How to Jumpstart the Economy

The Great Reset: How New Ways of Living and Working Drive Post-Crash Prosperity
by Richard Florida

Reviewed by Adam Fleisher

The Great Reset, by Richard FloridaWhile the business cycle has ordinary ups and downs, structural economic crises like the one we’re in are, Richard Florida would say, characterized by the demise of a particular economy. And with the right mix of policy and strategic investment, such crises can spur new eras of prolonged prosperity.

Florida, the well-known author of Rise of the Creative Class, argues in this new book that the economy is in the midst of just such a change or “reset” – much like what happened after the depressions of 1870 and the 1930s. The Great Reset, which evolved out of an Atlantic article, contends that these resets “take shape around new infrastructure and systems of transportation,” and create new housing patterns that shift the way we live and work.

The first reset came out of the “Long Depression” of 1873, when the rise of factory production drove people from farms into cities. Cities in turn expanded, thanks to trolleys and subways, that let people live and work in somewhat separate worlds for the first time. The second emerged out of the Great Depression as economic efficiency increased and infrastructure – from education systems to highways – improved drastically. Manufacturing and housing, both driven by a need for space, moved out of the dense and dirty city centers into clean and spacious suburbs.

Today, the country is transitioning, Florida says, from a manufacturing economy to one based on knowledge and creativity. Any fixes for our current crisis have to take this into account, rather than trying to prop up the remnants of manufacturing economies. The burst real estate bubble and the end of easy credit have reversed the trend of buying ever larger homes ever farther away from city centers. Poor Detroit is the emblematic Rust Belt city, with unofficial unemployment probably close to 50%, though smaller manufacturing cities in the Midwest have fared even worse.

The future for Florida is in dense, vibrant cities, because that is where we find “the highest velocity of ideas, the highest density of talented and creative people.” Of course, since those clever, creative financial types, in the big cities, played something of a role in the recent economic collapse, Florida is quick to point out that finance got away from supporting the economy to preying on it. Instead of just “moving money around,” finance needs to be about investing in the “real economy.”

And so we are in another reset. Florida sees a future of “vast megaregions” made up of several cities and their suburban rings. These regional economies, such as Boston-New York-Philadelphia-Washington (home to 50 million people and producing $2 trillion in economic activity), Chicago-Pittsburgh (46 million; $1.6 trillion), and 21-million-person greater Los Angeles are what really power the global economy. Meanwhile, traditional suburbs are turning into mini-cities, with more mass transit options and downtowns of their own; northern Virginia is emblematic of “the redevelopment of older suburbs into denser, mixed-use communities.”

The Great Reset suggests we improve education and health care and the social safety net to help with the shift. But Florida is most bullish about high speed rail as the “connective fiber” of the megaregions – just as new transportation infrastructure played a crucial role in previous resets. In this one, high speed rail would not only connect thriving cities like New York and DC, and San Diego and Los Angeles, but it could even link Rust Belt cities to Chicago (75 minutes from Detroit) or even Toronto. People wouldn’t make these commutes every day, thanks to flexible work schedules and telecommuting. But by connecting declining places to thriving ones, economic opportunities would reach residents of cities that have missed out on America’s post-manufacturing economy, and who don’t have the ability or desire to live elsewhere. And in any case, Florida argues it beats sitting in cars for hours. In Los Angeles, that adds up to two weeks a year per commuter. Though Florida insists that “government is not the prime mover in Great Resets,” he also argues that its role is to “enable and accelerate” the shift. For Florida, that means make high speed rail happen. While his passion is admirable, it’s hard not to be skeptical about a mode of transport that may not be used every day, and may not work, as the linchpin of the latest reset.

Excerpt: “The history of economic development has been a history of greater expansion and more intense use of land and space.  The First Reset saw the transition from small cities and an agricultural society to dense industrial cities.  The Second Reset gave us the sprawling suburbs and great metropolitan areas that defined recent times.  The current Reset is premised on the rise of a new and even larger economic landscape defined by megaregions that spread across multiple cities, several states and provinces, and, in some instances, national borders.  Those regions will have a hard time forming without the infrastructure necessary to bring people and ideas together.”

Further Reading: Shop Class as Soulcraft: An Inquiry into the Value of Work by Matthew B. Crawford and The Economy of Cities by Jane Jacobs

Adam Fleisher is a law student at the University of Virginia.

*Photo courtesy Mike_tn.


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