Here’s the long version of my column published in today’s The Globe and Mail.

Canadians often point to the angry red versus blue divide that is such a hallmark of American politics, with higher-income, more economically advanced places voting Democratic and less-affluent, more working class locales trending Republican, as a problem that Canada has risen above. But this same kind of cleavage has become increasingly apparent in Canada – glaringly so in Toronto’s upcoming mayoral election.

The most recent Nanos poll shows Rob Ford leading in Etobicoke, North York, and Scarborough, while George Smitherman leads in old Toronto. The conventional wisdom is that this is a product of amalgamation and the rise of the mega-city, which brought two distinct constituencies into one political jurisdiction in 1998. But it runs far deeper than that.

My Martin Prosperity Institute research team overlaid a map of the strongholds of the various mayoral candidates with another showing where creative, service, and blue-collar workers work. The division isn’t just urban-suburban.  Toronto’s economic and political geography takes the shape of a “T” that divides the city on an east and west as well as a north to south axis.  Higher-paying, higher-skill, creative class jobs – in fields spanning science and technology; business and management; arts, culture, and entertainment; health care and education – are concentrated along subway routes radiating out of the downtown core of the city in both directions. Lower-skill, lower-wage jobs are concentrated at the periphery of this T in both the core and more outlying areas. There are only a handful of districts left in the city where working class jobs predominate. One of them, up in the far left hand corner of the map, is Ford’s. Smitherman’s former riding and Pantalone’s ward are right smack in the middle of the T.

In the United States, that political divide is also a jurisdictional divide – pitting city against suburb. Joel Kotkin, who I have debated many times, has written about the increasing Balkanization of California along competing lines of class and occupation, with its affluent clustered along its coast and its farmers and middle class suburbanites concentrated in the state’s interior. The result, he writes, “is two separate…realities: a lucrative one for the wealthy and for government workers, who are largely insulated from economic decline; and a grim one for the private-sector middle and working classes, who are fleeing the state.” He might as well have been writing about Toronto.

But in Toronto it is taking place inside the city itself.  This inconvenient but unavoidable truth runs counter to a deep and long-standing perception: A social and political consensus – shared by NDPers, Liberals, and Conservatives alike – that Toronto, for all its demographic and economic variety, is at bottom “one” cit, and that it is a fair and equitable place. George Smitherman, Rocco Rossi, Joe Pantalone, and even John Tory, despite their differences, all reflect that same consensus — one that has streteched all the way from David Crombie and Mel Lastman to David Miller. The current election campaign shows how frayed that consensus has become. Ford, as Chris Hume wrote some time ago, “has tapped into a deep well of exurban fear and loathing… He personifies anti-urbanism, which makes him a hero.”

There has been considerable discussion in this campaign about whether we should concentrate on building more subways or light rail; much has been made of Ford’s adamant opposition to new bicycle paths. But these discussions ignore the basic fact that transit is bound up with Toronto’s class divide, as MPI research has shown. The members of Toronto’s struggling service and working classes – the ones who need public transit most — are woefully underserved. Forty-five percent of creative class members work within 500 meters of a subway line. Among the service class, that number drops to 31 percent. Buses could pick up some of the slack, but they don’t — they all too often run infrequently and on indirect routes. A five kilometer commute to the central city can take up to 40 minutes. Whether justly or not, Toronto’s working people feel that the city’s government is bloated and elitist and complacent, they believe that it benefits upscale urban dwellers and does not work for them.

Government did not cause Toronto’s (or for that matter, California’s) cleavages — they are the result of a fundamental economic restructuring that has brought enormous boons to some and left others out in the cold. As manufacturing shifts abroad and the technology and knowledge economy burgeons, innovative companies, highly skilled people, and the jobs that employ them have formed dense clusters. It is this very process which drives economic development forward, spurring innovation, generating new entrepreneurial firms, and creating new opportunities. But it also drives up housing values and splits up and sorts people by work and income.

The logic of capitalism is filled with contradictions. Those contradictions create new wealth and simultaneously bring new divisions and new social costs. Toronto, like virtually every other major city in North America, stands at a critical inflection point. Its recent economic success has, in effect, split it right down its middle.

