Rotman Insights Hub | University of Toronto - Rotman School of Management
Groundbreaking ideas and research for engaged leaders
Rotman Insights Hub | University of Toronto - Rotman School of Management
Rotman Insights Hub | University of Toronto - Rotman School of Management Groundbreaking ideas and research for engaged leaders
Rotman Insights Hub | University of Toronto - Rotman School of Management

The New Urban Crisis: How Our Cities Are Increasing Inequality, Deepening Segregation, and Failing the Middle Class — and What We Can Do About It

Read time:

Richard Florida explains the new urban crisis, and how the central challenge of our time is not economic inequality, but special inequality, where all the leading industries and growth occurs in a handful of cities.

Richard Florida

Transcript of the video:

There are lots of people who like to talk about the rise of the rest and I’m very supportive of that. I worked very hard to help Pittsburgh rise to the extent that it could. People talk about the rebirth of Detroit, a city that we both run and I both care very deeply about.

But here’s a fact for you, in the year 1990 22 per cent of venture capital back start-ups were in the San Francisco Bay area, today 50 per cent are. There are two neighbourhoods in downtown San Francisco that were formerly burned out warehouse districts when I began studying high technology industry, those two neighbourhoods attract more than $80 billion dollars in venture capital investment each annually, more than any other nation say for the United States on the planet. Our world is not becoming spread out for the things that really matter. They are becoming more and more concentrated.

So the first dimension of The New Urban Crisis is winner take all urbanism where London and New York and San Francisco and Toronto and another small group of cities, a couple of dozen, maybe three dozen cities around the world capture disproportionate gains and what’s so interesting about this is: if a city like London or New York or Toronto used to be strong in finance or media and entertainment, other than San Francisco guess which are the only cities that have seen any real appreciable gain in high technology start-ups?

New York City today in that same area that I studied as a young student, that same area of Lower Manhattan which had not a single high-tech start-up then now attracts more venture capital per year than Silicon Valley Proper and it’s approaching double.

Think about this. The place that houses Facebook and Apple and Intel now New York City, London and Toronto are the only places that have made appreciable gains in venture capital back start-up, so they’ve added technology to their mix of industries of finance and media and entertainment and these high velocity, high value added, highly innovative industries.

We are seeing a level of spatial inequality. It’s not economic inequality, that is the real central issue of our time. A level of spatial inequality and I just want you guys to understand this. In fact, the U.S. which gave rise to Trump has one of the lowest levels of spatial inequality of any advanced country.

A simple rubric, in the United States the five largest metros produce a quarter of GDP. In Canada, the five largest metros produce 50 per cent of GDP and in South Korea one metro, sole produces 50 per cent of GDP. Our world is incredibly spatially unequal and that is causing the backlash that we see.

[3.12 minutes]

This video was filmed as part of the Shift Disturbers speaker series on May 8, 2017.

Richard Florida is university professor at the Rotman School and the School of Cities at the University of Toronto. He is author of the global best-sellers The Rise of the Creative Class, The Flight of the Creative Class and Cities and the Creative Class, as well as Who's Your City? He is a regular correspondent for the Atlantic Monthly and a contributor to The Globe and Mail, The New York Times, The Wall Street Journal, The Washington Post, The Boston Globe, The Economist and The Harvard Business Review. He has been appointed to the Business Innovation Factory's research advisory council and named European Ambassador for Creativity and Innovation.
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