Richard Florida is the author of several global best-sellers: The Rise of the Creative Class, The Flight of the Creative Class, and Who’s Your City? His latest book, The Great Reset explains how new ways of living and working will drive post-crash prosperity. Florida is a regular correspondent for the Atlantic Monthly and a regular columnist for The Globe and Mail. He has written for The New York Times, The Wall Street Journal, The Washington Post, The Boston Globe, The Economist, and The Harvard Business Review. He has been featured as an expert on MSNBC, CNN, BBC, NPR and CBS, to name just a few. He has also been appointed to the Business Innovation Factory’s Research Advisory Council and recently named European Ambassador for Creativity and Innovation. Florida’s ideas on the “creative class,” commercial innovation, and regional development have been featured in major ad campaigns from BMW and Apple, and are being used globally to transform the way regions and nations do business and “reset” their economies. He is one of the world’s leading public intellectuals on economic competitiveness, demographic trends, global trends, economics, prosperity, competitiveness, and disruptive growth as well as cultural and technological innovation.
Here is an excerpt from my interview of him. To read the complete interview, please click here.
Morris: For those who have not as yet read The Great Reset, what is a “Reset”?
Florida: Economies and societies invariably remake themselves in the wake of a crisis. It’s a necessary component of rebound and recovery. Outmoded industries and tired consumption habits make way for new goods and services, new careers and forms of employment, and population realigns itself in the landscape. All these developments are connected to lifestyle changes.
Morris: In which specific ways are economic systems “embedded within the geographic fabric” of a society?
Florida: Many ways. I have always argued that the place and geography has a significant impact on economic systems. With this Great Reset, we will see an even greater emphasis on place – more specifically the rise of the mega region, which are new and incredibly powerful economic units. No longer will we focus on the city versus suburb but on how to increase our connection to our respective mega regions. Worldwide there are just 40 significant mega regions, which are home to 1/5 of the world’s population, 2/3’s of the global economic output and 85% of all worldwide innovation. The rise of vast mega-regions such as the corridors stretching from Boston to New York and Washington, D.C., which will intensify our use of land and space the way that the industrial city did during the First Reset and suburbia did in the Second.
Morris: Where were the most significant consequences of the First Great Reset in the 1870s? And of the Second Great Reset in the 1930s?
Florida: Each of the previous two Resets were actually vibrant periods of innovation. Inventors and entrepreneurs rushed to fill the voids left by struggling industries with new ideas and new technologies that led to new forms of infrastructure like railroads, subways, and highways systems. All of that innovation powers economic growth. The First Reset saw power and communication grids and streetcar and subway systems spread across the country, speeding the movement of goods, people, and ideas. This was the era of Thomas Edison and Alexander Graham Bell, Andrew Carnegie and J.P. Morgan, after all. The Second Reset brought huge developments in media, mass-produced consumer goods, and the role of large corporations, when companies like IBM rose to prominence and when what was good for General Motors was good for the nation. It also saw the rise of a suburban, mass-consuming nation.
Morris: In Chapter Thirteen, you discuss Toronto. Why do you think this city has “tremendous upside potential coming out of the current crisis”?
Florida: I’m convinced that Toronto has a tremendous upside potential coming out of the current crisis. It won’t topple New York or London as a financial center, nor will it dethrone Los Angeles as the international entertainment capital, but with its large and stable banks, numerous knowledge-based industries thriving in the surrounding mega-regions, and an increasingly diverse population, it will gain ground. And with employment opportunities in the largest centers eroding, it can make a big move on top global talent. It stands as a model of an older, once heavily industrial Frostbelt city that has not only turned itself around but continues to grow and thrive.
Morris: There were “winners” and “losers” following the Long Depression in the 1870s and then the Great Depression in the 1930s. Who or what will be the biggest “losers” following the recovery from the current global crisis?
Florida: “Losers” is not the right description. There’s no getting around the fact that some cities face long odds, and governments and societies are going to be confronted with some hard decisions. Most importantly, cities have to recognize that in times of crisis they have to help themselves. Governments, no matter how well intentioned, can only do so much, especially when they themselves are so strapped for cash, as the U.S. is now. Government money will probably flow to cities and regions with good prospects for the future, so as not to risk money even further by pouring it into stalled economic models.
We have to acknowledge that we can’t look to manufacturing or natural resources to drive growth like we have in the past. Human capital, talent, and knowledge are our most important resources now. Every city has hidden seeds of opportunity waiting to be nurtured. Places like Detroit, Cleveland, and Pittsburgh are among my favorite cities. They have great universities, clusters of innovation across a range of industries, and pools of innovative and creative talent to build on. They need to stop their penchant for mega-projects like new stadiums, convention centers, or casinos, and stop depending on federal bailouts. They need to understand that rebuilding takes a generation or two – it will not happen overnight – and that it has to come from building upon local strengths and capabilities organically.
Morris: What are the basic tenets of what you characterize as “The Reset Economy”?
Florida: Resets force us to remake out economies and societies; they are critical to rebound and recover. They force us to evaluate our outmoded industries and tired consumption habits. When you look to the growth and bust of the Sunbelt region in the U.S., you can see these tenants in action. The boom in housing and the influx of population generated a thriving retail and service economy, but there were no economic drivers underpinning it all. There was nothing to generate new capital, only the capital that people were bringing with them. When that bubble burst, there was nothing to fill the gap. The potential solutions in the Sunbelt aren’t much different from those in the Rust-Belt: Build on real underlying economic strengths and tap into the creative core in the existing population and its valuable human capital. Remember that three cities in Texas that are holding their own today – Dallas, Houston and Austin – were all in the top 10 on my own Creativity Index in 2002.
Morris: You talk about how Resets bring changes in housing and housing systems. You say that we’ll have to move away from home ownership toward more flexible forms of housing. Please explain.
Florida: Housing has always been a key to Great Resets. During the Great Depression and New Deal, the federal government created a new system of housing finance to usher in the era of suburbanization. We need an even more radical shift in housing today. Housing has consumed too much of our economic resources and distorted the economy. It has trapped people who are underwater on their mortgages or can’t sell their homes. And in doing so has left the labor market unable to flexibly adjust to new economic realities.
We need to remake and reinvent our housing system so that it supports the flexibility and mobility of our economic system broadly. Home-ownership is rewarded by the federal tax code, which made great sense when that piece of the American Dream, and all the consumption that came with it, was essential to rebuilding the economy. These days, however, it feels like a huge penalty to people who want to travel light within the new mobile economy without a mortgage to hold them back.
Already, new forms of short-term and long-term rental housing are popping up in some metro areas. You can take on a house or apartment for a few months or even a year or two in developments that are striving to provide critical elements of community – schools, healthcare, social and cultural institutions – even for people who are living there only temporarily. People invested in a home, mortgage, or community are less likely to move to more economically vibrant locales. That kind of entrenchment is going to be an impediment to the coming spatial fix.
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To read the complete interview, please click here.
Bob Morris is an independent management consultant based in Dallas who specializes in high-impact knowledge management and accelerated executive development. He has also reviewed more than 2,200 business books for Amazon’s US, UK, and Canadian websites. Each week, we will add to the Networlding Business Bookshelf abbreviated versions in which he discusses a few of his personal favorites. To contact him directly: [email protected]