Nation's Metropolis: The Economy, Politics, and Development of the Washington Region

By Royce Hanson and Harold Wolman

Nation’s Metropolis describes how the national capital region functions as a metropolitan political economy. Its authors distinguish aspects of the Washington region that reflect its characteristics as a national capital from those common to most other metropolitan regions and to other capitals. To do so, they employ an interdisciplinary approach that draws from economics, political science, sociology, geography, and history.

Royce Hanson and Harold Wolman focus on four major themes: the federal government as the region’s basic industry and its role in economic, physical, and political development; race as a core force in the development of the metropolis; the mismatch of the governance and economy of the national capital region; and the conundrum of achieving fully democratic governance for Washington, DC. Critical regional issues and policy problems are analyzed in the context of these themes, including poverty, inequality, education, housing, transportation, water supply, and governance.

The authors conclude that the institutions and practices that accrued over the nineteenth and twentieth centuries are inadequate for dealing effectively with the issues confronting the city and the region in the twenty-first. The accumulation of problems arising from the unique role of the federal government and the persistent problem of racial inequality has been compounded by failure to resolve the conundrum of governance for the District of Columbia. They recommend rethinking the governance of the entire region.

While many books are concerned with the city of Washington, DC, Nation’s Metropolis is the only book focused on the development and political economy of the metropolitan region as a whole. It will engage readers interested in the national capital, metropolitan development more generally, and the growing comparative literature on national capitals.

• Language: English
• Publisher: University of Pennsylvania Press
• Release date: Jan 3, 2023
• ISBN: 9781512822922

Royce Hanson

Royce Hanson is Professor of Practice in Policy Sciences at the University of Maryland, Baltimore County.

Book preview

Cover: Nation’s Metropolis by Royce Hanson and Harold Wolman

THE CITY IN THE TWENTY-FIRST CENTURY

Eugenie L. Birch and Susan M. Wachter, Series Editors

A complete list of books in the series is available from the publisher.

NATION’S METROPOLIS

The Economy, Politics, and Development of the Washington Region

Royce Hanson

and

Harold Wolman

UNIVERSITY OF PENNSYLVANIA PRESS

PHILADELPHIA

Copyright © 2023 University of Pennsylvania Press

All rights reserved. Except for brief quotations used for purposes of review or scholarly citation, none of this book may be reproduced in any form by any means without written permission from the publisher.

Published by

University of Pennsylvania Press

Philadelphia, Pennsylvania 19104-4112

www.upenn.edu/pennpress

Printed in the United States of America on acid-free paper

10 9 8 7 6 5 4 3 2 1

Hardcover ISBN: 978-1-512-82291-5

eBook ISBN: 978-1-512-82292-2

Library of Congress Cataloging-in-Publication Data

Names: Hanson, Royce, author. | Wolman, Harold, author.

Title: Nation’s metropolis : the economy, politics, and development of the Washington region / Royce Hanson and Harold Wolman.

Other titles: City in the twenty-first century book series.

Description: Philadelphia : University of Pennsylvania Press, [2023] | Series: The city in the twenty-first century | Includes bibliographical references and index.

Identifiers: LCCN 2022024370 | ISBN 9781512822915 (hardcover)

Subjects: LCSH: Washington Metropolitan Area—History. | Washington Metropolitan Area—Economic conditions. | Washington Metropolitan Area—Politics and government.

Classification: LCC F201 .H36 2023 | DDC 975.3—dc23/eng/20220609

LC record available at https://lccn.loc.gov/2022024370

CONTENTS

Preface

List of Abbreviations

1. All Capitals Are Peculiar: Washington Is More Peculiar Than Most

2. The National Capital Region’s Basic Industry

3. The Federal Government and the Region’s Development

4. The Geography of Race and Ethnicity in the National Capital Region

5. Race, Ethnicity, and the Region’s Workforce

6. Governing the District of Columbia

7. Governing Suburbia

8. Regional Institutions

9. The Capital’s Dilemma: Economic, Racial, and Ethnic Inequality

10. Managing the Region’s Vital Infrastructure: Transportation and Water Supply

11. The Federal Interest in the National Capital Region

12. Rethinking Governance of the Nation’s Metropolis

13. A Model for the Nation?

Notes

Index

Acknowledgments

PREFACE

This book began at lunch. We had each separately just completed work on books and fell to talking about what to do next as we awaited their publications. As we explored the possibilities, we realized there was a significant gap in the literature about the nation’s capital. Washington, DC, was the subject of fine histories, soon to include Chris Asch and George Musgrove’s Chocolate City. There was also a rich trove of studies on specific policies, problems, and issues by Brookings, the Urban Institute, the Fuller Center at George Mason University, and our own colleagues at the Center for Washington Area Studies at George Washington University.

