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Enrico Moretti’s, The New Geography of Jobs<\/span> (Houghton Mifflin Harcourt, Boston, 2012).\u00a0\u00a0<\/strong>has been exceptionally well received by\u00a0many of the economic development literati. Some commentators have described New Geography as the best economic development book of 2012. And if you don’t read New Geography, \u00a0you would also miss reading\u00a0the\u00a0best, most readable\u00a0explanation and defense of innovation, knowledge-based economics and\u00a0their effects on the location of jobs in the United States. There is a lot going on in New Geography.<\/p>\n You should read on because what\u00a0lies below the thematic visible tip of New Geography and innovation economics is its\u00a0frank and realistic understanding of what innovation economics\u00a0can do and not do. Perhaps more importantly, the linkage of\u00a0innovation economics with\u00a0American culture and society will be acknowledged and its implications made clear. In the Curmudgeon’s enfeebled mind, this linkage needs to be understood–and dealt with by economic developers.<\/p>\n Our organization of this review is startling in its simplicity. First, we shall try faithfully, with minimal Curmudgeon digression and distortion, to describe and outline\u00a0Moretti’s important message and the key concepts used in its construction and defense. You can stop there if you like. The Curmudgeon hopes you will\u00a0also consider the implications of the Curmudgeon’s\u00a0blather which shall be injected from time to time in the\u00a0Moretti’s\u00a0review. Between Moretti and the Curmudgeon blather that should be enuf and we will shut up when we run out of the latter.<\/p>\n The book, itself,\u00a0is quite an easy read;\u00a0it is\u00a0well-written and deserves to be read. The consequences of Moretti’s message\u00a0are disturbing, at least to the Curmudgeon. His\u00a0explanation of the current American geography of jobs\u00a0is the best application of innovation economics found in the economic development literature. But, sadly, the methodology and proof for much of his theme and message is at least limited, if not faulty. Despite the many tables and statistics upon which Moretti relies heavily, the bulk of his position rests\u00a0on mere assertion which he uses to connect\u00a0the many internal forces\u00a0and dynamics critical to his message.<\/p>\n First, the Curmudgeon will steal Moretti’s words in this review. The reader can safely assume, unless she is told differently [often expressed in brackets], that she is reading the words of Moretti. Page numbers will be provided. All this is meant to be faithful to Moretti and to improve readability–the Curmudgeon will speak up, usually, but not always in brackets, but much of the verbiage in this review is directly taken from the book. In many ways, much of this review is a precis using Moretti’s words.<\/p>\n For Moretti, the knowledge economy has an inherent tendency toward geographical agglomeration (i.e. those with knowledge tend to live and work in knowledge-based communities, or [(Curmudgeon here) they avoid dumb communities]<\/span><\/p>\n So, America’s new geographical map shows growing differences, not just between people, but between communities (p.3). A handful of cities with ‘right’ industries and a solid base of human capital keep attracting good employers and offering high wages, while those at the other extreme, cities with the ‘wrong’ industries and a limited human capital base, are struck with dead-end jobs and low average wages. This ‘Great Divergence’ has its origins in the 1980’s when American cities started to be defined by their resident’s level of education (p.4).<\/p>\n This Great Divergence in educational levels is causing an equally large divergence in labor productivity and salaries (p.4). But a worker’s education affects not only his own salary, but the also affects the entire community in which he resides by altering the kinds of jobs available (in the community) and the productivity of those who live in the community. This ensures that high wages for skilled workers also results in higher wages for all workers in the community (pp. 4-5). The Curmudgeon’s PhD raises the wages of the deli worker who made his lunch. (Once you know this, there is no need to tip)<\/p>\n “The sorting of highly educated Americans into some communities, and less educated Americans into others tends to magnify and exacerbate all other socioeconomic differences (life expectancy, divorce rates, crime and politics and electoral behavior)<\/span><\/p>\n For Moretti, the knowledge economy has an inherent tendency toward geographical agglomeration (i.e. those with knowledge tend to live and work in knowledge-based communities, or [(Curmudgeon here) they avoid dumb communities]. The success of a city attracting knowledge-based workers fosters more success “as communities that can attract skilled workers and good jobs tend to attract even more. Communities that fail to attract skilled workers lose further ground” (p.5). [At this point the Curmudgeon injects that this agglomeration or cluster tendency reminds him of Gunnar Myrdal (circular cumulative\u00a0causation)\u00a0and lately Nouriel Roubini both of whom describe vicious and virtuous cycles and are card-carrying members of a field of economics called ‘non equilibrium economics’].