
Rise of the Creative Class Worked a Little Too Well - petethomas
https://www.bloomberg.com/view/articles/2017-10-27/rise-of-the-creative-class-worked-a-little-too-well
======
rm_-rf_slash
Before industrialization, land that mattered was farmland. Then as
industrialization took hold, urban land became more important as the grouping
of people together allowed for economies of scale in manufacturing. But then
the petrochemical revolution put things in reverse, as people could live
anywhere and travel by car. Suddenly, open space was economically desirable,
as it made more sense to build a factory in super-cheap Nowheresville,
Arkansas than crowded, expensive Philadelphia.

But the rise in global supply chains - the shipping container in particular -
meant that it makes more sense to build just about everything in a few massive
hubs (Shenzhen as the prime example), and then ship things all around the
world, at a much cheaper rate than if the widget or smartphone were made at
home. Likewise for services, like IT and finance, it makes much more sense for
all of these professionals to work together in the same places, which is why a
handful of cities are crushing the Information Age while hundreds of other
towns and cities are either dying slowly or are on life support (higher
education economy, tax-break-driven manufacturing, etc)

Will we see the same resurgence of sprawl as followed the petrochemical
revolution? I'm not sure. Remote work has its niches but I couldn't imagine a
serious major company like Google or IBM existing without a lot of corporate
real estate and proximate workers. And as I've argued elsewhere on HN, today's
professionals have professional needs: doctors, lawyers, teachers, all things
they expect to have within their area. Rural areas and even small to medium
sized cities have trouble competing for the best-in-class services that the
upper echelons of professionals demand (and given that this class is both
responsible for and generally the beneficiary of globalization, that makes it
very hard to say that, say, Rochester, NY could become the next great tech hub
(a decent tech hub perhaps, but no Silicon Valley) without a LOT more to
attract the highest end professional class.

Maybe self-driving cars (personally I predict RVs) will be able to make sprawl
great again, but even then it would still be a concentration around a (albeit
larger) major metropolitan area.

Urban/rural was the most important divide of the 19th-20th centuries. It looks
like it will continue throughout the 21st.

~~~
justinator
Google, Amazon (for example), are building large work centers in desirable
places to work, which are raising the cost of living of everyone else in the
town that may not have a six figure income. Google is moving to Boulder, CO as
we speak; Denver was on the shortlist for Amazon.

It's the same problem with kicking out artists in a dilapidated warehouse
area, and moving in boring professionals to live in lofts built on the same
foundations: your renewed neighborhood loses all the reasons it was appealing.
In Boulder already you cannot really afford living in town with a service
industry job, but people who want to work in Google also want to go out and
have a beer after work. Those service industry workers need to commute into
town, which is time-consuming, adds expense, worsens traffic, and lowers their
quality of life.

~~~
WalterBright
> kicking out artists in a dilapidated warehouse area, and moving in boring
> professionals

So artists are wonderful, interesting people, and professionals are boring and
unappealing? Wow.

~~~
michaelchisari
Speaking as a boring professional, yes, artists may be insufferable in plenty
of ways, but boring they are not and their presence is important for
establishing and growing a local culture, whereas professionals are good for
growing an economy and both are needed for a healthy, vibrant city.

~~~
WalterBright
I know some artists, and many of them are definitely boring :-) Just because
someone decides to be an artist and sticks seashells on a model house doesn't
make them interesting. And why would, for example, playing a trumpet well make
you intrinsically more interesting than mastering complex mathematics?

I'd rather have lunch with the mathematician. In fact, Feynman is at the top
of the list of people I'd like to have lunch with, and it's not about his
bongo drum playing.

(P.S. I learned to play the trumpet in my youth.)

~~~
michaelchisari
Because most people can relate to music on an emotional level better than they
can relate to complex mathematics.

It sounds like you know some pretty terrible artists, though. I mean,
seashells on a model house?

PS. Feynman is Feynman for a reason.

