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New York City: One of life’s winners

Brad DeLong points us to a new paper which attempts to explain how New York got so big, and stays so big:

For 200 years, New York City has been the largest city in the nation, and it continues to outperform most cities that were once its competitors. In the 1990s, the city’s population grew by 9 percent and finally passed the eight million mark. New York is the only one of the 16 largest cities in the northeastern or mid-western United States with a higher population today than it had 50 years ago. New York’s economy remains robust. Payroll per employee is more than $80,000 per year in Manhattan’s largest industry and almost $200,000 per year in Manhattan’s second largest industry.

All cities, even New York, go through periods of crisis and seeming rebirth, and New York certainly went through a real crisis in the 1970s. But while the dark periods for Boston, Chicago or Washington D.C. lasted for thirty or fifty years, New York’s worst period lasted for less than a decade. While Boston’s history is one of ongoing crises and reinvention (Glaeser, 2005), New York’s history is one of almost unbroken triumph. The remarkable thing about New York is its ability to thrive despite the massive technological changes that challenged every other dense city that was built around public transportation.

Much to my embarassment, I’ve never been to New York City (on the other hand, much like the protagonist in Savage Steve Holland’s Better Off Dead, this fact has, more than any other, kept me willing to go on with life, no matter how badly the Astros are doing). Nonetheless, a similar question could be asked of Houston. Lord knows that we’ve had “periods of crisis and seeming rebirth.” Indeed, at a meeting on Friday a lecturer asked us if we knew what the “new hot thing” for young lawyers in Houston was twenty years ago. After an uncomfortably long silence in which no-one spoke up to answer, I guessed it might have been real estate.The correct answer was oil and gas. Wrong boom-bust cycle!

Indeed, the most relevant article I can find on Houston’s economic history was written at the peak of the go-go 80s (namely, Joe R. Feagin, “The Global Context of Metropolitan Growth: Houston and the Oil Industry”, Am. J. of Sociology vol. 90 no. 6 (May 1985), 1204-30). Which leads me to believe it’s time for some grad students to get busy on the theses.

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2 Comments

  1. Tory Gattis says:

    I would attribute much of New York’s success to “winner takes all” network economics like eBay: being #1 attracts others which keep you #1.

    The US is notable vs. other countries for splitting our industries among many cities. Many cultures put most everything in one super-city: London, Paris, Tokyo, etc. We split up finance and publishing (NY) from govt (DC) from top education (Boston) from industry (Chicago/Detroit) from entertainment (LA) from tech (SF/SV). I would argue that decentralization is a strength of the US, rather than a weakness.

    FYI, you can download the paper for free here:

    http://post.economics.harvard.edu/hier/2005papers/HIER2073.pdf

  2. Jeb says:

    Much of NYC’s success is due to location, location, location. NYC has excellent natural harbors and sits at the cross-roads between New England, the Mid-Atlantic States, the Hudson River, and Long Island. New York, city and state, expanded upon these advantages when they built the Erie Canal, adding the Old Northwest States to its geographic reach.

    Fulton came to New York to test his steam engine because what better place than a city on an island dependent on ferries. Success in shipping led to success in railroads and success in finance and success in media.

    New York has had its stumbles and falls, occupied by the British during the Revolutionary War, ruined by the Draft Riots during the Civil War, riddled by gangs and corruption during the 19th Century, persecuted by nativist legislators from Upstate, knocked down by the Stock Market Crash of 1929 and the fiscal crisis of the 1970s. New York has always come back because it is a city of opportunity.