Creative Class

CCG recently finished up a Creative Community Leadership Project in Noosa, Australia. The program was a true success with the original group of catalysts championing several successful initiatives. 

As the program moves forward into the second year, it will operate under a broader umbrella - the Sunshine Coast Regional Alliance. The program’s goal will be to build off of Noosa’s success and extend the Creative Community project to the entire Sunshine Coast.

Read more about the coverage here:

Noosa Journal - Now it’s over to you…

Noosa News - Change of name is a Sunshine Coast merger

Sunshine Coast Daily - Handover stretches benefits of alliance

Some topics, like some years, seem never to go out of fashion. So with the ranking of cities. This is in part due to the almost endless ways in which the pie can be sliced and the endless interest in the different types of fruit. Surveys throw up different results. In one of the newer slices, Tyler Brule ranks the most livable cities in the world in the FT. The index is based on Monocle’s “world’s most livable cities.”

Zurich, Switzerland wins as the most livable city in the world followed by Copenhagen and Tokyo. But Copenhagen is the most interesting result. I have spent some time in Copenhagen recently and have been curious about several things. The Danes are the happiest people in the world, are the most entrepreneurial, and now have one of the most livable cities. Curious. I wonder what the Baltic states have that the rest of us do not? Is it the homogeneous culture, is it the low level of stress? In the sixties the Danes decided not to teach children how to read because it was too stressful. College students get a stipend to go to school. And the city, well it is also a very livable place with almost everyone on bicycles, including women with babies in the winter.

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 always think of urban planning as the preparation for population and job growth. But, should some cities  plan for population and job decline?

Today, I was on NPR’s To the Point to discuss shrinking cities and the idea of planning for communities that are experiencing significant population decline. For today’s conversation, Flint, MI served as an intriguing case study. Some communities like Flint, MI are actively practicing land banking.

Take a listen.

NPR’s To the Point: Honey I Shrunk the City: Bold Ideas for Declining Urban Centers

“For years, urban planning has been all about growth. But in recent years, with the decline of American manufacturing, a whole new school of thought has emerged. It’s all about shrinking, not growing. As more and more metropolitan areas lose populations and healthy tax bases, guest host Sarah Terry looks at how are cities coming up with new solutions to control the change, instead of simply trying to cope with it.”

Listen here.

Profile here.

Should cities and communities plan for shrinking populations? Can this be part of a comprehensive economic development plan for declining communities?

Hypebot ran this three-part post recently.

Part I: Music & The Creative Class: A Fruit Fly Industry

The unemployment rate surged to 9.4 percent today. But unemployment continues to fall heavily on certain demographic and class groups and in certain cities and regions of the country, according to the latest figures from the Bureau of Labor Statistics.

Greater Detroit still posts the highest rate for large regions (those with a million or more people), 13.6 percent, down from 14 percent in March. Los Angeles, Tampa Bay, Las Vegas, and San Jose also have rates above 10 percent. Greater Portland, Oregon saw the largest jump in its unemployment rate (+6.9 percentage points), followed by Detroit (+6.6 points) and greater Charlotte (+6.4 points). Iowa City (3.2 percent), Des Moines (4.6 percent), and Salt Lake City (five percent) post the lowest unemployment rates.

Ryan Avent notes the resilience of Washington, D.C. and of the Bos-Wash mega-region across the board as well as college towns. He also points to the surprising strength of the “eastern Rust Belt” especially Buffalo, Scranton, Syracuse, and Pittsburgh. These places all  experienced the kind of hit Detroit is taking today roughly a generation ago. They have had time to stabilize the economic trauma and to begin to rebuild around universities, heath care, technology, and creative industries.

Large increases in regional unemployment remain heavily concentrated in regions with large fractions of blue-collar working class jobs. The change in unemployment from April ‘08 to April ‘09 is closely correlated (0.39) with the regional concentration of working class jobs - that is, jobs in industrial production, transportation, and construction, according to an analysis by my colleague Charlotta Mellander.

Regions with higher levels of the creative class and higher levels of human capital have fared much better. (Year-over-year, change in unemployment is negatively correlated with both the creative class, -0.29, and human capital levels, -0.35, the percentage of adults with at least a bachelor’s degree).

