superstar cities

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pages: 356 words: 91,157

The New Urban Crisis: How Our Cities Are Increasing Inequality, Deepening Segregation, and Failing the Middle Class?and What We Can Do About It by Richard Florida

affirmative action, Airbnb, basic income, Bernie Sanders, blue-collar work, business climate, Capital in the Twenty-First Century by Thomas Piketty, clean water, Columbine, congestion charging, creative destruction, David Ricardo: comparative advantage, declining real wages, deindustrialization, Donald Trump, East Village, edge city, Edward Glaeser, failed state, Ferguson, Missouri, Gini coefficient, Google bus, high net worth, income inequality, income per capita, industrial cluster, informal economy, Jane Jacobs, jitney, Kitchen Debate, knowledge economy, knowledge worker, land value tax, low skilled workers, Lyft, megacity, Menlo Park, mortgage tax deduction, Nate Silver, New Economic Geography, new economy, New Urbanism, occupational segregation, Paul Graham, plutocrats, Plutocrats, RAND corporation, rent control, rent-seeking, Richard Florida, rising living standards, Ronald Reagan, secular stagnation, self-driving car, Silicon Valley, sovereign wealth fund, superstar cities, the built environment, The Chicago School, The Death and Life of Great American Cities, the High Line, The Rise and Fall of American Growth, The Wealth of Nations by Adam Smith, Thorstein Veblen, trickle-down economics, Uber and Lyft, uber lyft, universal basic income, upwardly mobile, urban decay, urban planning, urban renewal, urban sprawl, white flight, young professional

These scores should not be read as being cast in stone, but rather as providing an approximation of how each city compares to others and how global superstar cities fall into broad tiers (see Table 2.1). New York and London represent the apex of superstar power (with scores of 48 and 40, respectively). Tokyo, Hong Kong, Paris, Singapore, and Los Angeles occupy the second tier of global urban power (with scores ranging from 13 to 29). The rest—Seoul, Vienna, Stockholm, Toronto, Chicago, Zurich, Sydney, Helsinki, Dublin, and so on—occupy a third tier, functioning as important regional financial and economic centers with key global functions. Boston, Washington, DC, and San Francisco play additional roles as specialized knowledge and tech hubs. Superstar cities, in effect, form a league of their own, often sharing more in common with each other than they do with other cities across their own nations.7 Superstar cities have unique kinds of economies that are based on the most innovative and highest value-added industries, particularly finance, media, entertainment, and technology.8 Everything in these cities happens fast—information travels at lightning speed, innovation occurs at a rapid pace, businesses form and scale up more quickly—and this speed, along with their sheer size, underpins their advantage in productivity.

These cities constitute the tallest peaks of the world economy: these peaks thrive, while the smaller hills stagnate; and the plains and valleys, which are large, suffer. A skeptic might point out here that superstar cities like New York, London, and LA, and knowledge hubs like San Francisco, Washington, DC, and Boston, haven’t experienced the levels of population growth that Sunbelt metros like Phoenix, Dallas, and Atlanta have. But population growth does not capture the dynamic that lies at the heart of superstar power. The superstar advantage is one of quality rather than quantity. Superstar cities are bastions of the most affluent and the most advantaged. Their high and rising costs of living mean that large numbers of people are priced out and ultimately move to less expensive regions like the Sunbelt, spurring the growth of these areas. Others say that the high prices in superstar cities and tech hubs will gradually cause some firms in their key industries to relocate to other, less expensive places, shaping what they refer to as the “rise of the rest.”

Even when such geographically constrained places as New York, San Francisco, LA, and Boston have restrictive land use policies, geography is the key factor in the extraordinary run-up of their housing prices.26 Despite high land and housing prices, the conventional wisdom is that workers tend to be better off in superstar cities and tech hubs, which offer higher wages and salaries. Then there are the additional gains that come from the multiplier effect of the knowledge and high-tech jobs that cluster in superstar cities, where high-tech jobs spur additional jobs in related industries and support services.27 The overall data support this view. Table 2.2 shows the top five large metros (those with over 1 million people) where the average worker has the most left over after paying for housing and the five where the average worker has the least.28 The top five are a who’s who of tech hubs and superstar cities. The average worker in San Jose (the heart of Silicon Valley) has $48,566 left over; in San Francisco, it’s $45,200.


pages: 325 words: 73,035

Who's Your City?: How the Creative Economy Is Making Where to Live the Most Important Decision of Your Life by Richard Florida

active measures, assortative mating, barriers to entry, big-box store, blue-collar work, borderless world, BRICs, business climate, Celebration, Florida, correlation coefficient, creative destruction, dark matter, David Brooks, David Ricardo: comparative advantage, deindustrialization, demographic transition, edge city, Edward Glaeser, epigenetics, extreme commuting, Geoffrey West, Santa Fe Institute, happiness index / gross national happiness, high net worth, income inequality, industrial cluster, invention of the telegraph, Jane Jacobs, job satisfaction, Joseph Schumpeter, knowledge economy, knowledge worker, low skilled workers, megacity, new economy, New Urbanism, Peter Calthorpe, place-making, post-work, Richard Florida, risk tolerance, Robert Gordon, Robert Shiller, Robert Shiller, Seaside, Florida, Silicon Valley, Silicon Valley startup, superstar cities, The Death and Life of Great American Cities, The Wealth of Nations by Adam Smith, Thomas L Friedman, urban planning, World Values Survey, young professional

When the list was narrowed to even more specific factors, access to work came in first, crime and security second, and access to airports third, well ahead of social networks, taxes, educational institutions, and leisure activities.3 Star Struck Using long-term trends in housing prices as their gauge, Wharton real estate expert Joseph Gyourko and his colleagues Todd Sinai and Chris Mayer of Columbia University identified the rise of what they call “superstar cities” (comprising central cities and their suburbs) across North America.4 According to Gyourko and his collaborators, the dramatic real estate appreciation in superstar cities is a long-term trend. In the short run, real estate prices in superstar cities experience significant ups and downs, but over time they will consistently appreciate in value. But some may ask, What about a place like Las Vegas, which has witnessed dramatic population growth—at or near 50 percent—in four of the past five decades? Most people would think that makes Las Vegas a major growth center.

