Real Trumps Virtual
The rise of the digital economy is repealing America’s established patterns of economic and social geography. How place relates to the burgeoning information and media sectors will increasingly determine the geographic losers and winners of the next millennium.
Since so much knowledge work can theoretically be performed anywhere, some have suggested that the shift to an information economy makes the very concept of place irrelevant. Yet, in reality, place matters more than ever. If people, companies or industries can truly locate anywhere, or at least choose from a range of places, the question of where becomes increasingly contingent on the peculiar attributes of a given location.
What has changed, and profoundly, are the rules shaping both successful and unsuccessful places. Under the new regime, wherever knowledge workers cluster, whether in small towns or big cities, that is where wealth will accumulate. By their very nature, such concentrations are far less constrained by traditional determinants like proximity to waterways, raw materials or dense concentrations of people. It is as if the location deck has been completely reshuffled. Once-relevant distinctions--Frostbelt and Sunbelt, city and suburb, countryside and metropolis--have been replaced by a paradigm of vast distinctions among kinds of places.
Since today’s technology allows work to be distributed anywhere, choice of location becomes more elastic. The growth of a jurisdiction or region increasingly depends on decisions by specific groups, individual entrepreneurs or workers. These individuals--investors, engineers, systems analysts, scientists, creative workers--are what one analyst calls “very sophisticated consumers of place.” To them, the world is essentially a vast smorgasbord of locales competing for their attention and affections.
Yet, the more technology reduces the tyranny of place and past affiliation and empowers information-economy elites, the greater the need to make a place more attractive. Surveys of high-technology firms find “quality of life” far more important to their skilled workers than such traditional factors as taxes, regulation or land costs. This preference helps explain why expensive, highly regulated San Francisco and its suburbs are among the wealthiest places in the nation and why an aesthetically unpleasant place like Fresno, though inexpensive and located in a magnificently fertile valley, ranks near the bottom in terms of economic health.
In some senses, this shift recalls the early period of the Industrial Revolution. Railroads, the manufacture of iron and steel and the exploitation of coal and other power sources fueled the growth of great new cities from the British midlands to the American Midwest. Often, these places were thought to be too cold and remote for mass habitation. Yet, their centrality and proximity to waterways, raw materials and labor enabled them to take advantage of the emerging technological paradigm.
Today, quality-of-life issues are similarly reordering the hierarchy of place. “Boutique” cities like San Francisco, Seattle, Boston and Denver are appealing to many skilled knowledge workers, whose steady migration to these cities has contributed to a revival of urban life. They enjoy among the lowest office-vacancy rates, the highest levels of education and the highest degree of Internet penetration.
The great metropolitan regions--New York, Chicago, Houston and Los Angeles--are bifurcating. In the new economy, Manhattan, the inner-lakeshore districts of Chicago and the coastal strip of Los Angeles are undergoing a heady renaissance. Older, former industrial precincts in the outer boroughs, the far west side of Chicago and South Central L.A. are suffering less rosy fates.
This “urban schizophrenia,” as historian Manuel Castells puts it, stems directly from the growth of the information economy. The growth of the “soft” side of the digital economy--graphics, advertising, animators--has sparked boom conditions in parts of the metropolis, such as Santa Monica and Lower Manhattan, while others have lost much of their traditional industries and middle class to the periphery, distressing working-class precincts.
This option is unavailable to cities, many of them former paragons of the industrial era, like Newark, Detroit and St. Louis. Lacking basic amenities and located in unappealing settings, these cities have been largely ignored by Internet and other high-tech companies. They remain among the least “wired” areas of the country and have among the lowest rates of connectivity to the Internet. They continue to suffer dramatic population losses, especially the young and talented. There may be “enough affluent yuppies” to revitalize well-placed cores such as San Francisco, West L.A., Manhattan and perhaps even Baltimore, says demographer William H. Frey, but, he adds, “How many of these people want to move to downtown Detroit?”
The most obvious winners in the digital economy have been the new peripheral communities, or nerdistans, that have been shaped to service the needs of both high-technology industries and their workers. Their raw material is not ports, coal, iron or even access to highways but concentrations of skilled labor. Austin, Tex., Chandler, Ariz., Irvine and Raleigh, N.C., exemplify this advantage.
The new realities shaping dynamics of place and prosperity can also be detected in the vast rural hinterlands. For a favored locale such as Boulder, Colo., once a remote and almost inaccessible college community, the new rules of geography have been a boon, transforming it into a hub of the burgeoning technology era. Smaller communities like Jackson Hole, Wy., and Park City, Utah, have also become important centers of wealth and even technological and financial power.
For other communities, the shift to the new economy has accelerated their decline. Small towns in less scenic locales, particularly those once dependent on resource extraction, have withered. Despite talk of a “return to the small towns,” there is little to suggest that the new economy will rescue dying settlements along the Great Plains or environmentally ravaged portions of Appalachia.
In thinking about community life in the next century, it might be wise to eschew the kind of millennialist enthusiasm, fueled by the current boom, that has led some thinkers, notably MIT’s Nicholas Negroponte, to see digital technology as “a natural force drawing people into a greater global harmony.” From a longer perspective, Daniel Bell may have a firmer hand on the future. Nearly three decades ago, he contended that the post-industrial economy also possesses the power to divide and atomize, fostering a new kind of apartheid based on access and ability to exploit information. If the new technology energizes utopian visions of equal access to information, it also adds “knowledge” as one of the “fundamental axes” of stratification.
In the past, for example, access to a decent life could be found in communities considered too cold, too unattractive, too remote for “sophisticated consumers of choice.” Yet, as information and intelligence have become prime drivers of the economy, many of these less-favored places have suffered grievously. An economy largely dictated by the location preferences of an aristocracy of talent, who can live where they want to and dictate a geography of wealth, could be death to less desirable places and the people left behind in them.
Constraining the chasm between those living in regions largely outside the digital economy and those thriving within it may be the greatest challenge of the new millennium. Post-industrial society must find ways to cultivate the skills and energies of those living in neglected communities or face the kind of class conflict that nearly destroyed capitalism during the industrial age. Ultimately, this depends less on technology than on the will of individuals and communities.
In the 21st century and beyond, communities will survive and prosper by being something more than soulless zip codes of brick and glass interconnected by fiber-optic cables. They can achieve this status by fostering a sense of connectivity--in human bonds, not just electronic links--among communities, businesses and neighborhoods. More than anything, this reclaimed sense of civic spirit will determine success in the emerging geography of the digital age.
