The secret of Seattle's success in a slow-growth era is complex, but it now has another major economic cluster in its crown.
I hope you’ve been reading Matt Day’s illuminating series about Seattle becoming a center of cloud computing (see here, here and here). It’s a fascinating read for techies, but also for people interested in the stark divide between a relatively few superstar American cities and everybody else. It’s a division that has become more pronounced as many cities have lost their economic touchstones over the past 35 years to mergers, financial plays and overseas competition.
Metro Seattle began with good bones: plenty of educated people, particularly in computer science; civic stewards that had given back decade after decade; a diverse economy including Boeing, seaports, major logistical centers, research from the University of Washington, Fred Hutch, and the Allen Institute for Brain Science, and a large number of major headquarters; the ability to re-invent itself over and over, punch above its weight. This is a special place. All these attributes and more allowed Seattle to avoid the worst of the Great Recession.
As Day’s reporting shows, the metropolitan area can add cloud computing to other world-class clusters: aerospace, software, e-commerce, biosciences and, with the Bill and Melinda Gates Foundation, world health. Composites, with the 777X, and green tech are coming online fast. I can’t think of another similar-sized metro in America with so many assets.
Here’s a critical point: In almost every case, Seattle sits at the headwaters of these clusters, where decisions and breakthroughs are made, top talent resides, the most advanced work is done.
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By contrast, Phoenix, my hometown, has none of this. It is the sixth-largest city in the nation and 12th largest metropolitan statistical area (Seattle-Tacoma-Bellevue is 15th), but has nothing comparable to show for it. No major headquarters with thousands of well-paying jobs, much less downtown. It gets the crumbs from superstar cities: Amazon warehouses, a Microsoft data center.
Superstar cities have always existed and past performance is no guarantee of future results (see Venice). In our era, brainpower and technology, tolerance and education, the ability to control capital or attract it, are critical to success. Today’s stars are masters of the economic game as it is played now. Hence, Denver and even Salt Lake City are becoming powerhouses. The likes of Phoenix are one or two trick ponies, unable or unwilling to play catchup. (Phoenix was one of only two large metros to go for Trump).
Things get politically explosive when the losers multiply — think of the many towns and cities that once underpinned a thriving middle class, now denuded of the economic crown jewels that made that possible.
Are superstar cities from New York to San Francisco and Seattle to blame? I’d put the onus on bad policies. But…food for thought.
Today’s Econ Haiku:
No Goldman bankers
Moguls, generals in charge
Wait, Hillary lost