GURUS JULY 24, 2013
In the depths of the Great Recession, in the early spring of 2009, as the country was scrambling for ways to stop a seemingly bottomless plunge, the economic development guru Richard Florida weighed in with a high-profile prescription on the cover of the Atlantic, titled “How the Crash Will Reshape America.” In the piece, which Florida later expanded into a book, The Great Reset, he argued that the recession was going to leave behind an entirely new economic order and geography, and that the country’s policy makers needed to adapt to this new order and encourage it, even if it meant leaving some places and industries behind. And it was pretty clear what one of those left-behinds would be: Detroit.
Florida wrote: “The Rust Belt in particular looks likely to shed vast numbers of jobs, and some of its cities and towns, from Cleveland to St. Louis to Buffalo to Detroit, will have a hard time recovering. Since 1950, the manufacturing sector has shrunk from 32 percent of nonfarm employment to just 10 percent. This decline is the result of long-term trends—increasing foreign competition and, especially, the relentless replacement of people with machines—that look unlikely to abate. But the job losses themselves have proceeded not steadily, but rather in sharp bursts, as recessions have killed off older plants and resulted in mass layoffs that are never fully reversed during subsequent upswings.”
He went on: “Perhaps no major city in the U.S. today looks more beleaguered than Detroit, where in October the average home price was $18,513, and some 45,000 properties were in some form of foreclosure. A recent listing of tax foreclosures in Wayne County, which encompasses Detroit, ran to 137 pages in the Detroit Free Press. The city’s public school system, facing a budget deficit of $408 million, was taken over by the state in December; dozens of schools have been closed since 2005 because of declining enrollment. Just 10 percent of Detroit’s adult residents are college graduates, and in December the city’s jobless rate was 21 percent. To say the least, Detroit is not well positioned to absorb fresh blows. The city has of course been declining for a long time. But if the area’s auto headquarters, parts manufacturers, and remaining auto-manufacturing jobs should vanish, it’s hard to imagine anything replacing them…As its population density dips further, the city’s struggle to provide services and prevent blight across an ever-emptier landscape will only intensify.”
So what should the country do? Invest in the places that, unlike Detroit, have promise. “We need to encourage growth in the regions and cities that are best positioned to compete in the coming decades: the great mega-regions that already power the economy, and the smaller, talent-attracting innovation centers inside them—places like Silicon Valley, Boulder, Austin, and the North Carolina Research Triangle.” What it most definitely shouldn’t do, he added, is prop up fading industries like auto manufacturing: “Different eras favor different places, along with the industries and lifestyles those places embody. Band-Aids and bailouts cannot change that. Neither auto-company rescue packages nor policies designed to artificially prop up housing prices will position the country for renewed growth, at least not of the sustainable variety. We need to let demand for the key products and lifestyles of the old order fall, and begin building a new economy, based on a new geography.”
But what does that mean for people who live in these fading places? In a blog post a few weeks after the article appeared, Florida suggested that we may just need to offer them a bus ticket out of town: “We can best help those who are hardest-hit by the crisis, by providing a generous social safety [net], investing in their skills, and when necessary helping them become mobile and move to where the opportunities are."
At the time, these arguments struck me as remarkable coming from someone who had, over the previous decade, become very successful by selling the argument that even struggling, old-economy towns and cities could thrive by adopting what Florida called the “creative class” approach to economic development—making their communities attractive to mobile professionals by encouraging amenities such as the arts, gay bars and bike paths. After his 2001 book The Rise of the Creative Class became a best-seller, Florida made a lucrative business out of elaborating on its themes in speeches (for a typical fee in the $30,000 range) and economic development consulting (his reports cost upwards of $300,000.) As I noted in a 2010 piece for the American Prospect, it seemed a bit rich for Florida, after having been paid a lot for solutions by struggling cities, to now be turning around and declaring many of them beyond hope.
