The Great Recession was supposed to clobber New York, but the city is doing just fine. Its unemployment rate is below the national average. Per-capita earnings in the New York metropolitan area remain 40% above the American metropolitan average. Housing prices have declined less than they have almost anywhere else.
How has New York remained so strong? The secret to the city’s enduring strength is not a specific industry or a political leader but rather its unequaled ability to bring millions of people together and enable them to educate each other. Humanity’s greatest gift is our ability to learn from the people around us. No place has ever done that better than New York.
That fact wasn’t always evident. Like all of America’s historic cities, New York was born on waterways and raised on rail; the city’s seminal industries — sugar refining, publishing, garment manufacturing — grew because New York was a transportation hub with easy access to key inputs, like raw Caribbean sugar and pirated English novels. But over the 20th century, cheaper transportation sparked the flight of manufacturing from older cities to lower-cost areas, like right-to-work states and poorer countries. New York’s garment industry, America’s largest industrial cluster in the 1950s, almost disappeared. Rising crime and public mismanagement accompanied economic decline. To most observers, New York’s future looked dark.
But it turned out that globalization would have an unexpected dividend — making good ideas more valuable than they’d ever been before. The preeminence of ideas played right into New York’s strengths. People once thought that new technologies, such as telecommuting, would make cities obsolete. Instead, technological change only strengthened New York, further increasing the returns to being smart and knowing the new, new thing. Sure, you can telecommute, but then you’d miss every water-cooler rumor, every facial nuance, and every unexpected tidbit of information that comes your way in the center of the action. New York City is a world financial center, for example, because knowledge is more valuable in finance than in any other sector. Slightly better information can make a trader billions, which is why trading firms are happy to pay so much for Manhattan real estate.
The same advantages that make cities productive — urban competition, innovation and specialization — also make them exciting places to live. A constant flow of new ideas does almost as much for New York restaurants as it does for New York financiers. Deindustrialization may have moved garment production elsewhere, but fashion innovations are still made in New York, and that makes for exciting retail. (I discovered my favorite bow-tie producer, a Japanese immigrant named Seigo, just by happening on his Lexington Avenue store.) The city’s history has left it with great physical treasures, like its museums, architecture and parks, but the biggest reason that New York is exciting is that it is filled with interesting people who breathe life into otherwise empty structures.
Of course, New York’s success has always depended on defeating the downsides of density, like crime and disease. At the start of the last century, a boy born in New York City could expect to live seven years less than the national average. Today, New York’s life expectancies are substantially higher than the nation’s. Younger people have less risk of dying in New York — city residents commit suicide at lower rates, and taking a taxi after a few drinks is a lot safer than driving home drunk.
Making New York healthier required enormous investments, like the Croton Aqueduct and the scientific battle against AIDS. Making the city safe required more and smarter spending on police. Those investments in safety and health helped turn New York into a consumer city, a place of pleasure as well as productivity.
New York also demonstrates the environmental sensitivity of big-city life. For some reason, many environmentalists cling to the fallacy that loving nature means avoiding cities and being around trees. Nothing could be more wrong. Living in a big city means emitting less carbon because people drive less and inhabit smaller living spaces. Midtown Manhattan may be the greenest place in the country.
When I was growing up in the city 35 years ago, it was hard to imagine wanting to live in New York and work in the suburbs. Today, tens of thousands of people do just that, putting up with long commutes and expensive, cramped apartments for the pleasure of living in New York City. Unfortunately, our political leaders are still influenced more by Virginia’s Thomas Jefferson than by New York’s own Alexander Hamilton: They seem to believe that homeownership in the suburbs is the only version of the American dream.
It isn’t. Living in a New York City apartment is just as American as living anywhere else.
Indeed, America was built on the economic, political and cultural innovations that were produced in its great cities — especially New York.
Edward Glaeser is the Fred and Eleanor Glimp Professor of Economics at Harvard University and a Manhattan Institute senior fellow. His new book, “Triumph of the City” (The Penguin Press), is out this week.