Why Denver, Nashville, and Boston are booming.

• Author: Glastris, Paul

Want your city to flourish? Just make it the seat of state government!

In late January, Forbes published its annual list of America's twenty fastest-growing cities. The magazine's metrics include population, job, and gross production growth rates for metro areas along with unemployment and salary data. Lists like these are of interest not just to Forbes's target audience of companies and young professionals looking to relocate, but also to researchers and others trying to understand the role of cities and innovation in the American economy. Much is known about why so many American cities declined in the post-World War II years. A bigger mystery is why some of those cities have come roaring back while others have not.

The cities that made the Forbes list were not very surprising. They were more or less the same names you'll find on similar "hot cities" lists published by other media outlets, such as Bloomberg and Money magazine: Houston, Raleigh, Denver, Phoenix, Salt Lake City, Nashville, and so on.

Like other publications, Forbes took a stab at trying to explain why certain cities made it onto their list. It noted that the fracking-based oil and gas boom helped put five Texas cities in the top twenty, while thriving tech sectors explained why Seattle and the three California cities made the cut.

One commonality, however, that the editors of Forbes apparently did not notice is that more than a third of the cities on their list are state capitals (see Table 1). This was not a one-time lapse: cities that are home to their state's governments have been overrepresented on Forbes's and other media-generated lists for years, without, as far as I can tell, any of these publications ever mentioning the fact. The stories that accompany these lists typically include quotes from economists and economic development experts who try to make sense of the numbers. Factors such as tax rates, regulatory burdens, region, education levels, venture capital investment, housing prices, the existence of top-tier universities, proximity to seashores and mountains, and the percentage of workers who are in "creative" fields are usually discussed. But the idea that being home to a state's politicians, lobbyists, bureaucrats, and tens of billions of dollars in tax revenues might give a city a significant advantage in garnering wider economic growth seems to be not widely held, nor even considered.

Which is weird when you think about it. After all, when Washington, D.C., makes it onto these kinds of lists, the first thing people say is, Well, of course it's booming, thanks to all the government money flowing through it. State capitals don't command as much tax revenue, obviously, as Washington does. But why shouldn't the same basic connection--between being the seat of government and enjoying robust economic growth--apply?

In fact, it does apply, almost without fail. To be sure, not every city that is booming is a state capital. Nor is every city that is a state capital booming. Plenty of small capitals (Lansing, Michigan, and Jefferson City, Missouri, to name two) are in the doldrums. But as Table 2 shows, all but one of America's eighteen medium to...