The culture that is Washington, D.C.

The article is here, or try this link, and it is scary.  Here is perhaps the worst bit:

Aside from its wealth, the single defining feature of über-Washington is its youth. Most of the people who have moved to Washington since 2006 have been under 35; the region has the highest ­percentage of 25-to-34-year-olds in the U.S. “We’re a mecca for young people,” Fuller says. One recent arrival says word has gotten out to new graduates that Washington is where the work is. “It’s a place where a ­liberal-arts major can still get a job,” she says, “because you don’t need a particular skill.”

Every paragraph in the article is terrifying.

For the pointer I thank Chug.

Comments

Instead of the article, I got a "heavy load" warning and a cute picture of a cat.

http://pastebin.com/EZENnNMw

But I thought catching mice would be "a particular skill.”

So terrifying that Wordpress won't even let us read it.

Tyler: bad link.

To get this article from Time--which BTW I also pointed out to Tyler Cowen by email but I guess somebody else beat me to it--you enter into Google this link: http://www.time.com/time/magazine/article/0,9171,2115062,00.html then you search for the pastebin.com entry since otherwise you must be a subscriber of Time to read it. BTW you are guilty of copyright infringement if you don't read this article and comment in a *scholarly* manner. So let's keep this thread clean! Since Time's IP lawyers are on the prowl looking for somebody to send a cease-and-desist letter to in order to prove their worth to their corporate paymasters!

Tyler,

The paragraph directly above the one you cite as the worst is actually the worst. I'll take a youthful D.C. over one which contractors and contractor-contractors are earning $300 an hour consulting for the federal government.

It makes you wonder if maybe it'd be cheaper for the gov't do to some of that work itself rather than pay an absurd rate to a private contractor, much less a contractor-contractor. Of course, it's harder to launder taxpayer money that way.

I've long thought that "privatization" was just an ideologically appealing word that meant, "let's add a few more layers of bureaucracy, lobbying, and cronyism to the mix so that well-connected people can squeeze some more "profits" from taxpayers." Of course, some of those profits are just redirected back at the politicians via PACs/campaign donations or to friends/family members of the politicians who get hired by the contractors. So, a bit of it is really just politicians getting taxpayers to fund their campaigns and the salaries of their friends and family.

It sounds like those $300/hr contractors are ZMP workers who shouldn't be employed at all, whether by a private contractor or the government.

The reason so much gets contracted out these days is that civil service protection make sit so hard to lay off no longer needed people that it's impractical to fill any need that isn't virtually certain to last forty years with civil servants.

Dick, I would appreciate some links or more evidence as to how civil service protections affect these contracting decisions. Are federal offices fiscally punished for having a high headcount of workers that are no longer needed?

Yet, I've seen how turnover rate is horribly discounted by private enterprise.

The inefficiency of gov't is horribly overstated compared to the inefficiency of completely opaque private businesses. I've worked too long in both the private and public sectors to think that corporations have any monopoly on efficiency or virtue.

And there IS a payoff for civil service protection: it helps attract talent that otherwise would be attracted solely by money. And it helps provide transparency, which is extremely important for a well-functioning gov't, never mind its importance to the economy.

$300/hour is not typical, even for the rate paid to the firm (as opposed to what's paid as employee salary). Taking SAIC (who do well over 90% of their business with the government) as a proxy, they most recently reported 41,000 employees and 10.59B in annual revenues, or $258k / employee / year - i.e. $135/hour at 1920 billing hours / year (i.e. 100% utilization) or $168/hour at 80% of that.

This may still seem high, but it's the result of (long-term) competitive bidding from private sector firms - no one is offering to do the work for the government at substantially lesser rates and comparable effectiveness. It might be cheaper for the government to do some work in-house but outsourcing still seems to be very popular, as it has been since Clinton; it would be interesting to know how the decision between insourcing and outsourcing is made.

What sort of work is this that gets billed at $168 an hour?

jonm

Correct figures, except with the catch that not all employees of the firm will be billable, of course. Of the 41K employees, only 30K odd will be billable, raising the billing rate to ~$230/hour. And this would be post the discount that will be given to a client that gives you 90% of your business, so the rated billing rate would in all likelihood be closer to $300/hour.

For the top end of discretionary high-skilled contracting, I won't be surprised if this $300/hour pushes upto $400/ hour - which is pretty much what the magic circle law firms and MBB-tier consulting firms would charge, if there is no discount. In general, after all adjustments, each contracted employee/consultant would cost the government in the range of $200K - $500K per annum.

Except that MBB do not charge clients hourly rates (in general, not even daily but more: this weekly price for this team composition with that much senior support)

I don't want the government to go with cut rate, $150/hr contractors, because then the government might be even less effective! I agree with Rahul's question: what sort of work is this?

I am quite skeptical that this is a true market rate. There may be a competitive bidding process, but the problem (as usual) is that there is little true incentive to control costs. The agency seeking the bids doesn't face serious consequences if the prices are too high, the work is shoddy, or too many hours are billed.

Yeah, I'm unclear why you wouldn't want a liberal arts major who wants to learn how to do something, over an econ major who already thinks they know how things work. Seems like a positive. I generally try to hire generalist majors over specialized ones as I've found the generalized majors are better thinkers and writers.

