Hou-Orleans

Interesting back and forth over at Tory Gattis's blog on Hou-Orleans, the mega-region running fro Houston to New Orleans and megas in general.

Caught this Richard Florida blog post on the rise of global mega-regions ... Unfortunately, something in their methodology led them to split Texas into two mega-regions, the Dallas-San Antonio corridor, and the Houston-New Orleans corridor, extending all the way the Florida panhandle (see map on p.27). Of course, anybody familiar with Houston's economy knows it has far more connections to the rest of the Texas Triangle cities than it does to NOLA and points east, and I let him know in the comments.  The true mega-region is the Texas Triangle Megalopolis, as identified by the Federal Reserve Bank.

But some disagree:

I wouldn't be so quick to dismiss the Houston-New Orleans corridor. That's the petrochemical belt, and though Houston is admittedly the dominant pole in that belt, we do have a very strong connection to the points in between, such as Beaumont and Lake Charles and Lafayette and the famed cancer alley between Baton Rouge and NOLA. There are a lot of strong connections tieing Houston in that direction.  I don't see a similar connection between Houston and San Antonio, nor the points in between.

Another points out:

Probably a much better and more thorough examination of this phenomenon in the US is happening at america2050.org ... It's very interesting stuff, and really just getting started, having had an official organization for just three years. But it's got some top demographers and planners working on it.

Hmmmmm ... These are empirical issues. We use a comprehensive methodology to identify mega-regions, using light-emissions to pinpoint contiguous geographic areas.  It's Hou-Orleans that's a distinct mega that way: There are significant light gaps in the Texas Triangle.  I'm a big fan of what America 2050 is doing, but our method for identifying megas is different and we believe to be a significant advance in two respects. One, it takes guess work out of the process, allowing mega boundaries to be determined purely on observed light data.  Two, it enables us for the first time to systematically identity and compare megas not just in the US but worldwide.

Buff-Tor-Chester?

The Economist.com (Free Exchange) chimes in:

As Felix Salmon notes, Richard Florida's debut column in the Globe and Mail reads like a response to Ed Glaeser's rather pessimistic assessment of Buffalo's economic prospects. In fact, Mr Florida specifically addresses Mr Glaeser in a blog post ... The city of Buffalo is only 60 miles, along a straight line, from Toronto (although an overland route extends the distance to just under 100 miles). Along the east coast, cities like New York and Washington enjoy economic spheres extending outward that far or farther, so it's quite reasonable to expect that Buffalo might, with sufficient infrastructure investment, share in the economic energy surrounding Toronto.  ... A more crucial point relating to Toronto-Buffalo symbiosis, however, is one that Mr Florida acknowledges--the role of the international border.

Megas around the Internets

Lots of interest in mega-regions generally and Tor-Buf-Chester around the blog-sphere.

Financial Times columnist, blogger, and "undercover economist" Tim Hartford, writes:

Richard Florida is now writing in the Globe and Mail. I enjoy his blog very much but confess to never having read his very successful books [RF: Ouch]. ... Florida and I, along with others such as John Kay, Martin Wolf and Robert Lucas, are huge fans of the late Jane Jacobs, who pointed all this out long ago. Anyone who has not read Jacobs is missing a treat. Start with "Cities and the Wealth of Nations".

I am a huge Tim Hartford fan and cite his stuff up and down in Who's Your City?

Over at Portfolio.com's Finance Blog, Felix Salmon adds:

Richard Florida doesn't explicitly mention Ed Glaeser in his column today in the Toronto Globe & Mail, but it can easily be read as a direct response to Glaeser's pessimistic view of Buffalo in City Journal. Glaeser says that any attempt to  revitalize Buffalo is doomed; Florida, by ontrast, places Buffalo in the context of a larger "mega-region" including Rochester, Toronto, and maybe even Montreal, Ottawa, and Syracuse. Looked at that way, he says, it's huge and vibrant, "a trans-border economic powerhouse that stretches from Buffalo to Quebec City."... To listen to Glaeser, then, infrastructure investment in Buffalo is doomed;  According to Florida, by contrast, it's desperately needed, especially when it comes to rail links across the Canada-US border, and much more efficient border crossings in both directions.

The folks at Strategy, Innovation and Change ask "Is Richard Florida the new Michael Porter?" -  which I take as high praise indeed, since he singlehandedly made strategy a field and is widely considered the number 1 business intellectual of his time, though I'm not sure this was exactly what they intended.

The Outsourcing of Consumer Services

(posted by David) Steve Lohr's piece, Hello India? I Need Help With My Math, in the NY Times (sub rq'd) uncovers the evolution of outsourcing as consumer services (often considered non-exportable) such as tutoring, tax and legal services, and personal valets are now available at much lower costs than local providers.

From the article,

The second wave, according to some entrepreneurs, venture capitalists and offshoring veterans, will be the globalization of consumer services. People like Ms. Yamaki and Mr. Tham, they predict, are the early customers in a market that will one day include millions of households in the United States and other nations.

