Creative Class

OK, so that explains why I’ve been spending so much time there lately. Quote is from Tom Wilson (on Huffington Post), author of this new book on Twitter.

Evident of the shift away from manufacturing work in North America, Statistics Canada reports that there are now approximately 200,000 more women than men in Canada’s paid labor force.

The shift toward a majority female workforce is probably also further evidence that the current economic downturn has accelerated the shift toward a creative economy.

After all, jobs that have traditionally employed women are creative, or have become so in recent years. In addition to the female majority in problem-solving fields like health care and teaching, what were previously more rote occupations now require tremendous creativity and smarts. For example, the traditional “typist” or “secretary” who took short hand and then typed memos word-for-word now tends to be an administrative assistant or executive assistant empowered to draft the memos, use creative flare to format and polish documents going to clients, and organize the business lives of a group of people in her team – among dozens of other responsibilities.

Richard Florida has often touched on the role gender has played in shaping what we choose to do. Men (like Richard’s father) have often drifted into manufacturing jobs because it was the “masculine” thing to do, rather than doing something more creative that they might have enjoyed better.

Strong unions that emerged from “men’s labor” successfully lobbied to retain these masculine manufacturing jobs for perhaps years beyond when they made sense. They have, unwittingly, put many of their members at a huge disadvantage in the 21st century economy where different skills are needed.

Meanwhile, the multi-tasking, diverse roles of women’s lives – raising kids, managing a household, and often doing some paid labor – somehow seem to suit the newer, knowledge-based, and service-based economy that is ever-changing and workplaces that requires both firm direction and kindness, dedication to routine and ability to adjust to changing circumstance.

Happy belated Labor Day.

I welcome your thoughts, including how all of this relates to discrepancies in pay between “male” and “female” jobs and workers.

Been busy with the final push on the book and also tweeting up a storm (so do follow me there). Hope to get back to more regular posting after the holiday. But news of rising unemployment and the two-track economy got me thinking about the changing nature of jobs and work and my favorite books on employment, labor, and work.

Ben Hamper’s Rivethead, a scorching account of mind-numbing, dehumanizing work on the assembly line.

Harry Braverman’s Labor and Monopoly Capital, the seminal analysis of the separation of mental and manual labor, conception from execution.

David Montgomery, The Fall of the House of Labor, a labor history classic.

In an age when the tendency to separate mental and manual labor has reached an extreme, it’s important to value all work and remember that each and every worker – in the laboratory, artist studio, factory floor, and retail shop – is creative. It’s also important that we continue to strive to improve the pay, working conditions, and creative content of all work.  We must do more than just create jobs. Our task is to create better, more fulfilling, more productive, and more humanizing kinds of work. The productivity of our society and well-being as individuals can be greatly enhanced by creating work that employs our full productive capabilities, enables us to use our chosen talents, and fully express who we are and who we want to be. In an era when so many people are alienated by work and choose to express themselves through consumption and lifestyle, work remains a key element – if not the key factor – of our identity.

Yesterday, we looked at the relationship between drug use and economic patterns. We saw that drug use was associated with both higher levels of state economic output as well as higher levels of unemployment.

Today, I turn to the relationships between drug use and economic class. My colleague Charlotta Mellander charted the relationships between drug use and the percentage of a state’s economy that is made up of two classes: the creative class – that is, people who work in knowledge-based, artistic, and professional occupations; and the working class – those who work in production, transportation, and construction jobs.

While the associations between drug use overall are weak, the patterns for marijuana and cocaine are significant. Take the creative class: Both marijuana and cocaine use are positively and significantly related to states with higher concentrations of the creative class.

Correlation coefficient: 39**

Correlation coefficient: 36**

Now look at the results for the working class, where the pattern is reversed. Both marijuana and cocaine are negatively and significantly related to the concentration of working class jobs in state.

Correlation coefficient: -.35**

Correlation coefficient: -.36**

Note: * indicates statistical significance at the .05 level; ** indicates significance at the .01 level.

The June unemployment numbers do not look very pretty for the United States. After four months of improvements in the number of jobs lost, the numbers again increased to 467,000 up from 322,000 in May. The unemployment rate, now at 9.5 percent, is the highest in 26 years. The recession is entering its 20th month and will soon reach two years with little end in sight.

