Richard Florida has come up with a marvelous piece in the Atlantic Monthly about the role of cities in the new economy. He details our current demise citing the good-natured intention of trying to get more Americans owning homes. This, of course, creates more civic responsibility and corporate solidarity while also giving people an investment and possible retirement package. It worked swimmingly until the housing bubble burst.

Now, says Florida, the new demographic makeup will not be built around cities that produce material things, but a commerce oriented around the exchange of ideas. The cities that best enable the creation and exchange of ideas will be the ones must apt to succeed. These cities, to facilitate the flow of these ideas, will have to cultivate markets that are dense and populated to generate the largest return and potential. Hence, large mega regions such as the Boston-New York-Washington corridor will come to power more so, while those areas in America less diverse will continue to lag. Clearly this piece is well thought out and very readable. I highly recommend.

Quote:

On one level, the crisis has demonstrated what everyone has known for a long time: Americans have been living beyond their means, using illusory housing wealth and huge slugs of foreign capital to consume far more than we’ve produced. The crash surely signals the end to that; the adjustment, while painful, is necessary.

But another crucial aspect of the crisis has been largely overlooked, and it might ultimately prove more important. Because America’s tendency to overconsume and under-save has been intimately intertwined with our postwar spatial fix—that is, with housing and suburbanization—the shape of the economy has been badly distorted, from where people live, to where investment flows, to what’s produced. Unless we make fundamental policy changes to eliminate these distortions, the economy is likely to face worsening handicaps in the years ahead.

Suburbanization—and the sprawling growth it propelled—made sense for a time. The cities of the early and mid-20th century were dirty, sooty, smelly, and crowded, and commuting from the first, close-in suburbs was fast and easy. And as manufacturing became more technologically stable and product lines matured during the postwar boom, suburban growth dovetailed nicely with the pattern of industrial growth. Businesses began opening new plants in green-field locations that featured cheaper land and labor; management saw no reason to continue making now-standardized products in the expensive urban locations where they’d first been developed and sold. Work was outsourced to then-new suburbs and the emerging areas of the Sun Belt, whose connections to bigger cities by the highway system afforded rapid, low-cost distribution. This process brought the Sun Belt economies (which had lagged since the Civil War) into modern times, and sustained a long boom for the United States as a whole.

But that was then; the economy is different now. It no longer revolves around simply making and moving things. Instead, it depends on generating and transporting ideas.