Wednesday, February 18, 2009

The Recession and Geography

This post relates to the following Keystone Economic Principle:

4. Economic systems influence choices.

Recently, a few of you have been forwarding a link to a specific story to me. I welcome this. But when I receive several emails from people I respect greatly, all with the same link, I take notice. What starts on my "to read" pile gets moved to the top.

This is such an article. Appearing the March 2009 issue of The Atlantic, Richard Florida's piece on the impact of the current economy on our geography is interesting and thought-provoking. Florida does not contend that our physical geography will change. Rather he's looking at how we organize ourselves within our physical space. He's thinking about how our changing economic fortunes may affect how we live and where we live and intereact. One of the unifying themes of geography is movement, and economics has always provided motive for that.

The piece is reminiscent of much of the work of Jane Jacobs, indeed he cites her in the article. Jacobs saw the cities as unique engines of economic growth - not because of specialization, but rather because the juxtaposition of so many different activities allowed for the exchange of ideas to generate innovation.

I found much of the article compelling. Indeed, Florida's forecast about the demise or reshaping of many mid-size cities makes sense. At the same time, I can't help escape a sense of déjà-vu. Some of the predictions, like a shift from home-ownership to renting or a resizing of our major cities, are familiar. I am reminded history doesn't so much repeat as it rhymes. This may an example. In the late 1970s, there were numerous warnings that the economy of that time would lead to falling living standards (our children will not be as well off as we are), and we would shift to renting. Yet, over the ensuing three decades, things did not go that way. We accumulated more things, and homeownership rose to previously unheard of levels. Did we go too far? Perhaps. But that does not necessarily mean that the pendulum must swing all the way back. (I think that maybe the pendulum is the wrong image to use. To Florida's credit, he does not use it.)

But the most significant point of the article comes in the closing paragraph. The author quotes the economist Paul Romer by saying "A crisis is a terrible thing to waste." Crises have a way of reshaping - not just the economic geography but the psyche. And as I've pointed out in past posts, those internal experiences and beliefs help shape our choices. I sense that Florida is hopeful. I agree.

This is a longer article, but worth your time. Please share your thoughts.

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