In The Gated City, Ryan Avent observes that population in the Silicon Valley area actually fell at the height of the 1990s tech boom. Try to imagine the birth of the great American industrial clusters if the invention of mass produced automobiles hadn't led to large-scale population migration toward Detroit? You can't have a boom without boomtowns.
Yglesias is sounding the alarm. Upward spiraling real estate prices can strangle the tech boom. On one hand, I'm sympathetic to this argument. Expensive New York City is pushing talent to Istanbul, where you can live out your Jane Jacobs fantasy on the cheap. Furthermore, global talent migration patterns are shifting away from the economic giants in the United States. Like Canada, Silicon Valley is too dependent on international flows.
On the other hand, I've learned that churn is more important than net migration. The strongest US metros tend to be domestic migration losers. Immigrants bolster the population numbers. No one sees a demographic crisis. I concede that a city can't shrink forever and thrive. But we give way too much weight to the population number. Talent is still moving to New York in droves, even if the metro spits out more than it lets in.
I know that Silicon Valley is concerned about the lack of local talent production. The population decline that Avent mentions might be a function of increasing education and declining birth rates. The number of young dependents could be plummeting. Likewise, the workforce is booming. It's a boom without boomtowns if we only consider population across all ages.
Finally, the next tech boomtown may be in India. But Silicon Valley will be plugged into that growth. Talent trade is not a zero-sum game. Declining population and all, Silicon Valley will be at the heart of global innovation.