Asia's economic rise keeps pulling Americans west

IT seems like forever we've been hearing about the decline of the Rust Belt, and people migrating to the West Coast. But why? Why did manufacturing decline in the Midwest? Why are rents so high in California, and house prices surging in the Pacific Northwest? Why does the US population continue to move slowly from east to west? Part of the answer might lie in the shifting patterns of international trade.

There are many forces at work here, all at once. There's the invention of air conditioning, which made the Sun Belt a more attractive place to live. Mass car ownership and the Interstate Highway System facilitated the sprawling cities of the west and south. Automation and competition from China combined to reduce US manufacturing employment. Immigration from Mexico and Asia began to pour into the west and south-west. But there might be another force at work here.

Economies are about trade, and trade costs money. The farther away two places are, the more it costs companies to ship goods and to send people over to meet subsidiaries, suppliers and customers. Those costs are one of the basic reasons why economic activity tends to cluster together in cities and industrialised regions. It also means that one city or region can get rich by trading with big concentrations of economic activity that are close by - the wealthier France is, the more it benefits Germany, which can ship cars to France easily since it's close by.