Remarkably, no major work had dealt in detail with Washington as a metropolis, although it had been included in one comparative study of national capital regions. We decided to remedy that omission. We have both spent much of our careers in the national capital region. Hanson began his academic career as a student of the region and later served as a planning official in the suburbs during two different eras of suburban development. So this book represents an intellectual homecoming. Wolman’s career has involved study of urban policy and politics in the United States and abroad and development of urban policy as a congressional staff member. Both of us have long been engaged in the study of cities, metropolitan areas, and national urban policy. We have both had the advantage of living in, working in, and studying other major metropolitan areas. We previously collaborated in research on urban policy, sprawl, and the civic engagement of business leaders. Our interests were easily merged.

We have observed the development of metropolitan Washington for more than a half-century as scholars, practitioners, and residents. Drawing on that long observation of the region and our experience in urban policy, we agreed on several core elements that formed the approach and framework of his book. First, we felt Washington, the national capital, had long since become a region and that it needed to be understood as a metropolitan political economy. That would emphasize the mismatch of its economy and its governance and might open new avenues for thinking about reforms of the latter. Second, we thought the regional political economy should be seen as a work in progress, its evolutionary path heavily influenced by the weight of earlier decisions and the resilient half-lives of established institutions and ways of thinking. Third, it seemed to us that Washington’s distinction from other metropolitan areas and national capitals was the product of a few defining features of its political economy. The features we identified would provide the thematic framework for the book. Finally, we felt a comparative dimension was needed, not only to note the differences and similarities with other regions and capitals, but to explain its role in the national urban system and to suggest ways in which some of the policy and institutional issues we identified could be resolved.

As policy analysts who have taught three generations of young scholars and practitioners, we are committed not only to advancement of knowledge for its own sake but to its practical application in formulation of public policy. We, therefore, offer this contribution to the public dialogue about the future of the Nation’s Metropolis.

ABBREVIATIONS

CHAPTER 1

All Capitals Are Peculiar: Washington Is More Peculiar Than Most

"Washington" is a place of layered meanings. It is the national capital, where laws and foreign policy are made, presidents are inaugurated, grand patriotic ceremonies are conducted, and demonstrations or marches for great causes take place. Its squares, circles, and parks are populated with monuments to wars won and regretted and statues of the eternally great and deservedly obscure servants of the Republic. The Smithsonian’s museums and other institutions curate and display national treasures, discoveries, and achievements. As home to Congress, the presidency, the Supreme Court, and the federal bureaucracy, it is at the center of the nation’s political life. Much of the news of the day originates in the capital.

Outsiders may refer to Washington derisively as a remote place inside the Beltway to characterize a political culture apart from the nation at large. For locals, it is the District—the 68.34 square miles ceded by Maryland in 1792 to the national government as part of the District (not exceeding ten miles square), which the Constitution provided for as the Seat of the Government of the United States. (In 1847 Congress retroceded the remainder of the square to Virginia.) Metropolitan Washington—the Metropolitan Statistical Area (MSA)—is the commuter shed where most residents in suburban Maryland and Northern Virginia live and work. For economic boosters, Greater Washington is an amorphous megalopolis stretching from Richmond to Baltimore. And for other nations it is the place where they look for leadership in international affairs, locate their most important embassies, come to forge alliances or seek military aid and economic assistance, or see it as a threat to their ambitions.

Washington is all those things. But it also an organic urban region that happens to contain the national capital. As such, it has attracted a population particular to it, and its economy is unlike any other U.S. metropolitan area. Its constitutional and political setting is also unique, thereby establishing a metropolitan political economy that at a minimum is interesting and at a maximum, perplexing.

Washington is thus both like other large cities and their metropolitan regions and different from them because it is the nation’s capital. Major national capitals compose a special class of urban regions. They have a symbolic and strategic significance that other cities do not possess. As Vadim Rossman observes, Capitals represent the ideal image of the country and country’s history, a miniaturized version of the nation, so to speak.¹ By their very nature, capitals also perform unique national governance and international roles.

