New York feels right
On the economics of opportunity cost and why New York is expensive.
New York feels right. I won’t say it feels great, because it’s worse than Europe along too many axes to be able to say that. But it feels right, and even only being here a few hours completely changes my internal sense of possibility.
The main thing about New York is that it’s expensive. Everything else flows from this. It’s partially expensive because greedy capitalist landlords etc etc. But I think it’s mainly expensive for the same reason that Norway is expensive: the opportunity cost of skilled labor is about as high as it is anywhere in the world.
That hip barista making your oat flat white could be a nursing aide to some of the most powerful people in the world. That subway driver could be running ad campaigns for new product launches that reach tens of millions. You, yourself, almost certainly could be doing something else right this moment with 100% or 1000% more impact.
This applies to the scarce resource of skilled labor, but it equally applies to any scarce, productive resource in the city. The other notable one being rent.
This fact about New York—its incredibly high marginal productivity and therefore opportunity cost of labor and space and therefore cost of services and rent—is of course both the primary attractant and repellant for those of us who come and go from this city.
The cause of this high marginal productivity is due to a lot of factors, but in addition to the fact there great people are drawn here and form a massive pool of concentrated human capital, American culture encourages mobility to a much greater degree than other societies I’ve lived in.
Physical mobility is only a small (though necessary) part of it. The bigger one is social and professional mobility. American companies tend to give outsiders a shot at proving themselves in new roles and new industries. This makes the space of your opportunity cost much larger. The skills you picked up teaching ballet to kids might be applied to great effect elsewhere—and the longer you fail to apply them there, the greater the pressures to do so.
I know New York is so much more than a single economic principle or jet-lagged coffee shop observation. It’s ten-plus million vibrant individuals stories of hope, struggle, and triumph. But in specific moments, this lens helps me to make sense of it and elide bewilderment.