TranscriptQuestion: Why did you write “The Great Reset?”
Richard Florida: When the economic crises hit in September, a year-and-a-half ago, my long-time editor at the Atlantic Monthly, a fellow named Don Peck, called me up and said, “We want to do something on the crisis, can you write about how New York has been hit: The financial markets, job loss, Wall Street, and all the spillover effects.” And I said, “Sure,” but as soon as I looked at that, it became clear to me that in fact, New York wasn’t the place, ironically, that was being decimated by the economic crisis. It was other parts of the United States, which I, then I wrote an essay for the Atlantic, called “How the Crash is Reshaping America.” And the article got a great deal of excitement and people said, “Why don’t you write a book on it?” With all that interest, I had to write a book.
So what I decided to do was, in the United States, in fact, in economics or in business, we kind of have a good sense of where economic crises, financial crises, panics, great economists have written on this, where depressions come from. The interesting part is we really don’t understand recoveries that well. So what I tried to do was write a book about, not just the short-term nature of recovery, about looking back historically and then into the future, what motivates economic recoveries? And so I looked back at the Great Depression, and then I looked back at the crisis before that, the long depression that was initiated in 1873.
What I found out was something, I think, and hopefully you guys think, is interesting. That the way we typically think countries and cities and communities escape economic crisis is either they have a wave of technological innovation—this is what great economists, Joseph Schumpeter, wrote about. And it’s true, the 1880s and the 1930s were fabulously innovative at that case. The 1930s were much more innovative than the 1990s or 2000s.
We also think sometimes that government spending, Franklin Roosevelt, The New Deal; John Maynard Keynes, Keynesian, public spending is what gets you out of crisis.
And then we had this notion that after the Depression it was World War II that saved us. When I looked at it actually—those things are very important—but what really recasts our economy or resets it or leads to these great resets, are what really you can think of as a new way of living and working. What saved the US or what propelled the U.S. out of recession and depression in the 1940s and ‘50s and ‘60s was suburbanization. And geographers, and I’m an urban planner, geographer, we have a word for this, we call it a "spacial fix." This new way of living and working and shaping our economic landscape propels us out of crisis. And so then I said, “Oh, my, it’s important that public policymakers, the president, the cabinet, the decision makers, the congress understands this,” and then I also wanted to look at what this next great reset, so a good part of the book is looking backward, but then the preponderance of the book is looking forward. What would this new great reset or new special fix or new economic landscape, what would this new way of life potentially be like, looking forward?
Question: Why is a crisis a terrible thing to waste?
Richard Florida: Rahm Emanuel, the president’s chief of staff, is often thought of as saying, you know, it’s a terrible thing to waste a crisis. But the quote actually comes from a fabulous economist, who actually is now working on cities, a fellow named Paul Romer, who was at Stanford University and had a thing called the Charter Cities Institute, a really terrific organization.
And the idea being that crises are times when you, if a company is in crisis, an organization in crisis... but if a country’s economy is in crisis, you can do things that will help you recover and regenerate and go past the normal. Yeah, I think we’ve been wasting the crisis.
But, that said, most other countries have been doing less. But I think, and I think we’re starting to get it now, but what really got me going was that what it seemed to be doing in the very early stages of this crisis was we were either bailing out banks, it turns out we’re going to get some of that money back, but I still think it was a mistake. I still think, and I think people are realizing we’re going to have to do something new and different on that front and every reset has seen us reform the way our banks and financial institutions operate.
And the second thing that was really tragic to me is our attempt to bail out these old industries and people are apologizing for that and saying, “Yeah, GM and Ford, and they all look better,” but I think what’s made America great was the ability not to just bail out the old, but to really focus on making investments in the new. And one of the big arguments in the book is, "Boy, we have to do that again." We can’t just bail out the past, we can’t let this crisis be a wasted opportunity, but it’s really interesting, you know, I do think now, the United States is starting to collectively get it. And the recovery may or may not hold, that’s not what I’m talking about, and many people, Robert Schiller, and others, think it looks a little bit false.. and Roubini.
But I think what’s really interesting: my dad, when I was kid, always told me, “Richard, when I was a young boy, you know, we struggled with the Depression”—my dad was eight when the Depression hit, and then he joined up for the American Army when Pearl Harbor was attacked, he was infantry soldier, he stormed the beaches at Normandy—he said, “But it’s amazing how fast America re-made itself.” To him, it was remarkable how a country that had no war mobilization, military mobilization, kind of stoked up this industrial engine and made tanks and jeeps and ships and planes and armaments, and he used to tell me, “You know, when the Germans saw that stuff coming, it must have just demoralized them.” When our opponents—I do think that we’re starting to get this again. I live in Canada now, I love Canada, but they’ve been spared this crisis. And somehow... not that times are great in Canada, but they’ve been spared the crisis, somehow when a crisis hits the United States, it forces the country to wake up, and I hope—we’re still very early on in this—I hope now we’re beginning to see the signs that our business leaders, our political leaders, our country, is really waking up and beginning to rethink some of the core things that we used to think of as the cornerstones of American way of life, or the American dream. And I hope that book contributes to that ongoing rethinking conversation.
