Friday, September 10, 2010

The Kinda Lame Reset

These days, I faithfully follow the CA High Speed Rail Blog.  I've gotten increasingly excited and agitated about everything going on with HSR in California, and the blog serves up great daily helpings of red meat, offering smack-downs to the NIMBYs along the Peninsula who want to kill the project, as well as some really cool and surprisingly in-depth pieces on the technical aspects of building the rail line.

Robert Cruickshank is the main writer for the blog, and a while ago he wrote a post about an article that riffed off a book called The Great Reset.  He later followed up on that post with one that clarified why he thought the book's HSR-related arguments were still sound even if one questioned its underlying thesis.  I was intrigued, and picked it up.

Richard Florida's main thesis is that what we're living through now, the period that people called "The Great Recession," is actually something much larger, deeper, and darker.  Unlike a typical recession that lasts a year or so as part of a standard business cycle, he thinks that we're at the start of a fundamental shift within our economy.  He believes the better parallels to our current situation are the Great Depression, and, even more so, the Long Depression of the 1870's.  His book offers both yin and yang: he thinks we're in for a long and painful ride, but that this time is necessary in order to transform our economy into something far greater in the future.

Historically, he sees the 1870's depression as the turning point where America stopped being a nation primarily of farmers and of small towns, and became a nation of cities.  This period saw an enormous collapse of wealth (much of it, as in our own time, based on banking misdeeds and real estate speculation), but also saw the rise of powerful railroads, industries, massive city centers, all sorts of production.  This wasn't just an economic upheaval but a social one as well: people fled their farms, and found entirely new lives as factory workers. 

What was the consequence of all this?  America shifted from being a majority of farmers, to only a fraction of farmers.  (Today, only about 2% of Americans live on farms, as opposed to much more than half in the 1860's.)  That freed up huge amounts of human capital, which we then used to build an industrial base.  The 1870's shift in American outlook laid the foundation for the 20th century of American supremacy, as a dominant manufacturing power.

He gets into a lot of other things that changed as well - the creation of the modern educational system, the land-grant university system, etc.  You get the idea, though: the Long Depression was painful, but it also led to great changes.  In the author's view, this happens in part because, during a Reset, a backlog of idea, social changes, and possibilities builds up.  Once the economy starts moving again, those ideas propel the country in a new direction, one better suited for the times.

Florida sees the 1930's as a similar Reset.  Here, the transformation was from an industry-centered economy into a consumer-centered economy.  Once again, people were freed up by mass production, machinery, and automation.  "Freed up" is horrible if you're a factory line worker; however, from a larger social perspective, it meant that we could produce many more goods, and make them far cheaper than before.  This was part of what transformed us into a nation of consumers.  And, in the same way that railroads in the 19th century connected industrial sites together to enable manufacturing, the highways in the 20th century opened up large swaths of the land where people could consume: buy big houses, buy big cars, buy lots of stuff to fill them up.  All that economic activity flowed back into our economy, propelling us through most of the last century.

So, what will this next Reset be like?  He doesn't think we can know, exactly; in the 1860's, who could have imagined Alcoa?  In the 1920's, who could have imagined McDonald's?  Using the earlier resets as a guide, he speculates that we're in for a long haul; it will probably take several decades for the economy to fully recover.  He thinks that we're moving from a stuff-based economy into an idea-based economy; this plays into his hobby horse of the Creative Class, the economic sector of artists, engineers, scientists, and others who deal mainly in abstract thought.  He ends the book by laying out some concrete suggestions for how we can ease this transition.  He doesn't think that the government is the solution, but they can encourage some beneficial behaviors, such as reform of our educational system (transitioning from rote memorization, which was helpful when creating docile factory workers, into encouraging entrepreneurship and creativity, which will help spawn an explosion of new industries); reforming our house-favoring tax system (financially encourage people to rent, so they can more easily move between economic hubs and find and keep great jobs); strengthen the service industry by empowering individuals and encouraging their contributions; and building high-speed rail networks to shrink distances, connect more people to the economic megaregions that he sees as the cornerstones of the new economy, and free up our spending so many resources on the auto so we can invest them in newer experiences.

