The New Geography: How the Digital Revolution Is Reshaping the American Landscapeby Joel Kotkin
In the blink of an eye, vast economic forces have created new types of communities and reinvented old ones. In The New Geography, acclaimed forecaster Joel Kotkin decodes the changes, and provides the first clear road map for where Americans will live and work in the decades to come, and why. He examines the new role of cities in America and takes us into the new American neighborhood. The New Geography is a brilliant and indispensable guidebook to a fundamentally new landscape.
Wall Street Journal
- Random House Publishing Group
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FROM CHAPTER 1: DIGITAL GEOGRAPHY
In a manner not seen since the onset of the industrial revolution, technology is reshaping the landscape of American communities. Just as the railroad, telegraph, and mass-production factory transformed the social and economic reality of cities, towns, and rural hamlets in the nineteenth century, the rise of the digital economy is repealing the economic and social geography of contemporary America.
The digital revolution not only accelerates the speed with which information is processed and disseminated, it also restates the relation of space and time within our communities. Decisions about where to locate businesses, for example--once dependent on questions of access to ports, roads, rails, or raw materials--are increasingly dependent instead on the ability to link often scarce human resources. This trend toward virtualization seems virtually unstoppable; electronic business-to-business transactions, estimated at $43 billion in 1998, are expected to grow to over $1.3 trillion by 2003.
As distance has shrunk, much of what has shaped our understanding of geography and place has been transformed irrevocably. Once the world seemed to be made up of unique locations--Texas cattle ranches, teeming and distinct urban neighborhoods, stately old New England towns, relaxed beachside cities. These locations still exist, of course, but ever more, as H. G. Wells predicted a century ago, many of the distinctions between places, between town and city, have become as obsolete as the horse-drawn mail coach.
The growing importance of information industries--those involved in the dissemination, processing, and creation ofinformation--has accelerated this process by making more and more of economic growth dependent on nontraditional factors, most particularly the locational preferences of individual entrepreneurs and skilled personnel. In the past twenty years, the share of the U.S. economy captured by these sectors, which range from media and entertainment to telecommunications and computers, has doubled. They now account for roughly two-thirds of the differential between various regions, according to Milken Institute economist Ross DeVol, and for most of the nation's growth in productivity.
These changes have resulted in the emergence of a social order, first envisioned by Daniel Bell in the 1970s, in which information supplants energy and conventional manufacturing as the critical source of wealth. Workers in the information field--whose numbers are projected to nearly double between 1994 and 2005--represent the ascendant new middle class of the twenty-first century, earning roughly twice as much as other private-sector workers. The information economy is likely to determine the locale of elite pockets of wealth. In 1984, technology and entertainment industries accounted for twenty-three of the Forbes 400 richest Americans; ten years later, that number had swelled to 57.6 The growth of technology, entertainment, and media since then has further accelerated this trend.
These changes profoundly alter the very nature of place and its importance by deemphasizing physical factors--such as access to raw materials and ports--and placing greater emphasis on the concentration of human skills in dense concentrations of population. Why? First, because increasingly, wherever intelligence clusters, in small town or big city, in any geographic location, that is where wealth will accumulate.
By its very nature, the emerging postindustrial economy--based primarily on information flows in an increasingly seamless net--frees location from the tyranny of past associations. Even such centers of gravity as Wall Street, Hollywood, and Silicon Valley, though possessing functions and allures that are mutually reinforcing, are increasingly not mandatory for the building of a successful firm or career in finance, film, or the computer industry. Increasingly, companies and people now locate not where they must but where they will.
This has led some to suggest the inevitable increase of a spirit of "placelessness." If physical constraints to wealth creation are largely obliterated, so too should the kind of attachments to a particular place that have been evident since the beginnings of civilization. "We are entering the fourth dimension," insists international business consultant William Knoke. "We are living in a placeless society."
In the business world, in particular, this notion of placelessness has some resonance. Already real estate companies are preparing to offer leases that allow clients to shift locales as they please. In the future, predicts one real estate executive, firms will demand "space" without actually committing to a locale: a firm will lease 100,000 square feet in New York, but with an option to cancel and shift the lease to Columbus. This antigeography is further enhanced by the proliferation of e-mail, cell phones, and other communications devices. Executives at major multinationals increasingly work in one country while essentially living in another, using the new technologies, air routes, and time-share arrangements in local hotels.
