How Silicon Valley's Tech Reign Will End

Technology is people. And more people are choosing to live in cities.

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Why is Silicon Valley in Silicon Valley?

"You've got Stanford, you've got federal expenditures, and you've got an ecosystem" of start-up mentors and established institutions, said Bruce Katz, the founding director of the Brookings Metropolitan Policy Program. But Silicon Valley's stranglehold on West Coast innovation is in danger, he said at the Aspen Ideas Festival on Friday. The main problem?

It's no fun to live in Silicon Valley.

"What's happening now is workers want to be in Oakland and San Francisco," he told Walter Isaacson. Young workers want to live in a city -- somewhere they can ride bikes, shop locally, walk to their favorite restaurants and bars, and live in a dense urban or urban-lite environment with nearby amenities. But Silicon Valley isn't like a city. It's like a suburb. "Silicon Valley is going to have to urbanize," Katz said. "[There is a] migration out of Silicon Valley to places where people really want to live."

The housing market might be on the march this summer, but Silicon Valley is still about as flat as a silicon chip. Mountain View, Palo Alto, and its kin aren't having a construction "boom," and that's precisely the problem.

Katz' new book, The Metropolitan Revolution, argues that there is no "national economy," realistically speaking, but rather a network of leading city economies whose density of talent and productivity drive the entire country's GDP. But in many of our richest and most productive metros -- not just around San Jose and San Francisco, but also New York and Washington -- housing costs and limited housing supply prevent some of the most smartest people from moving into the most productive cities.

In response to a question, Katz argued that untangling the web of NIMBYs and state and city zoning laws was intractable and won't be solved by outsider technocrats walking into City Hall with a memo saying: Build Higher. Silicon Valley's location isn't destiny. It's the result of a long and complicated series of decisions by various government agencies, companies and individuals over many decades. But new technology comes from people. And if people would rather live and work in dense and walkable cities, Silicon Valley's stranglehold on innovation in America isn't as strong as we might have thought.

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Derek Thompson is a senior editor at The Atlantic, where he writes about economics, labor markets, and the entertainment business.

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