Knowledge economy should evolve beyond Industrial Age Ver. 2.0

As much of the economy becomes more knowledge-based it continues to retain a key feature of the Industrial Age: geographic concentration in urban centers. That’s according to this piece recently appearing in Governing. Instead of a post-industrial economy, the economy is being rebooted as Industrial Age 2.0. As in ver. 1.0, work is centralized. Or clustered or agglomerated as it’s termed in the article. Less so in manufacturing plants but in office towers and sprawling info tech industry campuses requiring knowledge workers to show up there every workday just as in the industrial economy.

But that has distorted housing markets, driving up home prices and making nearby housing unaffordable for many. That in turn is expanding the geography of metro areas as knowledge workers seek more affordable housing in communities distant from the office towers and tech campuses in their centers. That drives a level of commuting to work metro areas’ 20th century transportation systems were not designed to handle, creating congested and unbearable “super commutes” that suck hours from each work day. Clustering and the agglomeration run up against fundamental limits. There is only so much residential real estate for knowledge workers to live on adjacent to the office towers and campuses. The law of supply and demand dictates only a limited amount will be affordable.

Analysts such as those cited in the Governing article contend the holy grail of the knowledge economy is the same as that of the offices and assembly lines of industrial economy: proximity. “You wouldn’t actually get the innovation if you took the people working on those things and spread them around the country,” Salim Furth, director of the Urbanity project at the Mercatus Center at George Mason University, told the publication. “We rely on face-to-face contact to come up with great innovation and changes.” Buy does that hold true most the time for most knowledge workers? Likely not. Knowledge work is both an individual and collaborative effort. And not all collaboration nor even the most productive must occur in same physical location. Lots of it can be done virtually using today’s information and communications technology.

The knowledge economy should evolve beyond Industrial Age Ver. 2.0 amid rising concern over the environmental impact of commute transportation demand, housing affordability and declining population health status (long commutes have a deleterious impact).