How the Crash will Reshape America

"How the Crash Will Reshape America" by Richard Florida, Atlantic Magazine, Volume 303, No. 2, March 2009

In "How the Crash Will Reshape America" Richard Florida tells readers no place in the United States will escape the long and deep recession he sees ahead, but the keyword in the title is "Reshape." At the end of the introductory paragraphs he predicts recession and decline spreading outward from New York to Detroit and the Sun Belt in a way that will permanently alter, or reshape, America’s economic landscape. In apocalyptic words, he writes, " … it will permanently and profoundly alter the country’s economic landscape . I believe it marks the end of a chapter in American economic history, and indeed, the end of a whole way of life."

The article runs 8 pages, which is long enough to develop and explain thesis predictions. After the brief introduction, material divided into 7 sub-headings develops his thesis: place matters in economic growth with the advantage going to a discrete number of mega-regions around the world. He argues place matters in economic geography because some cities and regions have an advantage in attracting highly educated people.

Little is said about mega-regions around the world, but Florida takes readers around the United States: New York, Detroit, Pittsburgh, Charlotte, Los Angeles, San Jose, Phoenix. Mostly he tells readers how these areas once prospered doing things that will no longer generate growth. Phoenix, for example, relied too much on real estate.

In the third section he tells readers educational attainment shows "Cities like Seattle, San Francisco, Austin, Raleigh and Boston now have two to three times the college graduates of Akron or Buffalo."

Florida does not cite data on educational attainment, nor do much to develop educational attainment, nor develop his earlier suggestion that cities with highly educated people will have an advantage in the future. Instead, he tells readers about a pioneering theory of urban evolution by a multidisciplinary team of researchers at the Santa Fe Institute. Their theory is called "urban metabolism." These researchers found that trends in innovation, patent activity, wages, and GDP are the opposite of biological organisms; they tend to grow faster as they get bigger. Florida quotes the Santa Fe Institute: "the larger a city’s population, the greater the innovation and wealth creation per person." Further he concludes "Places like New York with finance and media, Los Angeles with film and music, and Silicon Valley with high tech are all examples of high-metabolism places."

There are a few policy suggestions by the closing page. He wants to remove subsidies for home ownership, which he argues restricts mobility and uses resources that would be better used in medical technology, software and alternative energy. He predicts jobs will cluster in a smaller number of bigger cities so he favors making these elite cities more attractive and affordable. Decline in other areas cannot be stopped and it would be foolish to try.

For an article that starts out with bold assertions and a bold prediction I reached the end feeling disappointed. Forecasting growth for “high metabolism places” has a trendy ring, but I am from the old school where people move out of low wage places with declining jobs to go to higher wage places with more jobs. I can agree with Mr. Florida: the crash will "Reshape" America. I am still unsure how.