As for Las Vegas, he adds, given its relatively low price appreciation and falling housing prices, most anyone who would like to live there can. The price many people are willing to pay to live in this small set of superstar cities says something powerful about their economic importance. Of course, housing markets fluctuate and bubbles burst, but superstar cities possess a remarkable staying power that dates back at least half a century. They are, Gyourko says, “by their nature exclusionary—and due to the prices they command, residents have to pay a significant financial premium to live there.” They maintain their status by consistently attracting more of the same—increasingly skilled and wealthy households. In Darwinian fashion, richer households move in over time, and lower-income households are forced out. Because demand for space in superstar cities is so great and because there is a limited supply of it, Gyourko and his collaborators argue, all it takes is an increase in national income for these cities to appreciate faster than the rest of the nation.

Cities are not interchangeable, as the blogger Ryan Avent points out.8 Living and working in New York, London, Toronto, or Hong Kong is nothing like living and working in smaller places. Superstar cities have advantages in production and consumption other cities can’t replicate. Moreover, newcomers to these places are likely to increase those advantages, not reduce them. Additionally, Avent reminds us, it makes sense that a superstar city would act as a natural filter for residents who expect to see high returns for their education and skills. After all, individuals who expect to achieve smaller returns for their skill sets will not find it advantageous to locate in New York or London, especially if housing costs are high. They’ll go elsewhere, and the gap between New York and London’s advantages and those in other cities will continue to widen. The clustering force and the superstar city work together to sort people geographically.


pages: 484 words: 131,168

The Big Sort: Why the Clustering of Like-Minded America Is Tearing Us Apart by Bill Bishop, Robert G. Cushing

"Robert Solow", 1960s counterculture, affirmative action, American Legislative Exchange Council, assortative mating, big-box store, blue-collar work, Cass Sunstein, citizen journalism, cognitive dissonance, David Brooks, demographic transition, desegregation, Edward Glaeser, immigration reform, income inequality, industrial cluster, Jane Jacobs, knowledge economy, longitudinal study, mass immigration, meta analysis, meta-analysis, Milgram experiment, music of the spheres, New Urbanism, post-industrial society, post-materialism, Ralph Nader, Richard Florida, Ronald Reagan, Silicon Valley, stem cell, Steve Jobs, superstar cities, The Death and Life of Great American Cities, union organizing, War on Poverty, white flight, World Values Survey

May Be Losing Status as a Majority-Black City," Washington Post, May 17, 2007, p. A1. 52. Glaeser and Gottlieb, "Urban Resurgence and the Consumer City," pp. 13–15. 53. Joseph Gyourko, Christopher Mayer, and Todd Sinai, "Superstar Cities" (National Bureau of Economic Research Working Paper No. 12355, July 2006). 54. Glaeser and Gottlieb, "Urban Resurgence and the Consumer City." 55. Richard Florida, "Cities and the Creative Class," City and Community, March 2003, pp. 3–19. 56. Terry Nichols Clark, The City as Entertainment Machine (Oxford: Elsevier, 2004). 57. Gyourko, Mayer, and Sinai, "Superstar Cities," p. 2. 58. Data collected by the Bus Project in Portland, Oregon, and provided to the author. 7. Religion: The Missionary and the Megachurch 1. Brad Stone, "Social Networking's Next Phase," New York Times, March 3, 2007, p.

"Like a gas, entrepreneurship is hotter when compressed."47 The busting of the tech bubble in the early 2000s slowed the growth in these cities, but only temporarily. By early 2007, demographer William Frey was telling a "tale of two kinds of cities." Those producing patents and technology were expanding again; the older cities that made things—Buffalo, Cleveland, Toledo, Detroit—were reporting continuing declines.48 The Rise of the Superstar Cities People migrate to maximize their economic returns. At least that's been the most common explanation for why people move. They pull up stakes to make or save money. Economic utility seemed to be motivating both employers and workers in the 1970s; then, big-city businesses were paying higher wages to keep and attract workers. But by 1990, there was no wage advantage to living in one of the twenty-six largest metro areas.

In the sought-after cities, however, they shot out of sight. In 1940, for example, the average house in Cincinnati cost more than a home in San Francisco. Over the next sixty years, the price of a Cincinnati house increased from $65,000 to $145,000. The total population of San Francisco had changed little in that time, but the average house price rose by a factor of nine, from $60,162 to nearly $550,000. Gyourko dubbed these places "superstar cities," metro areas where residence had become, in essence, a luxury good.53 People paid for the privilege of being in cities such as San Francisco, Seattle, San Jose, Portland, Los Angeles, New York, Austin, and Raleigh-Durham because they wanted to live there, not because they expected an economic return. The function of cities had changed. Their reason for being—and their residents' reason for living within them—was no longer to produce salable goods and services.


pages: 391 words: 97,018

Better, Stronger, Faster: The Myth of American Decline . . . And the Rise of a New Economy by Daniel Gross

