Paul Krugman: The New York Paradox

The New York Times
Published: July 10, 2006

I live and work in New Jersey, but I've always loved the energy and variety of the city that's just an hour's train ride away. So I was happy to read in The New York Times about a New York success story: the surprising resurgence of Manhattan as a site for corporate headquarters.

What's interesting about the corporate return to Manhattan is that it flies in the face of today's conventional wisdom, which says that modern technology is making geography irrelevant. Since work can now be done anywhere, the story goes, jobs move wherever the wages and other costs of doing business are lowest. And this should mean trouble for a high-wage, high-cost location like New York.

But somebody forgot to tell New York about the new rules: in spite of high costs, the city's economy is thriving.