The Big Sort (21 page)

We examined another database Putnam had used. The DDB Needham Life Style survey
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asked 87,000 Americans dozens of questions from 1975 through 1998 about how they spent their free time—whether they volunteered, visited museums, or worked in a political campaign. Again we found that the cities that needed civic respirators were the most prosperous. These regions were filled with people filing patents and businesses paying higher wages. They were the places where young people were migrating. The civic-minded cities—those with crowded clubs and churches and abundant volunteers—had lower rates of innovation and lower average pay. We compared the 21 cities that had produced the most patents and had the most activity in technology-related businesses with the 138 cities that had the lowest rates of patent and high-tech production. We found that people in the high-tech cities had significantly different answers to the DDB surveys than those in the low-tech cities. The economic differences between these two groups were reflected in the agency's polling.

 

High-Tech Cities (Compared to Low-Tech Cities)

More interested in other cultures and places
More likely to "try anything once"
More likely to engage in individualistic activities
More optimistic
More interested in politics
Volunteering increasing, but less than in low-tech cities
Church attendance decreasing
Community projects decreasing
Club membership decreasing

Low-Tech Cities (Compared to High-Tech Cities)

More likely to attend church
Club membership decreasing, but less than in high-tech cities
Community projects increasing
Volunteering increasing
More active participation in clubs, churches, volunteer services, and civic projects
More supportive of traditional authority
More family oriented
More feelings of isolation
More feelings of economic vulnerability
More sedentary
Higher levels of stress
Political interest decreasing
More social activities with other people

Within the United States, groups of cities seemed to be developing in radically different ways, moving along diverging trajectories. There were obvious distinctions in the basic ways people were going about their lives, and these social distinctions seemed to have economic consequences.

Birmingham, Alabama, scored high in Putnam's survey on church attendance, civic leadership, volunteering, and club membership, but below the national average on interracial friendships and protest politics. On Putnam's measures of civic vitality, Boulder, Colorado, scored above the national average
only
on protest politics and interracial friendships—and the per capita rate of patent production in Boulder was
four times
that of Birmingham. Young people were particularly attracted to places with low levels of social capital. (Perhaps the massive inflow itself created problems in maintaining close social ties.) The number of Generation Xers (ages twenty to thirty-five) increased by 9 percent in Birmingham in the 1990s (well below the national average); the number in the Denver/Boulder metro area increased by more than 50 percent.

The calculations that Bob Cushing's computer was churning out backed up Richard Florida's argument that there was a link between talent, technology, and tolerance—that educated young people in the "creative class" would flock to places where they would not be bound by old ideas or tight social ties. (Florida used our analysis in his book
The Rise of the Creative Class.)
²⁹
Certainly, none of the old explanations seemed to apply to these socially fragmented but economically thriving cities. Indeed, this wasn't the way economies were supposed to work at all.

In the 1970s, cities were dying—at the same time mainline churches, civic organizations, and political parties also were dying. People were moving out. Most cities had their lowest population growth in the 1970s. For the ten largest cities (except Houston), each showed a decline in per capita income relative to the rest of the country. In four of the five largest cities, housing prices plummeted. (Only Los Angeles escaped the 1970s house price slump.) Crime rose in the 1970s, and metro areas bled people.
³⁰
Everyone pretty much concluded that cities were dead, murdered by the automobile; phones, faxes, and computers; and the rush to the Sun Belt suburbs. People didn't have to cluster in one place. There simply wasn't much need for cities or for people to be close to one another. People could scatter; they could live anywhere because distance no longer mattered.

Or did it?

Paul Romer, a Stanford University economist, delights in using everyday items to construct mathematic formulas that end in inconceivably large numbers. In a favorite example, Romer presents a child's chemistry set stocked with 100 substances. If someone set out to test all the possible combinations of these items, that would be a very time-consuming chore. There are 10
³⁰
possible compounds in the box (and that's without changing proportions). "If every living person on earth (about 5 billion) had tried a different mixture each second since the universe began (no more than 20 billion years ago)," Romer wrote, "we would still have tested less than 1 percent of all the possible combinations."
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Romer's point isn't just to show the power of exponential multiplication. The chemistry set is a metaphor for the story he has to tell about the sources of economic growth. If one looks at each possible formula from a child's simple chemistry set as the equivalent of a new idea—a potentially economy-changing compound—it becomes clear that the stock of potentially valuable knowledge in the world is quite literally infinite. Only a small percentage of those "ideas" have economic value, but a small percentage of such a large number means that the potential for growth and wealth from those new ideas is still limitless.

Until 1957, the prevailing theory was that increasing the application of labor and capital—more coal, ore, machines, and workers—made economies grow. That year, economist Robert Solow wrote a paper arguing that labor and capital alone couldn't account for the continuing expansion of the economy. Solow argued that a third factor, technical knowledge, combined with labor and capital to increase economic productivity.
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32
In the 1980s, Romer refined that concept. "We now know that the classical suggestion that we can grow rich by accumulating more and more pieces of physical capital like forklifts is simply wrong," he wrote.
³³
Economic growth wasn't a function of forklifts. Nor, to the disbelief of several generations of southern governors, was prosperity a function of the accumulation of Yankee smokestacks lured by low taxes. Counting physical assets missed what development was all about, Romer said. Using a Betty Crocker analogy, Romer insisted that an abundance of great ingredients—lots of oil, deep ports, or fertile ground—didn't make a place rich. The source of wealth was having the right recipe. The places that grew wealthy were those whose people learned to arrange their ingredients in ever new and economically useful ways.