Given these functions, national capitals have much larger knowledge, information, and public administration sectors than other cities. More of their labor forces are engaged in or dependent on government, information and professional services, and construction, with fewer involved in manufacturing.² Government is an exceptional generator of economic and population growth in both good times and bad. This is largely a function of continuing government expansion, even in the face of economic downturns and reductions in government budgets, which often are only reductions in the rate of growth of expenditures. By and large, Washington shares these characteristics with other national capitals.

But Washington is more than a national capital. It is the nation’s sixth-largest metropolitan area and one of its wealthiest, with rates of economic and population growth that have exceeded most other urban regions in the country.

Goals, Approaches, and Themes

Our goal is to understand how the national capital region works as a metropolitan political economy. This is a departure from studies that focus on Washington, DC, and have little to say about the metropolitan area. Viewing Washington simply as a national capital, or the capital as only the District of Columbia, is limiting. While the Capitol, White House, Supreme Court, and most cabinet headquarters are in the District, as a practical and functional matter the capital of the United States is a metropolitan region encompassing 6,568 square miles and, as of 2020, a population of 6.4 million. If the functionally interconnected Baltimore MSA is included, the Washington-Baltimore Combined Metropolitan Statistical Area encompasses 12,639 square miles and 9.9 million people in 2020.

The headquarters functions of the national government are no longer contained within the District of Columbia and, like the rest of its economic activities, are spread across the region. In September 2020, fewer than half the total federal civilian workforce in the national capital region worked in the District of Columbia.³ Only 15 percent of the region’s federal workers lived in the District. Forty-two percent lived in the Maryland suburbs and 43 percent in Northern Virginia.⁴

The economy is regional, but the metropolitan capital’s political system is fragmented, divided among the federal government, the District of Columbia, and twenty-four counties and independent cities in Maryland, Virginia, and West Virginia in the 2020 MSA. It is uniquely complicated by the statelessness of its central city and by the dual role of the federal government as the basic industry and an integral component of local and regional governance. Adding complexity, this basic structure of the national capital region’s political economy evolved on the racial fault line of the Republic.

As Figure 1.1 shows, the national capital region has grown in the last hundred years, extending beyond the District of Columbia to encompass three tiers of counties, reaching to the Maryland-Pennsylvania border on the north, stretching south in Virginia past Fredericksburg, and expanding west into Jefferson County, West Virginia. As jobs dispersed across the region, it also became one of the most polycentric. In 2020 the suburbs contained 90 percent of the population and about three-fourths of all non-farm jobs.⁵ The nation’s capital has become the Nation’s Metropolis.

Despite these characteristics, the existing literature on the nation’s capital largely ignores its metropolitan characteristics. The best-known general histories of the city are those of Constance McLaughlin Green, Howard Gillette, and Tom Lewis.⁶ Four studies that focus on race are especially valuable: Chris Asch’s and George Musgrove’s Chocolate City, Derek Hyra’s Race, Class, and Politics in the Cappuccino City, Constance McLaughlin Green’s The Secret City: A History of Race Relations in the Nation’s Capital, and E. Franklin Frazier’s Black Bourgeoisie.⁷ The definitive work on the planning and development of the District is Frederick Gutheim and Antoinette Lee’s Worthy of a Nation: Washington, D.C. from L’Enfant to the National Capital Planning Commission.⁸

Figure 1.1. The National Capital Region (Washington, DC, Metropolitan Statistical Area), 2020. Source: US Census. Map by Gordon Thompson.

While there has been growing recognition of the importance of Washington as a region, research has mostly been confined to single jurisdictions and has lacked a common approach that would facilitate a comprehensive regional narrative.⁹ Exceptions with a regional focus include histories of the Potomac River, the mass transit system, regional development issues, and Washington in the context of regional culture and global reach.¹⁰ The only comprehensive study of the metropolitan area was conducted by a joint congressional committee in the late 1950s when the region was less than a third its current size. The committee’s reports addressed regional issues of transportation, water, sewerage, solid waste disposal, planning, governance, economic development, and statistical needs.¹¹

Understanding a major metropolitan area’s political economy requires a regional perspective.¹² Bruce Katz and Jennifer Bradley, for example, note that our nation’s top 100 metropolitan areas sit on only 12 percent of the nation’s land mass but are home to two-thirds of our population and generate 75 percent of our national GDP.¹³ Chris Brenner and Manuel Pastor are particularly concerned with inequality in America’s urban areas and argue that regional fragmentation leads to lower economic growth and, in the absence of concerted effort, makes more equitable regions difficult to achieve.¹⁴

All metropolitan areas share some characteristics, while some are unique to each. Washington has many of the same problems of other major metropolitan areas, but its role as a national capital adds additional dimensions to its problems, as does the system of local and regional governance that its status as the U.S. capital city imposes on it.