When I first moved to Toronto, I believed we still had a chance to avoid the fraying of the social compact that is eating away at the states. But it has happened here too and it will not go away.

This, it seems to me, is the real subtext of this election, the understory that we have not wanted to acknowledge. Toronto has fallen victim to the same spiky structural forces that are concentrating economic assets and dividing communities across the globe, here in North America and right here in our very own city. We cannot push this under the rug. Regardless of what happens on election day, we must all face up to the fact that we are no longer one Toronto. That is the central challenge that the next mayor and all of us will be dealing with long after this election is past.

The Globe and Mail reports (ht: Wendy Waters):

Mr. Obama now proposes to levy a $210-billion tax increase (over 10 years) on U.S. corporations that operate through foreign subsidiaries – making them, by and large, the (nominally) highest-taxed corporate entities in the world. This will be negative for the United States, potentially terrific for Canada.

Beginning soon, major U.S. corporations can be expected to move head offices to Toronto and Calgary to take advantage of the lowest corporate tax rates (by 2012) in the G7. In the end, Mr. Obama will have ensured neither revenue nor jobs.

From today’s Globe and Mail:

Toronto’s mosaic an example for American cities

RICHARD FLORIDA

May 2, 2009

En route to obtaining his back-dated, life-long Canadian citizenship, Will Wilkinson, a research fellow at Washington’s Cato Institute, and one of the sharpest young policy minds around, dropped by to visit at the Prosperity Institute.

Back home stateside, he wrote this terrific essay on why Toronto’s largely successful experiment in immigration – its global-straddling ethnic mosaic – is a big smack upside the head for notions that immigration is eating away at core “Anglo-Protestant” values and institutions, à la the late Samuel Huntington. Here’s an excerpt.

WILKINSON ON TORONTO

From Will Wilkinson’s column in the online forum, The Street, April 27, 2009:

“Here is what Toronto is not: Toronto is not dirty, dangerous, or poor. Toronto is not a hell of lost liberties or a babble of cultural incoherence or a ruin of failed institutions. Yet a popular argument against high levels of immigration suggests it should be.

“In his 2004 book, Who Are We?: The Challenges to America’s National Identity, the late Harvard political scientist Samuel Huntington warned that “the United States of America will suffer the fate of Sparta and Rome,” should its founding Anglo-Protestant culture continue to wane … [so] we must keep outsiders out.

“Successful societies (so this argument goes) owe their liberty and prosperity to distinct institutions which, in turn, depend on the persistence and dominance of the culture that established and nurtured them. Should that culture fade – or become too diluted by the customs, religions, and tongues of outsiders – the foundation of all that is best and most attractive about that society cannot long last.

“But somebody forgot to tell Toronto! “Nearly half the denizens of Canada’s most populous metropolis were born outside the nation’s borders – 47 percent, according to the 2006 census, and the number is rising.

“This makes Toronto the fifth-biggest city in North America, also the most diverse city in North America. Neither Miami, nor Los Angeles, nor New York City can compete with Toronto’s cosmopolitan credentials.

“Here is what Toronto is: the fifth-most-livable city in the world. So said the Economist Intelligence Unit in a report last year drawing on indicators of stability, health care, culture, environment, education, and infrastructure. … “The United States, [a] fabled land of immigrants, has fallen dismally far behind countries like Australia and Canada in openness to immigration …That cultural-fragility argument is false, and it deserves to die.

“Toronto, which has an Anglo-Protestant heritage as strong as any, has proved it dead wrong. In fact, Toronto shows that a community and its core institutions can not only survive a massive and growing immigrant population but thrive with one. … “Maybe some day an American city will place in the top 10 on the list of the world’s most livable places. Maybe – if it becomes more like Toronto…”

FLORIDA ON WILKINSON

I could not agree more. Mr. Wilkinson hits several nails directly on the head here. In my book, Flight of the Creative Class, I similarly argued against Mr. Huntington. And I offered that Canada’s – and Toronto’s – mosaic principle may well prove to be one of the core enduring principles of our economy and society.

Or, as Mr. Wilkinson concludes: “Maybe some day an American city will place in the top 10 on the list of the world’s most livable places. Maybe – if it becomes more like Toronto…”

Here’s is the Globe and Mail’s excerpt from the hot-off-the-press Canadian edition of Who’s Your City?.