There's so much bad writing in this article. Mentioning the metro is uber-subsidized without mentioning that our roads are too? While I can easily believe DC is in a bubble, writing an anti-hipster article like this one is not particularly convincing.

ah the ressentiment of poortowners. remind me why youngstown ohio *needs* to exist, when its industrial capacity is perfectly outsourced to shenzhen?

Why would Shenzhen continue to send us goods if all we can offer in return are government services?

Because our government is a little less corrupt than theirs?

This is a weak little non-sequiter

T-bills. I keep thinking there must be more but I never think of anything.

Yet, the european nations with actual large gov't sectors provide high value services that no one can match.

If you take all the value out of our system, our publicly provided highways, our healthcare, our education system, then you just become 3rd world. Our most prosperous eras were the most socialized. Was it because of the superiority of the gov't, or simply because we took money away from the lazy rich, who send money overseas at greater rates than the working classes? I suspect the latter.

Latin America, Africa and Ireland never achieved stability and prosperity with 'Republican party' type economics. They just watched their money and jobs flee like we are right now.

The Silicon Valley is still around too, designing shiny new things to be made in Shenzhen.

This article just illustrates shows that DC is finally taking its rightful place as the nerve center of this country, as in other modern, progressive countries with capitals such as Beijing, Moscow, Havanna, Athens, and Rome, and unlike such boring, backwater capitals like Berlin, the Hague, Ottawa, or Canberra..

Soak the 1%! Give the government its due! The state is the vanguard of the people!

Or 'nerve center' capitals like London, Stockholm, Oslo, Paris, Vienna, Delhi, Berlin.... (Berlin a 'boring backwater' in Germany?)

Without an actual systematic treatment, I'm not sure this backwater/nerve center distinction has much going for it.

Your sarcasm comes off too strong. A bit more subtlety would do the job.

Agreed, it comes of way too sarcastic. But this is also because of the way this thread developed. It can be fun to pile on and on.

Typos too because no preview, which remains a persistent problem. Please bring back the preview option.

What, you traveled ahead to see how the thread developed and then posted? I'll pay thousands for that time traveling machine. Me needs to do some 1986 revisiting...

It worked in the 50s and 60s in the United States. There's a reason our economy is wheezing despite 10 years of tax cuts and record deficits in service of the rich. The rich send money overseas, the working classes don't. The rich accumulate money and keep it out of the economy, the working classes don't. And you can't have stability if fewer and fewer people have money, it's basic mathematics.

You really need to put a little more thought into this.

You can use the Google cache link for the page if pastebin is under heavy load: http://webcache.googleusercontent.com/search?sugexp=chrome,mod=3&sourceid=chrome&ie=UTF-8&q=cache%3Apastebin.com%2FEZENnNMw

Sounds like a good place to pick up a girl.

Tyler,

DC attracted You and GMU too. Didn't it?

an unassailable victory for the outsourcing of public jobs to the private sector. i'm pretty sure republicans have now fulfilled ayn rand's dream of eliminating the government teat--by turning it into a fleet of tax-financed unmonitored private contractors.

Hear,hear! Is there anything those damn objectivists haven't ruined?

I found one in my damn air filter yesterday. Those bastards are EVERYWHERE!

This article says more about how non-Washingtonians view DC than it does about actual Washingtonians.

With the Fed squeezing the private sector dry with the tightest money since the great depression, the feds are the the only ones who are adequately capitalized (since they can print their own money), and this is what you get.

Somehow after Friedman died, conservatives abandoned monetarism and so zombie-JM-Keynes rose in his place. I never would have predicted it, but I also think conservatives have nobody but themselves to blame.

I've long said that you should move your Supreme Court out of DC - Detroit might be suitable. But maybe you should move the Presidency and Congress too - how about St Louis? Or Buffalo? Or maybe New Orleans - that'd ensure it never floods again.

Geographic separation of powers? Though the checking and balancing part might just lead to more air travel

Private sector has cut on travel significantly (Skype!) and so could .gov if it only ever wanted to save taxpayers' money.

The functions of the federal government were located in Washington during an era when communication was person-to-person, even letters were delivered by hand. For its own reasons, the state refuses to take advantage of electronic communication and insists on gathering in that swampy pesthole on the tidewater. Today there is no reason why our elected representatives need to meet there, and, in fact, most of their communication now is done by phone, fax, email, etc. There's no reason for them to be away from their home districts in DC other than to engage in nefarious activity with contractors and lobbyists.

Just added to my presidential platform!

Slogan: Redistribute D.C.

But that's not how humanity works. We're social animals. That's why Silicon Valley is still SILICON VALLEY even though that industry, chief among others, could do everything with phones and email and the cloud and videoconferencing. Folks still want to be where the 'action is'.

I guess the distinction could be, we actually want more action in SV, but we'd prefer DC being less 'where the action is'.

There are still competitive advantages to concentrating an industry in one place - one of the most suitable to telecommuting and other geographic dispersion, the software industry, still clusters quite heavily, with the center being one geographically compact county in California. Government and rent-extraction from government gain far more efficiency from geographic concentration since so much of the value of the work depends on personal social contact.

Unfortunately, most government expenditure, and most of the energy devoted to directing it, are value-transference activities, not value-creation activities.

Government isn't an industry. The real issue is that elected officials should be both readily accessible to those that voted them into office and subject to the same conditions as those voters. A representative from say, Nebraska, shouldn't be spending 350 days a year in DC.

Incidentally, back in the '70s the voters of Alaska approved moving the capital of the state from inaccessible Juneau to Willow or some similar location. It still hasn't happened. So much for democracy.

