Why is it that some of America's most liberal cities also have the top economies? Seattle is about to test the limits.
Based on the election results so far, Seattle became even more blue, if that was possible. Yet Washington state became redder, especially if the destructive I-1366 requiring a legislative supermajority for tax increases becomes law.
It illustrates the continuing polarization of America, especially the split between cities and urban-values suburbs (blue) and most other suburbs and rural areas (red).
Seattle’s progressive paradox is that its liberal politics go hand-in-hand, indeed are empowered by, a vibrant economy that outpaces that of most other cities. The same is true in San Francisco, Boston and New York. By contrast, red cities and states outside of Texas, with its oil and heavy federal investment, tend to lag economically.
Why? Cities with a liberal tradition have benefited from investments in education, infrastructure, quality of life and research that help lure capital and grow companies, which perpetuates a cycle of prosperity. They are denser and more tolerant, which helps attract top talent. They are outward-looking. Progressive-leaning stewards with money have helped, too. Importantly, they have positioned themselves at the headwaters of forward-leaning technology and business (thus, Detroit, despite its Democratic politics, failed).
By contrast, red regions that trumpet their “business friendly” policies usually have higher unemployment, weaker venture capital investment, lower incomes, etc. Even red North Carolina depends heavily on the economic heft of the blue city of Charlotte, and Texas’ big booming cities are more liberal than the state as a whole. In Washington, the red regions depend on the tax revenues from commerce in the blue Puget Sound.
This is not to say red Sun Belt states haven’t been able to lure companies and jobs from places such as the Midwest. But there’s no indication that Seattle’s liberal politics have held back its economy or driven out quality companies in any number. Quite the opposite, as a new report showing Seattle and (increasingly urban) Bellevue leading the nation in demand for office space.
Here the talk about going after “the Man” is just theater to satisfy the progressive base. “The Man,” defined by corporate headquarters, development, investment and startups, makes progressive experimentation possible.
For example, the graduated increase to a $15 minimum wage is viable — and sellable — only in a prosperous city with abundant capital and talented, educated people who tend to vote center-left. Tacoma, with a weaker economy, is approving a $12 minimum, phased in over two years, as opposed to $15.
Seattle’s new City Council members might start to believe their press releases a little too much and, so to speak, confuse a bull market with brains. They could enact policies so onerous as to drive capital investment to the Eastside or other cities, or ignore public safety so much that conventions and tourism go elsewhere. Members could forget that downtown is not only a neighborhood, too, but the one that generates the tax revenue for the other neighborhoods.
On the other hand, San Francisco shows how an affluent technopolis can be fairly far to the left and continue to prosper.
Even so, Seattle will be fighting against more right-wing power statewide and nationally. One city can only do so much to address inequality and neoliberal economic policies when most of the country tilts against it.
Today’s Econ Haiku:
Hike the rates next month?
Unwrap this stress test and find