Published in 2010 by the noted University of Toronto professor, Richard Florida, “The Great Reset” is professor Florida’s well-timed thesis for how to make cities more prosperous.
What’s refreshing is his lack of nostalgia and sentimentality. The grandson of Italian immigrants from the Campania region in southern Italy, Professor Florida grew up in the blue collar part of New Jersey made famous by Bruce Springsteen. This was a world where Florida’s parents could graduate from high school and expect to get a good paying factory job. Florida pays homage to that era but acknowledges that it came to an end many decades ago. Facts don’t lie. Jobs in the U.S. manufacturing sector shrunk 32% since 1950, while the percentage of blue collar jobs went from 39 to 19%. The great reset as Florida calls it has been taking place in the past few decades, with some 28 million routine service jobs added to the U.S. labour force, while another 23 million jobs were added in what he refers to as the knowledge, professional, and creative sectors. Meanwhile, only one million manufacturing jobs were added during since 1950. The key as Florida sees it, is for society and policymakers to enhance the job skills of workers in the service sector, while promoting the more rewarding and higher paying jobs in the knowledge, professional and creative sectors.
Florida points to a key dilemma facing both Canada and the United States. One is the propensity for citizens in both countries to assume costly mortgages. The effect of this is to keep society from investing money in the high technology and creative sectors, whether in regard to research and development or in the financing of set ups. High mortgages also keep most consumers from saving money and preparing for their retirement. He believes that policymakers should be encouraging people to rent rather than to assume costly mortgages. Since workers in today’s economy need to be mobile, renting makes more sense. Forcing people into mortgages they can’t break only serves the needs of financial institutions.
Another dilemma he rightly points out is the financial sector’s disproportionate role in the running of the U.S. economy. The financial sector, he argues, is more interested in satisfying the interests of middle men than of creating dynamic jobs in the knowledge sector. The financial sector’s key aim, he adds, is to gain immediate and quick profits tied to real estate speculation and credit card debt. The effect is to keep money from going where it’s really needed, like science and technology.
But when did all this begin? An argument can be made that capitalism has been taking the wrong road ever since the collapse of the USSR and the end of the Cold War. Whether it be with regard to the financial banking crisis in Greece and Cyprus, or the near melt down of the world’s largest economy as almost occurred just a few years ago on Wall Street, the economies of countries in much of the western world are geared towards creating quick profits based on speculation rather than real profits and productivity. Regulatory laws, especially in the United States, were changed to meet the needs of financial institutions and their quest for quick short term profits, regardless of long term effects. Add to this the Federal Reserve’s policy of keeping interest rates at a historical low, and it becomes clear that the purpose behind public policy for the past two decades has been to favour financial institutions over the more innovative segments of the economy. Low interest rates encourage citizens in both Canada and the United States to assume mortgages they can’t not afford. The purpose behind government policies in much of the western world has been to support the interests of shareholders rather than employees.
Florida points out that the biggest debts in the U.S. are owed with regard to home ownership, health care, education, and transportation. Professor Florida might have made a comparison to Canada to show just how dire the situation in the U.S. has become. Unlike the situation in the U.S., Canadian banks are more conservative and less reticent to provide borrowers with ridiculous loans for mortgages borrowers can’t afford. Indeed, Canada’s financial regulatory laws are among the most conservative and severe in the Western World, something which U.S. policymakers may want to emulate. As for education, the cost of University education in Canada is way cheaper. Thus unlike their U.S. counterpart, Canadian graduates are not saddled with debts lasting decades. In contrast, it’s what keeps young American graduates from starting their own companies or from investing in other segments of the economy. As for health care, the single payer system in Canada means that consumers and Canadian companies are not saddled with health costs that can potentially bankrupt them. The effect of these debts in the U.S. is to render both citizens and companies less competitive. The only real winners are the financial institutions who stand to make billions. These are billions that are not
being poured into other segments of the U.S. economy.
Florida presents potential solutions for making cities more competitive. He rightly points out that both Canada and the U.S. should invest money in infrastructure, especially with regard to public transportation, like high speed rail between the Windsor to Quebec City corridor. And he points out that suburbia as a model no longer works. High density will help make suburbs built on a nineteen fifties model more economically and environmentally viable. Florida argues that transportation is a source of personal debt that can be alleviated through intelligent policymaking and maintains that competitive cities must provide for great public spaces, like parks and green spaces and vibrant waterfronts. And this is because the new economy is one based on creativity and technology that attracts a certain class of people for whom quality of life issues are supremely important. Portland, Oregon, rather than Detroit or Buffalo is where future prosperity lies. Bicycle lanes, progressive social policy, great cultural institutions like museums are what employees and employers tied to the knowledge economy are seeking. But more importantly, governments must spend on education and provide future workers with the skills to meet the needs of a knowledge based economy. Whether it be with regard to colleges, universities or vocational schools, no city or economy can thrive without these institutions receiving sufficient funds for teaching proper job skills.
In the end Florida is encouraging us all, citizens and policy makers alike, to examine how we live and to question whether the working model used in the fifties is still viable. He is basically asking us to be more mobile, adaptable to change, and open to new professions that may make our lives and our civic culture more prosperous and financially secure.