Saturday, July 24, 2010

"The Great Reset", Richard Florida

"The Great Reset" is the sociologist and urban studies writer Richard Florida's take on recovering from today's so-called Great Recession. Briefly summuarized, this is a hopeful look at periods of economic turmoil and recovery, with the Long Depression of the 1870's and the Great Depression of the 1930's being case studies, as incubators for technological and management creativity and as facilitators of necessary transformational changes in economic structure. The book is accessible, easy, and for the most part compelling reading, occasionally provocative, it's an interesting source of factoids, and as a generalized broad history of recovery from the bottoms of economic cycles it's a useful template. The book is tinged with an underlying idealism that at times is worthy of a hustling consultant or spirited motivational speaker. While not having read any of Florida's previous books, reviews and references previously read lead me to see "The Great Reset" as the latest extension of his ongoing thesis and academic exploration, that of looking at the demographic patterns of the "creative class" and extrapolating future trends and urban developments.

Florida's view is one of long term optimism and new opportunities, but for the medium term it does not whitewash any of the challenges. Looking at those challenges he writes, "Results, however, take time. If the past is any guide, they are complex processes that unfold over two or three generations". So as optimistic and hopeful as his overall view is, for many today, such as the 45 year old laid off manufacturing worker, 18 year old high school graduate ready to work hard, 22 year old college graduate ready to engage with the world, or 65 year old retirees hoping that their assets will grow to match their later needs, his thesis for the most part provides limited hope for the type of positive outcome that would have been reasonably assumed in the prior three decades. The gap between the bottom of the cycle and his regenerative and robust future will have many victims. Bluntly put, he says "You don't need to strain too hard to see the financial crisis as the death knell for a debt-ridden, overconsuming, underproducing American empire".

With discussions of economic megaregions, the demise of the "old suburban way of life", retraining of workers, the need for worker mobility and extensive relocation unencumbered by underwater homes, and infrastructure necessities like a commitment to high speed rail, Florida relentlessly looks forward. He writes "The whole approach of throwing billions of public dollars at the old economy is shortsighted, aimed at restoring the collective comfort level. Government spending can't be the solution long term". Those are sound observations that even knee jerk conservatives might like to hear, but at the same time Florida confronts our division of wealth societal challenge as he says, "Cheap mortgages, cheap car leases, and the use of homes as veritable ATMs created fictitious living standards for the middle class and the bulk of the population at a time of low productivity and paltry growth in income, when the bulk of the gains in wealth was scooped up by the top fraction of households". He quotes "Financial Times" writer Ben Funnell's description of this, "Excessive lending was the only way to maintain the living standards of the vast bulk of the population at a time when wealth was being concentrated in the hands of the elite". That hypothesis gives an impression that someone was actually in control of what happened, which is questionable as the great American marketing machine and financial oligopolies just steamrolled with enthusiastic blindness through the last two decades. That, however, does not detract from the validity of his to the point observation.

There are a few weaknesses to the book that, while not especially damaging, marginally undercut the impact of the book. For one, Florida is definitely not a finance guy. His financial insight is limited to generally accepted wisdom, or at times cliches, of the causes of the financial debacle. For a book that aims to tackle head on big economic issues, it's unfortunate that it contains some misconceptions, annoying generalizations, and a few outright inaccurucies about what transpired. As previously suggested, some of the langauge is vague and idealistic with jumbles of high sounding buzz words put together into meaningless paragraphs as in, "Today's shrinking cities advocates... recognize how globalization and market forces work against some older communities and sensibly suggest that such places would be better served by proactively managing the process of transformation and adjustment and by devising strategies to enable those communities to improve their quality of life and realign with the new economic and fiscal realities". Walk down Main Street past the many abandoned storefronts in my hometown Danville, Virginia and try saying that mouthful with much conviction.

Florida's hopes are huge and his intentions good. When he writes that "My greatest hope is that the current Reset can help us fashion a new commitment to work and enable every single person to do work that he or she enjoys, that pays well, and is truly motivating", his idealism is on full display. Who would not want that goal, however much beyond our reach. The preface to Edward Bellamy's "Looking Backward", the classic 1887 utopian novel, begins with an excerpt from a Robert Browning poem:

"We ask to put forth just our strength, our human strength,
All starting fairly, all equipped alike...
But when full roused, each giant limb awake,
Each sinew strong, the great heart pulsing fast,
He shall start up and stand on his own earth,
Then shall his long triumphant march begin,
Thence shall his being date."

Practical suggestions, useful observations, historical insight, and a paean to human creativity aside, Florida's longer term vision is in that tradition.


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