Skyscraper Effect

If you didn’t know, skyscrapers aren’t economically efficient most of the time. We built them because we can...and because we have fragile, competitive egos (“we” as in cities and countries, but mostly countries).

British economist Andrew Lawrence noticed in 1999 that there might be a positive correlation between the construction of the world’s tallest skyscrapers (an international d*#& competition if we ever saw one) and recession. Just like the joke that dudes with giant trucks are compensating for a lack of size in the nether regions, Lawrence thinks that giant skyscrapers might be compensating for a crumbling economy that’s about to go wayyy into the gutter.

His research shows a correlation with record-breaker skyscrapers being built with an economic downturn in the country soon after. This has been going on for years. In 1899, America said hello to the Park Row Building, the world’s first skyscraper and tallest building in the world. In 1901, America said noooo to the NYSE stock market crash and the Panic of 1901. Right before The Great Recession, The Empire State Building was built (and it was the tallest at its time). In Malaysia in the late '90s, the Petronas Towers were built right before a financial crisis there. Press “repeat” over the years with taller skyscrapers and ensuing depressions and panics.

While some see this as a curse (a punishment for being so egotistical), others see how it happens. Recessions usually come after periods of high growth, which causes happy-hour-like attitudes, more money, and increases in technology. It’s during these peak periods that skyscrapers are built, when a country feels like it’s on top of the world...until it comes crashing down. Just the business cycle doing it’s thing.

Want to watch? Check out the Barclays Capital Skyscraper Index, which forecasts financial downturns by watching the construction of the world’s next tallest skyscraper.