(Part Two) Creative Class War
Catch the waves
The sudden stalling of our creative economy threatens to undermine two decades of progress. Twenty years ago, America's economy had hit a crisis point, with record unemployment, stagnant productivity, a rusting industrial base, and an oil crisis that highlighted a dangerous dependence upon raw materials whose supply it could not necessarily guarantee.
But underneath the surface, some interesting things were happening. Previous investments in scientific research by both government and industry were yielding new technologies, from inexpensive computer chips to fiber optics. New financial instruments and practices were making capital more available for innovative new ventures. American film, television, and music were finding new export markets. U.S. corporations, spurred by competition from Japan and guided by best-selling books like Tom Peters's In Search of Excellence, were restructuring, pushing decision-making down the chain of command and into the hands of high-initiative line employees. And everywhere, economists and managers were talking about the need for more "human capital"--the buzz phrase meaning educated workers who could think on their feet.
Eventually, supply met demand thanks to two great migrations: first, a wave of foreign immigrants, following a loosening of immigration laws in the late 1960s. By the 1980s, more than six million immigrants settled in the United States, the greatest number in half a century. In the 1990s, 12 million more arrived. Most were unskilled and found work in factories, restaurants, and construction. But many came with good schooling and went into our universities and leading industries. Today, 11 percent of foreign-born adults in the United States have a graduate or professional degree, compared to only 9 percent of natives. Most of these educated immigrants originally congregated in a handful of big vibrant cities such as New York, Chicago, San Francisco, and Los Angeles, but many have since moved to smaller hotspots like Tucson, Chapel Hill, and Colorado Springs.
Without these immigrants, our high-tech economy would be unthinkable. Intel, Sun Microsystems, Google: All were founded or co-founded by immigrants from places like Russia, India, and Hungary. Nearly a third of all businesses founded in Silicon Valley during the 1990s were started by Chinese- or Indian-born entrepreneurs, according to the detailed statistical research of Annalee Saxenian of the University of California at Berkeley. And thousands upon thousands more constitute the technical core of our high-tech economy.
The second great migration was an internal one: Millions of young, energetic and talented Americans from traditional industrial centers, small towns, and rural areas, packed up their Hondas and moved to more-thriving metro areas--generally the same ones that the immigrants came to. These native-born migrants helped to design and then feed the emerging creative industries that during the 1990s would come to define the age.
This influx of talent turned America's creative centers into boomtowns. Salaries skyrocketed, followed by housing prices--especially those in the funky inner-city neighborhoods and gracious close-in suburbs favored by the product designers, video editors, hedge-fund analysts, and marketing consultants who made up this emerging new creative class. The rising living costs and go-go lifestyles engendered by the incoming creative class in turn drove out some of the lesser-educated natives, and even many of these creative migrants eventually had their fill and returned to their hometowns. The statistician Robert Cushing has come up with telling evidence of the economic impacts of these reciprocal migrations. Using Internal Revenue Service data, he found that families moving from Austin, a high-tech boomtown, to slower-growth Kansas City in the 1990s earned an average of $25,912 a year. Those going in the other direction, from Kansas City to Austin, earned over $65,000. He found similar disparities between Austin and other older cities: Cleveland, Louisville, Indianapolis, St. Louis, and Pittsburgh.
But it's not as if the Clevelands and Kansas Cities didn't advance at all. Most added some jobs thanks to local nodes of creativity, such as university-connected medical centers, or managed not to lose as many jobs in their existing companies as they might have absent the help of innovations--primarily information technology--that the creative centers gave birth to. Average incomes in these places rose more slowly, or in some cases declined, but people's purchasing power generally increased, again thanks to creative-center innovations. Patrons of 7-Elevens in Moberly, Mo., could pick up a Motorola cell phone designed by Chinese-born engineers in suburban Chicago for $30, or order any number of ever-lower-priced goods from Seattle-based Amazon.com (founded by the son of a Cuban immigrant) using ever-cheaper computers purchased at CompUSA, headquartered in Dallas.
The big sort
These migrations had not only economic consequences but cultural ones. The last 20 years has seen the rise of the "culture wars"--between those who value traditional virtues, and others drawn to new lifestyles and diversity of opinion. In truth, this clash mostly played out among intellectuals of the left and right; as sociologist Alan Wolfe has shown, most Americans manage a subtle balance between the two tendencies. Still, the cleavages exist, roughly paralleling the ideologies of the two political parties. And increasingly in the 1990s, they expressed themselves geographically, as more and more Americans chose to live in places that suited their culture and lifestyle preferences.
