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            On a sweltering Thursday evening, Chip Taylor and Carrie Rodriguez are singing to a crowd of several hundred outside at Shady Grove, an Austin institution.


            Get me back to Austin, oh, damn, I miss that town.

             I got them sweet tequila blues coming down


            Waitresses hustle through the crowd taking drink and food orders, even delivering to people standing in the back. A bartender wearing a "Keep Austin Weird" T-shirt sells longnecks from a tub of ice.

On the rear lawn, families sit on blankets, strollers nearby. Up close there are a few pony-tailed men who were fans when Taylor wrote, "Wild Thing," a Sixties hit for The Troggs. Scattered throughout are fresh-from-work twentysomethings in khakis and short sleeve shirts or skirts and blouses, here more for the beer and conversation than the free concert.

            The concert is sponsored by KGSR-FM, one of the highest rated stations in town despite playing a ridiculously eclectic list of artists -- British popsters Coldplay, bluesman Chris Smither, folkie Patty Griffin, hometown boy Lyle Lovett – in a business usually rewarded by generic repetition. (The station's collection of in-studio recordings is regularly the top seller at Waterloo Records, another independent, homegrown Austin product).

            This free concert, believe it or not, is an example of what helps make Austin an emerging economic powerhouse.

            Just ask Richard Florida, a professor of economic development at Carnegie Mellon University in Pittsburgh and the author of "The Rise of the Creative Class," the hottest book about creating wealth to come along in years.

             If an economic theorist can become a celebrity, Florida has earned his star. This fall he toured like a rock 'n roll act, appearing in Seattle, Green Bay, Copenhagen, Denver, Raleigh, Winnipeg, Miami, Toronto, San Antonio and Washington, D.C., among other cities. Mayors, city council members and city managers clamor for his recipe to transform their sleepy city into the next hot spot.

            What Florida tells them turns the conventional wisdom about economic growth upside down and shakes hard. Talent matters. Place matters. Not corporations. “Creative” workers, a diverse core group including scientists, information technology workers, engineers, artists and writers are the decisive competitive advantage driving economic growth.

 When it comes time to decide where to settle, those creative workers are looking for attractive cities, not just attractive companies. "Place is becoming the central organizing unit of our economy and society, taking a role that used to be played by large corporations," he explains. "The way you match people with jobs now is not the company, it's the place. The place for a company provides a thick pool of people to dip into. For a person, a place provides a thick labor market. So a place really provides the organizing glue for this creative economy by bringing people and companies together."

            Florida has created a ranking -- what he calls the Creativity Index -- a barometer of a region's long-term economic potential. Places that score high on the index, he says, are the places that have been and will be successful at generating the new ideas, new technologies and innovations that increase living standards and wealth.

            Not surprisingly, San Francisco tops his list. What is surprising is the city in second place -- Austin. Austin is a smallish city in a hellishly hot climate with a modest airport, no major league sports teams and modest architecture.

             But Florida says Austin hustled to do follow two vital tracks during the 1980s and 1990s. It attracted some high tech companies but didn’t stop there. It fostered a culture of entrepreneurship that spawned dozens of homegrown companies, attracting hundreds of millions of dollars of venture capital. And then it worked hard to make Austin a vital place to live, supporting the local arts and recreation scene. It became a place to work for a high-tech company by day and go see -- or play in -- an alt country band by night.

“A great place doesn’t mean these great monuments that so many cities have – opera halls, concert venues, magnificent stadiums,” Florida says. “What makes a great place is just what you saw in Austin.”

            Cities that provide the amenities and atmosphere the creative class desires -- outdoor recreation (forget that new sports stadium), great neighborhoods, clubs, cafes, restaurants, low barriers to becoming involved, a diverse pool of potential friends -- attract the kinds of workers that grow their economies.

             "Access to talented and creative people," Florida writes, "is to modern business what access to coal and iron ore was to steel making."



            When I meet former Austin Mayor Kirk Watson the morning after the Shady Grove show, I mention the diversity of the crowd. Watson turns my comment around and talks about the diversity of the city.

             Within walking distance of Shady Grove are funky Mexican and Italian restaurants, he notes. An RV park -- that's right, a recreational vehicle park -- sits next door. What other city has an RV park within its limits and just minutes from downtown? The surrounding neighborhood is mixed income with a new upscale development across the street from older, smaller homes. Across the street is Barton Springs Pool, a spring-fed watering hole. Nearby is a place to rent bikes on the trail that runs from downtown up into the hills. If you prefer water as your mode, you can rent canoes to paddle down what the locals call Town Lake, the part of the Colorado River that meanders through south Austin. Zilker Park, which features blues shows on Wednesday nights, is just down the road.

            Across town, the city has leased hangars for the old airport to the Austin Film Society for a public/private venture, which has quickly proved to be a Hollywood favorite, producing more than a dozen films and pumping $70 million into the economy in just three years.

            And, of course, Austin bills itself as the live music capital of the world. For the weekend ahead, The Austin Chronicle, the city's healthy alternative weekly (135 pages this week) lists more than 215 venues featuring acts as varied as blues band Indigenous, folkie Ellis Paul, alternative popsters The Pernice Brothers and spastic metalhead Ozzy Osbourne.

            To Florida, that kind of cultural and social diversity -- and openness --  is a key ingredient enticing the creative class.

             "It's not simply bike trails and music clubs and venues and hip places to go and restaurants," he says. "I think what people are looking for is the ability to plug in...That's the thing about an Austin or a Seattle or a Boston. They're so much more open and free form."

            Tyson Tuttle, the product manager for Silicon Labs, a homegrown Austin computer chip maker that employs 380 people, moved from Orange County after attending Johns Hopkins and the University of California at Los Angeles, partly for the job and partly for the Austin atmosphere.