They foresee an array of potential services beyond tutoring and personal assistance like health and nutrition coaching, personal tax and legal advice, help with hobbies and cooking, learning new languages and skills and more. Such services, they say, will be offered for affordable monthly fees or piecework rates.

Putting the Buff in Tor-Buff-Chester

The first round of comments on my Saturday column came mainly from Toronto but Buffalonians also have something to say.

Yesterday, while at lunch, the topic of conversation was that of Richard Florida (theory of the creative class) and his recent move to Toronto. The conversation led to a Globe and Mail article that ...formulates, as many of us have been doing for quite some time now, that the key to growth and prosperity it to capitalize on the fact that we're already a major force if you look at our region as a network. We all know that Buffalo must do a better job in marketing what we have, and what we are getting. One of those assets is our relationship to Toronto. When someone comes in to Buffalo for the first time Toronto is always on the laundry list when I talk of the great assets of our city. I tell them that they can leave Buffalo at 9am and still be in Toronto for breakfast. Then they can spend the day there and be back in their favorite city in time for dinner. That's the same length commute that many of my friends who live outside NY take to get into the city. It always amazes people that Toronto is so close. It also reinforces the idea that Buffalo should aim for becoming a strong mid-size city... with a mega cosmopolitan city within a short drive. Listen to what Florida writes as part of the lead-in for his article: "And yet everywhere we go we are met by Torontonians who either seem mystified that we would move to what they imply is a second-rate city, or seem to be seeking some kind of validation in our answer." Sounds a bit familiar doesn't it?

And vice-versa: One of "our" assets is proximity to Buffalo. I'm a huge Buffalo fan. I lived near Elmwood and taught at UB. The city has tremendous assets. Some of them, like great universities and great art museums are self-evident. Others a bit more mundane. As an American, I'm tickled pink we get watch our favorite US shows, as well as the Bills, on Buffalo TV.  Plus, I can pick up my favorite American micro-brews there.

Gay Shift?

The New York Times asks can gay neighborhoods maintain their relevance in the face of gentrification or are they becoming "passe'." The story draws heavily from the research of my long-time collaborator, UCLA demographer, Gary Gates.

There has been a notable shift of gravity from the Castro, with young gay men and lesbians fanning out into less-expensive neighborhoods like Mission Dolores and the Outer Sunset, and farther away to Marin and Alameda Counties, “mirroring national trends where you are seeing same-sex couples becoming less urban, even as the population become slightly more urban,” said Gary J. Gates, a demographer and senior research fellow at the University of California, Los Angeles. At the same time, cities not widely considered gay meccas have seen a sharp increase in same-sex couples. Among them: Fort Worth; El Paso; Albuquerque; Louisville, Ky.; and Virginia Beach, according to census figures and extrapolations by Dr. Gates for The New York Times. “Twenty years ago, if you were gay and lived in rural Kansas, you went to San Francisco or New York,” he said. “Now you can just go to Kansas City.”

Education 'Fix'

Stanford's Jeff Pfeffer is the world's preeminent expert on talent.  He has some important things to say about education as a magic bullet for economic woes.

The argument that "more education" (where more sometimes also means "better") will fix problems of competitiveness, income inequality, un- or underemployment, etc., essentially proceeds from a completely free- or competitive-market premise ...  Just upgrade skills and provide more/better education and everything (well, almost everything) will be fine.  But in domains other than science and engineering (as well as in science and engineering, as the current discussion and data suggest) this argument fails and has failed for a long, long time.  Almost 30 years ago (1979 to be exact), Randall Collins wrote a book entitled The Credential Society (Academic Press).  His argument ... was that a) there was little evidence that, on the educational requirements (as assessed by skill levels as derived from detailed studies of jobs and occupations) were increasing overall;  and b) what education and the credentials thereby attained did was move people relative to one another on the hiring list.

Interesting stuff.  Our research at the Martin Prosperity Institute points to a growing disconnect between education or "human capital" levels and regional outcomes.  Educated people frequently leave the places they were educated. That was India or Ireland for a while. When I lived in Pittsburgh I used to say, "our greatest export isn't steel, but our highly educated people." For a time, and maybe still today, lots of them ended up in California and especially Northern California, even though the state had slashed taxes and was not investing a huge amount in primary and secondary education.  And we're also finding that while education levels match somewhat to regional income, they have only limited effect on regional productivity.  Silicon Valley is different that Naples Florida, the former generates wealth and productivity, the latter lives off what was generated elsewhere.

The connection between local education and local development is broken. Something else is going on. It's important to focus the conversation on what exactly that might be.  Your thoughts?

Class Politics

I've long said political polarization in the United States reflects a fundamental class divide. Andrew Gelman of Columbia University provides an intriguing analysis complete with more maps.

