Creative (Class) Destruction

Richard Florida in Washington, D.C., last week. Photo credit: Washington Post.

In the inaugural edition of the Bacon’s Rebellion newsletter (back before there were blogs), I reviewed Richard Florida’s book, “The Rise of the Creative Class.” I was certain his work would spark a revolution in how Americans understood economic development in the Knowledge Economy, and I became an early follower.

The then-dominant paradigm of economic development focused on corporate recruitment, as epitomized here in the Old Dominion by the Virginia Economic Development Partnership. In that model of economic development, what corporations needed were utilities, Interstate access, low taxes, inexpensive real estate, and inexpensive, semi-skilled labor. But Florida documented that corporate investment was increasingly driven by a need to access human capital. Corporations, especially fast-growth technology companies, were expanding in locations where they could find skilled, educated, tech-savvy employees — an occupational cluster he dubbed the creative class.

In a break with the past, Florida observed, creatives weren’t attracted to regions with symphonies, operas, and ballets. They were moving to metros noted for openness to newcomers, social diversity, cultural tolerance, and a rich “street” culture. Instead of employees migrating to where the corporations were, corporations were migrating to where the employees were. To attract corporate investment, communities needed to attract the creatives.

Among other insights, Florida foresaw the decline of suburban office parks, which he disparagingly called “nerdistans,” which young people rejected in favor of the city experience of walkable neighborhoods and vibrant, participative cultural institutions. Through a series of books and publication of the “CityLab” blog, Florida transformed the nation’s thinking about economic development — especially in liberal, Democratic cities where talk of tolerance and openness came naturally.

I followed Florida for several years, but slowly lost interest as his shtick became increasingly political. Not only did liberal, Democratic cities embrace him, he embraced them in turn. The new Creative Class paradigm seemed to relegate smaller, less ethnically diverse, more culturally conservative cities to the dust heap of the economy, and Florida seemed to overlook obvious flaws in the Blue State model such as excessive regulation, high taxes and unfunded pension liabilities. To my mind, he had captured important truths but had shot way past the mark.

Well, it seems that Florida has written a new book, “The New Urban Crisis.” I have yet to read the book, but Florida appeared at a panel discussion at the Union Market in Washington, D.C., a week ago to discuss his latest thinking. From the Washington Post:

Somewhere along the way … Florida realized that the workers he so cajoled were eating their cities alive.

In places like New York, San Francisco, Seattle and arguably Washington, the mostly white, young and wealthy “creative class” has so fervently flocked to urban neighborhoods that they have effectively pushed out huge populations of mostly blue-collar and often poor or minority residents.

“I think, to be honest, I and others didn’t realize the contradictory effect,” Florida said Tuesday at a panel discussion. He said he realizes now that prompting creative types to cluster in small areas clearly drove living costs to such heights that low-income and oftentimes middle-income households have been forced elsewhere, creating a divide he did not anticipate.

“We are cramming ourselves into this limited amount of space. And at the same time that the super-affluent, the advantaged, the creative class — we could go on and on [with what to call them] — the techies, global super-rich, absentee investors, invest in these cities, they push others out … and it carves these divides,” he said. …

Although he still champions investments in urban areas, at the panel event Florida said the criticism had made a mark. “To be seen as the neoliberal devil, foisting gentrification on cities, is not a situation I like to be seen in,” he said.

Bacon’s bottom line: Members of the creative class may be tolerant, open, hip and edgy, but they, like everyone else, are NIMBYs. Once they move into a neighborhood, they like things the way they are, and they don’t want greedy developers building new projects that block their views, generate traffic, alter the architectural character of the neighborhood or otherwise inconvenience them. In Creative Class enclaves, NIMBYism restricts residential development, which aggravates housing scarcity, which drives up prices, which displaces the poor, the working class, and increasingly the middle class.

Members of the Creative Class happily wield government power to mold a world to their liking. They have no compunction about enacting laws and regulations that encumber economic activity — usually the economic activity of others — as long as it furthers their own goals. Thus has California transformed the coastal ribbon into an environmental paradise attractive to the Creative Class while devastating the farming and manufacturing economies of inland cities. Gross inequality is not the inevitable result of wealth creation, it is the inevitable result of wealth creation in a liberal Democratic political/cultural setting.

That’s the way I see it. I doubt Florida will see it the same. But I have enough respect for his thinking that I will read his latest work, and I reserve the right to change my mind.

