(2012-04-26) Moretti New Geography Of Jobs

Enrico Moretti's new book is The New Geography Of Jobs ISBN:0547750110

Arnold Kling loves it.

  • Without referring to Charles Murray, Moretti blows Coming Apart totally out of the water, replacing Murray's moralistic sociology with solid economics.
  • Also, Bryan Caplan should be worried. Moretti comes down very hard in favor of the benefits of education, notably College Education, and those of us who are on the skeptical side of that debate will have to pay attention to his analysis.
  • Many service jobs are embedded only in local trade. Every city needs to have an export sector. You can think of this export sector as providing the "foreign exchange" that enables the city to import and the profits with which to support the local service sector. Moretti sees a pattern in American geography. Cities that export innovative products and services are thriving. They also have more jobs and higher-paying jobs in the non-locally-tradable sector. Meanwhile, cities that (used to) export manufactured products are declining. (see Cities And The Wealth Of Nations)
  • Also, the way he goes about illustrating his points is captivating. He takes on Richard Florida's "cultural creatives" theory by describing Berlin, where the culture is avant-garde but the economy does not produce enough exports to sustain itself (it gets by on tourism and government transfers). Moretti describes the change in job structure through the lens of a Philip Roth novel, and this approach works well.

Jun'2012 update: RussRoberts interviewed Moretti. Here's a listener's guide.

Jul'2012: John Tamny reviews it. Enrico Moretti’s The New Geography of Jobs makes the essential case in support of individual mobility, and for doing so is easily the most important read of 2012. The Cal-Berkeley economic professor’s book is extremely necessary for politicians and commentators alike, and it is despite some conclusions from the author that make very little sense. But before addressing some of the book’s wrongs, it’s worthwhile to address just why it’s so worthwhile... Perhaps the most useful myth that Moretti eviscerates is the one about capital migrating to low-cost workers. This one’s long been very popular and is rooted in the belief that the U.S. economy will soon be hollowed out by workers in India and China willing to do high value work for next to nothing. It’s to some a scary thought, but also utter nonsense... Population Density, or “thick” clusters of workers is a frequent theme in Moretti’s book. Once again, this is a book about the geography of jobs. Though commentators think companies and entrepreneurs seek out cheap labor, in truth they regularly migrate to the San Francisco-s and Boston-s of the world precisely due to the density of workers in those locales possessing the abilities they’re in search of... Sadly for such a wonderful book, Moretti offers up a number of solutions and makes a number of presumptions that are logically false. They by no means wreck a book that this writer highly recommends, but they perhaps blunt the quality of reasoning within.

Sept: Aaron Renn Reviews it.

  • Out of 51 metro areas with more than a million people, Austin ranked 50th on this metric.

  • I know Indianapolis extremely well so wanted to see how it fared in his rankings. I was very surprised to see it rank in the bottom group on basically every map

  • One way economists measure clusters is by using a metric called Location Quotient

  • we can look, for example, at literal clusters of talent by looking at the location quotient of college degree attainment.

  • Also, one can perhaps only recognize stars in retrospect.

  • Moretti himself seems to side with the global city crowd, being a bit enamoured of the vertical style economy

  • While I think Moretti had a lot of great things to say, I think he missed a few points as well.

  • The legion of cities that experienced rebirth after Rust Belt malaise suggests that stars can’t be the entire story, however

  • There’s only one success story that’s at all relevant that he mentions, and that’s the Tennessee Valley Authority (TVA).

  • Where Moretti does provide some hope is in a observations about the genesis of clusters that already exist. For many of them, the key factor seems to be the presence of “superstars” at a critical phase. In our Seattle WA example, Gates and Allen were the superstars.

  • Success in high technology, especially in its formative years, comes down to a small number of extraordinary scientists with vision and a mastery of breakthrough technology.

  • One of the key takeways for me from the book is that cities should be extremely keen not to go backwards... Moretti examined various strategies for trying to turn around one of the “loser” cities, and basically came up empty. They all failed. (Urban Development)

  • A city stuck in a poverty trap faces the same challenges. It is trapped by its past. The only way to move a city from a bad equilibrium to a good one is with a big push: a coordinated policy that breaks the impasse and simultaneously brings skilled workers, employers, and specialized business services to a new location. Only the government can initiate these big push policies

  • There’s just one problem: he never actually cites a single example of where it works for a city.

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