Couch Potato Index

Forbes magazine released its list of America's most sedentary cities earlier this week (h/t: Dean Alexander).  The ranking is based on:

data on body mass index (BMI), physical inactivity and TV watching habits for the country's 50 largest metropolitan statistical areas. For information on BMI and physical inactivity, we turned to 2006 data from the Centers for Disease Control and its comprehensive Behavioral Risk Factor Surveillance System, which surveys metropolitan areas annually on a range of health issues. For BMI, we added the percentage of obese or overweight people and ranked cities based on the combined number. When measuring frequency of exercise we looked at the survey's sole indicator: the percentage of people who had not engaged in any physical activity in the past 30 days. To determine TV watching habits, we used Nielsen data on the average number of hours of TV watched per week by metropolitan area.  After establishing where cities ranked in each category -- 1 for the heaviest city and 43 for the lightest, for example -- we then added the three for a final score. Memphis earned the lowest score with 10, and San Francisco claimed last place with 123. Some metropolitan areas, like Sacramento, Calif., or Columbus, Ohio, could not be included due to insufficient data from either the CDC or Nielsen. In total, we ranked 43 cities out of the original 50.

Not sure I completely buy it, but the story is here. Still, I'd be curious to see what other regional factors correlate with this couch potato index.

CEOs for Cities Weighs In

Over at its blog, CEOs for Cities - an organization of the leading mayors, university presidents and CEOs from America`s largest cites - pummels Joel Kotkin.

In his opinion piece in The Wall Street Journal, The Rise of Family-Friendly Cities, Joel Kotkin sets up an either/or set of economic development and lifestyle choices that simply doesn't exist ...  Family-friendly cities are not terribly different from other cities. Ask business and civic leaders around the nation what‚s driving their concern about whether their city appeals to young people, and they will first tell you they are needed for the labor force. But what really worries many of them hits much closer to home. They worry their own kids won't return after college. Being family-friendly has a lot of surprising dimensions.

Drop Out Factories

Bill Gates says U.S. schools are "broken." Alvin Toffler calls them relics of a by-gone industrial age. Now, according to Johns Hopkins University researchers, 1 in 10 American high-schools is a "drop out factory," where 60 percent of freshman do not even make it to their senior year. What a colossal waste of human talent. The U.S. has been living off the educational investments of other countries, particularly China and India, for the past several decades.  What happens if the supply of foreign talent dries up or decides to head elsewhere?

Generation Innovation

Max Levchin is the 32 year old founder of PayPal which made him rich. He's bored, so he's launching a new company at age 32.  He's a serial entrepreneur, like many in the San Francisco Bay area.  This New York Times story provides a nice profile, quoting Stanford's Bob Sutton: "In other parts of the country, things like a great estate are the symbols people most respect. But here the greatest status symbol is a person's ability ... to still bring out new hot new companies ... working on hot new technologies."  It's a fascinating tale.

The key point, which the article breezes past, is this: He's an immigrant - born Maximilian Rafael Levchin in Kiev, Ukraine. His family migrated to  Chicago when he was 16 years of age.  And when immigration restrictions were far less stringent.  Maybe the Levchin's would be admitted to the United States today.  But with stricter immigration controls, then again maybe not.  And the real question is How many more families like Max Levchin's are making decisions on where to migrate to today?  How many will choose locations like Canada, Australia, New Zealand, the United Kingdom or elsewhere around the world?  We'll know the answers in another 16 years.  That's when the seeds of these location decisions will be harvested.

No one can say for sure where the PenPal's, Google's, and E-bay's of the world will crop up in the year 2025 or 2030. But there's one thing I'd bet on: Because of immigration restrictions. many many more will end up outside the U.S. - that's where the "human seeds" of those innovations are planting themselves today.

Mark DeSantis

Readers from Toronto, DC and the world's mega-cities may not know that name, but Pittsburghers will.  Mark is an old friend who left a promising career in DC to return to Pittsburgh and help foster change in the late 1990s.  Now he's running for Pittsburgh's mayor as a Republican.  And the Pittsburgh Post Gazette just endorsed him (h/t Camille Dvorsky).

As a self-proclaimed nonpolitician, he is refreshing and even chafes at the notion that mayoral politics expects him to "pound my chest and say I'm great." That's not him, he said. "I'll tell you what I don't know." Yet, in reality, there's not much he doesn't know. One thing we do know is the Republican, this year, can win. With $285,000 raised in cash and in-kind contributions, more than any recent mayoral candidate from his party, the DeSantis challenge has a shot. If the number of Post-Gazette readers reading this editorial agree he should win, then he will win. These readers, these voters, have that kind of power, even though some of them may have voted for few or no Republicans in the past. Other "Democratic" cities, after all, have had successful Republican mayors -- New York, Los Angeles, San Diego, to name a few. In Pittsburgh, plenty of disaffected Democrats and others have been waiting for a credible candidate to return two-party democracy, debate and decision-making to the city. That would be the first big change under Mark DeSantis. For Pittsburgh, it should be the start of many more.