<\/p>\n While this Great Divergence is first and foremost economic, it carries over into an individual’s and community’s cultural identity, health, family stability and even its politics. “The sorting of highly educated Americans into some communities, and less educated Americans into others tends to magnify and exacerbate all other socioeconomic differences (life expectancy, divorce rates, crime and politics and electoral behavior) [please refer to our review on the Big Sort located in the Journal’s “culture” theme; it also seems to reflect some\u00a0of\u00a0Charles Murray’s argument in “Coming Apart: the State of White America 1960-2010, (Crown Forum, 2012) although I suspect Moretti and Murray are on opposite sides of the ideological spectrum].” (p. 5)<\/p>\n For Moretti, America’s labor market is undergoing a momentous shift. While some sectors and occupations are dying, others are growing stronger, and still others, just born, promise to alter the landscape. These labor market changes profoundly and irreversibly<\/strong><\/span>\u00a0affect the new geography of jobs. (p.6) They favor the residents of some cities and hurt the residents of others. In particular, as manufacturing declines, new ‘innovation hubs’ are rising and the latter will become the new engines of prosperity\u00a0causing and\u00a0creating\u00a0a redistribution of jobs, population and wealth in America (p.6). [In this sense, Moretti seems to argue that so-called occupational and sectoral gazelles will create city\/community or geographic\u00a0gazelles. To the Curmudgeon, it also seems to imply a sort of Schumpeterian creative destruction as well]<\/p>\n Who are these sectoral and occupational gazelles? Over the past half-century, the USA has shifted from an economy centered on producing physical goods to one centered on innovation and knowledge (p.10). These sectors and occupations he labels as the ‘innovation sector’. The key ingredient in these knowledge-based jobs is human capital which Moretti defines as (1) people’s skills and (2) ingenuity or [what others would call,\u00a0 creativity]. (p. 10)<\/p>\n \u00a0Attracting a scientist or a software engineer triggers a multiplier effect<\/strong>, increasing employment and salaries for those who provide local services. (p.13) The innovation sector has the largest multiplier of all the economic sectors: about three times larger than that of manufacturing.<\/span><\/p>\n The innovation sector includes advanced manufacturing, information technology, life sciences,medical devices, robotics, composites and nanotechnology –\u00a0 but also includes “any job that generates new ideas and new products”, “What they all have in common is that they\u00a0create things the world has never seen before”\u00a0(p.11). [this last, after the hyphen, add-on is way too open-ended for the Curmudgeon. Also the first part of his definition is also way too time-bound. What might be on the list ten years from now? Gazelles fade fast and new ones constantly take their place. Where does all this gazelle-stuff begin and end? How does a geography grab onto one of these and how long can it hold onto it? will all be dealt with shortly]<\/p>\n Moretti asks why should the majority of Americans care about increasing innovation? Most will never work in a innovative firm? He answers his question by observing that a majority of Americans work in the local service sector. The local service sector does not engage in global competition but are, in effect, living off of those knowledge-based jobs which do compete globally. “Jobs in the local service sector … are the effect<\/strong><\/span>, not the cause, of economic growth. (p.12) Attracting a scientist or a software engineer triggers a multiplier effect<\/strong><\/span>, increasing employment and salaries for those who provide local services. (p.13) The innovation sector has the largest multiplier of all the economic sectors: about three times larger than that of manufacturing<\/span>. (p.13) [there is no footnote nor methodology which explains or supports what is a pure assertion] Nevertheless, the best economic development strategy for a city or state to generate jobs for less skilled workers “is to attract high-tech companies that hire highly skilled” workers. (p.13)<\/p>\n Great Divergence is that America today is really THREE DIFFERENT Americas (p.13). First, the ‘brain hubs’ (cities with a well-educated labor force and a strong innovation sector which constantly add good jobs and skilled workers. Second, “are cities once dominated by traditional manufacturing which are declining rapidly, losing jobs and residents”. Third, are cities that could go either way.