Question: How will the economic downturn change the face of home ownership?
Richard Florida: Well, it’s fascinatingly interesting to me about, that the role of home ownership and housing in the American dream. And in the book I say, “You know, there are really two American dreams.” Actually a student said this to me, he said, “You know, Professor Florida”—he wasn’t American, a Latin American guy— said, “I read somewhere that the American dream is about economic opportunity, but elsewhere I see it’s about owning a home, could those two things be in conflict?”
One of the things we’ve always done really well in America is during these resetting periods, during these crises, these remaking periods, of course, we’ve changed our infrastructure. Right, we build railroads during the first one, and subways and cable cars. During the second one, we built interstate highways, new power distribution systems and so forth, new ways of educating ourselves, mass public education early on, universities later. But we’ve always been able to change our housing system to suit our needs.
During the first great reset in the 1870s, in the '80s, we moved lots of people off farms and into cities. Many of them were renters, some were owners, but that shift in our population and the shift in the way we house people from small, farming villages to major urban centers, was a big part of our growth. And then after World War II with suburbanization, we created a nation of homeowners. About 40 percent of Americans, maybe a little more, were homeowners before the war, after the war it went up to 60, and then at the pinnacle, nearly hit 70 percent.
What we’re finding now though, is that era of home ownership, which so drive the suburban economic machine—really, when you think about it, it fed those industries. The auto industry, the steel industry, the chemical industry, the appliance industry, all those, all those industries that drove American greatness, were really facilitated by suburbanization. You bought the home, you had to fill it up with appliances, you had to buy a car, and then a second car, and then a car for the kids. So it drove the economic machine. Now that’s broken, I think.
And it’s actually something I write about in the book, but I’ve been studying in great detail with my research team at the Martin Prosperity Institute very closely since. It seems to me that we went overboard in our approach to home ownership and when we actually looked at the data... This is so ironic, places with the highest levels of home ownership have low rates of growth; they tend to be older, lagging cities with older economic structures; they tend to be less innovative; they tend to have lower levels of human capital, of creative, economic activity; lower wages, lower incomes; and the people there have lower levels of well-being.
The ones that have lower home ownership, they’re stronger economies, they’re more innovative, they’re higher wages, higher incomes. And I thought about this and it’s not only that those cities are more expensive, right? Los Angeles and New York and San Francisco and Seattle and Boston, they’re not only more expensive, so obviously fewer people can afford houses. Actually by having a lower level of homeownership, and that’s around 50 or 55 percent, where the big, the cities that have a lot have 80. It actually makes them quite fast and flexible. And I find this really interesting. If you lose your job in Detroit or Cleveland, you own your house: you’re stuck. You can’t even move to another part of Detroit or Cleveland for a job, never mind to a place that might have more economic opportunity on the east or west coast. You’re stuck and you’re stuck with that house and you can’t get rid of it and you have to pay for it.
If you work in New York or Los Angeles or San Francisco and you lose your job, first thing you can do is downshift to a cheaper apartment, and if you need to move to a new region, when your lease ends, you can up and go. So I actually believe, the Urban Land Institute says we’re falling in home ownership. We’re going to come down to about, I think, they think, anywhere to about 62 percent, I think we’re going to go a little lower. I think a nice balance is about 55 percent, with the rest of the people renting. I do think we need to reinvent rental housing, though. I think the kind of rental housing we have now, where you go find a landlord on Craig’s List and you get a place and they don’t fix the windows and the dishwasher breaks and you’re doing it; that’s crazy. I think with all the condos that are vacant, in fact, we’re even seeing this in Miami. And I see this when I go to Miami, it’s actually my cycling route. I cycle down through the city and through the City of Miami, into Key Biscayne. You see all the condo towers that went bankrupt, that were distress sales, now being turned to rental. And what’s interesting is you’re renting from a real rental agency, the housing is nice and high quality, but it’s very affordable, lots of people are streaming back into downtown, empty nesters, young people, people with families, more street-level activity.
I even imagine something more than that, where you could sign up with Acme Rental Company, or XYZ Rental Company, and if your job changes in New York, or San Francisco, Toronto where I live, and you want to be closer to where you work, you can switch apartments. Or if you transfer to the West Coast or the Midwest or wherever it is, San Francisco, Chicago, you can basically be part of that rental company’s units there. Some way, and I think with the excess inventory—according to one analysis, we now in the United States have 8 years, 103 months, of excess housing inventory; well, somebody’s got to do something with that. If companies over the course of the reset in an entrepreneurial fashion begin to roll that up, begin to provide mass rental housing, if you will, and what gives me—I talk to a lot of developers and I speak to developers' forums, I was just at the Urban Land Institute: multi-family housing is one place people are actually profitable in.