Amen.

Glamour and Class in the Global City

Very interesting interview with sociologist and global cities guru, Saskia Sassen.

[G]entrification is not a new phenomenon. Some would argue it is the result of capitalism’s “creative destruction”.  ...It makes the urban economy dynamic, it beautifies the city, brings in state-of-the-art infrastructure. ... But this is an economic dynamism that has a nasty habit of hiding its costs. You do not see all the displaced little shops and people, the disruption, and often, destruction of livelihoods that this brings with it. Finally, the state-of-the-art glamour zone makes everything else look rundown and unattractive. It devalues the rest of the city. Yet much of the urbanity of a city comes from the older, messier areas. In the new glamour zones, you won’t see street life, the mixing of differences and people who are not there just to take an elevator up to the 102nd floor.

The full interview is here (h/T: Ken McGuffin).

Outside Looking In

Wendy Waters one of the absolutely top urban bloggers around offers some interesting observations on mine.

As I’m sure Florida would agree, all of his praise is not to say Toronto does not have challenges and problems. But, some of these are issues other cities would love to have: transit is too popular and therefore crowded; too many people want to live in the area, driving up housing prices and creating the need for more infrastructure, etc. And other challenges are somewhat universal, or at least North-America wide in their occurrence such as crime, homelessness, etc.

One possible reason Torontonians think less highly of their city is that within Canada, it is currently often compared to Calgary and Vancouver, which are doing better financially right now because of the global oil and resource prices around which those cities’ economies are partially based. Also, Vancouver has attracted more world attention and accolades from being named to host the Olympics, to being labeled among the world’s most liveable cities by organizations such as The Economist and Mercer Consulting. But there is a downside to the constant rosy picture of Vancouver painted by outsiders. Vancouver’s writers politicians and other business and civic leaders have tended to believe the international press as well as their own economic development marketing promotions, allowing them to ignore some of the real problems the city has (which, are not that different than other cities’ problems, but need attention nonetheless) such as crime, homelessness, and drug addiction.

Hopefully, Toronto’s economic and social leaders will use Florida’s comments to take the gloomy blinders off and celebrate what the city does well (and try to ensure this will continue). But the danger is then dawning rose coloured glasses and not addressing the challenges the city faces if it is to continue to be a key.

Actually, Wendy, I could not agree more! 

And everyone else out there, Wendy's blog, All About Cities is a must read if you care about cities and urban trends.

Different Strokes

Here's a comment just in from a Swedish colleague who's familiar with Toronto and Washington DC.

The best way of learning about the way people perceive their cities is to talk to - taxi drivers. Those are the ones with all the info.  When I asked taxi drivers in DC what they thought of the US almost all of them said - "the US is great, if it wasn't that people are working so hard," adding how many hours per week they were working themselves. I asked taxi drivers in Toronto the same thing - and they said: "Canada is great. If I work hard I can have a decent standard of living". On the plane back from Toronto, I was squeezed in between two giant men, both with strong eastern European accents. I thought they knew each other, but one was of Polish origin the other one from Russia. We talking and I asked them how long I'd been in Toronto. Both of them laughed and said they were FROM Toronto, not from Poland or Russia. They considered themselves Canadian. Both of them praised Canada, saying this was a country that would promote you for your hard work and a great place to raise your kids. The Polish man had his son with him and they were going back to Poland to meet with relatives). So over and over again I got this message - Canada is good to you if you work hard, whereas the  US message has always been "US is good for you BUT you have to work hard"...There's a fine line between the two, but it was so very noticeable to me during this very short stay." I think you've got it right -- and sometimes it takes someone from outside to notice.

Amazing how much one can learn from a single column and subsequent exchange around the blog-sphere.

It's Getting Hot in Here

Lots of comments on the column around the blog-sphere. Here's a quick sampling.

Dan at More Notes from the Underground writes: "[I]t's obvious that he hasn't been in Toronto long. Why? He's optimistic about this place in a way that we longer-term Torontonians do not permit ourselves to be in many ways. Is this because we've been let down by our city's inability to get top-flight events (Olympics, Expos) that other, smaller Canadian cities can attract? I don't know, but we've taken to shrugging about this place too much."

We Eat Toronto says that I: "mentioned having the uber-Toronto peameal and egg sandwich at the St. Lawerence market so that planted the idea in my mind. We spied the shop hawking these sandwiches while at the market so we couldn't resist. 4.95 with tax so certainly not cheap (maybe that helps make it authentically Toronto-ish?). It was pretty good. Just like the Tim Horton's egg mcmuffin is a better version of the original McMuffin, this sandwich was better than the TH edition. However, the bacon wasn't as flavourful as it could be. No other complaints except obviously the price."