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21 responses to “Creative (Class) Destruction

  1. Good article, Jim. Thanks for sharing.

    Sincerely,

    Andrew

  2. So are cities that vote blue – failed settlement patterns?

    🙂

  3. Red states/cities and blue states/cities each botch human settlement patterns in their own unique ways.

  4. Another example of how the Blue State governance model exacerbates inequality. A new Harvard Business School study, examines San Francisco’s increase in minimum wage to $13 on the local restaurant scene. From the study:

    “The evidence suggests that higher minimum wages increase overall exit rates for restaurants. However, lower quality restaurants, which are already closer to the margin of exit, are disproportionately impacted by increases to the minimum wage. Our point estimates suggest that a one dollar increase in the minimum wage leads to a 14 percent increase in the likelihood of exit for a 3.5-star restaurant (which is the median rating), but has no discernible impact for a 5-star restaurant (on a 1 to 5 star scale).”

    Thus, the minimum wage increase hurts the poor/working class by pushing restaurants out of business and eliminating jobs. This effect, of course, is commonly known.

    But the minimum wage hurts the poor/working class in another way: by driving out of business restaurants that cater to a lower-income clientel, depriving less affluent consumers of dining options.

  5. I actually thought Florida was screwed up from the get go.. with an elitist mindset…. that failed to recognize that cities RELY on a huge workforce of labor to maintain and operate the facilities that the “creative class” need for their own lifestyles.

    And Florida and the creatives treat those folks as if they are actually part of the “facilities” that don’t have problems finding “affordable” places to live, health care.. and the ability to raise a family without needed entitlements.

    Not arguing for socialism nor equality – but AM pointing out that cities have a crapload of people – waiting on the needs of other people and truth be known would not “work” if only “creatives” sashayed up and down the streets …

    re: “depriving” people of restaurants… good lord..

    what are your solutions for people who work in those restaurants in terms of affording a place to live.. and provide for their own selves and families without needing entitlements?

  6. Ideological blather: Creative class is a group of NIMBYs restricting development.

    Facts: 2 of the largest practitioners of Florida’s creative class theory are Austin, TX and San Francisco, CA.

    1990 populations (within the city limits):
    Austin: 465, 622
    SanFran: 723,959

    2015 populations:
    Austin: 931,830
    SanFran: 864,816

    Also, SanFran is the 2nd most densely populated city in the entire country after NYC! Yes, that’s pure NIMBYism right there (rolls eyes).

    • San Francisco has always been a densely developed city, long before anyone thought of the Creative Class. But housing supply has nowhere near kept pace with demand in recent years. I’m not saying NIMBYism is uniquely strong there, just that it works to throttle expansion of the housing supply.

      • NIMBY was a relevant term 20 to 30 years ago. But right wing ideologues have completely distorted the meaning when it comes to housing in 2017.

        NIMBY used to mean that a very undesirable project (say a garbage dump) was proposed for a parcel. The neighbors raised enough of a stink that the project would eventually move to another neighborhood where the residents weren’t as politically active or mobilized or moneyed.

        But now, every single housing project rejected in a major city is called “NIMBY.” Which is inaccurate.

        First, right wingers throw out NIMBY about rezonings. Which shows their use of the term is simply ideology. Localities have zoning ordinances and comprehensive plans in place. When a developer applies for a rezoning, he is asking the governing body to change the policies enacted by the locality. In no logical way is it “NIMBYism” to oppose a rezoning. The default for any rezoning in any area (rural, urban, suburban) should be denial as it is a request to amend the zoning ordinance (and often the comprehenisve plan). Right wing ideologues want to turn the world upside down and say that any developer should be able to come in and amend a community’s zoning ordinance and comprehensive plan and if you oppose it, you are a NIMBY.

        When a Planning Dep’t develops a comprehensive plan and zoning ordinance that designates a certain density for a street or neighborhood based on utilities, transportation, schools, parks, and other city services, it is NOT NIMBYism for residents to oppose projects that massively increase density on a street.

        That is the case for most of the right-wing cries of NIMBYism in large coastal cities. They believe that a street that a community designed for 30 residents should just accept any developer’s proposal to rezone and plop a 200 person multifamily complex on the street. If you dare oppose it, you’re a NIMBY.

        • It is NOT NIMBYism for residents to oppose projects that massively increase density on a street.

          Call it whatever you want. People do oppose density increases near where they live because they’re afraid it will change the character of their neighborhood. Opposition from people who resist change — who resist the evolution of cities to greater density — acts to restrict the supply of housing.

  7. Dear Jim,

    “Demand” and “growth” are treated as if they are sacrosanct. They aren’t. If these things damage quality of life, then they should be curtailed, i.e. as in restricting immigration that inflates such demand.

    Sincerely,

    Andrew

  8. Oh good lord – we’re back to recycling the “regulation” makes housing more expensive mythology – a nice complement to the “increased minimum wage costs jobs” trope!

