Richard Florida’s newest book, The Great Reset: How New Ways of Living and Working Drive Post-Crash Prosperity, looks beyond the world’s current economic crisis of today to examine the opportunities it could open up for tomorrow. As part of Webster’s Biz Talk Book Club review of The Great Reset, we asked Mr. Florida to elaborate on some of the themes in The Great Reset as well as his predictions for everyone’s future.
The Great Reset is all about how our current economic crisis will reshape America, hopefully moving us into a new and innovative direction. In what ways is that already happening?
For one thing, I think we’ll start defining wealth and success differently and develop new approaches to consumption. Things that have always signified wealth and security – home ownership, new cars, luxury goods – have become a burden for many people and will be replaced by more experiential consumption like travel and recreation, self-improvement, and so on. By divesting themselves of certain big-ticket possessions that have been keeping them tied down, people will gain a new freedom to live more meaningful lives. Changes in consumption and lifestyle are key to Great Resets. In order to spur industrial growth after the Great Depression and World War II, food became cheap and the fraction of Americans employed in agriculture decreased dramatically. This freed up both resources and labor that could be used to build the industries of the industrial age – housing, cars, appliances, and so forth. The same thing has to happen today. We need to make the core products of the industrial age – housing, cars, energy – cheaper if we want to fuel demand for the new technologies and industries of the future, from health care and biotechnology to new information, educational, and entertainment industries.
Just as importantly, infrastructure will have to develop and adapt to these new realities. We need new infrastructure that can dramatically speed the movement of goods, people, and ideas. Part of that will mean people moving closer to where they work, working flexibility, and walking or riding a bike to work. It will also require new infrastructure like high-speed rail which can speed the connection and reduce the commuting time between far-flung places. Actually, the best thing the federal government can do for older Rustbelt cities is connect them via high-speed rail, shrinking the distance between them and creating a bigger market, labor pool, and talent cluster.
In past resets America has made major changes from manufacturing overhauls to population shifts. What will be the hallmark of this restructuring?
Cities and regions are likely to rise and fall, possibly dramatically. Places with diversified economies and high concentrations of highly educated people and those that work in the “creative class” have done much better in weathering the current economic storm. Even as financial industries are shedding jobs, historic financial capitals are better positioned for the future because of the large, diverse, open economies populated by innovative and entrepreneurial talent. Cities and regions that are based on older industries, or where growth was fueled by housing and sprawl, will have a tougher time. The new spatial fix will be bigger than the industrial city and mass suburbanization combined. The history of capitalism is a history of the more intensive and expansive use of land and space. It’s no longer city versus suburb but the rise of a new and larger form of economic landscape – the mega-region. Mega-regions are gigantic complexes of cities and suburbs like the greater Boston-NY-Washington corridor and others across the U.S. and the globe. The world’s 40-largest mega-regions produce two-thirds of all economic output and nine in 10 new innovations while housing only 18 percent of the world’s population. Mega-regions are to our time what suburbanization was to post-war growth.
We have choices to make: We can either wait for these mega-regions to take shape and for population to move and then try to retro-fit infrastructure and services to accommodate those changes, or we can anticipate these developments, and begin planning and implementing the technology and infrastructure that can enable the spatial fix, and hasten a return to economic prosperity. I’m talking about universal broadband access, high-speed rail, new forms of housing, and so on, which can only take shape through a thoughtful alliance of government action and private development.
In The Great Reset, you stress the changing face of home ownership as something we will see soon in America’s future. Why do you feel this is such an important component of the reshaping of America?
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, health care, 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.
How do you see Missouri and other parts of the Midwest benefiting from the upcoming reshaping of America?
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, St. Louis, 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.