In the following chapters we sort those aspects of the Washington region that reflect its characteristics as a national capital from those that are common to most other metropolitan regions in the United States and other capital regions. We employ an interdisciplinary approach, drawing from economics, political science, sociology, geography, and history, among others, to describe and analyze the evolution of its economy, urban form, demographic and racial transformation, and political system. In doing so, we trace the development of the area’s political economy over time in the firm belief that context and history matter and that, while all large metropolitan areas share many common characteristics, each one’s specific history and development provides a degree of path dependence that distinguishes it from others.

We pursue this goal by focusing on the four major themes introduced below: the role of the federal government in the region’s economic, physical, and political development; race as a core force in the growth and development of the metropolis; the mismatch of the governance and economy of the national capital region; and the conundrum of effective and democratic governance for the city of Washington, DC.

Theme 1: The Dominant Role of the Federal Government in the Regional Economy

From the beginning, the federal government has determined and dominated the growth and development of Washington and its region. In this respect it differs from some larger capital cities, such as London, Paris, and Berlin, which have more diverse economies. These capitals accommodate their national governments but rely more than Washington does on other basic industries. If the capitals moved to other cities, the former capitals would continue to prosper, as Berlin did prior to unification when the Federal Republic of Germany’s capital was in Bonn, and as Rio de Janeiro and Melbourne did after Brazil and Australia moved their capitals to Brasilia and Canberra.

The importance of government to the economy of the national capital region can be seen in the contrast between London and Washington. Only 4 percent of London’s workforce is employed in public administration and defense.¹⁵ In metropolitan Washington 10 percent of the workforce in 2019 were federal civilian and military employees; state and local governments employ another 8 percent, making the city’s government sector the largest of the top ten U.S. metropolitan areas, although it ranks sixth in population.¹⁶

Urbanists term city regions with such economies as knowledge or information cities, national information brokers, or transactional cities. The National Research Council’s Committee on National Urban Policy classified Washington and nine state capitals as economic command and control centers specializing in government and education.¹⁷ Whatever nomenclature is applied to describe their functions, Washington and other capitals are places where complex relationships among government, private, and independent sector actors form distinctive economic networks, which in turn produce information and knowledge that are important to the nation and the world.¹⁸

As the region grew, its economy diversified, but its industrial and occupational structure still differs substantially from most other large metropolitan areas. In 2019 federal, state, and local government employees constituted 18 percent of metropolitan-area employees, while manufacturing employment accounted for less than 2 percent of jobs.¹⁹ The averages for all U.S. metropolitan areas combined are 5 percent for government and 10 percent for manufacturing. Moreover, as a result of the federal government and private firms in the area associated with its operations, the Washington region employs a high proportion of knowledge-intensive, high-value managers and professionals. In 2010, 29 percent of the region’s employment was in the high-order service sector compared to an average of 21 percent for all metropolitan areas.²⁰

Theme 2: The Effects of Race and Ethnicity on Inequality

For most of its history, the population of the national capital region consisted of two major racial groups, white and Black. Carved from two slave states, Washington featured racial hierarchy and division from its inception, and for many decades, the racial mores of the capital city were indistinguishable from those of the surrounding countryside. As civil war approached, local attitudes in the capital city and the adjacent Maryland counties were similarly ambivalent—for the Union but not opposed to slavery, while some places favored both secession and slavery. The Civil War and the end of slavery brought a substantial and permanent increase in the Black population, and by 1900 Black people accounted for 31 percent of the city population. The following half-century saw the initial stages of expansion of the region accompanied by mass suburbanization of white residents and high concentration and segregation of Black residents in the city. By 1970, Washington’s population was 71 percent Black.

After the Fair Housing Act of 1968 forced open the suburban housing market, middle-class Black residents began migrating to the suburbs. The proportion of Black residents in the region has stayed almost constant over several decades since the 1950s, ranging from 23 to 26 percent, compared to an average of 10 to 14 percent for all large metropolitan areas.²¹ Black population distribution across the region has changed radically since 1970, however. Prince George’s County now has more Black residents than does Washington and is home to four of every ten Black people living in the region. In the District, Black residents are still the largest racial or ethnic group but now make up less than half the city’s population.

