The Wall Street Journal had an article yesterday called the Myth of the Superstar Cities. This op-ed piece, by Joel Kotkin, discusses the concept of American ‘superstar’ cities, such as New York City, Los Angeles, San Francisco, or Boston, and how they are generally considered ‘better’ in ways such as economic growth, trendiness and opportunities. Unfortunately, as Kotkin maintains, these are more images than reality. These cities are growing no faster, and sometimes more slowly, than other large (albeit less flashy) cities such as Phoenix or Houston. The most unusual feature of the ‘superstar’ cities are their stratospheric housing prices, which in the long term will cause a drain in talent and businesses from these superstars.
Here some different ways of looking at this article. The superstar cities are outliers because they have outsize populations in certain specific ‘industries’, such as finance, publishing, art, and so forth. The network effects of having these all in the same place (telecommuting notwithstanding) can yield a ‘rich get richer’ phenomenon where these cities become the hubs for such activities, and make it hard for other cities to catch up. While there is certainly potential for other cities to woo businesses and talent in general, it might be difficult for them to catch up in certain sectors. The superstars might still be superstars in the future for a reason (not just as enclaves for the super-wealthy), despite high housing costs.
On the other hand, while these network effects are strong, they are not insurmountable. And having a large number of other cities capable of competing with the superstars will in turn require them to innovate. Either the elite cities will rise to the challenge and flourish (and probably become more affordable), or other less glamorous cities will come in and take their place. Either option is good for residents.