A representative from say, Nebraska, shouldn’t be spending 350 days a year in DC.

What representative from any state (except possibly VA and MD) spends 350 days a year in DC?

If you believe Representatives do not want to be at home pressing the flesh and raising money for the next election you are so clueless as to be beyond help.

Senators may be a different story. See, however, Lugar, Dick, and Hatch, Orrin.

DC was a political compromise between cash rich Southern states and cash poor Northern states. In exchange for moving the capital south from New York debt was shared by all.

DC was also geographically central back in the 13 state era. I wonder if it is time to rethink this. Maybe the capital should be someplace in the hinterland like Missouri or Colorado?

Moving the SC is a very interesting idea. There's literally no reason that it needs to be in the same place as the rest of the government; moving it elsewhere would reinforce its independence and insulate it from day to day politics. They could still fly in for the State of the Union.

Several foreign jurisdictions already segregate their SCs from the government, ranging from the civilized (Germany) to the not so civilized (Louisiana.)

Is every paragraph in the article terrifying because it is so lacking in substance and relies so much on shallow stereotypes and strawman hearsay? All of the horrors of DC that this conservative, poor man's Thomas Friedman exposes are trends that are found in other parts of the (urban) country: Uber car service was founded in SF and has now expanded to San Francisco Bay Area, New York City, Los Angeles, Seattle, Chicago, Boston, Washington, D.C., Paris, and Philadelphia. Totally shocking to see DC on that list, no? Retro-Speakeasies: popular for so long in NYC that even Queens has one (see also Fro-yo, cupcakes, and DIY food production). And gentrification? It is very impressive that Mr. Ferguson can write an entire article about DC with once using the words "race" "black", and only using "African American" and "poverty" once (in the same paragraph). And in referring to 14th St. as one of DC's grand boulevards, clearly he missed out on the 40 years when it was a burned out shell of its former and renewed glory.

There is something important to be said about the current economic development in DC and what it means for the region and the nation, but unfortunately, this article isn't it.

This comment is full of win.

Having lived in DC I disagree on all points. It's true these trends are found in other cities but it's not true that for every one dollar DC sends into the IRS it gets back from the Federal Government five dollars. Nor is it true that you'll find 9 out of 15 of the top household median income places in the country in and around Washington DC. You seized on the superficial stuff in the article, designed to give color, and ignored the substantive things. You fall guilty of the case not base type of fallacy--looking to refute antidotes (the case) but ignoring the 'base' or statistically significant sample size baseline. DC is indeed guilty of getting too much money from the rest of the USA. A REASON magazine cartoon years ago summed it up: hysteresis is the problem with the Federal government--as it shows Uncle Sam taking out blood from one arm and putting it into another arm, of the same patient (the taxpayer) lying on their back. The residual which remains in the bottle and tubes of the blood transfusion equipment is what the Dracula called Fed. Govt feeds off of.

Another good stat --besides the facts DC gets back five dollars from the Fed. Govt for every one dollar sent in, and nine of 15 top countries in household median income are in Greater DC --was the stat that showed the increase in Federal government employee expansion since 1960. I've wondered why, unlike State and local governments, the Federal government employee numbers have plateaued since 1960. After reading the TIME article, I now know it's because of ballooning federal private contractors, paid top dollar, who have done the work the bureaucrats should be doing. Disgraceful.

If that's all you got out of the article then you completely missed the point, which is that DC is booming while the rest of the country is experiencing economic hardship (as a DC resident, I can attest that this is true. Condos going up everywhere, rents surging, new restaurants and bars opening). Given that DC has a host-parasite relationship with the rest of the US, that's not a good thing.

And 14th St is in fact quickly emerging as one of the city's grand boulevards, and was just profiled in the NYT a few weeks ago.

Visit San Francisco. Hell, visit Boulder.

San Francisco is *recovering*, but the metro area got hit pretty hard. Most of the new restaurants, bars, etc., are replacing ones which didn't survive the recession.

It isn't parasitic, it's an immune system. At least make an intelligent analogy.

Picture of parasitic elites running the country into the ditch is terrifying enough.

Speaking as a recent Ivy League graduate, I will argue that the perception of D.C. as a place "where liberal arts majors can get a job" is spot on. I'm a little bit repulsed by how many of my peers march to jobs in consulting, lobbying, and policy work on Capitol Hill. Mainly because of my politics, I must admit. But also because I sense that when the rent-seeking gravy train finally ends, we will have a host of people with great feelings of entitlement and little productivity.

People go to where the money is.

I know it's more comforting to your political priors to uncritically believe that the government pays people to sit around and do nothing, but that's not actually the case. I've worked for both a Fortune 500 company and a mid-sized government contractor, and I worked harder for the contractor.

It's not that I believe that the government pays people to sit around and do nothing. My peers are working long and hard hours on Capitol Hill and at various boutique consulting firms and whatnot. I'm more concerned about the value of the work they're doing. In a sense, how distant these "producers" are from their alleged consumers and beneficiaries. I've interacted with many older alumni of my university who are in top positions in D.C. federal agencies, law firms, etc. and they have not been shy about acknowledging this. A great deal of work is done, but for whose benefit?

I'll also argue that firms, both governmental and private, are all likely more dysfunctional than we'd like to think.
http://www.overcomingbias.com/2012/01/why-so-much-consulting.html

"I’ve worked for both a Fortune 500 company and a mid-sized government contractor, and I worked harder for the contractor."

