Need more evidence that the federal government is growing far too large? Consider Andrew Ferguson‘s new TIME story, “Bubble on the Potomac.”
Other big cities, of course, have made it through the recession in one piece. But few eased through the crash as lightly as D.C., much less prospered so widely on the rebound. The local unemployment rate, at 5.5%, stands well below the national figure of 8.2%. The region’s foreclosure rates have always been significantly lower than those elsewhere, and now housing prices in D.C. and across the river in the Virginia suburbs of Arlington and Alexandria are close to their precrash peaks. The Association of Foreign Investors in Real Estate–in Washington, everyone has an association–ranks the region as one of the best investments in the world, right after London and New York City. The cost of office space in Washington rivals New York prices, averaging $50 a square foot.
How’s a country to make sense of a national capital whose day-to-day life is so much more upholstered than its own? Increasingly, it cannot. Recently Washington passed San Jose in Silicon Valley to become the richest metropolitan area in the U.S. Since the 1990s, says economist Stephen Fuller of George Mason University, the region has led the nation’s metropolitan areas in overall employment rate. The median household income in the metro area in 2010 was $84,523, according to calculations by Bloomberg News, nearly 70% over the national median household income of $50,046. Nine of the 15 richest counties in the country surround Washington, including Nos. 1, 3, 4 and 5. Per capita income in D.C. is more than twice that in Maine. …
… The riches reflect a regional economy as resilient–and as strange–as any in the world. “We don’t make anything here,” Fuller says simply. Washington is one of the few metropolitan areas in the country that have no significant manufacturing sector, placing it alongside Atlantic City, N.J.; Myrtle Beach, S.C.; Cape Cod, Massachusetts; and Ocean City, N.J. “There isn’t any single major industry,” says Jim Dinegar, president of the Greater Washington Board of Trade. “We’re just very diverse.”
Yet the diversity of the Washington economy is an illusion, for each of its business sectors is to some degree a creature of the region’s single great industry–the federal government. According to a 2007 report by the Tax Foundation, for every dollar in taxes Washington sends to the federal government, it receives five in return.
One wonders how much longer the rest of the country can afford to fill the D.C. hot tub.