While the great recession of the 21st century grinds on, explanations for it continue to elude us. Some think that it is a depression and they may be right. I suggest that we have at least four issues on our plate that have emerged as a perfect story. The solutions to all are institutional. First, let’s start with the financial crisis. This financial crisis resulted from market failure. The lack of rules or what some like to call regulatory arbitrage, that is, working the rules led to the financial meltdown. We are still not out of the woods on this one because the rules have not been fixed. Without rules markets cannot work.

Second, we now have a global recession with falling demand and rising unemployment. A classic case of underused resources. The recession was in part caused by the financial crisis, but only in part. It is clear now that at least two interpretations are in order. First, it was a classic case of over-investment in housing. We have about two to three million too many houses. It will take about six years to work this off through population growth and attrition. This “inventory recession,” to use an old phrase, is nothing new, only the sector is – housing. The other interpretation is that it was caused by imbalances in the global economy between rich and poor countries. In either case, as Richard Florida pointed out with housing, or Business Week with global imbalances, new rules are needed.

Third, we have finally realized that we do indeed have a sustainability issue in the environment. It is both about the carbon footprint and about the type and amount of energy used. This is not a cause of our current financial and economic problems but it impacts it directly since it is about investment, and with a huge amount of uncertainty where to invest it is also putting a drag on the economy. Rules would help.

Finally, we are just realizing that globalization that started a few decades ago might be a dead end. It is a dead end not because the world does not want to globalize (most do) but because markets cannot work without rules. And in a global economy we need global rules. Here is the rub. All of the above problems in some way suffer from having a global economy without a set of global rules. When the last era of globalization ended at the dawn of the first world war, the rules that governed up to then also evaporated and it took decades to put them back in place after the second world war.

We are now into the second decade of the second globalization of the world economy. Until we are able to put the “rules of the game” in place markets, I am afraid the economy, and the financial sector, cannot be expected to lead to growth. The environmental rules are even more onerous. We just might need to start working on the rules of the game sooner rather than later. This seems like a task for the creative class. What is needed is talent and honesty in order to put a global structure in place where all can prosper. This is no small task.

There’s no shortage of debate on this one. But a new report (pointer via Tyler Cowen) by the intriguing combination of Harvard professor of Technology and Operations Management Robert D. Austin and Lee Devinand, a theatre dramaturg, shows there’s really no conflict:

[W]e examine the apparent conflict between artistic and commercial objectives within creative companies … We surface some assumptions that underlie such debates, compare them with findings from our research on creative industries, and identify three “fallacies” that sometimes enter into discussions of art in relation to money. This, in turn, leads us to propose a framework that can support more productive discussion and to describe a direction for management research that might help integrate art and business practices. We conclude that despite an inclination to take offense that often attends the close juxtaposition of art and commerce … the interests of art, artists, and business can be best served if more commerce enters into the world of art, not less.

Check out the other fascinating work on art, music, and management this team is doing.

Matthew Crawford’s observations on the nature of work, notably manual labor, struck me as extremely valuable. Per Crawford:

“Many of us do work that feels more surreal than real. Working in an office, you often find it difficult to see any tangible result from your efforts. What exactly have you accomplished at the end of any given day? “

His essay explores the rewards/fulfillment of working with one’s hands, and rightly notes that many “knowledge workers” (myself sometimes included) are often denied a real sense of gratification or creativity.

“Ultimately it is enlightened self-interest… that will compel us to take a fresh look at the trades… For anyone who feels ill-suited by disposition to spend his days sitting in an office, the question of what a good job looks like is now wide open.”

Not to mention, Crawford notes, that many jobs such as his – repairing motorcycles – simply can’t be outsourced. He might over-romanticize some of the truly dirty work that is performed but his essay and hopefully his book Shop Class as Soulcraft: An Inquiry Into the Value of Work asks some powerful questions.

Do you feel accomplished at the end of a long day sitting in front of the computer or in meetings?

