Sunday, November 14, 2010

The Creative Economy

This week, I had intended to explore the similarities and differences between the skills needed by scalable vs. small business entrepreneurs.  But in exploring the interplay between education, entrepreneurship, and employment, I got caught up re-reading a book, originally published in 2002, called the Rise of the Creative Class, by Richard Florida, a professor at George Mason University.  I highly recommend it for anyone interested in what the future will look like for our children and indeed what our society is changing towards right now.  In my mind, it should be required reading for anyone in government in a position to influence public policy.

The Rise of the Creative Class: And How It's Transforming Work, Leisure, Community and Everyday LifeFor those who have heard me teach or speak, they know that I believe that the 2008 Great Recession marked the final death of the Industrial Era as the driving force in our economy and society, just as the 1929 Great Depression marked the ascendant dominance of the Industrial Era over the Agricultural Era.  In both cases, the trends were evident for many years prior to the final shift.  In the case of Industrial over Agricultural, this trend was visible for almost 300 years before the Great Depression nailed the coffin shut.  In the case of latest shift, the trend towards what has been called the Information Era has been evident since the late 1800s.

But the term Information Era has always struck me as a misnomer given that most(1) of the service jobs created under this label were actually low level, "deskilled" positions that require very little engagement on the part of workers to apply information.

The Great Reset: How New Ways of Living and Working Drive Post-Crash ProsperityInstead, Richard Florida has coined the term "Creative Economy" which I believe is a much better term to describe the post-Industrial era that the most advanced economies, including the United States, are becoming.  In his writings, including his most recent The Great Reset,  he argues that it is creativity, not just information, that is becoming the dominant source of value generation whether it be economic or social value.

To me, here are some of the most interesting findings from Florida's work.  At the risk of oversimplifying:
  • Service sector jobs can be divided into two types.  Creative Class jobs involve high level processing of information to create value and solve problems and are often highly compensated.  Scientists, artists, engineers, architects, doctors, lawyers, and managers are typical of this class.  Conversely, Service Class jobs involve the execution of deskilled tasks, often in support of people in the Creative Class. These are lower wage jobs like food service, security guards, and janitorial work.  Now I am not denigrating the dignity and worth of these jobs; they need to be done.  But the fact of the matter is that today it is very difficult for people in these positions to earn a living wage.  This was not the case with Industrial Era "blue collar" jobs.
  • During the Industrial Era, socioeconomic stability came to be built around private enterprise, in particular, large corporations.  Salary, health benefits, and pensions were predominantly provided by private employers.  Much of this infrastructure came as a result of the fallout from the Great Depression and enacted during Franklin Roosevelt's New Deal.
  • During the Creative Era, socioeconomic stability is crystallizing around geographic location, not private enterprise.  Job security today is less tied to a particular company than to a particular region.  For example, one of the attractions of living in Silicon Valley, or Austin, New York, Boston, or Seattle for that matter is that even if you lose your job at one company, the chance of picking up new work at another company is better than if you live in an Industrial Era center like Detroit where the economy is dominated by a few large employers.
  • Unfortunately, at least in the United States, we have yet to put into place the socioeconomic infrastructure suitable for the Creative Era.  For example, in spite of the recent health care reform bills(2), it is still not available to nor is it affordable by a vast number of Americans.  Portability is limited to clumsy mechanisms like COBRA.  Defined benefit pensions have been replaced by defined contribution 401(k)s and IRA plans, both of which are riskier.  
Now, I'm not an expert in government or economic policy but it seems to me that if a defining attribute of the Creative Era will be more fluid economic relationships (i.e. project teams, core employees plus contractors) and frequent transitions (i.e. multiple employers and careers) what is needed is some form of offsetting, stabilizing infrastructure like portable, universal health care and "transition benefits" in lieu of the current unemployment insurance system.  (Of course one challenge in a transition benefits program would be how to provide sufficient infrastructure to foster the risk taking and retraining that may be needed to help people in transition without turning it into a welfare entitlement program.)

If location is the new locus for socioeconomic stability, this means that it is no longer possible nor sensible for private enterprise alone to provide answers.  Local government has a role.  Arts and cultural institutions have a role.  And of most interest to me personally, educational institutions have a role.

Creative Era Implications for Education?
I'm still thinking this one through, but in terms of how to educate people to navigate and prosper in the Creative Era, a couple of things seem evident to me:
  • If information is the grist for the creative mill, then education needs to better prepare people on how to search, sift, and evaluate information quality, analyze and manipulate qualitative and quantitative data, make and validate hypotheses, and how to synthesize and communicate findings.
  • Education needs to prepare people to work in a more fluid work environment.  This includes training to work as part of a project team, training in interpersonal dynamics, in creativity, in opportunity recognition, in personal self management, in risk assessment.  Unfortunately, today's educational system is structured around producing Industrial Era employees with its emphasis on standardized curriculum, testing, "command and control" classroom setup, and adherence to synchronized class period schedules.  At least this is beginning to change.  For example, in Palo Alto, where I live, my kids do a lot more group project work than I did at their age.  And I see more alternative learning options available.
  • People need to learn the rudiments of self-employment.  I'm not saying that everyone should aspire to being self-employed.  Rather I am saying that the probability that a young person starting a career today will experience a period of transition and self-employment is high.  We should prepare them for this.  Skills like networking, skills and interest self-assessment, self-presentation and salesmanship, and basic financial management are key.
Next week (assuming I don't get sidetracked again):  I intend to explore the similarities and differences between the skills needed by scalable vs. small business entrepreneurs.

(1)  According to Florida's classification of Creative Class vs. Service Class jobs to U.S. Dept. of Labor statistics, 60% of the service jobs in 1999 were the latter.
(2)  Patient Protection and Affordable Care Act; Health Care and Reconciliation Act of 2010.

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