come out ahead as the fear of crime represents a kind of psychic tax. This leads me to wonder how much richer New York city would be if local government were more efficient and if the tax burden were considerably lower.