But what was your ROI?

Would you prefer that they went into I-Banking instead?

"I-Banking" in the strict sense (M&A and underwriting) or "I-Banking" in the loose sense (any front-office function at an investment bank) vs. consulting, lobbying, and policy work? Either banking much preferred.

To the extent those workers are doing something useful, yes, I'd probably agree with you. However, given the last 5 years, I think it is pretty safe that there is plenty of rent seeking in the banking sector.

Yes. That would imply that there is sufficient investment happening to warrant the increase in staff.

"...we will have a host of people with great feelings of entitlement and little productivity."

Isn't that a defining characteristic of "liberal arts majors"?

I live in the district (in one of the recently gentrified areas) and am not in the youth demographic (any more) and have been to many of the places mentioned. The article makes one side of the imbalance seem more wealthy and cool than it really is. DC isn't even close to being like NYC. But the poor in DC are really poor and there is a sense that the white people are "taking over the city". Nowhere is this more clear than H st NE. To me there seems to be a palpable tension, but many of the white kids either don't seem to be get it or just don't care.

There probably should be incentives for young bright people to move to the city to work for the government. But the work should be about making the world a better place. May be that isn't the role of government - I genuinely don't know.

There are a lot of places where white people are "taking over", and they all happen to be in places the elites live. We see black people being gentrified out of Harlem, out of huge tracts of Chicago, and of course out of DC. The demographic effect is the opposite essentially everywhere else.

The elites love diversity, but they just don't want it anywhere near where they live, work, or school their kids. The fact that the America's elites (.01%) gained their wealth the parasitic way (via the multinational corporation/government/finance industry axis of evil ) just adds insult to injury.

Just curious - what do you think are the non "parasitic" ways to gain wealth ?

Just guessing for Brian: gun manufacturers and farmers?

Economists in DC are not familiar with the concept of "value creation"?

My choice for the next major asteroid strike. I'm serious.

That's good; my choice is your hometown.

Just choose a larger asteroid?

That way everybody wins

Nuke the site from orbit. It's the only way to be sure.

Thank goodness. I don't live in my hometown.

What, you never saw the movie "Aliens"? Big hit. Sigorney Weaver. Lance Henrikson. Michael Bien.

The ending of the article is a hamfisted attempt to play upon readers' fears of "out-of-control Washington spending." Duh, the government is going to spend more in 2021 than it does today. Even if we all stopped having children (out of fear that they would become entitled young hipsters) this could not be avoided.

Just because spending in 2021 has to be larger than 2012 doesn't mean it has to be $1 billion larger. Besides, I'm not convinced that it has to be larger. Your ideal level of spending in 2021 is probably larger than your ideal level of spending in 2012, regardless of your ideology. But if actual spending in 2012 is larger than ideal spending in 2012, I don't think you can be certain that actual spending in 2012 is not also larger than ideal spending in 2021.

1. I'm thinking under the assumption that Social Security and Medicare will not be cut (seems politically suicidal to even suggest it now). People born between 1947 and 1956 are such a huge cohort that no amount of health care efficiencies is going to reduce the needed increase in spending to zero.

2. My ideological preference is for heavy social spending and light military spending. So to speak of "ideal spending" in the abstract does not address my preferences.

First of all, let's admit that a "cut" in DC parlance means a cut in the rate of spending growth, not in absolute terms. You acknowledge this implicitly in your second sentence. This shows how disconnected you are from the rest of the world. Second, please define "heavy" and "light" in the context of your spending preferences. You might have noticed, had you read it, that the FY 2011 budget allocated approx. $1.560 trillion to Soc Sec and Medicare/caid and $700bn to Defense. I suspect that you are one of the "liberal arts" graduates with no particular skill, which is exactly why Cowen calls that sentence "scary".

mutters something about attractive people flocking to bubbles.

Because god forbid anyone but old white guys get the benefits of rent seeking.

Zachary,

Keep in mind that GMU is a state university, even if it has a lot of private support, :-).

As for all those liberal-arts majors without particular skills, heck, there has to be some place for them to get a job, or the collapse of the student debt bubble will really be horrendous!

I'm aware of the source of funding. That was not my point. My point is that, even without the excessive Fed. Govt. spending, its increasing regulatory and legislative activities attract policy interests. GMU just so happens go specialize in public policy (And it should! Being so near the capital, it would be foolish not to!) NOVA's economy is awash in contractors and lobbyists while the rest of the economy is dependent on serving them! Its economy sucks on the teat, willingly or not, of the bureaucracy.

What would Econ majors do if they can't work for the academia, federal government, or a NGO? :)

Point of info, state school is not synonymous with government school.

I'm genuinely confused why anyone would find this terrifying. Young people are frightening? Drinking gives you the willies? Fine dining? Or disposable income gives you nightmares?

There seems to be a general hatred on MR of liberal arts majors seeking and finding employment while also enjoying their lives.

Hot chicks are going to shut down all his favorite Thai joints.

While ordering fruit cocktails with vodka.

Sure, have you seen how hard the median liberal arts student has worked during college? Have you noticed how difficult these majors are?

The median liberal arts student is likely serving a $67 martini sampler in DC instead of ordering one.

