Dumb
- Posted by ryan on July 14th, 2009 filed in Economics
Greg Mankiw links to Luis Zingales, being dumb:
The biggest threat of all to the Big Apple’s financial supremacy, however, comes from Washington. The Founding Fathers wisely decided that the nation’s political capital should be separate from its financial capital (in both senses of the word).
Because whoever heard of a global financial capital colocating with the national political capital?
July 14th, 2009 at 8:39 am
I’m not sure it was the “founding fathers” per se. I’d always been told it was more or less Girard that worked to see that Philadelphia was the research and innovation capital of post-colonial America, while the ugly business of Commerce stayed in NY and politics stayed in DC.
I’m sure there were other players, but that’s sort of how we divided it up.
When we my partner and I moved to DC in 2004, I didn’t prepare him well for what DC was going to be like — he thought, it’s the capital of the U.S., it will be like Tokyo or Paris, mixing fashion and music and politics and movies in one glorious mix.
Um, not really.
Eventually he decided to move to NY. I will be following him in August.
It’s not that they can’t mix. It’s that for whatever reason our governmental cities — besides maybe Boston — are separated from our financial cities. SF is another example in that the California Supreme Court refused to be located in Sacramento. And so it isn’t, the SCOCA is in SF. The lawyers and judges didn’t want to move to a cowtown in the centrally Valley.
And Illinois my home state has increasingly moved more and more government to Chicago — although that kind of depends on who is in the governor’s mansion. Those governors from Chicago invariably have difficulty convincing their families to move to Springfield. And so they stay in Chicago.
July 14th, 2009 at 9:14 am
At the time of the founders the people who had heard of a financial capital colocating with a national political capital were the same people who had never seen a republic the size of the United States thrive.
How is this a dumb idea? You throw it out there as if it were obvious but I would like to see some reasoning. I don’t know if it an important notion, but you are arguing that it is a dumb idea. How is it dumb? Are you saying that not having the two colocated has somehow hurt America?
July 14th, 2009 at 9:20 am
Kinney, you’re arguing that the founders were unfamiliar with England?
July 14th, 2009 at 10:19 am
Or Paris.
July 14th, 2009 at 10:49 am
Jefferson may have hated cities, but locating the capital was more about appeasing the south and keeping it out of any one state than it was about keeping it from any one city.
If Jefferson’s hatred for cities were the primary obstacle, I guarantee the capital would have been in either New York or Philadelphia.
July 14th, 2009 at 12:25 pm
Ryan, the fact that London and Paris existed at the time of the founding doesn’t mean the founders meant to follow the same model or were unwise to try it differently. Didn’t feudal Japan have separate capitals for politics and commerce?
I don’t know that I agree with Zingales here, but the existence of a counter-example doesn’t mean he’s being dumb, does it?
July 14th, 2009 at 12:45 pm
I mean, I don’t think I’d give the founders a ton of credit here. England was already one of the world’s richer countries and was about to kick off the industrial revolution.
But what’s dumb is Zingales determination, with the advantage of two centuries’ of hindsight, that separating the financial and political capitals was a huge deal and very wise, when in fact it doesn’t seem to have mattered in the least bit.
July 14th, 2009 at 12:51 pm
And matters less and less. I’m not even sure it matters that Saudi Arabia’s political center is in Riyadh and its financial center in London.
July 14th, 2009 at 1:09 pm
Ryan, I am arguing that the idea of a Republic the size of the 13 colonies rather than a constitutional monarchy the size of Britain may have influenced the founders thinking. I know DC was just up the road from Mount Vernon, but it had the added benefit of being close to the epicenter of the Republic. A Republic that many observers thought was doomed to failure due to its size and disparate populations.
You use the example of England to deny the founders credit as it was “already one of the world’s richer countries”, yet by the same logic you ignore the counter example of current the United States which would argue that it may have made a huge difference.
Obviously, I don’t think that it is that clear cut and would not use either example as evidence. I think multiple doctoral theses could be written on the topic. But precisely because it is a complicated issue I don’t think that you can just point at the idea and call it dumb without arguing its underlying merits.
July 14th, 2009 at 2:42 pm
Actually, in 1776 the political capital of England and its financial capital were distinct: London and Westminster weren’t far from each other, but they were separate, administratively, ecclesiastically and juridically. And it took some time to travel between them, particularly from London to Westminster, which was upstream.
July 15th, 2009 at 4:10 pm
Uh, jim, there may be evidence of institutional separation between the City of London and Westminster, but they’re a 40-minute walk from each other: http://maps.google.com/maps?f=d&source=s_d&saddr=st.+paul’s+tube+station&daddr=Palace+of+Westminster,+London,+SW1A+0AA,+United+Kingdom+(Houses+of+Parliament)&geocode=%3BFfTTEQMd9hb-_yGov0Zk7hF-sg&hl=en&mra=cc&dirflg=w&sll=51.509025,-0.112415&sspn=0.033762,0.061884&ie=UTF8&z=14