Edward Glaeser has a characteristically subtle take on the notion that high-cost metropolitan areas are doomed. He observes that population growth has increased more in regions with less per-capita productivity growth, like Atlanta and Houston, than in regions with more per-capita productivity growth, like Boston and the Bay Area. The danger facing the Atlantas and Houstons, however, is that cities with lower levels of educational attainment tend to be less resilient in the face of economic shocks.
On one level, the divergence between population and income growth reminds us of the diversity of America. Boston thrives with high education and income and little new housing construction. Houston thrives, with lower incomes, by providing abundant affordable homes. Neither urban model appears to be headed for the trash heap of history.
Yet there are still lessons from recent urban history, and there are some places that face dramatic danger. Cities such as New York, Boston and San Francisco, where prices have stayed reasonably high, despite the crash, should do more to promote affordable housing, especially by eliminating the barriers to new construction. There is demand in these areas, and they would grow, if only they could build more homes. Their public sectors are expensive, and future leaders will have to adjust to far more austerity than in the recent past. Cities such as Dallas and Houston are doing well with their low-cost pro-business model, but history has been less kind to less-educated places. They should be investing more in education and in urban amenities that will attract the more skilled.
Glaeser is right to push back against Joel Kotkin and others who are proclaiming the death of the “luxury city,” if only because the problems facing our “luxury cities” would be easier to solve if they really were in the kind of death spiral that concentrates the mind of civic leaders. New York, Boston, and San Francisco can “afford” not to promote affordable housing, etc., because they have extremely valuable fixed amenities that attract affluent residents, many of whom are migrants from other regions who displace middle class natives, and the cost of inefficient public service delivery is borne largely by less affluent people who are less politically influential than the coalition of public employees and affluent NIMBYs. One hopes that we can change this dynamic before we hit some kind of crisis point.