Edward Glaeser, an economist at Harvard, argues that a large city like New York City may have the capability to re-invent itself and thus not suffer the most severe effects of an economic downturn. He claims that the density of the urban environment contributes to the resiliency of the city’s economy.
Every older city has survived a number of recessions. Boston has been around for almost 400 years despite having few natural advantages except cranberry bogs and a decent harbor. Over and over again, economic shocks challenged Boston’s survival. Time and time again, smart people learning from each other in a dense city have come up with new ways to thrive.
New York still has an amazing concentration of talent. That talent is more effective because all those smart people are connected because of the city’s extreme population density levels. Historically, human capital — the education and skills of a work force — predicts which cities are able to reinvent themselves and which ones are not. Those people who are continuing to pay high prices for Manhattan real estate are implicitly betting that New York’s human capital will continue to come up with new ways of reinventing the city.