2013 Report for America's Infrastructure - American Society of Civil Engineers - 19 March 2013, Affordable Care Act / Obamacare, Airbnb, American Society of Civil Engineers: Report Card, asset-backed security, Bakken shale, banking crisis, BRICs, British Empire, business cycle, business process, business process outsourcing, call centre, Carmen Reinhart, clean water, collapse of Lehman Brothers, collateralized debt obligation, commoditize, creative destruction, credit crunch, currency manipulation / currency intervention, demand response, Donald Trump, Frederick Winslow Taylor, high net worth, housing crisis, hydraulic fracturing, If something cannot go on forever, it will stop - Herbert Stein's Law, illegal immigration, index fund, intangible asset, intermodal, inventory management, Kenneth Rogoff, labor-force participation, LNG terminal, low skilled workers, Mark Zuckerberg, Martin Wolf, Maui Hawaii, McMansion, money market fund, mortgage debt, Network effects, new economy, obamacare, oil shale / tar sands, oil shock, peak oil, plutocrats, Plutocrats, price stability, quantitative easing, race to the bottom, reserve currency, reshoring, Richard Florida, rising living standards, risk tolerance, risk/return, Silicon Valley, Silicon Valley startup, six sigma, Skype, sovereign wealth fund, Steve Jobs, superstar cities, the High Line, transit-oriented development, Wall-E, Yogi Berra, zero-sum game, Zipcar

The collapsing housing market has turned many Americans into prisoners in their own homes. With mortgages underwater, people in Southern California’s Imperial Valley, where the unemployment rate was 30 percent in July 2011, can’t easily sell their homes and move to North Dakota, where jobs are plentiful. The “superstar cities” thesis, advanced by Christopher Mayer of Columbia University and Joseph Gyourko and Todd Sinai of the University of Pennsylvania, explains why real estate values in certain cities around the world have held up well. Superstar cities have lots of people, big industries, and limited land and zoning regulations that help stop massive development. Crucially, they also have big transportation networks that bind residents together. It’s not uncommon for people who live in New Jersey to work in Westchester, New York, or to commute from Brooklyn to Manhattan.

article_id=35036; for Google’s solar-powered parking structures, see http://pluginbay area.org/fileadmin/materials/zero_emissions/EV_and_PHEV/Solar_Fuel_Station_Brochure.pdf. 8. On Governor Christie’s rejecting tunnel funds, see http://www.cnn.com/2010/US/10/07/new.jersey.tunnel.project/; the Regional Plan Association’s study can be seen at http://www.rpa.org/2010/07/arc-to-raise-home-values-by-18-billion.html. 9. The “superstar cities” paper can be seen at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=921741; Dana Rubinstein, “Rail Stations Drive Demand,” Wall Street Journal, June 13, 2011. Conclusion. The Myth of American Decline 1. Data on home starts are available at the U.S. Census residential construction site, http://www.census.gov/construction/nrc/; data on home sales volume are from www.realtor.org. 2. The Macroeconomic Advisers report can be seen at http://macroadvisers.blogspot.com/2011/05/long-view-on-housing-theres-boom-out.html. 3.

., 124 Stiglitz, Joseph, 6, 9 stimulus, 23, 57, 81 economic decline and, 5–6 infrastructure and, 209–10, 212 timely policy decisions and, 28, 30–32 stocks, stock markets, 1–2, 7–8, 12–13, 15–18, 109, 180, 185 capitalization of, 22, 25, 198–99, 204 declines and collapse of, 18, 56, 81, 171 inports and, 133, 136, 147 Internet and, 15, 21–22, 82 restructuring and, 51–52 timely policy decisions and, 35, 37–38, 42–43 Stoffel, Bob, 77 stress tests, 37 Subaru, 173 Subramanian, Arvind, 8 subways, 212–13 suicides, 8 Summers, Lawrence, 3–4, 10, 26 infrastructure and, 205, 208 Super Cool Biz campaign, 9, 60–61 Super Girl, 20 supersizing, 199–214, 216 ability to scale in, 204, 207–8, 214 Apple and, 199–201 employment and, 199–201, 203–7, 209–11 infrastructure and, 202–14 networks and, 199, 201–4, 206–9, 211–13 superstar cities thesis, 212–13 Swift, Earl, 207 Syria, 227 Taphandles, 177–78 Target, 58, 177 Tata, Ranan, 117 Tata Consultancy Services, 172 taxes, taxpayers, 46, 83, 109, 175, 212 on carbon, 61, 75, 103–4, 217 on corporations, 146–47, 163 cutting of, 10, 30–31, 150, 157, 181, 218, 221–22 economic policy proposals and, 217–18 efficiency economy and, 61, 75 efficient consumers and, 181, 191 employment and, 163, 166 infrastructure and, 205, 208 inports and, 133, 136–37, 146–47 North Dakota and, 150, 152, 157 timely policy decisions and, 30–36, 38–42 Taylor, Frederick Winslow, 61 TD Bank, 92 technology, 3, 7–8, 10, 14–15, 48–49, 96, 104, 108, 121–22, 164, 170, 195, 211 efficiency economy and, 77, 79–80 efficient consumers and, 184, 192 FDI and, 84, 86 North Dakota and, 151, 160 telegraph, 206, 209, 214 Temporary Liquidity Guarantee Program (TLGP), 34 Term Asset-Backed Securities Loan Facility (TALF), 34, 48 Terminator, The, 134 Tesla, 79 Texas, 5, 86, 118, 141–42, 206 Barnett Shale in, 79, 151 Thain, John, 48 This Time Is Different (Rogoff and Reinhart), 5, 17 Three Gorges, Three Gorges Dam, 7, 202 timely policy decisions, 28–44, 60, 80 auto industry and, 33, 40–43 bailouts and, 28, 31–43 banks and, 32–34, 36–40, 43 housing and, 29, 32, 34–35, 42–43, 54–55 restructuring and, 44, 58–59 stimulus and, 28, 30–32 TARP and, 36–38, 40 TMD Friction Group, 88 Tokyo, 8–9, 29, 67, 138, 168 Super Cool Biz campaign in, 9, 60–61 Toledo, Allan, 95 total quality management, 61–62 tourism, 82, 208, 215 exports and, 116, 121–26, 164 inports and, 132, 137–38, 144–45 medical, 125–26, 145 retrofitting Empire State Building and, 69, 71–72 Toyota, 79, 87 Toys“R”Us, 141 trade, 3, 14, 19, 22, 24, 26, 94, 106, 152 deficits in, 102, 107, 168, 221–22 surpluses in, 101, 122 see also exports Transformers, 129 transportation, 72, 101, 105, 167, 169, 224, 226 efficiency economy and, 76, 158, 223 North Dakota and, 152, 158 supersizing and, 205, 208, 210–13 see also autos, automakers Transportation Department, NYC, 192–93 Treasury Department, U.S., 21, 26, 47, 133, 218 TARP and, 37–38, 54 timely policy decisions and, 32–38, 42 Troubled Asset Relief Program (TARP), 47, 54 bailouts and, 36–38, 40–42 Trust Bank, 129 Tsongas, Paul, 14 Tung Chee Hwa, 22 Turkey, 26, 71, 117, 123, 126, 129 inports and, 132, 139 Twitter, 204, 227 U.K.


