Cities drive economic growth in service- and knowledge-based economies. They bring together smart, educated, ambitious people—the creative class—where they can exchange ideas, start businesses and raise the capital needed to put them into action. But the transformation of the cities is not without drawbacks. More and more, cities are places where inequality is rising as increasing housing costs drive out the low-income and working classes. In the early 2000s, urbanist Richard Florida documented the growth of the creative class and heralded it as a boon for cities. But he has since had some second thoughts about the impact on those left behind. Bloomberg View columnist Noah Smith decided to interview Florida to discuss his new book on cities. What follows is a lightly edited version of their discussion.
Noah Smith: In your book, The New Urban Crisis, you spend a lot of time talking about inequality within cities. But you also mention inequality between cities—how some cities are prospering while others languish. These seem like two different crises to me. In a recent blog post, you even suggest that there’s a tradeoff between addressing within-city and between-city inequality—that eliminating the development restrictions that are pricing working-class people out of superstar cities like San Francisco would result in those cities pulling even farther ahead of the rest of the country.
Which of these two crises should we care more about solving?
Richard Florida: They’re two facets of the same underlying process. Winner-take-all urbanism occurs both between metro areas and within them; it’s fractal. Within-city inequality is the easier of the two to deal with. That sort of inequality is worse in our largest, densest, most affluent, most educated cities. These places have the greatest economic capacity to address these issues. They also have the most progressive politics; they are more inclined to local redistribution.
Many of these places are already working to make local economic development more equitable and inclusive. We know the broad outlines of what to do— build more housing, build more affordable housing, upgrade low-wage service jobs, invest in transit and so on; we just need more of it in a more comprehensive way.
Addressing spatial inequality between cities is much harder. America is one of the most spread out economies on the planet. In the U.S., for example, the top five metro areas produce a quarter of gross domestic product; in Canada, the top five produce 50 percent.
NS: If loosening density restrictions in superstar cities increases between-city inequality by causing the superstars to pull even further ahead of the pack, is that an acceptable price to pay?
RF: Yes, unfortunately. Actually, I don’t think there is much we can do to stop the issue of inequality between cities and metros. It is by product of the clustering forces that drive innovation and economic growth and therefore raise our overall living standards. Americans look back fondly on the bygone industrial age when we were more spatially equal. But this was a product of manufacturing that could be spread out. Knowledge and talent concentrate: that’s the basic mechanism of economic growth.
Maybe, we can make spatial inequality work for us rather than against us, by encouraging and helping cities and metro areas focus on their strengths and assets. Smaller cities can use their lower cost of living to compete by attracting and growing less expensive industries, like Nashville, Tennessee, has done by providing a low-cost alternative for music to Los Angeles and New York; Pittsburgh has done in self-driving cars; or South Carolina has done in manufacturing.
NS: Also, reading your book, it struck me that some of the problems you talk about are bigger than any city can handle. It seems like cities can only do so much to turn service jobs into good, well-paying jobs before high costs of living force businesses to move to other cities. Doesn’t that mean the federal government needs to step in? Also, doesn’t Europe’s experience show us that redistribution is best done at the level of the national government?