Economic freefall: The winners and losers
Richard Florida, an author and director of the Martin Prosperity Institute at the University of Toronto’s Rotman School of Management, has a thought-provoking piece in The Atlantic about the long-term changes the economic crisis is likely to create on the American landscape.
“No place in the United States is likely to escape a long and deep recession. Nonetheless, as the crisis continues to spread outward from New York, through industrial centers like Detroit, and into the Sun Belt, it will undoubtedly settle much more heavily on some places than on others. Some cities and regions will eventually spring back stronger than before. Others may never come back at all. As the crisis deepens, it will permanently and profoundly alter the country’s economic landscape. I believe it marks the end of a chapter in American economic history, and indeed, the end of a whole way of life.”
Metro Atlanta isn’t mentioned directly, but it fits into several of the categories that Florida defines. Its economy was driven to a large degree by suburban growth, an industry that will never return to its former prominence. On the other hand, it is also the focus of a mega-region, drawing human capital and intellect that will hold the key to future prosperity.
But go read it yourself. You may not agree with it all, but it will make you think and will rearrange how you see the changing world around you.
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© 2009 The Atlanta Journal-Constitution
21 comments Add your comment
Hillbilly Deluxe
February 16th, 2009
12:50 pm
An interesting article though I admit I didn’t read it all. The Democrats, Republicans, Liberals, Conservatives, Supply-siders, Keynsians, etc. can sit around and argue abstract economic theories from now until doomsday. Unfortunately it’s real people who pay the price when their theories and economic models don’t work.
I think we need a complete re-thinking on our economy. We need to get away from a credit/consumer driven economy. What we need is to encourage savings, investment, and get back to producing things. Admittedly that would be a slow and painful process. I think we’ve forgotten the lessons we were taught by the Great Depression generation or more likely most didn’t listen.
Soothsayer
February 16th, 2009
1:17 pm
Some of our political leaders instead seem to be reacting merely to the economic crisis du jour. The artificially created housing bubble pops, as was long predicted; subprime lenders inevitably suffer the fallout; homeowners are thrown on the street; consumer confidence and spending fall; a stock market decline naturally follows. In response many of our political leaders propose band-aid fixes: tax cuts, rebates, short-term aid to the newly homeless and the poor. These may be fine, even necessary. But debate over the terms of this economic band-aid should not obscure the need for a broader debate about why we are in this fix and how to prevent similar crises in the future.
Soothsayer
February 16th, 2009
1:20 pm
Many of the economic problems faced by the US were largely avoidable and are the result of economic mismanagement at various levels.
Taxpayer
February 16th, 2009
1:35 pm
Actually, Jay, Atlanta is mentioned as being part of one of the mega-regions — the Char-Lanta Corridor.
Soothsayer
February 16th, 2009
2:35 pm
China also feels that it is being victimized for America’s structural problems. Premier Wen Jiabao was crystal clear on that point when he ended the recent China Development Forum by stating, “It is unfair to make China a scapegoat for structural problems facing the US economy.” There’s no dark secret what he was referring to – China’s important role as a provider of goods and financial capital to a saving-short US economy. As long as America has a serious saving problem – and, of course, the US net national saving rate plunged into negative territory for the first time in history in late 2005 – trade deficits are a given in order to attract the foreign capital to fill the void. If the Schumer-Graham bill closes down US trade with China through the imposition of steep tariffs, a saving-short US economy will simply have to divert a significant portion of its multilateral trade deficit elsewhere. Undoubtedly, that means a higher-cost producer would have to take China’s place as a low-cost provider of capital to the US – imposing the functional equivalent of a tax hike on the American consumer.
Paul
February 16th, 2009
2:38 pm
Interesting article. I will wager, though, that the Obama Administration (or nearly any Democratic administration) will be wedded to action that largely preserves what was, not what will be. Granted, Obama has diverged a bit – his aggressiveness on alternate energy comes to mind – but look at the ‘infrastructure’ spending in the ’stimulus’ bill – repairing and preserving what was. Get ready for the bailout of states and cities – in the context of this article, isn’t much of it pitching money to slow the inevitable? Will gov’ts shift? Doubtful – they’ve made promises to the people based on taxing items that are in decline – and they have to ‘care’ for those who are in difficulty. Meanwhile, the transfer of wealth from those areas that kept up on infrastructure needs or adapted to changing demographics will limit their ability to invest in the changes that are needed.
Just a few years ago there was much discussion over how rampant housing increases were leaving more people behind in home ownership (I don’t think the author’s idea to glorify renting will find any traction). Not housing prices are adjusting – downward – and what’s gov’t doing? Trying to limit the decline and preserve people in their homes. Two different but interrelated goals – but pity the politician who floats the ‘heartless’ idea that maybe gov’t shouldn’t intervene too much.