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The Coming of Neo-Feudalism: A Warning to the Global Middle Class by Joel Kotkin

Admiral Zheng, Andy Kessler, autonomous vehicles, basic income, Bernie Sanders, call centre, Capital in the Twenty-First Century by Thomas Piketty, carbon footprint, Cass Sunstein, clean water, creative destruction, deindustrialization, demographic transition, don't be evil, Donald Trump, edge city, Elon Musk, European colonialism, financial independence, Francis Fukuyama: the end of history, gig economy, Gini coefficient, Google bus, guest worker program, Hans Rosling, housing crisis, income inequality, informal economy, Jane Jacobs, Jaron Lanier, Jeff Bezos, job automation, job satisfaction, Joseph Schumpeter, land reform, liberal capitalism, life extension, low skilled workers, Lyft, Mark Zuckerberg, market fundamentalism, Martin Wolf, mass immigration, megacity, Nate Silver, new economy, New Urbanism, Occupy movement, Parag Khanna, Peter Thiel, plutocrats, Plutocrats, post-industrial society, post-work, postindustrial economy, postnationalism / post nation state, precariat, profit motive, RAND corporation, Ray Kurzweil, rent control, Richard Florida, road to serfdom, Robert Gordon, Sam Altman, Satyajit Das, sharing economy, Silicon Valley, smart cities, Steve Jobs, Stewart Brand, superstar cities, The Death and Life of Great American Cities, The Future of Employment, The Rise and Fall of American Growth, Thomas L Friedman, too big to fail, trade route, Travis Kalanick, Uber and Lyft, uber lyft, universal basic income, unpaid internship, upwardly mobile, We are the 99%, Wolfgang Streeck, women in the workforce, working-age population, Y Combinator

Many other moguls likewise brought their wealth to the city that the Beards called “the most powerful center of accumulation,” and lived gloriously insulated from the poverty around them.16 Globally, today’s billionaires now cluster in a handful of cities led by New York but also including San Francisco, Moscow, Tokyo, Shanghai, Mumbai, Beijing, Singapore, London, and Paris. Fifteen cities together hold roughly 11 percent of the planet’s total wealth.17 These “superstar cities” are becoming more bifurcated, with oligarchs and the upper clerisy living in the gentrified urban core, surrounded by propertyless and often impoverished masses on the periphery.18 The elite urban cores constitute only a small percentage of the metropolitan area both in the United States and in Europe. In France, over 60 percent of the population live in the increasingly neglected periphery—the suburbs, provincial cities and small towns, and rural areas.19 The new urban paradigm is what Michael Bloomberg, the former mayor of New York, famously labeled a “luxury city,” built around the preferences of his ultra-rich compadres.20 But within the dominant cities are clear divisions by class, education, and sometimes race.

Home of the Cockney and postwar socialism, London is no longer a city of aspiration for the working and middle classes; it now exists mainly for investors, their student offspring, and highly educated professionals who are taking over the traditional blue-collar areas like Hackney.32 Today only three of the city’s thirty-two boroughs are affordable for people of median income. While many of the world’s richest people live in London, four of its boroughs rank among the twenty poorest in England, and 27 percent of the city’s population live in poverty.33 London’s polarized economic landscape is typical of “superstar” cities. Other leading cities of Europe—Oslo, Amsterdam, Athens, Budapest, Madrid, Oslo, Prague, Riga, Stockholm, Tallinn, Vienna, Vilnius—also suffer widening gaps between the top and the bottom of the social hierarchy.34 Heavy immigration from developing countries, or from less wealthy parts of Europe, has exacerbated urban polarization. As the indigenous working and middle classes move out to the urban periphery, immigrants and their offspring crowd into the urban centers.