Well, it now appears that Florida has shifted on this question yet again. As Florida predicted back in 2009, Detroit is in very dire straits. But is Florida citing that as confirmation that his 2009 piece was correct and that we should, in fact, be letting the city and the rest of the “old order fall”? Far from it. In a big piece on the Atlantic Cities Web site this week titled “Don’t Let Bankruptcy Fool You: Detroit’s Not Dead,” Florida made a strong case for redoubling investment in the city: “Detroit's problems surely run deep. But beneath its fiscal problems, and all the hemming and hawing about them, lie the seeds of rebirth for the city and the broader metro region. Since the economic crisis, and perhaps somewhat before it, the first signs of recovery and revitalization, modest as they may be, are finally starting to surface.”
Hemming and hawing? You mean like the fellow who, when it mattered a few years ago, with the auto industry on the line, wrote that “no major city in the U.S. looks more beleaguered than Detroit”? Now, Florida is noting enthusiastically that the metro Detroit economy produces “nearly $200 billion in economic output” and is “larger than New Zealand's and not too much smaller than that of Hong Kong or Singapore.” “The size and scale of the region's economy, the quality of knowledge institutions, its International airport, and openness to global talent put Detroit in a different category than other hard-pressed Rustbelt cities,” he writes. Huh, not bad for a place that was “more beleaguered” than all others just a few years ago. Maybe the jump has something to do with the auto bailout that he so strongly opposed in 2009, which now has factories humming even inside the bankrupt city?
I e-mailed Florida, who now runs the Martin Prosperity Institute at the University of Toronto, asking him about the discrepancy between his downbeat 2009 assessment and his current boosterish one. As he did when I talked to him in 2009, he responded with collegial good cheer. He stuck by his opposition to the auto bailout but argued that his 2009 argument was not inconsistent with his current one: “My earlier comments were centered mainly on programs like the bailout of the auto industry. To be more specific, I was arguing against industrial policy masquerading as urban policy, whether that be subsides for auto in Detroit or tariffs for steel in Pittsburgh. The logic and thrust of my remarks were that we cannot stop and should not try to stop these deep and ongoing economic and industrial shifts nor strive to bailout or prop up sagging industries in the name of helping places and the people who live in them. Such efforts tend to reflect the power and tend to help well-organized influential and relatively advantaged group, as Mancur Olson long ago argued. Also they tend not to work and serve only to hold back needed restructuring.”
I’m grateful for this attempt at clarification. But it strikes me as trying to have it both ways. Today’s metro Detroit economic output would be a good bit smaller than $200 billion if the Obama administration had taken Florida’s advice and decide not to “prop up sagging industries in the name of helping places and people who live in them.” So, while Florida’s new piece had some good nuggets in it, I’m more than a little puzzled about why we are once again turning to him for wisdom on urban policy (some Detroiters are asking that question too). I’m reminded of a moment from 2009 that I included in my piece from that year:
After the Atlantic cover story appeared, Florida was a guest on National Public Radio's Talk of the Nation. Tessa from Detroit called in: "My neighborhood is really disappearing," she says. "I would love to hear some comments from your guest about what's going to happen to my neighborhood. What are his predictions? ... Do we get out? Do we stay?"
Florida assured Tessa that Detroit's plight "is not something I'm particularly happy about." He told her his wife is from Detroit. And then he told her that his friends who live in Detroit are making it as "freelancers" who "commute on an irregular basis" to work on projects somewhere else. He had recently given a speech to Detroit airport officials, who told him that the airport would remain viable. "That airport provides connective fiber," he told her. "Finding local employment is going to be a lot harder. So you either have to say, can I commute to work, by plane perhaps, or do I have to look for a place that has a better set of opportunities for me?"
There was no way to know if the answer was satisfactory: Tessa from Detroit was off the air.
Who knows where Tessa is today, whether she left the city deemed most “beleaguered” of all, or whether she’s still there now to witness the moment when, in its bankruptcy, it is deemed, by the very same person, as full of “seeds of rebirth.”
Alec MacGillis is a New Republic senior editor. Follow him @AlecMacGillis.