Recently, other ethnic groups—Hispanics and Asians—have established an important presence in the region. In 1970 more than 98 percent of the metropolitan area population was listed in the census as either Black or white.²² Today (in 2020), 11 percent of the population is Asian, and 17 percent is Hispanic. Both Hispanic and Asian residents live predominantly in the suburbs rather than the central city. The 2020 Census counted almost twice as many Hispanic residents (205,463) as non-Hispanic whites (109,060) in Prince George’s County. As a result of the dispersal of Black residents and the immigration of other racial and ethnic groups, the national capital region is one of the most diverse metropolitan areas in the nation. Although the percentage of Black population is above average and its Hispanic population percentage is below the national average, the Nation’s Metropolis looks like America, even though the capital city alone does not.

Theme 3: The Mismatch of the Regional Economy with Its Governance

Governance of the U.S. national capital region is more complex than most national capitals and, indeed, most metropolitan areas in the United States.²³ It includes, in addition to Washington, DC, parts of three states (Maryland, Virginia, and West Virginia) and a variety of local governments within those states.²⁴ These local governments include eighteen counties, the basic units comprising metropolitan areas, as well as six independent cities in Virginia. The Washington MSA as of 2020 represented a massive expansion of the region, which, in 1950 consisted of only the District of Columbia, four counties (Montgomery and Prince George’s in Maryland and Arlington and Fairfax in Virginia), and the city of Alexandria. The area has no regional general government to cope with problems that individual local governments cannot address effectively; instead, there are regional and subregional special districts, each responsible for a specific function. The resulting hodgepodge makes governance of the region extremely difficult.

All metropolitan regions have expanded, and all are beset with governance issues, but none has a basic industry—in this case, the federal government—that is also one of its local governments and is in charge of the central city, at that. Of course, all national capitals face a dilemma in governance: how to protect the national interest and also serve and respond to the needs of its citizens. The problem is particularly acute because unlike other cities, capitals must take account of the national interest and the cost and responsibility it imposes on them. On the other hand, as Enid Slack and Rupak Chattopadhyay observe, Capital cities, like other cities, are places where people live and work, use local services and engage in political activity. Not only do they host the national government and principal national institutions, but they also play a unique cultural and symbolic role in the country. The national capital role and the local role sometimes come into conflict with each other.²⁵

So long as the national capital was contained within the boundaries of the District of Columbia, thinking about governance beyond the city limits was unnecessary. Regionalization compounded the capital’s governance problem, creating some significant complexities and differences from other metropolitan areas when it comes to fashioning an effective regional governance system. First, the central city is not in the same state as any of its suburbs. Second, the region has fewer governments than many other metropolitan areas because of the dominance of county-based local government in both Virginia and Maryland. Three inner-suburban counties have greater populations than the central city. In some respects that fact reverses the normal barrier to regional problem-solving in which suburbs fear domination by the central city. In the national capital region, the obverse can prevail. Third, and uniquely, because it is the national capital, some regional functions are performed by federal agencies, with varying degrees of interaction and cooperation with local governments.

The resulting complexity encumbers planning, financing, and governance of infrastructure systems vital to orderly development of the region and the efficient performance of its economy. There is little disagreement that problems of housing, pollution, race, poverty and income inequality, transportation, water supply, sewage disposal, and infrastructure related to all of these are regional in nature. These issues have been addressed, if at all, through a series of regional institutions with limited implementation powers, a set of single-purpose special districts, and a metropolitan council of governments that provides, in addition to a data-gathering function, a venue for discussion of issues that transcend local and state government boundaries but has no power to act.

Theme 4: The Special Problem of Governance of the District of Columbia

Since 1800, several different local government systems have been devised for the District of Columbia in response to this dilemma, with varying degrees of inadequacy. Conflict between the national interest and the interests of local residents, common in some degree to all national capitals, is perhaps more extreme in Washington, where the U.S. Constitution grants Congress exclusive jurisdiction. For much of the District’s existence residents did not have self-governance and, until the ratification of the Twenty-Third Amendment in 1961, were not even permitted to vote in presidential elections.

The absence of voting representation for the citizens of the District of Columbia in the Congress, which governs them, is a two-centuries-old embarrassment of the nation’s democratic professions. Sorting the federal and local interests to find a way to protect the former and provide self-government and representation for the latter was governance conundrum enough, when dealing only with Washington, DC.