ANALYSIS: CANADA HAS BEEN SPARED – FOR HOW MUCH LONGER?

Our cities are good, but they’ll need to be a lot better

A BC reader comments on my Globe column:

I don’t think we’re in a recession so much as we’re in a revolution – and it seems closely linked to age and generation lines.

Anyone born after 1996, has experienced resistence settling into a career, paying off student debt, financing a house, a car, etc. The idea of working for one company during one’s working life is far fetched.

Having been denied the single family homes in the suburbs and it’s trappings, alternative values and lifestyles have emerged. There’s no loyalty to automakers, phone companies, or TV networks.

The new generation and economy has forced individuals to adapt to cheaper technologies, means of mobility, communication and a global marketplace. Raising families has been put on hold if not abandoned altogether. Even nationhood has become obsolete.

It’s a brave new world, but corporate boards and political parties have yet to figure it out – or are in a blissful state of denial.

As the new generation abandons traditional middle class mores and lifestyles, who will pay the taxes on increasing medicare costs? Who will purchase the homes built during this last boom and the baby boom generation? Who wants to finance a vehicle in which gas, insurance, maintenance costs continue to rise?

My new Globe and Mail column is out:

Less than a month after taking office, the Obama administration unveiled its massive stimulus package aimed at recharging the lagging American economy – a staggering three-quarters of a trillion dollars. As the Harper administration rushes to dole out a $40-billion stimulus of its own, it’s high time to ask a simple question: Are we stimulating the right things?

Confusion was nowhere more evident than in the debate on the U.S. Senate floor, where a relatively small amount marked for the National Endowment for the Arts was derided as nothing but pork-barrel spending and waste. The stimulus, such thinking goes, ought to focus on infrastructure only.

As Jack Kingston, a Georgia Republican, put it: “We have real people out of work right now and putting $50-million in the NEA and pretending that’s going to save jobs as opposed to putting $50-million in a road project is disingenuous.”

However, the facts are that the locus of economic growth has shifted dramatically and a stimulus that focuses on traditional infrastructure cannot succeed. What drives the economy today is not the old mix of highways and single-family homes but new, idea-driven industries. They range from software, communication devices and biotechnologies to culture and entertainment – and importantly the convergence of the two.

The familiar kind of stimulus – the “shovel-ready” kind that built highways and roads, and worked so well during the Great Depression and its aftermath – worked precisely because it didn’t stimulate that period’s aging agriculture economy. Instead, it accelerated the transition to a new economy based on housing, autos and all the products of the industrial assembly line, from refrigerators and washing machines to air conditioners and television sets.

The Keynes-derived notion of pouring money into public works built the roads and infrastructure that spurred postwar demand and primed North America for postwar global economic dominance, because the consumption embedded in our suburban way of life stimulated just the right kind of industrial production.

But eventually the system got out of whack. The housing and credit bubbles of the past decade ultimately biased and distorted our economy, channelling money and investment toward older industries, real estate and construction and away from more productive, innovative and creative ones.

For a stimulus to work today it has to stimulate the emerging creative economy, the engines of regional economic growth and higher incomes across Canada and the U.S.

Companies and workers in these fields also have “spillover effects.” Computer scientists and designers – unlike, say, lawyers and doctors – foster productivity in others, beyond the services they provide themselves. Creative industries also benefit from considerable synergy as arts and design combine with technology, from iPods to video games.

But it’s not enough merely to produce more scientists, engineers and artists or even high-tech entrepreneurs and entertainment moguls. We must also build an infrastructure and an economy that can sustain a demand for their creative efforts. In his book The Venturesome Economy, Columbia University business professor Amar Bhide shows how sophisticated, risk-taking consumers who demand new things and buy new products are the key to technological innovation in places such as Austin, Tex., and Silicon Valley.

It’s unlikely that the BlackBerry would have succeeded if it had come from Eastern Europe, for example, because consumers there would not have appreciated its security, convenience and systems integration the way that the Western world did.

The creative economy already includes roughly 30 per cent of Canada’s work force and about a third in the U.S. It accounts for more than half of all wages and salaries paid in each country. So, if the stimulus were allocated proportionately, between $250-billion and $375-billion should have gone to the U.S. creative economy; in Canada, the figure would be $12-billion to $20-billion.

