Creative Class

Source: New York Times

Countries where people eat faster have higher rates of economic growth. Floyd Norris discusses the findings of recent OECD research:

The fastest eaters were in North America; the United States, Canada and Mexico were the only three nations to report fewer than 75 minutes a day devoted to eating and drinking.

As the accompanying chart shows, the 10 countries where people spend less than 100 minutes eating and drinking each day have, as a group, consistently shown higher economic growth than those that took more than 100 minutes to savor their daily repasts …

The relationship persists within regions. All four of the Western European countries whose people eat relatively rapidly — Britain, Finland, Norway and Sweden — showed average economic growth of 2 percent or better over the eight years. Of the five Western European nations whose people ate more slowly, only Spain grew that rapidly. The others — Germany, France, Italy and Belgium — showed compound growth rates of 1.5 percent or less. Similarly, New Zealand, with slow eaters, grew at an average rate of 2.8 percent a year, while the faster eaters in Australia produced a 3.1 percent growth rate. South Korea, with faster eaters, grew at an average rate of 3.8 percent. Japan, which favors a more leisurely approach to dining, grew just 0.8 percent a year.

Makes sense, actually. A pioneering study by researchers affiliated with the Santa Fe Institute research team documents the role of “urban metabolism” in shaping city innovation and growth. As I wrote in The Atlantic:

The rate at which living things convert food into energy-their metabolic rate-tends to slow as organisms increase in size. But when the Santa Fe team examined trends in innovation, patent activity, wages, and GDP they found that successful cities, unlike biological organisms, actually get faster as they grow. In order to grow bigger and overcome diseconomies of scale like congestion and rising housing and business costs, cities must become more efficient, innovative, and productive. The researchers dubbed the extraordinarily rapid metabolic rate that successful cities are able to achieve “super-linear” scaling. “By almost any measure,” they wrote, “the larger a city’s population, the greater the innovation and wealth creation per person.”

The other day I showed Pew data on the things Americans consider necessities. I speculated that the economic crisis has brought us to an inflection point. We’re seeing the decline of the old auto-housing consumption bundle which powered post-war growth. And while certain new trends in consumption and lifestyle are emerging, nothing has yet come to form a “new normal.”

Writing in Esquire, the ever-insightful Nate Silver looks into whether or not America’s once-great car culture is coming to an end.

(Graph via Esquire)

To sort this out, I built a regression model that accounts for both gas prices and the unemployment rate in a given month and attempts to predict from this data how much the typical American will drive… [The results of the model are shown for the month of January in each year since 1980 in the graph above.]…

Americans should have driven slightly more in January 2009 than they had a year earlier. But instead, as we’ve described, they drove somewhat less. In fact, they drove about 8 percent less than the model predicted.

For people like me who live in big cities where one does not need a vehicle to get by, there is a certain romantic attraction to this story. Why, if only all those Bubbas could ditch their SUVs, take the monorail to work, and buy their families a bunch of Schwinns, life would be just grand!… In the real world, of course — outside perhaps a half dozen major metropolitan areas — American society has been built around the automobile.

Still, there is some evidence that more Americans are at least entertaining the idea of leading a more car-free existence. Between October 2004, when gas prices first hit two dollars a gallon, and December 2008, when they fell below this threshold, three cities with among the largest declines in housing prices were Las Vegas (-37 percent), Detroit (-34 percent), and Phoenix (-15 percent), each highly car-dependent cities. Conversely, the two markets with the largest gains in housing prices were Portland, Oregon (+19 percent), and Seattle (+18 percent), communities that are more friendly to alternate modes of transportation.

The exceptionally sluggish pace of new-vehicle sales, moreover, in the face of extremely attractive incentives being offered by the automakers might imply that Americans are considering making more-permanent adjustments to their lifestyles. And the denigration of the brand of the Big Three automakers in light of their financial difficulties — about one third of Americans have generally told pollsters they will buy only an American-made car — might reduce some of the patriotic associations with the activity of driving. Building a light-rail system might not persuade Bubba to get rid of his vehicle — but forcing him to buy foreign might.

If Silver is right (and his analysis looks good to me) that’s another nail in the coffin for old fordist consumption bundle.

The Pew Research Center recently asked a sample of Americans what they consider to be life’s necessities. Here’s a chart summarizing the key results.

Felix Salmon reacts:

I’m quite surprised that the landline phone is still considered more of a necessity than a cellphone — I can’t imagine that’s going to continue to be the case for long. I am interested in the huge drop in the perceived necessity of the microwave, however. Yes, there’s something about microwaves which just feels old-fashioned and unnecessary — but the microwave hasn’t really been replaced by anything … I’m also surprised that 52% of people consider a TV set to be a necessity, while only 23% of people consider cable or satellite TV to be a necessity: subtract the second number from the first, and you get a good indication of the sheer power of network TV. I’m sure that, too, will erode quickly.

