America reaches a tipping point as Washington becomes its heart and soul

Summary:  All bow down to our Versailles-on-the-Potomac!

I recommend reading in full this powerful and prophetic essay, “Height of Power: As other American fiefdoms fade, Washington looms larger than ever“, Joel Kotkin, Washington Post, 25 January 2009.  It describes a likely result of the current downturn, a climax to trends that date back to WWI.  This article has been reposted around the Internet, for good reason.  (Hat tip to Instapundit)

Kotkin describes the process of centralization, but not the likely results.  Centralization means rigidity, less adaptability, slow growth, concentration of wealth and income, and probably even lower social mobility — as loss of regional autonomy means fewer opportunities outside the capital.  And vs. other developed nations our social mobility is already low and inequality high (see here and here).

About the author

Kotkin is Presidential Fellow and director of the Urban Futures Program at Chapman University. He is author of seven books including the best-selling The City:A Global History (Modern Library:2006). He speaks and consults to business, government and professional groups throughout the world. He is also affiliated with the Praxis Strategy Group, the New America Foundation and the Center for an Urban Future. He is finishing a new book on the American future. (source; it also provides a listing of his other articles)

Excerpt (section headings were added)

Washington’s history one part of the American mosaic

For more than two centuries, it has been a wannabe among the great world capitals. But now, Washington is finally ready for its close-up.

No longer a jumped-up Canberra or, worse, Sacramento, it seems about to emerge as Pyongyang on the Potomac, the undisputed center of national power and influence. As a new president takes over the White House, the United States’ capacity for centralization has arguably never been greater. But it’s neither Barack Obama’s charm nor his intentions that are driving the centrifocal process that’s concentrating authority in the capital city. It’s the unprecedented collapse of rival centers of power.

This is most obvious in economic affairs, an area in which the nation’s great regions have previously enjoyed significant autonomy. But already the dukes of Wall Street and Detroit have submitted their papers to Washington for vassalage. Soon many other industries, from high-tech to agriculture and energy, will become subject to a Kremlin full of special czars. Even the most haughty boyar may have to genuflect to official orthodoxy on everything from social equity to sanctioned science.

At the same time, the notion of decentralized political power – the linchpin of federalism – is unraveling. Today, once proudly independent – even defiant – states, counties and cities sit on the verge of insolvency. New York and California, two megastates, face record deficits. From California to the Carolinas, local potentates with no power to print their own money will be forced to kiss Washington’s ring.

… To foreigners, this concentration of power might seem the quintessence of normalcy. As the sociologist E. Digby Baltzell wrote in 1964, elites have dominated and shaped the world’s great cosmopolitan centers – from Athens to Rome to Baghdad – throughout history. In modern times, capital cities such as London, Paris, Moscow, Berlin and Tokyo have not only ruled their countries but have also largely defined them. In all these countries (with the exception of Germany, which was divided during the Cold War), publishing, media, the arts and corporate and political power are all concentrated in the same place. Paris is the undisputed global face of France just as London is of Great Britain or Tokyo is of Japan.

… {Washington’s} lowly status stemmed, to some extent, from what the historian James Sterling Young has defined as the “anti-power” ethos of early Americans. The revolutionary generation and its successors loathed the confluence of power and wealth that defined 19th-century London or Paris. A muddy outpost in the woods seemed more appropriate to republican ideals.

Even as other American cities, such as New York and Baltimore, expanded rapidly, Washington grew slowly, at a rate well below the national average. Bold predictions that the city would boast a population of 160,000 by the 1830s fell far short. Instead, it had barely reached 45,000 people, including more than 6,000 slaves. It remained eerily bereft of all the things that make cities vital – thriving commerce, a busy port, decent eateries and distinguished shops. Visiting the city in 1842, Charles Dickens marveled at a city of “spacious avenues that begin in nothing and lead nowhere.”

To some observers, such as Alexis de Tocqueville, Washington’s relative decrepitude reflected one of the glories of the young republic. The fact that the country had “no metropolis” that dominated it from the center struck the young noble, on his visit to America in the early 1830s, as “one of the first causes of the maintenance of Republican institutions.”

Born-again as the center of the American tapestry

… It would take enormous misfortune – the Depression – to provide Washington with its first great growth spurt. As the business empires of New York, Chicago, Detroit and Cleveland buckled and the New Deal took control of the economy, power shifted decisively to the capital. This expansion of influence continued with the onset of World War II and then during the Cold War.