Stimulus funds could be used to strengthen Canada’s science and technology infrastructure and its music, film and art scenes; it would provide entrepreneurial assistance and garage-like incubation spaces for innovators the Bloomberg administration is doing in New York City.

It would make far greater sense to invest precious infrastructure dollars in high-speed rail and broadband Internet lines to connect our communities than in roads and highways.

We will begin to move toward a durable recovery only when we stop unnecessarily propping up the old economy. Indeed, we have to make housing and transportation cheaper, as we did with agriculture during the New Deal, in order to free up the demand that will provide enduring stimulus for the creative-economy businesses and jobs of the future.

Fortunately, in the U.S., the $50-million for the NEA was reinstated at the very last minute. But it still aimed a huge amount of its stimulus at the old economy. Canada has the chance to do much better.

We had one overarching goal in mind when we released our report on Ontario’s economic future this Thursday – to help catalyze a real conversation about the long-run future of the economy. We want put to rest any false distinction between a creative elite and the rest of the economy. We call on government, business, labor, education, mayors, economic developers, and all of us to develop new strategies and new models to harness the creative talents of each and every person, each and every organization, and each and every community. Roger Martin and I – and our entire team – could not be more pleased by the reaction.

The Star’s David Olive builds brilliantly on our call for tapping workers’ intelligence and transforming education.

The Globe and Mail calls for putting the creativity of every single person at the center of our economic strategy, and for making manufacturing more productive and effective by harnessing the full talents of workers.

Roger and I provide a summary of our ideas here.

And here’s our column today on the need to focus on and invest in the skills required to compete and prosper in the future.

Like all advanced economies, ours is in the midst of a great transformation – to an economy in which creativity, skills, and knowledge matter more than strength and muscle… At bottom, today’s challenge is the move from jobs oriented to routine to jobs that hinge on creativity. Routine-oriented workers carry out standardized tasks, often repetitively and in a preset sequence.

Traditionally, many of these jobs have been in manufacturing – Henry Ford’s assembly line is the classic example. But the greater portion of them now are in service occupations: waitresses following standard procedures in restaurants, or clerical staff and their paperwork.

Over the coming decade, they will account for about half of all jobs created in Canada and the U.S. alike. Yet we still undervalue creative jobs and the key skills on which they depend – consider the controversy over funding cuts for research and innovation in the recent federal budget.

The manufacturing economy honed physical skills such as lifting and manual dexterity. But two sets of creative skills matter more now – analytical skills such as pattern recognition and problem solving, as well as social-intelligence skills such as the situational sensitivity and persuasiveness that are required for team building and mobilization.

Fields that demand high analytical skills (such as medicine and bioengineering) and social intelligence (such as psychiatry and management) are not only growing faster than others, they also pay much more.

Moving from a job in the bottom quarter of analytical-skill levels to one in the top quarter – from travel agent to, say, accountant – means an additional $18,700 in pay; the gap between jobs that are low or high in social-intelligence skills is even greater, valued at $25,100. The reverse is true of physical skills: Moving between a job in the bottom quarter and one in the top quarter of physical demands would be accompanied by, on average, an $8,100 drop in wages… But it’s not enough just to expand the availability of Creative Age work. It’s critical that we increase the creative content – the analytical and social aspects – of all our jobs.

And that is a challenge that goes beyond government: Business needs to take on more sophisticated models that encourage their workers to use these kinds of skills, which generate the productivity needed to pay higher wages. The result is a virtuous circle of prosperity in which workers use more of their capabilities, and business gains and wages and living standards increase.

It is already happening in some places. While workers at some manufacturing operations remain stuck with mindless labor, others are engaged in quality circles and statistical training and have more individual authority on the line. Their companies benefit from improved productivity, while the workers benefit from more secure jobs and higher wages.

And it is happening in parts of the service economy as well, which is key – since routine-oriented service accounts for 46 percent of all jobs in Canada – to building shared prosperity for everyone. Four Seasons, for example, established itself as one of the world’s leading luxury-hotel chains in no small part thanks to its ability to increase the creativity content of hotel-staff jobs. By treating its employees with dignity and leveraging their talents, Four Seasons is able to offer the unparalleled service that has made it a global leader in its field.