Megaregions are probably the most important concept in the book other than Reset.  As he sees it, pre-1870's America was centered on the town.  A town was self-sufficient and fairly isolated.  1870-1930 was centered on the city, which had an industrial core and close-in workers.  WWII to today has been suburb-oriented, where consumers can live lives of leisure and consumption around loosely organized rings.  Our next step will be centered on megaregions, such as the Boston-New York-Washington, D.C. corridors, or the Bay Area in northern California.  In these regions, large cities have melded together and created social and economic personalities.  The megaregions support culture, excitement, and density, which young people are increasingly drawn towards.  He points to the well-known fact that, while the Internet enables software startups to begin literally anywhere, they still often set up shop in Silicon Valley, precisely because bright engineers want to be around other bright engineers.  He thinks that this Reset will find these megaregions deciding what their strengths are, how they want to define themselves, and what actions to take to become who they want.  He points to some surprisingly uplifting success stories, such as Pittsburgh's transformation from a failed industrial economy to one based on education and research.

So, how do I feel about the book?  Kinda indifferent.  I like a lot of the points that he made, but found myself playing devil's advocate throughout, and being unsatisfied with the answers he gave.  Ultimately, while I agree with a lot of the specific policy suggestions he outlines, and his vision of our our society needs to transform, I have a hard time buying his key concepts.

For example, I was never really all that satisfied by his description of Resets.  He describes them as periods of intense change and economic uncertainty, but things are always changing, and we regularly have economic problems.  Yes, you can argue that the 1870's and the 1930's were very transformative times; but so were the 1900's (radio, national newspapers, mass communication), 1950's (television, national culture), 1960's (space exploration, counterculture, sexual liberation), 1990's (computers, Internet), and so on.  It just seems a bit arbitrary to say that, for example, the Internet was the result of the Second Reset, or a harbinger of the Third Reset. 

Playing a mental game: what would have happened if there hadn't been a Second Reset?  Would we have never built Levittown, never gotten color televisions, never created the Edsel?  Does our society always need to make sharp, abrupt changes, or can we sometimes make smooth, gradual ones?  I'd argue that there have been HUGE changes in our society since the Second Reset was well completed - to pick just one example, we practically doubled our workforce by accepting women as full members of society.  If this had happened during a time of economic turmoil, or right afterwards, I'm sure the author would claim it as further evidence of his thesis.  He doesn't seem to view the fact that it occurred during a long, gradual period of general economic growth as countering the thesis.

What else... one thing he never got into was the question of specialness.  He lists exactly two Resets, which occurred sixty years apart in the same country.  Do other nations have Resets?  Do they occur globally?  Do all nations get them in the same sequence?  Were there any Resets before the 1870's?  If not, why did they just start then?  Is it possible that China will get the Third (or Fourth) Reset so we don't have to?

Similarly, while I dig the general idea of megaregions, and find it particularly helpful in explaining the Bay Area's properties, I was really unhappy with his treatment of the subject.  He probably rubbed me the wrong way by listing Chi-Pitts as a megaregion.  (Actually, over half of his megaregions are just the names of cities squished together, which I think says a lot for the lack of identity in those areas.)  I love Chicago, I spent my high school years there, and still have family and friends who keep me in the loop of everything that's going on.  I don't think that I've ever once heard someone in Chicago speak as though they considered Pittsburgh as part of their region.  I don't think I've ever heard someone link Ohio with Chicago.  Don't get me wrong, there is a large region around Chicago, which is variously called Chicagoland, Greater Chicago, and so on.  It's quite mega, too - it stretches from Wisconsin through western Indiana, and strikes out far to the southwest of the metro region.  Within that area, people have a shared identity, shared sports teams, shared culture, shared economy.  But, Pittsburgh?  Not a chance.

It's possible that a megaregion may grow between those areas some day, linked by high speed rail, but... I just don't know.  Why not an Upper Midwest culture that links the Twin Cities with Madison, Milkaukee, and Chicago?  We could call it NFC Northland.  It would be awesome.

Ultimately, I ended up feeling the opposite about this book as I did about Malcolm Gladwell's Blink.  I thought that Blink was a collection of wonderful anecdotes in search of a thesis.  The Great Reset is a collection of inadequately developed ideas defending a powerful thesis.  I'm not saying that it's wrong, just that he hasn't sold me yet.

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