I've made an effort to lay off politics and industry in recent days, but Dr. Florida summed up almost everything I've been thinking in his most recent article.
The recent collapse of banking and manufacturing were not only inevitable, but a rare opportunity to approach the 21st Century economy with fresh thinking. We need to take bloated old systems off life support and stop throwing money we don't have at them in order to preserve stagnant, age-spotted power structures and some sick sense of nostalgia. [The 80s weren't really that good, and the 50s were even worse... unless you were a rich white guy with an oppressed wife.]
We should seize this time to do what we do best: be innovative. American business and government needs to take actions relevant to contemporary circumstances if we want to not only progress humanity [which should be the whole point of this life on earth thing,] but to survive. Giving money [which we will have to borrow from China] to banks and car manufacturers is only going to prolong the pain. Let those who've sown their own destinies through greed and lack of vision fail, and reward and support new thinking in every possible way we can.
The hard lesson is that we need to consume less, not more. Our economy needs to shrink. We should make fewer and smarter purchases. With few exceptions [such as higher education] there's not much any of us really need to borrow money for. Nobody needs a new car. If you want to be "green", buy a used car with good mileage. It's environmental footprint is astronomically less than a brand new hybrid, with it's toxic batteries and all. Until we're all driving hydrogen fuel cell cars powered by wind, everything else is simply corporate public relations to make you feel good. Even the idea of home ownership is an outdated notion tied to an outdated idea of lifelong employment in one location. That "great investment" is just an anchor in 20th Century industrial mentality.
It's not just an economic shift, but a cultural shift that happened more than a decade ago. The economics are just starting to catch up.
I'm going to stop ranting and let Mr. Florida speak for himself:
The Way to Recovery
What’s needed now is to massively shrink expenditures on houses and cars to free up spending for newly emerging goods and services. Part of this rollback will naturally occur as the real-estate bubble deflates and housing prices fall. But we need to take it a step further if we truly want more demand for new kinds of economic activity.
Our reliance on single-family homeownership is a product of the past 50 years – and the experiment has outlived its usefulness. Not only is it now readily apparent that not everyone should own a home, and that the mortgage system is a big part of what got us into the current financial mess, but homeownership also ties people to locations, making it harder for them to move to where work is. Homeownership made sense when most people had one job and lived in the same city for life. But it makes less sense when people change jobs frequently and have to relocate to find new work.
Housing production remains a cottage industry that needs to be brought into the 21st century. As a sector, it holds huge potential for making environmental gains, reducing energy use and overall consumption, and introducing new technology.
Government can also encourage a shift from ownership toward flexible rental housing. Instead of bailing out homeowners who have fallen behind on their mortgage payments, tying them to houses and locations for life (and taking up 38 per cent of their income or more), why not take the houses off their hands and rent them back at a much more affordable rate? This would allow people to move more freely as their job, career and lifestyle prospects change. Government incentives spurred a massive increase in homeownership after the Second World War; it can do the same for the expansion of new, more flexible forms of rental housing today.
Both energy and transportation must become significantly cheaper before we can shift into a new era of economic growth. Every economic revolution has been premised on the rise of new and less expensive sources of energy to power growth, and a drastic reduction in the costs of moving goods, people and ideas. The car will surely remain part of our life, but we need to improve rail, subway and bus transit. We should also make a major effort to reduce widespread commuting patterns.
Imagine a future where people live in plug-and-play rental housing units – able to move quickly when they change their jobs, with many shrinking their commute to a short walk or bicycle trip and many others able to trade in their cars for accessible mass transit.
Last but not least, government investment can help to revolutionize the way we develop people. Human capital investments are the key to economic development. But many of our schools are giant creativity-squelching institutions. We need to reinvent our education system from the ground up – including a massive commitment to early-childhood development and a shift away from institutionalized schooling to individually tailored learning. This will require a level of public and private investment of a magnitude larger than the widespread creation of public schools and modern research universities a century ago.
Only by catalyzing such a wholesale shift in our underlying socio-economic system – and thereby unleashing the massive innovative and productive potential of our time – can government investment restore our economy.