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We all know the story: Much of the world is becoming increasingly less equal thanks to the new knowledge economy. Using data from the Federal Reserve Bank of New York, the NY Times (Emily Badger and Kevin Quealy) recently published this interesting piece on "4 decades of inequality" in American cities. This is what the findings look like:
In 1980, the United States was relatively flat in terms of wage inequality (except for maybe Fairfield). In fact, inequality in a place like Binghamton, New York was about the same as in New York City. But thanks to decline in the former and growth in the latter, New York City is now a much more unequal place.
Economic growth is usually considered a good thing, but inequality is not. Emily and Kevin rightly call attention to the fact that -- according to the above charts -- these two things seem to come together as one package. See New York, Chicago, San Francisco, San Jose, Washington, D.C., and so on.
The other takeaway from these charts is the way in which inequality seems to correlate with metro area population. We know that as the population of a city increases it tends to also become more productive. And so what we are seeing here are those urban agglomeration benefits accruing to some, but not all.
There's a lot that can be inferred from these charts.
Harvard Business Review recently published a conversation between Roger Martin – who is the former dean of the Rotman School – and Tim Brown – who is CEO of the global design firm IDEO. The title of the talk is “Capitalism Needs Design Thinking.” But I decided to call this post something else after reading Roger say this:
My friend Dan Pink argued in an HBR piece in 2004 that the MFA is the new MBA. I wrote to Dan to say that if that’s the case we have a problem because America pumps out a mere 1,500 MFAs a year versus 150,000 MBAs. Thirty MFAs per state per year is just a rounding error. This is one of the reasons I was so keen on transforming business education. It’s a huge infrastructure: 27% of all graduate students in America are in an MBA program. If they’re all being taught how to analyze things to death, that’s going to affect how they’ll shape the future of business.
But what this conversation is really about is the future of democratic capitalism, which is why I think it’s a nice tie-in to yesterday’s Architect This City post about startups and inequality.
I’m very worried about the fact that in America we’ve now gone 24 years without the median household income rising — it was the same in 2013 as it was in 1989. That’s unprecedented in American history. The longest that’s ever happened before is when it took just under 20 years to recover, after the Great Depression. This long period of stagnation has coincided with the top 1% of the economy doing spectacularly.
And so while it’s easy to point fingers at the tech community and say that it’s to blame for rising income inequality, the reality, I think, is that there are other more fundamental issues that need addressing. Roger and Tim believe that design thinking can help. Here’s another great snippet from the former:
I think the way that government generally works is to think, think, think, think, and then finally create legislation that brings about some change, and then they ignore their legislation and say okay, we’re finished with that. Then people go and figure out how to game that legislation, and the government doesn’t do anything about it. Whereas if they had a design view of it, they’d say when they passed a bill, that’s just the best idea we’ve got now, we have to go see how it works in practice, and then fix it. That’s just not the mentality.
Technology is having a profound impact on the world. And it’s something that is very visible. But part of the challenge is that governments aren’t keeping up. They are almost never out in front.
So when something new comes along, like Airbnb or Uber, the reaction is to just stop it. It doesn’t conform to the rules and regulations currently in place, and so it shouldn’t exist.
But as Roger and Tim point out, maybe we need to look at our rules and regulations as simply part of an iterative process (like designers do). Because if we did that, maybe we’d be better equipped to transfer the benefits of innovation over to society as a whole.
Image: HBR
Earlier this week Richard Florida published on article on CityLab talking about the relationship between tech innovation (in cities) and inequality. Specifically, the article deals with the correlation between venture capital investment and a variety of factors, such as monthly housing costs, wage and income inequality, and so on.
The intent of the piece was to address the growing backlash against tech workers – in places like San Francisco – who have become the symbol for the growing gap between the rich and poor.
The strongest correlation appears to exist between venture capital investment and housing costs. As the amount of venture capital goes up, so do housing costs – which probably shouldn’t surprise you. The rich start outbidding the poor for housing. Note: The two outlying dots at the top right, in the graph below, are Silicon Valley and San Francisco.
But when it comes to inequality, the relationship isn’t so clear. For wage inequality, there seems to be a relationship. But for the broader income inequality measure, the relationship is fairly weak. Here’s the graph:
So this is not as black and white as it might seem. Regardless, Florida ends the piece with the following statement (that I think is spot on):
It’s time to stop pointing fingers and get on with the far more important task of harnessing the urban tech revolution to create a new urban middle class and a more inclusive urbanism—one in which many more workers and residents can participate, and one from which many more can benefit.
The answer is not to stop innovating. That would be counterproductive. We should be be encouraging innovation, but at the same time figuring out how best to harness it for society as a whole.
Tomorrow, I’ll touch a bit more on how we might go about doing that. I have a post planned that I think will tie in really nicely to this discussion. So stay tuned.
