New Report: These 2 Cities Have Crippled the US Economy

May 22, 2017

by Maggie Gallagher


A new study by University of Chicago and University of California, Berkeley scholars Chiang-Tai Hsieh and Enrico Moretti suggests an economic villain shocking to the liberal imagination: San Francisco and New York.

Yes, San Francisco, the glittering cosmopolis of the new money, and New York, the towering stronghold of the old money, are together responsible for “lower[ing] aggregate US growth by more than 50% from 1964 to 2009.”

Intense development constraints create a market where the rich bid with super-rich to live in the core cities. Tenants in rent-controlled apartments hang on for dear life. New entrants have nowhere to live. (I myself turned down a job in San Francisco when I looked at what it would cost to live there — and that’s compared to Washington, D.C., which is not cheap.)

But the rich and the rent controlled use their combined political power to block what needs to happen next: permitting more and denser housing in response to the demand.

When that fails to happen, Issi Romem, chief economist at BuildZoom notes, city dwellers are pushing “into a game of musical chairs rigged to favor the rich.”

“As long as these cities continue to do well economically, you’re going see poorer folks replaced by richer folks,” he said. “You’re going to read stories about teachers not being able to find place to live.”


Maggie Gallagher is a senior fellow at the American Principles Project.

Archive: Maggie Gallagher

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