But the thing is, every time we’ve changed in America, had a crisis, we’ve reinvented our housing system, and our housing finance system, and even now, I’m talking to public policy makers and decision makers in Washington who are really thinking this through, who are saying, you know, "We have gone overboard with home ownership, we have to dial back, and how do we reconfigure our housing and housing finance institutions and policies to encourage a better, more flexible form of housing, which is more in sync with the needs of an advanced economy.
So I actually think, one of the hopeful rays of optimism I see, I think the United States may be out in front of this and it may be one of the first countries that is really rethinking what would be a housing, mortgage... housing finance system, rent-own system for a 21st Century flexible and mobile economy.
Question: How can the government respond to the foreclosure crisis most effectively?
Richard Florida: Most urban economists and smart housing economists and thinker urbanists are on this. We have to stop the unbelievable subsidy that we’ve provided for single-family home ownership. When you add up the tax incentives, the financial incentives, the subsidies to the secondary mortgage market institutions, the freeway subsidies, the highway subsidies, the infrastructure subsidies, it’s billions, hundreds of billions and trillions of dollars. And we have to stop that, we have to make our housing system more reflective of a market. And I think our public policy... I don’t want to say it has to favor rental, I don’t think we need a massive public policy. We just have to stop the madness in subsidizing home ownership and causing people, some people to make bad decisions. One of the things that brought on the crisis is there were "evil people on Wall Street doing all these bad things and everybody has the pitchforks out and they’re after them," but there are a lot of Americans who made really bad decisions. I find it just unbelievable how people would go and buy a house with nothing down and that they couldn’t afford. That’s not the way my parents brought me up. I live in Canada, I had to put 25 percent down, and Lord knows, if I tried to get up and walk away from my house in Toronto, they’d attach my wages for the rest of my life. I can’t just jingle mail the keys back in.
So I think we do need a system that’s more responsible and a system that doesn’t create those crazy incentives. I tell the story, it was the "60 Minutes" show with this woman from Miami and they were asking her, she said she had five apartments that were under water, five condos. And they said, “How did you get five condos under water?” She said, “Well, only as a side thing, I’m an acupuncturist.” I mean, it’s unbelievable that a woman who’s an acupuncturist could walk in and have mortgages on five multi-million dollar condos and then say, “Well, I didn’t even think about the mortgages, that was a sideline, I do acupuncture.” Who would give somebody like that a loan?
Now that madness has stopped, obviously. I think just thinking about a system that’s sensible... but obviously one of the big points of “The Great Reset,” is this: We can’t grow our economy, we can’t build new industries, whether that’s software, high tech, biotech, modern health care, gene therapy, we can’t move, build new industries and entertainment in media and the experiences, performance, we know a lot of the money to be made in the performances, people seeing performances, consuming live entertainment, even buying art, all of these experiential things are personal development, lifelong education, holistic health. If we’re spending, the average is about 55 percent of our income for housing and energy and transportation. And in some cities, it’s 75 percent plus and then you add in education costs, you add in health care costs, no wonder people went into debt! How are you going to build the industries of the future if you have no money to buy that stuff with?
So one of the things “The Great Reset” is saying is that during the Depression and actually before that, we made agriculture a lot more efficient, we made food a lot cheaper. Herbert Hoover said "we have to have a car in every garage, a chicken in every pot." In order to get the car in every garage, we had to make agriculture cheaper, we employed most of our people in agriculture, now we employ 1 percent of our people in agriculture. Same thing with housing. We still have to house ourselves, we still need transportation, we still need cars, but they can’t consume 50, 60, 70, 80, 90 percent of household income. We need to free up space, free up budget, free up demand. That’s what that new way of life has to be. Less expensive, more efficient housing, less expensive, more efficient transit, less expensive, more efficient energy, that’s going to open up the space to grow a new knowledge and create a new economy and really power our growth into the future.
Question: Will Americans ever get over their dependence on automobiles?
Richard Florida: I think we’re already seeing Americans start to get over their dependence on the automobile, and on the big house, in certainly the surveys of younger people. I was just looking at the data the other day. About 67 percent of Americans own their house, but the lowest rate in a long time, of people under 35, only 38 percent, now they’re young. 38 percent of people under 35 own their house. When you look at surveys of younger people, younger Americans, they don’t want the house. My students tell me this all the time, they don’t want the debt. They don’t want the space that they’re not going to use, that’s just there to impress people. They don’t want two, three cars. Actually the studies show that if you want to look at who saves versus the spends? The people who save are the ones who don’t have cars. Cars are killers, one in two and three of those are killers for family budgets. So younger people are already saying, “Enough’s enough! I’ll use a ZIP car, I might have one car, it’ll be a small car, we may carpool and share. “
And I think one of the things that we’re going to have to do is remake our geography. It’s not that we’re going to live out there in the suburbs with no car and try to get around on our bicycles. I think what’s happening now is 60 percent of Americans say if they had a choice, they’d want to live in a walk-able community. And I think we have kind of a false choice now. And I think it’s one of the things that’s really important about the next great reset and the next spatial fix.