If we want a high-wage economy, we also have to ensure that our training programs and schools develop social and analytical skills, and focus our efforts on attracting businesses that invest in the creativity of their workers.

To be successful, we must tap and harness our most important resource: the creative capabilities and talents of all…

The full report is here.

A new study written by Richard Florida and Roger Martin, released by the Martin Prosperity Institute today, makes recommendations for how Ontario can become a world leader in the creative age.

Roger Martin and Richard Florida call on Ontarians to embrace the promise of the global economic transformation underway and to harness its potential for building shared prosperity for Ontarians. Despite the current economic environment, Ontario is well positioned to compete and prosper in the ongoing global economic transformation. While the economic environment has worsened in the past year, the current upheaval only accelerates the longer-term trends – especially the shift from more routine-oriented to creativity-oriented jobs. Yet Ontario can do more to ensure it is a globally competitive jurisdiction. That is the key conclusion from the report released today, Ontario in the Creative Age.

The full report and press release can be found here and, to read more, see the related articles in The Globe and Mail and the Toronto Star.

Your thoughts?

My Globe and Mail column is out.

SOCIAL SCIENCE: THE POST-SUPERPOWER WORLD

Russia’s youth ready to embrace the dawn of a new era

Hard to believe, as we enter a thoroughly globalized world in 2009, that as an elementary-school student, I crouched under my desk every time an air-raid siren pierced the unsteady calm. I was born in 1957, the year of Sputnik, and my first political memory is of John F. Kennedy announcing that he would “stand up” to Russia during the Cuban missile crisis. Back then, in the United States, we grew up believing that we were engaged in a titanic struggle against a mortal enemy whose very existence threatened our creed of individualism, freedom and liberty.

But when I visited Russia this month, I was struck at how similar it has become to the United States. Certainly, the country is pushing to develop more of a market-based economy, having abandoned its state-run economy to the historical dustbin. But it’s more than that.

In Russia, as in the U.S., everything is big. People are loud and aggressive. Many are overweight. The roads are clogged with gas-guzzling SUVs. Billboards advertising luxury products dot the sky, and women walk around covered in designer labels – most of which, as in the U.S., are knock-offs. In a Moscow airport café, two young women are transfixed by the Russian version of InStyle magazine, poring over pictures of Sarah Jessica Parker, Paris Hilton and Scarlett Johansson.

And, just like the U.S. then and now, Russia is security-crazed – from the contortions required to obtain visas to airport checkpoints, from the suspicion of anyone taking a photo in a restaurant or hotel to the metal detectors at the entrances of official buildings, even the security gate at my hotel’s front door. Police sirens blare into the night, reminding me of city life in the U.S.

But it’s among the youth that the similarities between Russia and the U.S. become eye-popping.

While older Russians still appear to smoke and drink too much – evoking a U.S. culture more typical of the 1950s Mad Men era than the present – young Russians, with their jeans, T-shirts, BlackBerrys and iPhones, are virtually indistinguishable from their Western counterparts.

I had been invited to Moscow along with Megatrends visionary John Naisbett, Garage Technology Ventures start-up guru Guy Kawasaki and billionaire entrepreneur Richard Branson to take part in a conference on innovation and entrepreneurship, meant to encourage a new generation of techies to launch start-up companies in Russia.

Even as someone who has written about the growth of a new global creative class worldwide, I was struck by how much entrepreneurial zeal there was among Russia’s young generation.

I asked our interpreter and guide – a twentysomething foreign affairs staffer – what could account for it. Three things, he said.

One is globalization. Young Russians are well aware that they are part of a global economy, a global lifestyle and growing global class.

The second cause is communication. With international distribution of television and movies (including the Russian version of the recent Hollyood comedy Baby Mama), the boom in Internet and social media, the country’s young people are participating in cutting-edge trends.

The third is language. Young Russians (of whom he is a perfect example, he said) are speaking more and better English. When I addressed a class in Siberia last year, many of the students (a self-selected group for sure) engaged me in perfect English, asking questions that mixed academic insights with of-the-moment slang. I couldn’t help but feel that these young Russians had developed capacities that even exceeded so many of their North American peers. They seemed perfectly poised to navigate our global economic terrain.

