Friday, March 29, 2013

You Can't Eat A Hipster

This post is inspired by the Kotkin - Florida debate about the extent to which the Creative Class contributes to urban welfare.

Back in the day, when I was a Trotskyist in the Socialist Workers Party (SWP), there was an effort to get comrades involved in union fractions. A fraction is a group of comrades who participate as a collective in a union (or on campus) to advocate a for revolutionary socialist perspective. The model for this work was the famous union fractions of yore--communist involvement in the UAW sit-down strikes and the Minneapolis Teamsters' strike in the 1930s. The latter is engagingly recounted in Farrell Dobbs' classic book, Teamster Rebellion.

In the 1930s unions really could shut the economy down. By the late 1970s that ability was much more limited, but that didn't stop us from trying. It is that distinction--disrupting the entire economy versus a labor action against a small-time capitalist--that roughly divides basic industry from the less important stuff. Thus comrades tried to get jobs in basic industry, organized by the UAW, the United Steel Workers, the United Mine Workers, etc. They were (in those days) less interested in AFSCME or the teachers' unions.

I am reminded of this because of Joel Kotkin's emphasis on the material boys. These are the guys who drill for oil, build new manufacturing plants, or are farmers. While likely unaware of his neo-Trotskyist sympathies, Kotkin nicely echos our efforts in basic industry. Like Trotskyists, he believes value is created by the hewers of wood, the diggers of coal, and the molders of steel. Hence thriving cities are places like Dallas and Houston, Charlotte and Nashville, and Indianapolis and Oklahoma City.

Contrast this with the neo-Schumpeterian Richard Florida, who has long touted the Creative Class. These are the artists, the counter-cultural youth, gays, immigrants, eggheads, denizens of Starbucks. Creative class folks are always looking for the Next Big Thing, the idea that'll just knock your socks off. Forget those old, fuddy-duddy material boys--creative destruction is our future. Down with fracking; up with Google. In Florida's vision, the successful cities are New York, San Francisco, Boston, Seattle, and perhaps Portland or even Pittsburgh.

Left off of either list are the old rust-belt cities: Chicago, Detroit, St. Louis, Cleveland, Buffalo. Kotkin's remedy for these towns is more manufacturing. Meanwhile, Dr. Florida prescribes cool bars, nice restaurants, and walkable streets.

I guess I'm still enough of a Trotskyist to side with Mr. Kotkin on this, but not without reservations. His basic point is certainly correct: wealth comes from creating something that people want to buy, and at the core this includes food, energy, housing, clothing, transportation. The hipsters produces none of those things directly. The world will always depend on the material boys.

Trotskyists dismiss the creative class as petty bourgeois parasites, and unfortunately I sense the same tendency in Mr. Kotkin. The truth is that given real products that people want to buy, then the creative class adds substantial value on top of that. For example, the material boys grow wheat, but the creative class financial wizards create futures options and financing opportunities that ultimately make wheat much cheaper for the consumer. Trotskyists treat Wall Street as if it were a casino, but it's not--it is essential to the modern marketplace.

Likewise, one can't eat Google, but Google has made foodstuffs cheaper and more readily available. Advertising, logistics, financing, packaging and R&D are all ways that the creative class adds value. But the material boys have to be there first.

And this Mr. Florida doesn't seem to understand. His view that cities need to welcome the creative class and then everything else will follow is precisely backwards. He is absolutely correct that the creative class adds substantial value, and he is also correct that creative folks thrive in densely populated, diverse, interesting cities. But he's got the cause and effect arrow backwards. It's the material boys who create the cities which the creative class can then move in to. Without the material boys, the hipsters have nothing to work with--they're artists without a canvas.

So I think Mr. Florida's plan--for cities such as Cleveland or Detroit to build gentrified, bohemian neighborhoods in hopes the creative folks might move in--is the wrong way round. If the material boys are already there, then the hipsters will construct their own neighborhoods. Arguably that's what's happened in Portland--first came Weyerhauser, and then came the silicon forest, and after that the Pearl District turned into Florida's dream. Portland's economy has always depended on real products that people want to buy.

Similarly, no amount of artsy-fartsy decorating is going to revive the city of Detroit. Absent something like automobile manufacturing, the city is toast. Formula One races are nice, as is Greektown and the monorail, but those are at the top of the economic pyramid, not the foundation. To revive Detroit, somebody needs to start an industry building something that people want to buy. There's no other way around it.

In some respects, both Mr. Kotkin and Mr. Florida are wrong, and the error exists also in what I've said above. My Trotskyist heritage leads me to segregate the material boys from the hipsters into distinct classes. Kotkin and Florida make the same mistake. In fact, the two groups will increasingly be the same people. Additive manufacturing (3D printing), for example, will involve both kinds of skills, in a manner similar to the traditional craftsman where both design and woodworking are embodied in the same individual.

Second, manufacturing will never employ very many people, and thus cannot support big city populations. The size of the creative class is also limited by opportunities to create value--there aren't that many of them. Most people will work in the service sector, from which they will earn some share of the return from manufacturing.

And finally, it is possible for a few cities to beat the odds. New York and San Francisco both have successful hipster economies, despite no manufacturing of note. New York thrives on finance (and will continue to do so, new financial centers notwithstanding), fashion, art, and retailing. I have posted elsewhere about what I think is New York's golden opportunity for additive manufacturing, but we can all dream. It probably won't happen. Still, New York is not dying in the way Mr. Kotkin seems to indicate. Likewise, the Bay Area survives on software. Boston and Pittsburgh live on eds and meds.

But this model doesn't scale. There simply isn't a big enough market for two dozen eds & meds cities, nor can the country support more than a handful of financial centers. For everybody else but the lucky few, the material boys come first, followed by the creative class.

So it is true--you can't eat a hipster. But it is also true: Man cannot live by bread alone.

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