MY TAKE on whether Washington, DC's immense wealth (cf my colleague) makes it the decadent capital of a declining empire (cf Matthew Yglesias) is that Washington has never been anywhere near decadent enough. In the wealthy, mainly white part we're discussing, it's a pleasant but highly conformist city where people dress terribly and expend much of their cultural energy in a strange quest to seem like "regular Americans", whatever those are. Even the city's most celebrated contribution to global culture, the emocore punk-rock tradition it launched in the 1980s, was animated by a very non-decadent spirit of straight-edge monasticism. Which is great; but the point is that nothing that happens in Washington bears much resemblance to the freaky high-culture divergence of a Rome, a Versailles, or the fictional Capitol of "The Hunger Games". That's Los Angeles.
On the more substantive question of why Washington has become the richest metropolitan area in the country, Dylan Matthews has just written the definitive blog post. In 1969, the first year for which the Bureau of Economic Advisers has records (and also coincidentally the year my parents moved to Washington), wages were 12% above the national average; in 2010 they were 36% higher. Mr Matthews checks out a series of possible explanations. The federal regulatory burden, measured by the number of regulators employed, hasn't gone up much, and has actually fallen since 1980. The total amount of government spending is about the same. You might think privatisation of government functions could drive up wage premiums, but contrary to received wisdom, the share of federal spending going to private contractors has actually fallen substantially since 1980. The level of education relative to the rest of the country isn't changing much. The one factor that does look like it tracks the rise in Washington's wage premium is the amount spent on lobbying by businesses:
Each million dollars spent on lobbying is associated with a $3.70 increase in the D.C. wage premium. Correlation isn’t causation, obviously, but it seems improbable that the $1.7 billion increase in lobbying between 1998 and 2010 wouldn’t increase wages in the D.C. area.
But if the regulatory burden doesn't seem to have increased, what are those corporate lobbyists getting? A deadlocked arms race with rival corporations, Mr Matthews argues. He cites the work of Frank Baumgartner, a political scientist at the University of North Carolina, and colleagues (Lobbying and Policy Change: Who Wins, Who Loses, and Why ), who find that lobbying generally leads to a very expensive standoff between, say, credit-card companies and retailers, and no substantive change.
I don't much like the whole "maker/taker" model; it sounds rather communist to me. One of the weak points of old-fashioned communist thinking was a failure to recognise that lots of people who are not involved in the design or production of physical objects, notably merchants, salespeople, bankers, lawyers, advertising executives and clergy, are nonetheless doing work that's crucial to the functioning of the economy and society. The maker/taker distinction seems to me to partake of the same essentialist mysticism. But it is certainly true that you can end up with too many lawyers or lobbyists, and they can be a net drag on the economy. Mr Matthews' post mostly reinforces my colleague's conclusion that "the taker economy has less to do with citizens receiving transfer payments and rather more to do with crony capitalism."
But it also gives a somewhat different colour to the "crony capitalism" we're talking about. If Mr Matthews is right, Washington isn't getting richer because (as Tim Carney has it) "when government controls more money, those with the best lobbyists pocket most of it." The government isn't spending more money now than it was 40 years ago, as a percentage of the economy, so that doesn't explain why Washington is richer than other American cities. Rather, Washington is getting richer because the intensity of the struggle for influence at the centre of power has a natural tendency to keep spiraling upwards, and influence groups have to spend more on their struggles in the capital just to stand still. This isn't a conspiracy by a unified ruling class of takers against the far-flung makers, as in the Capitol of "The Hunger Games". It's an unavoidable, never-ending political battle between powerful clans to protect their interests at court, as in King's Landing in "Game of Thrones" (pictured above). Gridlock between powerful vested interests can be very profitable for experienced, well-connected court players who can promise to preserve the gridlock.
So what's the solution? One strategy for escaping this dynamic that has traditionally been employed by national rulers is to move the capital to a new location, usually one built from scratch. That seems implausible and expensive in the modern economy, but maybe we could try putting Congress on the road and just sending them to a new convention centre in a different state every two years, on sort of a Mongol Golden Horde or Dothraki model. It might not actually decrease the amount corporations spend on lobbying; the lobbyists would probably just follow them around. But it might be easier for less wealthy businesses and civil-society groups to rent office space in Boise than in Washington, and could help keep property values reasonable in the Washington metropolitan area, if that's the problem we're trying to solve here.
(Photo credit: HBO)
via Democracy in America http://www.economist.com/blogs/democracyinamerica/2012/09/wealth-washington-dc?fsrc=gn_ep
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