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.

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 focused 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 focused on that.

Clyde Haberman of the New York Times asks why do America’s presidential candidates in both parties don’t give a hoot about cities and urban issues. Heck a huge share of the US population lives in urban centers and most of the countries economic output is generated there. There’s the usual hemming and hawing about the primary calendar which puts states like Iowa and New Hampshire first. But the real reason is the Republicans could care less about this vote and the Democrats take it for granted. Bruce Katz hits the nail on the head when he says:

“the political class at the national level is about 20 years out of
date as to how the country has changed because of population growth,
demographic diversity and economic restructuring. We’re a metro
nation. It’s time to start acting like one.”

Politics is one thing. Economics quite another. Since density and urbanization economies play a big role on productivity, innovation and competitiveness, strengthening cities and metro areas is a key component of economic competitivenesses and prosperity. US economic might, in my view, was premised on two pillars – open immigration and an urban system with literally dozens of great cities. Both pillars are being undone.

So, The Advocate asked five big city mayors, “Why should young gay professionals move to your city?”  (h/t Allison Kemper) 

Of course, even The Advocate ignored the actual implications of the Gay/Lesbian Index and instead went with a "gays are good for economic development" argument.  Which, in turn, allowed the mayors to ignore the importance of tolerance, diversity and inclusiveness.  So for many mayors, the answer seems to be cheap housing.  "Please, come and gentrify my city…"

I actually like Allison’s take on it much more:

I wonder what the mayors would say about the underlying legal framework. Inviting gay professionals to Kansas City when they have less than no legal rights once they get there is outrageous.

It’s hard for Americans to see the difference between living with legal discrimination and living without it. The mayors point to night life and real estate prices, but people are willing to pay a high premium to have rights under the law. Boston and SF are expensive for a reason.

These guys think that they can capture the market by telling people about art galleries. What they don’t get is that the sunk costs, the table stakes are the presence of progressive laws and the promise of future improvements in those laws. For many of the same reasons that companies locate in Delaware, queers locate in Boston.

Once you’ve paid the ante, the art galleries will follow. But you have to ensure you have a competitive institutional framework. You can’t just wave cheap real estate flyers. The Kansas City mayor almost got it when he said you can stay at home more cheaply in Kansas City. He should have known that wouldn’t cut it.

Way to go, Allison!

posted by Kevin Stolarick

“$1 million plan to make Noosa gay mecca,” Sunshine Coast News, Australia

“Get lost, Richard Florida. Young adults love Tucson!“ Arizona Daily Star

Over at the Wall Street Journal David Wessel has an interesting p.2 story on the vanishing middle of the U.S. job market.  Reminded me of things my late colleague Bennett Harrison and Barry Bluestone warned us of long ago.

As Harvard economists Lawrence Katz and Claudia Goldin put it recently, “U.S.
employment has been polarizing into high-wage and low-wage jobs at the expense
of traditional middle-class jobs.”

The story hems and haws about technology and globalization. The answer is simple and straightforward – the economic transformation to a Creative Economy.  The US is losing manufactruing jobs and growing two kinds, what Ed Leamer calls geek jobs and grunt jobs – or what we call creative  sector and service sector jobs.

Hem and haw all you want, the solution is staring us all right in the face.  The last big economic transformation, the shift from an agricultural one to an industrial one created a very similar kind of divergence – heck the called it the gilded age.  There were lots of manufacturing jobs. They just stunk. They were dirty, paid poorly and were extremely dangerous. Eventually, we built institutions that turned these bad jobs into good jobs.

Wake up already. We can do something similar now. We are generating millions upon millions of low-skilled jobs in the service economy. We need to turn them into good jobs.

It amazes me that no one can see this. Not in the U.S. Not anywhere else. The right says the market will fix it. The left wants to rebuild manufacturing.

Can someplace, somewhere out there pay attention to this and organize the world’s first service economy summit devoted to turning service economy jobs into better paying, more fulfilling, longer-term, career-track creative jobs.

Everything in my very being wanted to resist doing an Al Gore-Nobel Peace Prize post, until I came across this by Dave Roberts over at grist.org:

If he entered the race, Gore would run headlong into the same dim-bulb, theatrics-obsessed political press that did him so much harm in the 2000 race. He’d also run into Hillary Clinton’s political
machine. … He’d end up in a bruising, demeaning battle, and winning some peace prize wouldn’t shield him. The process of electing a president, like so
many things in the U.S. today, has become small and petty. It shrinks,
cheapens, simplifies, and plasticizes those who take part in it, and
Gore has already learned.

No, it would be a disaster for Gore to enter the race at this point — not because he might lose, but because he has transcended U.S. partisan politics. He has become a figure of
global stature, one of a tiny fraternity of private individuals in the
world capable of driving historical change from outside the confines of
any institution. What many Americans don’t realize is that the rest of
the world is not distracted by the serial, lurid distractions that
compose our political dialogue. … In other countries, they don’t care about his electrical
bills or his waist size or his clothing choices or his lack of that
most important qualification for leader of the free world, the ability
to act like a regular guy.

Gore can’t act like a regular guy. He’s smart, and he talks like a smart person. He’s earnest and
committed. He cares. He wants to help save the world. Inside the
glorified high school of U.S. politics, those qualities make him a
square, an easy subject of mockery. But outside the U.S. they are
assets. Gore can help bring governments together; he can get powerful
financiers, corporate titans, rock stars, and energy scholars in the
same room. He can help shape policy and public opinion across globe,
not just in the U.S.

Amen!  I remember well when Al Gore was a senator and worked on environmental issues across the aisle with the late Senator John Heinz, one of his best friends.

Maybe instead of running for President, Gore should do himself a favor and move to Toronto.

Click here and tell us how you see it (hat tip: Martin Kenney).

Paul Graham has a new paper on the role of “startup hubs” like Silicon Valley in accelerating and improving the efficiency of new business startups. From what I can tell, it sparked quite a reaction when it was presented. Here is the reaction, and here is another take.

Appears that a group of CFL (that’s Canadian Football League for all you yanks is laying the foundation to purchase the Buffalo Bills. The current Bills owner is 89 and won’t leave the team to family. Toronto is within a two-hour range of Buffalo so apparently it is easier to sell the team this way because it’s not a “move” per se.  The story quotes the Bills owner as saying Buffalo and Western New York is a small market. So, the story suggests a Toronto move makes sense. Read more here.

Makes even more sense when you think in terms of mega-regions.  There was a time not too long ago when Buffalo and Toronto were separate cities and  Buffalo with its manufactruing muscle was the stronger one. Now  they are part of the same great mega-region with 22 million people, $530 billion in economic activity – 12h largest in the world and 5th largest in North America (only Bos-Wash, Chi-Pitts, Southern California, and Char-lanta are bigger)- ahead of Northern California and Greater Paris!

Having a bi-national team would be great on so many levels. And hopefully it would even encourage immigration officials to streamline the border-crossing process. Who knows it could even lay the seeds for a bi-national Olympic bid.

Can’t wait to see how they squeeze the mega name on the new logo!