Richard Florida has a piece in the March 2009 Atlantic, How the Crash Will Reshape America. Readers will not be surprised to hear that there’s a lot to disagree with in the piece, particularly Florida’s continued support of his notion of the creative class, then again, the idea his bread and butter so of course he’s going to tout it.
Florida suggests that the creative class® is still going to be a mainstay for cities, but we’ll see otherwise. I am now predicting a major newspaper closing within months, not by the end of the year and I think there’s a very strong likelihood that the Times itself won’t stay in print for long, except maybe as some kind of Sunday morning rip-off of Monocle: news subsidized by fashion and style (this is actually the Times now, but think of the whole paper in the magazine). The music industry has been bleeding like a stuck pig for years and there’s only so much blood left. Hollywood is going to continue its dance of death, surviving for the moment, although worse off that before. I expect that the next economic crisis will take it down as well. Hipsters have managed the illusion of living without any means of financial sustenance for a while. Now we get to see them do it for real. Florida’s creative class is hardly well. For all of the excitement about amateur-generated content, it is hard to see how it can be monetized. Between the crisis in overproduction of cultural goods that marks network culture and the free availability of amateur-generated content, the creative industries are set for a Detroit-style tailspin. Make no mistake, this economic crisis is their first round.
Similarly, Florida’s prediction that financial centers will continue to dominate is questionable. I won’t outrightly say that he’s wrong, since my research doesn’t confirm this yet, but the financial collapse is also a transition. Nobody is going to trust the friendly face of their doe-eyed real estate broker, banker, or financial advisor anymore. These jobs, along with a similar array of positions in the financial sector, will be streamlined out of existence. Over 50,000 jobs in lower Manhattan are history and I suspect we’ll see double that before the crisis is over. Where will these freshly-minted MBAs go? Here Florida is right: there were plenty of financial industry jobs in peripheral places in Middle America and as those have evaporated, the MBAs won’t be able to find easy jobs back home, unless they are good with the topless dancing.
This is a central problem with the creative class: it doesn’t really exist and it never did. On the contrary, the creative class was a place in which the financial sector could hide itself. Take a look at Kevin Phillips’s Bad Money for the real story. It was finance, e.g. the bubble economy, that dominated the American economy since the 1980s. Like Patrick Bateman in American Psycho, the financial sector liked to surround itself with the trappings of the creative class and saw itself as creative. Moreover, with the massive cuts in taxes at the top brackets over the last thirty years, living in cities and consuming culture like mad was something the financial industry did, but this is hardly the same as suggesting, as Florida does, that creative professionals have much say in the economy.
When I was growing up in rural Western Massachusetts, the local General Electric plant was shedding jobs. My friends in high school saw themselves as "burnouts," understanding that before they even held a job, any dreams of a well-paying life in industry were gone. Finance and the creative class will now follow in their wake. Sadly there isn’t a whole lot left to replace them and as I’ve already stated, infrastructure is hardly being funded in Obama’s stimulus plan. Why do people continue to think it is? It baffles me.
I’ll agree with Florida when he observes that the early predictions this crisis would undo the United States were self-serving. On the contrary, other countries are suffering much harder and will continue to suffer much harder. For all the blather about the problems in the United States, the country has massive resources and Americans work harder and absorb immigration (and thereby cheap labor, new talent, and global connections) more readily than any other country. Speculation was as crazy, if not crazier, in the EU and Asia than in the US. Americans didn’t build Dubai or CCTV. A quick check: is real estate in your city more expensive than in New York? If you aren’t in a global city (I’d include London, Tokyo, and Hong Kong), then you’re doomed. This is not to say that real estate in those cities isn’t going to collapse, but it is to say that real estate in countries on the periphery of Europe will likely never recover to its pre-bust levels.
Florida is also right that we should give up homeownership in favor of rentals. Obama needs to roll back laws, enacted decades ago, that favor new rental construction and encourage landlords to find ways to profit with existing apartment buildings while maintaining them in good condition. Nurturing an older housing stock in cities would keep labor costs down by making it easier for employees to live near their workplaces, encourage economic and ethnic diversity, and discourage commuting long distances. These are all vital things and they have been lost in the reshaping of American cities to serve Florida’s creative class (e.g. the financial sector in hipster clothes). I am not referring to section 8 housing here. There is room for that, but there is also a need for housing for the working class and we have abandoned that wholesale in search of easy profits.
He’s also right about foreclosures. We need to find gentle ways to reduce the prices of real estate by another 20 to 30% and not prop it up artificially. I don’t like the idea of subsidizing housing for former homeowners (this also undoes the support for landlords I mention above), but prices need to drop and drop fast.
I have problems with even the cautious optimism at the end of the article. We’ve reached a heat-death within capitalism. The ponzi scheme shuffled around for so long and took so many people’s money that we’ve exhausted any possible economic growth that the biggest technological advance in this generation, network convergence, offered us. Finding ways to make a profit in this economy may be possible on an individual level, but I am not confident that growth can be stimulated again on a worldwide level. Both in this country and elsewhere, a lot of people who made poor job choices are going to have to find other ways to make a living besides finance and they’ll have to do it back home, in the same places that have been depopulating for years since that is where housing is cheapest. Am I optimistic? No, not at all. Too bad Starbucks isn’t hiring much these days.
®creative class is a registered trademark of the Creative Class Group LTD, global services advisory firm founded by Richard Florida.