(Part One) Creative Class War
How the GOP's anti-elitism could ruin America's economy.
By Richard Florida
Last March, I had the opportunity to meet Peter Jackson, director of The Lord of the Rings trilogy, at his film complex in lush, green, otherworldly-looking Wellington, New Zealand. Jackson has done something unlikely in Wellington, an exciting, cosmopolitan city of 900,000, but not one previously considered a world cultural capital. He has built a permanent facility there, perhaps the world's most sophisticated filmmaking complex. He did it in New Zealand concertedly and by design. Jackson, a Wellington native, realized what many American cities discovered during the '90s: Paradigm-busting creative industries could single-handedly change the ways cities flourish and drive dynamic, widespread economic change. It took Jackson and his partners a while to raise the resources, but they purchased an abandoned paint factory that, in a singular example of adaptive reuse, emerged as the studio responsible for the most breathtaking trilogy of films ever made. He realized, he told me, that with the allure of the Rings trilogy, he could attract a diversely creative array of talent from all over the world to New Zealand; the best cinematographers, costume designers, sound technicians, computer graphic artists, model builders, editors, and animators.
When I visited, I met dozens of Americans from places like Berkeley and MIT working alongside talented filmmakers from Europe and Asia, the Americans asserting that they were ready to relinquish their citizenship. Many had begun the process of establishing residency in New Zealand.
Think about this. In the industry most symbolic of America's international economic and cultural might, film, the greatest single project in recent cinematic history was internationally funded and crafted by the best filmmakers from around the world, but not in Hollywood. When Hollywood produces movies of this magnitude, it creates jobs for directors, actors, and key grips in California. Because of the astounding level of technical innovation which a project of this size requires, in such areas as computer graphics, sound design, and animation, it can also germinate whole new companies and even new industries nationwide, just as George Lucas's Star Wars films fed the development of everything from video games to product tie-in marketing. But the lion's share of benefits from The Lord of the Rings is likely to accrue not to the United States but to New Zealand. Next, with a rather devastating symbolism, Jackson will remake King Kong in Wellington, with a budget running upwards of $150 million.
Peter Jackson's power play hasn't been mentioned by any of the current candidates running for president. Yet the loss of U.S. jobs to overseas competitors is shaping up to be one of the defining issues of the 2004 campaign. And for good reason. Voters are seeing not just a decline in manufacturing jobs, but also the outsourcing of hundreds of thousands of white-collar brain jobs--everything from software coders to financial analysts for investment banks. These were supposed to be the "safe" jobs, for which high school guidance counselors steered the children of blue-collar workers into college to avoid their parents' fate.
But the loss of some of these jobs is only the most obvious--and not even the most worrying--aspect of a much bigger problem. Other countries are now encroaching more directly and successfully on what has been, for almost two decades, the heartland of our economic success -- the creative economy. Better than any other country in recent years, America has developed new technologies and ideas that spawn new industries and modernize old ones, from the Internet to big-box stores to innovative product designs. And these have proved the principal force behind the U.S. economy's creation of more than 20 million jobs in the creative sector during the 1990s, even as it continued to shed manufacturing, agricultural, and other jobs.
We came up with these new technologies and ideas largely because we were able to energize and attract the best and the brightest, not just from our country but also from around the world. Talented, educated immigrants and smart, ambitious young Americans congregated, during the 1980s and 1990s, in and around a dozen U.S. city-regions. These areas became hothouses of innovation, the modern-day equivalents of Renaissance city-states, where scientists, artists, designers, engineers, financiers, marketers, and sundry entrepreneurs fed off each other's knowledge, energy, and capital to make new products, new services, and whole new industries: cutting-edge entertainment in southern California, new financial instruments in New York, computer products in northern California and Austin, satellites and telecommunications in Washington, D.C., software and innovative retail in Seattle, biotechnology in Boston. The economic benefits of these advances soon spread to much of the rest of the country, as Ohio-born MBAs in Raleigh-Durham built credit-card call centers in Iowa, and Indian computer whizzes in Chicago devised inventory software that brought new profitability to car factories in Ohio, Kentucky, and Tennessee.
But now the rest of the world has taken notice of our success and is trying to copy it. The present surge of outsourcing is the first step--or if you will, the first pincer of the claw. The more routinizable aspects of what we consider brainwork--writing computer code, analyzing X-rays--are being lured away by countries like India and Romania, which have lower labor costs and educated workforces large enough to do the job. Though alarming and disruptive, such outsourcing might be manageable if we could substitute a new tier of jobs derived from the new technologies and ideas coming out of our creative centers. But so far in this economic recovery, that hasn't happened.