The frightening part is that the hottest opportunity for newly minted grads is working for the government (directly or indirectly) in D.C. Also that D.C. has rapidly become the wealthiest area in the nation. Twenty-five years ago, new grads were flocking to CA to work in high tech (and not just engineers -- liberal arts majors went as well, to work as designers or tech writers, for example). It's scary when a country's big boom is in government work.

And then 5-10 years ago the new grads flocked to Wall Street to pump up that bubble. These things cycle.

I don't necessarily see what is terrifying with the rapid changes in The District. Obviously, what is driving the growth (the federal government) is worrisome, especially because it raises questions of sustainability. However, it is also very likely that as the DC metro area grows it will also diversify and with the additional talent create new and innovative businesses.

What bothers me about this article is its condescending tone toward millennials.

I also felt that the condescension towards the cultural proclivities and spending habits of this new D.C. generation was bothersome. It distracted from what could have been more salient aspects of the relative prosperity of the Capitol.

"Obviously, what is driving the growth (the federal government) is worrisome, especially because it raises questions of sustainability. However, it is also very likely that as the DC metro area grows it will also diversify and with the additional talent create new and innovative businesses." - seems wrong on both counts. Federal government has been expanding since, what, 1945? The only way it will fall now is collapse. Second, DC has diversified: into getting more Federal dollars via contractors. That was the point of the article. Look at the NIH budget: over $30 BILLION a year. That's I think 10%-15% of the annual GDP of Pakistan, Greece or the Philippines--two out of three of these countries have populations of between 100 to 180 million people. And all in one smallish complex in Bethesda. And that's just one agency. This kind of biotech spending attracts rent-seekers from the South Bay area in San Francisco, which does the real work. Same with Goldman Sachs: they have a DC office that caters to their client, the federal government. "New and innovative" indeed.

NIH is the is the foundation of the health research infrastructure in this country and grants go to institutions and investigators all across the U.S. The "smallish complex" in Bethesda only does about 10% of the research the agency funds.

We attract some of the world's best scientists by offering these opportunities. Many of them stay, innovate and start companies. Guess which country has the world's largest pharmaceutical, device and biotech companies?

NIH wastes money by definition, as it has no competition. Contrary to your misunderstanding, it seems about 15% not 10% goes into Bethesda, see: http://www.nih.gov/about/almanac/appropriations/index.htm (first column--this link was hard to find as the NIH hides their budget in their website). That's about $5 billion a year for, as you admit, a 'smallish' complex in Bethesda. As for the science it funds, I know biotech scientists who game the system and live off grants, all the while hoping the economy improves so they can sell out. That's hardly a model for advancement of science: fund private entities so they can get rich with public money off the next dot-biotech boom? And US medical research has exceeded inflation while lagging in any sort of reasonable metric in improving health: cancer survivor rates are about 15% better now than they were in the 1970s, overall. More or less the human body heals itself, if it does not die of some viral disease. More or less if you don't die of coronary heart disease before your time by eating fatty food, then cancer will get you. What the NIH should do IMO is offer prizes--say $1 billion, or $10 B--to the first team to reach a certain medical milestone, then get out of the way. Same for most federal bureaucracies--I'm sure the Agricultural Dept claims they are preventing famine from their subsidy work--what hogwash.

Your link does not provide any information indicating that 15% of its budget is in Bethesda. This NIH front page document explicitly state that its 10%: http://www.nih.gov/about/budget.htm (What a hard to find budget! On the about page of their website!)

I don't think grant-funded research is "gaming the system." I want these researchers to have viable careers producing good science to help people. If they sell out, great! If they are successful that means they are selling something people want. The second part of your paragraph on self healing makes no sense whatsoever, so I'm not sure what to say.

Prizes will not work as no companies will take those odds.

The device you used to type your comment would not exist were it not for Fed spending. The integrated circuit only became cost effective after the space program and other military spending.

Thank god the space race ended the stone age.

@ JMC: Tyler is middle aged now, of course he wants the kids off of his lawn.

I don't see what the problem is with lots of young, educated people moving to DC to get a job. Is it because some inherently dislike the liberal arts and/or young people? Seriously.

When government is the most vibrant sector of your economy, you've got a problem. I'd much rather be reading about these people moving to other cities that actually produce useful things than coming here (I live in DC, right off the construction strip that is 14th St) to suckle at the federal teat.

Because clearly nothing the government provides is a "useful thing," and all who work/live there are solely "suckling on the federal teat." One can argue that the government is too big/powerful (and one can argue against that, too), but hyperbolic statements like those you offered aren't particularly convincing, at least to me.

I agree, and I know more people in DC get their income from the government than in other U.S. cities. This is a problem for the country because its increasing our debt. However, I don't necessarily know if it is a big problem for the workers who rely on government money, assuming they aren't running up lots of debt and will not be able to pay if off if they lose their jobs. Many would probably be able to get other jobs if the government reduces its spending. I'm sure they have wide networks, good analytical skills, and good communication skills. Also, there are other industries, such as private universities and private media. What about the financial industry? I know someone who lives in Dupont and works for a hedgefund. The main office of his hedgefund is NYC, but I think they have a small office in Dupont or he just works from his home. Are there a substantial # of people in the financial industry in DC? I wander if these non-government affiliated industries are growing in DC and about how many new DC people are coming to the city to work in these industries.

