Sichuan and the Sun Belt

Vienna has five times more people than Graz, Austria’s second city. London is four times, Seoul six times, and Paris seven times larger than their countries’ next largest cities.These primate cities are the singular political, cultural, and financial centers of their countries, hosting the overwhelming concentration of the national elite.

Washington, DC and Beijing are awesomely powerful entities. Yet Beijing is not China’s largest city – that’s Shanghai – while DC does not rank among even the top five metro areas of the United States. The political center of both countries sometimes struggles to assert itself against other national hubs. That tension imbues the United States and China with productive friction. It is part of the reason that they are superpowers that have been able to combine social dynamism with jealous states.

Earlier this summer, I visited a few comedy shows in Shanghai. Performers have to submit their scripts beforehand so that censors can expurgate any routine that carries a whiff of political commentary. But they will permit jokes on regional stereotypes. I listened to stand-up comedians make fun of Shanghainese, who worship money while henpecked husbands are governed by formidable women. I heard them say that folks from Liaoning and other northeastern provinces became conniving drunks after the local economy collapsed, but they are redeemed by humor and loyalty. Everyone appreciated the idea that people in the northern metropolis of Beijing can hold forth beautifully on any topic – though that is all they can do. 

This comedy reveals a deeper point: China is made up of distinctive macro regions. China’s central government has for millennia tried to impose its will on the entire nation. Though top leader Xi Jinping wields more governance instruments than any former emperor, central authorities still have to contend with the ambitions of different regions. New investments do not end up in Beijing by default. They also go toward the southwestern mountain zone centered around Sichuan and Chongqing, the coastal provinces of Fujian and Guangdong, the populous heartland of Hubei and Hunan, and around a half dozen other macro zones.

Geography determines much of local culture. Coastal areas are more outward looking. Mountain people have developed greater wiles to avoid the edicts of the political center. In the modern era, factional disputes in Beijing have sometimes strengthened regional autonomy. Deng Xiaoping established special economic zones along the southeastern coast as a beachhead for his campaign to dismantle the planned economy. The spectacular rise of Shenzhen and other export areas subsequently pulled China’s entire population southward. People are still packing up their lives in arid and state-dominated northern cities in favor of warmer climes in the more market-friendly southern cities.

The United States too is a giant state governing a diverse geography. My favorite thing to do when I travel around America is to ponder the culture of the local elites.

Miami has beautiful beaches studded with Art Deco. To a first approximation, the most cherished value of a big part of the population is to look hot. The folks in Boston are different. They really are more bookish, possessing perhaps a less practical bent. Rust Belt states like Pennsylvania (where my parents live) and Michigan (which is my home) are pleasant in many ways, but they also feel stuck. By contrast, Sun Belt cities like Nashville, Dallas, and Phoenix exude greater optimism. They are actually pro-growth. One prominent Houston businessperson once told me: ‘We don’t have great weather or natural beauty. Our leaders know that, which is why they work especially hard to attract people’. The explosion in Houston’s population is testament to their success.

Washington, DC does not drive all the big changes in the United States. Often it seems barely aware of Silicon Valley or much of the rest of the country. And though the Communist Party aspires to see all, it too struggles to enact its will. I have seen so many ways in which local governments would subvert or ignore senseless directives from the central authorities. Enforcement is sparse once one leaves big cities. Sometimes the local enforcers in even Beijing could be relied upon to turn a blind eye.

The United States and China have many centers, but there are also differences in how they’re polycentric. Although many people in China have moved away from their home regions, the state maintains substantial mobility barriers. Cities like Shanghai and Beijing still block many would-be migrants from accessing local schools or medical services. The hukou, or household registration system, still deters national social mobility.

By contrast, the sorting in the United States feels more efficient. People who have the greatest amount of smarts and hustle move to a handful of cities: New York and San Francisco especially, but also Washington, DC and Boston too. Socially skillful people might be found in any city, but socially challenged men really are clustered in San Francisco. Those who want to perform might end up on Broadway, Hollywood proper, or Hollywood for ugly people. It’s always pretty clear where the community of practice is centered for any field, whether that is AI, algorithmic trading, or energy flows. And many of the most ambitious people from not only the United States but around the world are there.

Another difference is that the United States has much more wealth piled around the entire country. In an illuminating new book, The Everywhere Millionaire, economics professors Owen Zidar and Eric Zwick reveal how many wealthy people live among us in stealth. They are car dealership owners, operators of dental clinics, or first movers of building tanning salons. Their assets have not reached the stratosphere. But so many communities in even middling American states have deep pockets of wealth. Even though Detroit has suffered precipitous economic decline, automotive wealth has endowed its suburbs with palatial homes, country clubs, and excellent museums and universities. All these are evident by driving around.

The United States and China are powerful because they have many centers. Their business elites are simultaneously locked in a dance with the state while both parties scheme to take the lead. These interactions sometimes weaken state power; sometimes they might inadvertently extend the state’s reach. It wasn’t the Treasury that built a global financial network atop US banks; but it has made fine use of the system that Wall Street built. And central planners did not exactly anticipate that China would create global chokepoints of so many manufactured goods; but Deng Xiaoping would have been thrilled to learn that Shenzhen is the world’s only maker of so many electronics products.

There’s not much that Britain, France, or South Korea can do to change their underlying political systems. But individuals can do something. People in China can still get away from the overbearing central government by moving to the mountains or to the coasts. Meanwhile, ambitious people from Europe, the Anglo world, and in the United States can still find communities of practice, which might be embodied by San Francisco, Miami, or somewhere else. That’s how to harvest the effects of being surrounded by ambitious peers.