What should really alarm us is that our capacity to so adapt is being eroded by a different kind of competition--the other pincer of the claw--as cities in other developed countries transform themselves into magnets for higher value-added industries. Cities from Sydney to Brussels to Dublin to Vancouver are fast becoming creative-class centers to rival Boston, Seattle, and Austin. They're doing it through a variety of means--from government-subsidized labs to partnerships between top local universities and industry. Most of all, they're luring foreign creative talent, including our own. The result is that the sort of high-end, high-margin creative industries that used to be the United States' province and a crucial source of our prosperity have begun to move overseas. The most advanced cell phones are being made in Salo, Finland, not Chicago. The world's leading airplanes are being designed and built in Toulouse and Hamburg, not Seattle.
As other nations become more attractive to mobile immigrant talent, America is becoming less so. A recent study by the National Science Board found that the U.S. government issued 74,000 visas for immigrants to work in science and technology in 2002, down from 166,000 in 2001--an astonishing drop of 55 percent. This is matched by similar, though smaller-scale, declines in other categories of talented immigrants, from finance experts to entertainers. Part of this contraction is derived from what we hope are short-term security concerns--as federal agencies have restricted visas from certain countries after September 11. More disturbingly, we find indications that fewer educated foreigners are choosing to come to the United States. For instance, most of the decline in science and technology immigrants in the National Science Board study was due to a drop in applications.
Why would talented foreigners avoid us? In part, because other countries are simply doing a better, more aggressive job of recruiting them. The technology bust also plays a role. There are fewer jobs for computer engineers, and even top foreign scientists who might still have their pick of great cutting-edge research positions are less likely than they were a few years ago to make millions through tech-industry partnerships.
But having talked to hundreds of talented professionals in a half dozen countries over the past year, I'm convinced that the biggest reason has to do with the changed political and policy landscape in Washington. In the 1990s, the federal government focused on expanding America's human capital and interconnectedness to the world--crafting international trade agreements, investing in cutting edge R&D, subsidizing higher education and public access to the Internet, and encouraging immigration. But in the last three years, the government's attention and resources have shifted to older sectors of the economy, with tariff protection and subsidies to extractive industries. Meanwhile, Washington has stunned scientists across the world with its disregard for consensus scientific views when those views conflict with the interests of favored sectors (as has been the case with the issue of global climate change). Most of all, in the wake of 9/11, Washington has inspired the fury of the world, especially of its educated classes, with its my-way-or-the-highway foreign policy. In effect, for the first time in our history, we're saying to highly mobile and very finicky global talent, "You don't belong here."
Obviously, this shift has come about with the changing of the political guard in Washington, from the internationalist Bill Clinton to the aggressively unilateralist George W. Bush. But its roots go much deeper, to a tectonic change in the country's political-economic demographics. As many have noted, America is becoming more geographically polarized, with the culturally more traditionalist, rural, small-town, and exurban "red" parts of the country increasingly voting Republican, and the culturally more progressive urban and suburban "blue" areas going ever more Democratic. Less noted is the degree to which these lines demarcate a growing economic divide, with "blue" patches representing the talent-laden, immigrant-rich creative centers that have largely propelled economic growth, and the "red" parts representing the economically lagging hinterlands. The migrations that feed creative-center economies are also exacerbating the contrasts. As talented individuals, eager for better career opportunities and more adventurous, diverse lifestyles, move to the innovative cities, the hinterlands become even more culturally conservative. Now, the demographic dynamic which propelled America's creative economy has produced a political dynamic that could choke that economy off. Though none of the candidates for president has quite framed it that way, it's what's really at stake in the 2004 elections.
Yankees doodle
Roger Pederson is one of the leading researchers in the field of stem cells. But in 2001, he left his position at the University of California, San Francisco, to take up residency at the Centre for Stem Cell Biology Medicine at Cambridge University in the United Kingdom. His departure illustrates how the creative economy is being reshaped--by our competitors growing savvy and by our own cluelessness. Pederson bolted because the British government aggressively recruited him, but also because the Bush administration put heavy restrictions on stem-cell research. "I have a soft spot in my heart for America," he recently told Wired magazine. "But the U.K. is much better for this research.... more working capital." And, he continued, "they haven't made such a political football out of stem cells."
Stem cells are vital to the body because of their ability to develop any kind of tissue. Scientists play a similar role in the economy; their discoveries (silicon circuitry, gene splicing) are the source of most big new industries (personal computers, biotechnology). Unfortunately, Roger Pederson's departure may be among the first of many. "Over the last few years, as the conservative movement in the U.S. has become more entrenched, many people I know are looking for better lives in Canada, Europe, and Australia," a noted entymologist at the University of Illinois emailed me recently. "From bloggers and programmers to members of the National Academy I have spoken with, all find the Zeitgeist alien and even threatening. My friend says it is like trying to research and do business in the 21st century in a culture that wants to live in the 19th, empires, bibles and all. There is an E.U. fellowship through the European Molecular Biology Laboratory in Amsterdam that everyone and their mother is trying to get."
