It’s a post-industrial revolution

The end of our car- and auto-centric economy is approaching, says Richard Florida today in the Globe and Mail. Propping up the old ways is not a good way to get ahead in the new economy.

Basically, we’re going through a post-industrial revolution. We’ve already had a handful of industrial revolutions which changed how people lived and worked: there was one that gave us steam power; one that gave us rails and trains; and one that gave us cars, suburbia, and consumer goods.

The latest industrial revolution also gave us Fordism, a bastardization of capitalist and command economies whereby the government structures the economy around certain industries and corporations. For example, the government accommodates and encourages the home-building and auto industries to the point that a slow down in either is major blow to the economy. I’m not knocking government interventions in the economy, but there is a clear danger that acute political incentives will not align with our long-term needs.

We don’t really get to pick our economy – it is largely determined by factors like technology and wealth. But we can either do the best with what we’re given or fall behind by resisting change.

Florida’s prescription for change?

  1. We need to pour fewer resources into housing. Governments need to ecourage renting, not building and buying single family detached homes in Brampton.
  2. The same goes for transportation: Cars and all the infrastructure they require are gobbling up wealth that could be purchasing new goods and services. Plus cars run on oil. Let’s have more public transit, walking, and bicycling.
  3. “Last but not least, government investment can help to revolutionize the way we develop people. Human capital investments are the key to economic development. But many of our schools are giant creativity-squelching institutions. We need to reinvent our education system from the ground up – including a massive commitment to early-childhood development and a shift away from institutionalized schooling to individually tailored learning. This will require a level of public and private investment of a magnitude larger than the widespread creation of public schools and modern research universities a century ago.”

But first we have to overcome the political inertia which sustains the old way of doing things. Most people cannot remember or imagine an economy structured any way but how it is (just read the comments following Florida’s article), and there are a lot of powerful people invested in the status quo.

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