Are We Done With Beltways?
Will centers of power – political, economic, cultural like "Inside The Beltway" D.C. – ever be powerful again?
On Presidents Day this year, the Trump Administration’s disruption of the federal government raises anew the question of whether Washington, D.C., will continue to be the center of power in the United States. Will “Inside The Beltway” ever be the same? Or will the new center of power be “Inside Mar-A-Lago”?
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“Inside The Beltway,” of course, refers to locations inside I-495, which encircles Washington, D.C., through Maryland and Virginia. It’s always been viewed as the center of political power on the country. But with Trump and Elon Musk slimming down the federal government, it’s worth thinking about where political power in the country will lie – if anywhere. No doubt conservative Republicans will again bring up the idea of decentralizing federal government agencies (or what’s left of them) by doing things like moving the Department of the Interior to Denver.
An aerial view of Rosslyn, Virginia, home to innumerable think tanks and advocacy groups, looking back over the Potomac River toward Georgetown.
And given the geographical dispersal of white-collar labor since the pandemic, it’s worth wondering whether any industry’s “Beltway” – their concentrated center – will be as powerful and concentrated as before. The question of whether tech will leave Silicon Valley and head for Austin or Miami has come up again and again since the pandemic. (More on that later.) Los Angeles’s entertainment industry is in crisis. Tesla has assaulted Detroit from both California and Texas. And on and on.
Easy To Love, Easy To Hate
I myself have always had a love-hate relationship with Beltways – at least political ones. I have lived in Washington, D.C., twice – each time for a little more than a year – but much as I love the place, Potomac Fever didn’t stick. I found it too claustrophobic and insular. And I have consistently resisted the possibility of moving to a state capitol, including both Sacramento and Austin. I’ve always said I prefer living “in the real world,” where I can witness the impact of the decisions made by the economic, political, and cultural elite.
Yet living near the center of something is very tempting, even dizzying. Los Angeles is, of course, the center of the entertainment industry and I lived on the Westside of L.A. for six years. Houston is the energy capital of the world and I lived there for almost nine years. In each case I found myself stimulated to be near the center of a major industry, even though I was only on the fringes of it.
And I realized recently that, with the exception of the time I have spent in our nation’s capital, I have lived my entire life in county seats – seven of them in total, all little Beltways in their own way – and I have often lived in close proximity to the county government’s headquarters. (These days, I regularly walk from my home to meetings at the San Diego County Administration Center.) I guess this makes sense given the fact that I am a local government nerd.
Is Beltway Thinking Breaking Down?
But ever since the beginning of the pandemic, there’s been a general sense that the whole idea of industry-driven Beltways is breaking down.
Leaders in many major industries left their Beltway during COVID – sometimes for semi-rural locations nearby, sometimes for distant places. New Yorkers discovered distant locations Upstate. Texans spent months or years in Colorado. Bay Area tech folks went everywhere – all over the Intermountain West, as well as Austin and Miami, which were supposed to be the new centers of the tech industry.
The tech industry is a particularly interesting example. During and after the pandemic, Austin was flooded with affluent Californians moving there. It was supposedly indicative of a tectonic shift in which Silicon Valley would no longer be the leading tech center in the country.
And yet that hasn’t happened. Tech folks are now leaving Austin and moving back to California, while Austin home prices – which had reached stratospheric California levels – are now in decline. The joke in tech circles is that a lot of folks traded moderate weather for no state income tax – but after enduring one or two of Austin’s 105-degree summers, they decided that a state income tax wasn’t so bad after all. (One of my Texifornian investor friends says his rich colleagues simply regard California’s maximum 13.3% income tax as a “resort fee”.)
Sand Hill Road in Palo Alto
Which just reinforces the traditional view of the tech venture capitalists. The line on them was always that they wanted to be able to keep a close eye on the companies they invest in, so all those companies had to have headquarters within 20 minutes of Sand Hill Road in Palo Alto, where all the VCs had their offices. (Remember that scene in The Social Network when Mark Zuckerberg, in his Harvard dorm room, decides to open up Facebook to Stanford students? The reason was simple: “They need to see this in Palo Alto.” Shortly afterward, he moved the company there.)
And apparently that’s still true. Some of the VCs may be Trumpers now, but they’re not leaving Sand Hill Road. California still gets over half of all venture capital, while Texas gets around 5% and Florida 2%.
D.C. Will Always Be The Center Of Politics And Policy
I think the same thing is true about the real Beltway. Trump and Elon Musk may take a sledgehammer to the federal government, but the policy and political infrastructure isn’t going anywhere. The sheer agglomeration of think tanks, advocacy groups, lobbying firms – and major endowments – inside the Beltway is staggering and unlikely to change. (Heritage, Brookings, and AEI each have assets running into the hundreds of millions of dollars.)
When I ran my small consulting firm/think tank Solimar Research Group out of Ventura, California, I used to say I could stand in the middle of Dupont Circle, spit, and hit half my money. This was not a joke – I’d have to spit pretty far, but half of my paying clients were probably within three blocks of that location. And they’re all still there. No matter what happens to the federal government, D.C. will remain the center of public policy and political strategy in this country.
The Beltway — I-495 in Prince George’s County, Maryland
I think the bottom line is that, in spite of the remote work phenomenon and growing distrust of all centers of power, the agglomeration effects are just too great to wipe away the Beltways altogether. There’s just too much money invested in these locations and the talent pool is too great. Plus, don’t forget the Urban Hotel effect: People in an industry love to go that industry’s center of power for meetings and conferences.
For example, the CPAC conference – the leading conservative event in the country – fled D.C. during the pandemic but now it’s back comfortably inside the Beltway, just across the river from Reagan Airport. Because as much as conservatives seem to hate government – and want to “reduce it to the size where it can drown in the bathtub,” as Grover Norquist once said – inside the Beltway appears to be where they think they belong.