As I sat in the fashionable Pushkin Café near the Kremlin and Red Square one evening, musing that the bustling nightlife around me could just as easily been that of Toronto, New York or London, it occurred me: I was witnessing the dawn of a new era. The age of the great superpower conflict – of a generation and a world defined by the Cold War – is over. While both countries remain powerful in their own ways, they are now subsumed in a global economy that is bigger than either of them.

At the conference, John Naisbett spoke of the rise of Asia, and especially of China as not just the world’s factory but as a growing centre of research and innovation. He described new universities, new research institutions (including one that he runs), high-speed trains and the striking, architecturally significant new airport terminals being built there. The contrast between an emergent society in the throes of rapid expansion and older societies that are living off the past and failing in many ways to embrace the 21st century could not have been clearer.

While Fareed Zakaria, editor of Newsweek International, describes a post-American world defined by the rise of the rest, I now think of our era as that of a post-superpower world. The energy has shifted, and been unleashed, and it’s not just a wide range of countries that matter, but mega-regions such as the Beijing-Shanghai corridor, the Mumbai-Bangalore axis, greater Toronto and its environs, Cascadia in the Pacific Northwest, and all throughout Asia, Europe and across the world – everywhere the Internet and global airwaves now reach.

Language, communication and openness to new ideas – these are now the drivers, whether you find yourself in New York or Toronto, Amsterdam or Moscow.

It will be interesting to see how the first post-superpower generation in the U.S. and Russia handles the looming economic crisis. Judging from the ubiquitous Louis Vuitton purses and InStyle readers in the Moscow airport, populations in both countries appear to be in denial about the prospect of a full-fledged depression. Americans still pacing the malls fervently wish that some combination of government bailouts, Federal Reserve action and the incoming Obama administration will save them. Russians cannot bear to think back to the late 1990s, when they last faced an economic fallout, and have stockpiled savings and foreign reserves in the hopes of avoiding it, even in the event of a stock-market collapse.

But it’s also clear that we share more connective tissue. A truly global creative class has emerged and is growing. We are all much more connected and similar than ever before – much more so than when we cowered under our desks at the threat of mutually assured destruction when I was in grade school.

Call me an optimist, but that fact bodes well for our shared future.

A friend (who does not work where I work) recently confided that a rival company to her employer has approached her with a job offer. This company has approached her at least once a year for the past five years and she always turned them down. But this time, she’s likely to accept the new position.

Why?

• Because in the current economy, the projects she has been working on will not be making much if any profit and therefore there are no bonuses she’d be walking away from this time.

• And, her current position has become boring to her - nothing much is going on so there are few opportunities to learn new skills or gain new experiences.

Her employer relies heavily on her experience and will be shocked when she gives notice.

To prevent departures of top talent such as the one described above, many companies are now doing “stay” interviews. Instead of waiting until a valued employee announces their departure – and doing an “Exit Interview” – companies are finding ways to survey existing staff to learn why they enjoy coming to work and what new opportunities people would like to have.

Last week, the Globe and Mail ran a good article on the subject, focusing on USA-based companies and consultants. Here are a couple excerpts:

A young tech company in San Francisco, Experience Project Inc., also uses stay interviews, particularly with newer hires who are possibly feeling a little shell-shocked by the start-up’s long hours and intense workload.

“I’m trying to unearth things that are working well for them, things that are getting them excited and jazzed up about the job,” says Julio Vasconcellos, the company’s vice-president of business development. “I want to know what makes them get up in the morning so they’ll keep coming to work.”

…

At Panamedia Group [of St. Louis], the formalized stay interviews paid off because the company takes the data and acts on some of the best ideas. For example, when some employees started saying they would like to work on a project geared to smaller events – instead of those that drew upward of 5,000 people, which was what the company focused on at the time – Panamedia gave the new initiative a green light.

“It came out of their desire to watch the company grow and have something cool to work on,” Mr. Slawin says.

Stay interviews here offer not just ideas for retention but new directions for the business as well.

As companies try to increase productivity and improve their ability to keep top people in the years to come, having formal discussions about why people stay – as well as why they leave – will likely become increasingly common.

If my friend’s employer were doing this, they might not be about to watch top talent walk to a competitor.