People think, well we’re either going to move back to the city, or we’re going to go to the suburb and they’re in conflict. There’s a suburban way of life and there’s the urban way of life, and this has been played out in so many conversations and narratives. The suburban and rural versus the urban, it’s part of our history. I think what’s actually happened is, in some ways, and I say this gently, that conflict doesn’t exist. Many of our cities are becoming more suburban, and I say that gently. I had a caller today on an NPR Show saying, “My neighborhood in Brooklyn is starting to look less edgy and all these people with strollers and I feel like I live in an older, inner-ring suburb.” Well, that’s true! Cities are becoming safer, they’re becoming more family friendly. Where I live in Toronto, it’s a completely family friendly city, with young people, old people, immigrant families, wealthy families, low income families... But our cities in the United States are becoming more family friendly, many of them, and they need to do more, need to fix their schools and so forth. At the same time, our suburbs are becoming more urbanized. When I lived in greater Washington, D.C., it wasn’t only the District of Columbia that was becoming changed and transformed or perhaps overly gentrified: Arlington, Virginia; Bethesda, Maryland; and then Tyson’s Corner, the old, what they called the Boom Burg, the Ex-Urb, the Edge City—it was trying to make itself a more walkable, mixed live/work/learn/play community; Silver Spring, and Prince George’s County, largely African-American, or predominantly African-American, trying to remake as walkable, denser communities around transit.
In some ways, the history of capitalism is really a history of the more intensive and expansive use of land and space. So what we’re seeing is, what we used to think of city versus suburb is going away and we’re getting denser, more mixed, more—and I think this is a 20 or 30-year process—the word I use for this, is we’re going to see the birth of the "mega-region." The mega-region. We grew up with "metropolis," the city and the suburb, New York and its suburbs, LA and it’s suburbs, San Francisco, Chicago and their suburbs, that hinterland. Now, I think we’re seeing these more large-scale units, like the New York/Boston/Washington corridor, the mega-region that runs throughout northern California, Cascadia from Portland to Seattle to Vancouver, across the border. Where I live that goes from Toronto to Buffalo to Rochester, up to Ottawa, across to Montreal. And then Char-Atlanta, you know, from Charlotte to Atlanta. These mega-regions are becoming much more integrated economic units, and over time, I think that’s what we’re looking at, a denser place where, yes, certain parts of it are more city, certain parts are more suburban, but its much more of an integrated economic field, if you will.
Question: What do you envision for Detroit?
Richard Florida: Looking at the new economic geography and the new economic landscape of America, suggests that two types of communities in the United States have been very, very hard hit by this economic reset and actually this shift has been going on for a long time. I often say that the world is not flat: it’s not that the world is becoming more spread out, in fact, the world is becoming more concentrated and spiky and our economic geography is becoming much more uneven. In fact, our economic inequality, our class, economic class, is becoming reflected in our geography.
I think on the one hand, the Sun Belt cities, the cities of the sand, that really thought they could be built around real estate, whether it was Miami in Southern Florida or whether it was Phoenix, whether it was Las Vegas, the Inland Empire in California, whatever. People sort of believed real estate could become an economy, that you could grow an economy by moving and selling and shifting around real estate and those economies had 30, 35, 40 percent of their people working in or around real estate construction, real estate finance, real estate deals. That’s over. That’s over. And those economies are working hard and I believe they can rebuild themselves. Even Las Vegas, around conferencing and business networking, global conference center, and then gaming technology.
And the other one that was hard hit were the old Rust Belt centers. Detroit is the poster child; it by no means has the highest rate of unemployment. Other cities in Michigan have higher: Flint. In Ohio, Toledo. In Elkhart Indiana. Many of these old rust belt auto-dependent, heavy industry towns have been buffeted because of the off-shoring and the movement of manufacturing work, not only it’s becoming more automated, but the movement to China and other places. The reality is those places are hard hit. They’ve lost their economic reason and I lived in Pittsburgh for 20 years, I saw what happened when Pittsburgh lost its steel industry. And for years and years and years, Pittsburgh thought it could protect its steel industry and go to Washington and put up tariff barriers and somehow we’re going to rebuild. And people finally accepted the fact that steel was going to be a much smaller part of the economy, they had to rebuild around universities, high tech, Carnegie-Mellon, the University of Pittsburgh. And the other thing that these cities, and in Detroit, with the auto bail-outs, the idea that auto can be, it’ll come back... it can’t. It’s certainly a part of the economy and the economy has robust research and technology and design in automotive and it has... what’s nice, it has globalization, so global headquarters have come in and Fiat and the Korean manufacturers and Japanese, but it’ll never be the manufacturing backbone that it was and you can’t prop that back up.
