Creative Class

Earlier this week, I discussed the new Gallup-Healthways Well-Being Index of happy cities. Today, with the help of my Martin Prosperity Institute colleague Charlotta Mellander, we take a look at some of the social, demographic, and economic factors that are associated with the happiness and well-being of cities.

There has been considerable debate on the factors that are associated with happiness and well-being at the national level. The well-known Easterlin Paradox suggested that happiness tends to level off after a certain income threshold. Psychologists, notably Edward Diener, have argued that factors such as health, challenging work, and close social relationships, among others, play a considerable role in happiness. Some have even made the case for instituting a new measure of gross national happiness to supplement conventional metrics like gross national product.

Recent studies by Princeton University’s Angus Deaton and Justin Wolfers and Betsy Stevenson of the University of Pennsylvania’s Wharton School question the Easterlin Paradox and indicate a closer link between happiness and income across nations. Carol Graham raises the enigma of the “happy peasant and the miserable millionaire” as a way to resolve this apparent paradox. Graham suggests that happiness is relative to one’s position in society. Take unemployment for example. Unemployment is crushing for previously employed people in places where gainful employment is the norm. But people in poor countries where unemployment is more the norm find other ways to be happy.

The Gallup-Healthways is the first comprehensive data set we know of that tracks happiness and well-being at the metropolitan level, providing data from a large-scale survey of individuals across 185 metro regions. We look at the associations between the Gallup-Healthways Metro happiness index and key social, demographic, and economic factors. Data-matching reduces the size of our sample to 170 metros – roughly half of all U.S. regions. As usual, we point out that our analysis points only to associations between variables. It does not specify causation or the causal direction of those associations which are questions for future research. Still, the results are interesting across several dimensions.

Income, Wages, and Output: So what is the relationship between metro-level happiness and income, wages, and output? The correlation analysis suggests a moderate relation between wages (.45), income (.4), and economic output per capita. The scatter-graphs below show the relationships are reasonably linear, though there is a better fit for wages and income than for output per capita.

Unemployment: Conventional wisdom and academic studies suggest that a rising unemployment rate would take a big toll on happiness. We find a moderate effect across U.S. metros. The correlation between happiness and the unemployment rate is -.34 and between it and the year-over-year (December 2008 to December 2009) change in unemployment is -.3.

Post-Industrial Economic Structures: In ongoing research, we have been testing the notion that happiness and well-being may be more associated with key features of so-called post-industrial economic structures – namely the shift from physically oriented work to knowledge, professional, and creative occupations and industries – and from lower-skilled to more highly skilled and educated workforces. A large body of research has found a close association between human capital (measured as share of the population with a B.A. and above) and economic development across nations as well as regions; other research has found that human capital levels are becoming more divergent across regions over time. To get at this, we looked at the associations between happiness and human capital, as well as between it and creative-knowledge-professional occupations and blue-collar working class occupations.

Human Capital: Happiness at the city or metro-level is more closely associated with human capital with a correlation of .68 – the strongest correlation of any of the variables we looked at. The scatter-graph below shows a fairly linear relationship.

Creative Class: Happiness is also associated with the creative class, a correlation of .45. The scatter-graph below shows a fairly linear relationship.

High-Tech: Happiness is also associated with locations that have higher concentrations of high-tech industries. We find a correlation of .41 between it and the Milken Institute’s Tech-Pole measure.

Working Class: On the other hand, metro-level happiness is negatively associated with the working class, -.34, a finding which is similar to that for states.

Silicon Valley is America’s happiest big metro-region and Washington, D.C. is second, according to a new survey of America’s 52 largest metro regions by the Gallup-Healthways Well-Being Index.

The Gallup-Healthways data breaks down well-being into six main categories. Greater D.C. leads in life evaluation. The Twin Cities of Minneapolis-St. Paul lead in two categories – emotional health and basic access. Silicon Valley takes first place in two categories as well – physical health and healthy behavior.

