How the Crash Will Reshape America (Charlotte: 2009, credit card, university)

[jstevens44]

How the Crash Will Reshape America

Richard Florida, author of The Rise of the Creative Class, has an interesting article in the new Atlantic Monthly that is worth a read:
http://www.theatlantic.com/doc/200903/meltdown-geography

In it, he argues that a diversity of business sectors and "talent clustering" in "high-metabolism places" will help protect it from decline. As the economy shifts "toward idea-driven creative industries" some places will be luckier than others.

On Charlotte, he writes:

This phenomenon, a sort of lottery whereby some places win merely by outlasting others, will not be limited to towns built around automobiles, or even around manufacturing. As the recession continues and large companies in a variety of industries fail, their remaining competitors may grow stronger, along with the places where those competitors are situated. Charlotte, North Carolina, offers an interesting case study. The financial crisis left one of the city’s two big banks, Wachovia, ailing; this fall, Wachovia was acquired by San Francisco–based Wells Fargo, in a deal that will cost the city many thousands of jobs. But things could have been much worse; the deal also preserved many jobs. What’s more, at roughly the same time, Bank of America, Charlotte’s other large bank (and the biggest bank in the U.S.) bought Merrill Lynch for pennies on the dollar.

A business truism holds that when your competitors are retrenching, it’s a great time to grow your market share. Deborah Strumsky, an economist at the University of North Carolina at Charlotte, told me she believes that in the end, both Charlotte’s banking industry and Charlotte itself will emerge from the crisis all the stronger: “The Wells Fargo deal has saved thousands of jobs by keeping Wachovia afloat. More importantly, Bank of America has taken to the banking crisis like a shopaholic with a new credit card; it has been bargain-hunting and cutting some astonishing deals. Bank of America will come out the other side far better than in any fantasy it might have entertained previously.”

In recent years, Charlotte’s leaders have made some smart decisions about how to attract businesses and professionals, enabling the city to grow into the nation’s second-largest traditional banking center; in the lottery of business failure and consolidation, it was well positioned to win. But it was also lucky, and last fall, it escaped losing, big-time, by no more than a hair’s breadth. Overall, the roster of places that benefit from the failure of their champions’ rivals will probably be pretty short, and the names on the roster somewhat unpredictable. Especially among cities built around declining industries, more places will be weakened than strengthened; as with all lotteries, most players will lose.

It's a long article, but if you haven't seen it yet, it's worth the time.

[anifani821]

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