I don’t think there’s necessarily a causation conflict. These things are self-reinforcing. High income people support culture buildings, etc. A strong cultural infrastructure attracts more high income people. It’s a virtuous circle, but also a chicken and egg question.

When it comes to the jobs vs. people debate (do jobs attract the labor force or does the labor force attract the jobs?) it is the exact same thing, though I’ve argued that the labor force seems to be the most critical, at least for the jobs of the 21st century (e.g. life sciences – as I like to say, you can’t have a life sciences industry without life scientists). Perhaps for the industrial age jobs it was the reverse.

The causality arrow you describe (how a thriving city attracts cultural and intellectual elites) is that exact opposite of the Richard Florida Conjecture. Being the location of a state capital will ensure activity and investment downtown, which is a boon to creative types.

Government workers will support a strong service economy (e.g. restaurants) in the urban core. For the most part, that doesn’t go away during a recession or economic transformation. Did Midwestern capitals have to deal with the kind of devastation other Rust Belt cities endured?

The first thing that popped into my head when I read the post about Nashville is that I bet Chattanooga wishes it was the state capital during its bout with the evaporating industrial economy.

I don’t think the answer is in the anchor provided by government…anchors are deadweight, not dynamic. Such cities obviously do have state and federal government clusters that provide extremely stable long-term employment with benefits and pensions; those don’t typically attract the “best and brightest” but rather those looking for security.

State capitals (in the aggregate) usually have more than the surrounding region of: lawyers, insurance and investment companies, regional/specialty medical centers and health-care systems, real-estate developers, media outlets (often “the paper of record” for the state, though the importance of such a thing in the new media age is definitely smaller than historically), advertising/pr shops, policy think-tanks, regional non-profits, statewide trade associations, state universities (and thus, scientific and social-science research centers). These high-income people tend to support arts and culture clusters and charitable institutions.

As Urbanophile has documented elsewhere, several of these state capitals have become “net in-migration” cities and he has speculated that they are magnets for the best and brightest from the small towns and cities in their state. I tend to agree.

I’d expect state capitals to weather economic transformations and exogenous shocks better than other cities because the bureaucracy anchors the downtown.

You need to find a way to control for The Urbanophile Conjecture so we can better understand how agency is important.

There may be another aspect that makes a smaller city “play bigger”: the presence of a large state university. I’m thinking specifically of Madison.