~~~
torstenvl
People who only relate on an emotional level and don't appreciate intellectual
complexity are - wait for it - boring.

~~~
michaelchisari
You said only, not me. Great art is heavy on intellectual complexity.

~~~
WalterBright
The Beatles made some of the greatest music in history, but "she loves you
yeah yeah yeah" is a mite lacking in intellectual complexity.

~~~
michaelchisari
You're going to bring up the Beatles, and not bring up Tomorrow Never Knows or
Blue Jay Way or anything off of Sgt. Pepper?

And all art has a wide expanse between commercially available and popular, and
the avant garde, and within that range is another range between simplicity and
complexity.

Art also encompasses film, fiction, the visual arts, music. All of which have
a massive range of intellectual importance and depth.

No offense, but I feel as though you're showing your ignorance much more than
proving your point.

~~~
WalterBright
> All of which have a massive range

Of course they do. I'm merely challenging your claim "Great art is heavy on
intellectual complexity." There's no doubt at all that "She Loves You" is a
great song. Personally, I prefer the earlier Beatles tunes rather than Sgt
Pepper. Perhaps you could quote from the latter some lyrics that have deep
meaning to you?

I also greatly enjoy Led Zeppelin, have every album, even cover albums, but am
under no illusions about the intellectual complexity of "squeeze my lemon".

~~~
michaelchisari
There are great examples of lyricism in music. There are great examples of
production. There are great examples of musicianship. And there are great
examples of songwriting. Each has varying levels of complexity.

Nobody celebrates Led Zeppelin for their lyricism, but I think you knew that
already.

------
ChuckMcM
Does anyone have the book? I noticed in the chart they measured 'San
Francisco-Oakland-Hayward' which would be the northern half of the bay area
that does not include the Santa Clara valley (aka Silicon Valley). I'm
wondering if there was a measurement for the 'Redwood City - San Jose -
Fremont' southern half of the bay area.

~~~
chinstorff
The San Francisco-Oakland-Hayward MSA[0] contains San Mateo and Alameda
Counties, so Redwood City and Fremont are included.

Santa Clara County is not included, however.

[0] [https://en.wikipedia.org/wiki/San_Jose-San_Francisco-
Oakland...](https://en.wikipedia.org/wiki/San_Jose-San_Francisco-
Oakland,_CA_Combined_Statistical_Area)

~~~
ChuckMcM
That is awesome, it lead me eventually to discover the San Jose-Sunnyvale-
Santa Clara MSA (which is the 'other' side of the Bay) and this comparison
site ([https://datausa.io/profile/geo/san-jose-sunnyvale-santa-
clar...](https://datausa.io/profile/geo/san-jose-sunnyvale-santa-clara-ca-
metro-area/?compare=san-francisco-oakland-fremont-ca-metro-area))

------
Animats
Don't worry. Programming is becoming a blue collar job.

Being an "electrician" in 1880 was a big deal, the high technology job of its
day. By 1920 it was a union blue collar job. That's programming.

~~~
WalterBright
An electrician in 1880 did a lot of design work. One of 1920 (and today) does
it by rote - they just follow canned rules and procedures already worked out.
It's all coded into regulations, too, so there's little flexibility.

An electrical engineer, on the other hand, does design work.

~~~
thewarrior
Could nt that happen to programming as well ?

~~~
WalterBright
I'm in the compiler business. Compilers handle an increasing amount of routine
programming tasks, but programmers respond to that by making more complex
programs, so the creative input needed by programmers is about the same.

~~~
thewarrior
What do you think about the API ification of things because of AWS or Google
Spanner database . Everything is abstracted away so you're just gluing things
together.

Its not AI but it turns even complex projects into things that anyone can
learn to do in months . I can't imagine this remaining so well paying in such
circumstances.

~~~
nostrademons
The complex design work goes into creatively gluing these APIs together to
form _new_ product categories. If you don't need to spend time worrying how to
fit bits on disk, you can spend that mental energy searching for and solving
problems that would've been too complex without the APIs.

