Interviews March 2009

The Great Reset

Urban theorist Richard Florida explains why recession is the mother of invention.
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America’s shrinking economy has shortened everyone’s time horizons. When the Obama administration announced its plans for an $800 billion dollar stimulus package, legislators were on board with spending 75 percent of the money over the next 18 months. But the portions of the bill that are more forward-looking—like long-term investments in education and infrastructure—have proven more controversial. Who can think about laying down train tracks over the next decade when millions more jobs could be derailed by the middle of next year?

Urban theorist Richard Florida, for one, takes the longer view. In a series of provocative books and articles—including The Rise of the Creative Class and, most recently, Who’s Your City?—Florida has set his sights on how economic shifts give rise to demographic trends. And in his March article for The Atlantic, “How the Crash Will Reshape America,” Florida applies those lessons to the current economic crisis. Which cities will rise and fall with investment banks and the housing market? Which regions will thrive, and which will start to look like latter-day Dust Bowls?

I spoke recently with Florida about his Atlantic piece. But our conversation quickly turned to Obama’s stimulus and the kinds of policies we can enact to shape our own demographic destiny.

—Conor Clarke


One of the major themes in your work is that various economic changes have shifted more emphasis onto creativity and ideas.

I think the crisis concentrates and accentuates a few long-running trends. The first is this notion—initially advanced by people like Peter Drucker as early as the 1950s—that our economies were becoming more knowledge driven. I simply added that this kind of idea of human capital actually comes from a much more fundamental human characteristic called creativity. People who are engaged in creative work will not only be happier and more satisfied, but they’ll add relatively more economic value.

But this seems to contradict one of your other major themes, which is that creativity flourishes most in high-density areas. In an economy that’s fueled by ideas and information, why should proximity matter?

Well, I combine that first point with another insight made by urban economists. Paul Krugman won a Nobel Prize in part for some of these insights.

And you cite Ed Glaeser as well.

Yeah, Ed Glaeser is the person who has done the most and the best research on this, although he’s quite a bit younger. He’ll win his share of awards. But a lot of this goes back to the great Jane Jacobs, who argued that what really mattered was not simply accumulation of knowledge or creativity but the geographic concentration. And Robert Lucas, who explained that urban areas bring together and multiply human productive efforts.

But as you mentioned, we have this kind of mythology going around that somehow the rise of new technologies—communication and transport technologies, which shrink the world—will spread out our geography. We always have this kind of romantic notion that technology will free us from the dirty, the pathological, the slum-ridden, the unhealthful city, and that the world will spread itself out.

And why won’t it?

In a previous piece I wrote for The Atlantic, “The World is Spiky” [PDF], I kind of took that myth on. There are two tendencies in the world economy. There is a great tendency for low-cost, fairly standardized stuff to spread itself out, and that’s where people say, “Oh my God, the world is flat.” But there’s also this counter-tendency for things to concentrate—to take advantage of these forces of agglomeration and human capital. So what I tried to argue is that that second tendency is very important. And now we have all sorts of World Bank reports talking about how productivity and performance are so much higher in urban areas, even in the emerging economies.

What I tried to do in this piece is say, “I don’t think this great crisis—or great ‘reset,’ as I like to call it—will change this trend. In fact, my hunch is that, coming out of this crisis, our geography will end up more concentrated than it was before.”

So I take it you don’t have a lot of hope for telecommuting.

I actually think we’re going to telecommute more. I think that the congestion problems of the great cities and what I call the great mega-regions—the best example would be the Boston/New York/Washington corridor—will become so great that the car will no longer be the single dominant mode of transportation.

People are going to have to live closer to work. I live in Toronto, where they’re good at using bicycles and walking. People are obviously using rail and subway transit, and using the car for localized trips. I know the Atlantic headquarters are in Washington, D.C., which has a big Metro system. It’s growing fast, even during the recession. But the roads are still very congested.

Well, how are you going to relieve that traffic congestion? Part of it is going to involve better rail and subway connections—in Washington, there’s the whole debate about the Metro extension out to Tyson’s Corner, Virginia. But I think telecommuting will be part of it. Now my hunch is that in the future, people’s employment relations will be quite a bit different, quite a bit more flexible. And creative people will march to their own rhythms.

At the end of your piece, you raise a question about public infrastructure. I want to see if I can get you to speculate more about that.

Well, in earlier versions of the piece I did speculate wildly on this. For reasons of time and space—

I’m sorry about that. Well, sound off about it now, here’s your chance.

Well, I am worried, and I think many people are worried, that we would waste public investment on bailing out the industries of the past—on things like automotive bailouts, which promise to simply prop up and breathe life back into industries that certainly show their share of problems in international competition. And that’s why I like to think of this as a “great reset” rather than a crisis. What economic crises do is reset the conditions for technological innovation and consumption and demand.

But rethinking infrastructure changes the institutional rules of the game and the way people and industries organize themselves geographically. What that does is create new patterns of living, new patterns of working, new patterns of consumption, and new demand. So, for example, the railroads and canals created all sorts of demand from new and innovative industries and products. Suburbanization created all sorts of new demand for automobiles and television sets and durable goods.

So it’s important to spend money on the right kinds of projects and the right kinds of infrastructure. The problem is—and I think this is very relevant for the Obama administration—that it’s hard to anticipate exactly what the next big infrastructure configuration will be in advance. So what I would like to see is people beginning to think through and experiment—making investments in a range of infrastructure projects that might add up to the infrastructure of the future.

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Conor Clarke is the editor, with Michael Kinsley, of Creative Capitalism. He was previously a fellow at The Atlantic and an editor at The Guardian. More

Conor Clarke is the editor, with Michael Kinsley, of Creative Capitalism, an economics blog that was recently published in book form by Simon and Schuster. He was previously a fellow at The Atlantic and an editor at The Guardian. He is also on Twitter.
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