That said, Boulder tops the list of small- and medium-size city-regions – and posts the highest happiness index score of any metro. Holland, Michigan; Honolulu, Hawaii; Provo, Utah; and Santa Rosa and Santa Barbara, California also post higher scores than any of the larger regions.

The most unhappy metros are mainly housing-dependent Sunbelt cities of sand and Rustbelt locations that have been hard-hit by the Great Reset. Las Vegas has the dubious distinction of being America’s unhappiest large metro.

The Winter Olympics’ host city of Vancouver tops the new list of the world’s most “liveable” cities by the Economist Intelligence Unit.  Toronto comes in fourth. Canadian and Australian cities do well. Not a single U.S. city makes the top 10. More here.

Check out this CNN video of Detroit’s terrific Ice House project. The two men managing the “collaboration with Mother Nature” are dousing the state-donated house with water to make a statement about the frozen housing crisis. It’s their hope that this installation art piece will reveal a solution and show that there are plenty of uses for abandoned homes, whether they’re used for recycled materials or turned into new homes.

Check out the Ice House website.

How do economic crises affect inequality? In the past, inequality increased prior to economic crises, only to moderate during and after crisis periods. In the present crisis, many expected inequality to decline. Others, however, note that with job loss in the millions and unemployment above 10 percent, while investment bankers continue to rake in big bonuses inequality is on the rise.

A new study by researchers at the Minneapolis Fed and New York University tracks inequality in the U.S. since 1970 (via Mark Thoma). I find that while income inequality has increased during the crisis, consumption inequality has declined.

Recent evidence shows how the distribution of resources changes in recessions in complex ways.

• The bottom of the earnings distribution falls off substantially relative to the median, causing earnings inequality to increase in recessions.
• This increase is substantially mitigated by government and private transfers. This mitigating effect, together with the fact that households can use borrowing and lending to smooth income declines, causes the consumption distribution to typically move very little during recessions.
• The current recession appears somewhat unusual. So far, consumption inequality has declined sharply, perhaps because the consumption-rich have been disproportionately hurt by declining asset prices.

On July 13, 2009, I wrote this comment Pollyanna Has All the Friends…. Here we are exactly six months later and my premonitions have been born out. The Senatorial election in Massachusetts was an earthquake – make no mistake about it – and unless there is change there will be many more. Massachusetts was not just tea-baggers or the health care debacle — the level of anger on Main Street is rising. This can be seen in the Bernanke renomination fight, which, though likely to be approved, is probably the last stand for what I believe is a Chicago School of Economics-driven flawed analysis of the current crisis. The anger will dramatically grow if, as I expect, the market takes another terrible fall during 2010.

The Obama victory was as fundamental as that of Franklin Roosevelt. Roosevelt’s victory heralded the appearance of the mass production industrial working class on the political scene. He galvanized their demands into the New Deal. The result, after World War II, was U.S. global leadership. I suggest everyone read Roosevelt’s first Inaugural Address. It is a statement of vision, leadership, commitment to change, and a recognition that a new order was in birth.

Many of us, me skeptically included, saw Obama as the harbinger of a different sector of the U.S. economy and polity, what Rich has called a “creative class,” moving into power. We all know what has happened since. Essentially, Obama felt it necessary to succor the old order, while not clearing the way for a new sensibility.

In my estimation, President Obama has about one month to dramatically change course or I fear his presidency will, for all intents and purposes, be finished and the nation will have three years of dangerous drift, while a hurricane rages around us. These are the things I think he must do now:

1. Military spending must be cut massively and the two wars in Central Asia must be rapidly wound down. Iraq appears quiet, but Afghanistan is ramping up and will be far more costly than Iraq ever was. As an example, it costs $400 to deliver a gallon of gasoline to our troops there, and $1 million per year for every soldier there! This is unsustainable.
2. Money must be withdrawn from bailouts, maintaining unsustainably low interest rates, and subsidizing mortgages in a vain effort to keep home prices high.
3. The funds saved must be redirected toward jobs programs of all sorts, a Greentech roll-out, the arts, infrastructure renewal, education, and research. Most of these are low-cost, high labor-intensity.

Do you think my July premonitions are that far off where we are today? What is it that will be required to create a transition to a new order?

