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January 15, 2013

Nation's Capital In Economic Boomtimes as It Skims Money from Increasingly Poor Hinterlands

As Instapundit says, when even the NY Times notices (about 15-18 months after most others did), it's safe to say everyone has now noticed.

Billions in federal spending, largely a result of two foreign wars, were pouring into the local economy by the early 2000s. Then came the housing bubble. But after it burst, a remarkable inversion occurred: as the country withered, Washington bloomed. Since 2007, the regional economy has expanded about three times as much as the overall country’s. By some measures, the Washington area has become the richest region in the country. It is now home to the three highest-income counties in the United States, and seven out of the Top 10.

he growth has arrived in something like concentric circles. Increased government spending has bumped up the region’s human capital, drawing other businesses, from technology to medicine to hospitality. Restaurants and bars and yoga studios have cropped up to feed and clothe and stretch all those workers, and people like Jim Abdo have been there to provide the population — which grew by 650,000 between 2000 and 2010 — with two-bedrooms with Wolf ranges.


...

How Washington managed this transformation, however, is not a story that the rest of the country might want to hear, because we largely financed it. As the size of the federal budget has ballooned over the past decade, more and more of that money has remained in the District. “We get about 15 cents of every procurement dollar spent by the federal government,” says Stephen Fuller, a professor of public policy at George Mason University and an expert on the region. “There’s great dependence there.” And with dependence comes fragility. About 40 percent of the regional economy, Fuller says, relies on federal spending.

And then there's the classism and racism -- something to keep in mind the next time a young liberal DC politico pops off about such matters. The city is divided into "good" (white, rich) neighborhoods and "bad" (poor, black) neighborhoods, and all those young liberal DC politicos definitely live in the former and not the latter, and that's not some kind of gigantic coincidence, either.

Washington, though, has become an increasingly two-class town. About a third of households make less than $60,000 a year, while around 45 percent make more than $100,000 a year. Relatively few are what might be traditionally considered middle class.

Perhaps that, more than anything, explains the appearance of the new gilded-age Washington, which is less about wealth than it is about the growth of one of the most ascendant petite bourgeoisies that the United States has known.

...

And these days, many lower-income families have moved from the District altogether, often to the suburbs of Maryland, like Prince George’s County, or even farther out. Newsome stressed that the change has been economically driven, but there are some racial overtones too.

“People will tell you it’s not about race, but it is,” said George Pelecanos, a Washington native, novelist and screenwriter who worked on “The Wire.” “It’s no longer a black city, and a lot is going to be lost because of that. But the flip side of that is, I try not to get too nostalgic about what Washington was.”

The article, being a NYT piece, explains that all this boomtime in the capital is due to... Reagan and Bush's push for contractors over federal workers and the War on Terror.

One strains to find a single sentence in the piece noting that Obama's trillion-plus-per-year deficits -- trillions of dollars not just extracted from the people in the hinterlands but from the children and grandchildren of the people in the hinterlands -- might have something to do with the boom.

Which is, incidentally, happening now, and not in 1987 under Reagan.

And yet this is all due to Reagan. And Bush.

I read it in the Times. It must be true!


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posted by Ace at 02:26 PM

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