America's Second City: Washington D.C.

From City Journal:

Hail Columbia!

The federal government’s relentless expansion has made Washington, D.C., America’s real Second City.

The Washington, D.C., region has long been considered recession-proof, thanks to the remorseless expansion of the federal government in good times and bad. Yet it’s only now—as D.C. positively booms while most of the country remains in economic doldrums—that the scale of Washington’s prosperity is becoming clear. Over the past decade, the D.C. area has made stunning economic and demographic progress. Meanwhile, America’s current and former Second Cities, population-wise—Los Angeles and Chicago—are battered and fading in significance. Though Washington still isn’t their match in terms of population, it’s gaining on them in terms of economic power and national importance.

In fact, we’re witnessing the start of Washington’s emergence as America’s new Second City. Whether that’s a good thing for America is another question.
Washington is an artificial capital, a city conjured into existence shortly after the Revolutionary War. Its location was the result of political horse-trading. Virginia congressmen agreed to let the federal government assume the states’ war debts, even though Virginia itself was already paid up; in exchange, the new capital would be located in the South.

The city’s early boosters hoped that its location on the Potomac River would help it grow into a commercial as well as a political capital, but that didn’t happen. While other cities got state backing for their business endeavors—a good example is the Erie Canal, built by New York State, which benefited New York City enormously—Washington was run by a Congress more interested in national affairs than in local ones. The city stagnated at first. Its growth finally picked up during the Civil War, but it wasn’t until the Great Depression and World War II, with their expansion of the role of the government in American life, that Washington grew prosperous. During the war, average family income there was higher than in New York or Los Angeles.

It was also a heavily black city—by 1957, the country’s first major city with a black majority. But back in the 1870s, Congress, motivated by racist fears of black votes, had replaced the city’s elected mayors with a board of commissioners appointed by the U.S. president. That change, coming just a few years after black males had won the right to vote in Washington local elections, hobbled the city’s ambitions and set the stage for its troubled legacy in race relations. It wasn’t until 1973, when the civil rights movement had made the disenfranchisement of the city’s blacks untenable, that D.C. regained local control. Unfortunately, a number of factors—including the 1968 riots after Martin Luther King, Jr.’s assassination and a series of disastrous urban policies enacted by the federal government—set the stage for the emergence of political opportunists, including the infamous Mayor Marion Barry. During his tenure in the 1980s, unchecked corruption, ineptly delivered city services, soaring crime, horrendous public schools, financial chaos, and racial tensions made the city a byword for dysfunction nationally. So did the 1990 video that caught Barry smoking crack in a hotel room.

Nevertheless, the metropolitan area surrounding Washington continued to grow and thrive. And when the 2000s arrived, the expansion of the federal government not only catapulted the region into a new league of success but also transformed the troubled city at its center.
During the first decade of the twenty-first century, the Washington metropolitan area overachieved on a variety of measurements versus its peer metro areas—that is, the rest of the ten largest metros in the country, plus the San Francisco Bay Area (which federal classifications divide into two, neither of which would make the Top Ten on its own). Among these regions, Washington ranked fourth in population growth from 2000 to 2010, trailing only the three Sunbelt boomtowns of Atlanta, Dallas, and Houston (see “The Texas Growth Machine”). Washington is currently the seventh most populous metropolitan area in America....MORE

HT: the Washington Post's The Buzz blog
See also Reuters Dec. 18, 2012:

Redistributing Up
The federal government has emerged as one of the most potent factors driving income inequality in the United States - especially in the nation's capital.

In the town that launched the War on Poverty 48 years ago, the poor are getting poorer despite the government's help. And the rich are getting richer because of it.

The top 5 percent of households in Washington, D.C., made more than $500,000 on average last year, while the bottom 20 percent earned less than $9,500 - a ratio of 54 to 1.

That gap is up from 39 to 1 two decades ago. It's wider than in any of the 50 states and all but two major cities. This at a time when income inequality in the United States as a whole has risen to levels last seen in the years before the Great Depression.

Americans have just emerged from a close presidential election in which the government's role as a leveling force was fiercely debated. The right argued the state does too much; the left, too little. The issue is now at the center of tense negotiations over whose taxes to raise and what social programs to cut before a Jan. 1 deadline. And the government's role will be paramount again next year if Congress takes up tax reform.
The federal government does redistribute wealth down to struggling Americans. But in the years since President Lyndon Johnson took aim at poverty in his first State of the Union address, there has been an increasingly strong crosscurrent: The government is redistributing wealth up, too - especially in the nation's capital.

The beneficiaries are not the billionaire financiers and celebrities who have come to personify income inequality in the 21st century. Yet the Washington elite are just as much part of the trend, having influenced laws and decisions that alter the entire country's distribution of income.

The federal funnel

 

Two decades of record federal spending and expanding regulation have fostered a growing upper class of federal contractors, lobbyists and lawyers in the District of Columbia area. The federal government funneled $83.5 billion their way in defense and other work in 2010 - an increase of more than 300 percent since 1989, even after adjusting for inflation. Private industry poured more than $3 billion into lobbying to influence the government, nearly double what it spent a decade ago.

Like spokes on a wheel, the high-rise offices of this elite radiate out from Capitol Hill along major arteries deep into suburban Maryland and Virginia. The latest Census figures placed 10 of the capital's surrounding counties in the top 20 nationwide for median household income - up from six in 1990.

There probably isn't much society can do to stop some causes of the spreading class divide, such as technological change. But there's one factor that is changeable - public policy. This series of articles explores how government is exacerbating or alleviating the causes and consequences of inequality, by examining three places where the rich-poor gap has widened....MORE