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Richard Florida: The Crash and Our Economic Geography

University of Toronto professor Richard Florida

University of Toronto professor Richard Florida

This weekend I got around to reading Richard Florida’s piece in The Atlantic, “How the Crash Will Reshape America.” In it, the University of Toronto professor suggests that the current economic crisis has the potential to remake the country’s economic geography in the same way that the crash of 1873 and the Great Depression did. At the very least, Florida says, it will accelerate already existing movements.

Buffalonians might take some pleasure in Florida’s prediction that the Sun Belt, to which so many from this region have fled, will not fare well in the new order. Unfortunately he does not imagine that cities like Buffalo will benefit from the miseries of Phoenix:

Sadly and unjustly, the places likely to suffer most from the crash—especially in the long run—are the ones least associated with high finance. While the crisis may have begun in New York, it will likely find its fullest bloom in the interior of the country—in older, manufacturing regions whose heydays are long past and in newer, shallow-rooted Sun Belt communities whose recent booms have been fueled in part by real-estate speculation, overdevelopment, and fictitious housing wealth. These typically less affluent places are likely to become less wealthy still in the coming years, and will continue to struggle long after the mega-regional hubs and creative cities have put the crisis behind them.

The Rust Belt in particular looks likely to shed vast numbers of jobs, and some of its cities and towns, from Cleveland to St. Louis to Buffalo to Detroit, will have a hard time recovering. Since 1950, the manufacturing sector has shrunk from 32 percent of nonfarm employment to just 10 percent. This decline is the result of long-term trends—increasing foreign competition and, especially, the relentless replacement of people with machines—that look unlikely to abate. But the job losses themselves have proceeded not steadily, but rather in sharp bursts, as recessions have killed off older plants and resulted in mass layoffs that are never fully reversed during subsequent upswings.

In November, nationwide unemployment in manufacturing and production occupations was already 9.4 percent. Compare that with the professional occupations, where it was just a little over 3 percent. According to an analysis done by Michael Mandel, the chief economist at BusinessWeek, 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 call the “creative class” of scientists, engineers, managers, and professionals—increased by more than 500,000. Both sorts of jobs are regionally concentrated. Paul Krugman has noted that the worst of the crisis, so far at least, can be seen in a “Slump Belt,” heavy with manufacturing centers, running from the industrial Midwest down into the Carolinas. Large swaths of the Northeast, with its professional and creative centers, have been better insulated.

Florida has made a career of a central thesis that I will oversimplify thusly: Those regions able to attract large numbers of the most talented, educated, and creative will create strong economies, because innovation is the key product in today’s markets. However one feels about that idea, this paragraph from Florida is sobering:

Thirty years ago, educational attainment was spread relatively uniformly throughout the country, but that’s no longer the case. Cities like Seattle, San Francisco, Austin, Raleigh, and Boston now have two or three times the concentration of college graduates of Akron or Buffalo. Among people with postgraduate degrees, the disparities are wider still. The geographic sorting of people by ability and educational attainment, on this scale, is unprecedented.

  • WNYmind

    Florida is just the latest guru of vudu economics. His trickle down theory is old and unproven. All he is really saying is that we need a lot of rich people in a city to spread the wealth. The sad truth is that the rising tide of the creative class does not raise all boats. Instead, it is built on a small elite class who keep the rest of the community working at Starbucks, tending bar, and giving spa treatments at massage parlors. It’s a bleak world Florida dreams about, a few elite and a lot of poor slobs wiping the gravy from their chins.

    No thanks Florida. Keep your creative class to yourself. Look at any of the creative cities Florida talks about and you will find growing inequality and declining incomes just under the boot of the shallow, “creative” yupies.

    Florida needs to pack up his snake oil wagon and move on.

  • Sean

    To put this economic crisis into context, what Florida is saying is there is a transformation taking place. The transformation is that of a post-industrial to a creative economy. He is not just looking out for elites. He clearly states in his book ” The Rise of The Creative Class” that as humans we are creative. He explicitly states that creativity, or innovation is not inherited or owned. It’s the creative capital within all of us to come up with new ideas which help us reach our full potential and be innovative. In turn, by focusing on our creative potential, we not only improve our lives, but we contribute to the growth and development of the regions/urban centers we live in. With this change, he states that jobs are dealing more and more with analytical and social intelligence. This does not mean, that those whose jobs run like bureaucracies, with physical routines, will be cut out of the creative economy. He believes and argues the opposite. He’s looking into the way we can tap into the creative capital that ‘Star Bucks,’ workers have in the service sector for example. He suggest one way of doing this is by letting workers come up with creative ideas, or suggestions that will better the business, and help the company. In turn, he believes Canada needs to choose the high road in building it’s infrastructure by investing in technology, attracting talent, displaying cultural diversity. Florida states the economic and cultural growth of regions are key to their success. The reason being, people are moving to where they can identify as themselves and no longer running to companies. As for the snob comment, the reason Florida chose the term “Creative Economy” is because he does not like the term most commonly referred to as “The Knowledge Economy”. He argues the former is a better term to apply to defining the changing economy because the latter is a form of snobbery in itself

    Florida is not only a guru but a true urban economist, and social theorist who is theorizing this change with experience. Great job Dr. Florida!