This movement of people is what the journalist Bill Bishop and I have referred to as the Big Sort, a sifting with enormous political and cultural implications, which has helped to give rise to what political demographer James Gimpel of the University of Maryland calls a "patchwork nation." City by city, neighborhood to neighborhood, Gimpel and others have found, our politics are becoming more concentrated and polarized. We may live in a 50-50 country, but the actual places we live (inner-ring v. outer-ring suburbs, San Francisco v. Fresno) are much more likely to distribute their loyalties 60-40, and getting more lopsided rather than less. These divisions arise not from some master plan but from millions upon millions of individual choices. Individuals are sorting themselves into communities of like-minded people which validate their choices and identities. Gay sales reps buy ramshackle old houses in the city and renovate them; straight, married sales reps purchase newly-built houses with yards on the suburban fringe. Conservative tech geeks move to Dallas, while liberal ones are more likely to go to San Francisco. Young African Americans who can write code find their way to Atlanta or Washington, D.C., while whites with the same education and skills are more likely to migrate to Seattle or Austin. Working-class Southern Californian whites priced out of the real estate market and perhaps feeling overwhelmed by the influx of Mexicans move to suburban Phoenix. More than ever before, those who possess the means move to the city and neighborhood that reinforces their social and cultural view of the world.
And while there are no hard and fast rules--some liberals prefer suburbs of modest metro areas with lots of churches and shopping malls, some conservatives like urban neighborhoods with coffee shops--in general, these cultural and lifestyle preferences overlap with political ones (which the political parties have accentuated with computer-assisted redistricting). In 1980, according to Robert Cushing's detailed analysis of the election results, there wasn't a significant difference between how high-tech and low-tech regions voted for president; the difference between the parties still depended upon other factors. By 2000, however, the 21 regions with the largest concentrations of the creative class and the highest-tech economies voted Democratic at rates 17 percent above the national average. Regions with lower levels of creative people and low-tech economies, along with rural America, went Republican. In California, the most Democratic of states, George Bush won the state's 14 low-tech regions and rural areas by 210,000 votes. Al Gore took the 12 high-tech regions and their suburbs by over 1.5 million.
Mutual contempt
Bill Clinton was, in many ways the midwife of the new creative economy. Present at the birth of the '90s boom, he recognized it quickly for what it was and helped spur it by such projects as wiring poor and middle-class school classrooms around the country for the Internet and beating back Republican efforts to cut immigration. For this, he was beloved not only by creatives, but also by many of those in Red America whom he convinced would benefit from the new economy. But he also personally symbolized the creative-class archetype--its libertine character, its cleverness, its global-mindedness. For this, he drew the lasting enmity of many millions of those in the "other" America. It's often been said that Clinton was the embodiment of the '60s, and one's position for or against him revealed one's attitude towards that era. It's perhaps more precise to say that with his constant hyping of new technologies and "bridge to the twenty-first century" rhetoric, Clinton was the embodiment of what the '60s became--the creative class '90s, hip but pro-growth, open-minded and progressive but ambitious.
While Clinton and the Democrats increasingly drew their support from the high-tech parts of the country, the Republicans increasingly came to represent the low-tech areas. Republican leaders like Tom DeLay and Dick Armey were beginning, during the early 1990s, to articulate the cultural and political antagonism Red America felt towards the emerging creative-class culture. But the politician who most skillfully spoke to these grievances was George W. Bush.
Clinton's whole life is a testimony to the power of education to change class. Bush prides himself on the idea that his Yale education had no effect on how he sees things. Clinton was a famous world traveler, appreciative of foreign cultures and ideas. Bush, throughout his life, has been indifferent if not hostile to all of that. Clinton, especially in the early years of his administration, had the loose, unstructured management style of an academic department or a dot-com--manic work hours, meetings that went on forever, lots of diffuse power centers, young people running around in casual clothing, and a constant reappraising of plans and strategies. The Bush management style embodies the pre-creative corporate era--formal, hierarchal, with decision-making concentrated in the hands of only the most senior executives. Clinton was happy in Hollywood and vacationed in Martha's Vineyard. Bush can't wait to get back to Crawford. Clinton reveled in the company of writers, artists, scientists, and members of the intellectual elite. Bush has little tolerance for them. Clinton, in his rhetoric and policies, wanted to bring the gifts of the creative class--high technology, a tolerant culture--to the hinterlands. Bush aimed to bring the values and economic priorities of the hinterlands to that ultimate creative center, Washington, D.C.
