Review of Martin-Florida Report

Ontario in the Creative Age, the report by University of Toronto professors Roger Martin and Richard Florida, was received last week by the Ontario Government. This report has received a significant amount of media coverage. The key ideas in the report will be extremely useful in enabling us to have good discussions about economic growth, and they deserve to become more familiar.

 

The authors set out their thesis that our economy is in an epochal transition, similar to the move from an agrarian to an industrial economy.

 

What we’re witnessing is a replay of the employment decline in farming, forestry, and fishing occupations in the first half of the twentieth century. Around 1900, fully 42 percent of Ontario workers were tilling the soil, cutting trees, or hunting and fishing for our food. Because of massive productivity improvements in the agricultural and resource sectors, today we are able to meet the basic consumption demands of Ontarians and untold numbers around the world with only 2 percent of our work force. (P. 7)

 

Their analysis of job trends is based on the concept of “routine-based” jobs versus “creativity-based” jobs. While the concept of “routine-based” is fairly easy to grasp, the definition of “creativity-based” has been more challenging to explain. In essence, however, Martin and Florida have marshaled impressive statistical evidence for two facts: first, that the need for “routine-based” work is shrinking and will continue to shrink; and, second, that the future prosperity of our society depends on our ability to encourage the accelerated growth of the “creativity-based” economy in Ontario. In other words, if we are not proactive, we will fall behind.

 

We need to recognize that jobs that are high paying, but not highly skilled or contributing to a high value-added firm will not be around for the long term. This is a painful transition in our economy – but we don’t have the option of ignoring it or fighting it. To gain a distinctive advantage for Ontario, we need to guide the development of workers in routine-oriented physical occupations toward those that are highly skilled and where workers draw on their full creative potential to make decisions rather than be bound by dictated routines and processes. (P. 23)

 

In the current climate, this part of the report will be politically delicate. It’s not easy to identify areas of shrinking long-term employment during a time when society needs to pull together. Martin and Florida do address this concern, emphasizing that “our aim is not to lop off the peaks, but to raise the valleys.”

 

The report describes Ontario’s strong statistical advantage in tolerance and diversity, compared to other jurisdictions. At the same time, Ontario lags behind its competitors in some key areas of education and innovation.

 

Recommendations

One of the great strengths of their report is the specificity of their recommendations. It may come as a surprise to some, but the strongest recommendation is to strengthen education, not just at the post-secondary level, but at the early-childhood level:

 

There is an enormous opportunity for our province here. While we must work to help all Ontarians improve their skills and qualifications, the greatest opportunity of all lies in early childhood development. (p. 24)

 

In a graph entitled “Returns to investment in human capital relative to age,” the report shows that money spent on progams for children in the first three years of life has the greatest rate of return. The report cites a pre-school program in the US, run at a cost of $19,000 per child, in which the social results paid back a 9:1 cost-benefit ratio. Closer to home, the report also cites the Toronto-based Pathways to Education program, which helps high-school students in at-risk neighbourhoods to graduate and continue into post-secondary education. This program is achieving “a long-term benefit to society of $12 for every dollar invested in Pathways, according to the Boston Consulting Group.” (P. 34)

 

The report makes other specific recommendations on infrastructure and energy.

 

[…] we propose the province orient its infrastructure strategy around a simple goal – to speed the movement of goods, people and ideas and reduce wasted time spent commuting. (P. 27)

 

Rising energy prices are leading to quests for lower costs on a sustainable basis. As we search for alternate forms of energy supply, we may find it advantageous to integrate more tightly our energy systems for transportation, heating, and electricity use; these are now largely independent today. (P. 28 )

 

Clustering

Taken as a whole, Martin and Florida’s recommendations are focused on one goal: to enable the conditions necessary to sustain the density that their research indicates is present in all outstanding economic communities today. They call this “clustering,” the results of which are “mega-regions.”

 

Today, the shift from suburbs and metropolitan areas to mega-regions composed of multiple cities and suburbs is the next step in the more intensive use of urban space beyond the previous period of metropolitanization and suburbanization. These mega-regions reflect the natural progression of geographic space from agricultural villages to merchant towns to industrial cities to postwar suburbs, made up as they are of interconnected sets of core cities and their surrounding suburbs. (P. 28 )

 

The mega-region around Toronto is not just the GTA. It is an area that stretches from Kitchener-Waterloo to the west, down through Buffalo and Rochester in the United States, over to Ottawa and eastward to Montreal.

 

What makes Martin and Florida’s analysis exciting is this marriage of geography and economics. They acknowledge the strong influence of Jane Jacobs on their current thinking. They argue that while traditional economics has often disregarded place and location, our future prosperity will depend on our recognition of the critical importance of the mega-region.

 

The mega-region is our main source of connection to the world economy and main competitive asset. The stronger it gets, the stronger the province will be in the global competition for talent, creativity, investment, and jobs. To do so, we must encourage density and concentrated development and improve our infrastructure broadly to increase the velocity of the movement of goods, people, and ideas. (P. 35)

 

Martin and Florida refer to an analogy between the effect of “clustering” and the scaling up of biological organisms. Another analogy that comes to mind is that of the evolution of microprocessors. In order to increase computing power, we’ve had to increase the density of the microprocessors, reducing the heat dissipated and increasing the speed and efficiency of each generation of design. This may be a good way to view the challenges that lie ahead for our social infrastructure: to increase velocity, we need to increase density and reduce the energy consumed.

 

How does all this affect real estate?

We’re experiencing a gradual, long-term shift in how we think of “home” and “neighborhood.” Thinkers like Jane Jacobs and Richard Florida have powerfully influenced the way we perceive the places we live. I recommend Florida’s recent book, Who’s Your City, to anyone facing a major step in their life-path. This is not about whether February is a good time to list your house… it’s about the kinds of criteria that home buyers and sellers should be including in their thought processes.

 

It’s important that we inform ourselves about the very real issues that will affect our lives and our children’s future. The Martin-Florida report puts down some markers which we will have to recognize. The authors are not tentative in their conclusions!

 

Further reading

The full report, Ontario in the Creative Age, can be found at the following web site:

 

http://www.martinprosperity.org/research-and-publications/publication/ontario-in-the-creative-age-project

 

Roger Martin is Dean of the Rotman School of Management at the University of Toronto.

Richard Florida is Director of the Martin Prosperity Institute and a professor of Business and Creativity at the Rotman School of Management.

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One thought on “Review of Martin-Florida Report

  1. Pingback: The 3Ts – Technology, Talent and Tolerance « James and Joanne’s Blog

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