Troubling signs in wealth centers clustered around D.C.
The national unemployment rate recently dropped below 8 percent for the first time in three years. Most economists see the United States moving through a steady, but anemic, economic recovery. As usual, some parts of the country are doing better than others.
One area of the country that is doing very well and was spared the impact of the national recession is not the area that most people would expect, such as Silicon Valley or Manhattan. The latest census figures reveal that seven of the 10 wealthiest counties are around Washington, D.C.
So, while President Barack Obama famously said earlier this year that “the private sector is doing just fine,” it appears that the part of the economy that is doing fine is the range of businesses involved in contracting to the federal government or trying to influence government officials for corporate gain.
Writing a commentary for the New York Times, titled “Washington versus America,” Ross Douthat noted that suburban Washington is where the real money is these days. Douthat wrote about Washington and the surrounding suburbs, saying, “Cross the bridges into Virginia or shoot north to Maryland, and you’ll find concentrations of wealth greater than in the richest counties around New York and Los Angeles and San Francisco.”
Douthat commented that the federal government itself is not the direct cause of the wealth — government workers, though making a comfortable salary with very good benefits, are not in the high-income brackets. The wealth statistics around Washington are linked to the highly compensated lobbyists, consultants and contractors whose job it is to influence government or to handle some normally public-sector work that has been outsourced to the private sector.
Anyone who has traveled around Washington has noticed the impressive corporate offices with recognizable names from the defense, high-technology and telecommunications industries. These companies understand that by locating close to the federal government — a source of power and money in this country — they will prosper.
The worldview and prosperity that is found in much of the Washington, D.C., area is sometimes described as the “Beltway Bubble.”
The census data revealing that 7 of the 10 wealthiest counties in the United States are in the suburbs of Washington is telling — and troubling. It suggests that the federal government has become the source of wealth rather than innovation, entrepreneurial efforts and manufacturing.
While a well-functioning federal government is important, much of the wealth flowing to lobbyists, private contractors, consultants and lawyers is tied to extracting favors from government such as having tax loopholes added or preserved or applying political pressure to ensure the awarding of a lucrative contract for defense or another government-related function.
Many of the people in the wealthy counties around Washington work in jobs that involve buying or selling influence, and not what is considered productive work.
On the recent surge in Beltway prosperity, Douthat notes, “D.C.’s gains have coincided with the country’s losses.”
It’s not good for America that the people in and around Washington are so insulated from the kinds of economic challenges facing most of America. And as the federal government grows ever larger and more powerful, this trend will continue.