But the other mistake those cities make is they think that they can rebuild in a quick fix, silver bullet. And the thing that really drove me crazy in Pittsburgh, and I see it in Detroit. "We’re going to build a new baseball stadium and that’s going to bring our city back. We’re going to build a new football stadium. No, we need a convention center. You know, a casino now. The casino’s going to bring the city back with two hotels attached to it." It’s insane. That stuff just, it’s like just burning money.
So what happens, of course, and I think what will happen... what happened in Pittsburgh, is people said, "Well, what can work to build our city?" Focus on research, technology, build our clusters, but also help to strengthen the neighborhoods, adaptive reuse, historic preservation, all these small things, arts and culture, begin—and one economic developer, I quote him in the book said, “If you believe that you can bring back these industries with mega projects, move to China.” That’s where all the big, industrial mega projects have gone. Economic development today is about literally hundreds and thousands of little things that you do to slowly and cumulatively at the neighborhood and community level. Building partnerships involving universities, building clusters, many, many small things that accumulate, that create some economic viability. It’s the stuff Jane Jacobs, the great urbanist, called just plain old "good urbanism." That’s what Detroit has to do and in the book, I talk about all the assets Detroit has. It has a spectacular airport. That’s still a hub for global commerce. It is the 11th largest region in the country, it’s still much bigger than Pittsburgh ever was. It has large constellations of human capital in many of its outlying regions. I talk about Birmingham, Michigan having a similar level of Bethesda, Maryland. It has spectacular universities like Wayne State, it has the Cranbrook Academy, the center of modern design, industrial design, and furniture design. It has two of the greatest research universities on the planet, very close by at Ann Arbor and Lansing, the University of Michigan and Michigan State. And it has a fabulous design/architecture community, creative energy in its low income communities, a tremendous, really resilient African-American community, a phenomenal Arabic community that will do anything to save and pitch in... but it has this legacy of musical talent that is just incredible and it continues to propulsively create new musical styles.
All of those things add up to kind of creativity and innovation being in Detroit’s DNA. But it’s not going to come from a federal bail-out from the auto industry, it’s not going to come from a big casino and convention and stadium project, it’s going to come from really the small-scale efforts that when people are empowered, where neighborhoods are empowered. I do worry. And I’m so passionate about this, because my wife’s family, they all live there and I visit so much and I so care about Detroit. I think there’s some mistakes being made, I think this idea that you can grow a city by shrinking it, I don’t like it. And a woman named Roberta Gratz has just written a fantastic piece on this, it’s on my Web site if people want a link to it, about the urban renewal and shrinking cities has never, demolishing things, that’s always been an abomination. Where those bulldozers have gone has been a disaster.
And the other thing that really worries me, although I believe that you can do some level of farming, I think it’s nice and people have a garden and a roof garden, the idea that you can rebuild Detroit around an urban farm. Why would you turn a great city into a corn field? And I’m not trying to be overly dramatic, but the whole approach just strikes me as bizarre. That doesn’t mean that you shouldn’t have more urban farming, that you shouldn’t have more urban gardening, that sustainability is critical, but the idea that Detroit is going to somehow come back by shrinking into oblivion, annihilating neighborhoods and starting urban farms, when you have some of the greatest research universities on the planet, some of the greatest design talent, where you have people with manufacturing knowhow in that community... it all has a role. But the ideas that are being discussed just leave me so perplexed and I find that now some of us urbanists are beginning to speak out and say, but I think that Detroit can be rebuilt and the lessons there—you can learn from Europe, you can learn from Pittsburgh—they’re going to come from empowering people and neighborhoods and communities and as I said, not giving big federal bail-outs or big state bail-outs to all declining industries or all declining sports stadiums.
Question: What is the danger of geographic sorting by education?
Richard Florida: This fellow Bill Bishop wrote this remarkable book—and Bill’s a dear friend—called “The Big Sword.” Ed Glaeser, the Harvard economist, has been showing the divergence in our levels of highly skilled people. I mean, the basic motor force of economic development is not big companies, it’s not even big technologies. Jane Jacobs first identified this and another great economist, a Nobel Prize winner, Robert Lucas, kind of formalized this: it’s when talented and creative people come together in a community, that’s when you get explosive growth. Skill multiplies skill, talent multiplies talent. And what Jane Jacobs was saying, which is so amazing... Adam Smith told us about firms and innovation and efficiency and a pin factory and a division of labor as a firm can make things with people doing fine grain tasks. And she said, “That’s a great theory of efficiency and it’s a great theory of making things more cheaply, but it doesn’t tell you anything about where innovation comes from.” And what she said, is what cities do, is they give you new kinds of people, new kinds of talent, new input. And people in those cities comes together, and my best example of this is not only the silicon valley with high tech and people moving around and shifting jobs, changing jobs without even changing the parking lot, as they say, it’s the music scene.