Yeah, a thoughtful topic, Jay. I wonder – is there typically in inverse relationship (one factor increases while another decreases) between a thoughtful article and the number of comments?
Soothsayer
February 16th, 2009
2:43 pm
What is ironic is that tThe larger the U.S. trade deficits and foreign military spending have grown, the more of these dollars are turned over to foreign central banks by foreign exporters and other recipients of U.S. funds. Central banks then find themselves with little to spend their money on, except to buy U.S. Treasury securities. They have bought so many that Americans have not had to bear the cost the U.S. federal budget deficit by buying the bonds to finance it. Foreigners have bought themse bonds. This means that, iIn effect, they have loaned the U.S. Government the dollars and foreign exchange to wage its war in the Near East–a war that most foreign voters do not support! To fund the U.S. payments deficit and federal budget deficit is to subsidize this war.
Soothsayer
February 16th, 2009
2:48 pm
The 1920s was often referred to as the “Roaring Twenties”, or the “Jazz age”. This related to the booming period of rapid economic expansion, but also changing social attitudes. Society was becoming less regimented and discovering new found freedoms; suddenly people’s expectations were changing, and this was fueled by new technologies and a booming economy. However, hidden behind the optimistic views and a booming economy, there were significant structural problems, which led to the notorious stock market crash of 1929 and the Great Depression of the 1930s.
Soothsayer
February 16th, 2009
2:52 pm
We all have to acknowledge that our problems were in part brought on by the failure of our government to regulate the institutions and markets that are now in crisis. The irresponsible fiscal policies of the past decade have led to a national debt that amounts to $9 trillion. The irresponsible so-called free trade policies of Democratic and Republican administrations over the past three decades have produced a trade debt that now amounts to more than $6 trillion, and that debt is rising faster than our national debt. All of which is contributing to the plunge in the value of the U.S. dollar.
Jay
February 16th, 2009
3:02 pm
Soothsayer, an endless line of links is not a conversation.
TnGelding
February 16th, 2009
3:04 pm
Hillbilly Deluxe
February 16th, 2009
12:50 pm
Might as well since the slow aqnd painful process has already begun.
Soothsayer
February 16th, 2009
3:06 pm
A depression is not self-correcting. Roosevelt Administration stimulus packages—huge deficit spending—eased the pain but failed to end the Great Depression. Roosevelt’s policies did not put the U.S. economy on a sustainable growth path, because New Deal policies worsened structural problems that pulled the economy down in the first place. For example, the New Deal proliferated monopoly pricing, extended the life of undersized farms, raised structural savings rates, and created a system of home lending too dependent on federally sponsored banks.
The challenges facing President-elect Barack Obama could not be clearer. The current economic slowdown has two structural causes—bad management practices at the large money center banks and the huge foreign trade deficit. These problems are not self-correcting.
The economy will not recover without fundamental changes in banking and trade policy. A large stimulus package, though necessary, will only give the economy a temporary lift but then unemployment will rise again and continue at unacceptable levels indefinitely without successively larger stimulus packages and huge federal budget deficits. The economy is a depression, not a recession.
If you don’t read any other article, read this one.
Taxpayer
February 16th, 2009
3:13 pm
Well, that was quite an article, Jay. My take on it was that our new homes should take the shape of sailboats and coach class with reclining seats. I suspect that another variable, that was not factored into this article, that will continue to rear its ugly head is weather patterns. If the southeast is to see an increase in the intensity of hurricanes interspersed with longer periods of drought, that may ultimately take its toll on the residents. Also, tornadic activity combined with more floods could takes its toll on some areas of the midwest. Time will tell — it always does. As for feeding all of us in the future within our new confines away from the soil, Soylent Green may be closer to reality than any of us realize. I just hope it’s well cooked and properly spiced.
TnGelding
February 16th, 2009
6:13 pm
I had been having similar thoughts. Let’s hope we are wrong. Why all the emphasis on exports? We’ve proven we can consume everything we produce and then some, and you save the tremendous shipping costs. And help save the Earth as well. Bush should have acted when oil prices started rising due to out of control speculation. He also should have worked with Congress on another stimulus package last fall.
TnGelding
February 16th, 2009
11:08 pm
Bush, and Obama, also should have called for a voluntary moratorium on foreclosures and layoffs right after the election, if not before.
RealityKing
February 17th, 2009
10:11 am
No worries! At least in the short term..
You see, next year there’s going to be a huge rebound as our drunken band of congressional free spenders unloads 2T from our children’s future. And when that runs out and the economy once again sputters due to the even larger sized government, another 3T they will spend from our grandchildren’s livelihoods. And yes, once again, boom, the year after that in a dismal attempt to get the entire drunken band of narcistic liberals re-elected. Spend, spend, spend, nope no worries for us!!