<\/span><\/p>\n The reality of all this innovation-knowledge economy and its [Schumpeterian creative destruction] current manifestation, the Great Divergence is that America today is really THREE DIFFERENT Americas (p.13). First, the ‘brain hubs’ (cities with a well-educated labor force and a strong innovation sector which constantly add good jobs and skilled workers. Second, “are cities once dominated by traditional manufacturing which are declining rapidly, losing jobs and residents”. Third, are cities that could go either way. (p. 14)<\/p>\n The three Americas are growing apart at an accelerating rate. The paradox is that the very success of the country’s engine of growth is generating a deep and growing inequality among American <\/strong>communities.<\/strong> (p. 14)<\/p><\/blockquote>\n [To the Curmudgeon this is very important, very insightful, and very, very disturbing. Innovation (probably productivity) creates jobs and kills communities. To his credit, Moretti is providing a very real touchable, real life\u00a0context to creative destruction]<\/p>\n It wasn’t supposed to be this way, Moretti asserts. When we first studied innovation and clusters and the emergence of a new knowledge-based economy we were told that “Distance was dead. Geography didn’t matter” (p.14) Citing Thomas Friedman, The World is Flat<\/strong><\/span> cell phones, e-mail, and the Internet lowered communication costs so much that location was irrelevant. This meant that good, high paying, occupations, jobs and sectors “will quickly disperse to low-cost locations” and out-sourcing \u00a0(P.14). Innovation jobs and sectors will disperse [more or less] evenly across the county and result in a convergence of American communities. [in this sense, brain hubs would ooze into dying manufacturing cities and everywhere else]<\/p>\n ACCORDING TO MORETTI, THIS SCENARIO\u00a0JUST FLAT OUT HAS NOT HAPPENED. “The data don’t support this view” (p.15)<\/p>\n Once a city attracts some innovative workers, innovators and innovative companies, its economy changes in ways that make it more attractive to other innovators. Once attracted by these changes in the economy growth continues to spiral and the city leaps into the knowledge-based world and becomes a “winner”.<\/span><\/p>\n Instead what happened is that in the innovation economy, a company’s success depends on more than just the quality of its workers— it also depends on the entire ecosystem that surrounds it. Cities are not just a collection of individuals but complex, interrelated environments that foster the generation of new ideas and new ways of doing business. For example, “being around smart people makes us smarter and more innovative” (p.15)\u00a0 Thus once a city attracts some<\/span> innovative workers, \u00a0innovators and innovative companies, its economy changes in ways that make it more attractive to other innovators. Once attracted by these changes in the economy growth continues to spiral and the city leaps into the knowledge-based world and becomes a “winner”. (p.15) This is the fundamental cause of the Great Divergence. [Not all cities can or at least have been able to attract some<\/span> innovative workers to begin the process of growth]<\/p>\n [For those that have read our review on the theory on innovation economics, one now appreciate the importance of economic convergence and the rejection by innovation economists of the need for convergence. (See Journal theme of Innovation & Knowledge-Based Economies)]\u00a0 Next, Moretti tackles the issue of economic convergence. He does not reject the notion that low-cost and undeveloped communities and nations can catch up— [in effect, that some of what Friedman called for could occur] but Moretti does argue that the convergence, or catch up if it occurs\u00a0is quite uneven<\/span> (p. 16). Not all parts of a region, nation, state converges. Only some of its geography catches up. The rest languishes and continues an unabated decline.\u00a0Don’t count on convergence!