The co-location of the creative class

I have never read Richard Florida’s The Rise of the Creative Class. There are a few reasons for this. First, his thesis was so ubiquitous in the 2000s that a distillation was easy to be had for free. People would write about Florida’s ideas. And he’d talk about it constantly in interviews.

Second, what was true about his model struck me as obvious, and what was not made it less significant. Single professionals in the knowledge economy are not by and large young Mormons who marry young and want to move into spacious tract homes in the suburbs as soon as possible. Rather, they will spend a significant part of their 20s and 30s expending and consuming in and around large cities, and want to be in circumstances where they can meet other like-minded people in similar situations.

But you can’t just create these cities by putting up bike paths. There’s no easy way to mimic what occurred in Silicon Valley. The Valley has a combination of structural (Stanford is there) and contingent factors (California has no non-compete clauses) that help it. It may be that in the modern world there are actually greater returns to locating in an ideapolis which is more expensive.

I recently had a conversation with a friend about academic research. What proportion in a given field of novel and innovative findings are produced by the top 10 institutions? The percentage varies by field and person to person, but I’ve gotten numbers ranging from 40 to 90% from people in different fields. In other words, research productivity is described by a power law as a function of institution.

Similarly, there will be one Silicon Valley, and everyone else will have the scraps. Information technology has not made the landscape flat. The visceral and concrete aspect of “being there” is even more of an advantage in a world where everyone is accessible via email and social media.

This article in Wired, Can the American Heartland Remake Itself in the Image of Silicon Valley? One Startup Finds Out, makes it pretty clear that it doesn’t matter how cool Denver is, it’s going to be hard if you aren’t in Silicon Valley.

The importance of geography and co-location is why I propose that a project for the 21st century should be the construction of a massive arcology between Long Beach and San Diego. Perfect weather on the coast and mountains inland. Aim to house the entire United States population there to start out with.

16 thoughts on “The co-location of the creative class

  1. Enough with that sort of talk. The surf spots down there are crowded enough already!

  2. I think Razib is joking. The obvious counter example to his proposal is San Jose which is co-located with SV but not at all innovative and more so every year.

  3. I was under the impression that Southern California was already “full” population-wise due to chronic water shortages.

  4. I’ve lived in Pittsburgh for twelve years, and watched the renaissance of the city. Hell, my former neighborhood was the epicenter of gentrification in the seven years I lived there, to the point I sold my first house for 3.5 times what I paid for it seven years earlier. I mean, we basically redid the whole house from top to bottom while we were there too, but we got out all the money we put into it and then some.

    Not every city needs to become the next San Francisco. Hell, cities shouldn’t want to, considering how ridiculously expensive it has become. Really in order to stage a comeback, a city needs to do only one thing – have residential neighborhoods which appeal to people who a generation or two ago would have moved right out to the suburbs after college. This is admittedly just shifting the pile around, because the city’s gain is the suburb’s loss – one of the big reasons why Richard Florida has soured on his “creative class” thesis. But from a strictly budgetary perspective, it makes perfect sense for cities to attract more middle-class professionals as residents, which is why virtually all of them (even lost causes like Detroit) have been doing so.

  5. First of three comments:

    Here is an economists approach to this issue:

    “Housing Constraints and Spatial Misallocation” by Chang-Tai Hsieh and Enrico Moretti
    http://realestate.wharton.upenn.edu/wp-content/uploads/2017/03/802.pdf

    “We quantify the amount of spatial misallocation of labor across US cities and its aggregate costs. Misallocation arises because high productivity cities like New York and the San Francisco Bay Area have adopted stringent restrictions to new housing supply, effectively limiting the number of workers who have access to such high productivity. Using a spatial equilibrium model and data from 220 metropolitan areas we find that these constraints lowered aggregate US growth by more than 50% from 1964 to 2009.”

    John Cochran comments: “Half of all US growth for a half century is an astounding amount. 1964: $3,734 trillion; 2009: $14,419 Trillion. Growth = 3.05% per year. At 6.1% per year, $3734 x (1.061)^(2009-1964)=$53.6 trillion dollars! OK, maybe that’s too huge. Well, read the paper and see how they came up with the number. If you don’t like their assumptions make different ones.”
    http://johnhcochrane.blogspot.com/2017/05/yimby-papers.html

  6. Number 2:

    Richard Florida has apparently developed some second thoughts about how the “Creative Class” is working out for us. Harvard Urban Economist Ed Glaeser reviewed Florida’s new book in the Wall Street Journal:

    “Gentrification and Its Discontents: Cities attract the rich with amenities and the poor with services. But they are failing the middle class. Edward Glaeser reviews “The New Urban Crisis” by Richard Florida.” by Edward Glaeser on May 5, 2017
    https://www.wsj.com/article

    “Fifteen years ago, Richard Florida’s book “The Rise of the Creative Class” correctly argued that in the 21st century urban success would stem from skills and innovation, not smoke stacks and heavy industry. Now he has issued a wake-up call about a new crisis that threatens the future vitality of our cities. …

    “Cities have always contained enormous inequality, largely because they attract both rich and poor people. The rich are drawn to cities by amenities and opportunities, but they also offer many job options for the less skilled, especially within service industries. Social services are often more extensive than in rural or suburban communities, and urban public transportation eliminates the need to own a car. But urban poverty can have terrible consequences: Even if poorer people choose cities for good reasons, their children can become “stuck in poverty for generations.”