Beard, The Rise of American Civilization (New York: Macmillan, 1930), vol. 2: 385. 17 James Cherowbrier, “Leading billionaire cities in Europe in 2014 and 2016, by billionaire population,” Statista, March 2017, https://www.statista.com/statistics/434709/leading-bilionaire-cities-europe/; WealthX, “The WealthX Billionaire Census 2018,” May 15, 2018, https://www.wealthx.com/report/the-wealth-x-billionaire-census-2018/; Stratfor, “Mapping the World’s Wealthiest Cities,” February 22, 2018, https://worldview.stratfor.com/article/mapping-worlds-wealthiest-cities. 18 Daniel W. Drezner, “ ‘Connectography’ by Parag Khanna,” New York Times, May 1, 2016, https://www.nytimes.com/2016/05/01/books/review/connectography-by-parag-khanna.html?_r=0; Simon Curtis, “What Comes After the End of the Global City?” De Gruyter Conversations, April 17, 2018, https://blog.degruyter.com/what-comes-after-the-end-of-the-global-city/; Joseph Gyourko et al., “Superstar Cities,” National Bureau of Economic Research, July 2006, https://www.nber.org/papers/w12355. 19 Wendell Cox, “Paris, London Lead European Metropolitan Areas: Latest Data,” New Geography, July 10, 2019, http://www.newgeography.com/content/006349-paris-london-lead-european-metropolitan-areas-latest-data; Christophe Guilluy, Twilight of the Elites: Prosperity, the Periphery, and the Future of France, trans.


pages: 302 words: 84,428

Mastering the Market Cycle: Getting the Odds on Your Side by Howard Marks

activist fund / activist shareholder / activist investor, Albert Einstein, business cycle, collateralized debt obligation, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, financial innovation, fixed income, if you build it, they will come, income inequality, Isaac Newton, job automation, Long Term Capital Management, margin call, money market fund, moral hazard, new economy, profit motive, quantitative easing, race to the bottom, Richard Feynman, Richard Thaler, risk tolerance, risk-adjusted returns, risk/return, Robert Shiller, Robert Shiller, secular stagnation, short selling, South Sea Bubble, stocks for the long run, superstar cities, The Chicago School, The Great Moderation, transaction costs, VA Linux, Y2K, yield curve

As part of—or contributing to—the bullish trend, some researchers rendered supportive statements and optimistic projections: According to a New York Times Magazine article from March 5, 2006 titled “This Very, Very Old House,” a vice president of the Federal Reserve Bank of New York had concluded that “the sharp rise in home prices is in line with economic conditions . . . not a skewed vision of reality.” It even quoted him as saying, “We sometimes wonder why home prices haven’t increased much more, given the tremendous increase in the size of mortgage the average family can finance.” The article also mentioned “like-minded experts [from Columbia University and the Wharton School] who focus on what they call ‘superstar cities,’ places so desirable that they not only are not headed for a correction but they also can sustain ‘ever-increasing’ prices compared with less-sought-after cities.” (Of course, willingness to employ terms like “ever-increasing” should serve as an absolute red flag for the alert investor.) But there was a lot to question regarding the reasonableness of these conclusions: the brevity of the data on home prices, the fact that statements made about the trend in the price of the average home sold in a given year don’t necessarily say anything about the price performance of a given home or of all homes standing (e.g., there is no adjustment for physical changes in the average house over time, or in the mix of homes sold that year relative to all homes), and likewise, there is no adjustment for the fact that neighborhoods and whole cities go in and out of favor over time, affecting the value of homes.

Thus the article provided insight not as to whether the price of the average home had risen, but how the price of a particular home had performed. In contrast to the long-term optimists on housing quoted earlier, Yale’s Robert Shiller said of the Fransz house and its neighbors, “Looking at the Herengracht data is very instructive, because you can see 50-year intervals of growth, then it turns around. That’s more realistic than the superstar-cities argument.” The author of the study, Piet Eichholtz, was described as being “skeptical of those who claim that property values can continue to increase ad infinitum.” He considered the economic arguments for it being “different this time” but said, “you can see similarly rosy assessments made over and over, which are then quashed by circumstances.” Amen. Here’s more from the Times article: “There is a myth which says that real-estate values go up significantly over time, . . .”


pages: 363 words: 28,546

Portfolio Design: A Modern Approach to Asset Allocation by R. Marston

asset allocation, Bretton Woods, business cycle, capital asset pricing model, capital controls, carried interest, commodity trading advisor, correlation coefficient, diversification, diversified portfolio, equity premium, Eugene Fama: efficient market hypothesis, family office, financial innovation, fixed income, German hyperinflation, high net worth, hiring and firing, housing crisis, income per capita, index fund, inventory management, Long Term Capital Management, mortgage debt, passive investing, purchasing power parity, risk-adjusted returns, Robert Shiller, Robert Shiller, Ronald Reagan, Sharpe ratio, Silicon Valley, stocks for the long run, superstar cities, survivorship bias, transaction costs, Vanguard fund

P1: a/b c11 P2: c/d QC: e/f JWBT412-Marston T1: g December 20, 2010 17:3 Printer: Courier Westford 225 Real Assets—Real Estate TABLE 11.6 Real House Appreciation in 12 Largest Cities 1978 Q1–2009 Q4 New York Los Angeles Chicago Dallas Philadelphia Houston Miami Washington Atlanta Detroit Boston San Francisco 2000 Q1–2009 Q4 Geometric Average Cumulative Return Geometric Average Cumulative Return 3.1% 2.1% 0.5% −0.2% 1.4% −0.7% 1.1% 1.6% 0.2% −0.4% 3.1% 2.8% 163.5% 93.6% 17.8% −6.8% 56.7% −21.4% 42.4% 68.3% 6.3% −12.7% 163.8% 145.2% 4.5% 4.4% 1.4% 0.6% 3.6% 2.1% 3.2% 4.4% 0.1% −3.5% 3.5% 3.9% 55.8% 54.1% 14.4% 6.3% 41.8% 22.5% 36.6% 53.4% 0.8% −30.2% 40.4% 46.9% Cities are ranked by size of metropolitan statistical areas. Housing data are from the FHFA. CPI data are from the IMF, International Financial Statistics. Why are the rates of house appreciation so varied? An interesting paper by Gyourko, Mayer, and Sinai (2006) entitled Superstar Cities focuses on two key factors. For house prices to rise rapidly, there must be substantial growth of population in the area, and that requires substantial job growth. But that alone is not enough, since a city like Atlanta has surely seen a lot of growth. In addition, a city (or, more accurately, metropolitan area) must impose limits on land use. Los Angeles and San Francisco certainly qualify in this regard.