We all know the story: Much of the world is becoming increasingly less equal thanks to the new knowledge economy. Using data from the Federal Reserve Bank of New York, the NY Times (Emily Badger and Kevin Quealy) recently published this interesting piece on "4 decades of inequality" in American cities. This is what the findings look like:
In 1980, the United States was relatively flat in terms of wage inequality (except for maybe Fairfield). In fact, inequality in a place like Binghamton, New York was about the same as in New York City. But thanks to decline in the former and growth in the latter, New York City is now a much more unequal place.
Economic growth is usually considered a good thing, but inequality is not. Emily and Kevin rightly call attention to the fact that -- according to the above charts -- these two things seem to come together as one package. See New York, Chicago, San Francisco, San Jose, Washington, D.C., and so on.
The other takeaway from these charts is the way in which inequality seems to correlate with metro area population. We know that as the population of a city increases it tends to also become more productive. And so what we are seeing here are those urban agglomeration benefits accruing to some, but not all.
There's a lot that can be inferred from these charts.
Harvard Business Review recently published a conversation between Roger Martin – who is the former dean of the Rotman School – and Tim Brown – who is CEO of the global design firm IDEO. The title of the talk is “Capitalism Needs Design Thinking.” But I decided to call this post something else after reading Roger say this:
My friend Dan Pink argued in an HBR piece in 2004 that the MFA is the new MBA. I wrote to Dan to say that if that’s the case we have a problem because America pumps out a mere 1,500 MFAs a year versus 150,000 MBAs. Thirty MFAs per state per year is just a rounding error. This is one of the reasons I was so keen on transforming business education. It’s a huge infrastructure: 27% of all graduate students in America are in an MBA program. If they’re all being taught how to analyze things to death, that’s going to affect how they’ll shape the future of business.
But what this conversation is really about is the future of democratic capitalism, which is why I think it’s a nice tie-in to yesterday’s Architect This City post about startups and inequality.
I’m very worried about the fact that in America we’ve now gone 24 years without the median household income rising — it was the same in 2013 as it was in 1989. That’s unprecedented in American history. The longest that’s ever happened before is when it took just under 20 years to recover, after the Great Depression. This long period of stagnation has coincided with the top 1% of the economy doing spectacularly.
And so while it’s easy to point fingers at the tech community and say that it’s to blame for rising income inequality, the reality, I think, is that there are other more fundamental issues that need addressing. Roger and Tim believe that design thinking can help. Here’s another great snippet from the former:
I think the way that government generally works is to think, think, think, think, and then finally create legislation that brings about some change, and then they ignore their legislation and say okay, we’re finished with that. Then people go and figure out how to game that legislation, and the government doesn’t do anything about it. Whereas if they had a design view of it, they’d say when they passed a bill, that’s just the best idea we’ve got now, we have to go see how it works in practice, and then fix it. That’s just not the mentality.
Technology is having a profound impact on the world. And it’s something that is very visible. But part of the challenge is that governments aren’t keeping up. They are almost never out in front.
So when something new comes along, like Airbnb or Uber, the reaction is to just stop it. It doesn’t conform to the rules and regulations currently in place, and so it shouldn’t exist.
But as Roger and Tim point out, maybe we need to look at our rules and regulations as simply part of an iterative process (like designers do). Because if we did that, maybe we’d be better equipped to transfer the benefits of innovation over to society as a whole.
Image: HBR
Earlier this week Richard Florida published on article on CityLab talking about the relationship between tech innovation (in cities) and inequality. Specifically, the article deals with the correlation between venture capital investment and a variety of factors, such as monthly housing costs, wage and income inequality, and so on.
The intent of the piece was to address the growing backlash against tech workers – in places like San Francisco – who have become the symbol for the growing gap between the rich and poor.
The strongest correlation appears to exist between venture capital investment and housing costs. As the amount of venture capital goes up, so do housing costs – which probably shouldn’t surprise you. The rich start outbidding the poor for housing. Note: The two outlying dots at the top right, in the graph below, are Silicon Valley and San Francisco.
But when it comes to inequality, the relationship isn’t so clear. For wage inequality, there seems to be a relationship. But for the broader income inequality measure, the relationship is fairly weak. Here’s the graph:
So this is not as black and white as it might seem. Regardless, Florida ends the piece with the following statement (that I think is spot on):
It’s time to stop pointing fingers and get on with the far more important task of harnessing the urban tech revolution to create a new urban middle class and a more inclusive urbanism—one in which many more workers and residents can participate, and one from which many more can benefit.
The answer is not to stop innovating. That would be counterproductive. We should be be encouraging innovation, but at the same time figuring out how best to harness it for society as a whole.
Tomorrow, I’ll touch a bit more on how we might go about doing that. I have a post planned that I think will tie in really nicely to this discussion. So stay tuned.
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