Inelastic Cities

An inelegant theory about Austin and Dallas

Just as the summer in Austin turned into ... a milder summer, I began to think about leaving again. At lunch with a friend, I complained, "Only San Antonio and Houston are real cities in Texas. Austin and Dallas are two sides of the same coin, full of people channeling middle-class ennui into various dead ends "(of course, I compulsively posted it too). He paused midway through taking a bite from an overpriced banh-mi, nodded his head, and said, "It's because of demand elasticity." He explained that people in cities like Austin are not sensitive to price changes enough and end up paying higher prices for everything. They don't demand cheaper or fairly priced Banh-mi's, and so there are fewer cheaper Asian spots. I don't know if any of that is sensible economic theory, but I think he's onto something. Certain cities, I've noted, are chockfull of businesses that charge a 20-50% premium, and patrons whose only marker of good taste is price¹. 

One of the signs of an inelastic city is the proliferation of businesses and habits around small optimizations and minute taste differences. Recently, upon developing a strong preference for an overpriced cappuccino from a specific, overpriced coffee shop, I was disappointed in myself. I had become one of those guys who could tell expensive cappuccinos apart. But, such behavior is usually rewarded in inelastic cities. You can become a coffee guy or beer guy in one of these places and base your entire identity around consumption and subjective taste. When I told another friend, a band teacher in another life, about my cappuccino problem, he said, "Well, that's a skill, kind of like how I can tell a good trumpet apart from a bad one." Yes, only that he probably spent thousands of hours honing his skill, along with feedback from peers. I likely spent thousands of dollars, with no external feedback other than my own grumpiness, which may or may not have been misattributed to the quality of the coffee. 

When the federal interest rates are higher, you can see people cracking their knuckles, trying to keep the small optimizations going². There has been a proliferation of thrift shops in the last couple of years, most of them selling junk, artificial scents filling the air, trying to wish away the mustiness of the clothes. It is no coincidence that the run club that popularized run clubs on TikTok is based out of Austin. Running and an ill-directed obsession with health is as good an excuse as any for buying gear and optimizing a three-mile run as much as possible. 

Inelastic cities like Austin tend to have neighborhoods that are extremely sensitive to prices. This is where all the Indians live. It is about 15 miles north of the city. Even the gas is cheaper by a few cents in these neighborhoods. You could argue that I should move there, but I like the expensive cappuccinos and walking as we have established. I just want the people who demand elasticity to be around me so that I don't have to pay 6 dollars for a taco out of a food truck that was built in the last century. Instead, I could drive to San Antonio and pay 11 dollars for a meal for two in an air-conditioned Mexican diner 2 miles from the city center. 

Newsletter will be on pause while I focus on other works and some major travel coming up soon. It will resume sometime in November.

Claude Monet’s The Doge’s Place

1. Two days after getting lunch with my friend, someone who gets wine at cost from their place of work told me that wines are usually marked up 100-150%. This explains the rise of wine bars in cities like Austin in the last 3-4 years.

2. In addition to the examples, I also think standing in long lines for restaurant pop ups or bakery sales is a sign of living in an inelastic city. As

Kneeling Bus

notes in NPCs in the Slop Mine, this is a type of NPC behavior we resent, “…because they are also unsurprising, consuming without enhancing the public realm in return”