    You’d convince me if you actually had real data to show the more regulated cities had less available affordable housing..

    surely among the hundreds of major cities in the US – there are examples of low regulation locales that allow more affordable housing.. no?

    what are the most affordable cities in the US for housing?

    how about those Republican cities? surely they are walking the walk!

    that would be an awesome Conservative tour-de-force!

    sorta like free-market health care!

    🙂

  9. There was a study done in California back in the 1990s with respect to the impact of housing prices of mandatory contributions from builders to various infrastructure needs. California’s proffers.

    The study showed several things. First, the market determined how much of the impact fees were recovered in higher prices for houses or lower prices for land. Builders had an easier time recovering the impact fees in higher priced housing, but often ate at least some of the costs for lower priced housing.

    I suspect the same results would be found today, both in California and in Virginia.

  10. re: ” who resist the evolution of cities to greater density — acts to restrict the supply of housing.”

    Given the fact that most major cities DO HAVE DENSITY – i.e. multi-story buildings ARE built .. and most cities DO permit dense development WHERE they have committed to provide the infrastructure to support it… the claim that cities and their residents oppose density and that’s why housing is so expensive is as LocalGovGuy said – more ideological blather than reality.

    You’d look at cities like New York and the “theory” says that housing is so expensive there because they what? did not allow density? You could repeat that view with many cities – so there is more to it that just that.

    re: “impact fees get “eaten” by developers for lower priced housing.

    Binary thinking going on here. Developers do not “eat” profits. They do not go broke trying to build affordable housing. If leaders in cities want to provide for it – they can take a number of actions including a common one of requiring a percent of some units to be affordable – which the developers will offset by making the less-affordable units more expensive.

    But the bigger problem – is what kind of housing is available to people who work in the lower tier service and maintenance, operations, food service jobs?

    what is the plan for housing for these folks? Should housing units be built that meet the standard of 30% of their income if they are making minimum wage?

    If you don’t want them living 10-15 in a house in a residential neighborhood – what is your solution?

    bonus question – are regulations that limit the number of people who can live in a housing unit – an example of those terrible anti-density regulations that Bacon is talking about? After all – if people seek housing that they can afford in a free market – and it results in “sharing” .. should that be regulated?

    • Exactly. It is beyond ludicrous to call a city with a density of 18,000 people per square mile (SanFran) a NIMBY paradise as silly right wingers do.

      These cries of NIMBY are appropriate in places with 60 or 70 people per square mile that deny new multifamily developments. They are not appropriate for places like Arlington, Austin, or San Francisco.

  11. errata – OOPS:

    ” If leaders in cities want to provide for it – they can take a number of actions including a common one of requiring a percent of some units to be affordable – which the developers will offset by making the less-affordable units more expensive.”

    by making the standard-price units a bit more expensive.

    ….. to continue…………………

    we KNOW what percent of income defines “affordability”.

    the “not enough density because of regulation” critics – seem to think that if you let builders build when and where they wanted to build that there would be “enough” affordable housing.

    but would those same critics support regulation to require all development to provide a certain percentage of “affordable housing” even if the price of it was “below market”?

    What would be an interesting article – would be a discussion of the relationship between “affordable” and “market” and how you’d achieve some parity – and how – with or without regulation.

    that’s the KIND of dialogue I’d LIKE TO HEAR from the folks who say the answer to “affordable” is MORE DENSITY.. and if we only allowed more density -we’d have more affordability…

    It’s way, way more than the simplistic anti-regulation, anti-govt ideology that gets bandied about…

  12. Density is expensive. Once a builder goes beyond “stick-built” garden apartments to concrete and steel structures (“elevator buildings”), costs skyrocket. Couple this with the fact land tends to be more expensive in urban areas than in others and we find expensive places in which to live.

    Indeed, in light of the high land and construction costs, Fairfax County has exempted Tysons developers from any requirement to provide “affordable housing” except for Macerich, which was approved before the 2010 Comp Plan was adopted and had proffered a small amount of affordable housing. Only “workforce housing” is required.

    Unless density means allowing people to chop up SFH into apartments, density is expensive.

    • I completely agree.

      I’d also note that the cries of NIMBY ring pretty hollow when I walk around Arlington or Austin or SanFran and I see so many multifamily dense developments. Seriously, how many people who scream NIMBY have ever spent a day walking in those places? There are hundreds of dense multifamily developments in those places if you walk around. I could get the argument if all I saw was single family homes. So, no, there is no war on density in those localities. They’re just desirable places to live. And therefore, people with money are going to drive up the price of housing.

