Florida on the Crash

Usually, when a book or movie or article is prefaced with a modifier as unabashedly positive as "spell-bindingly brilliant", I approach the piece with the fastidiousness of a mother examining her only son's fiancée for the first time. After turning every dangling participle or two minutes of dead time into a pretext for intense disdain, I am inevitably disappointed. In the case of Richard Florida's "How The Crash Will Reshape America , the advance praise (supplied by John Judis) was well warranted. It was brilliant, and I was spellbound. I especially liked the last quarter of the article. Take this section:

The bubble encouraged massive, unsustainable growth in places where land was cheap and the real-estate economy dominant. It encouraged low-density sprawl, which is ill-fitted to a creative, postindustrial economy. And not least, it created a workforce too often stuck in place, anchored by houses that cannot be profitably sold, at a time when flexibility and mobility are of great importance.

So how do we move past the bubble, the crash, and an aging, obsolescent model of economic life? What’s the right spatial fix for the economy today, and how do we achieve it?

Not only is this a piercing observation that has been sorely lacking over the course of the last two decades, but it's also one I've had right in front of me my entire adult life. Even as friends and acquaintance have bought their own houses, I've never considered it, for the very reasons Florida mentions.* I didn't want to be tied down; if a job opened up in, say, Torreón, I didn't want to be stuck in Chicago in a lame job with an irritating boss simply because I'd bought a house. My home-buying instincts (and those of many like me) were shaped by the globalized world, but American policy was based on an ultimately unsustainable denial of that world. How could this observation have escaped me?

Later:

As homeownership rates have risen, our society has become less nimble: in the 1950s and 1960s, Americans were nearly twice as likely to move in a given year as they are today. Last year fewer Americans moved, as a percentage of the population, than in any year since the Census Bureau started tracking address changes, in the late 1940s. This sort of creeping rigidity in the labor market is a bad sign for the economy, particularly in a time when businesses, industries, and regions are rising and falling quickly.

The foreclosure crisis creates a real opportunity here. Instead of resisting foreclosures, the government should seek to facilitate them in ways that can minimize pain and disruption. Banks that take back homes, for instance, could be required to offer to rent each home to the previous homeowner, at market rates—which are typically lower than mortgage payments—for some number of years. (At the end of that period, the former homeowner could be given the option to repurchase the home at the prevailing market price.) A bigger, healthier rental market, with more choices, would make renting a more attractive option for many people; it would also make the economy as a whole more flexible and responsive.

Next, we need to encourage growth in the regions and cities that are best positioned to compete in the coming decades: the great mega-regions that already power the economy, and the smaller, talent-attracting innovation centers inside them—places like Silicon Valley, Boulder, Austin, and the North Carolina Research Triangle.

Maybe it wouldn't work for a variety of reasons I can scarcely envision, but the foreclosure plan Florida mentions sounds better than any other plan I've heard tossed around. The people who made bad decisions would be punished but without ruining their lives, the banks would be able to maintain a revenue stream in declining real estate markets through the rent revenue, and it would counteract the rigidity imposed by the ownership society.

I do worry that Florida's scheme for the government favoring certain regions' growth would be problematic. This isn't a case of broadly favoring cities and close-in suburbs instead of exurbs, but punishing citizens simply for growing up in Detroit or Youngstown, while rewarding others for inhabiting specific areas thought to have the potential for high growth. It's hard to imagine a government policy that could achieve this fairly and smoothly.

To summarize: while reading, I felt like I was visiting a soothsayer. However, since I don't regularly read work by other demographers and don't really think about the world the way I imagine they do, I do wonder if most any demographer is capable of blowing my hair back the way that article did.

*Of course, a much more direct impediment to Gancho's entering the ownership society is the fact that I've never had enough money in my bank account to even consider purchasing a new car, much less a new house.