<\/p>\n The growth of manufacturing (and the cities associated with manufacturing) was an “unprecedented rise in the productivity of workers” (p.21) This productivity fueled substantial wage increases and also enabled manufacturers to cut costs and produce cheaper goods. This factors, combined with the rise of consumerism (mass marketing and consumption) caused manufacturing employment to peak in 1978 at almost twenty million (p.21) Today half this amount are employed in manufacturing. Since 1978, the “big manufacturing centers” are “pale ghosts of what they used to be and many are at risk of disappearing from the economic map entirely. Their names are now synonymous with urban blight and irreversible decline (p.23). For each manufacturing job lost, Moretti says his research indicates that 1.6 additional jobs were also lost [no footnote or methodology to support this multiplier] (p.2). Why?<\/p>\n Job opportunities in USA labor market have been concentrated, since 1978, in high-skill, high wage professional, technical, and managerial jobs AND low-skill, low wage jobs mostly in the service and personal care sectors. Moretti calls this the “Hollowing Out of the American Labor Market”. This hollowing out is not a passing trend<\/span><\/p>\n “History” killed manufacturing (p.26). “What happened was an enormous shift in the production of physical goods away from rich countries with high labor costs to poorer countries with low labor costs” (p.28) [This is pretty conventional micro economic stuff which has been the foundation of traditional economic development attraction and retention programs. The trick for Moretti is that he is at some point going to have to explain why high costs will not exert the same result on his innovation sector which, after all is great because of its higher wages (costs). Moretti, no dummy to be sure, knows he must deal with this problem and so….]<\/p>\n The effects of globalization, however, are UNEVEN. Low-value-added manufacturing (found in Buffalo, Providence) fled to China. But cities like Washington DC (a notorious manufacturing center?) and Houston\u00a0with different kinds of manufacturing did not suffer nearly as much. High tech, high innovation manufacturing survived and low tech, low innovation manufacturing didn’t. (p.29). So, much of the USA lost jobs to low cost developing worlds, and got in return cheaper consumer goods (comparative advantage at work). “One of the paradoxes of globalization is that the very people who have been hit the hardest in terms of jobs have gained more as consumers” (p.36). This is the “productivity paradox”.<\/p>\n New machinery, technology and productivity enhancements allow American industry to produce more and cheaper goods BUT with fewer jobs. “increases in productivity lower prices for consumers and raise wages, but they ultimately end up killing jobs”\u00a0 (p.37)<\/p><\/blockquote>\n Chapter two traces the rise of the innovation economy and provides definition as to why it developed and how you can actually locate an innovation job. Innovation jobs, he concedes are not easily defined and are often found in sectors not usually cited as\u00a0 the usual suspects (those listed above). He then moves on and describes the who’s who of innovation. No surprises here. Internet firms, Facebook, Zynga, Cisco, Apple, IBM, Pixar are all discussed but the concluding summary says it all: “What really matters is that American workers produce goods or services that are innovative and unique and not easily reproduced. This is the ONLY way to generate jobs that pay well in the face of stiff global competition (p.55). He estimates that “10 percent of all jobs in the US belong to the innovation sector (p.55) [no footnote or methodology provided]. These innovation jobs are included in “the traded sector” because the good or service can be consumed outside the region where they are produced.<\/p>\n Moretti contrasts the traded sector (quite small) with the non-traded sector (goods and services which cannot be exported outside the region which they are produced) and develops the point that while the non-traded sector is massive, majority of jobs in the USA, “it is NOT the driver of our prosperity (p.57). Instead, the traded sector, the home base of productivity, is the ONLY way to raise worker’s standard of living.<\/p>\n Interestingly, higher productivity of workers in traded sector means higher salaries not just for the workers in that sector but also for workers in other sectors, especially those with similar skills. (p.58)<\/p><\/blockquote>\n Also, “With only a fraction of the jobs, the innovation sector generates a disproportionate number of additional\u00a0local jobs and therefore profoundly shapes the local economy.