The huge drop in the perceived necessity of clothes dryers, home air conditioning, and dishwashers is I think partly a response to the economic crisis, but more a response to the bursting of the housing bubble: people don’t define themselves by their appliances in the way that they did during the housing boom.

What went up in perceived necessity? Nothing, really — nothing more than the margin of error of 3.6 percentage points, anyway. Although it would have been interesting to see the results if intangibles had been included in the survey.

I mainly agree with Salmon. The results show the fragility of the old suburban, fordist, “keeping up with the Jones’” lifestyle. Looks to me though that the old order has declined, but we’re still awaiting something to replace it.

But this begs a bigger question: When might we see a tipping point toward something new – a new normal, so to speak.

The numbers for high-speed internet and iPod are not so encouraging in terms of potentially signaling the rise of a new higher-tech consumption bundle. But there are many things that are not probed, as Salmon notes. I wonder what the results would be, not just for intangibles but for experiential goods and for things like personal development (education, learning), higher-quality food, exercise, health-care, and a cleaner, greener environment.

It’s important to begin to understand what this new consumption bundle and new lifestyle might be for a simple reason. It’s not government spending that ultimately will set the stage for long-run recovery, but a shift in private consumption that provides the broad pattern of consumer demand that fuels innovation and new patterns of production. As I’ve noted before, it was the rise of suburbanism that powered post-war recovery and expansion.

We’re in the earliest phases of the current reset so it is still hard to tell what the core components of that new consumption bundle might be. The Great Depression began in 1929, for example, and it was not until the 1950s and 1960s that the new suburban lifestyle burst onto the scene fully formed. My dad was an eight-year-old boy in 1929 living with his nine family members in a tiny Newark apartment without a refrigerator or full plumbing. Like so many others of his generation, he bought his first suburban home in the late 1950s. He could not even imagine the total transformation of his lifestyle 20 or 30 years earlier, buying his own home on what was then a farm, filling it with all manner of modern conveniences, and driving his Chevy Impala car to work.

It may not be apparent yet, but a new consumption bundle and a new way of life will have to emerge sooner or later. It will have to be less oriented around the auto-housing industrial complex: We’ll all have to spend less on these things, so we can create demand for the stuff that will power and build our future.

If we look closely we can already notice some of the emergent strands or threads of this new normal – in the shift away from big cars and big houses, away from conspicuous consumption and toward not just organic and energy-efficient, green products, but from material goods to experiences, health, and personal development.

But, it’s still very early in the resetting process. Transformations on this scale take time.

Still, I can’t help but wonder what the shape of the new consumption and new lifestyle might be, and would very much welcome your thoughts.

There’s an undeniable home-base effect for leading consumer brands. So, Starbucks does better in Seattle; Wal-Mart in Arkansas; Heinz ketchup in Pittsburgh. Here’s the abstract for the detailed study published in the Journal of Political Economy.

We document evidence of a persistent “early entry” advantage for brands in 34 consumer packaged goods industries across the 50 largest U.S. cities. Current market shares are higher in markets closest to a brand’s historic city of origin than in those farthest. For six industries, we know the order of entry among the top brands in each of the markets. We find an early entry effect on a brand’s current market share and perceived quality across U.S. cities. The magnitude of this effect typically drives the rank order of market shares and perceived quality levels across cities.

Tyler Cowen comments; and Andrew Gelman has maps which depict a similar diffusion away from home-base effect for Starbucks and Wal-Mart.

I wonder though if this is just a home-base effect, as brands take hold where they are established and get picked up more slowly elsewhere, or if there might be another (deeper) process which would explain why certain kinds of brands – say like Starbucks and Wal-Mart – crop up in particular locations to begin with.

Your thoughts?

Remember the seven deadly sins: lust, gluttony, greed, sloth, wrath, envy, and pride. Geographers at Kansas State University have developed a sin index and have mapped them. They presented their research at the  recent annual conference of American Association of Geographers tailoring their research to the conference host city Las Vegas and state of Nevada (h/t: Karen King). The Las Vegas Sun summarized the study this way.