You know, they asked Jack White, the founder of the White Stripes Rock On Tours, one of the greatest musical minds of his generation, “What gave Detroit a great music scene?” “Oh,” he said, “That’s easy. There’s an amazing talent base there and what these bands are, they’re like little start-up companies and the people are always combining and recombining in different little start-up companies, different little bands, and sooner or later, one hits. Not all those bands.” So what a city does is allow that mixing and matching of creativity and skill and inputs and technology and it creates something new.
I think what’s happened is that certain cities have galvanized that, New York in media and entertainment and finance and very broadly, LA in entertainment and other fields, they’re big and they can do a lot. San Francisco and Silicon Valley in technology, Nashville in music, we can go on and on down the line. Other cities have lost their way and they’ve wanted something to specialize, so what you’ve got out of this is a geography that’s terribly economically unequal. I’ve been writing about this for more than a decade. Our regions are becoming further apart and within our regions, even our most innovative, we have levels of inequality, special, geographic inequality, rich and poor neighborhoods, unlike anything we’ve ever seen. Somebody has to wake up and smell this coffee.
What we’ve been doing is pushing this aside; "No, it’s not really there. Oh, the world is flat, we’re all happy, we’re all participating." Baloney. Our world, every economic transformation, every economic period of crisis, particularly with the rise of new industry, like early industrialization, like the rise of a knowledge in technology and creative economy, carries with it tremendous economic inequality. It takes a lot of effort to make that system more stable and here’s what I think we need to do:
After the first reset we built manufacturing industries, we started to build those industries in the latter part, or the middle part of the 19th Century. We strengthened them up in the later part of the 19th Century. Henry Ford came along and he gave us the assembly line, and it wasn’t until Roosevelt and the New Deal and after the war that we actually made manufacturing work good work. My dad always told me this story. He said, “Rich, my dad had to quit school in the seventh grade in Newark, New Jersey, he took up work at a factory,” and he said, “He, my grandfather, my grandmother, he, and his six siblings, all had to work to make one good pay, one family wage.” When he came back from World War II after unionization, the Wagner Act, Social Security, and attempts to really lift productivity, his job, a manufacturing job, was a good job. We got to create good jobs in our country and our society. And obviously we’re going to create technology jobs, those are relatively high paying for engineers and scientists, we’re going to create media jobs, we’re going to create creative jobs. And, you know, about 35 million Americans work in those jobs, we’re expected to create another 6 or 7 million of them over the next decade or so.
But we’re losing manufacturing jobs, we’re losing the jobs that my dad had. They’re going away; we’re projected to lose anywhere from a couple hundred thousand to another million of those over the next decade, depending on who you believe.
The other kind of jobs we’re creating are these lower-wage, lower-skilled jobs in the services and people joke. It’s a Costco job, it’s a Best Buy job, it’s a food preparation job in McDonalds, home health care aide, hair cutter, who cares? 60 million people work in those jobs and it’s become something that I probably care more about than anything else in the world. We’re working on it in Toronto. Our mayor and our council are behind it, in Toronto. We got to make those jobs good jobs, we can’t write off 60 million people. We can’t just write them off and say those are bad jobs. And the things we did to make manufacturing jobs good jobs, we can do in the services. We can organize workers to improve their own efficiency. We can introduce continuous improvements, suggestion systems. I mean, it sounds so, lean, they call it "lean manufacturing," lean, they’re talking about lean starts, lean services. Companies are doing it. And when I look at the list of the best places to work, I was startled to find it was some high tech companies like Apple and the Sands Institute and all of this, Genentech, but there were service companies like Best Buy and the Container Store and Whole Foods and Wegman’s, way up, Four Seasons, way up at the top of that list.
We’ve got to make services pay and the only way we’re going to do that is by just arbitrary lifting wages. We’ve got to improve their productivity and my best example of this is janitorial work. We typically look at janitorial work as just horrible work. But we want to make our buildings greener and more efficient. Well, who knows how to do that? Who’s made the factories greener? The people on the line, on the shop floor, by figuring out ways to make sure spills don’t happen and working together to make industrial processes less toxic and less polluting. The janitors know more about the building and its operation and who left the window open and can do small and large scale things when teamed with engineers that would make our buildings much more efficient. Why don’t we empower them? And you can do this across the board.