            "In Orange County, all my friends lived an hour in every direction behind a gate," he says. "In Austin, I love the political diversity. I love the music scene. Things here are compact. It's a more interactive social environment here than it was in southern California. For both me and my wife, that was a really important aspect."

            Another striking thing about Austin is the lack of chains. Oh, there is a fast food place here and there, and a few chain drugstores. But casual local places dominate. Places like Guero's on South Congress, famous for its soft tacos. Or Curra's on Oltorf, known for its margaritas. Lining South Congress, just across the bridge from downtown, are dozens of homegrown bohemian businesses, including the Hotel San Jose, once a fleabag and now transformed into the cool, minimalist choice of celebs when they're in town.

            "That's the kind of thing a community that gets it does," Florida says. "It emphasizes the authentic and the unique instead of becoming filled with generica. That goes back to people's need for community. They want to see that they are living somewhere, not nowhere. That's what those authentic things say: you're living somewhere."

            The city also aggressively set aside green space, purchasing 15,000 acres in the surrounding hills through a $65 million bond referendum during the go-go years of the late 1990s. As mayor, Watson sold the project to environmentalists by saying it would preserve space for endangered species, then turned around and sold it to business and real estate interests by telling them it would attract the kinds of talent the city needed -- and guarantee clean water for the chip fabrication operations. Lately, Austin has been pushing residential development downtown.

            Florida’s theory had its beginnings in his doubts about the prevailing wisdom explaining economic growth.

            As the booming 1990s came to a close, there were just too many examples that didn't fit. The old principles were simple. A city needed needed a great job base to grow. To create the jobs, it needed to lure corporations. To lure the corporations, it needed to give them tax breaks and other financial incentives.

            "There was something missing," he says. "I began to think that maybe there was this unexplored question why people chose certain cities."

            So he started to ask why people moved. For the job, of course, they answered. But then he asked a second question: What cities did you look in for jobs? Did you look in Cleveland? No. Did you look in Buffalo? No. Did you look in Cincinnati? No.

            Well, where did you look? The answers were often the same: I looked at Boston, Chicago, New York, Washington, D.C. and San Francisco.

            "Then I began to hear weird things like, 'I really want to move to Austin'," he says. “So that was the genesis of the theory. It just took off from there."

            The notion of a "creative class" as diverse as software engineers and musicians driving economic development sounds gimmicky upon first listen.  Robert Cushing, a retired University of Texas sociologist, didn't think much of Florida's theory when the Austin American-Statesman asked him to look at several theories of economic development last year. After some study, he came away convinced that the creative class theory was the one best at explaining why people moved to some cities -- and those cities thrived -- and not others.

            Cushing's work for the newspaper revealed that taxpayers moving to Austin had significantly higher incomes than those who left. From 1992 to 2000, for instance, he found more than twice as many people moving from Pittsburgh to Austin as vice versa. Those leaving Pittsburgh had a much higher average annual income -- more than $58,000 -- than those coming the other way -- roughly $44,000. From 1992 to 2000, according to Cushing's work for the paper, Austin gained $4.3 billion in income in similar trades with cities. 

            Ray Gindroz, a partner with Urban Design Associates, a Pittsburgh consulting firm that has guided the rebirth of numerous cities including Cincinnati, Charlotte, Cleveland, Louisville and Baltimore, says he’s seen the creative class dynamic work. “The character and quality of a place make a difference,” Gindroz says. “He’s saying cities should make that a part of their economic development policy. And I think what he says rings true.”

             Florida tells officials from cities with ailing economies that tapping into the creative energy is hard work, but it can be done. "The market left alone will not give you this," he says.

            Each city, he says, has the ingredients to attract creative people. The hard part is finding the right recipe and the right chef.  

             "No longer do you need to have the work hub," agrees Watson. "No longer do you need to be a financial center or have large quantities of land or a large population because you can access labor and you can access markets and you can access capital any time of the day virtually anywhere in the world.

            “Regions that never before thought that they could be economic powerhouses have the opportunity to be economic powerhouses."


            What Austin has been learning in the last couple of years is how to live with growth and the downturn in the technology industry. Real estate prices, which soared at the century ended, have come down a bit, but remain high.  Traffic has mushroomed. Moreover, the city exemplifies a disturbing trend found in places atop Florida's ranking: cities with high growth also had the largest income inequality. Florida says cities – and academics -- will have to address that. “My book is the first step,” he says. “I think what we really need to do is understand the ecosystem of creativity.”

Cushing wonders whether workers in a down economy will look only at the job and less at the amenities offered by a city, dampening the advantage that Florida says places like Austin have.

            So the city is taking another look at itself, shoring up some efforts and creating new ones. It's revamping the economic development plan. It’s looking at removing some of the red tape facing businesses.

And it's embraced a "Keep Austin Weird" campaign supporting local business. Symbolic of that are the vendors at the new Austin airport. All of them are hometown merchants; there isn't a McDonald's or Borders among them. 

            "One of my rules when I talk to other cities is it's important to re-evaluate, let a critical eye come in so don't start believing your own bull," Watson says. "It's part of what a creative, smart place ought to do.”


n      END ---


 THE TOP TEN on FLORIDA’S CREATIVITY INDEX (of the 49 regions over 1 million people)


    • San Francisco
    • Austin
    • (tie) San Diego, Boston
    • Seattle
    • Raleigh-Durham
    • Houston
    • Washington-Baltimore
    • New York
    • Dallas





49. Memphis

48. Norfolk, VA

47. Las Vegas

46. Buffalo

45. Louisville

44. Grand Rapids, MI

42. (tie) New Orleans, Oklahoma City

41. Greensboro, NC

40. Providence, RI


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