Podcast: Inequality in American Cities

TRANSCRIPT: Inequality in American Cities

Richard Florida:

The most liberal cities, which are also the densest and the most diverse, but the cities that vote the most for progressive mayors or vote the most for candidates like Obama or Clinton are the most unequal.

Ian Bremmer:

Work hard, be smart, and you can achieve success. That's the American dream, right? And if so, inequality isn't an unintended consequence of the system, it's the point, or at least a key ingredient. That might sound harsh, but a system where people are incentivized to work hard, take risks, and be made unequal, has led to astounding innovations and enormous leaps in global standards of living. Of course, that system also depends on everyone having a fair shot at making it, and that's where this train starts to go off the rails.

Ian Bremmer:

Hello, I'm Ian Bremmer, and welcome to the GZERO World Podcast where you'll find extended versions of the interviews from my show on public television. And today, on the podcast, I speak with leading urbanist and expert on all things cities, Richard Florida. We'll talk about inequality, where it's growing and why urban revival has a downside. Let's get to it.

Announcer:

The GZERO World Podcast is brought to you by our founding sponsor, First Republic. First Republic, a private bank and wealth management company, understands the value of service, safety, and stability in today's uncertain world. Visit firstrepublic.com to learn more.

Richard Florida:

Top down in China and top down, not only from the party structure, but the mayor, bottom up from the US, and who knows? I think this is going to be a fascinating thing to watch over the next 20 or 30 or 50 years.

Ian Bremmer:

Richard Florida, great to be with you. Thanks for coming on.

Richard Florida:

Hey, thanks for having me.

Ian Bremmer:

You are sort of the legendary urbanist, you know everything about cities. One of the things that I guess I should kick off with is that when I see where cities are going, it seems pretty parallel to this growth in global inequality at the individual level. Is there such a parallel? Are they linked?

Richard Florida:

Well, I actually think that cities have magnified inequality. If you look at the inequality of nations, generally speaking, it's going to be higher in superstar cities because of the obvious reason. Those superstar cities, those big cities, those capital cities-

Ian Bremmer:

New York, London, Hong Kong.

Richard Florida:

Of course.

Ian Bremmer:

Yeah.

Richard Florida:

They attract super talented, super ambitious people. One, those people just make more money if they have a college degree or they're professional workers, but two, they tend to attract people who do things that make a lot of money. Finance is very concentrated in these cities, technology now, media. Then, of course, cities also at the other end tend to attract people who are coming off the farm, or immigrants coming in from other countries, so they tend to amplify inequality.

Richard Florida:

The only other thing I would add though, and something that I think I've tried to make the case for, is that we talk about economic inequality a lot. We don't often talk about geographic inequality or spatial inequality, the inequality between not just individuals or classes of individuals, but types of places. I think really this geographic inequality, when we look at political instability, the rise of populism, backlash politics, I think that has a lot to do, it's not just economic inequality that's driving that, it's the spatial inequality, the separation of different groups of people and different classes of people into different geographic communities.

Ian Bremmer:

One thing that I find very interesting is this notion that you've got to move if you want to have an opportunity these days. Your second tier, your third tier cities don't necessarily make it for you, and a lot of people are very rooted to where they grew up, their sense of family, their sense of belonging, and communities. First of all, do you think that that is one of the most dramatic of drivers of inequality right now? To the extent that you do, do you think there's anything can be done about it?

Richard Florida:

It's the big, big question, and it's something that I've been interested in for the better part of two decades. In a book I wrote called, "Who's Your City?", I actually separated people into three different classes. The mobile, people who are ready, willing and able, and have the income, the background, and the personality characteristics. They tend to be very open-minded, open to experience, people who are able to move to opportunity. The stuck, people who don't have the income, don't have the wherewithal, are kind of just stuck, underprivileged, disadvantaged people. Then the rooted, that's the term you use, people who are rooted to friends, rooted to family, rooted to community. I think that pretty much describes it. We're now, just now, starting to see good research on this.

Ian Bremmer:

Now, one thing that you write about, which I hadn't appreciated as much, is that the real growth in poverty in the United States right now is in suburbs, not in urban centers, not the rural areas. It's in the suburbs. That's a change. Why is that? When I was growing up, everybody was like, "That's where the wealthy people were going." I may not have been one of them, but you aspire to that. Why is that changing so much?

Richard Florida:

People have called this the 'great inversion.' The inversion that in the old days, the old urban crisis, I grew up in Newark, the cities were emptied out of the middle class, emptied out of jobs, and left with disadvantaged and low income people trapped in a cycle of poverty. What seems to be happening now as cities revitalize, as tech companies, headquarters companies, talented, highly educated, college educated people, the creative class, move back to cities and schools get better, and families start to migrate in. There's no more room so low income people get pushed into the suburbs. Still I think the poorest people and the most disadvantaged people live in the urban core, but poverty and economic disadvantage is growing much faster and a larger number of, because suburbs house more people, a larger number of poor people, and the growth is much faster in the suburbs. The way I like to think about this is that we have to get beyond these words, city and suburb. I kind of like to use the word patchwork, a patchwork city, a patchwork metropolis, where you have these little-

Ian Bremmer:

I'm not sure that's going to catch on, just let you know.