Ultimately this leads to a notion that, over time, our compelling connections will be not with our physical neighbors but with those with whom we share business, cultural, or other interests. The "cities of the future," argues William Mitchell, are by nature antispatial: "The worldwide computer network--the electronic agora--subverts, displaces and radically redefines our notions of gathering place, community and urban life. The Net has a fundamentally different physical structure, and it operates under quite different rules from those that organize the action of public places of traditional cities."
WHY PLACE STILL MATTERS
Despite such assertions, I believe that the digital economy may well have precisely the opposite effect on place.
In truth, the importance of geography is not dwindling to nothing in the digital era; in fact, quite the opposite. In reality, place--geography--matters now more than ever before. If people, companies, or industries can truly live anywhere, or at least choose from a multiplicity of places, the question of where to locate becomes increasingly contingent on the peculiar attributes of any given location.
What has changed, and profoundly, are the rules governing geography, and the making of successful and unsuccessful places. Perhaps the key rule grows from the realization that where information-processing companies, related services, and skilled professionals choose to locate will increasingly shape the geographic importance of future cities and communities.
As today's technology allows work to be distributed anywhere, locational choice becomes more elastic. The growth of a given juristication or region now depends increasingly on the decisions of specific groups of individual entrepreneurs or workers to locate there. These individuals--investors, engineers, systems analysts, scientists, creative workers--are increasingly what one analyst has called "very sophisticated consumers of place." To them, the world is essentially a vast smorgasbord in which various locales compete for their affections and attention.
As a result, the important distinctions between locations, and the variables governing their success, have become, if anything, more important. The more technology frees us from the tyranny of place and past affiliation, the greater the need for individual places to make themselves more attractive. Surveys of high-technology firms find that among factors that drove their decision of where to locate, a "quality of life" that would make the area attractive to skilled workers was far more important than any traditional factors such as taxes, regulation, or land costs. The primacy of this factor helps make expensive, highly regulated San Francisco and its suburbs among the wealthiest places in the nation and also explains why aesthetically unpleasant places such as Fresno, inexpensive and located in a highly fertile valley, rank near the bottom in terms of economic health.
In the process, many of the geographic certainties and delineations that dominated America in the second half of the twentieth century have become increasingly irrelevant. It is as if the locational deck has now been reshuffled in a profound way. The once sharp distinctions between frost belt and sun belt, city and suburb, countryside and metropolis are now increasingly blurry. In the new paradigm, there are both successful and unsuccessful places of every type and distinction. What matters is not so much whether a place is little or big, hot or cold, old or new, but whether it has found or not found a viable niche within the new economic order.
In some senses, this process recalls the industrial revolution, when the rapid growth of railroads--mileage in the United States alone increased ninefold between 1860 and 191515--and the telegraph similarly repealed the existing urban geography by changing the dynamics of time and space. As with the Internet today, the world was telescoped at what seemed a remarkable rate. In 1800, it took six weeks to ship goods or people from New York to the Midwest; less than sixty years later it took three days.
Trains, telegraphs, steel, electric lights, and automobiles--the sinews of modern civilization both created enormous new wealth and occasioned the growth of great new cities in former backwaters from the British Midlands to the American Midwest. Many of these places had once been thought of as too cold, remote, and unattractive for mass habitation, yet they proved to be the places best suited to take advantage of the new technology--by dint of central location, access to waterways, raw materials, and supplies of labor--and they benefited most from the new economic realities.
Today the hierarchy of place is once again being radically reordered. In the digital age, some cities thrive and others continue to die; some rural communities breathe new life and others expire; one set of suburbs becomes ever more affluent, another becomes a ring slum. Some small compact cities--such as San Francisco, Seattle, Boston, and Denver--attractive to many skilled knowledge workers, have become exemplars of a modern resurgence of urban life. They enjoy some of the lowest vacancy rates for offices, the best levels of education for their workers, and the highest degree of Internet penetration.