Smart programmers move up the value chain as needed so that they're still
doing work that can't be done easily with an existing product.

~~~
thewarrior
Good point .

So that begs the question , what are some of the things that are right now
higher up the value chain ?

~~~
WalterBright
Writing a better compiler :-)

------
dougbright
The author raises good points which are hard to disagree with. I'm troubled by
the decision to choose the odd and seemingly arbitrary "95-20 ratio" though,
instead of a more typical 80-20.

Does anybody know what these graphs look like at 80-20?

~~~
s17n
Wouldn't gini be better than either of those?

~~~
arcanus
Or a straight up power-law curve fit, which is what those are both
(implicitly) based upon.

~~~
s17n
Really? I thought that Gini is equally applicable to any type of underlying
curve.

------
gt_
My ex-girlfriend bought this book for me and it was one of the red flags that
led me to break up with her. I still love her very much, but this gesture made
it so evident she could not understand me. Forgive me father/HN.

------
indubitable
This article made me curious about something, statistic wise, with inequality.

Imagine we have a kingdom of a million workers and one king. Inequality would
be mostly invisible. Unless you compare yourself to the king (and who would
dare do such a thing..), you're doing pretty well - or at least as well as
average. But now let's imagine the king wants to modernize his land. So he
starts developing and training people. And now we have 1 king, 50,000 skilled
experts, and 950,000 workers. Well there's not _that_ many of those skilled
workers, so they must still be pretty special. It seems kind of unfair, but
things are still pretty decent.

And now imagine the king trains another 50,000 experts and grants 10,000 of
the already existing experts vast tracts of land. Now we have 900,000 workers,
90,000 experts, and 10,000 lords. Now inequality is starting to feel very
real. There are lots of these guys and they don't seem to be anything special.
How is it that they're doing so well, while the majority struggles?

I think we can say that the king's actions have greatly benefited society. Yet
there's a strange paradox. As benefit, and privilege, comes to more and more
people - it seems ever more unfair for those yet to benefit themselves. And
now imagine by the time our hypothetical skilled individuals start to become
the majority. It would begin to seem something beyond fair. As we start to see
things like there being only 200,000 workers left, they would start to see
their situation as more and more desperate. Indeed they would start to seem to
be a sort of slave caste.

A quick search for information to try to see if this is indeed what is
happening yielded this [1] study which seems to lend some credence to this
possibility. In particular they examined the percent of individuals in each
income group, based on real incomes. These showed that the middle class has
been substantially chiseled out (shrinking from 38.8% to 32% of the
population) but that alone is disingenuous. What's happening to every class's
population? Here are their data for this specific question:

\- Change in share of each class as a percent of US population. 1979 -> 2014

\-----

\- Rich: 0.1% -> 1.8%

\- Upper Middle Class: 12.9% -> 29.4%

\- Middle Class: 38.8% -> 32%

\- Lower Middle Class: 23.9% -> 17.1%

\- Poor or Near-Poor: 24.3% -> 19.8%

\-----

This seems incredibly positive at a glance, but this change in demographics
has indeed resulted in very large measurable changes in inequality. In
particular in 1979 the bottom 3 economic classes controlled 70% of all income,
with the upper class and rich controlling the remaining 30%. Today those
numbers have practically swapped. The lower 3 classes control 37% of all
income to 63% for the rich and upper middle class. Though, on the other hand,
the top groups have also more than doubled in size.

One other issue I noticed is that the study (at least at a somewhat intensive
glance) did not seem to meaningfully consider that many things critical to the
growth and health of the lower classes, such as education and housing, have
inflated in price far beyond nominal inflation rates. So real income
measurements can be quite misleading. Nonetheless, I'm not sure why but I had
not strongly considered this before. This article emphasizing the inequality
as more of a changing of demographics than an existing demographic making
themselves even richer was what brought it to mind.

[1] - [https://www.urban.org/research/publication/growing-size-
and-...](https://www.urban.org/research/publication/growing-size-and-incomes-
upper-middle-class)

~~~
hkmurakami
I have thought something similar as well. If you have one Bill Gates and
everyone else making $80k, then Bill Gates has a pretty low upper limit on
consumption of scarce assets, and thus goods and services are not bid up. But
when a larger and larger number of people make more than their peers, then you
start to have a bidding war for scarce goods (ex: housing, education, etc).
Hats what you have in the Bay Area. More people than ever making more money
than ever before, while supply hasn't increased to keep up.