As president, Bush chose a group of senior advisors whose economic backgrounds have a century-old flavor. His vice president is an oil man. His treasury secretary, John Snow, is a railroad man. The White House's economic and fiscal policies have been similarly designed to provide life support for these aging red-state industries: $190 billion in subsidies for farmers; tariffs for steel; subsidies, tax breaks, and regulatory relief for logging, mining, coal, and natural gas. Even Bush's tax policy shows the same old-economy preference. His dividend tax cut was supported by mainstream, blue-chip companies, which stood to gain, but opposed by high-tech executives, whose company stocks seldom pay dividends.
Thanks to the GOP takeover of Washington, and the harsh realities of the Big Sort, economically lagging parts of the country now wield ultimate political power, while the creative centers--source of most of America's economic growth--have virtually none. Democrats Dianne Feinstein and Barbara Boxer speak for Silicon Valley and Hollywood. New York's Charles Schumer and Hillary Clinton, also Democrats, represent New York's finance and publishing industries. Washington State, home to Starbucks and Microsoft, has two Democratic senators, Patty Murray and Maria Cantwell. Boston's Route 128 and Washington's high-tech Maryland suburbs are also represented by Democratic senators. It's hard to understate how little influence these senators have with the Bush White House and in the GOP-controlled Congress.
The new Ellis Island
You don't have to be a Democrat to recognize that the political polarization of America and GOP dominance of Washington are not necessarily good news for America's economic future. Yet it's clear that Democrats themselves don't quite get it.
All the current Democratic aspirants to the White House have whacked Bush for undermining our alliances and diplomatic capabilities through his unilateralism. A few, including Sen. John Kerry, have criticized the president as "anti-science." But none seems to have understood--or at least articulated--the disastrous economic consequences of these Know-Nothing views. In the post-1990s global economy, America must aggressively compete with other developed countries for the international talent that can spur new industries and new jobs. By thumbing our nose at the world and dismissing the consensus views of the scientific community, we are scaring off that talent and sending it to our competitors.
If there is any candidate who speaks for the creative class right now, it is Howard Dean. His educated, tech-savvy supporters and grass-roots, non-hierarchal campaign structure perfectly represent the creative economy. Yet his economic message has so far focused on luring swing-state unionists--criticizing Bush, for instance, for not extending steel tariffs.
America must not only stop making dumb mistakes, like starting trade wars with Europe and China; it must also put in place new policies that enhance our creative economy. Here, too, neither party quite gets it. Most of the Democratic candidates for president have rightly sounded the alarm about rising college-tuition costs and offered ideas to expand college access. That's well and good, but we need to think far, far bigger. Our research universities are immigrant magnets, the Ellis Islands of the 21st century. And, with the demand among our own citizens for elite education far outstripping the supply, we should embark on a massive university building spree, for which we will be paid back many-fold in future economic growth. Building some of these top-flight universities in struggling red-state regions might give their economies a shot at a better future and help bridge the growing political divide.
Democrats have understandably seized on the corporate outsourcing of jobs as a campaign issue. But let's get real: Demanding higher labor and environmental standards in trade agreements--the Democrats' favorite fix--is not going to keep software jobs from migrating to Eastern Europe. Our only hope is to strengthen our creative economy so that it produces more jobs to replace the ones we're losing. That will require taking on the Washington lobbyists who put the fix in for established industries at the expense of emerging ones. Millions of new jobs in the wireless networking field, for instance, could be created if unused broadcast spectrum, currently controlled by TV networks and the military, could be freed up. When's the last time you heard a presidential candidate talk about that?
It is a sad irony: America's creative economy sparked a demographic shift and a political polarization that now threaten to choke that economy off. What America desperately needs now is political leadership savvy enough to bridge that gap. To his credit, President Bush has made the Republican Party much more immigrant-friendly. But his talk about diversity seems almost entirely pitched to win the working-class Hispanic vote; he seems uninterested, to say the least, in changing other policies that are driving away the high-end immigrants and generally undermining the creative economy. To his credit, Howard Dean has tried to speak to his party of the need to put forth policies that appeal to citizens in both blue and red parts of the country. But as he showed with remarks about reaching out to guys with rebel flags on their pickups, he seems, to say the least, not to have found the language to do so.
The challenge for the GOP, if it wants to avoid running the economy into the ground, is to stop sneering at the elites, the better to win votes in their base, and to start paying attention to economic policies that might lift all boats. The challenge for Democrats, if they want to win, is to find ways of reaching out to the rest of the country, to convince at least some of its many regions that policies which operate to the interests of the creative class are in their interests as well.
Richard Florida is the Heinz professor of economic development at Carnegie Mellon University and the author of The Rise of the Creative Class.
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