I am a BIG fan of macroeconomics. Macroeconomics tells the whole story of an economy, without getting caught up in the nuance of in-the-moment events or irrelevant small instances that cloud perception around the truth of human behavior. Trying to sift through today’s opinions and daily rumblings, I find relying on macroeconomics comforting.
Macroeconomic theory, as you know, focuses on the behavior and subsequent performance of society as a whole; macroeconomics doesn’t sweat the small stuff. Rather, it assesses aggregate changes in the economy such as unemployment, inflation, GDP, etc. – the things that really matter.
A great case in point is a macroeconomic factoid I came across regarding high-tech. We read about how high-tech is changing our lives every day in ways we never imagined. We also read how high-tech is transforming cities and towns, large and small. Cities like Austin and Raleigh/Durham are often written about as “new tech hubs for today’s Millennials.” At the same time New York City is being penned as an East Coast hub for the likes of Facebook, Alphabet, and even Amazon. I’m sure you have your own story to add to this list.
Unfortunately, macroeconomics has shown that high-tech only really matters to our economy if you live in one of five U.S. cities: Boston, San Francisco, San Jose, San Diego, or Seattle. No where else. It may be personally relevant to you, or make a good story, but if you live anywhere other than these five cities high-tech is not a game-changer.
Why? Because macroeconomics, as outlined in a recent Wall Street Journal article, cites that according to research conducted by The Brookings Institution and the Information Technology and Innovation Foundation, that 90% of all high-tech job growth over the past decade has occurred solely in these five cites. That’s it! Everything else you read is fluff. The truth of macroeconomics has spoken – an ever-increasing concentration of high-tech resources has occurred in but five U.S. cities. Cities such as Washington D.C., Los Angeles, Chicago, Dallas, and Philadelphia are made irrelevant, i.e., with a net loss of high-tech jobs this past decade. All the other cities, combined, account for only ten percent of high-tech job growth. Divide this ten percent across the nation’s other 377 metro areas and the growth per metro is negligible, at best.
What does this mean? It means these five cities will likely emerge as our centers of excellence as the century progresses. These are the five places where innovation and talent will commingle to change today’s world. New ways of living, working, consuming, and generally behaving will emerge from these five cities. The others will, in varying degrees, ape them and follow along. Some, such as Washington D.C. may catch up due to the new Amazon HQ2 set to soon open, as well as all the spiraling government space/defense-tech resources that spill over the Potomac. New York City is tough to bet against, yet the city seems at odds with itself with chronic congestion. The others?
It’s a sobering statistic and I still have trouble getting my head around it, given all the hype I read about other places. But this goes to show the power of the pen, digital or otherwise, to persuade. Plan accordingly!