This week, Forbes and Joel Kotkin released a  list of the “world’s smartest cities.”

“In today’s parlance a “smart” city often refers to a place with a “green” sustainable agenda. Yet this narrow definition of intelligence ignores many other factors–notably upward mobility and economic progress–that have characterized successful cities in the past.

The green-only litmus test dictates cities should emulate either places with less-than-dynamic economies, like Portland, Ore., or Honolulu, or one of the rather homogeneous and staid Scandinavian capitals. In contrast, I have determined my “smartest” cities not only by looking at infrastructure and livability, but also economic fundamentals.”

The list included:

1. Singapore
2. Hong Kong
3. Curitiba, Brazil
4. Monterrey, Mexico
5. Amsterdam
6. Seattle, Washington
7. Houston, Texas
8. Charleston, South Carolina
9. Huntsville, Alabama
10. Calgary, Alberta

Are these really the “smartest cities?“

Last week the Global Entrepreneurship Research Association (GERA) had its annual meeting in Santiago, Chile and launched the 2010 Global Entrepreneurship Monitor (GEM) executive report. The annual meeting was held in a developing country for the first time. The meeting is a mixture of media events, planning meetings, and strategic decision-making. In addition, social events make this a welcome activity.

The 2010 GEM executive report, in addition to reporting on the state of entrepreneurship in the world, had sections on the economic crisis and social entrepreneurship. The main finding was that entrepreneurial activity had declined in the developed countries but not in the developing countries. In other words, do not look to Europe to lead the world in the future. As a founder of the Hungarian team, the so-called transition countries are not going to lead either. The labor force of Europe is in decline and, therefore, Europe and Japan are in no position to provide entrepreneurial leadership in the future as they age.

By the year 2050, most of the labor force in Europe will be aging and the under 40 labor force will be in the developing world according to my colleague Jack Goldstone at George Mason University. In other words, the creative, innovative and entrepreneurial talent will be in Brazil, Chile, India, China, and Indonesia. The developing world will have to provide the economic leadership for the market. While the world will be flat, hot, and crowded, the creative talent will also be in these places. GERA is uniquely positioned to measure and track the progress that the world is making in shifting the creative epicenter from Europe to Asia and South America.

This seminal meeting of the GERA represents the first step of the association in this transition. After spending the first 10 years of this decade trying to figure out if Denmark is more entrepreneurial than the United States, we are now shifting to measuring the entrepreneurial progress of the developing countries. As Richard Florida said to me a few years ago, the young are the same all over the world. If that is the case they will surely be the leaders in the future.

So last Wednesday I was invited to York University to come do a little guest lecture in a class called Creativity and Cities in Urban Politics and Planning 4800. Heather McLean, the courses professor, is a PhD candidate and member of the City Institute at York University but I first heard about her in an article entitled “Why Richard Florida’s Honeymoon is Over.” She teaches a cool course, with a cooler M.O: Subject the creativity discourse that is leading much of contemporary urban policy to some intelligent criticism.

By looking at an old Wall Street Journal article and two very different conversations that emerged about it here on the Creative Class Exchange – one that is perhaps more celebratory of how the creative class theory is attributed to this situation, and one that I wrote that is perhaps a bit more critical of the role creative class theory might be playing – I tried to impart on them that it’s really important that they bring their content to the table when looking at dominant theories, and to sift these theories through that content to see if they pan out.  That content could be their cultural leaning, their ethnicity, age, political leaning, or whatever lens that they are most invested in, but it’s important that they understand that they’re empowered by that lens to see things that others who aren’t as invested as they are don’t see.  They should ask questions about what they see. Or moreover, what they don’t. Prepping to do that lecture brought me back to when I first met Richard, which is kind of an interesting story about the value of critique and about the mettle of Richard Florida as well I guess.

