Why Is DC So Wealthy?


Dylan Matthews tests out the competing theories to why 7 of the 10 richest counties in America are in the DC area. District wages are now 36 percent higher than the national average, compared with just 12 percent in 1969. His conclusion:

The growth in inflation-adjusted lobbying spending, as measured by OpenSecrets, tracks the DC wage premium’s rise since the 1990s quite well. … And though lobbying alone is not a huge industry, its growth most likely grew in concert with other influence-peddling activities. The rise of influence-peddling more broadly, more than just lobbying, is likely what’s driving this correlation.

Ryan Avent, meanwhile, points to military contractors, arguing that this type of "clustering" tends to be good for local economies. Matt Steinglass has another theory:

The government isn't spending more money now than it was 40 years ago, as a percentage of the economy, so that doesn't explain why Washington is richer than other American cities. Rather, Washington is getting richer because the intensity of the struggle for influence at the centre of power has a natural tendency to keep spiraling upwards, and influence groups have to spend more on their struggles in the capital just to stand still. 

Douthat's two cents:

I think the best way to at least contain the Beltway influencers’ arms races are the boring, old fashioned, conservative ones: Look for reforms that make existing programs less amenable to political and interest-group intrigue, and if you can’t shrink the state’s footprint at least keep it roughly where it’s been these last few decades, instead of giving the D.C. area’s Littlefingers another 3-5 percent of G.D.P. to work with.