Unemployment does not appear to be related to regional income levels (the correlation between the two is insignificant). And it tends to fall more heavily on regions with higher housing prices (with a significant positive correlation between the two of 0.18) - perhaps an artifact of the bubble.

Interestingly, regions with large concentrations of lower-end service jobs (like food prep, building maintenance, and personal care services, which are typically seen as the worst and least secure kinds of jobs) are holding up much better than those with large working class concentrations. (Change in unemployment is negatively correlated, -0.29,  with large concentrations of these standardized service jobs).

Seems to me, we’d be much better off developing new strategies to improve wages and working conditions in this sector - by say speeding the dissemination of better management models and improving innovation and productivity - instead of bemoaning the loss of blue-collar jobs or, worse yet, bailing out failed manufacturing firms.

Yesterday, The New York Times had one of the most frightening articles I have ever read.

In what I think is one of the most perverse misuses of our creative talent that I have ever heard, President Obama is launching a massive Reagan-like Cybersecurity Cold War that has the military-industrial complex salivating. This is expected to soak up the trained computer scientists from Silicon Valley and put them into super-secret R&D.

Instead of creating value for the global economy, they will now be sequestered in high-security laboratories where the knowledge they create will only slowly, if ever, leak out to the commercial world. Mind you, this initiative is being pushed while Harvard and many other universities are considering firing tenured faculty. If a massive military cybersecurity program is the change that the current administration believes is going to assist the U.S. economy in overcoming the worst crisis of the last 75 years, then the future for us and our creative class is likely to be grim indeed.

It is my belief that openness, information exchange, and creating value for the consumer has been the hallmark of U.S. success and what made us a beacon for brilliant people from around the world. By taking some of best and brightest and sequestering them in laboratories shrouded in secrecy, we are taking a deliberate step in the wrong direction.

Can a creative economy be built on directing resources in such directions?

Over the past week, I’ve discussed the role of class in economic performance, innovation, and entrepreneurship. But what about happiness? There is considerable debate over the happiness of nations. The Easterlin paradox suggests that there is little or no relationship between a country’s economic development and its level of happiness in comparison to others. A recent influential paper by economists Justin Wolfers and Betsey Stevenson contradicts the Easterlin paradox, finding a clear relationship between economic development (measured as GDP per capita) and happiness. In other words, countries that increase their wealth become happier, and countries that increase their wealth more than other nations become happier than others.

But what about the effects of class on happiness? Are societies in which a greater share of workers are members of the creative class on balance happier than those with large working class populations?

To get at this, Charlotta Mellander used data on happiness - measured as overall life satisfaction - from the Gallup Organization’s World Poll.

The results could not be more striking. Happy nations appear to be creative class nations.

Nations with a large concentration of the working class are far less happy. In fact they appear downright unhappy. Perhaps Marx was right after all about the alienation that comes from industrial work - or, in this case, the unhappiness found in working class locations.

Source of all graphics: Martin Prosperity Institute

We’ll be doing more on the connection between class structure and the happiness of nations in the future, so stay tuned.

Yesterday, we looked at the effects of class on economic growth. Today, we turn to the relationship between class and innovation.

It’s a well-established truism that innovation drives economic growth and development. Nations and regions around the world go to great measures to stimulate innovation in their attempts to create the “next Silicon Valley” which will generate new technologies, improve economic growth, and lift their living standards.

To examine the relationship between class and innovation, Charlotta Mellander used data on patents by country available from the World Intellectual Property Organization. Despite some limitations, patents are the best-available measure of innovation.

The relationships between class and innovation are, if anything, even stronger than between class and economic activity.

The working class and innovation - not so much. Countries with a large working class have much lower levels of innovation.

Source of all graphics: Martin Prosperity Institute

This YouTube video offers up a creative (of course!) visual interpretation of job culture- then and now - and describes the many ways in which the working world is continually impacted by the creative class.

Whether you’ve been in the workforce for decades or just a few years, how has the rise of the creative class influenced what you need, require, and expect of an employer and your work environment?