Austin, leader of the up-and-comers.
Austin, leader of the up-and-comers.

by James A. Bacon

Joel Kotkin and Wendell Cox have introduced the concept of the “aspirational” city — cities to which people move “to change their circumstances and improve their lives.” These are cities on the rise — restless, growing and entrepreneurial magnets of opportunity.

I was pleasantly surprised to find Richmond ranking No. 7 on the list of the Top 15 Aspirational Cities — one notch above Washington, D.C.! Austin led the list, followed by New Orleans, Houston, Oklahoma City, and Raleigh.

RVA, aspirational city.
RVA, aspirational city.

Here’s a description of how the list was compiled, as described in the New Geography blog:

To determine America’s current aspirational hotspots, we focused in large part on economic indicators, such as employment growth, per capita income, and unemployment. But we also took into account demographic factors, such as the growth of domestic migration and the movement of college-educated people and the foreign born.

Finally, we considered quality-of-life factors such as traffic congestion, housing affordability, and crowding—which are keenly relevant to young families hunting for the places with the best “inventory of the possible.” In a sense, we believe aspirational cities reflect a kind of urban arbitrage, where people look for those places that provide not just economic and cultural opportunity but a cost structure that allows them to enjoy their success to the fullest extent.

Kotkin and Cox made an interesting statement that I have long believed (and have expressed in Bacon’s Rebellion):

Both No. 1, Austin, Texas, and No. 2, New Orleans, are places where people can enjoy the cultural amenities and attitudes of “progressive” blue states but in a distinctly red-state environment of low costs, less regulation, and lower taxes. These places have lured companies and people from more expensive regions, notably California and the Northeast, by being not only culturally rich but also amenable to building a career, buying a home and, ultimately, raising a family in relative comfort.

Red state governance system + blue state culture may be the winning combination.

If you believe Kotkin and Cox, the long-standing dominance of the Northeast and California may be coming to an end. The list is dominated by Southern cities, with a strong representation from the Midwest. Only one West Coast city, Seattle, makes the cut.

Kotkin and Cox have sparred spar frequently with Richard Florida of “creative class” fame, but this is the first analytical framework I’ve seen that may be able to compete with Florida’s as an explanation of why some regions succeed and others fail. It doesn’t matter how hip or cool a region is, it won’t grow if business isn’t hiring. Young people won’t move there if they can’t find jobs, and they may not marry and raise families there if costs are so high that they live at subsistence levels. In thinking about their future, regions would be well advised, I think, to adopt a synthesis of both views.

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3 responses to “The Rise of the Aspirational City”

  1. larryg Avatar

    I’m still trying to reconcile the idea that cities are incubators of the creative class an knowledge economy – but they have this problem paying for it….

    how can you have police, teachers, trash pickup, sanitary sewers, mass transit, etc… without incurring the costs necessary to provide those city amenities?

  2. DJRippert Avatar

    Too bad the researchers had to destroy the value of their work by adding quality of life indicators. Those factors are taken into account by the net in-migration. The research should be verifiable facts and figures, nothing more and nothing less.

  3. Government is essential to a civilized society, without which economic growth cannot occur. But the cost of government is also an economic overhead that its residents must generally support through taxes and regulatory compliance costs.

    The typical analysis assumes these costs (taxes and compliance) are borne by those upon which the taxes are levied and the regulations applied – the legal incidence of the costs. But what is truly important is the economic incidence of the taxes and compliance costs. For example, most economists would conclude the economic incidence of a sales tax falls to landowners in the area where the tax is applied. Purchasers can drive to another jurisdiction to avoid the tax or make an Internet or other similar purchase. So a retailer subject to the sales tax may pay lower rent.

    Generally, the economic incidence of the costs for running government and complying with its edicts rests on those with poor education or skills missing or not in high demand. For example, Obamacare imposes costs on many employers. Many of these employers are passing along the costs to their lower-level employees by reducing work hours or laying off workers. In contrast, those employees regarded as “critical” or “high producers” are likely left alone.

    My point is not to argue against all taxes or government regulation. Without any, economic activity would crawl. But the public policy debate needs to include an understanding and discussion of the economic incidence of taxes and regulations. Similarly, it is not necessarily wrong to place the costs of a tax, fee or regulation on a specific party or industry, so long as we also understand what we are doing.

    Finally, I think it’s important to understand that economic conditions can be such that not all costs will flow to those at the bottom. For example, a study from the early 1990s in California concluded the costs of impact fees often were not recovered in the prices of less expensive houses/apartments as readily as they were in prices for the most expensive houses/apartments. In sum, we need to look at policies individually. But we need to look at the economics even though the MSM doesn’t understand.

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