[T]he Kansas geographers also compared the level of sin in 10 top casino markets, and while the Las Vegas Strip ranked first for greed, it could muster no better than third place for pride, the aggregate of all sins. It was the southern gambling cities — Lula, Miss.; Biloxi, Miss.; and Shreveport, La., that came out on top of the bottom. Why, exactly, remains to be seen. The Kansas geographers started this project, it seems pretty clear, for the erudite amusement; something to stand out at a 6,000-person convention consumed with the world’s heavy questions. But if Tuesday’s convention crowd was evidence, the sin study was interesting to other scholars as well. So Vought and colleagues plan to continue their national study of evil. “It’s too much fun,” Vought said, smiling in a way that suggested, if not pride, then a good deal of pleasure.

Some people are wine afficianados, others love fine brandy or scotch. But me, I’m a micro-brew fanatic. In my fridge right now is a good size collection of Victory, Dogfish, Rogue, Bell’s, and a dozen or so others. One of my favorite holiday presents of all-time is my subscription to the beer of the month club. So I was greatly enthused to come across this map via Strange Maps, based on these data on the location of medal winning brews since 1987.

Here’s the top 10 states in terms of overall number of medals.

1. California – 474
2. Colorado – 322
3. Wisconsin – 232
4. Oregon – 170
5. Pennsylvania – 162
6. Texas – 133
7. Washington – 114
8. New York – 98
9. Missouri -90
10. Massachusetts – 76

Here’s the list controlling for population.

1. Colorado – 64.4
2. Oregon – 42.5
3. Wisconsin – 38.6
4. Washington – 16.2
5. Missouri – 15
6. Pennsylvania – 13.5
7. Massachusetts – 12.6
8. California – 12.8
9. Texas – 5.6
10. New York – 5.1

My very favorite casualty of the reset – conspicuous consumption. The New York Times reports:

In just the seven months since the stock market began to plummet, the recession has aimed its death ray not just at the credit market, the Dow and Detroit, but at the very ethos of conspicuous consumption. Even those with a regular income are reassessing their spending habits, perhaps for the long term. They are shopping their closets, downscaling their vacations and holding off on trading in their cars. If the race to have the latest fashions and gadgets was like an endless, ever-faster video game, then someone has pushed the reset button…

Still, economists point out that the Great Depression created a generation of cautious savers. The longer the downturn this time, they say, the more likely it is to change financial habits permanently.

“Though the recession was always talked about in economic terms, we felt really strongly that, in fact, it was a crisis of culture,” said Tracy Johnson, research director for the Context-Based Research Group, a market research firm in Baltimore that views the recession as a rite-of-passage that will reorder consumer priorities. Ms. Johnson has advised clients to focus on quality rather than quantity. Malls redecorated in screaming red “sale” signs are not the way to go, she said, because “if you just give people the opportunity to buy more, you’re not matching up to where their minds are…”

Carol Morgan, who teaches law at the University of Georgia and whose husband has a private law practice, said she felt a responsibility to cut needless spending. “That is probably something that is a prudent thing to do in any event, but particularly now I see it as the right thing, as the moral thing to do,” she said, adding that she also hoped to increase her charitable giving. “Before, extravagance and opulence was the aspiration, and if we can replace that with a desire to live more simply…”

Any sharp decline in consumer spending will feed on itself, said Juliet B. Schor, an economist at Boston College and the author of “The Overspent American: Upscaling, Downshifting and the New Consumer” (Basic Books, 1998). Typically, people spend when those around them are spending, but in a downturn, the need to compete evaporates. “You can stay right where you are without falling behind,” Ms. Schor said.  Consumers’ focus may have shifted, she said, from striving to catch up to those above them to contemplating the fates of those below them.

The new organic garden at the White House gotten a lot of attention, but a story in last Sunday’s NY Times business section says that the administration’s agricultural policies go much deeper. If the story is right, and if the changes are sustained, Americans may move back to eating the way our grandparents did on the farm.

The long Times piece talks about food’s impact on health and the environment, class issues around healthy eating, and the entrenched agricultural industry.

The most vocal booster so far has been the first lady, Michelle Obama, who has emphasized the need for fresh, unprocessed, locally grown food and, last week, started work on a White House vegetable garden. More surprising, perhaps, are the pronouncements out of the Department of Agriculture, an agency with long and close ties to agribusiness.

In mid-February, Tom Vilsack, the new secretary of agriculture, took a jackhammer to a patch of pavement outside his headquarters to create his own organic “people’s garden.” Two weeks later, the Obama administration named Kathleen Merrigan, an assistant professor at Tufts University and a longtime champion of sustainable agriculture and healthy food, as Mr. Vilsack’s top deputy….

(Vilsack) has said he hopes to devote more resources to child nutrition to improve the quality of school breakfasts and lunches. He also wants to make sure that only healthy choices are available in school vending machines….

