Monday, February 16, 2009

Florida and the Atlantic

NEW YORK, New York -- Unfortunately, this isn't about a Hemingway short story, as the title may imply. It's about Richard Florida, author and urban theorist; and The Atlantic magazine.

Florida's piece "How the Crash Will Reshape America" in this month's Atlantic is well worth reading for two reasons. But before that, it's worth pointing out the flaws both of this piece and of The Atlantic as a whole, of which they are indicative.

The article, like so many The Atlantic now publishes, takes a huge theme and offers it up for some mind-onanism/voodoo thought exercises. Like many of these Atlantic pieces, it takes a trend and projects many, many years into the future to tell us how this trend will permanently make an imprint on history. In Rome, they called this Bitingoffus Moreus Thanus YouCanChewus.

A classic example is the May 2001 cover story "Russia Is Finished." It explained in the broad detail expected of a child using sidewalk chalk why Russia was totally irrelevant and doomed to eternal penurity. As anyone who has read a newspaper in recent years knows, stories about the "resurgent Russia" have flooded the presses since, well, June 2001. (Tayler is now writing for The Atlantic about the resurgence of Russian professional hockey, of all things -- another dubious claim.)

For his part, Florida makes lots of ridiculous generalizations about why he *feels* that New York will benefit from the crisis and Detroit will become a "ghost town." Most of this is based on his definining argument, outlined in his book The Rise of the Creative Class, that "knowledge economy" types are the way of the future -- scientists, singer-songwriters, novelists, and Farrah Fawcett. The dots are connected by the claim that New York has lots of these creative types, while Detroit has few. As Florida tells it, "New York is more of a mecca for fashion designers, musicians, film directors, artists, and -- yes -- psychiatrists than for financial professionals."

Has this man been to New York? The 3,000 hipsters in Williamsburg are neither a large part of New York's population nor of its economy. The economy is based on finance -- every one of New York's 200,000 finance jobs supports 3 other jobs, according to the city's comptroller. And those jobs pay 33% of income in the city. The population, meanwhile, is largely individuals of minimal education and income. Despite the many Wall Street jobs paying on average nearly $400,000, income in New York City is below the national median. And poverty levels are 150% that of the national level. Not to sound like John Rocker, but most of the teenage mothers of 3 I share a subway with every morning are neither stylish, hip, nor especially "creative" as far as I can tell. Florida's "evidence" for his statement is that New York "is home to high-tech companies like Bloomberg, and boasts a thriving Google outpost in its Chelsea neighborhood." Calling Bloomberg, a financial information provider, a high-tech company along the lines of Apple or Dell is absurd. And the Google floor of office space employs about 100 people and is similar to other outposts in Boston and elsewhere. The truth is, New York has very, very few life sciences, engineering, high-tech manufacturing or even non-financial management jobs per capita when compared with San Francisco, Boston, North Carolina, Seattle, Chicago or even Austin or Minneapolis.

The "creative class," titans of commerce, descend on Bedford Ave.

Moreover, Florida's underlying assumption -- that production jobs are dead and the future economy is in film directors and grunge rockbands, and that this is a good and viable thing -- makes me think he's on crack. A typical statement would be this: "Jobs in the 'tangible' sector -- that is, production, construction, extraction and transport -- declined by nearly 1.8 million between December 2007 and November 2008, while those in the intangible sector -- what I canll the 'creative class' of scientists, engineers, managers, and professionals -- increased by more than 500,000."

Yeah, those 500,000 fairy-dust "intangible" jobs make up for the loss of 1.8 million lesser, "tangible" jobs. I guess "tangible" jobs only get 3/5 of a vote. So Florida's claims are delusional and counterproductive. Let's count the problems: Not everyone can be in the "creative class" because scientists and executives are culled from the highest ranks of graduates; the "creative class" exists largely because of capital generated by years of production that is now migrating away as quick as possible (goodbye, career in YouTube filmmaking; hello, RiteAid job!); and if manufacturing is in China, you can be sure management and R&D will be there soon for logistical as well as cost reasons.

More reliable and profitable than the Hipster Sapiens

Because of the fundamental idiocy of Florida's argument and of so much of what The Atlantic prints in its quest for that evasive Best Reporting in Futurology and Speculation Pulitzer, I am skeptical of the parts of his article that make sense and have begun doubting myself and pulling at my hair.