Geert Rouwenhorst, 2006, “Facts and Fantasies about Commodity Futures,” Financial Analyst Journal (March/April), pp. 47–68. Greenwich Associates, 2009, Greenwich Investment Report. Gyourko, Joseph, and Donald B. Keim, 1993, “Risk and Return in Real Estate: Evidence from a Real Estate Stock Index,” Financial Analyst Journal (September/ October), pp. 39–46. Gyourko, Joseph, Christopher Mayer, and Todd Sinai, 2006, “Superstar Cities,” working paper. Harvard Management Company Endowment Report, 2009, “Message from the CEO”, September. He, Guangliang, and Robert Litterman, 1999, “The Intuition Behind BlackLitterman Model Portfolios,” Goldman Sachs Investment Management Division. Hennessee Group LLC, 2007, “Sources of Hedge Fund Capital,” The 2007 Manager Survey. Himmelgerg, Charles, Christopher Mayer, and Todd Sinai, 2005, “Assessing High House Prices: Bubbles, Fundamentals and Misperceptions,” Journal of Economic Perspectives (Fall), 67–92.


pages: 444 words: 138,781

Evicted: Poverty and Profit in the American City by Matthew Desmond

affirmative action, Cass Sunstein, crack epidemic, Credit Default Swap, deindustrialization, desegregation, dumpster diving, ending welfare as we know it, fixed income, ghettoisation, glass ceiling, Gunnar Myrdal, housing crisis, informal economy, Jane Jacobs, jobless men, Kickstarter, late fees, mass incarceration, New Urbanism, payday loans, price discrimination, profit motive, rent control, statistical model, superstar cities, The Chicago School, The Death and Life of Great American Cities, thinkpad, upwardly mobile, working poor, young professional

Over the last several decades, millions of people around the world have migrated from rural villages and towns. In 1960, roughly one-third of the planet lived in urban areas; today, more than half does. Cities have experienced real income gains that have brought about global poverty reductions. But therein lies the rub, for the growth of cities also has been accompanied by an astonishing surge in land values and housing costs. Urban housing costs have risen around the globe, especially in “superstar cities” whose real-estate markets have experienced an influx of global capital, driving housing prices upward and crowding out low-income residents. In Lagos, Africa’s largest city, an estimated 60 percent of all residents dedicate the majority of their monthly income to rent, even as the majority of the city’s residents live in one-room dwellings. Rents in Delhi’s business district now rival those in midtown Manhattan.

Roughly 330 million urban households worldwide live in substandard or unaffordable housing demanding more than 30 percent of their income. By 2025, based on migration trends and global income projections, that number is expected to climb to 440 million households, representing 1.6 billion people. The world is becoming urbanized, and the city is becoming unaffordable to millions everywhere. See Joseph Gyourko, Christopher Mayer, and Todd Sinai, “Superstar Cities,” American Economic Journal: Economic Policy 5 (2013): 167–99; McKinsey Global Institute, A Blueprint for Addressing the Global Affordable Housing Challenge (New York: McKinsey, 2014); Pedro Olinto and Hiroki Uematsu, The State of the Poor: Where Are the Poor and Where Are They Poorest? (Washington, DC: World Bank, Poverty Reduction and Equity, 2013). 35. Russell Engler, “Pursuing Access to Justice and Civil Right to Counsel in a Time of Economic Crisis,” Roger Williams University Law Review 15 (2010): 472–98; Russell Engler, “Connecting Self-Representation to Civil Gideon,” Fordham Urban Law Review 37 (2010): 36–92. 36.


pages: 223 words: 58,732

The Retreat of Western Liberalism by Edward Luce

"Robert Solow", 3D printing, affirmative action, Airbnb, basic income, Berlin Wall, Bernie Sanders, Boris Johnson, Branko Milanovic, Bretton Woods, business cycle, call centre, carried interest, centre right, Charles Lindbergh, cognitive dissonance, colonial exploitation, colonial rule, computer age, corporate raider, cuban missile crisis, currency manipulation / currency intervention, Dissolution of the Soviet Union, Doha Development Round, Donald Trump, double entry bookkeeping, Erik Brynjolfsson, European colonialism, everywhere but in the productivity statistics, Fall of the Berlin Wall, Francis Fukuyama: the end of history, future of work, George Santayana, gig economy, Gini coefficient, global pandemic, global supply chain, illegal immigration, imperial preference, income inequality, informal economy, Internet of things, Jaron Lanier, knowledge economy, lateral thinking, liberal capitalism, Marc Andreessen, Mark Zuckerberg, Martin Wolf, mass immigration, means of production, Monroe Doctrine, moral panic, more computing power than Apollo, mutually assured destruction, new economy, New Urbanism, Norman Mailer, offshore financial centre, one-China policy, Peace of Westphalia, Peter Thiel, plutocrats, Plutocrats, precariat, purchasing power parity, reserve currency, reshoring, Richard Florida, Robert Gordon, Ronald Reagan, Second Machine Age, self-driving car, sharing economy, Silicon Valley, Skype, Snapchat, software is eating the world, South China Sea, Steve Jobs, superstar cities, telepresence, The Rise and Fall of American Growth, The Wealth of Nations by Adam Smith, Thomas L Friedman, Tyler Cowen: Great Stagnation, universal basic income, unpaid internship, Washington Consensus, We are the 99%, We wanted flying cars, instead we got 140 characters, white flight, World Values Survey, Yogi Berra

