Creative Class

My research team at the Martin Prosperity Institute just released a new report on Toronto in the Creative Age. Several things really stand out.

First, Toronto is still coming into its own as a major North American metro. U.S. metros in the Northeast and Midwest had significant expansion a whole lot earlier, but Toronto has seen substantial growth since the 1950s, sort of like a Sunbelt metro. Since then, it has transformed from a sleepy metro into a large and rapidly growing one, fueled by massive immigration and growing across almost every knowledge and creative  industry.

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Here’s some video from my CNBC StreetSigns appearance with Robert Shiller.

The most powerful factor in economic growth is human capital – the level and concentration of skilled, energetic, and productive people. Charting the human capital levels of nations and regions is all the rage today, but Adam Smith long ago argued that human capital constitutes a critical fourth factor of production alongside land, labor, and capital.  Human capital is the key factor in both national and regional growth, according to careful empirical studies.

Most regional economic analyses measure human capital across metropolitan regions. But metro regions – which are made up of central cities and their surrounding suburbs – come in all kinds of shapes and sizes. Some have densely concentrated central cities, like Manhattan in the greater New York region; others are more continuously sprawling like Los Angeles. A while back, a reporter called to ask me about the role of human capital in Milwaukee. He wanted to know whether it made any difference that human capital levels were low in the central city compared to the region as a whole. I responded that I thought it did. Following Jane Jacobs, my hunch was that regions with more concentrated human capital would have some advantage over others where the distribution was flatter or more similar across the metro. When his article came out, a number of prominent economists more or less said the same thing. But we all added that we couldn’t be sure; most studies focus on human capital at the metro level and few, if any, have looked at the distribution of human capital within metros – that is, between the urban center and its suburbs.

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It’s pretty well-known that our economy – and society – is transforming from one where wealth and prosperity came from industrial products and material goods to a system where new ideas, human creativity, and experiences play a greater and greater role. As societies become more educated and basic needs are fulfilled, the attention of their populations shift to favor experiences and self-actualization over physical goods and even luxury items – what sociologist Ronald Inglehart calls the rise of “post-materialist” values.

This shift can be seen in everything from the excitement around the sleek design and user experience of the Apple iPad to the rise in sales of organic, high-quality foods.

But my sense is that perhaps the best place to observe this transition is in the rapid evolution of the music industry. Music is a highly competitive business – one I like to think of as an innovative market in miniature. Musical entrepreneurs compete not only on the basis of musical talent and their ability to create new sounds and arrangements, but also on fashion, design, business acumen, and even spectacle. Music was one of the first industries to experience the brutal effects of the digital transition, and it’s clear that the ability to make money has shifted – even for the most established acts – from selling albums, CDs, and even digital downloads to live performance and, well, designing experiences. (more…)

Food is increasingly a key element of the city and of city life. Ever at the cutting-edge of trends that are reshaping the city, Chicago Mayor Rich Daley has become the No. 1 ambassador for the city’s world-class food scene, according to this report in The New York Times.

The mayor’s pride in Chicago’s growing stature in the world of haute cuisine was on display again this week. After Mr. Daley spent much of last week in Idaho at a conference of the nation’s news media moguls, his next two public appearances in Chicago involved promoting the local gastronomy scene

The mayor made a stop at the French Pastry School on Monday to promote its expansion into new teaching kitchens at the City Colleges of Chicago. The school’s chefs had recently visited City Hall to present the mayor with a chocolate replica of the Blackhawks’ Stanley Cup trophy. The mayor beamed below the brim of a tall chef’s hat” …  “He’s the best cheerleader for the industry that anybody could ask for,” said Sheila O’Grady, the mayor’s former chief of staff who is now president of the Illinois Restaurant Association.”

Money quote: “These chefs, to me, represent the creative class of society,” Mr. Daley said. “We have to realize how important they are to the city.”

My latest columns:

GOOD links this map from a new report on state obesity from the Trust for America’s Health.

A quarter or more of all adults are classified as obese in more than two-thirds of states. The fattest states are all in the South. Colorado, California, Montana, and Mid-Atlantic and New England states have the lowest rates of obesity.

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Economists and geographers have looked at the role of scale economies in shaping industries and also in the the clustering or agglomeration of economic activity. Princeton University economist William Baumol identified the role of economies of scope – for example, when large companies leverage shared research and development or marketing capabilities across their product lines or even used the same assembly lines to make different products. The theory of scope economies has been influential in economics and business studies but has not really been applied or discussed in economic geography or regional terms.

A new study with my Martin Prosperity Institute colleagues Charlotta Mellander and Kevin Stolarick explores the role economies of scope in shaping geographic outcomes, advancing a concept we call geographies of scope. Here’s the abstract: (more…)

That’s the title of my column in the Sunday New York Times Business Section.

When I was growing up, there was a strict line between work and life. Every morning, my dad downed a bowl of cereal and a cup of coffee and drove his Chevy Impala from our home in North Arlington, N.J., to the eyeglass factory in the Ironbound section of Newark, where he worked…

Over the past couple of decades, a new way of working and a new kind of workplace have evolved…

The trend has spread to the point that our lifestyles and our work styles are becoming increasingly blurred. Though my factory-worker father might not have believed it, those people you see hunched over their laptops in coffee shops and thumbing instant messages on their BlackBerrys as they walk through the park are actually working.

The full column is here.

To keep up with the changing creative economy and its new demands, communities, organizations, and educational institutions have to develop and embrace new strategies to better train, educate, and prepare workers.

As the second feature in our series, Creative Capstones, we interviewed Michael G. Novak, CEO of  the School of Design in Monterrey, Mexico (CEDIM) to discuss how the school is developing new models to train future designers and innovators. CEDIM recently launched its Master of Business Innovation.

Creative Class Group (CCG): Describe CEDIM and its history.

Michael Novak: From its beginning in 1978, when CEDIM started as a School of Design in Monterrey, México, it was clear for their visionaries’ founders that design and innovation would play a relevant role in our future society. Today, CEDIM is recognized for its innovative educational model which integrates design and innovation as the competitive strategy for the business in the new global economy.

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