Nonetheless there are two valuable points that make this article worth reading:

1. The spatial economy: Florida raises an interesting point about the relationship between our spatial/geographic existence and economic trends. Before the Long Depression of 1873, the US economy was based on an agricultural-cottage industry model wherein most people lived in rural areas and small mill towns like Lowell, MA, were the centers of industrial production. Afterward, and until the Great Depression, large industrial concerns gained predominance, with mass migration to man factories in cities where people rented space in tenements. But after the Depression and war, the creation of Fannie Mae and use of tax deductions on mortgage payments, which effectively subsidizes home ownership over renting, saw home ownership rise from 44% to 62% between 1940 and 1960 as people fled to the suburbs and affordable homes.

Owning a home, with the government's prodding, came to be a symbol of freedom and end in itself. Moving from dirty cities made sense for residents as well as businesses that could buy land cheaply in the suburbs. And the automobile and Interstate Highway system meant people could easily get to work from any suburban location. And in recent years, President Bush's "ownership society" and homeownership drives by both parties in Congress led to homeownership rates of 70%. It also became the greatest source of both equity and debt for people -- and was directly to blame in building a debt-laden, consumer-based economic order that has proved to be disastrous.

This all seems like an accurate telling of history, and clearly leaves us wondering what, if anything, comes next. Florida argues there will have to be a return to cities to allow for the cross-pollination that fuels the "creative class." I think he's partly right -- cities will increase in importance in part because of young people wanting to be hip and to be among other hip people. Of course, the "creative class"'s engineers aren't the heppest cats out there, and I wonder if anyone's ever told Florida that they really don't feel a need to be near a Nobu. And if there is to be any viable economy, manufacturing will have to return in some form or other to make the products the "creators" dream up, or else there'll just be more capital flight along with RiteAid clerks taking out loans based on their future rent payments or what-have-you in order to buy the imported products the "creators" dreamt up.

The next great spatial/geographic/economic step?

2. Make cities more attractive to power a new economy: Given the crisis in the prevailing model of life/geography/economy that we've adopted since WWII, the other interesting point Florida makes is that government now needs to act to make cities relatively attractive just as at different key moments it acted to make various geographies and spatial arrangements attractive to people. Subsidies for homeownership, he argues, deprive more important programs like alternative energy or medical or research spending from funding. Moreover, the cult of homeownership has left the population less flexible -- a smaller portion of Americans moved last year than at any time since 1940. With economic uncertainty and companies folding and (hopefully) opening at a quickened pace, restoring that mobility will be very crucial.

Moreover, with the popping of the credit bubble, people simply won't be able to afford homes. And with the popping of the home equity lines of credit bubble, they won't be able to fill McMansions with baubles. With the threat of gasoline price volatility affecting people's ability ot commute from one suburb to another, smaller, denser, rented homes will by necessity gain in prominence.

Florida is convinced that an ever-smaller number of mega-cities in the US (and world) will have larger and larger shares of output. I think that's a lot of speculation. But he's right to note that the US has succeeded so well in part because it has traditionally been farsighted enough to invest in new means of transportation that open new sectors of the economy and new geographies to exploit them: from canals that allowed fur and timber from the Old Northwest to reach the Atlantic; to railroads that shipped agricultural products, minerals and manufactured goods West; to the sewers that gave rise to cities; to the Interstate Highway that brought us suburbia -- we have always been progressive in transportation. Until recently.

Obama will have to pick up the ball that he dropped in his attempt to "bipartisanate" with the Republicans. New realities have developed in the environment, society and the economy. While production is a necessary part of a healthy economy, new modes of production will have to come about. And yes, the "creative class" will remain important -- as it always has been. While it'd be nice to think every American will be a researcher, that's not going to happen. But that doesn't mean Florida's focus on cities is wrong -- building links between colleges, hospitals, consumers and business is key; so is living more sustainable, affordable lives. The city will need to shave a few points off the exurban model for this to happen. There will have to be spending, and change. Mortgage subsidies need to end (no, that won't encourage people to buy more of the many homes going unsold now -- but they shouldn't be encouraged to buy them anyway; government needs to plow down the 1.5 million surplus "zombie" homes that were idiotically built in the Sunbelt if there isn't any demand for them). Zoning codes will need to be changed to allow denser, taller development, with mixed-use neighborhoods (i.e., a mix of retail, institutions and homes, as opposed to the cul-de-sac developments of tract housing miles from any retail or services). Transit-oriented hubs (housing development around mass-transit stations). Trains to go between cities. Subways to go within them. And light rail and commuter trains to move from suburb to city or, importantly, suburb to suburb. Key to it all is a variable gas tax to discourage wasteful driving and ensure gas-price stability once the price of a barrel of oil shoots up again, which it will as soon as the economy returns to health. On these points, Florida is dead on.

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