    “… His excoriation of NIMBYs—the exponents of a “Not In My Back Yard” anticonstruction ideology—is delightful: He calls them “destructive” urban rentiers who ‘have more to gain from increasing the scarcity of usable land than from maximizing its productive and economically beneficial uses.’ He coins a wonderful phrase, ‘The New Urban Luddism,’ to describe the antigrowth advocates who oppose not only home-building but all infrastructure, including ‘the transit and subway lines required to move people around’.”–https://www.the-american-interest.com/2017/05/06/californias-reactionary-housing-policy-burns-millennials/

    Glaeser formulates his own opinion:

    “The Economic Implications of Housing Supply” by Ed Glaeser and Joe Gyourko.

    “In some parts of America, there has been a revolution in the regulation of home building over the past 50 years … For most of U.S. history, local economic booms were met with local building booms, so labor could follow shocks to local productivity. However, between the 1960s and the 1990s, it became far more difficult to build in the nation’s most desirable locations, especially those along the coasts. Higher economic productivity in San Francisco now leads to higher prices, not more homes and more workers … This change has both led to a transfer of wealth to a few lucky homeowners and to a distorted labor market where people move to regions such as the Sunbelt that make it particularly easy to build …

    http://johnhcochrane.blogspot.com/2017/05/yimby-papers.html

  7. Florida’s charlatan ideas were thoroughly debunked even back in the day. The man is exactly that – a charlatan, a snake oil salesman – who pitches glib ideas to the gullible (including policy-makers) and enriches himself.

    The world of the half-read is full of them. Another notable example of this type in the public policy field is Ian Bremmer, the man who “invented” the J-curve and founded The Eurasia Group consultancy.

  8. Number 3 Some push back.

    I remember reading an article in the late 1980s that discussed Japan growing economic power. The Japanese stock market was soaring, and it hit 39,000 at the end of 1989. Then came the crash. 27 years later, the Nikkei is at 19,000. The Dow which never crossed 3,000 in the 80s is now at 20,000. The article said that the grounds of the Imperial Palace were worth more than the State of Florida.

    I said to myself, that if I were the Emperor, I would make that trade. He would have been way ahead.

    The point is that the wheel keeps spinning. Silicon valley is way up, but that could change. It really doesn’t make much silicon anymore. Most of the new products are social media fripperies, hardly necessities.

    Not only that, but the relevant history suggests that Tech (i.e. digital computer based technology) happens all over. A few examples:

    Apple in the Valley was an early maker of personal computers, but it was IBM based in Suburban NYC acting through a branch in Boca Raton FL that made it a commercially viable product, using software supplied by Microsoft in Seattle. Microsoft is still a major force in that field.

    Apple’s Macintosh personal computers operating system is a shell on top of Unix, invented by Bell Labs in suburban NYC (opposite side from IBM). The Apple iPhone has a lot more not invented in the valley, like the cell phone system which was invented by Motorola in the Chicago Suburbs. Its processor is based on designs from ARM in Cambridge UK (from whence came Alan Turing who theorized the digital computer well before one was built), based on the RISC idea of IBM.

    Stanford is a great university (at least in STEM fields), but they are not the only ones. LA has Cal Tech, the home of Carver Mead, the prophet of smaller, cooler, faster, cheaper. Carnegie Mellon in Pittsburgh is a very important center of Tech. MIT in Boston is very important.

    Another factor that will trim the dominance of Silicon Valley is the crazed politics and regulatory environment of California that is making it difficult to start new business there and to attract talent. High prices for electricity, housing, water and other necessities will yet drive people away.

  9. People have been predicting that Silicon Valley will collapse under its own weight of overcrowding, long commutes, high real estate prices, high labor costs, etc etc etc for 30 years now and yet it keeps defying gravity and continues to prove the critics wrong. I think its dominance in cyber tech fields will continue for a long time. The above stated problems pale in comparison to New York City’s which still remains the capital of finance and many of the arts here in the US.

  10. Just because you’re feeling a little homesick for Cali doesn’t make it okay for you to propose that the rest of us should have to move back there too.

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