January 29, 2004

Creative Sweden?

Cyborg Democracy mentioned an interesting article by Richard Florida: AlterNet: Creative Class War

I think Florida's analysis is convincing (and deeply worrying). I just have to observe the slow shift in my own postdoc plans to convince me that the US is making itself less appealing for the creatives to immigrate to. But he also claims Scandinavia is getting ahead in creativity. Is this true? Some thoughts on why the same but different problems might limit Sweden.

Floridas core idea is that economic development is increasingly driven by "the creative class", people whose work is based on their own creativity, initiative and skill. Places that attract them will grow and prosper, and in turn become even more attractive. There are of course plenty of spill-over effects to the rest of the economy and other locations, but the movement of the relatively moveable creatives are a key social force. The key according to Florida is the combination of talent, tolerance and technology. Sweden clearly has all three. But why isn't it booming? Sure, it is not doing bad, but it is hardly a place like Austin or Amsterdam. Here are some of the likely causes; in short, it is all about structure. Without the three 'T's it is hard to get the creative feedback, but the feedback can be inhibited by other factors.

Stockholm is an obvious creative cluster in Sweden, the only real metropolitan area (OK, I'm a Stockholmer and biased). There are some other areas too (like the Íresund region in southern Sweden), but given the small population of Sweden it is hard to get enough people to set off the creative feedback loop. You cannot spread them too widely, so they tend to end up in the few centers. So a simple cause is just lack of people.

However, it is notable that people are relatively unwilling to move around in Sweden. While creatives are likely more mobile, I have a distinct impression that quite a few creatives do not leave their home regions. This means that they do not contribute, or gain from, the creative feedback of a cluster. Quite a bit of resources are wasted here. Politicians of course want to keep voters in their districts happy, so making sure nobody needs to leave to find work has been a powerful political force over the last decades. This of course compounds the problem, as the atmosphere of "jag flytt' int" ("won't move") is reflected back as policy making it possible to stay even when ecnomics says differently, and produces a lot of local projects that do tie up the creatives in less-than-optimal structures. Tax transfers from the apparently undeserving metropolitan creative regions to the rest of the country add another burden (as well as disincentive to go to Stockholm).

Even worse, horizontal career mobility in Sweden is also relatively weak. Creatives are often stuck within the same few major companies. This suggests that just as there are underutilized creatives in the non-metropolitan regions, there are also lots of underutilized creatives in the Swedish companies. This is made worse by a government policy that benefits big companies (low taxes, a government that likes you) but blocks small companies and entrepreneurs (much administrative overhead, being treated by the governments as at best an "alternate lifestyle" and more often as potential economic criminals). The creatives can start their own firms, but it is much hard (creativity-sapping) work, and the high wages even for non-creative support jobs like secretaries makes it expensive to hire people to deal with the overhead.

Start-ups doing something tanglible and old-industrial get far better support than these new, strange, unclassifiable ideas. Swedish industry and government understand steelworks, machine workshops, call centers and mobile phones. They do not understand think tanks, lifestyle medicine or the Internet. There is a multitude of programs to help people start their own companies, but these are of course aimed at old style companies - and especially in the rural regions.

Florida is keen on universities, and lauds the idea of opening more universities in the less creative areas. From his perspective Sweden would be marvellous, since the government has started many new universities (and turning university colleges into formal univeristies) over the last decade. More people than ever attend tertiary education.

But there is a problem here. Florida sees universities as places where the creative feedback process starts, where people gain the values of the creative class that enables them to link with others later on, and places where new creative clusters can emerge. But just as he describes the problem of Pittsburgh in his book, in the same way it is not enough to just drop even a good university into a small town and expect it to blossom. Many of these new universities are just as ineffectual in turning around their regions to the creative economy as Carnegie Mellon apparently has been in Pittsburgh. There are plenty of company clusters around Swedish universities, but far too many are dependent on a continuing outside support rather than making themselves profitable.

But worse, the move towards mass tertiary education may be diluting the creativity fostering effect of higher education. Quite a few of the people attending education these days are there simply because they won't show up in unemployment statistics. As long as they study they get education grants, and the government can boast about a high degree of education and low unemployment. But university funding (which is, surprise, from the government) is dependent on the number of students who pass exams. Having lots of students that all pass is far better than having fewer students and where people fail. While people at universities are not willingly or deliberately lowering standards, the funding system rewards them for doing so. I have seen it for myself, and it is not good for one's sense of academic honesty.

And there is the final problem with this system. I have a strong impression that quite a few of the students go through the system without acquiring creative values. They have the skills, but they do not see themselves as creative agents able and willing to shape their own future. They become well adjusted for a job in a big company, but not likely to create something new. This weakening of the enculturation may actually undermine the role of universities in the long run, as they become less and less creative cores.

