Inequality.org

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Institute for Policy Studies

To Nurture Business Creativity, Try Equality

Researchers from the University of Toronto have found that many of the world’s most successful economies are combining high levels of innovation and creativity with low levels of inequality.

Richard Florida, a senior editor at The Atlantic, also directs the Martin Prosperity Institute at the University of Toronto’s Rotman School of Management. He obsesses over issues around entrepreneurship and innovation, creativity and competitiveness. In other words, a typical business school muckety-muck.

Once upon a time, business honchos at Florida’s level seldom gave equality a passing thought. And if they did, that thought would almost always be negative.

Any significant commitment to equality, the conventional business wisdom held, leaves enterprises ill-equipped to innovate and successfully compete. Without a fairly hefty dollop of incentivizing inequality, business leaders agreed, how could we ever spur entrepreneurs onto greatness?

Florida and his University of Toronto colleagues have, of late, been putting this conventional wisdom to the test. They’ve developed a “measure of creativity and competitiveness” they call the Global Creativity Index. And they’ve compared national ratings on this GCI with global indices that measure everything from innovation and efficiency to business climate and entrepreneurial know-how.

Highly creative nations are less likely, on balance, to suffer from  deep class divides.

Out of all this data came a ranking of the world’s most innovative and creative economies. Did business activity in these economies, the Florida team then went on to ask, “necessarily lead to greater levels of economic inequality?”

The answer that emerged: a thundering “no.” Florida and friends found that “highly creative nations are less likely on balance to suffer from the deep class divides that beset the U.S. and U.K.”

“The Scandinavian and Northern European countries as well as Japan,” Florida writes in a new essay on his work, “combine high levels of innovation and creativity with much lower levels of inequality.”

Americans, Florida argues, need “to reframe the dialogue over America’s economic future.” They ought to be far more worried by their nation’s “lagging performance” developing a creative class — a lag “magnified” by America’s “high level of inequality” — than by the “danger of being surpassed by China.”

“Economic growth increasingly turns on the full development of each and every single human being,” Florida sums up. “Real sustainable economic prosperity can and must benefit the many, not just the few.

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