What are useful things? Telling people what is "useful" sounds like something that would come from the mouth of a government planner, or someone advocating communism. At the least, it sounds elitist and patronizing, something that Conservatives always throw at Liberals when the latter advocate what people should do to live a healthier life, create a better environment, etc. I guess the people of DC can sell timber. Is that a "useful" or productive thing? I guess the people of DC should grab their axes and start chopping down the trees around the Potomac so that you can sell them to China. This will make Conservatives view the residents of DC as doing something "useful".

What are useful things?

A good test for whether something is useful is whether people will pay money for it. Things that are useful, people purchase. Things that aren't useful, people generally avoid.

But people are paying for the services of those in DC. So, they must be doing something useful. I'm confused. Many Conservatives are paying for these services, since Conservatives are in Congress and in the government more generally. I also have a Conservative uncle in Texas who gives lots of money to Conservative think tanks and lobbyists in DC.

What a silly argument. Next you are going to highlight the hypocrisy of someone like Tyler, sitting in his tenured position, preaching to others about the importance of facing free markets while never again having to do that. I mean he must be valuable because sometime 20 years ago a group of 10 or so people decided he deserved a job for life so thats totally different from all those communist liberal arts skilless losers.

."Is it because some inherently dislike the liberal arts and/or young people?"

Does DC inherently dislike old STEMmers?

"I don’t see what the problem is with lots of young, educated people moving to DC to get a job. Is it because some inherently dislike the liberal arts and/or young people? Seriously."

I think we've clearly got another thing to be terrified about: people who read the article, and read Tyler's post, and their only conclusion is that Tyler must hate young people and liberal arts majors.

I could understand if it were just one or two people, and they were just Krugman-style trolls.

But we've got more than that, and they seem to be sincere.

I repeat: this is truly terrifying.

Demolish the White House.
Permanently.
Replace it with a log cabin.
Find out who still wants to be President.

Meh, it didn't stop Lenin...

Its all a good place for someone with a PhD on physics to get a job. One of the few cities where there are multiple companies that hire physicists.

/shakes fist at young, attractive rent-seeking physicists

New York and Chicago financial firms have massive demand for people with a physics background. San Francisco/Silicon Valley firms hire droves of physicists for machine learnings/data science positions.

The difference is that in DC you get a nice cushy, stress and competition free job. On Wall Street and in the Valley the ethos is ruthless competition.

I should have said hire physicists to solve physics-related problems.

90%+ of the economy doesn't enjoy the luxury of working in a job directly related to what they studied in school. The nature of a dynamic, highly evolving economy is that workers flexibly change jobs and fields as demand for different skills shift.

Physics is too generalized to be comparatively advantageous in most roles that actually deal physics itself. So most of the actual work that uses physics is done by specialized domain experts (i.e. engineers). Throwing a physicist at a problem when a civil engineer will work is overkill. Sure design of a bridge must be informed by the laws of physics, but I'd rather have someone who's been doing bridge specific problems his whole life than someone with a mastery of the first principles of Newtonian mechanics.

Instead physicists hold a comparative advantage in three specific roles. 1) Academic and experimental physics research. 2) Physics applications that are currently are too recent, not understood, and/or complex to have a domain specific engineering field associated with it (e.g. rocketry early in the 20th century or exotic solid state problems like superconductivity or metamaterials).

3) As adept, highly intelligent quantitive problem solvers. A physics background both trains and selects for a fluid intelligence that is strong at solving general problems from first principles. Many jobs and fields cannot be simplified into to the more rote and standardized procedures that an engineer is designed to tackle. Quantitive financial trading certainly falls into this because of the continual arms race between strategies. Participants need to build ever more sophisticated systems to retain and capture a fixed size pie of alpha.

Machine learning/data science also falls under this category because of the nature of the No Free Lunch algorithm. ML means that every specific problem will be highly idiosyncratic and the practitioner must have a deep intuitive understanding of the tools and algorithms he is applying and how they're related to the problem. These types of skills are much more common in physics than base engineering.

"capture alpha"! Yes, front running people's orders based on the location of your sever in relation to the uplink server really captures a lot of valuable alpha and requires immense fluid intelligence. So does writing code that makes it impossible for a CDO to fail. Very very important work.

How exactly, as you say, does a CDO "fail"?

Thanks for the lecture. You don't sound brainwashed at all.

And yet spending whole percentage points of GDP on developing nuclear weapons of mass destruction or pointlessly putting a flag on the moon for no other reason then macho muscle flexing was oh so important?

"Massive demand"? The job market for quants is very bad right now, especially at entry level. There are tons of people with experience looking for jobs.

As for data science, it is booming, but it is considered part of CS + statistics. Not many physicists have all the required skills (R, Java, Python, Hadoop).

Look at the Chicago-based prop shops, who are hiring like mad. There's obviously a slow down in structuring quants from the bulge-bracket banks, but right now there's a boom in trading quants especially in HFT.

The real HFT boom was two years ago. It is getting harder to make money. And the skill set is very specific, they can not employ all the physicists that are willing to do it.

I agree that Chicago is hiring more than New York.

Sometimes, it is hard to tell when Professor Cowen is joking, his sense of humor is unique.

"Scary" and "Terrifying" are not words he usually uses when he's genuinely concerned, but I can't really say.

I recently visited DC, and contrary to what the article says, smoking seemed to me to be a lot more prevalent than my area (sunny SoCal). Getting on the Metro at Union Station during rush hour, my first thought was "I've never seen so many people - male or female - in suits smoking in my life." My second thought was "all of these people look absolutely miserable." I saw nothing to refute either thought in the whole weeklong visit.