At the same time, the largest metropolitan regions--New York, Chicago, and Los Angeles--have become increasingly bifurcated, with large attractive sections flourishing with the rise of the digital economy while others remain still devastated by the collapse of the industrial paradigm. Manhattan, the inner lakeshore districts of Chicago, the Los Angeles coastal strip enjoy a heady renaissance; older, less attractive former industrial precincts in the outer boroughs, the far West Side of Chicago, and South-Central Los Angeles fare far less well.
Still other cities--many of them former paragons of the industrial era, including such cities as Newark, Detroit, and St. Louis--have become utterly marginalized in the new economy. These communities continue to suffer the most dramatic population losses and remain among the least "wired" areas of the country, with among the lowest rates of connectivity to the Internet.
The most obvious winners have been the new peripheral communities, what I call nerdistans, self-contained high-end suburbs that have grown up to service the needs of both the burgeoning high-technology industries and their workers. Their raw material is not ports, coal, iron, or even highway locations but concentrations of skilled labor. High levels of educated workers characterize such areas as Austin, Texas, Chandler, Arizona, Irvine, California, and Raleigh, North Carolina, to an extent far above the national norm. Companies prefer these locations for a host of reasons, including the relative lack of distractions, low crime, and often lower taxes, but again, the most critical reason, according to numerous studies, is with the availability of and attraction for needed employees. The promise of lifestyle appealing to both executives and their workers, not traditional economic factors, is the key motivator. Explains corporate demographer David Birch, "The impulse is not hard to understand. People want to live where the air is clear, where you can ride a bike or play golf all year round."
In contrast to the nerdistans, the older suburbs, which as a whole I label the midopolis, generally face less rosy prospects. Built largely in the 1950s and 1960s, these areas face increasing competition from the nerdistans, many of which were planned precisely with information-age companies in mind. As knowledge workers and companies flee to the newer nerdistans, there are dramatic increases in the poverty and potential for further decay in scores of older suburbs, from Long Island to the San Fernando Valley and even in parts of Silicon Valley. These areas have also become increasingly ethnically diverse. In many cases, as in Northern California's Santa Clara Valley, immigrants, largely from Latin America and Asia, have brought new life and energy to the economy. Yet at the same time, they have also brought new challenges, including the growth of a large population of poorly educated residents, interethnic conflicts, crime, and gang-related problems. This, plus an aging infrastructure, declining schools, and increased pollution, have caused many of these areas to lose their appeal to knowledge workers, particularly those with families, who instead choose to flock to the generally more homogeneous, freshly minted nerdistans.
Like the inner city before it, the midopolis is now being left in an exposed position, increasingly out of favor with the middle-class homeowners who have long been its primary residential constituency. If present trends are left unchecked, ghettoization looms as inevitable for some communities, particularly older areas populated with smaller houses and apartments. This can already be seen in parts of San Jose, Queens, northern New Jersey, and the northeastern corner of the San Fernando Valley.
The new dynamics of place and prosperity can also be seen reshaping the vast rural hinterlands of the nation. For the favored locale of Boulder, once a remote and almost inaccessible college community, the new rules of geography have been a boon, transforming it into a new hub of the burgeoning technology era. These communities constitute what I call the Valhallas: rural areas, usually with significant urbanlike amenities and appealing scenery, where knowledge workers can enjoy a pastoral paradise yet remain plugged into the burgeoning information economy. Some of these communities--such as Jackson Hole, Wyoming, and Park City, Utah--even have become important centers of wealth, technological prowess, and financial power.
For other communities, particularly in less attractive locales, the shift to the new economy has accelerated the process of decline. Small towns, particularly those once dependent on resource extraction, have tended to wither in the new era. In rural America, as in the suburban midopolis and the center city, the new century will produce both winners and losers, future boomtowns and incipien
Meet the Author
Joel Kotkin is a senior fellow with the Davenport Institute for Public Policy at Pepperdine University, a research fellow in urban studies at the Reason Public Policy Institute, and a senior fellow with the Milken Institute. He writes a monthly column, "Grass Roots Business," in the Sunday New York Times Money & Business section, and is a contributing editor to the Los Angeles Times Opinion section as well as a columnist for the Los Angeles Business Journal. An active participant in the new economy, he is director of content for Prime Ventures, a high-tech venture-capital firm specializing in new-media and technology ventures. He has written four previous books, including Tribes. He lives in North Hollywood, California.
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