\u00a0His research [no footnote or methodology cited] suggests that the multiplier for an innovation job is 5 (p.60): for every one innovation job, five additional jobs are created in the non-traded sector. How does this occur. Because these innovation jobs are so well paid (high disposable income), “they consume more local services than other workers and therefore create more local jobs (p. 61). What’s more, the high-tech firms which employ innovation workers tend to be located near each other.<\/p>\n Bringing more high-tech companies to a city eventually results in having more high-tech companies locate there, as dense high-tech clusters make high-tech firms more innovative and more successful” p.62 [no footnote or support for the assertion is provided]. (p.62)<\/p><\/blockquote>\n Hence the extraordinary multiplier effect.<\/p>\n But, at this point, Moretti confronts the creative destruction unleashed by the innovation sector.\u00a0 Recognizing that innovation can also result in the destruction of innovation jobs themselves [logically, how can it not].\u00a0 So Travelocity and Expedia shut down “countless travel agencies” and Netflix is “disastrous for thousands of neighborhood video stores” (p.65). [He does not mention Amazon, Barnes and Noble, Borders, and Best Buy and mobile smart phones and laptops\u00a0kill the personal computer]. Perhaps more importantly, creative destruction someday will be visited upon the current innovation sector itself:<\/p>\n Jobs that today look more like art than labor [i.e. innovation workers] will eventually become commodified, standardized and mechanized-they will lose their luster, and their numbers will start to shrink …. This is likely to happen … in most … parts of the innovation sector. [all capitals, underlining\u00a0are the Curmudgeon’s] WE MUST HOPE THAT WHEN THIS HAPPENS, PROMISING NEW IDEAS AND PRODUCTS WILL APPEAR AND THE CYCLE OF OLD AND NEW JOBS WILL START ALL OVER AGAIN.<\/strong><\/span> (p. 64)<\/p><\/blockquote>\n But not to worry, “[net] jobs in the innovation sector will keep increasing” (p.65) “Innovation keeps churning out an ever-changing roster of jobs, and yet the net effect is positive” (p.65) [Trees will in fact grow to the sky AND (for those who read our earlier Journal review of innovation economics) no need to worry about convergence; it will not happen. Why will convergence not happen–read on] “The rise of the innovation sector is associated with an increase in the value of talent, for a simple reason: economic value depends on talent as never before (p.64) Innovation industries are fundamentally different from all other industries in how they make their profits<\/span> [Curmudgeon underlining, this difference will make them more prone to long-lasting dominance].<\/p>\n For innovative industries “the main production costs are the fixed costs of research and development. The variable costs of production are typically low. Having access to global markets (and its increasing middle class)\u00a0dramatically raises the returns on creating new ideas by increasing sales without increasing costs” (p.67-68). What’s more, innovative products and services can charge higher prices (Apple, Versace\u00a0by way of example). Moretti (and other economists) call this “economic rent” and the patent provides an innovator some level of “monopoly power” (p.71)[shades of Paul Krugman and Romer]. Who ultimately benefits from the innovation sector’s economic rent? “Consumers benefit in the form of new or cheaper products. Companies benefit in the form of higher profits (p.71).<\/p>\n [The Curmudgeon feels compelled to step\u00a0in at this point! Unless the Curmudgeon\u00a0missed something, Moretti switched gears somewhere in the middle of his assessment on creative destruction’s impact\u00a0on the current glorious\u00a0innovation sector. Admitting at first that the current innovation sector would also sooner or later come under essentially the same pressures as have manufacturing and agricultural production,\u00a0Moretti then points out factors such as talent, monopoly power, price and profitability of firms or economic rent which would seem to permit the “innovation sector”, but no one\u00a0sub-sector or occupation of current \u00a0innovation sector<\/span>, to continue to grow indefinitely into the future. Moretti does NOT state or explicitly acknowledge this last point– rather he switches to another core principal: that innovation jobs will keep on increasing into the future. But he does not specifically confirm the current configuration of innovation, jobs, and even locations is timeless]<\/p>\n [In our view, Moretti\u00a0leaves