But the bigger problem isn't that Americans are going elsewhere. It's that for the first time in modern memory, top scientists and intellectuals from elsewhere are choosing not to come here. We are so used to thinking that the world's leading creative minds, like the world's best basketball and baseball players, always want to come to the States, while our people go overseas only if they are second-rate or washed up, that it's hard to imagine it could ever be otherwise. And it's still true that because of our country's size, its dynamism, its many great universities, and large government research budgets, we're the Yankees of science. But like the Yankees, we've been losing some of our best players. And even great teams can go into slumps.
The altered flow of talent is already beginning to show signs of crimping the scientific process. "We can't hold scientific meetings here [in the United States] anymore because foreign scientists can't get visas," a top oceanographer at the University of California at San Diego recently told me. The same is true of graduate students, the people who do the legwork of scientific research and are the source of many powerful ideas. The graduate students I have taught at several major universities -- Ohio State, Harvard, MIT, Carnegie Mellon -- have always been among the first to point out the benefits of studying and doing research in the United States. But their impressions have changed dramatically over the past year. They now complain of being hounded by the immigration agencies as potential threats to security, and that America is abandoning its standing as an open society. Many are thinking of leaving for foreign schools, and they tell me that their friends and colleagues back home are no longer interested in coming to the United States for their education but are actively seeking out universities in Canada, Europe, and elsewhere.
It would be comforting to think that keeping out the foreigners would mean more places for home-grown talent in our top graduate programs and research faculties. Alas, it doesn't work that way: We have many brilliant young people, but not nearly enough to fill all the crucial slots. Last year, for instance, a vast, critical artificial intelligence project at MIT had to be jettisoned because the university couldn't find enough graduate students who weren't foreigners and who could thus clear new security regulations.
Nor is this phenomenon limited to science; other sectors are beginning to suffer. The pop-music magazine Tracks, for instance, recently reported that a growing number of leading world musicians, from South African singer and guitarist Vusi Mahlasela to the Bogota-based electronica collective Sidestepper, have had to cancel their American tours because they were refused visas, while Youssou N'Dour, perhaps the globe's most famous music artist, cancelled his largest-ever U.S. tour last spring to protest the invasion of Iraq.
These may seem small signs, but they're not. America's music industry has been, for decades, the world's standard setter. The songs of American artists are heard on radio stations from Caracas to Istanbul; their soundtracks are an integral part of the worldwide appeal of American movies. The profits earned from American music exports help keep America's balance-of-payments deficits from getting too far into the red zone. Yet part of what makes American music so vital is its ability to absorb and incorporate the sounds of other countries--from American hip-hop picking up Caribbean Reggae and Indian Bhangra beats, to hard rock musicians using industrial instrumentation from Germany. For American artists and fans, not being able to see touring foreign bands is the equivalent of the computer industry not getting access to the latest chips: It dulls the competitive edge.
Our loss of access to high-level foreign talent hasn't drawn much attention from political leaders and the media, for understandable reasons: We seem to have bigger, more immediate problems, from the war on terrorism to the loss of jobs in the manufacturing, service, and creative sectors to China, India, and Mexico. But just as our obsession with the Soviet Union in the last years of the Cold War caused us to miss the emerging economic challenge of Japan, our eyes may not be on the biggest threat to our economic well-being.
For several years now, my colleagues and I have been measuring the underlying factors common to those American cities and regions with the highest level of creative economic growth. The chief factors we've found are: large numbers of talented individuals, a high degree of technological innovation, and a tolerance of diverse lifestyles. Recently my colleague Irene Tinagli of Carnegie Mellon and I have applied the same analysis to northern Europe, and the findings are startling. The playing field is much more level than you might think. Sweden tops the United States on this measure, with Finland, the Netherlands, and Denmark close behind. The United Kingdom and Belgium are also doing well. And most of these countries, especially Ireland, are becoming more creatively competitive at a faster rate than the United States.
Though the data are not as perfect at the metropolitan level, other cities are also beating us for fresh new talent, diversity, and brainpower. Vancouver and Toronto are set to take off: Both city-regions have a higher concentration of immigrants than New York, Miami, or Los Angeles. So too are Sydney and Melbourne. As creative centers, they would rank alongside Washington, D.C. and New York City. Many of these places also offer such further inducements as spectacular waterfronts, beautiful countryside, and great outdoor life. They're safe. They're rarely at war. These cities are becoming the global equivalents of Boston or San Francisco, transforming themselves from small, obscure places to creative hotbeds that draw talent from all over--including your city and mine.
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