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epochal shifts + economic crisis « Previous | |Next »
March 8, 2009

Richard Florida in How the Crash Will Reshape America in The Atlantic updates his creative economy account in the context of the global financial and economic crisises. He says:

Economic crises tend to reinforce and accelerate the underlying, long-term trends within an economy. Our economy is in the midst of a fundamental long-term transformation—similar to that of the late 19th century, when people streamed off farms and into new and rising industrial cities. In this case, the economy is shifting away from manufacturing and toward idea-driven creative industries—and that, too, favors America’s talent-rich, fast-metabolizing places.

By talent -rich, fast-metabolizing places Florida means well-educated professionals and creative workers who live together in dense ecosystems, interacting directly, generate ideas and turn them into products and services faster than talented people in other places can. Places like New York with finance and media, Los Angeles with film and music, and Silicon Valley with hightech are all examples of high-metabolism places are examples.

With reference to the US Florida says that the financial/economic will likely find its fullest bloom in the older, manufacturing regions whose heydays are long past and in newer, shallow-rooted Sun Belt communities (the Gold Coast in Australia) whose recent booms have been fueled in part by real-estate speculation, overdevelopment, and fictitious housing wealth.

Florida says that 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 in the US) will have a hard time recovering, then adding

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.

The implication is the challenge that many Rust Belt cities share is managing population decline without becoming blighted. The task is doubly difficult because as the manufacturing industry has shrunk, the local high-end services—finance, law, consulting—that it once supported have diminished as well, absorbed by bigger regional hubs and globally connected cities.

Will cities like Adelaide subsist on tourism and on the pension checks of their retirees? Its option, like Pittsburg, is to redevelop its core to attract young professionals and creative types, and by cultivating high-growth services and industries.

This depends on how it makes the transition to the new economy. The economy no longer revolves around simply making and moving things---it depends on generating and transporting ideas. The places that thrive today are those with the highest velocity of ideas, the highest density of talented and creative people, the highest rate of metabolism. Velocity and density are not words that many people use when describing the suburbs. The economy is driven by key urban areas; a different geography is required.

Florida argues the coming decades will likely see a further clustering of output, jobs, and innovation in a smaller number of bigger cities and city-regions. Consequently, properly shaping that growth will be one of the government’s biggest challenges. This means, for Florida, needing to ensure that key cities and regions continue to circulate people, goods, and ideas quickly and efficiently.

| Posted by Gary Sauer-Thompson at 3:57 PM | | Comments (7)


We heard a lot of this old/new economy stuff 20 years ago. Back then Victoria was widely predicted to have the ghost towns of the future.

Sure innovation will be important in future - it has been for 150 years; being slow to adapt to electricity, the automobile, refrigeration and the telephone didn't exactly reward firms that refused to change - but only a comparatively small number of people will be employed in those kinds of worklaces. Most will work like they do now, in service industries like health care, education, aged care, child care, construction and retailing.

All these activities thrive in urban environments which is why the cities of the world will just keep getting bigger and bigger, even as plants that make things disappear offshore. Which is not to say there won't be some relocations here and there but they won't have a significant impact on the general population.

The internet is a problem for the idea of a digitally and creativity-driven future economy. We keep hearing about how ideas, knowledge and innovation are the commodities of the future.

There's content, and there's ways of producing content. The hardware and software industries will be ok, but the content element won't revolutionise the economy. People make, upload and share content for free. Why watch Funniest Home Videos when you can watch kids and cats hurting themselves on YouTube?

What, then, becomes of the squillion dollar advertising industry? That's the creative, innovative industry that's traditionally supported other content industries.

For a digital economy to work you need people to start paying for what they currently get for free.

Melbourne---not Victoria---can be regarded in Florida's terms as a talent -rich, fast-metabolizing place. The Gold Coast cannot--its built around speculation. It will become a part of a great mega-region centred around Brisbane that will rise farther upward and extend farther outward.

Florida says:

But different eras favor different places, along with the industries and lifestyles those places embody. Band-Aids and bailouts cannot change that. Neither auto-company rescue packages nor policies designed to artificially prop up housing prices will position the country for renewed growth, at least not of the sustainable variety. We need to let demand for the key products and lifestyles of the old order fall, and begin building a new economy, based on a new geography.

Victoria is propping up the old ---an old style auto-industry selling an inappropriate product. The epochal change is about an urban region using the economic and financial crisis to reinvent itself, clearing away the old and making way for the new.

I'm not sure that Florida's concept of talent -rich, fast-metabolizing places, that is:

well-educated professionals and creative workers who live together in dense ecosystems, interacting directly, generate ideas and turn them into products and services faster than talented people in other places can

can be reduced to the digital economy and the internet.

True Gary. I associate the name Florida with his favourite example of the creative class, young IT dudes flocking to Austin to live with bohemians and do hip things with software.

He may still hold that but he is now talking about long wave epochal change or the “spatial fix” for the era. By this he means

The physical character of the economy—the way land is used, the location of homes and businesses, the physical infrastructure that ties everything together—shapes consumption, production, and innovation. As the economy grows and evolves, so too must the landscape.

He says that the causes of this crash are geographic in nature, and they point out a whole system of economic organization and growth that has reached its limit. Positioning the economy to grow strongly in the coming decades will require not just fiscal stimulus or industrial reform; it will require a new kind of geography as well, a new spatial fix for the next chapter of economic history.

A few of the rust-belt cities in the US might grow to be lively centres of art, music (again) and web media.

In Motown, Stanley Inges lives in a 3-bedroom home that he bought for $6000 and spent another $10,000 renovating the kitchen and bathrooms (plural in the original).

For people who can put up with Motown weather and a crappy bathroom and kitchen, this is a once-in-a-lifetime opportunity to get somewhere to live and work on the very, very cheap,

For people to whom Detroit doesn't appeal, in Cleveland and East Cleveland (a little closer to New York), "at least 1,400 homes were snapped up for $1,000 or less in 2008 - 133 for only a dollar [...]

"Katherine Chilcote, a 29-year-old artist, scoured low-priced real estate listings in the city, hoping to find a place to call home. She said she was careful to find a property that had a clean title and needed only repairs that she could handle herself.

"She ended up with a one-bedroom cottage on Cleveland's West Side that she picked up from U.S. Bank for just $5,000. She and some of her more handy friends replaced stolen copper pipes, pulled up layers of carpet, refinished the natural wood floors and laid down bathroom tile.

"'We worked every day for about six weeks,' she said. 'Then I moved into a house that looked like a shack and event'

"Now Chilcote has a place to live rent free just a few blocks from the new Gordon Square Arts District on Detroit Ave."