Randy McDonald adds: "It's interesting to see that Toronto's hinterland really might extend that far beyond Toronto proper, beyond even Canada's borders. Since at least the 1960s, Canadian journalists, sociologists, and others have been writing about the Quebec City-Windsor Corridor, a concentration of population, industry, and wealth that stretches from Windsor, Ontario in the southwest (just next to Detroit) northeast towardS Québec City, and has Toronto very nearly dead-centre, with its importance rising since then with Montréal's relative decline. More recently than that, at least as earlier as my brief 2005 observation about the decline of the American cities of Detroit and Buffalo relative to Toronto, others have been suggesting that these and other cities might try to recover by linking with a luckier Toronto. I only hope that Toronto's up to the challenge."

CanCult on "The Rise of the Toronto Class" - gotta love that headline: "Toronto has an inferiority complex?"

Great to see folks reading and commenting on the column. Keep 'em coming!

Globe and Mail Column

The first installment is here.

Clunky sounding or not, mega-regions are the real economic engines of the global economy. The 10 largest account for 43 per cent of the planet's economic activity and more than half of its patented innovations and star scientists who generate pioneering breakthroughs, while housing only 6.5 per cent of its population. The top 40 produce 66 per cent of the world's economic activity and more than eight in 10 of its patented innovations and most-cited scientists, while being home to just 18 per cent of the world's population. All of this convinces me that place, not statehood, is the central axis of our time and of our global economy.

There's a nice story by Globe and Mail editor, Edward Greenspon, here.

Today is the hard launch and Exhibit A in what one of my predecessors used to call editorial refreshments is Dr. Richard Florida, one of the world's leading scholars on the relationship between economic and social progress and the critical role of the creative classes. Richard, long an attentive student of this country, chose earlier this summer to move his research team and family to Canada from the United States. He is itching to become part of our national conversation and we are delighted to make The Globe and Mail his venue.

Richard is an inveterate blogger and his musings will appear on globeandmail.com. You can find it today just under the headlines of our home page. He will also write a monthly column in the Focus section and a separate monthly reflection on his new hometown in the revamped and rechristened Globe T.O. section. Today, he pronounces on the deeper meaning of the relationship between the Buffalo Bills and Toronto.

Obviously, we live in times that are both faster moving and more complex. We all share the frustration of being overloaded with information but still missing understanding. Recruiting Richard to write for The Globe is part of a broader effort to bring more context and meaning to the world around us.

Thanks for the kind words, Ed. It's a true pleasure to be on board.

There's a story on our "social life" in Toronto, here.

The blog is over at the Globe and Mail, here.

Can Buffalo Come Back?

Harvard University economist Edward Glaeser has a new piece in the City Journal on Buffalo's prospects (h/t: Alison Kemper). His  answer: "Probably not—and government should stop bribing people to stay there." Whoa - talk about tough love. He continues:

The truth is, the federal government has already spent vast sums of taxpayer money over the past half-century to revitalize Buffalo, only to watch the city continue to decay. Future federal spending that tries to revive the city will likely prove equally futile. The federal government should instead pursue policies that help Buffalo’s citizens, not the city as a geographical place. State and local policymakers could take steps that might—might—help Buffalo stave off its demise, if they avoid the errors of the past. ...

As for state and local politicians, reducing New York’s unnecessary taxes and regulation would be a good idea, since if Buffalo is ever to rebound, even somewhat, private innovators, not government projects, will be the primary reason. Better schools and safe streets would also be key to improving Buffalo’s chances of survival. Yet though such policies would improve things, they would not restore the boomtown of the early twentieth century; the economic trends working against such a prospect are simply too great. The best scenario would be for Buffalo to become a much smaller but more vibrant community—shrinking to greatness, in effect. Far better that outcome than wasting yet more effort and resources on the foolish project of restoring the City of Light’s past glory.

I'm realistically optimistic. The key to Buffalo's future lies less in U.S. policy and more on the dynamic economy here on the Canadian side of the border. The Tor-Buff-Chester mega-region is Buffalo's greatest hope. It's in the interest of Buffalo and New York policy-makers - including the current front-runners in both parties - to make sure that border works effectively. Another key is establishing better transit links to Toronto. Another thing that Buffalo and Rochester have to offer is world-class health-care, that could potentially serve the mega-region. The key is to think and plan across borders  - in terms of the mega. Our mega is a growth magnet and that growth can spill-across to Buffalo and upstate New York. It doesn't necessarily have to, but with the proper framework and actions, it could.

Coming in the Globe and Mail

We've entered into a cool new partnership with the Globe and Mail. I'll do a regular column and more. Here's the announcement that's been running in the paper the past couple days - which literally bowled me over. The first column runs this Saturday. I'll also do a special series where I visit great neighborhoods and spots in and around Toronto. We'll be taking write-in nominations for places to visit.  This blog will be picked up on globeandmail.com giving us an audience of 5 million per month! More to come soon.

Update: The Globe and Mail's press release after the jump (courtesy of Ken McGuffin).

