Washington ( CNN ) -- The Wall Street Journal reported Friday that office rents in Washington are poised to overtake rents in New York City . Washington now boasts the lowest office vacancy rate in the nation . New York City is bleeding jobs , unemployment is over 10 percent . Washington is booming as government agencies like TARP and the General Services Administration expand . New York 's crisis and Washington 's growth is more than a business page story . Over two centuries , American culture has been shaped by the physical separation of politics and finance . The British might centralize everything in London , the French in Paris , the other countries of Europe in their great capitals , but the United States divided these functions . The Constitution of the new republic provided for an autonomous federal district . It did not specify where that district should be . Mexico and Argentina both have federal districts that coincide with their greatest cities , and that option was at least theoretically available to the United States as well . Instead , the capital was sited on the swampy banks of the Potomac , far from the great commercial centers of the founding era : Boston , New York , Philadelphia and Charleston . This decision had profound effects for the first 150 years of the new country 's life . If a business leader wanted to talk to a member of Congress or the Cabinet , he had to take a long train ride , often a very long train ride . Simpler and easier to leave the job to a lobbyist . Sheer physical distance interposed itself much of the time between the country 's financial , business , and political leaders . It was an event when the great J. Pierpont Morgan made his way here , and most of the titans of 19th century industry never appeared at all . In our own era , however , the distance has shrunk , decade by decade , faster and faster all the time . It 's not a coincidence that the impressive new premises of the Securities and Exchange Commission are located across the street from Washington 's Union Station . The power brokers do n't even have to hail a cab on disembarking from the Acela . And now the distance has vanished to nothing , and the one-time junior partner has gained the upper hand . The crisis of 2008 -- and the Great Recession of 2009 -- has interpenetrated government and finance in a way never before seen in the history of the United States . The kind of proximity to power once required only by defense contractors is suddenly required by all kinds of firms . Hilton Hotels will move from Beverly Hills to Washington . The accounting firm Deloitte will consolidate operations here , as will the legal firm McGuire Woods as it develops a new focus upon lobbying . The Federal government is now the majority owner of the lending arm of General Motors , GMAC . It owns the nation 's largest insurance company , AIG . It is banker , automaker , and lender of last , second and first resort . President Obama joked at his first White House correspondents ' dinner that he had just been named Auto Executive of the Year . Who would n't want to lease the office next door ? The Federal Reserve has acquired a portfolio of $ 1 trillion in mortgage securities . The government regulates salaries in the companies in which it holds interests -- and pay czar Kenneth Feinberg has lamented in a television interview that his power does not extend even further . `` The biggest disappointment , I think , is that under the statute my jurisdiction is so narrow , and so circumscribed , that I have no real direct mandatory power over other Wall Street or other national companies , '' he said . But as Washington gains , the country loses . It loses something more than its ideals of free enterprise and private ownership . It loses the very American idea of a capital as a specialized locale to which specific tasks are delegated -- not an American Versailles where favors are distributed and attendance is mandatory . Not so long ago , Microsoft did n't even have a Washington office . Today Microsoft and Google are deadlocked in fiercer struggles than those that divide the oil lobby and the eco lobby . For those of us who reside in Washington , the change is mostly positive . Certainly the restaurants are vastly improved . But maybe the country was better when the food in the capital was worse . The opinions expressed in this commentary are solely those of David Frum .
Rents for apartments in Washington could soon be more expensive than in New York . David Frum says it 's a sign of Washington 's dominance as the new financial capital of U.S . He says long history of small government , government , has ended .