Visit China. It's even worse there.

The smoking rate in California is under 12%. Of course smoking is going to appear more prevalent in DC, where the the rate is 15%.

What boom? Here are the facts: unemployment is 5.5% in dc, above what we usually consider nairu. Federal government spending minus military and transfers has fallen as a percentage of gdp over the last 40 years. The reason young folks are in dc is because other places are in a recession, not because dc is booming. And a big reason other places are in recession is because of a massive decline in local and state government spending, including investment.

This, and the fact that the guy who pointed Tyler toward this article has a whole business based on charging people for training and advice on navigating Congress and accessing the DC teat, makes me think Tyler is kidding. Terrifying?

Horrible that all these kids are in DC looking for work. They should go back to West Virginia and Nevada, live at home, get on welfare, do drugs, get involved in crime, and go to jail. At least they wouldn't be on the government's "teat"... oh wait, yes they would, plus they would be creating lots of other negative externalities.

Congratulations on the numero uno strawman argument of the day.

Fuller says, (you don't need a particular skill) in Washington, DC. The lack of skills has been vividly showing itself in our Congress and Senate these last few decades, leaving us on a political merry-go-round.

Anyone who thinks that a person with a BS in American studies is going to get a great job in DC is a fool. DC lives on 20 somethings who are subsidized by their parents and has the most over-educated work force in DC.

One of the jokes in DC is that the guy delivering your pizza (In Arlington, Fairfax, or Montgomery counties) probably has a masters degree in public administration and is trying to get into law school.

There are a remarkable number of fairly high IQ people in the DC area. The quality of conversations I overhear in DC tends to be well above that in yuppie parts of, say, Chicago or L.A.

But what race are these people?

Shouldn't they all be working on Wall Street?

It's hard to deconvolute how much that says about the city versus the observer......

So you three live in Chicago or L.A., eh?

And how are the Canadian IQs?

Steve has discovered conversation - another nail to be pummeled by his big racist hammer.

Steve especially values people with high verbal and mediocre visuospatial intelligence, so it's not surprising that overheard conversations should be the relevant barometer of cognitive ability. Personally, I'll take German or Japanese engineers over New York lawyers or Washington D.C. public policy consultants.

Perhaps we can propose a law to rename the city "ZPM Washington."

VA (primarily NOVA) and MD have always benefited off the heavy federal and DoD presence. There has always been inbreeding or network effects (depending on your perspective) from this. Georgetown has always been known as a feeder school for the Foreign Service, wanna-be politicians via congressional aides/clerkships, lobbyists, etc... No dour and boring Middle aged guys anymore in gray suits? Whole Foods, kid friendly parks - maybe just another "victim" as the hipsters would say to gentrification?

I've heard young and attractive people have been seen in other not overtly cosmopolitan but utilitarian capitals around the world also where there is a heavy government/NGO presence. And I've also heard the rent is high in some of these places too.

The piece is intellectually disingenuous in its framing. Throughout, it uses the term "DC Area", and all the statistics are likewise about the DC Area, of which the District is home to maybe 1/9th of the population. Tyler of all people knows this, since he lives in Fairfax County, the single largest subdivision of the DC Area and the second most affluent in the U.S. In fact, DC has a lower median income than most of the surrounding counties. The region's fastest growth is in Loudoun County, which is likewise more affluent than DC.

So if you're going to write a piece about how "the DC Area" is becoming wealthy by sucking taxpayers dry, you'd think most of the anecdotes would concern these new suburbs and exurbs, which are home to garish McMansions and fancy malls. That's were the richest lawyers, lobbyists, and corporate raiders tend to live. I used to work for a government contractor headquartered in an office park in Fairfax, and literally all of its generously compensated senior staff lived nearby. Anyone who knows DC knows the real money is out that way. Tyler knows it, and so does Andrew Ferguson, who lives in the area.

But instead, Ferguson uses 20- or 30-something hipsters in gentrifying neighborhoods for all of his anecdotes. The problem is that DC's revitalization started in the Clinton years, when federal spending actually decreased. It continued through the big-spending Bush and Obama years, of course, but that's part of a national trend. DC's gentrification is similar in scope and content to New York's, San Francisco's, Chicago's, and countless other older cities. There are a lot of ways to tell this story: the long recovery from the '68 riots, the decline in crime, the maturation of gayborhoods, the cultural shift (see Friends, Sex and the City, etc) to seeing urban centers as attractive, the boredom suburbs tend to instill in young people who grew up in them, etc. But it's not unique to DC, and it would be happening independent of whether the federal government was growing.

What makes DC unusual is that its suburban housing market hasn't crashed, unlike everywhere else. And for that, we can blame (or credit, depending on your politics) federal spending. But something tells me Tyler wouldn't have enjoyed this article as much if Ferguson had been attacking his lifestyle instead of those damn hipsters with their overpriced restaurants and bars.

David Brooks-style armchair sociology strikes again!

Partly, the appeal of these sorts of pieces is that they channel a sort of tribal resentment. Ferguson probably expects most of his readers to be middle class people living in suburbs who are raising families. Therefore, urban "hipsters" can be portrayed as a particularly contemptible, vain and firvolous breed of person, just as surely as articles mocking suburban life with its housing developments and strip malls will get cheers from the readers of New Yorker magazine. But it is also just a question of laziness: since Ferguson lives in D.C. himself, he doesn't actually have to do any work to write this. He can simply relay common tropes that would be familiar to everyone else in his neighborhood and add a bit of literary flair and license just as with David Brooks.