The ensuing rise of the military and domestic bureaucracies transformed Washington from a small provincial city into a major metropolitan area. The greater economic shift from a predominantly manufacturing to a high-tech, information-centered economy also played to Washington’s strengths. In his groundbreaking 1973 book The Coming of Post-Industrial Society, the sociologist Daniel Bell predicted that the country’s prevailing “business civilization” would inevitably become dominated by the government bureaucracy. Corporations would eventually look to Washington’s lead for regulatory standards, to sponsor research and make critical science-related decisions.

In the past half-century, this confluence of technology and bureaucracy has transformed Washington and its surrounding suburbs into the most dynamic large metropolitan economy in the Northeast. Between 1950 and 1996, the region’s population expanded by roughly 150 percent, three or more times faster than other cities along the Boston-Washington corridor.

By the mid-1970s, Washington and its environs had also emerged as the richest region in the country. Since then, it has remained at or near the top of metropolitan areas in terms of both per capita income and level of education. Despite deplorable concentrations of poverty, particularly in the city proper, the region’s average household incomes remain the highest in the country – nearly 50% above the national average. The percentage of adults with a bachelor’s degree or higher, nearly 42%, surpasses even such brainy-seeming places as greater Boston, Seattle and Minneapolis.

The contrast between Washington and most of the United States has gradually become more pronounced. In good times and in bad, lawyers, lobbyists and other government retainers have continued to enrich themselves even as the Midwest industrial-belt cities have cratered and most others struggled to survive. “The vision of generations of liberals,” admitted the New Republic in the mid-1970s, “has created a prosperous and preposterous city whose population is completely isolated from the people they represent and immune from the problems they are supposed to solve.”

In today’s crisis, the Washington area remains somewhat aloof, with the second-lowest unemployment rate among major metropolitan areas of more than 1 million. (Only Oklahoma City, largely insulated from both the financial and housing bubbles, is doing better, although collapsing energy prices could threaten its prosperity.) The rate of job growth, although slower, is still among the highest in the country, and unemployment is below the national average.

Newly crowned as the heart and soul of America

This disparity will grow in the coming years, as rival regions reel from the recession. Many once-powerful places are already losing their independence and allure. Wall Street, formerly the seat of privatized power, has been reduced to supplicant status. The fate of New York Mayor Michael Bloomberg’s “luxury city” will be determined not in deals with London, Dubai or Shanghai but by the U.S. Treasury. Similarly, the vast auto economy of the upper Midwest will take direction from congressional appropriations and whoever is named the new “car czar.”

This loss of power in the provinces will broaden in scope during the coming months. Even proud Texas has lost its unique political influence. Its energy barons will now be forced to do the bidding of the lawmakers and regulators, instead of carrying them in their hip pockets.

… All this is bad news for much of America, but it should mean great business for many residents of greater Washington. Sudden interest in District pied-a-terres among investment bankers, venture capitalists, energy potentates and their hired help could do a lot to restore the battered condominium market. Office buildings in the District and surrounding environs can now expect a new rush of tenants, both from the private sector and the soon-to-be expanding federal bureaucracies.

The transfer of cultural power to Washington will also accelerate. After all, Washington is more than ever where the action is.

… Over time, those of us in the provinces may grow to resent all this, seeing in Washington’s ascendancy something obtrusive, oppressive and contrary to the national ethos. But don’t expect Washingtonians to care much. They’ll be too busy running the country, when not chortling all the way to the bank.


Please share your comments by posting below.  Per the FM site’s Comment Policy, please make them brief (250 words max), civil, and relevant to this post.  Or email me at fabmaximus at hotmail dot com (note the spam-protected spelling).

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To read other articles about these things, see the FM reference page on the right side menu bar.  Of esp interest these days:

Previous situation reports about the economy:

  1. Forecasts – Why wait? Read tomorrow’s news … today! (part I), 11 July 2006
  2. The Future of America – Why wait? Read tomorrow’s news … today! (part 2), 17 July 2008
  3. Forecasts – Why wait? Read tomorrow’s news … today! (part 3), 17 July 2006
  4. Forecasts – Why wait? Read tomorrow’s news … today! (part 4), 17 July 2006
  5. A soft despotism for America?, 22 July 2008
  6. Can Americans pull together? If not, why not?, 29 July 2008
  7. The World’s biggest mess, 22 August 2008
  8. Dr. Gulliver explains why America has become so fearful of the future, 23 October 2008
  9. A sad picture of America, but important for us to understand, 3 November 2008
  10. Quote of the day, by P. J. O’Rouke, 19 December 2008
  11. Does this economic crisis make the State stronger – or is it another step in the decline of the state?, 16 January 2009

45 thoughts on “America reaches a tipping point as Washington becomes its heart and soul”

  1. The elephant in the living room here, touched on above but barely is the overall trajectory. The gap between national polity and political discourse is ever-widening. What we actually have is a good old fashioned Empire, in this case knit together not so much on the ground per se as via international networks of contracts, finances and so forth. In any case, this Empire is bringing the country to its knees even as its people genuflect to the Ruling Elites of that same destructive imperative to save them by ponying up the rest of their (increasingly worthless) National Treasure to bail them out. It’s bizarre.

