Cities Will Be More Fragile, More Competitive, Than Ever Before

Both taxes and housing costs are large drivers of migration, and we needn’t get too caught up in which has the greater impact. Other factors influence growth as well.

Any city one visits turns up people who believe they live in heaven. In the cities that I have most disliked, I met people who loved living there. The dispassionate observer sees various amenities and understands that some people like them a lot, others not so much.

Forecasting the future growth of a particular city requires getting away from the chamber of commerce brochures and into actual changes over time. If a place has gorgeous scenery, that probably won’t change. So the person wondering about the future must look at other factors to see if a city or region will do better or worse than its historical path.

Changes in lawlessness and homelessness are two factors that have drawn criticism of Portland, Seattle, and San Francisco. With high housing costs, especially in San Francisco and Seattle, and high personal taxes, especially in San Francisco and Portland, these cities may seem doomed. But that’s neither inevitable nor immediate. Inertia slows change considerably.

Migration from one state to another, and from one county to another, has declined in the last few decades. People seem more interested in staying put. Family and friends have always kept many people near their childhood homes. The plain old bother of moving, and for some fear of the unknown, keep people where they are. For these people, poor governance is something to be put up with, not something to flee from.

Although total migration has declined, it still exists and has large impacts. Declining population in, say Detroit and New Haven is not just a matter of more deaths than births. Migration is the principle reason why some areas have grown in the last decade while others have shrunk.

Economists speak of changes at the margin. Beer purchases increase when its price is lower. That happens despite the many people who don’t drink beer and are thus not influenced by a sale. Nor is the increase in purchases driven by the people who like beer and set their drinking based on diet or lifestyle decisions, with the price of negligible impact. But in between these two classes are people who are sensitive to price, and they won’t tolerate prices higher than necessary. They drive brewers to compete on price.

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