What I find so amazing about services is many of them are very local. And, you know, I always say this funny line, but I mean it. Whether it’s the person who cuts your hair, the person who takes care of your older parent, the person who takes care of your kids or your lawn, or the person who gives you a manicure or a wax, whatever you want to call it: it’s hard to imagine that being off-shored. For me, I don’t even see how it could be off-shored. So they are jobs that are very sticky and very local. If we’re going to build a modern economy—if we’re going to take care of our people and overcome inequality—we can talk all we want about other approaches and bringing manufacturing back up. There’s this guy who pokes fun of me, Matt Crawford, and I like his book on the shop class and the soul craft, and he says, “You know, Florida is crazy, he believes creative people and knowledge workers, they’re all automatons stuck in an office and the service, they’re crappy jobs,” and he says, “People should be like me, like a motorcycle mechanic.” There are 16,000 motorcycle mechanics in the United States. There are 5 million people who work in mechanical work, repair, there are 62 million people who work in the service industry. 62 million versus 5 million versus 16,000. And, you know, I only wish everybody’s job could be like Matt Crawford’s. Matt Crawford not only works with his hands in a motorcycle place, not only that, that’s a fabulous job, he’s an entrepreneur, owns his business, who has control over his schedule, who can make his time, and does work he loves. You know, maybe that’s what we should say. Everybody deserves, whether they’re in service or high tech or creative or motorcycle repair or auto, everybody should have a job that’s more like Matt Crawford’s job than like what... and it doesn’t matter, what I say in the book, it doesn’t matter what kind of work you do. We shouldn’t raise those distinctions. Whether it’s service, creative, agriculture, you should have work that’s meaningful, that pays well, that uses your full skills, and I actually think it should be a basic human right. I say this, that the ability to use your skills and engage in work that’s meaningful instead of having to go out and buy stuff to give yourself an identity, that should be a basic, that should be a basic human right and I think it’s, you know, where our country, and other countries, need to head.
Question: Will we see a shift in the political geography of our country?
Richard Florida: I think we’ve seen a shift in the political geography of our country and I think we’re... and I wrote about this in a book I wrote called “Flight Of The Creative Class,” and I said it was coming and it’s come. I think our geography is an economic and political geography. It’s a geography of class, it’s a geography of political partisanship, it’s a geography of anger now and it worries the heck out of me.
When I look at, not only the dysfunction on Capitol Hill, when I look at the polling data from Pew and Gallup and others.. When I look at how Americans are not very happy with either party at all, and they do like the president, I like the president, President Obama, we’re lucky to have him. It’s not only the Republicans, it’s the Democrats. I think the Democrats are even in less favor than Republicans in certain quarters and where I find hope, though, this is really interesting, I do find hope in one place and it’s why I think cities are so darn important. People are really peeved about the Congress and Democrats and Republicans and partisanship, but when I go to a city, and I meet the mayor, and I meet the county executive, or I meet the council people. I’ll tell you, I can’t tell who’s a Republican or a Democrat. And people there, they like or they don’t like, but it’s not a partisan thing, they all want to build their city, they all want to make their city better, they want to make sure their kids have opportunity, there are jobs that they love, the community is vibrant, air is clean. You know, some are Republican, maybe Mike Bloomberg, some are Democrat, Gavin Newsom, I’m just thinking names, Rich Daley, Tom Mannino in Boston, John Hickenlooper in Denver, I don’t know what, he’s a friend, I don’t know what party he’s in.
But I think what’s interesting is at this local level, that’s where we’re coming together and working hard to build our communities, and maybe that’s where we have to look for solutions, rather than looking to this kind of dysfunctional partisan, political geography at the national level, I think at the local level we’re seeing real solutions, real laboratories of innovation, laboratories of democracy. And I say in the book, I think we have to push a lot of our decision-making, not just now what we’re doing is pushing decision making down and giving them money, we’ve got to give cities and communities the ability to raise revenue, not transfer revenue, raise revenue, and take care of themselves. And I think the more we do that, the better off we’ll be.
Question: Why might the financial crisis ultimately help New York?
Richard Florida: Well, you know, we’re in New York, and I think New York’s going to be just fine. I mean, it’s really funny when people talk about New York’s going to go down and Shanghai is going to eclipse it and the banks are going to go down and the economy’s going to collapse. I mean, anyone who’s studied the history of financial centers knows that it takes a lot to push one over. Look at London. The U.K. economy was literally in collapse after the war, and yet London stayed resilient and then made a massive comeback. Even after New York surpassed London years ago, London is still the top two and some people even say still competes very vigorously with New York. Financial centers have a long life, not because they’re financial centers, there’s something else that underscores them. They’re big, vibrant, fast, diverse, speed, velocity, they have a rate of urban metabolism, a high rate of innovativeness. I think the problem New York got into is it became distorted when these incentives for finance and banking just became crazy, and others have written on that. Others have written much more eloquently than I.