This is something that my typical SF tech peer does not seem to grasp.
Relative compensation vs your economic competitors (other knowledge workers in
the Bay) matters much more than your absolute pay when considering your
ability to afford the good life in a supply constrained environment.

~~~
WalterBright
Industries that have government heavily involved in (health care, education,
housing) have seen huge runups in prices. Ones government is not involved in
(such as software) have seen precipitous price declines.

~~~
scientistem
I would not describe government as heavily involved in health care. The prices
you see rising are from lack of meaningful competition and transparency
allowing providers and insurance companies to dictate prices virtually
arbitrarily and certainly irrationally to the consumer using the services.

Meanwhile, government is the only meaningful access many have to healthcare
and education.

~~~
WalterBright
About half of health care spending in this country is done by the government.
That's heavily involved by any metric. Secondly, the amount of regulation of
it is very, very heavy.

The price rises are due to this. See

[https://www.theatlantic.com/magazine/archive/2009/09/how-
ame...](https://www.theatlantic.com/magazine/archive/2009/09/how-american-
health-care-killed-my-father/307617/)

Note how prices for Lasik eye surgery, which has little government
involvement, have trended down dramatically.

~~~
scientistem
While that may be true, the causal link between government spending and high
prices is unclear. The vast majority of waste I see getting healthcare myself
is the absolutely massive cost of dealing with insurance itself. This is an
industry (billing!) that employs vast numbers of people. I think it’s much
more likely the high costs are an effect of ludicrously poor price
transparency and the unsustainable healthcare practices that this sustains. At
worst, government regulation exacerbates this; I think you’d be hard pressed
to demonstrate it’s the primary cause.

Either way, we need price transparency before people start acting rationally,
and government regulation of irrational spending is going to be wasteful.
Price transparency would make the promise of single payer (government)
healthcare actually sustainable for a populace; without it, you’re just making
the healthcare industry richer without actually providing a proportionate
amount of care to the public.

~~~
WalterBright
It's the primary cause. See the article I linked to. Government payments,
subsidies, regulations, and tax policy all act to distort market incentives.

~~~
scientistem
Hmm, I suppose we have different standards for evidence.

~~~
WalterBright
Why have software prices trended to zero, in spite of the desires of their
capitalist creators to make it as expensive as possible?

~~~
scientistem
Well, I’d assume price competition. (I appreciate the response!) How can you
expect prices to improve if you can’t shop around?

~~~
WalterBright
Shopping around in health care is greatly restricted by government policy. Tax
policy, for example, is why health insurance tends to be tied to your
employer, unlike car insurance. The supply of MDs is closely controlled and
restricted by the AMA in order to drive up prices.

See "Competition and Monopoly" by Frecht.

The supply of drugs is heavily restricted by patents and the FDA. See
"Regulation of Pharmaceutical Innovation" by Peltzman.

------
dontlikeitupem
Parts of East London were always there, but remained in the shadows,
underdeveloped and relatively cheaply priced compared to the west and central
areas. Everyone waited for others to make the area trendy, they needed someone
else to socially validate and approve the area before they then came en-masse.
They demanded new expensive bakeries, tweeted their delight with the
distressed decor coffee shop, and simply purred about the expensive butcher.
Then at some point later, those some people went on to complain the area had
become gentrified. One day even the hipsters and shiny people will be priced
out, and maybe the area will change again, but the original locals, who had
business and family for generations there, were never asked about any of this,
and the remaining few still don't have a voice.