Resolving the issues of democratic self-government for the city and finding a way for its people to be fully represented in Congress as are residents of states are not merely legal and constitutional quandaries. The situation is a political hot potato because it has implications for party strength in the U.S. Senate. Seeing Washington as a metropolis instead of a city, especially a city under the exclusive jurisdiction of Congress, can broaden our perspective of the national capital and may open some new, even novel ways of thinking about the way it functions as part of a national urban system, its role as a physical and institutional symbol of ideals of American democracy, and how we might better reconcile its national and local or regional interests.

Through focusing on these four themes and exploring how Washington is both different from and similar to other large cities and their regions, we hope to contribute to a body of research that is rich and diverse. We also hope to provoke constructive discussion of how to improve the governance of the national capital region and strengthen the congruence between national democratic ideals the capital symbolizes and how they are realized there.

Organization of This Book

Having reintroduced Washington as a metropolitan capital and introduced our four organizing themes, the next two chapters take up the first theme and discuss the dominant role of the federal government as the region’s basic industry. Chapter 2 describes its role in the evolution, diversification, and geography of the regional economy and its adaptation to the information age. Chapter 3 then traces the impact of federal government expansion on the pace, direction, and pattern of growth, contributing to a regional development pattern that shifted from one centered on the urban core in the District of Columbia into a more diffused and increasingly polycentric metropolis.

This analysis is followed by Chapters 4 and 5, which focus on the centrality of race and racial policies in shaping the region’s settlement patterns from the founding of the capital to the present day and how recent suburbanization of Black residents and immigration of Hispanics and Asians have transformed the demography and politics of Washington and its suburbs. That discussion is followed by a consideration of race and ethnicity in the region and particularly the effects of restructuring of the economy and the federal headquarters workforce, along with technological changes, on the region’s nonwhite workers.

Three chapters address the governance conundrum. Chapters 6 and 7 trace the evolution of the political systems of first the District of Columbia and then its suburbs. Our principal focus in these chapters is on the composition and orientation of the governing regimes of each jurisdiction toward local and regional development and their adaptation to changes in demography. With respect to the suburbs, we identify two virtual republics whose competition frames suburban politics. The first of these we term commercial republics. They favor growth and development and a market democracy in which people vote with their feet. We call the second miniature republics, composed largely of homeowners who are skeptical of the benefits of growth and seek its democratic regulation through exercise of the ballot. The balance struck between the values and interests of these competing republics defines the character and determines the stability of suburban political regimes. In Chapter 8, we focus on regionalism and deal with the functions and politics of regional organizations and the development of a system of cooperative regionalism to deal with common and metropolitan problems.

Moving from exposition of the forces that have shaped the national capital region’s development and politics, we devote two chapters to analysis of the capacity of its political economy to meet present and foreseeable challenges of human and physical capital. Chapter 9 examines how the region’s political economy is equipped to deal with such issues of racial and income inequality as poverty, educational equity and human capital development, and the affordability of housing. Chapter 10 examines the political economies of regional transportation systems and emergency water supply to illustrate problems of producing and managing regional infrastructure that is vital to the growth, amenity, functionality, and efficiency of metropolitan Washington as an urban region and as the national capital.

We return in Chapter 11 to a consideration of the brooding, omnipresent federal interest, which makes the national capital region so unique and hovers over any discussion of rationalizing its governance. We argue that it is best defined operationally in terms of what specific components of the federal government do rather than as an overarching constitutional or legal theory or set of clear rules distinguishing it from local interests. That analysis leads us to Chapter 12, in which we rethink the governance of the District of Columbia and the metropolitan region. Drawing on lessons from other national capitals and U.S. metropolitan areas, we offer alternatives that could resolve the governance conundrum and better equip the region to deal with the sort of human and physical capital issues discussed in earlier chapters.

We conclude in Chapter 13 with a summary of our findings and their implications for the future of the nation’s metropolis as a world political capital, a regional center of advanced knowledge-based services, and a symbol of American democracy.