According to Romer, not every idea (or new recipe) was big or even based on scientific discovery. Economies grew because people were constantly incorporating new ideas into all aspects of work. If a guy on a loading dock figured out a better way to pack a truck, that idea could increase profits throughout a firm. And once an economically useful idea was hatched, it could be used and reused without wear and tear. An idea, unlike a forklift, also could be put to work simultaneously by a limitless number of people. Eventually, other companies would pick up the idea about packing a truck. Then it would be modified for use in warehouses. Everyone using the truck-packing idea would benefit. The entire society would be more productive and richer because of one person's new way of arranging a limited set of ingredients.
³⁴
"No amount of savings and investment, no policy of macroeconomic fine-tuning, no set of tax and spending incentives can generate sustained economic growth unless it is accompanied by the countless large and small discoveries that are required to create more value from a fixed set of natural resources," Romer wrote.
³⁵
According to Romer-inspired "new growth theory," ideas were the essential factor in increasing economic returns.

City life was key for such economies of ideas to flourish, because cities sped both the creation and the spread of useful knowledge. That insight came from a woman who never graduated from college and was best known for her observations about city planning. In 1969, Jane Jacobs published the first edition of
The Economy of Cities,
a book that described how ideas scattered through urban areas, creating new industries and new wealth.
^*
Jacobs wrote that new wealth and businesses didn't stem from isolated discoveries or unique inventions. Innovations sprang from older lines of work—"parent work," she called it. Consider, for example, the brassiere. Ida Rosenthal was a custom seamstress in early-twentieth-century New York, as Jacobs told the story. In trying to find ways to make her goods better fit her customers, Rosenthal began experimenting with different garments to be worn underneath her dresses. A result of her innovations was the brassiere. Her customers liked the new undergarment so much that in time, Rosenthal stopped making dresses altogether and went into the business of sewing undergarments full-time. She called her company Maidenform Brassiere.
³⁶

The Economy of Cities
is filled with examples of how a series of small innovations can spawn entirely new industries. The Minnesota Mining and Manufacturing Company (3M) was a small firm founded in 1902 to produce the sand used as an abrasive in the production of metal casings. To find other uses for its primary product, 3M tried making its own sandpaper (a product already invented). The adhesives the company was using failed, so 3M experimented with sticky substances. That's where the new work began to appear. In a series of innovations, 3M first produced a gummed paper that house painters found useful (masking tape), then electrical tape, Scotch tape, plastic tape, and sound recording tape.
³⁷

Sure, there had been significant scientific discoveries, Romer said. Penicillin, for example, hadn't been cobbled together on the shop floor. But great advances didn't often stem from fundamental scientific research. If that were the case, Romer wrote (echoing Jacobs), the study of thermodynamics would have led to the development of the steam engine. The reverse happened instead: the people who solved the practical problems of making steam engines uncovered the basic principles that led to the science of thermodynamics.
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38

Cities were essential in the work of innovation not because they were efficient or practical, because they certainly were neither. They were essential because economic development was the
social
process of problem solving, discovery, and innovation. Henry Ford failed twice in his single-handed attempts to manufacture an entire automobile. He succeeded when he pieced together parts from other small businesses around Detroit. This process of making connections and sharing ideas worked best when people involved in related kinds of work could meet face-to-face and share new ideas.
³⁹
Almost twenty years after Jacobs wrote
The Economy of Cities,
academic economists developing new growth theory adopted her observations. If cities were simply accumulated sets of production factors (capital, people, and land), economist Robert Lucas wrote, they would "fly apart." Land was always cheaper outside cities. Cities were crowded and inefficient, crazily so. By any ration of common sense, everyone should move out. But they didn't. In fact, the opposite happened. Firms paid higher rents to be in cities than elsewhere. What could these businesses be paying for, Lucas reasoned, "if not for being near other people?"
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40

Research in the 1970s and 1980s explored how economies were social enterprises. A grad student in sociology in the early 1970s was curious about how people found out about new information. Mark Granovetter read a study of a southern textile mill swept by a "hysterical contagion." The first people to report being bitten by a mysterious insect were workers at the mill who had few close friends. (The biting critter was, in fact, imaginary.) The "disease" started at the social margins of the mill and then moved into the more conformist social center of the factory's workforce. Granovetter theorized from this case that new ideas (good and bad) didn't start where there were a lot of strong, stable social ties. New behaviors and ideas were transmitted first and fastest through weak, peripheral relationships. Granovetter wanted to discover how people learned about new job openings. Based on the example of the southern textile mill, he predicted that finding a new job wasn't a function of having
strong
friendships. The best bet for hearing of a new opening was to have a slew of
weak
relationships. Strong ties between people bottled up information, Granovetter theorized. That made sense. Your friends know what you know. That's why they're your friends. "Weak ties" tapped new pools of information—and weak ties allowed that information to flow.

To test his hypothesis, Granovetter went to a Boston suburb and in terviewed people who had recently found new jobs through personal contacts. Granovetter asked his subjects how often they saw the person who had told them about the job. Only 17 percent of those newly employed people said they were often in contact with their source, 56 percent said they occasionally saw their source, and 28 percent said they saw their source rarely. Granovetter described this phenomenon as the "strength of weak ties." The more bridges connecting a person to others, no matter how tenuous or seldom used, the better his or her chances for employment. The same would hold true for a community, Granovetter proposed. Communities with lots of internal bridges, even if they were flimsy ones, would be better off than places with social groups that were tightly knit internally but unconnected to other groups in the community.
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