Noting that the department’s recently released Census of Agriculture included more than 100,000 new small farmers, he said he wanted his agency to help them develop regional distribution networks. The small farms’ produce could be sold to institutional buyers like schools.

Vilsack was generally seen as an agribusiness supporter in Congress and wasn’t a popular choice with the organic and local foods communities, but they’ve been pleasantly surprised. If Vilsack and the local food activists succeed in getting their crops into supermarkets and school lunches, it could be a sea change in American eating habits.

The market is ahead of the government on this. Chains like Whole Foods have brought organic to the big grocery business and now Safeway and Wal-Mart have organic produce sections. Farmer’s markets that sell locally grown food are springing up around American cities, and my guess is that the many of those 100,000 small farmers are selling to them. Portland’s metro area has over 30 farmer’s markets – downtown, in low income working-class neighborhoods, and in the suburbs. Healthy school lunches were pioneered by Bay Area celebrity chef Alice Waters, who got the Berkeley schools to plant gardens for their cafeterias. With Michelle Obama out front, the healthy food movement is poised to make another giant step forward.

Agribusiness is similar to Detroit automakers in many ways. “Big Ag” has subsisted on subsidies and fought reform, while marketing products heavy in corn syrup made cheap by subsidies, and petroleum-based fertilizers are a major oil user. When I was a kid growing up in California’s agricultural Central Valley, my father worked for a poultry feed manufacturer. He brought home calendars from Shell (I think) with cartoon pictures of gigantic tomatoes grown with chemical fertilizers. Now the Valley’s aquifer is poisoned by fertilizers and pesticides and the tap water is unsafe to drink.

Adam Smith in the Wealth of Nations suggested over 200 years ago that what makes us human was the fact that we exchange. Dogs do not. Well, today we know that sometimes animals do exchange according to an article in a recent issue of the Economist Magazine (February 21, 2009 p. 80).

In a recent book, Richard Wrangham, an anthropologist at Harvard University believes that what makes homo sapiens unique is that their food is so often cooked. In a new book Catching Fire he explains that what makes us truly human is cooking food. We are the only species that cooks food. But what is really interesting is that cooking, especially meat, is what led to our big brains. Without cooking the human brain, which consumes 20-25 percent of the body’s energy, could not keep running. Without cooking, raw food cannot feed the brain. Cooking softens food and makes it easier to digest so even the tough stuff is easy to use. Cooking also increases the food digested in the small intestine from 50 percent to 95 percent.

What is really interesting is do we have a connection between cooking and the creative class? Most creative cities and regions we know have lots of gays, bohemians, and immigrants. But what role does cooking play in all of this? Do we not find that most of the creative places also have great eating places? Is this the immigrant connection? I do not mean the simple fast food restaurants, but really good cooking and good food. What is the connection between these two activities?

Does culture and therefore cooking and food also act as a part of the social capital that drives creativity and the creative class? Give me a good bowl of pasta, a nice bottle of wine, and the creative juices will start to flow because we are feeding the brain. Give us bad food and obesity develops, the brain does not develop, and we have no creative class.

Food for thought.

Over the past few weeks, I have been taking a longer view of things, more like 100 years, to the end of the 21st century. However, 10 years of it is already almost gone! So when I read a recent issue of New Scientist on how to survive the rest of the century, I was rather surprised. In an article on “Surviving in a Warmer World,” under very simple conditions, a 4 degree C rise in global temperatures, results in the abandonment of most cities, the desertification of most of the world, the death of five billion people and the end of life as we know it. Although we do survive.

This is of course a simulation model, but I am not sure how many of us have focused on just the recent financial collapse and the global depression with the hopes that if we get out of this in the near term our troubles are over. Not only are our troubles not over, but getting out of the depression and surviving the present century are intertwined. For what a depression tells us is that the current consumption and investment trends are unsustainable financially. As Richard points out, the current investment in housing is not sustainable.

The current crisis comes from an over-investment in housing and all that goes with it and now under-consumption because of consumer debt. Society needs to put these two crises into perspective, and the way to move forward in this crisis is not just to reflate the economy at all costs (read: money expansion) but to stop consumption-led growth and start to focus on investment for the future – energy, environment, clean cars, etc.

This message is starting to sink in. Joseph Stiglitz, in a recent issue of the FT, pointed out that we can have several shots at the financial crisis until we get it right, but we only have one shot to get the environmental story right. I would argue that we do not have too many shots to get the economy and the environment right. The huge investments needed for the future cannot be put into the wrong place. If they are we might all be dead in the long run.

If one is going to invoke the creative class, and they are not going to destroy the financial sector, perhaps we can ask if the incentive structure is right to get them to focus on saving the environment from total collapse.