Tuesday, June 14, 2005

Richard Florida gets a kicking - The Curse of the Creative Class

Dicky Florida gets a well-deserved kicking!

Calling time on another guru-bullshitter:

Steven Malanga writes in City Journal:

Richard Florida’s theories are all the rage worldwide. Trouble is, they’re plain wrong.

...Florida was stunned to find, correlated highly with the other indexes. Cities with many gays were also places with lots of performers, creative workers, and tech companies.

At this point, Florida made two big—and dubious—leaps in logic. First, he assumed that there was some causal connection linking all of these indexes to economic growth. Then he decided he could infer just what it was about these cities that helped power this growth.

...much of The Creative Class is little more than Florida’s depiction of the Internet bubble’s go-go culture, the last third of the book offers urban policymakers a seemingly dazzling new economic-development agenda derived from these observations. To capitalize on the hot new economy, Florida tells policymakers, they must reach out to the creative class...

Armed with such notions, cities across North America, Europe, and as far afield as New Zealand are rushing to implement the professor’s ideas....

But Florida rarely lets basic economic data get in the way of his theories. Since the Internet meltdown, for instance, he has said that, although some of his most creative cities don’t seem to be doing very well these days, their performance shouldn’t be viewed so narrowly. “These places have been growing for decades building solid new industries that have helped to strengthen our economy,” he writes. But this simply isn’t true. Jobs data going back 20 years, to 1983, show that Florida’s top ten cities as a group actually do worse, lagging behind the national economy by several percentage points, while his so-called least creative cities continue to look like jobs powerhouses, expanding 60 percent faster than his most creative cities during that same period. None of this is surprising: given that many of Florida’s most creative cities are so tech-oriented, the further back one looks, to the days before the tech boom, the less impressive their performance is likely to be. In fact, the economics of Florida’s theories look good only if you take a snapshot of the numbers in a narrow time range—just before the Internet bubble burst.

Florida likes to talk about his most creative cities as centers of innovation, and, based on his writings, one would assume that these cities would be home to thousands of fast-growing companies.

But many are not. In fact, according to one recent independent study of entrepreneurship in America, Florida’s most creative cities are no more likely to be powerful incubators of fast-growing businesses than those at the bottom of his rankings

In 2001, a National Commission on Entrepreneurship [concluded that] the study concludes that “most fast-growing, entrepreneurial companies are not in high tech industries,” but rather “widely distributed across all industries.

Among major cities, Detroit—omitted from Florida’s most creative cities—finished second in the commission’s report, incubating about 50 percent more fast-growing companies than the average of all major cities, [but] with a particular strength in nurturing high-growth manufacturing businesses.

If Florida’s cities can’t produce jobs or high-growth companies at a rapid rate, you would think they would at least do a good job of attracting and retaining people, given the professor’s notion of the importance of place in the new economy, as a magnet not just for the talented but for residents of all kinds. But Florida is wrong again. Many of his “talent magnets” are among the worst at attracting and, more importantly, hanging on to residents. Just look at the 2000 census reports on domestic migration, which follow the movements in and out of metro areas by U.S. residents. That report found that New York, among Florida’s top talent magnets, lost 545,000 more U.S. residents than it gained in the latter half of the 1990s, the worst performance of any U.S. city. The greater San Francisco metro area was close behind, with a negative domestic migration of more than 200,000 people. In fact, five of the ten places atop Florida’s creativity index had steep losses of U.S. residents during that period, while some of Florida’s creative losers—including Las Vegas, Memphis, and Tampa Bay—were big winners.

It’s no coincidence that some of Florida’s urban exemplars perform so unimpressively on these basic measures of growth. As Florida tells us repeatedly, these cities spend money on cultural amenities and other frills, paid for by high taxes, while restricting growth through heavy regulation. Despite Florida’s notion of a new order in economic development, the data make crystal-clear that such policies aren’t people- or business-friendly. The 2000 census figures on out-migration, for instance, show that states with the greatest loss of U.S. citizens in 1996 through 2000—in other words, the go-go years—have among the highest tax rates and are the biggest spenders, while those that did the best job of attracting and retaining people have among the lowest tax rates. A study of 1990 census data by the Cato Institute’s Stephen Moore found much the same thing for cities. Among large cities, those that lost the most population over a ten-year period were the highest-taxing, biggest-spending cities in America, with per-capita taxes 75 percent higher than the fastest-growing cities. Given those figures, maybe Florida should have called his book The Curse of the Creative Class.

The city that sits at the pinnacle of Florida’s list, often jokingly referred to as the “People’s Republic of San Francisco” because of its socialistic political culture, is the perfect example of what happens to cities that follow this heavy-handed governing philosophy. While San Francisco sports taxes higher than all but a few U.S. cities, and passes laws forcing business to boost wages, San Francisco’s jobs economy has expanded at only one-fourth the rate of the national economy over the last 20 years. Similarly, high-tax New York has been caught in a cycle of boom and bust that has produced no net job growth in 40 years. During the mid-1990s, the city briefly got back to basics when the Giuliani administration focused on fighting crime and cutting some taxes and spending, and—presto!—for the longest period since World War II, the city’s economy outpaced the nation. However, now that the city’s political culture has veered sharply to the left again, with a mayor who declares that taxes don’t matter to businesses or residents, New York is once again an economic slacker, having lost 200,000 jobs, or nearly 6 percent of its jobs base, in the current recession.

These examples only accentuate what is otherwise obvious: that there is little evidence that people or businesses set much store on what Florida is prescribing.

It is exactly because Florida is an exponent of this kind of aggressive, government-directed economic development (albeit with a New Age spin) that liberal policymakers and politicians have latched on to his theories so enthusiastically. To them, an expanding government is always more interesting than an expanding economy—especially if economic growth depends on something so very uninteresting as low taxes and small government. But it is just as likely that the Floridazed brand of aggressive governing will get things as wrong as the builders of sports stadiums and convention centers.


Post a Comment

<< Home