Of course, the trick is going to be to save enough in your retirement fund to last you, and your descendants, until 2050. After the impending great Obama depression ends. I’m almost ready.., are you??
Stephanie
February 17th, 2009
11:38 am
Greed is the reason why this economy is in this shape. This is a trickle down affect to the economy. For the past 20 years, I watched the value of homes triple. People were buying home that they could not afford and didn’t know which type of loans to get. A lot of people even made the mistake of getting a second mortgage put on their home. For many this caused a great number of people to lose their homes. Jobs were closing here and being shifted to other countries. Big businesses thought it would save money to close down businesses in the USA. But the reality of it that it affects everybody. The price of gas kept going higher and higher to a point that people couldn’t afford to put gas those hugh and small vehicles. People stop buying SUV,trucks and start buying gas savers. The higher price of gas even cost higher grocery prices in the supermarkets. The price for the parcel services and US postal even got higher. No matter what some people may think, I truly believed that President Obham’s stimulus plan will work for this unstable economy.
RealityKing
February 17th, 2009
1:55 pm
Obviously America has chosen a loser.
“$787 billion economic recovery package becomes law with the simple stroke of Obama’s pen.”
DOW 7,587.25
-263.16 -3.35%
N.J,
February 17th, 2009
5:30 pm
Where were all of the deficit hawks when George Bush was having the government borrow historically large amounts of money over the last eight years, while more than doubling the deficit. When George Bush entered office, there was a national deby of 5.7 trillion dollars.It was 10.6 trillion the day he left office.
When Clinton was president, the rate of government borrowing increased by one third of a percent per year. Compare this to Ronald Reagan, who annually increased the rate of borrowing by an average of 17 percent each year. The Clinton Administration borrowed 18 billion dollars in its last year. The Bush Administration STARTED by borrowing almost 140 billion in its first year, and was up to borrowing 500 billion by 2003, and it continued to borrow at this rate until the end of his presidency.
Going back to 1961, only two presidents have handed Congress a balanced budget. One was bill Clinton. The last one before Clinton was Lyndon Johnson. And he did that during the Vietnam War.
If one looks back at every presidency since the end of World War II, the record shows that Republicans for every dollar of debt created by Democratic presidencies, Republicans have created two dollars and fifty two cents in government debt. The neo-conservatives have the worse rate. Reagan came into office with a national debt less than a trillion dollars. By the time he left office, he had increased it to 2.6 trillion. His sucessor, did a little better, but this was simply because he continued to increase borrowing by about 13 percent per year. But he did not cut taxes, so the rate of the increase of debt was slower that Reagan. Clinton reduced virtually eliminated government borrowing, so the debt levels stayed flat during his presidency and he started on paying down the debt.
His sucessor and last president, simply copied Reagans economic ideas, and the results were the same. The debt doubled.
Historically republicans have done much worse with “borrow and spend” economic ideas, than democrats have done with “tax and spend” ones.
jaypat
February 17th, 2009
9:31 pm
I hope that Mr. Florida isn’t a gambler; he’d lose almost every bet.
I plowed through almost half of the piece, but I had to stop when he was ventilating about how Smyrna, TN would benefit from the slowdown in the auto business. Isn’t Smyrna, TN the place that the Saturn car is built? This is the same car line that GM announced today that they would be be selling or shutting down.
Before that, he was going on about as how Tom Friedman and some guy from the University of Chicago were so absolutely prescient about how the world really worked, being flat and all that. (Almost everything that came out of Friedman’s mind has been wrong, or at least, twisted into some contorted allegory of reality. His [Friedman's] advocacy of globalization has blown up in his face, just as the opponents said it would: The benefits of globalization rained down on Wall Street, while the costs fell on places like Blue Ridge, GA, and thousands of other towns that lost jobs and manufacturing facilities.)
And how Dubai was going to be a center of the financial world. It’s actually shrinking faster than a grape in the desert sun. There are thousands of cars left at the airport in Dubai as the former owners flee the city lest they be put in a debtors prison.
The awful fact is that the entire financial system is broken.
“The Atlantic,” “The New Republic,” “Time,” “Newsweek,” “US News and World Report,” “Reader’s Digest” are all magazines that have all run their course. Too much ideology, too little truth.
Color all of them gone.
BDAtlanta
February 18th, 2009
9:33 am
Wow, this is the conservative viewpoint in a nutshell. I can hear Hannity, Boortz etc in this. Very succinct.
Calling Out the Conservative Lies on Stimulus
http://www.commondreams.org/view/2009/02/05-1