    There needs to be far more discussion about really what the country is and where it is going. Only in that context can economic and other policies/regulations have any hope of being helpful.

    Good rant on this: “The Big Stimulus — Get rid of the empire“, Justin Raimondo,, 30 Janauary 2009.
    Fabius Maximus replies: It is “touched on above but barely” in this post because it is one of the major themes of this site, discussed in several dozen posts. Only so much can be discussed in one post.

    Just to mention a few on this topic:
    * “Our metastable Empire, built on a foundation of clay“, 3 March 2008
    * “Prof Nouriel Roubini describes ‘The Decline of the American Empire’”, 18 August 2008
    * ““A shattering moment in America’s fall from power”“, 19 November 2008
    * “‘End of Empire’” by David Roche”, 29 November 2008
    * “The transition between Imperial reigns: what will it mean for America?“, 16 December 2008

  2. While Stalin continued to centralize power and murder millions he created his own country’s destruction. After all, when all those peasant farmers died or refused to produce, where did the rest of the population get their food? Oh, I know, from the United States and other donor nations. But now the United States will soon experience the same as producers of all types of things from food, to machinery, to knowledge, begin to fade as the all-powerful state denies them the fruits of that same production. Ah, what a party it will be!

  3. According to Antonio Maria Costa, executive director of the UN Office on Drugs and Crime (UNODC). drug traffickers are doing their bit to prop up the economy:

    If you look at agriculture markets, it is the most important,” Costa replied. “According to our calculations, the wholesale value of illegal drugs is more than $90 billion, in the range of world meat and grain trade. The street trade, we assess at a volume of over $320 billion.”

    While profits from the illicit drug trade fund political violence by the likes of the Taliban or Colombia’s leftist FARC insurgents and rightist paramilitaries, they are also finding their way into the coffers of the world banking system at a critical time, Costa said. The drug business is one of the few global growth industries right now, he noted.

    “The drug trade at this time could be the only growth industry, with little unemployment,” Costa explained. “The money that is being made is flowing only partly back into illegal activities, in parts of Asia, Africa, and South America, where it is used to bribe politicians, buy elections, or finance insurgents, such as the Talibans in Afghanistan, the Tamil Tigers of Sri Lanka, or the FARC in Colombia, for example.”

    The rest of the profit, Costa said, “is fed into the legal economic circulation through money laundering. We do not know how much, but the volume is imposing. As such, seen from the macroeconomic effect, this is simply bringing in investment capital. There are indications that these funds also ended up in the finance sector, which has been under obvious pressure since the second half of last year. In many instances, drug money is currently the only liquid investment capital, to buy real estate, for example,” Costa continued. “In the second half of 2008, liquidity was the banking system’s main problem and hence liquid capital became an important factor.”

    When pressed on just how this was accomplished, Costa responded: “It appears that interbank credits have been financed by money which comes from the drug trade and other illegal activities. It is naturally hard to prove this, but there are indications that a number of banks were rescued by this means.

    Costa noted that money laundering controls put in place to stop drug trafficking have “ironically” resulted in drug traffickers sitting on large stashes of cash — the ultimate liquid financial instrument. “To get around the electronic surveillance of bank transactions, now criminals stash their funds in cash sums which can be up to hundreds of millions of dollars. This is the way they try to hold these funds liquid.”

    Fabius Maximus replies: You see, we can count on the private sector when things look dark!

  4. Long has California served as a bell weather for the nation. In this regard, Sacramento bears an ill omen for D.C. Here, our seat of power is in paralysis, and collapse. A consequence of excessive social spending combined with taking private sector growth for granted. Now the same pattern plays out in Washington, and owning a printing press will not save us/them from the same fate. When the wheels come off, expect intransigence, finger pointing, and ultimately political paralysis just as our Rome starts to burn. That’s what we’re seeing here in the golden state.

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