Creative class war: how the GOP's anti-elitism could ruin America's economy.

• Author: Florida, Richard

Last March, I had the opportunity to meet Peter Jackson, director of The Lord of the Rings trilogy, at his film complex in lush, green, other worldly-looking Wellington, New Zealand. Jackson has done something unlikely in Wellington, an exciting, cosmopolitan city of 900,000, but not one previously considered a world cultural capital. He has built a permanent facility there, perhaps the world's most sophisticated filmmaking complex. He did it in New Zealand concertedly and by design. Jackson, a Wellington native, realized what many American cities discovered during the '90s: Paradigm-busting creative industries could single-handedly change the ways dries flourish and drive dynamic, widespread economic change. It took Jackson and his partners a while to raise the resources, but they purchased an abandoned paint factory that, in a singular example of adaptive reuse, emerged as the film studio responsible for the most breathtaking trilogy of films ever made. He realized, he told me, that with the allure of the Pangs trilogy, he could attract a diversely creative array of talent from all over the world to New Zealand; the best cinematographers, costume designers, sound technicians, computer graphic artists, model builders, editors, and animators.

When I visited, I met dozens of Americans from places like Berkeley and MIT working alongside talented filmmakers from Europe and Asia, the Americans asserting that they were ready to relinquish their citizenship. Many had begun the process of establishing residency in New Zealand.

Think about this. In the industry most symbolic of America's international economic and cultural might, film, the greatest single project in recent cinematic history was internationally funded and crafted by the best filmmakers from around the world, but not in Hollywood. When Hollywood produces movies of this magnitude, it not only creates jobs for directors, actors, and key grips in California. Because of the astounding level of technical innovation which a project of this size requires, in such areas as computer graphics, sound design, and animation, it can germinate whole new companies and even new industries nationwide, just as George Lucas's Star Wars films fed the development of everything from video games to product tie-in marketing. But the lion's share of benefits from The Lord of the Rings is likely to accrue not to the United States but to New Zealand. Next, with a rather devastating symbolism, Jackson will remake King Kong in Wellington, with a budget running into upwards of $150 million.

Peter Jackson's power play hasn't been mentioned by any of the current candidates running for president. Yet the loss of US. jobs to overseas competitors is shaping up to be one of the defining issues of the 2004 campaign. And for good reason. Voters are seeing not just a decline in manufacturing jobs, but also the outsourcing of hundreds of thousands of white-collar brain jobs--everything from software coders to financial analysts for investment banks. These were supposed to be the "safe" jobs, for which high school guidance counselors steered the children of blue-collar workers into college to avoid their parents' fate.

But the loss of sonic of these jobs is only the most obvious--and not even the most worrying--aspect of a much bigger problem. Other countries are now encroaching more directly and successfully on what has been, for almost two decades, the heartland of our economic success--the creative economy.

Better than any other country in recent years, America has developed new technologies and ideas that spawn new industries and modernize old ones, from the Internet to big-box stores to innovative product designs. And these have proved principal force behind the U.S. economy's creation of more than 20 million jobs in the creative sector during the 1990s, even as it continued to shed manufacturing, agricultural, and other jobs.

We came up with these new technologies mad ideas largely because we were able to energize and attract the best and the brightest, not just from just from our country but also from around the world. Talented, educated immigrants and smart, ambitious young Americans congregated, during the 1980s and 1990s, in and around a dozen U.S. city-regions. These areas became hothouses of innovation, the modern-day equivalents of Renaissance city-states where scientists, artists, designers, engineers, financiers, marketers, and sundry. entrepreneurs fed off each other's knowledge, energy, and capital to make new products, new services, and whole new industries. Cutting-edge entertainment in southern California. New financial instruments in New York. Computer products in northern California and Austin. Satellites and telecommunications in Washington, D.C. Software and innovative retail in Seattle. Biotechnology in Boston. The economic benefits of these advances soon spread to much of the rest of the country, as Ohio-born MBAs in Raleigh-Durham built credit-card call centers in Iowa, and Indian immigrant computer whizzes in Chicago devised innovative inventory software that brought new profitability to car factories in Ohio, Kentucky, and Tennessee.

But now the rest of the world has taken notice of our success and is trying to copy it. The present surge of outsourcing is the first step--or if you will, the first pincer of the claw. The more routinizable aspects of what we consider brainwork--writing computer code, analyzing X-rays--are being lured away by countries like India and Romania, which have lower labor costs and educated workforces large enough to do the job. Though alarming and disruptive, such outsourcing might be manageable if we could substitute a new tier of jobs derived from the new technologies and ideas coming out of our creative centers. But so far in this economic recovery, that hasn't happened.

What should really alarm us is that our capacity to so adapt is being eroded by a different kind of competition--the other pincer of the claw--as cities in other developed countries transform themselves into magnets for higher value-added industries. Cities from Sydney to Brussels to Dublin to Vancouver are last becoming creative-class centers to rival Boston, Seattle, and Austin. They're doing it through a variety, of means--from government-subsidized labs to partnerships between top local universities mad industry. Most of all, they're luring foreign creative talent, including our own. The result is that the sort of high-end, high-margin creative industries that used to be the United States' province and a crucial source of our prosperity have begun to move overseas. The most advanced cell phones are being made in Salo, Finland, not Chicago. The world's leading airplanes are being designed and built in Toulouse and Hamburg, not Seattle.

As other nations become more attractive to mobile immigrant talent, America is becoming less so. A recent study by the National Science Board found that the U.S. government issued 74,000 visas for immigrants to work in science and technology in 2002, down from 166'000 in 2001--an astonishing drop of 55 percent in a single year, and matched by similar, though smaller-scale, declines in other categories of talented immigrants, from finance experts to entertainers.

Part of this contraction is derived from what we hope are short-term security, concerns--as federal agencies have restricted visas from certain countries after September 11. More...