Renting A Dream

Richard Florida writing at the Atlantic offers up an informed and well-developed outlook on how the United States will respond to the current economic contraction. It is a fascinating read and likely more grounded than similar analysis offered by James Kunstler. He poses that creative urban areas benefit from a spillover of innovation that will lead them to be the central locations in the new American epoch.

Big, talent-attracting places benefit from accelerated rates of “urban metabolism,” according to a pioneering theory of urban evolution developed by a multidisciplinary team of researchers affiliated with the SantaFe Institute. The rate at which living things convert food into energy—their metabolic rate—tends to slow as organisms increase in size. But when the Santa Fe team examined trends in innovation, patent activity, wages, and GDP, they found that successful cities, unlike biological organisms, actually get faster as they grow. In order to grow bigger and overcome diseconomies of scale like congestion and rising housing and business costs, cities must become more efficient, innovative, and productive. The researchers dubbed the extraordinarily rapid metabolic rate that successful cities are able to achieve “super-linear” scaling. “By almost any measure,” they wrote, “the larger a city’s population, the greater the innovation and wealth creation per person.” Places like New York with finance and media, Los Angeles with film and music, and Silicon Valley with hightech are all examples of high-metabolism places.

Florida also suggests that the government is supporting the ideal of home ownership to the detriment of society and suggests some incentives create a more mobile workforce.

If anything, our government policies should encourage renting, not buying. Homeownership occupies a central place in the American Dream primarily because decades of policy have put it there. A recent study by Grace Wong, an economist at the Wharton School of Business, shows that, controlling for income and demographics, homeowners are no happier than renters, nor do they report lower levels of stress or higher levels of self-esteem.

I am curious how strong generation-xyz holds on to the dream of home ownership. It’s understandable how the greatest generation put owning a home on such a pedestal. In the red fearing aftermath of WWII nothing could have been less Communist than being the king of your own castle. The communes of the 1970’s tried to create a new model for living but they were just a flash in the pan. Now that we are almost thirty years removed from those ventures the modern generation may be more open to alternative and semi-communal living arrangements. Over the next thirty years condominiums, credit unions, farm shares and zip rides could all hold a much more prominent place in American life.