Anthony J. Pennings, PhD


The World is Bubbly: Capital, Cities, and Creative People

Posted on | July 21, 2019 | No Comments

Edited keynote presentation at the “Conference on Urban and Regional Development in an International Perspective” held in Opole, Poland on May 14 -16, 2018. The event was organized by the University of Opole and supported by an European Community Erasmus+ grant.

Greetings from the State University of New York (SUNY) in the Republic of Korea. SUNY Korea is located in Songdo, a new city built out of the Yellow Sea. It was designed as a “smart city” and part of the Incheon Free Economic Zone (IFEZ), along with the Incheon Airport, often rated as the top airport in the world.

Since I’m opening up this conference, I thought it would be appropriate to introduce a juxtaposition with two statements that recently achieved significant currency in popular discussions. These are the “The World is Flat” by Thomas L. Friedman and “The World is Spiky” by Richard Florida.

The World is Spiky

I’m also going to introduce a third statement, “The World is Bubbly,” that points to problems associated with rising asset prices in urban areas and their economic ramifications. I am using “bubbly” to refer to the price inflation associated with urban real estate and how it influences the artistic, creative, and innovative forces that drive much of the economic energy of the city.

Urban environments are becoming storage facilities for global surplus wealth, and consequently, these investments are seriously challenging the economies of major cities. The carbon bubble, in particular, has been creating pockets of excess wealth in significant cities as investors crave the luxury brands, cultural amenities, and increasing security of cosmopolitan urban life.

Low-interest lending rates have also been a significant factor in general asset inflation as accommodating monetary policy by central banks has made borrowing cheap, allowing many others to also participate in asset bubbles. The flows of investment into expensive condos and high rent buildings are problematic because they are pushing out key aspects of the labor force, in particular, the “creative class,”[1] a prime economic catalyst that sets in motion much of the action and innovation in urban economic development.

This post examines the economic importance of cities, the centrality of creative workers, and problems attracting and retaining creative talent. It will critique the role of creative capital and the “spiky world” thesis and discuss issues related to the divide between creative workers and service workers. Also how jobs, income, housing, and transit remain key issues for the future of urban environments, especially in an era of real estate appreciation.

Jane Jacobs and The Economy of Cities

Let me first explain the underlying contention of this presentation. That is that cities are major engines of economic growth and innovation. They are spaces where people interact regularly, and information flows quickly. They attract people who appreciate the intensity of interactions and the cultural and economic opportunities available in urban environments. The renowned urbanist Jane Jacobs followed her classic The Death and Life of Great American Cities (1961) with a treatise on The Economy of Cities (1969) where she celebrated the diversity, the liveliness, the desires, the inefficiencies, and the creativity of urban areas.

Jacobs argued cities had been largely neglected as sources of economic growth. Richard Florida echoed this concern and placed emphasis on the creative class that is attracted to life and work in cities. My own concern follows Florida’s, but I’m concerned that as cities develop policies to become more attractive to the creative class, that they sow the seeds of their own demise by attracting excess real estate capital.

In support of the argument that cities are engines of economic growth is the data from Yale University’s G-Econ Project. They mapped data on global economic activity and provided estimates of “gross cell product” for the entire globe measured at a 1-degree longitude by 1-degree latitude resolution at a global scale. It shows that economic activity is predominately located in urban areas, confirming Jacob’s argument.[2]

The World is Flat

Thomas L. Friedman popularized the idea of global “flatness” in his The World Is Flat: A Brief History of the Twenty-first Century. It refers to the spread of opportunity afforded by a number of historical events and technologies. The collapse of the USSR combined with a set of complementary information and communication technologies (ICTs) around PCs, the World Wide Web, and its Netscape browser broadened the audience for the Internet and spurred the “” era.[2]

These tools made documents and files of all kinds manipulable and shareable, whether they were applications, pictures, text, or videos. Technology also became available for people to collaborate over long distances and from rural to urban areas without actual travel. By not only downloading webpages but also uploading files to cloud technologies and being able to work on them collaboratively, new alliances and interactions could take place.

For Friedman, technology is allowing people from more places to participate in the global economy, even if they reside in regions and countries generally considered peripheral environments. With fiber optic cables spanning land and sea and with satellite signals hopping across geographical barriers, it has become possible for people to connect and compete like never before.

Digital technologies have become “permissive” in that they allow organizations to collaborate, outsource, subcontract, offshore, supply-chain, in-source, etc. These processes are having a significant influence on the world economy and, in a sense, “flattening it.”

Capital is moving to places that had previously been unable to participate in manufacturing or services such as call centers. The result is a “level playing field” with opportunities opening up for previously restricted or hampered environments.