Rather than being shaped by those who live there full-time, the characters of our biggest cities are increasingly driven by the global super-rich as a place to park their money. Many of the creative classes are being edged out. Urban downtowns have turned into ‘deadened trophy districts’. New York’s once-bohemian SoHo is now better known for its high-end boutiques than its artists’ studios. SoHo could nowadays be found in any big city in the world. ‘Superstar cities and tech hubs will become so expensive that they will turn into gilded and gated communities,’ Florida predicts.51 ‘Their innovative and creative sparks will eventually fade.’ Karl Marx was wrong: it is the rich who are losing their nation, not the proletariat. The gap between global cities and their national anchors is already a metaphor for our times. By contrast, the rise of the robot economy has only half lodged itself in our expectations.


pages: 353 words: 98,267

The Price of Everything: And the Hidden Logic of Value by Eduardo Porter

Alvin Roth, Asian financial crisis, Ayatollah Khomeini, banking crisis, barriers to entry, Berlin Wall, British Empire, capital controls, Carmen Reinhart, Cass Sunstein, clean water, Credit Default Swap, Deng Xiaoping, Edward Glaeser, European colonialism, Fall of the Berlin Wall, financial deregulation, Ford paid five dollars a day, full employment, George Akerlof, Gordon Gekko, guest worker program, happiness index / gross national happiness, housing crisis, illegal immigration, immigration reform, income inequality, income per capita, informal economy, Intergovernmental Panel on Climate Change (IPCC), invisible hand, Jean Tirole, John Maynard Keynes: technological unemployment, Joshua Gans and Andrew Leigh, Kenneth Rogoff, labor-force participation, laissez-faire capitalism, longitudinal study, loss aversion, low skilled workers, Martin Wolf, means of production, Menlo Park, Mexican peso crisis / tequila crisis, Monkeys Reject Unequal Pay, new economy, New Urbanism, peer-to-peer, pension reform, Peter Singer: altruism, pets.com, placebo effect, price discrimination, price stability, rent-seeking, Richard Thaler, rising living standards, risk tolerance, Robert Shiller, Robert Shiller, Ronald Reagan, Silicon Valley, stem cell, Steve Jobs, Stewart Brand, superstar cities, The Spirit Level, The Wealth of Nations by Adam Smith, Thomas Malthus, Thorstein Veblen, trade route, transatlantic slave trade, ultimatum game, unpaid internship, urban planning, Veblen good, women in the workforce, World Values Survey, Yom Kippur War, young professional, zero-sum game

International comparisons of inequality are found in Organisation for Economic Co-operation and Development, Growing Unequal? Income Distribution and Poverty in OECD Countries (OECD Publishing, October 2008), pp. 77-92. Data on the impact of income inequality on health and segregation are drawn from Richard Wilkinson and Kate Pickett, The Spirit Level: Why More Equal Societies Almost Always Do Better (New York: Bloomsbury Press, 2010); and Joseph Gyourko, Christopher Mayer, and Todd Sinai, “Superstar Cities,” NBER Working Paper, July 2006. 125-127 The Vanishing Middle: The discussion of the impact of education on income growth draws from Claudia Goldin and Lawrence Katz, The Race Between Education and Technology (Cambridge, Mass.: Belknap Press of Harvard University Press, 2008); David Autor and David Dorn, “Inequality and Specialization: The Growth of Low-Skill Service Jobs in the United States,” NBER working paper, November 2008; Congressional Budget Office, “Changes in the Distribution of Workers’ Annual Earnings Between 1979 and 2007,” October 2009; Francine Blau, Marianne Ferber, and Anne Winkler, The Economics of Women, Men and Work, 5th edition (Upper Saddle River, N.J.: Pearson Prentice Hall, 2006); Bureau of Labor Statistics (www.bls.gov/news.release/wkyeng.t05.htm, accessed 08/08/2010); Census Bureau, “Income, Poverty, and Health Insurance Coverage in the United States,” 2008 (www.census.gov/prod/2009pubs/p60-236.pdf, accessed 08/09/2010); Bureau of Labor Statistics, “100 Years of U.S.


pages: 611 words: 130,419

Narrative Economics: How Stories Go Viral and Drive Major Economic Events by Robert J. Shiller

agricultural Revolution, Albert Einstein, algorithmic trading, Andrei Shleifer, autonomous vehicles, bank run, banking crisis, basic income, bitcoin, blockchain, business cycle, butterfly effect, buy and hold, Capital in the Twenty-First Century by Thomas Piketty, Cass Sunstein, central bank independence, collective bargaining, computerized trading, corporate raider, correlation does not imply causation, cryptocurrency, Daniel Kahneman / Amos Tversky, debt deflation, disintermediation, Donald Trump, Edmond Halley, Elon Musk, en.wikipedia.org, Ethereum, ethereum blockchain, full employment, George Akerlof, germ theory of disease, German hyperinflation, Gunnar Myrdal, Gödel, Escher, Bach, Hacker Ethic, implied volatility, income inequality, inflation targeting, invention of radio, invention of the telegraph, Jean Tirole, job automation, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Maynard Keynes: technological unemployment, litecoin, market bubble, money market fund, moral hazard, Northern Rock, nudge unit, Own Your Own Home, Paul Samuelson, Philip Mirowski, plutocrats, Plutocrats, Ponzi scheme, publish or perish, random walk, Richard Thaler, Robert Shiller, Robert Shiller, Ronald Reagan, Rubik’s Cube, Satoshi Nakamoto, secular stagnation, shareholder value, Silicon Valley, speech recognition, Steve Jobs, Steven Pinker, stochastic process, stocks for the long run, superstar cities, The Rise and Fall of American Growth, The Wealth of Nations by Adam Smith, theory of mind, Thorstein Veblen, traveling salesman, trickle-down economics, tulip mania, universal basic income, Watson beat the top human players on Jeopardy!, We are the 99%, yellow journalism, yield curve, Yom Kippur War