But I think what’s important is that New York is resetting and recalibrating and its getting back to what Jane Jacobs and others always identified that made New York great. This fast metabolism, this kind of New York speedy way of life, this focus on entrepreneurism, picking yourself by your own bootstraps, finding opportunity, and being innovative. And I think, you know, even when I look around New York now I can see it. You can already see the hegemony of the banks is broken. Yeah, yeah, yeah, they’re still extracting exorbitant profits, but hopefully that, too, will end, and as the reset goes on, that hopefully will end. But the longer you have that hegemony of banking and finance... and I remember I asked the head of one of the big investment banks during the boom, I said to him, “How do you think these crazy real estate prices in New York are affecting your ability to recruit people? Are you going to have to move to Chicago or Pittsburgh or open a branch somewhere else?” And he laughed at me, he laughed, he chortled, he said, “Oh, come on, Professor, we’re the cause! We’re the causing of housing boom, we’re not a consequence of that, our people are the ones driving up these prices.”
Jane Jacobs had this great, I actually asked Jane Jacobs this question, about what happens with gentrification and yuppification and a city that becomes tilted out a whack, and she said, “Oh, Richard, when a place gets boring, the rich, even the rich people leave.” And she just was a genius, she was just literally the most amazing common sense. When a place gets flattened out, when a place loses that creative energy, it dies. And I think one of the great things about New York is it has had this ability to constantly, even when it looked like, you know, the whole place was going to turn into a mall, and, you know, Times Square was going to be this boring, old thing, and Soho was this and that, somehow, it’s able to find in itself a new way of reinventing. And I love, I love the analysis that New York Magazine and this young man named Nate Silver did, where he looked at the best neighborhoods in New York. And if you look at that analysis, which is so nicely done, the rise of Brooklyn, the resurgence of Queens, the transformation of different Manhattan neighborhoods, and there’s a lot of old buildings and there’s a lot of neighborhoods and a lot of places for people to go and find affordable space, like the space we’re in right now, doing this interview. There’s a lot of space in New York that can still be rebuilt and rebuilt, so I think it still has a lot of life in it and it’s hard for me.
Now, I think over the next generation or two, sure, we’re going to see the rise, Hong Kong’s going to do better, and Singapore, of course, and Shanghai. But I think we’re at least a generation or two off until any of those places can really compete against New York or London.
Question: How will climate change affect the geography of our country?
Richard Florida: Well, I mean, we made a mess of this. We made a mess of the earth, we made a mess of this incredible natural environment that God gave us. And it’s just tragic when you think about it. I mean, when you really think about what industrialism has done to this planet, you almost say, “Were we aware? Did we have a giant stroke?” What happened to human beings, and maybe we invented these technologies that we just couldn’t fully understand, but we’ve destroyed so much of our environment.
My hunch is, now we've finally—and I’m not an environmental expert—we've finally reached a point where we understand we have to stop doing this. One, I think people are much more aware. Most people are much more aware of their environmental impact, of being more energy efficient. There’s kind of a new culture emerging where people are just more careful, a little bit more careful, and we have to do much more, but I think the other thing that’s really occurring in our society, is we just can’t afford the time of giant commutes, people are understanding their time is valuable, they have to live in denser areas, and they, there’s a fabulous book by David Owens, and I quote it in my book, “The Great Reset,” called “The Green Metropolis.” And when he looks at it, as counterintuitive it sounds, big cities like New York, like Tokyo, are much more energy efficient than these sprawled out, stretched out, suburban areas.
So, I think one of the things we’re going to find is, if we can find a new way of life which is denser and combine that with environmental efficiency and by engaging people and being smart about it, we can do a lot better. But, boy oh boy, you know, I’d say it’s one of the two or three big challenges of our time, but it may be, it may well be the number one challenge of our time... I think the important thing is not to draw a distinction between a natural environment and a human environment. And here’s the way I’d phrase it:
One of the things industrialism did to us, which was so tragic, it had taught us, encouraged us to be wasteful. On the one hand, we could be wasteful of environmental inputs, we could be throwing stuff back into the environment that was toxic. We were just terribly wasteful because we were producing these things with new technology. But it also encourages to be very wasteful of human resources. We treated workers like crap, we saw them as cogs in the machine, we didn’t skill... I mean, Marx talked about this and the alienation and exploitation, we can’t waste our natural resources and we can’t waste our human resources and what gives me great hope, I say in the book, “The clock of history is always ticking.” The competitive nature of capitalism means though who are less wasteful win over time. So those who waste less natural resources get more efficient. Those who waste less human resources and use human creativity and don’t neglect that talent, win.
So I think there’s something in the logic of capitalism that is at least pointing us, pointing us toward potentially a more efficient and more creative—and I say in the book, you know, “The history of capitalism, for the first time now, economic development requires human development.” You probably could add to that it requires to some kind of natural resource cultivation as well. So I think all those three things point, at least point us in the direction of a better future.
Recorded on April 27, 2010