The Creative Class is Spiky

Terrific new paper shows just how spiky the creative class is. The research by Mark Lorenzen and Kristina Vaarst Andersen of DRUID, a research center in Copenhagen -and who will be visiting with us at the Martin Prosperity Institute this winter - charts the statistical distribution of the creative class across 445 cities in Europe.

Using novel statistical data, the paper analyzes the geographical distribution of Richard Florida’s creative class among 445 European cities. The paper demonstrates that size matters, i.e. cities with a high proportion of creative class tend to get more creative through attraction of still more creative labor. More specifically, the distribution of the European creative class falls into three phases, each approximating a rank-size rule, with different exponents (i.e., inequality).

Rise of the the Mega-Regions

Great piece by John Gapper over at the Financial Times on "NyLon" - the twin "city-states" of New York City and London.

NyLon is also part of the phenomenon of the city state. Coastal and entrepôt cities around the world are outgrowing the nations that contain them. Dubai and other Emirates states are reinventing themselves as financial centres and a token of Shanghai’s rapid growth was the appointment this week of Xi Jinping, one of the city’s leaders, to the ruling Chinese politburo. Meanwhile, New York’s fortunes have decoupled from the US in the past year or two. Home prices have plunged in California and Las Vegas but have kept rising in Manhattan and, while the US economy grew by only 0.7 per cent in the first quarter of the year, New York City’s economy grew by 4 per cent.

Our own research confirms this. So, hot off the press here's a link to our new research identifying the 40 mega-regions that truly drive the world economy.

Long and Short of It

Grant McCracken takes on Chris Anderson and the Long Tail:

The Long Tail a thoroughly partial book.  As I read through a second time, I was struck by what is missing.  You give plenty of attention to aggregators like Netflix, Amazon, iTunes, eBay, and Google and pretty much ignore the rest of capitalism!  You have taken on one of the most explosive developments in contemporary capitalism...only to offer a partial view and a single solution.  It's as if you declined the larger intellectual challenge. ... What is missing in The Long Tail is the work horse of capitalism, the corporation, and the extraordinary challenges that now confronts its innovation, strategy and marketing functions.   As virtually everyone knows, the corporate world is scrambling to deal with the speed with which taste and preference now fragment and change.  In turns out, The Long Tail pipe has pretty much a single answer for exploding markets: big (or bigger) pipes. ... There are two problems with this answer.  First, there can only be a few aggregators in the world, and this limits the usefulness of this book for the rest of the world.  Second, bigger pipes isn't, in the larger order of things, really the most interesting, ambitious or canny solution. What the "aggregator answer" ignores are the real challenges that exist as a single corporation learns how to be many things to many people, how it makes the boundary of the corporation more porous, letting the world in and innovation out, how it escapes the inevitable gravitational field created by the corporate culture, how it accomplishes some kind of continuity in the face of its external and increasing internal discontinuity. ... The scope of this book is smaller than I realizeIt seems to be that The Long Tail treats an astonishing problem, with a narrow, partial, and one might even say provincial response.

Anderson responds in the comments section of McCracken's blog.

Seems to me McCracken is onto something.  Sure individuals have more choice, but consumption still follows broad patterns.  My travels around the world - and our research on markets and consumption - convince me that the global creative class increasingly wears the same clothes, drives the saame cars, eats the same food, shops for the same brands and so on. The tail of the distribution plays its role, but I think Grant is right that it's important to keep focussed on the big fat middle.

Jane Jacobs and Global Change

Andrew Blum on Jacobs, cities and the environment (pointer vis Steve Johnson).

We are wedging ourselves between a rock and a hard place: between the pleasures of medium-density living (Greenwich Village, Park Slope, Toronto’s Annex) and the ecological necessity of even more density. When it comes to our homes, we are all justifiably afraid of change, especially when it feels like (or is) destruction. But we don’t often pair that truth with another oft-repeated one: Our way of life is unsustainable. In North America’s most beautiful urban places, we unfailingly fight every new tall building in the name of “quality of life” and the “character of the neighborhood.” We claim to have internalized the idea that it’s all connected, that slowing the warming of the planet is a global project, but the nature in our backyards remains sacred—often to the point, perhaps, of self-destruction.

Blum makes some interesting points, But I'm not so sure that localism is the nub of the problem.  Our cities are much better today that they were before.  Density is increasing in Toronto and other cities. Nimbyism remains a force for sure.  The rise of a spiky world and the mega-region - the flip side of globalization - are generating tremendousn growth pressures in a dozen or two megas worldwide which are growing "up" as well as out.  Environment is a huge problem but it seems a stretch to blame localism and the residents of city neighborhoods.

Service Design

Came across this interesting interview with Lauren Tan on "service design."

They have used a lot of service design on the projects, there were designers who call themselves service designers. But there are also a lot of different people coming from different backgrounds, like psychologist, social scientist, film producers, artists … I think this mixture is very interesting. There are people who don’t come from design backgrounds, but do service design.
Service design is not new. People have been doing it in marketing, in IT, in engineering, in arts …  It’s very interesting to have lots of different disciplines involved in what we call service design. Is service design something exclusive to designers? We’ve already talked about designers working in business, but the other disciplines can also do design. It’s about the exchange, it’s fascinating.