Princeton, NJ: Princeton University Press. Grönqvist, Hans. 2011. “Youth Unemployment and Crime: New Lessons Exploring Longitudinal Register Data,” https://www.sole-jole.org/12129.pdf. Grossman, Sanford J., and Robert J. Shiller. 1981. “Determinants of the Variability of Stock Market Prices.” American Economic Review 71(2):221–27. Gyourko, Joseph, Christopher Mayer, and Todd Sinai. 2013. “Superstar Cities.” American Economic Journal: Economic Policy 5(4):167–99. Hacker, Jacob S., and Paul Pierson. 2016. American Amnesia: How the War on Government Led Us to Forget What Made America Prosper. New York: Simon and Schuster. Halbwachs, Maurice. 1925. “Les cadres sociaux de la mémoire.” In Les travaux de l’année Sociologique. Paris: Alcan. Haldrup, Michael, and Jonas Larsen. 2003. “The Family Gaze.”


pages: 596 words: 163,682

The Third Pillar: How Markets and the State Leave the Community Behind by Raghuram Rajan

activist fund / activist shareholder / activist investor, affirmative action, Affordable Care Act / Obamacare, airline deregulation, Albert Einstein, Andrei Shleifer, banking crisis, barriers to entry, basic income, battle of ideas, Bernie Sanders, blockchain, borderless world, Bretton Woods, British Empire, Build a better mousetrap, business cycle, business process, capital controls, Capital in the Twenty-First Century by Thomas Piketty, central bank independence, computer vision, conceptual framework, corporate governance, corporate raider, corporate social responsibility, creative destruction, crony capitalism, crowdsourcing, cryptocurrency, currency manipulation / currency intervention, data acquisition, David Brooks, Deng Xiaoping, desegregation, deskilling, disruptive innovation, Donald Trump, Edward Glaeser, facts on the ground, financial innovation, financial repression, full employment, future of work, global supply chain, high net worth, housing crisis, illegal immigration, income inequality, industrial cluster, intangible asset, invention of the steam engine, invisible hand, Jaron Lanier, job automation, John Maynard Keynes: technological unemployment, joint-stock company, Joseph Schumpeter, labor-force participation, low skilled workers, manufacturing employment, market fundamentalism, Martin Wolf, means of production, moral hazard, Network effects, new economy, Nicholas Carr, obamacare, Productivity paradox, profit maximization, race to the bottom, Richard Thaler, Robert Bork, Robert Gordon, Ronald Reagan, Sam Peltzman, shareholder value, Silicon Valley, Social Responsibility of Business Is to Increase Its Profits, South China Sea, South Sea Bubble, Stanford marshmallow experiment, Steve Jobs, superstar cities, The Future of Employment, The Wealth of Nations by Adam Smith, trade liberalization, trade route, transaction costs, transfer pricing, Travis Kalanick, Tyler Cowen: Great Stagnation, universal basic income, Upton Sinclair, Walter Mischel, War on Poverty, women in the workforce, working-age population, World Values Survey, Yom Kippur War, zero-sum game

This would explain why some regions like Silicon Valley or cities like London, New York, or San Francisco become magnets for the capable and talented, where they meet one another and become yet more successful. My colleague Chang-Tai Hsieh and Enrico Moretti from Berkeley estimate that the dispersion in wages across US cities in 2009 was twice as large as in 1964, in part because of the emergence of superstar cities like New York, San Francisco, and San Jose.10 They argue that simply reducing the stringent zoning regulations in New York, San Jose, and San Francisco to that of the median US city, and thus allowing freer worker movement into those cities with a red-hot job market, would have increased GDP per US worker by an additional $3,685 in 2009. Agglomeration economies in the workplace would suggest economic productivity goes up when the capable flock together.


Southeast Asia on a Shoestring Travel Guide by Lonely Planet

active transport: walking or cycling, airport security, Alfred Russel Wallace, anti-communist, British Empire, call centre, car-free, carbon footprint, clean water, clockwatching, colonial rule, Google Earth, haute cuisine, indoor plumbing, Kickstarter, large denomination, low cost airline, low cost carrier, Mason jar, megacity, period drama, Skype, South China Sea, spice trade, superstar cities, sustainable-tourism, trade route, urban sprawl, white picket fence, women in the workforce

Angkor Wat is the world’s largest religious building; Bayon is the world’s weirdest spiritual monument with its immense four-sided stone faces; and at Ta Prohm nature has run amok. Siem Reap is the base to explore this collection of temples and is a buzzing destination with superb restaurants and bars. Beyond the temples are cultural attractions, such as floating villages and cooking classes. ANDERS BLOMQVIST / LONELY PLANET IMAGES © Bangkok (Thailand) 3 Southeast Asia’s superstar city (Click here) has it all in supersized proportions: food, shopping, fun and then some… It might be a pressure cooker for new arrivals but it will be a needed dose of civilisation after weeks of dusty back roads. Build in plenty of time to load up on souvenirs, refresh your wardrobe, be plucked and kneaded and recount tall tales over a sweaty bottle of beer. Don’t forget a sunset river ferry ride, an evening noodle tour of Chinatown and one final round of temple spotting.