      What this argument really is is the toddler argument. Austin’s a cool place to live. I can’t afford to live in Austin. Damn it, build more housing in violation of your comp plan and zoning ordinance so I can afford to live in Austin. I want to do what I want to do regardless of the rules. (Stomps feet like a 3 y.o. to make point and screams “NIMBY”)

      The other reason that I hate the term NIMBY is that it implies that localities don’t have a right to their own governance. The argument of opponents really is, “If I want to plop down a 500 unit multifamily complex” I should be able to override all local governance. Who cares if the locality has to build new roads, new schools, new parks, new water & sewer lines, etc.? The developers may claim, “but I have to pay proffers or impact fees.” That’s not the point. A locality should be able to determine if it wants to build a new road or a new school. A developer should not be allowed to come in and just upend the locality’s governance.

  13. I agree that Florida comes off as a snake oil salesman after a while. But I wonder why everyone thinks that he’s the seer of gentrification, which had been going on for decades before he ever popped onto the scene.

    A few ideas: A lot of gentrification is not the result of “liberals” necessarily (I wonder why this blog gets so hung up on this stupid classifications). Part of it is the sexual and gay revolution. Gays in particular tended to buy into older neighborhoods and fix them up. Since they rarely have children, they have the money to put into dwellings. As such, they aren’t that concerned about public schools. Not all gays are liberal Democrats.

    As far as gentrification and city politics, the best book I have ever read is “Common Ground” (1985) by NYT journalist J. Anthony Lukas. He examines in rich detail the dynamics of three families in Boston in the 60s and 70s. One is a white, middle class young couple moving into a minority neighborhood. This was long before Florida popped up. Lukas also deals with a poor African-American family and an Irish-Catholic family. All three undergo big personal displacements as Boston evolves.It is a powerful, gritty and realistic book that shows just how racist Boston actually is. I graduated form an area college in 1974 and was offended by the holy-than-thou attitudes about race(especially since my family was living in North Carolina at the time, I and I didn’t quite see the South as my classmates did) . During the October after I left, a judge ordered school busing. The city exploded along racial lines. Reading Lukas was like a breath of fresh air.

    Also, I don’t get the blog author’s disenchantment with millennials moving into Richmond and supposedly displacing poor people. For one thing, he’s been cheerleading this trend for years. Secondly, I don’t see the richer young folks moving into Gilpin Court of Mosby which are murder prone public housing populatd by minorities. There may be some displacement in Church Hill or Scott’s Addition, but, in the later, case, the neighborhood was a bunch of industrial warehouses. Likewise in popular Manchester, warehouses (not residences) are being converted into condos and apartments. If you want to talk about the “creative class,” the center of gravity is not in downtown Richmond so much as in very suburban Short Pump and West Creek, where the IT big firms such as CapOne are.

    Another fallacy with this blog post is that it assumes that being a urban pioneer means a new generation of leftist hippies. Take San Francisco. It may be one of the most progressive cities in the country, but my guess is that is less so. Many INfo Tech gurus who are fabulously wealthy are actually quite conservative about not wanting to pay taxes and share their wealth. Many are Republicans.

    But I agree that Richard Florida seems like Oh-So 25 years ago and he was hardly a visionary then. He is more of an idea recycler.

  14. re: Density is expensive ” Unless density means allowing people to chop up SFH into apartments, density is expensive.”

    re: COmp Plans , and governance

    In the repetitious claims that cities make housing expensive by denying “density”…. there is a near total lack of a definition of what “density” means.. does it mean the idea that SFH can have tennant room rentals or does it mean multistory skyscrapers or what?

    those who make that argument are never really clear as to identifying the specific regulations and what they prevent, much less what should be permitted… or not.

    and I agree with LocalGovguy with respect to governance and nimby but I still do ask the question of what is done for housing for lower-tier service workers… since no city can run without a substantial number of them?

    Is that the job of the unfettered “market” and Jim’s claim that the market would provide for the need if the local govt would allow it?

    or is this something that won’t happen in a free market unless the local govt gets directly involved in a proactive way via regulation and/or other means?

    the basic “anti density” argument lacks credibility unless it can identify specifics AND provide good and bad examples along with data that shows that such regulation does have an impact .. you need metrics.. to make the case – otherwise – it becomes just another ideological belief and not much else.

  15. re: ” But I agree that Richard Florida seems like Oh-So 25 years ago and he was hardly a visionary then. He is more of an idea recycler.”

    me too… I had thought that Bacon was more astute and perceptive than to latch on to Florida’s faux chic schtick .. in the first place.

    and no.. you don’t have to be “left” or “right” to see that..

    well.. you shouldn’t have to .. so maybe Bacon needed a good excuse to abandon him .. and blaming liberals was perfect!

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