I’ve just read a fascinating book, The Age of the Unthinkable, by Joshua Cooper Ramo. Ramo is a managing director at Kissinger Associates, focusing on China. He’s a former foreign editor for Time magazine.

The Age of the Unthinkable talks about how uncertainty and interconnection is increasing in every aspect of our lives and in world politics. From the interplay of energy use and the environment to finance and mortgages, to diseases spread by travelers, to terrorists and weapons of mass destruction, the world is becoming unmanageable using old models.

Complex decentralized systems are not unmanageable. Think of the Internet or healthy ecosystems or financial markets (OK, there was mismanagement at some levels. But the system worked, trading can go on even with the overload of a crisis). The thing is, they’re not manageable by straight-line thinking and top-down control.

As you might guess from his background, Ramos talks a lot about international relations. He says the old institutions set up after WWII – from the UN, to the way the State Department is organized, to how foreign aid is distributed – are not only incapable of dealing with today’s uncertainly but are actually counterproductive. One reason is they’re all designed to confront perceived problems head-on, which often has the result of making them worse – think nuclear proliferation, the war on terror, the financial crisis.

To oversimplify, Ramos says we need to do a couple of things.

1. Build resilient systems at every level.

• To deal with bioterrorism or new virus strains, we could try to plan for every eventuality, develop and stockpile vaccines, etc. But a more effective plan would be to build a strong healthcare system, with an efficient and effective public health component, and be ready to react to whatever happens.
• On the financial crisis, he talks about America’s low savings rate as a reason why the meltdown is so hard on individual families. If people had adequate rainy day funds we’d be better able to ride out the inevitable  downturns.

2. Design for uncertainly by using the model of our immune system.

• Be ready to react to crisis and opportunity with flexible systems. He talks about involving people at every level of an organization, or of a society, in decision making. Great case studies from Hizb’allah to a company in Brazil’s 1980’s financial meltdown to AIDS care in Africa.

This seems to me to overlap with the transition to a creative economy and Richard’s mantra that every person is creative and we need to make all work creative.

(Interesting David Brooks piece about Iran in today’s NY Times along the same lines.)

Entrepreneurship seems to be the cure all for almost everything including the common cold. In a recent paper, the Kauffman Foundation found that the number of Fortune 500 companies and Inc 500 companies were founded in bear markets. A bear market is when stock prices are more or less falling and a bull market is one in which they are rising. Now this seems counter-intuitive at first. Would you not start a business when times are good? In bad times, if other firms are having trouble selling goods and services, why would you start another one? However, there is another aspect to this. If you lose your job you might have to start a business (a necessity entrepreneurship). But I do not think many of these would grow up to be Fortune 500 companies.

So how do we explain the Kauffman finding? Well, a quick look at bear and bull markets reveals a very interesting finding. Over the whole of the 20th century we found about three bear markets (the market rising) and about three bull markets (the market falling). Each is about 15 years, give or take a little. Keep in mind that a bear market does not mean recession. Recessions are short, but bear markets can last a very long time. In fact, the current bear market stated about 2001 so we are about halfway through if you take the more or less 15-year average. So it is not surprising if about half of businesses are started in bear markets. In fact, a quick look at the statistics suggests that the start-up rate of new firms is not very sensitive to recessions. They are around eight percent. They never fall by 50 percent and never rise by 50 percent.

So what does this finding tell us? Nothing I am afraid. It is business as usual. In good times and bad times Americans will start businesses. I would suggest that the creative class start-up rate is also very steady in the recession. The regional variation of this might also be very interesting.

We’ve already got a name for conventional infrastructure projects that are ready to go: shovel-ready. But what do we call ready-to-fund projects that might be part of a needed creativity stimulus?

Here’s a list our gang at the MPI came up with:

• Production Ready
• Neuron Ready
• Spotlight Ready
• Camera Ready
• YouTube Ready
• Synapse Ready
• Cortex Ready
• Imagination Ready
• Log-in Ready
• Google Ready
• Performer Ready
• Web 2.0 Ready
• Stage Ready
• Performance Ready
• Canvas Ready
• Realization Ready
• Communication Ready
• Pen-stroke Ready
• Roll-out Ready

Vote for your favorites and feel free to suggest more.