open the possibility, perhaps even likelihood, that as innovation proceeds into the future, the current winners too can\u00a0(shall?) suffer fates similar to Detroit and Buffalo. Specific innovation sector jobs, occupations and firms will come and go, live and die, but the innovation sector itself will grow without abatement into the future. This is a very important point. Today’s winners can become losers in the future. That is almost heresy. But, Moretti\u00a0leaves open the possibility\u00a0that, even if the innovation sector continues to grow forever,\u00a0it is not clear who, what, or\u00a0which geographies (particular cities or nations), will benefit. Firms, profits, talent and patents are\u00a0mobile, saleable\u00a0and fluid. Today’s winners are not etched in stone or even silicon and they too can be tossed into the scrap bin of history. Or perhaps the Curmudgeon once again has gotten off on the wrong track.]<\/p>\n In any case, Moretti, in the Curmudgeon’s view, mutes the above\u00a0implications. He ends his chapter three quite optimistically. “The supply of skilled and creative workers capable of innovating is increasing worldwide … the demand for skilled and creative workers is rising. The latest recession temporarily slowed this increase … but in the long run, globalization and technological progress mean more jobs and greater rewards for the creative workers” (p.72). But his last few concluding\u00a0sentences are a bummer, nevertheless. “The creation of new jobs is not spread uniformly over the entire country. It favors some cities and regions while ignoring others (p.72).<\/p>\n Who wins and who loses in this new innovation economy? How does the innovation economy reshape the social fabric of American communities? These are the questions which underscore Moretti’s chapter “The Great Divergence”.<\/p>\n Recounting the movement or evolution of Microsoft from Albuquerque (its first location) to Seattle, Moretti is amazed at how “serendipitous” it was (pp. 74-77), but the impact of Microsoft relocation to Seattle transformed Seattle into a hotbed of the innovation economy\u00a0 and demonstrated the innovation sector’s power “to reshape the economic fates of entire communities, as well as their cultures, urban form, local amenities and political attitudes” (p.77). Albuquerque subsequently “limped along” and Seattle has “one of the largest concentrations of software engineers in the world (he cites that one-fourth of all wages paid in\u00a0North America\u00a0to software engineers accrue to Seattle).\u00a0 He transforms Seattle into a laboratory in which he demonstrates in operation those forces which we have described previously-how innovation sector simply transforms the city, the non-trading sector and almost everything else into an innovation winner: the brain hub.<\/p>\n There are at least two similarities which are shared by the winners: (1) their share of workers with a college degree, and the (2) gains in earnings and salaries of such college graduates since 1980.<\/span><\/p>\n Innovation requires innovators. Specific entrepreneurs and inventors are the atom, the DNA, of the innovation economy. Patents are their signature. Using patents to demarcate those metropolitan areas that have been generating the most innovation relative to their size, Moretti he discovers that California (the huge winner), New York, Texas and Washington generate almost half of all patents granted in the USA. In terms of metropolitan areas, we were shocked to learn that Silicon Valley and runner up Austin were the national leaders. also Raleigh-Durham-Chapel Hill and Boston-Cambridge. Smaller, but emerging high-tech clusters can be found in Dallas, Minneapolis, Denver, Atlanta, and others.\u00a0He also cites the losers as well, but we shall spare the reader.<\/p>\n There are at least two similarities which are shared by the winners: (1) their share of workers with a college degree, and the (2) gains in earnings and\u00a0salaries\u00a0of such college graduates since 1980.