Jane's Place

I spent last week in Toronto and fell in love with what I will call its messy urbanism. The city contains the usual suspects on the menu of elements of contemporary good urban form: mixed-use, bike paths, transit, street trees, etc. However, there's a sort of less-than-manicured quality to the whole thing, and coupled with a huge diversity of people, the city ends up feeling gloriously messy, in a functional and walkable way. The city's messiness and realness stands in refreshing contrast to oft-cited beacons of "smart growth" and good urban design, such as San Francisco and Boston, where the perfection of the built form has almost transformed these cities into museums. In Toronto, rickety and ramshackle Victorian buildings sit snugly next to sleek modern 20-storey condos. Tree-lined streets of row houses (some restored, many not) run right into bustling commercial boulevards filled with streetcars, bicyclists, traffic, produce vendors. ... Toronto's urban messiness creates a truly unique city to visit and use as a role model for U.S. cities.

I could not agree more. This article captures the very essence of the city. Read the whole thing here.

Title of the Week

"Gawker and the Rage of the Creative Underclass" in the New Yorker (h/t: Courtney Miller).

Music and Class

Most interesting post by Mark Belmont over at Image and Authenticity:

With its true spiritual center in Richard Florida-lauded "creative" college towns such as Portland, Ore., this is the music of young "knowledge workers" in training, and that has sonic consequences: Rather than body-centered, it is bookish and nerdy; rather than being instrumentally or vocally virtuosic, it shows off its chops via its range of allusions and high concepts with the kind of fluency both postmodern pop culture and higher education teach its listeners to admire. ... Among at least a subset of (the younger) musicians and fans, this class separation has made indie more openly snobbish and narrow-minded. In the darkest interpretation, one could look at the split between a harmony-and-lyrics-oriented indie field and a rhythm-and-dance-specialized rap/R&B scene as mirroring the developing global split between an internationalist, educated comprador class (in which musically, one week Berlin is hot, the next Sweden, the next Canada, the next Brazil) and a far less mobile, menial-labor market (consider the more confining, though often musically exciting, regionalism that Frere-Jones outlines in hip-hop). ... The profile of this university demographic often includes a sojourn in extended adolescence, comprising graduate degrees, internships, foreign jaunts, and so on, which easily can last until their early 30s. ... If class, at least as much as race, is the elephant in this room, one of the more encouraging signals lately might be the recent mania for Bruce Springsteen—as if a dim memory suddenly has surfaced that white working-class culture once had a kind of significant berth in rock 'n' roll, too.

Bohemian Factor

A very compelling and very careful new study of the United States by Timothy Wojan, Dayton Lambert and David McGranahan provides substantial support for a large bohemian effect on local economic development. The authors conclude that their "results support the hypothesis that an unobserved creative milieu that attracts artists increases local economic dynamism." The study, published in the Journal of Economic Geography, is here.

Trumped

 

The New York Times Magazine dips to a new low - with an almost cover-to-cover feature on - GET THIS - "The City (read: Manhattan) in the Second Gilded Age."  I know the magazine has devolved into a marketting vehicle for selling expensive condos, high-end cars, and watches - not to worry this Sunday's Times also includes an entire special magazine for the chronographically inclined.  I can see Herbert Muschamp and Jane Jacobs turning in their graves.  The whole thing would be completely inane if it didn't include Bob Walker's piece on "the Donald's" new project downtown. Any artist or creative types left downtown are surely now packing their bags for Queens, Jersey City or Philly.  And another by Dan Gross on how the place is losing it's global edge in finance to London. After detailing the shift to London and other global financial centers, Gross tries to find light at the end of the tunnel. "So rather than high-end luxury services fueled largely by Wall Street wages and bonuses," he writes," New York will have high-end luxury services that themselves fuel the economy. wait til the dollar drops another 20 percent or so." Maybe. More likely, the globally idle rich will buy up more of Manhattan, at the very moment its economic base is being eclipsed.  Or as Jane Jacobs would say: "When a place gets boring even the rich people leave."

Flawed Science and the Creative Class

The creative class theory has had not its shortage of critics. Here the Raleigh News and Observer reports on a paper by Emil Malizia and three other University of North Carolina researchers:

"The general conclusion was that the traditional measures did a better, if still imperfect, job of predicting growth," Malizia said in a phone conversation. "Florida's ideas may sound good, but there's very little science behind them." In a pivotal finding, Malizia and his collaborators observed that the creative class is more a reflection than an engine of economic health: Their numbers correlated with a growth in income but not in jobs. ... Malizia noted one other flaw in Florida's argument: His overly broad definition of the creative class. Encompassing about 30 percent of the work force, it includes middle management at, say, Cisco Systems, as well as the programmers who design its breakthrough products. "Essentially, he uses one aspect of the creative class -- the bohemians, artists and goofy professors like me -- as a stand-in for a much broader population whose aspirations and tastes may be more middle of the road," Malizia said."