Richard Florida:

Yeah, that's all right.

Ian Bremmer:

Yeah.

Richard Florida:

Little globs of concentrated advantage in the city and in the suburbs surrounded by much larger spans of concentrated disadvantage. What's the problem though is the middle has disappeared. In the year 1970, about three quarters of Americans lived in middle class neighborhoods. Now about a third of us do. We've divided our society into rich and poor, areas of advantage and disadvantage, and the middle's dropped out. It's amazing to me as an urbanist, we can stack up this office filled with books on cities. We have just a handful of books on suburbs. First of all, I think it's a topic because most Americans live in suburbs in rural areas. It's a topic we need more work on.

Ian Bremmer:

When we think forward, new technologies that are going to affect the way we think about how cities function-

Richard Florida:

Well, actually, this is what I'm working on right now. I believe, we took all the data on venture capital investment in the world. We segregated it out by industry and by city. First time I think anyone's looking at by city precisely. We identified a group of new industries we call urban technology, urban innovation, or urban tech, ride sharing, co-working, co-living, delivery, construction technology, real estate technology. It's like $50 billion a year. It's about a fifth of all VC investment, it's bigger than biotech, it's bigger than software, it's bigger than hardware, it's bigger than crypto, it's bigger than AI. I believe that, I'll put it this way. In the old industrial economy, it was the factory and the large industrial corporation that was the organizing platform of the economy. In the knowledge economy, we know, in the global knowledge economy, the city is the place that organizes the factor of production. It matches talent with capital, with innovation. It's the place where innovation is occurring due to density and diversity. These technologies, these new urban technologies, are about making the city run more efficiently. I actually believe these urban technologies are the most important growth wave of all innovations in the modern global economy.

Ian Bremmer:

Autonomous vehicles. People that are driving that tell me, "My God, you're just going to open up the entire core of these places." In some ways, it's going to exacerbate every factor you're talking about right now. Is that true?

Richard Florida:

Yes. I've been in an autonomous vehicle. It was a very strange experience, and in fact, when I taught at Carnegie Mellon for 20 years, I watched the autonomous tanks. They were developing for the military right around our parking lots. My hunch on this is that most people say, "What autonomous vehicles will do is reduce traffic." That never happens. We build more lanes, and there's a basic law, the more lanes you build, the more traffic comes. But also they say, "Well, it's going to enable people to avoid the congested city and move out to the suburb or rural area."

Richard Florida:

Here's what I think. What's driving back people to the city is not just congestion cost. People are coming back to the city for the networks they get, the professional networks that are there, the educational opportunities, and what economists call the unique bundle of amenities. Not just the restaurants, the schools, the galleries, the arts, the museums that are only, that's why the housing cost... Take New York, look at what it costs to live in lower Manhattan. You go across a tunnel or a bridge, it goes down by a factor of four or five.

Ian Bremmer:

It's incredible.

Richard Florida:

Four or five.

Ian Bremmer:

It's incredible, yeah.

Richard Florida:

People are paying for something unique here. I think what autonomous vehicles do is enable the world cities to push poverty further out to the periphery. You won't be driving to work in your autonomous car. There'll be autonomous buses and micro buses and low income people will be pushed further, the great inversion will get even greater and poor people will get pushed further out in the periphery and more affluent people will [inaudible].

Ian Bremmer:

Because it's plausible for them to then go two hours each way and it's very easy and efficient, yeah.

Richard Florida:

It'll look like a European or Latin American city with rich people at the core and poor people pushed out in the periphery. That's my hunch. No one can really predict this. My hunch is the advantages of the urban center for talent, for productivity, for innovation, for capital will be magnified in autonomous vehicles, will widen spatial inequality.

Ian Bremmer:

Now, you're an urbanist. You talk about suburbs, maybe not surprisingly, you don't talk a lot about rural areas, places that it's the red wave, it's Trump's support base in the United States. We see this in Canada too. Are they just going to be further left behind in every way you're thinking about this?

Richard Florida:

Rural areas are really fascinating because we've now begun to do a lot of research on rural areas. There are about a 100 rural places in the United States that are attracting the creative class like all get out. The ones New Yorkers would now are Hudson, New York, rural places in California or Colorado. The way I look at this, I know it sounds crazy, but if you go back and look at the United States history, particularly the '50s and the '60s, there are a lot of creative people that were already migrating back to the rural areas. The whole hippie movement was about going back to rural areas, so I think there's something in the world that pushes some people to rural areas, but that means about 100 of them will do well, and we have hundreds and thousands of them. We have a situation where a relatively small number of cities, a larger, but still relatively more small number of suburbs and also a relatively small number of rural areas are doing well when large spans of cities, suburbs, and rural areas decline, and I think that's the agenda. How do you try to help the large numbers of urban, suburban, and rural places that are really struggling?