So before all of this DJ/bureaucrat business I was a young(er) DJ/student/journalist writing for the Ottawa Xpress. In school I was studying cities, and for the paper I was writing music and reviewing books. Richard Florida was coming to town for the Tulip Festival, and his then new book Who’s Your City? had come into the office to be reviewed. I’d just been into a lot of Richard’s research journals, and the Elizabeth Currid stuff was just coming out too, so this was an interesting time to be talking. In all of the reading that I had done I really didn’t see myself represented in the creative class – either as a Hiphopper, or as a North American Black person. So in our interview I respectfully stepped to him on those issues.

From my article/review of Who’s Your City?:

“I am a rock-ist,” he admits, “and my students have informed me of this, but I’m learning.” As it turns out, Florida reveals that one of his future projects will look at the relationship between music and the city, and that he was already taking that opportunity to look at hip-hop culture…

and then on race…

How is the movement of the creative class affecting these [racial] communities? “Probably the reason I don’t write about it [race] is that when I wrote about gay issues, I had a gay collaborator. So I felt, as a straight person, that I could then work on gay issues. It’s probably a part of my age, I’m very sensitive when trying to weigh in on those issues.”

And while I’m the first to recognize that this isn’t him leaping to engage that problematic, you ask him a direct question, you get a direct answer. At the end of the interview we kept talking about where I saw room for engagement within his theory, and eventually we started doing this thing that you’re reading right now.

Recently there has been a lot of good critique of the Creative Class and Creative City theories. Here in Ottawa at Carleton, Sarah Brouillette  is studying the Commodification of Creativity. Profs like Heather and groups like the the Creative Class Struggle are keeping a critical voice in the discourse.  And as much as there are things that I think it would be interesting to see Richard address, one thing I can say about him is that he’s always willing to host me to address those things, and likewise with other critics. A good example is Ian David Moss’ incredibly fine grained and detailed deconstruction of the creative class over at Createquity.com, and Richard’s response to that criticism. Or while I was in Toronto visiting the MPI a few months ago I met Philipp Oehmke who had just spent time doing the interview that leads the article he wrote about the Hamburg squatters in Das Spiegel which captures the nuance of the situation really well.

In this discourse the traditional skirmish lines seem to be skewed. All of the ire from the left seem to evaporate into a vacuum of hugs from what we thought was the right. In Hamburg the artists occupy, and the city sends talkers and crews to make sure the building is safe. In my interview, I ask this guy tough questions about the exclusion of race and Hiphop from his ideas and he invites me to answer them myself on his site. Coming from the “Fight the Power” generation, this is certainly not what I expected when challenging a dominant ideological discourse. Sometimes I don’t know what the hell is going on myself. All I can say is that, for now at least, it seems to be as broad a conversation as you want to have. Yes there are still barriers but, surprisingly, listening seems to be an emerging trend. I think people are still correct to question the root of that  - why are people listening? – but in my opinion, it’s more important that people like those students are taking the time to grow and use their critical skills to make this discourse broad enough that their content and concerns can either find their place within this discourse or expose where improvement of it is necessary. That’s a creative class if I’ve ever seen one.

Music.

I was talking to a 60-year-old, retired entrepreneur at a party the other night. Successful guy, very sharp. I asked him what he thinks is next for Florida and he said he did not have much hope for Florida, mostly due to lack of visionary leadership. Then he said something that really struck me. He suggested that Florida is on a course to reset to its old state of being “cheap, sunny, and dumb.”

That really struck me because while we are all talking about the great reset that is going on, I had not thought to ask the question, “What does Florida reset to?” And he may very well be right. At the state level, we are relaxing the rules for developers  to encourage even more sprawl to try to kick-start our construction industry again. We are actually lowering impact fees in places. We are lowering protections on the environment. This seems like a reset towards “cheap, sunny, and dumb.” There are powerful forces and attitudes that could very well push Florida back into this reset mode. And that is pretty scary.

While we all generally agree that this reset is needed and welcomed in some cases, we should be careful that we don’t reset back to a point so far back that we actually lose too much of our hard won progress. We all have to ask ourselves and our leadership what the plan and vision is for this reset. Each community is facing this and we act as if the reset is just something that will happen. That is not the case, yet I hear far too little  debate as to how we actively shape the reset.