A Note on Terminology

Throughout this book, we use some terms interchangeably when referring to the national capital region or to the city of Washington, DC. When referring broadly to the city and its suburbs, we use terms such as national capital region, the region, metropolitan Washington, metropolitan area, Washington region (or area), or Greater Washington. However, when we use specific terms such as the Washington Metropolitan Statistical Area or Washington MSA, we mean the U.S. Census–defined Washington, DC, Metropolitan Statistical Area to distinguish it from the area defined by membership in the Metropolitan Washington Council of Governments (COG), the Washington Metropolitan Transit Authority (WMATA), or other regional institutions. Unless specified otherwise, metropolitan data reported in this book are for the census-defined Washington–Arlington–Alexandria, DC–VA–MD–WV MSA, which we shorten to Washington MSA. One important thing to remember is that the territory included in the MSA usually expanded with each census. Thus, the 1950 MSA included only the District of Columbia and the first tier of suburbs, but by 2020 the census had added the outer suburbs and a ring of Virginia exurbs to the MSA. When referring to the constitutionally defined capital city, we use several terms: Washington; Washington, DC; the District of Columbia; the District; DC; the city; and the central city. We trust the context of a term’s usage will make its geography apparent and that readers will tolerate the variation in terminology as preferable to deadening repetition of a single term for either the city or the region. Finally, since this is a book about Washington, we have included a glossary of abbreviations, which may help distinguish the NCP, NCPC, NCPPC, and M-NCPPC from each other and other bits of the capital’s alphabet soup.

A Note on Data

To the extent possible we used data for place of residence from the 2020 Census made available for redistricting purposes on September 17, 2021. For data by place of work we used 2018 or 2019 data provided by the Bureau of Economic Analysis in November 2020. We did so because these years represented the normal economy better than did 2020 data, which reflected the impact of the coronavirus pandemic on the economy in that year.

CHAPTER 2

The National Capital Region’s Basic Industry

Over dinner arranged by James Madison at Secretary of State Thomas Jefferson’s residence in Philadelphia in 1790, Jefferson and Alexander Hamilton, the secretary of the treasury, agreed the seat of government would be located on the Potomac River and the federal government would absorb the Revolutionary War debts of the states. Two years later, Maryland ceded roughly two-thirds and Virginia ceded one-third of a ten-mile square of land to the United States and the exclusive jurisdiction of Congress.

The chosen site seemed propitious. It contained Georgetown on the Maryland side at the head of the Potomac estuary and Alexandria some five miles downstream on the Virginia side. Both were busy ports. The Potomac reached farther west than any coastal river, offering access to territory beyond the Allegheny Mountains. In a new nation of optimists and land speculators there was a general assumption that the federal city would become a great center of commerce as well as government.¹ Wealthy Scottish tobacco farmers and merchants were the core of the new capital’s commercial class. They aspired to make the capital a major regional and national commercial center and sponsored construction of canals, roads, and other public infrastructure and buildings.²

Despite the ambition of its boosters, Washington did not become the center of a great commercial empire. That hope was thwarted first by its more remote and inferior harbors and the lack of resources to build the infrastructure to enable it to compete with Baltimore as the market for the west, compounded by the shift in transportation technology to railroads that made the Chesapeake and Ohio (C&O) Canal obsolete as its construction began. The Baltimore and Ohio (B&O) Railroad reached Wheeling, West Virginia, before the C&O reached Cumberland, Maryland. Baltimore business leaders guarded their advantage. A line from Baltimore to Washington opened in 1835, but it was not until 1873 that a branch line connected Washington directly to the west.

Instead of becoming a great center of commerce rivaling Philadelphia, New York, Boston, or Baltimore or a center of industrial production such as Detroit, Pittsburgh, or Cleveland, Washington became a company town. Paradoxically, that company, the federal government, is the basic industry of the capital of a nation resolutely devoted to private enterprise. This chapter discusses the consequences for the capital’s political economy of the federal government serving as its largest employer. We also examine how the federal government’s role as basic industry affects the nature of the services and other sectors of the region’s private economy and the independent sector. We begin, though, with a discussion of the peculiar and advantageous economics of growth and development of national capital regions.

The Economies of National Capitals

As standard economic theory suggests, national capitals and their regions are likely to have robust economies.³ In addition to faster growth than most regions, a national capital’s residents should have higher incomes, and its gross metropolitan product should be greater than other urban regions of similar size. That is because government, functioning as basic industry, exports services to the remainder of the country in return for taxes and debt. This is a good proxy for Keynesian export-led growth.

