06/29/2008: "Can We Rebuild New York Somewhere Else?"

I came across a January Q&A in the New York Observer from Yale economics professor Robert Shiller who made several comments on the high cost of real estate in the big apple and addressed the question of whether real estate prices can keep going up. I agree that they are not immune from going down, but I don't think New York, in any practical scenario, can be replaced. While I hear quite a few people in New York say the city has gotten boring or corporate and artists can't afford to live here anymore, I always heard that about San Francisco when I lived there. It may be just a case of "it's so crowded, no one goes there anymore."

Shiller said, "If it gets too expensive in New York, people will leave it, no matter what—they can’t afford to live there." Perhaps this is true, but the population of New York continues to grow and is expected to continue to grow for the foreseeable future. Schiller said "It would be a great thing for New York if prices came down, because more interesting people would move in." Also sounds good, but cheap isn't often the reason a city is a big draw. Sure, Haight-Ashbury in the 1960s was cheap and gave birth to a counterculture, but coastal cities in the U.S. haven't been cheap since.

"I just don’t think it’s reasonable to think it’s just going to keep getting more and more expensive." Again, I wonder how expensive it can get, yet New York is far less expensive than other cities like Tokyo and London. What's happening in the U.S. seems to be segregation by income along the coasts. If the well healed keep moving in, sure it can get more expensive for a while longer. What's lost on many is that there are relatively affordable parts of New York too, the train ride is just longer.

The next point Shiller makes, and the one that had me scratching my head the longest is "It’s too expensive in Manhattan, there’s no reason why we can’t have a brand-new one somewhere," Well, you can build smart, dense, livable communities elsewhere, but they will no more be Manhattan that New York, New York in Las Vegas. Manhattan isn't just buildings, its institutions--three or four hundred years of them. Further a new Manhattan couldn't have a fraction of the diversity of people and most importantly people of a variety of income levels, than old Manhattan. Lastly, and Shiller sites New Amsterdam, a new Manhattan would have to be accessible to the old Manhattan, so what can you do? Make a high-speed rail line to Scranton?

You'd be hard-pressed to find a Wall Street suit, let alone an artist ready to pack up and move.

Eric Miller, on 06.29.08 @ 06:51PST