Great Reset

Richard Florida‘s theories about economic development and the “creative class” don’t always resonate with me, but his latest book The Great Reset most certainly did. He makes some important points about the role of the service sector in our economy, as well as high-speed rail and urban development. My head was nodding vigorously at almost every page.

The thesis of the book is that we are on the brink of a “Great Reset”, or a massive reorganization of the old economic and social order that lead to the 2008 recession.  Just like the urban, industrial era following the Long Depression of 1873, and the suburban, mass-production boom after the Great Depression of the 1930’s, this Reset will be a sweeping transformation of where we live and work, what our jobs are, and how we spend our money.

Megaregions as the new economic geography

Each Reset resolves in a “spatial fix,” or geographic resettlement: the industrial city of the late 1800’s and the suburbs from the 1940’s onwards are examples. Florida projects that the spatial fix to the current Reset is the Megaregion: clusters of major metro areas, secondary cities, and their suburbs. The largest in North America is the “Bos-Wash” corridor (encompasing Boston, New York, Philadelphia, Baltimore, and Washington D.C, with over 50 million people and more than $2 trillion in economic activity). Megaregions, more than nations, run the global economy: the world’s 40 largest megaregions comprise 67% of all economic activity, 85% of all technological innovation, yet only 18% of the population.

People have been concentrating into cities for a while (since 2010, the world’s urban population now comprises the majority), and they will continue to. Megaregions serve as magnets for Florida’s “creative class” and have weathered the recession better than other areas, sustaining high economic and population growth while smaller cities have shrunk. A new theory of urban economics helps to explain why larger cities sustain higher “metabolisms” (a metaphor for the pace of innovation, economic growth and social life) without collapsing into congested and inefficient messes. The study’s authors describe this mechanism as “accelerated innovation cycles,” but I prefer Florida’s wording: “As globalization has increased the financial return on innovation (by widening the consumer market), the pull of innovative places, which are already dense with highly talented workers, has only grown stronger” (p. 152). Megaregions have a bright future.

The new economy: fulfilling jobs in the service sector and beyond.

While higher-paying knowledge/professional/creative jobs are growing and generate substantial wealth, catering solely to the educated “creative class” employed in this sector is an elitist, tunnel-visioned approach to economic development. Florida points out that the service economy, comprised of routine, low-paying, and generally disdained jobs such as in food service, hospitality, cleaning, and health aids, is bigger than any other sector. It comprises over 45% of U.S jobs, and it isn’t going anywhere because unlike manufacturing, it’s impossible to outsource overseas the tasks of cleaning buildings, walking dogs, or cashing people out at the grocery store.

Florida argues that the service sector is a huge untapped source of jobs that could be made better if companies paid front-line workers more liveable wages, offered promotion potential, and made better use of the analytical and social skills of all workers, not just the managers. Companies pioneering this approach have already shown that extending creative input to all workers yields innovations that help the bottom line, and makes for a more fulfilling work experience for employees, reducing costly turnover.

High-speed rail infrastructure is an investment in the new economy

If the highway and private automobile provided the framework for the Suburban spatial fix, High-speed rail will be the backbone of the megaregion economy. High-speed rail is the fastest and most convenient ground transportation available – and is often quicker than air travel when you account for security procedures and wait times. Rail increases connectivity within and between major metropolises and their secondary cities. It facilitates the exchange of people, ideas, and economic functions, broadening labor markets and providing a framework for in-fill development along rail corridors. As I noted in a previous post, economists and politicians have argued that the cost of high-speed rail infrastructure is not justifiable. I was very pleased with Florida’s counterargument, that it is less justifiable to use federal dollars to bail out the auto industries and banks that fueled the recession – in terms of the sprawled, suburban landscape and accompanying housing bubble – in the first place. A new economic order, a Great Reset, calls for new infrastructure. He goes on to say:

“Infrastructure is always expensive, and there’s no clear way to measure the overall future return on the investment, whether it’s in the form of innovation, development, or new communities and jobs. Infrastructure provides a skeleton on which to grow a new economic model. The infrastructure investments we make now will determine the kind of economy we have in the future…In some ways, infrastructure is analogous to government support for basic research in medicine or the social sciences. Such investments, which are either too large or too risky for private companies to undertake, offer a significant social rate of return that can drive future invention, productivity, and growth” (p. 170).

High-speed rail is an example of such infrastructure, a critical adaptation and complement to a new economic order of megaregions, that could offer a high quality of life and fulfilling employment opportunities for those in the professional and service sectors alike.

Advertisements

About katosulliv

Transportation, mapping, and cities enthusiast.
Aside | This entry was posted in Uncategorized and tagged , , , , , , , , . Bookmark the permalink.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s