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The Flight of the Creative Class
A Policy Forum on The Intangible Economy with Richard Florida

The Recipe for Entrepreneurship — Three “Ts:”

America’s edge in creativity and innovation is threatened by poor policy and an atmosphere of neglect, author and economic development professor Richard Florida told a June 19 panel forum hosted by the Woodrow Wilson International Center for Scholars. Speaking at a discussion of his new book The Fall of the Creative Class, Florida painted a bleak picture for the future of economic growth, urging lawmakers to take immediate steps to revitalize “creativity” that he said was vital to preserve America’s lead in entrepreneurial activities and culture.

“Boy, we’ve got a big problem on our hands,” he concluded, reflecting on the current state of the country’s ability to attract and retain top-notch creative talent.

Florida’s speech and his book are based on his own three-part recipe for entrepreneurship: technology; talent; and tolerance. He criticized the conventional economic wisdom that has long considered labor a “stock” resource, similar to other classical factors of production. Instead, Florida argued that entrepreneurial talent is highly mobile and flowing, forcing the U.S. to compete in a global marketplace for the freshest and brightest minds.

Because it lags such emerging leaders as China in classical variables that create comparative advantages, such as market size, manufacturing efficiency and raw resources, Florida maintained that it is a unique entrepreneurial spirit that can help America compete. While his first two “Ts” are important in building such a spirit, Florida argued that it is the third — tolerance — that provides the potential for bringing the biggest short- and long-term marginal benefits through policies that are “proactively inclusive.”

Challenges for Talent:

Foreign actors have played a tremendous role in meeting the American thirst for talent that drives its entrepreneurial economy, Florida said. For example, foreign-born Chinese or Indians founded more than a third of high-tech Silicon Valley companies started in the 1990s, and more than half of current American engineering students come from outside the country. However, the U.S. faces key challenges in attracting these key innovators:

• Other countries have “gotten hip to the talent thing” while the U.S. has become less so
  Universities in other countries, in particular, Canada, have become highly competitive challengers in the race to attract foreign students and workers. In a survey of students in Canada, most said that America was their most-preferred destination but that they were deterred from attending because of the stringent visa regulations of the post-9/11 era and what they view as a climate of antipathy toward foreigners. The problem is especially pressing, as the U.S. ranks just eleventh in the number of people in its “creative class,” who go on to become entrepreneurs and inventors.

• U.S. fails to tap the creative energies of a large portion of its population
  Two recent advents, Florida argued, have created the perception of the 30 percent of the population involved in entrepreneurial and innovative activities as social and economic elites. A growing socio-economic class divide has created two distinct groups of “creative haves” and “creative have-nots,” with the latter rebelling against innovation-friendly policies like research-and-development funding in favor of class-specific benefits. Similarly, a growing political polarization that stems from that class divide has created a societal recoil against new ideas and those who espouse them.

• Innovators priced out of entrepreneurial hubs
  Even when engineers and scientists overcome visa hurdles, few can afford to live near universities and corporate epicenters that serve as leaders in incubating new technologies and ideas. The housing affordability crisis, Florida said, has literally priced out new creative minds.

Skeptic’s Questions:

Himself a highly distinguished author of books on technology and economic growth, Progressive Policy Institute President Rob Atkinson offered a cautious assessment of Florida’s conclusion that a culture of inclusion was the biggest hurdle in the future of the American economy.

Calling the book cogent and well written, Atkinson said he believed that Florida had overstated the importance of immigration and foreign labor in the “creative class,” and the role of the entire class, as a whole. While the competition for foreign talent may be global, Atkinson said he was skeptical that American workers would move overseas in large numbers in a search for more tolerant or economically equitable societies. The most pressing problem, Atkinson concluded, was not in America’s pool of talent but in the wages it offers to skilled workers, making the country a less attractive place for new enterprises.

Instead of people, Atkinson argued that technological innovation would drive future economic growth in the U.S. Atkinson also criticized Florida for failing to offer any concrete public policy proposals needed to bring about the changes he says are needed.

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