Comments on Richard Florida’s “The Rise of the Creative Class”
June 11, 2008
by Robert A. Letcher, 11 June 2008
With the economy in decline, I thought I’d dust off my critique of Professor Florida’s “Creative Class”, against the possibility that the economy will decline far enough and fast enough that public economic development officers will start grasping for straws—as I saw them do around “hi-tech” in Flint, Michigan in the 1980s (as Michael Moore examined in Roger and Me) twenty-some years before Professor Florida wrote his book.
In the town where I live, the local paper did a valuable public service by drawing attention to the potential benefits of Professor Florida’s ideas for the local economy. In advance of a visit by Professor Florida few years ago, the paper wrote “Successful city taps creativity, expert says”. And this article helped sponsors draw an overflow crowd to hear Professor Florida discuss his main finding. The paper also wrote a follow-on article, asserting that “redevelopment can attract new, creative class”.
My purpose in dusting off this essay now is twofold. First, I want to help keep Professor Florida’s ideas in the public eye. I really do think they can help development, provided that they are applied correctly. And that’s my second purpose: to help people apply his ideas correctly. Toward this second purpose, I would like to describe some substantive shortcomings in Professor Florida’s formulation; in particular, shortcomings in his “creativity index”. By pointing out these shortcomings, I hope to hold enthusiasm generated by apparently high ranking down to substantively supportable levels. Enthusiasm helps in economic development; but unwarranted enthusiasm inevitably leads to bad decisions—and that’s what I hope to help avoid.
I will describe four shortcomings. One arises from the well-established tendency for most types of economic activity to cluster in relatively few places rather than dispersing widely. A second shortcoming concerns an equally well-established characteristic of economic activity: in addition to being clustered geographically, the various activities are also tiered functionally. A third shortcoming arises from the distinction between [1] outputs attributable to creativity already present and already being put to use and [2] potential creativity available for undertaking generation of new creativity-based outputs—a distinction I haven’t seen mentioned. The last shortcoming I will describe concerns the one-sidedness of Professor Florida’s index. Basically, it doesn’t account for “anti-creative” factors that would hinder actually putting to work the creativity that his index does measure. Let me elaborate on each of these.
The tendency for economic activity to cluster in relatively few places arises from so-called “economies of agglomeration”. When a new kind of economic activity emerges (perhaps resulting from the work of Professor Florida’s creative class), the first few entrepreneurs to jump into it are often able to locate their ventures according to other than strictly economic criteria. For a promising new kind of economic activity, “if you build it, they will come”; that is, “pioneers” can pull investors, employees, infrastructure builders, support service providers, and the like, to them.
But, after only a few “pioneers”—usually five or six at most—have located their new ventures, economic factors exert steadily increasing pressure on locational decisions “late-comers” make. They can’t locate anywhere they want because they can’t compete with pioneers for employees and other resources. Conversely, if they locate near a pioneer, they can take advantage of the employee pool, infrastructure and support services already attracted by that pioneer. And in the longer run, late-comers know they may be able to combine forces with pioneers to attract still further developments, like college courses and vocational training programs. So, they “agglomerate” in order to realize these “economies”.
The hi-tech sector illustrates this tendency. A few locations dominate this sector: Silicon Valley, Boston’s Route 128, Seattle, Austin, Portland, and perhaps Ann Arbor (owing to its proximity to the primary concentration in this country of the auto industry). The prospects for an Atlanta or a Columbus breaking into hi-tech at this top level are essentially zero—more on this shortly.
Basically, Professor Florida’s creativity index addressed the wrong question. Numerical ranking doesn’t matter; category does. The relevant question is: is the city ranked in the top five or six? Practically speaking, economic development strategy must be formulated in such a way that a city can fairly present itself as being in the top category—of something. Another way to put this is, what economic development question can a city ask such that that city is one of the five best answers?
Fortunately, accounting for the tiered structure of economic activity opens up more opportunities for a city’s economic development planners to pursue, and it eases somewhat the challenge they face in pursuing them. Economic activity is tiered both functionally and geographically. It is tiered functionally because ventures of one sort systematically demand services of other particular sorts, while the reverse does not normally arise. Entities that provide such services occupy lower tiers. Economic activity is tiered geographically because within functional tiering, proximity tends to generate advantages in both cost and performance. Electronic communication may reduce some of these advantages—but it is unlikely ever to completely negate them. Practically speaking, this opens up many possibilities for a city’s pursuit of development. It can narrow the question it needs to be among best five answers to, either functionally or geographically, or both.
The hi-tech sector illustrates tiering. The local paper quotes Professor Florida as saying, “[This town] can become the Austin of the Midwest.” This errantly portrays Austin as a regional player in the hi-tech sector, when Austin is really one of the top-tier locations—a national and even international center. In this crucial sense, Austin is not the Austin of the Southwest—it’s the Austin of the nation (or possibly, the world). Again, the Atlanta’s and Columbus’s are unlikely to join Austin in the top tier of hi-tech. What is possible for such cities is to carve out either a functional specialty like medical scanning or a geographical niche for servicing higher-level economic activities. Significantly, the generalized, national ranking conferred by Professor Florida’s creativity index is not relevant in either type of undertaking. Of course, creativity can still matter—just not in the way Professor Florida’s index suggests.
The third point addresses the “carrying capacity” of the creative substance nominally captured by Professor Florida’s creativity index. By carrying capacity I mean the obvious: how much creativity-induced investment can be attracted/supported by a given level of creativity. This concept is necessarily implicit in Professor Florida’s creativity index; otherwise, higher values of the index would have no practical significance.
The significance of carrying capacity is this: irrespective of both a region’s score and ranking on Professor Florida’s creativity index, if investors have subscribed to that region up to the carrying capacity the region could exert no further pull for creativity sensitive investment—and its ranking would therefore be both superfluous and misleading. Furthermore, even though information would never be perfectly available, a region’s planners would do well to consider whether they would be more cost-effective by advertising their unsubscribed creativity than by merely generating new creativity. In conjunction with these two observations, it is also important to distinguish between [1] the investment-inducing effect of creativity captured by Professor Florida’s index and [2] the investment-inducing effect of investment already induced by creativity—a non-linearity that is difficult to assess in the abstract.
Finally, Professor Florida’s index does not appear to account for systemic/institutional, organizational, and acculturated interpersonal factors that obstruct or hinder or work against whatever processes link creativity and investors. Where obstructing factors are relatively strong, Professor Florida’s index likely overstates the “pull” exerted by creativity captured by that index. Only where obstructing factors are relatively weak does Professor Florida’s index have a fair chance both of capturing the creativity of a region and of conveying the significance of that creativity to potential investors. Presumably, potential investors look into both dimensions. For that reason, both investors and economic development planners would benefit from [1] a sequel to Professor Florida’s book that examines the uncreative (or even anti-creative) class and [2] a synthesis of the two books.
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