The World is Spiky

Richard Florida countered that the world is “spiky” because economic growth is primarily created in cities, and less so in suburban and rural areas.[3] Like Friedman, he acknowledged that the global economy is significant, but he promoted cities as the major economic generators. He cited the critical intellectual leadership of Jacobs and argued that urban areas are particularly energized by groups of highly educated and skilled workers he called the “creative class.”

He argued that cities would continue to be significant in the world economy primarily because innovation comes from producing spaces that attract and enhance clusterings of creative people. The presence of the creative class provides creative capital – the human ability to create new ideas. And, consequently, we get new business models, cultural forms, and advanced technologies, leading in some cases to whole new industries. Architects, artists, engineers, healthcare professionals, lawyers, scientists, writers, etc. are some of the contributing members of the creative class.

Florida argued the primary economic policy concern for any city, region, or nation is to ensure the constant influx of creative talent. The key to doing that is being mindful that the creative class gravitates to the three T’s: Technology, Talent, and Tolerance. Access to advanced technology, the talent to use it effectively, and an openness to all the different types of people that can contribute to a community are the keys to successful economic growth, especially in urban areas.[4]

The World is Bubbly

This thesis is that the dynamics of global finance capital are both following the creative class into cities and subsequently pushing them out. Increasing global flows of capital and low interest rates due to accommodating monetary policy have pushed up urban real estate, both in terms of vertical heights and inflationary prices.

Wealthy investors are attracted to urban lifestyles because of the availability of cultural activities, leading restaurants, and quality education. Bolstered by the “wealth defense industry” that provides everything from asset management, tax avoidance, foundation setup, to private security forces, capital has become transnational. Global wealth has been looking for appreciating assets to deposit their surplus wealth, preferably detached from the reach of any taxing governments. A preferred target has been “land bank” real estate properties in progressive cities.

While this is not particularly new to primary cities (New York, London, Paris, Seoul, and Tokyo), secondary cities (Boston, Chicago, San Francisco, Washington DC, Shanghai) and even tertiary cities like Vancouver and Austin have seen prices increase substantially in the past decade due to cheap global capital unhindered by national boundaries and regulatory constraints.[5]

Not surprising, Richard Florida’s “creative industry workers” are also attracted to the benefits of urban living conditions. But while creative workers are generally well paid, they cannot universally participate in the asset growth associated with real estate investment in major cities. Global flows of capital and low interest rates due to accommodating monetary policy has pushed up urban real estate, both in terms of vertical heights and inflationary prices, making the world “bubbly.”

Addressing the Urban Crisis

So, what to do about the situation? Below is an interview with Richard Florida on August 3, 2015, that I found interesting. The unedited audio from The Brian Lehrer Show on WNYC public radio can be found here.

Florida was talking along with Steven Pedigo, director of Creative Cities & Civic Innovation at New York University’s School of Professional Studies, about their analysis of New York City’s post-recession economy and the role of the creative economy. In particular, they talked about strategies to relieve urban inequality and how jobs, income, housing, and transit remain vital issues for the future of metropolitan economies.

In his 2017 book, The New Urban Crisis: How Our Cities Are Increasing Inequality, Deepening Segregation, and Failing the Middle Class-and What We Can Do About It, he addresses the growing crisis facing the creative class as well as blue collar and service workers such as police and fire protection that keep the city livable. In addition to the need for higher incomes, many place-based policies need to be addressed that include improving transportation and creating more affordable housing.

Postscript 2020

Three of the most important sources of investment “oligarchic capital” in luxury real estate have declined significantly. China has instituted strict currency controls and its citizens have expressed concerns about racism in the US. Russian oligarchs are struggling with reduced prices of oil, as are the princes of Saudi Arabia, especially in the wake of the coronavirus. Prices are going down as the carbon bubble continues to deflate and less surplus wealth is searching for urban real estate.


[1] Richard Florida actually credits his editors with the term “creative class.”
[2] Robert Friedman (2005)The World Is Flat: A Brief History of the Twenty-first Century
[3] Richard Florida (2005, Oct) The World is Spiky. The Atlantic Monthly.
[4] Richard Florida, Charlotta Mellander, Kevin Stolarick. Talent, Technology and Tolerance in Canadian Regional Development. See also Richard Florida (2004) Cities and the Creative Class.
[5] Saskia Sassen pointed out in her Global City: New York, London, Tokyo that one of the characteristics of the modern global economy is that commodity and manufacturing activities have been spatially dispersed while management and marketing-related services such as accounting, advertising, finance, and management have been centralized in several urban “global cities.”



AnthonybwAnthony J. Pennings, Ph.D. is Professor at the Department of Technology and Society, State University of New York, Korea. From 2002-2012 he was on the faculty of New York University. Previously, he taught at Hannam University in South Korea, Marist College in New York, Victoria University in New Zealand, and St. Edwards University in Austin, Texas where he keeps his American home. He spent 9 years as a Fellow at the East-West Center in Honolulu, Hawaii.


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