Arnold Kling  

The Internet, New York, Detroit, and House Concerts

Why The Fair Tax is Unworkable... Pathological Individualism?...

Edward L. Glaeser and Giacomo A.M. Ponsetto write,

This paper advances the hypothesis that improvements in transportation and communica-
tion technology can explain both the decline of Detroit and the reinvigoration of Manhattan. While we present some suggestive evidence, the main contribution of this paper is a model that illustrates how reductions in the costs of communication can cause manufacturing cities to decline and innovative cities to grow. Reductions in transport costs reduce the advantages associated with making goods in the Midwest, but they increase the returns to producing new ideas in New York.

Not exactly news to Richard Florida. Although I wonder if the low dollar won't interrupt the decline in manufacturing for a little while.

Speaking of changes wrought by the Internet...This weekend, we went to a "house concert," where a professional artist does a gig in somebody's basement. The artist in this case was Mike Rayburn, who appeals primarily to a demographic of aging baby boomers who are willing to laugh at themselves.

The Internet lowers the cost of arranging this sort of gig. I think it makes it easier for an entertainer who does not hit the big time in the mass market to still make a decent living.

Comments and Sharing

COMMENTS (2 to date)
John Thacker writes:

Further evidence that this is an advantage to cities with industries based on information is offered by this report mentioned by Tyler Cowen, offering more evidence that information is shared most easily and effectively among neighbors, even in a company like Google where IM and e-mail are used more widely than face-to-face discussion. Otherwise, as you know, the promise of technology reducing distance would apply to information technology collaborations as well, reducing the beneficial effect of being in Silicon Valley or where have you.

Ted Craig writes:

About 100 years ago, Detroit was the idea-producing city where the best minds (Henry Ford, the Dodge brothers, Ransom E. Olds) would gather at places like the Ponchatrain Hotel and share ideas about the latest technology of the day (the automobile). I'm not sure changes in technology have driven a new model as much as the types of "technology" (or innovation, in the case of financial products) have changed and the growth locations along with them.

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