What's inherently illegitimate about tribal resentment? Some cultures are, as a matter of fact, superior to others. Urban hipsters with master's degrees living off their parent's dime are, by the standards of traditional American culture, glorified bums. Those that graduate to living profligately off the taxpayer's dime are glorified crooks.

Go and see great Joseph Hellers book.

I'm shocked, shocked to find that counter-cyclical economic activity is going on in here.

The only thing scary about this article is that it somehow managed to get published in one of most widely read magazines in the country. The general theme is exactly the same as Newt Gingrich's stump speech.

I get it, DC is a young, hip city. Young college educated people live there, and do young college educated people things. But pick any number of cities hosting a similar demographic - think San Francisco, Brooklyn, Austin, or Boston - and you can paint the exact same picture. There's nothing unique about DC in this regard. Hell, every cultural critique he wrote about is 10x worse in New York City, let alone a place like Miami. But this is the third or fourth article that I've read over the past month trying to convince me that my city is an immature, privileged, place filled with horrible people, and I'm tired of it.

I'm tired of people from "real America" criticizing my urban lifestyle. I commute on the Metro every day. Guess what? I'm willing to bet that my transportation infrastructure is far less subsidized than a person in Youngstown, Ohio. Federal transportation policy favors building roads to inefficient, denser-than-optimal destinations like Youngstown, Ohio. And yeah, its bad for the environment too.

I'm also tired of people accepting the, "The DC metro area is nothing but useless government spending" argument as given. We do have plenty of highly talented (young) people doing great, productive work here. One of my 20-something friends from the area works in a lab researching treatments for cancer. Two others are programmers for a tech start up. Another does economic analysis for an insurance company. Another works (for a very, very low salary) for a Senate office. I work for a research and advocacy organization. The federal government forms the base of the region's prosperity, but when you put a critical mass of smart, educated youngish people in an area together, you'll get real industry as well. (And let's not pretend that the federal government doesn't perform necessary and useful functions for the country. That's value-creating just as much as any service industry is;)

It wasn't that long ago that Newt Gingrich was decrying, "Urban elites living in high rises riding to subway to work" as if this was a fundamentally different kind of life choice from some kind of romanticized pastoral setting. I have a ton of respect for you Tyler, and have been reading for years, but I'm very concerned when you fail to recognize a B.S. argument like this. There's some concerning issues in the article - federal contractors for one - but the armchair social psychology here, from someone who clearly came to a conclusion before assembling evidence to prove his conclusion, is particularly bad.

You convinced me. I'm now willing to believe that if the government closed up shop in DC and moved to Topeka property values in Fairfax County would continue to rise.

Please provide a measurement of government productivity. Are you certain that you didn't come to "a conclusion before assembling evidence" to prove it?

Also, it's amusing that you are impressed with a critical mass of "smart, educated younish people" in DC. Plenty of those on Wall St. too, and I can only imagine your opinion of them. The point being that intelligence doesn't equate to wisdom, especially in young people. Also, what kind of advocacy group do you work for? Why didn't you go into manufacturing, or some other good-producing sector which this country so desperately needs more of (according to some of your co-ideologists). Perhaps it's not to late for a career change.

I meant "goods-producing". I suppose you would consider government to be a "good-producing" industry.

When places like Youngstown have public high schools where students can take college-level courses in Quantum Mechanics, Calculus, and Biology intelligent young people will move there. Until then they'll move to places like DC, NYC, and Chicago which do have such schools.

It must be nice to be able to move across country just for a high school course. Seems a little extreme to me, though.

The public schools in DC or PG country do not have classes in qantum mechanics calulus, and biology. Whites in DC pay five figures to send their children to private schools.

Most of those parents studied calculus, quantum mechanics, and biology somewhere else in the U.S. and then moved to the U.S. to get a high paying job. No one moves to DC without a job line up because of the schools except the Chinese Parnents who squat in the suburbs to get their children qualified for for the magnet schools.

Where to begin? Was this article really published in TIME? It makes some interesting points, SOME of which are backed by numbers, but I'm not entirely sure of what the author's argument is here. Perhaps I'm mistaken, but it appears the take-away for TC, along with the majority of those commenting here, is the "scary" bloated government and all that goes with it these days: overpaid contractors, lobbyists, staffers, and the like -- most of which are characterized as low-skilled, liberal arts majors? Really?

I understand the nature of the blog and the political persuasions of its followers, but everyone here seems to have glazed over the most poignant and alarming point in the article, which is the striking inequality throughout the District, what Harris describes as "civic detachment among his fellow young strivers." To me, this is the grimmest part of the situation. Whether or not the "skill-depraved" ambitious liberal arts majors are working for the government or as contractors or have moved to the area to pursue an advanced degree is not the point. The drinking problems and extravagant tastes of the young and successful here are also not really compelling nor unusual. For me, the dissolution of community and the racial and social fragmentation of our society as something that is ubiquitous but very visible in DC in particular is the scary part. Or maybe just depressing. Get past your politics already.

"For me, the dissolution of community and the racial and social fragmentation of our society as something that is ubiquitous but very visible in DC in particular is the scary part."

Sounds like you're just afraid of change.

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