Furthermore, government in the modern age has tended to expand relative to the rest of the economy, providing an export base with built-in long-term growth and relative protection from economic volatility. This is particularly the case during times of economic recession and war, when growth may stagnate in other places.⁴ As government expands, its institutions must be well staffed and supplied. Elected officials, other policy makers, and bureaucrats who occupy permanent positions provide the base for a residential market that spans election cycles and changes of administration. The capital of a great nation attracts ancillary activities such as diplomatic missions and international organizations, interest groups, professional associations, think tanks, law firms, and others that seek to influence government policy and regulatory decisions. They open offices in the capital region, and their employees reside in the capital region.⁵ As a symbol of the nation and densely populated with national monuments, museums, buildings, and parks, foreign and domestic tourism is an important part of its export base. Such capital-related functions can, by definition, be given to only one region and they constitute a big bonus for this region and a relative disadvantage to the rest.⁶

Government agencies procure goods and services from local vendors, minimizing transportation costs. Concentration of national government institutions in the region produces economies of scale, reducing principal-agent, transaction, and accountability costs by co-locating elected officials and bureaucracies.⁷ Private firms, researchers, and consultants that rely on government procurement contracts congregate near the agencies for which they do work, and media organizations have headquarters or large bureaus in the capital. Median earnings of civil servants have tended to be higher than the national average, and employees of advanced service firms are even better compensated.

Empirical evidence supports the theory described above.⁸ National capital regions have higher levels of economic output and higher disposable income per capita than the national average and other urban regions.⁹ In 2010, the median per capita disposable incomes of residents of the capital regions in twenty-five of the twenty-nine countries that are part of the Organization for Economic Cooperation and Development was 19 percent higher than their nation’s median.¹⁰ Capital regions are also likely to experience high population growth. A 1995 study of the largest cities in eighty-five countries found, after controlling for other factors, a city was 42 percent larger if it also was the national capital.¹¹

Given its status as a national capital, the Washington economy starts with a great advantage. To that it adds the advantages of typical large metropolitan areas, namely, the agglomeration economies that are generated by geographic proximity. Agglomeration economies are real savings to firms that result from knowledge spillovers that result in innovation and higher productivity and lower input costs, particularly transportation due to proximity of suppliers. The greater savings and higher productivity that result from firms co-locating in large areas produce competitive advantages for these firms and generate economic growth for them.

The Region’s Largest Employer

When the federal government moved its offices from Philadelphia to Washington in 1800, it brought 131 employees in addition to the president. For most of the next sixty years, only a small number of federal employees worked in Washington, and the growth of the nation’s headquarters workforce was slow. Even in 1816 after the stimulus of war, when the executive branch of the federal government had grown to 6,327 employees nationwide, only 317 of them worked in Washington and Georgetown. Congress had a staff of 11. The judicial branch had 18 people on the payroll, half of them the 7 members of the Supreme Court and 2 district court judges. Small though it was, the Navy Yard, which employed 1 of every 5 federal workers, was the capital’s largest employer.¹² From the very beginning the federal government has been and continues to be the largest employer in the capital region.

Engine of Growth

Population growth in the capital was sensitive to growth of the federal government during the nineteenth century and most of the twentieth. Washington’s population grew by only about 5,000 people per decade, mirroring the tepid growth of the federal presence in the District, until the 1830s when, despite the parsimony of the Andrew Jackson and Martin Van Buren administrations, the number of executive branch employees in the capital city almost doubled, increasing from 350 to 688 by 1840, reflecting the growth of the country. The stimulus of the Mexican-American War and the addition of new states and territories induced a further expansion of the Washington executive workforce to 1,049 by 1853, accompanied by the first major jump in the city’s population, which reached 40,000 in the 1850 census. By the beginning of the Civil War, Washington’s population exceeded 61,000, and a Washington-based workforce of 2,199 managed the 49,200 federal executive branch employees deployed across the country.¹³

During the Civil War, the capital city’s population exploded. Some estimates placed it close to 200,000 at the peak of the war, but it had receded to 109,199 when the 1870 census was taken. War also resulted in a tripling of the local federal workforce to 6,222, and it would more than double again by 1880.¹⁴ Federal expenditures ballooned with the war, rising from $78 million in 1860 to $334 million in 1870.¹⁵ One consequence of the war was expansion of the federal government back across the Potomac. The Custis-Lee estate was quickly taken into custody by the Union Army. Quartermaster General Montgomery Meigs, looking for a place to bury the mounting fatalities from the climactic battles of the war, converted the Confederate general Robert E. Lee’s estate into Arlington National Cemetery.¹⁶

Even after the demobilization following the Civil War, federal employment increased to deal with Reconstruction, the admission of new states, and settlement of the West. It picked up during the Progressive era, exploded during World War I, and even after demobilization remained at more than half a million. Federal employment in the District of Columbia held a fairly constant relationship to the nationwide total; 11 to 14 percent of the federal executive workforce was headquartered in Washington. From 1880 to 1910, the federal government employed one of every five of the District’s nonagricultural workers. By 1920, a third of the city’s workforce were federal employees.

Initially, federal expenditures