One can of course blame many factors here, but I think the criticism Florida makes of the US government and political parties is (in a slightly updated form) relevant for Sweden too. The political class does not understand the creative class and does not promote it. The division between high- and low-creative areas leads to political decisions that further limit the creatives.

Thankfully we can all go to Lausanne, Amsterdam or Wellington.

Posted by Anders at January 29, 2004 12:32 PM

Well, see the problem you've sort of skirted around is the fact that Sweeden's has much greater control of the economy compared to the US.

Both suffer from overly conservative, pro big-business attitudes, but the US much less so. Frankly at present the question isn't finding a country that is entrepeneur friendly, so much as finding one that is less hostile.

At present, the US is probably the least hostile, which is why I think it will continue to attract the creative class disproportionately.

Although I live in Australia, which economically is a strange middle ground between the European fondness for democratic socialism and America's tentative support for free enterprise.

The latter of which I fear is dying. Is there anywhere on earth that will continue to foster the creative spirit? A 'Galt's Gulch' if you will.

Reccomended reading: http://denbeste.nu/cd_log_entries/2002/12/EuropeanDecline.shtml

Posted by: Korgmeister at January 30, 2004 02:00 PM

Being a fish, I tend to ignore water :-)

Yes, you are of course right that economic freedom is important. But although I can go on for ages about uneccessary regulations and how things can be improved, it is important to consider that Sweden is actually a quite free economy. The Heritage Foundation economic freedom index is a good start:

If you look at the list, you will see that right now Australia and Sweden share rank 11. Australia has been mostly stable, Sweden has been creeping slowly upwards over the last few years. The big surprise is how low the US scores! Looking at this list shows how many places that are truly unfree, but also gives hope - many are improving. As said on http://www.heritage.org/research/features/index/pressReleases/overallRelease04.html

"Of the 155 countries analyzed, 75 scored better this year than last year and 11 had scores that were unchanged. The scores of sixty-nine countries were worse than they were last year". So while things are not looking perfectly bright, there are places getting more free.

As I said, we can always go to New Zeeland :-)

Posted by: Anders at January 30, 2004 09:01 PM

Hmm, the thing is I have some qualms about the scoring system. As far as I can tell, all the elements are weighted pretty much equally, so you can get away with being really lousy in a couple of areas and still look good overall.

Cases in point: Australia, New Zealand and Sweeden have really high income taxes. However, apart from that their economies are very free. Indeed I wouldn't hesistate to say that Australia's economy is much freer than America is, for all the chest-thumping the USA engages in about Free Trade.

However frankly I'd prefer making my fortune in Canada, which is a nice compromise between low taxes and genuine free trade. Canada has more millionaires as a proportion of the population than America - no co-incidence, IMO.

The reason is one simple, three letter word: TAX

High levels of taxation can undo admirable levels of economic freedom elsewhere, because they squish the incentive to engage in creative an entrepeneurial activity. It's just too much of a risk for too little potential reward to give up some job for a safe, government-protected corporation to try your hand at something you're more passionate about.

So frankly I think the scoring they've done is rather misleading. However, much as I disagree with their ranking system, the information is really fascinating. It is, if anything strengthening my resolve to emigrate to Canada.

Posted by: Korgmeister at February 1, 2004 12:23 PM

It is always a bit hazardous to read a economic freedom index. What parts are left out? Which are in?
In the Frasier Institutes index for instance Sweden comes in a place 22.

Often many indexes leave out Sweden's heavily regulated labour market or does not give a big significance to its heavily regulated and subsidized market for housing.

In any case, very very few would say that Sweden is laissez faire economy. Today it has become in many respects an normal EU member. Some markets are more regulated, some are a bit less regulated. But other than a steep taxation it is quite normal.

But the quite normal EU member, is a country with a high degree of regulation, a static economy and some very troubling signs for the future and it is quite adverse to the create class.

One wonders why Richard Florida does not take note of the EU's heavy brain to the US? Is it just a willing negligence in order to make a point against the Bush administration?

In order to illustrate this, the EU Lisbon Protocol, indicates as the source of the US' success in creating economic growth, new business opportunities and opening up new creative environments is that the US government is much better at centrally planning the economy from Washington and that Brussels should follow.
One sees what one wishes to see...

Posted by: Waldemar at February 1, 2004 10:52 PM

Erm, I thought the key behind American economic success was a lack of central planning.

In all honesty, I find the obsessive committment to statism amongst European government types to be rather unnerving.

I mean I consider America to be overly authoritarian, let alone EU nations.

Posted by: Korgmeister at February 3, 2004 10:45 AM