The article does not have a link to the final version of the study, but an early version I read is deeply flawed. First off, it does not even include a measure of the creative class as a key explanatory variable. So how can it purport to even test the theory.  Careful research done in the US and now in Europe shows incontrovertibly that the creative class measure (of occupations) not only performs well, but typically outperforms the standard educational measures of human capital in explaining economic development (measured as wages and incomes).

The North Carolina team shows how poorly they understand the theory and the flaws in their own research in the quotes above.  If they don't include a measure of the creative class, how in the world can they claim that is a reflection of economic health. They even say that our measures correlate more with income than jobs. Income is widely acknowledged to be a better measure of the level of development than jobs. Emerging economies create a lot of jobs but their incomes lag the advanced ones: Do we say this makes them more developed.

The comment about "bohemians, artists and goofy professors" is again strange and confused. We never use bohemians as a "stand-in" for the creative class. In fact, we estimate the bohemian index, like the gay index, as a separate measure NOT of human capital or talent but of tolerance. The argument is quite simply that cultural factors like openness to diversity and self-expression matter to economic development - again measured as wages, income or housing values.  Our research, including detailed path analyzes preformed by Charlotta Mellander and Kevin Stolarick  (see There Goes the Neighborhood; Inside trhe Black Box; Creative Class vs. Human Capital on the sidebar) shows how important these cultural factors are - a fact that is now becoming more widely recognized. The bohemian measure is not a substitute for the creative class, it is an indicator of an open-self-expression environment that attracts talent across the board.

These cultural measures - or "soft-factors" - which have been near completely ignored by economic development scholars like Malizia and his team really do matter to the reality and practice of economic development.  When we met with the South Carolina Council of Competitiveness last week, I asked what was the NUMBER ONE factor that they felt was impeding further development in their state. Their unanimous answer - not taxes, not incentives, not regulation - but CULTURE - that is openness and diversity. Why would people who teach and do research on economic development want to ignore and poo-pooh them, when these cultural factors are clearly so very important to the reality of economic development in their very backyard.

If research groups want to test the theory fine, then test it, honestly.  Understand what the underlying principles are and evaluate them empirically on their own merits. But don't completely mischaracterize the theory and test straw-men.  When you confuse the key variables, change around the causal mechanisms in the theory, fail to measure and estimate key measures and, and get the whole notion of how culture matters completely backward, that can only be called shoddy and flawed science. It's the kind of thing that gives social science -or should I say regional development scholarship - a bad name. If the authors truly believe in their results, I'd encourage them to engage in an open dialogue of their findings and results here in a serious and systematic way, instead of taking silly pot-shots in the press. 

Education, Schmeducation

Interesting article over at the American Prospect (pointer via Ryan Avent) on education and economic inequality. The title is right on - "schools as scapegoats."  I agree with the authors and with Ryan that schools and education are like mom and apple pie. It's a great way for folks on both the right and the left to avoid the issue. If we want to fix inequality, they say, fix the schools and increase the education level for everyone.  Sure it's true that the past several decades have seen what economists call increasing returns to education.The college educated earn more, and they tend to marry one another so the gap has grown. So far, so good.

But consider the fact that a huge number of those at the very top of the economic spectrum are college dropouts - Bill Gates, Michael Dell and many others.  These folks found the school system constrained their ability and focussed their attention on building hugely successful companies.

Our education system is broken, plain and simple. According to recent studies, a huge number of students are bored to death and learning takes place an hour or two of the school day.  We totally screw up the important thing - making sure everybody has adequate early childhood development, make it so that both parents have to work and can't spend enough time with their kids at this critical level, and then totally screw up education after around grades 5 or 6, with high-school for most kids a near waste of time.

But education isn't the driver of inequality. The real problem is less on the supply side than on the demand side. Our economy (as I've said many times) is generating two kinds of jobs - creative and service. The service jobs pay poorly and are career dead-ends.  If we were serious about dealing with inequality, we'd stop blathering on about education and do something to make those service jobs better.

People are creative. We like challenging and creative work. Most of us do not need to spend more time in educational prisons sitting like a bump on a log in class or getting ready for the big game, the pep rally or the prom. We need to be involved in stuff that activates creativity. Bruce Springsteen recently told 60 Minutes, more or less: "I guess I was a smart kid. But you wouldn't know it in school. Until I discovered the guitar and my band, and I found out how to use my creativity." Bingo.  How many of us have felt like that.

The real issue is on the demand side. As my colleague Charlotta Mellander is fond of saying, the key is how to increase the demand (and the pay) for creativity. Those service jobs are the place to start - from the coffee shop to the hair salon and more.

It's time our business and political leaders stop whining about education and get focussed on that.