Ian Bremmer:

You've lived in a hell of a lot of cities over the course of your life. Who's getting it, leave aside the big ones. Leave aside New York-

Richard Florida:

That's the hard part.

Ian Bremmer:

... who in the second group, places you might not pay that much attention to, a lot of our viewers probably haven't been there, what are some places you think are really getting it right right now?

Richard Florida:

I don't think any place is getting it right. I do think that large cities like New York and London have been blessed. People will say, "This is crazy because they've had all sorts of problems with mayors," with good governance, that these cities have developed nonprofit infrastructures and public-private partnerships and thoughtfulness outside of just local government. I think they do pretty well. That's why partly they've been so resilient and be able to stay large. I think what cities have done really well is urban revitalization. You could go from Pittsburgh to Detroit, even Newark. Remember Newark, my hometown, was an Amazon HQ2 finalist. It was one of the 20 finalists, Tulsa, Oklahoma. I could go down the list of all of these small cities, Milwaukee, Minneapolis, there's so many.

Ian Bremmer:

Dallas.

Richard Florida:

Oh, Dallas has done fantastic.

Ian Bremmer:

Incredible, yeah.

Richard Florida:

Houston, Austin, San Antonio. I think that cities, and I think my work and the work of my colleagues, my peers have been very important. We developed a series of narratives, a series of theories, and a series of tools, cluster analysis. How do you focus on the clusters of industries? The kinds of talent, quality of place? How do you make your place more attractive? We worked with mayors and councils and economic developers. What we haven't done well is mitigate inequality and unaffordability. I think that's the next generation. There I would say cities have not done well and until recently not been cognizant. There's been such a focus on reviving the urban center, on bringing people back that cities haven't stopped until this recent moment and said, "Oh, oh wait. We have a problem in that the gains of urban revitalization are going to an advantaged group and a disadvantaged group is being left behind." That's the next agenda of urban policy.

Ian Bremmer:

Is San Francisco the single biggest example of this in the world today?

Richard Florida:

Yeah, and you look at-

Ian Bremmer:

Because it's crazy how to see it.

Richard Florida:

One of the things I talk about in the new urban crisis is we ran this silly correlation analysis. The most liberal cities, which are also the densest and the most diverse, but the cities that vote the most for progressive mayors or vote the most for candidates like Obama or Clinton are the most unequal. They're the most unaffordable, they have the highest housing prices. I think that's what's happened is in these vibrant superstar cities and tech hubs, they've attracted highly educated people that have moved there and that's driven up housing prices because housing's scarce, we know this, and inequality because those people have more money.

Ian Bremmer:

But are they also driving much more NIMBY policies? Not in my backyard?

Richard Florida:

Well, this is the big new agenda of urban policy and I think they're split. I think they're incumbent homeowners that tend to be NIMBYs because they want to protect their property values, but young people who aren't home owners tend to be YIMBYs. NIMBYs, not in my backyard, YIMBY, yes, in my backyard.

Ian Bremmer:

Yes, in my backyard, yeah.

Richard Florida:

I think that's sort of a political, someone told me, a political scientist at Stanford I talked the other day, told me NIMBY versus YIMBY is the number one most significant issue in California more than any else. That's telling you something about housing prices.

Richard Florida:

The point I want to make, though, is that even the most progressive politicians, the most progressive mayors on the planet, have not been able to make a real dent in this because I think city policy can't do it. One, I think there's a big national dimension to this. We have now the studies that show a lot of spatial inequality is the result of national level characteristics. But two, what has rebuilt our cities is not city policy. It's the role of so-called anchor institutions, large universities, large medical centers, progressive companies that have taken an interest in their town. What is happening now is those anchor institutions are starting to hear the message, "Hold on. We can't just develop housing for professors and doctors. We can't just pay our top talent high wages. We need to develop more affordable housing for community residents. We need to develop more affordable housing for our service workers. You know what? We employ a lot of service workers. We have to figure out a way to raise their wages and make them more productive and give them better career paths." That's a change that's happening right now.

Ian Bremmer:

Richard Florida, thank you very much.

Richard Florida:

Oh, it's a pleasure being with you.

Ian Bremmer:

That's it for the podcast this week. We'll be back in your feed next week. Check out full episodes of GZERO World on public television or at gzeromedia.com.

Announcer:

The GZERO World Podcast is brought to you by our founding sponsor, First Republic. First Republic, a private bank and wealth management company, understands the value of service, safety, and stability in today's uncertain world. Visit firstrepublic.com to learn more.