<\/p>\n Of course, the relationship between innovation and salaries (of college graduates) is not perfect. Stamford’s wealth is mostly due to financial services, while salaries in Raleigh, one of the world’s top innovation hubs, are relatively low. Nevertheless, there is a clear tendency for cities with many college-educated residents to have a local economy with a great deal of innovation and good salaries. (p.96)<\/p>\n Possibly, the most remarkable fact shown by these\u00a0tables (pp.94-95) is that high school graduated in the top group (the winner brain hubs, innovation centers) often make more than college graduates in the bottom group …. wage differences in the United States have as much to do with geography as they have to do with social class. (p.96)<\/p>\n Brain hubs pay high average salaries to NONSKILLED (Moretti’s emphasis) workers too. Thus a worker’s education has an effect not just on her own salary, but also on the entire community around her. (p.97)<\/p><\/blockquote>\n [These\u00a0are incredibly important observations. But there are some issues at play. Moretti acknowledges the compensatory impact of higher costs of living as offsets to these higher wages. But the thought that a computer science degree in Flint Michigan\u00a0pays less and potentially is less innovative than the same degree in Boston is really upsetting. The reader is urged to pause and think of the implications and consequences that flow from this. In many ways, this is the heart of his Great Divergence]<\/p>\n [The convergence of Moretti with Michael\u00a0Porter’s cluster agglomeration dynamics is striking. Essentially\u00a0Moretti’s explanation of how and why\u00a0college-educated graduates\u00a0innovate more in brain hubs\u00a0is pure cluster micro economics. It also relies on Krugman’s old knowledge spillovers (see our innovation economics theme). He also cites Lucas and it all flows from Solow]<\/p>\n A good part of this micro economic cluster dynamic is subsumed by “human capital externalities”. This is Lucas and its core insight is that “sharing knowledge and skills through formal and informal interaction generates significant knowledge spillovers”\u00a0 “… when people interact, they learn from each other, and this process makes those who interact with better-educated peers ultimately more productive and creative” (p. 100).<\/p>\n The Great Divergence is not just a geographic divergence between innovation and non innovating metropolitan areas, but, in Moretti’s words, a “New Geography of Inequality” follows from the Great Divergence. The geographical sorting out of America not only sorts our of economies, and economic classes, but cultures as well.<\/span><\/p>\n These human capital externalities, plus better technology and a complementarity of skilled and less-skilled workers (in which association-interaction of the less skilled with the skilled workers raises the productivity of the former) produces not only the Great Divergence BUT A CORRESPONDING GEOGRAPHIC DIVERGENCE OF INEQUALITY (Curmudgeon’s emphasis). The Great Divergence is not just a geographic divergence between innovation and non innovating metropolitan areas, but, in Moretti’s words, a “New Geography of Inequality” follows from the Great Divergence. The geographical sorting out of America not only sorts our of economies, and\u00a0economic\u00a0classes,\u00a0but\u00a0cultures as well. There is not only an economic multiplier effect, but also a “social multiplier effect” (p.111)<\/p>\nMORE THAN YOU EVER WANTED TO KNOW<\/h3>\n
[The next five chapters of his book delve deeper into\u00a0explaining, supporting and fleshing out the dynamics\u00a0\u00a0of the Great Divergence. His concluding chapter\u00a0suggest some programs and strategies to reduce the Great Divergence. In the following section we shall focus on a few key concepts which in the Curmudgeon’s opinion are important to the approach. We shall also present his assessment of what will not reduce the Great Divergence and what will not. The Curmudgeon will be more in evidence as we go forward]<\/h4>\n
American Rust: The Decline of Manufacturing-based\u00a0Cities<\/h3>\n
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[The inescapable conclusion is that innovation can kill some\u00a0jobs (our creative destruction) but it doesn’t kill\u00a0ALL jobs.]\u00a0Job opportunities in USA labor market have been concentrated, since 1978, in high-skill, high wage professional, technical, and managerial\u00a0jobs AND low-skill, low wage jobs\u00a0mostly in the service and personal care sectors (p.40). Moretti calls this the “Hollowing Out of the American Labor Market”. This hollowing out is not a passing trend, nor is it unique to the USA and despite ebbs and flows will continue. Manufacturing employment is doomed by history to continue its decline. [Hence, logically, economic development strategies based on saving or increasing manufacturing employment will fail (p.44). Low skill manufacturing is the new agriculture in that high productivity leads to fewer jobs in the sector, yet a massive leap in output]<\/p>\nWhat is an Innovation Job?<\/h3>\n
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<\/p>\nThe Great Divergence: City Competitiveness, the Big Sort and Coming Apart in White America<\/h3>\n
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<\/a><\/p>\n