The Great Reset

1. Economic crises spark major resets, transforming society and industry

Great Resets are broad and fundamental transformations of the economic and social order and involve much more than strictly economic or financial events.

Cycles of crisis and renewal. Throughout history, economic crises have led to periods of significant transformation, known as Great Resets. These resets are not merely economic events, but comprehensive shifts in society, technology, and infrastructure. They typically unfold over two to three decades, reshaping the economic landscape and ushering in new ways of living and working.

Innovation during downturns. Contrary to popular belief, crises often spur innovation. For example, the 1930s, despite being a time of great economic hardship, was one of the most technologically progressive decades of the 20th century. During these periods, outdated systems collapse, making way for new technologies and business models to emerge and thrive.

• Key aspects of Great Resets:
  • Technological breakthroughs
  • New infrastructure systems
  • Shifts in urban development
  • Changes in consumption patterns
  • Transformation of industries and job markets

2. Past resets reshaped cities and infrastructure, fueling new growth

Infrastructure provides a skeleton on which to grow a new economic model. The infrastructure investments we make now will determine the kind of economy we have in the future.

Urban transformation. Previous resets dramatically reshaped the urban landscape. The First Reset in the late 19th century saw the rise of dense industrial cities, while the Second Reset after the Great Depression led to suburbanization. These changes were not merely physical but fundamentally altered how people lived and worked.

Infrastructure as catalyst. Each reset was accompanied by significant investments in new infrastructure. Railroads, streetcars, and subways in the First Reset, and highways in the Second Reset, enabled new patterns of development and economic growth. These infrastructure investments provided the foundation for new industries and ways of life to emerge.

• Examples of transformative infrastructure:
  • First Reset: Railroads, electricity grids, telephone lines
  • Second Reset: Interstate highways, suburban development
  • Current Reset: High-speed rail, digital infrastructure

3. The current reset demands a shift from manufacturing to creative work

The real key to economic growth lies in harnessing the full creative talents of every one of us.

Creative economy ascendance. The current reset is characterized by a shift from a manufacturing-based economy to one driven by knowledge, creativity, and ideas. This transition is as fundamental as the shift from agriculture to industry during the First Reset. It requires a reimagining of work, education, and economic development strategies.

Embracing human creativity. In this new economy, human creativity becomes the primary driver of economic value. This shift demands that we tap into the creative potential of all individuals, not just a select few. It requires a transformation in how we think about work, moving beyond routine tasks to jobs that involve problem-solving, innovation, and creative thinking.

• Characteristics of the creative economy:
  • Knowledge-intensive industries
  • High value on innovation and ideas
  • Emphasis on human capital over physical assets
  • Increased importance of cities and urban clusters
  • Growing significance of the service sector

4. Megaregions are becoming the new engines of economic growth

Megaregions are to our time what suburbanization was to the postwar era. They provide the seeds of a new spatial fix.

Rise of megaregions. As the economy shifts, so does its geographic organization. Megaregions – large networks of metropolitan areas – are emerging as the new centers of economic activity. These regions, such as the Boston-New York-Washington corridor, concentrate talent, resources, and infrastructure, driving innovation and growth.

Density and connectivity. Megaregions benefit from their size and density, which facilitate the exchange of ideas and resources. They offer diverse job markets, cultural amenities, and educational opportunities that attract talent and foster innovation. The success of these regions is increasingly tied to their ability to provide efficient transportation and communication networks.

• Key megaregions in North America:
  • Bos-Wash (Boston to Washington, D.C.)
  • Chi-Pitts (Chicago to Pittsburgh)
  • Char-lanta (Charlotte to Atlanta)
  • Cascadia (Seattle to Portland)
  • SoCal (Southern California)

5. High-speed rail could revitalize declining industrial areas

I believe that investing in high-speed rail systems may be the single most important thing we can do to bring back once-great Rust Belt cities.

Connecting communities. High-speed rail has the potential to reinvigorate declining industrial areas by better connecting them to thriving economic centers. By shrinking travel times between cities, high-speed rail can effectively expand labor markets and create new economic opportunities for struggling regions.

Infrastructure for the future. Investing in high-speed rail is not just about transportation; it's about laying the groundwork for future economic development. It can spur new patterns of urban growth, encourage more sustainable development, and create construction and operational jobs in the short term while facilitating long-term economic growth.

• Benefits of high-speed rail:
  • Reduced travel times between cities
  • Increased economic integration of regions
  • Potential for transit-oriented development
  • Environmental benefits compared to car and air travel
  • Improved competitiveness with other global economies

6. Service jobs need upgrading to drive future economic prosperity

We need to support the growth of higher-paying knowledge, professional and creative jobs, and make sure that greater numbers of workers are prepared for them. But that will only get us part of the way there. As service jobs continue to grow and be point-of-entry jobs for many, we need to make them into better, higher-paying jobs.

Reimagining service work. As manufacturing jobs decline, service jobs are becoming increasingly important. However, many of these jobs are low-paying and offer limited opportunities for advancement. To drive economic growth and reduce inequality, it's crucial to upgrade these jobs, making them more productive, innovative, and rewarding.

Innovation in services. Just as manufacturing jobs were transformed in the past, service jobs can be reimagined to be more fulfilling and productive. This involves applying principles from high-performing companies to service industries, such as empowering workers to innovate, providing ongoing training and development, and using technology to enhance productivity.

• Strategies for upgrading service jobs:
  • Increasing wages and benefits
  • Providing career advancement opportunities
  • Incorporating technology and innovation
  • Emphasizing customer service and experience
  • Developing specialized skills and knowledge

7. Rethinking home ownership is crucial for economic flexibility

Letting go of it [home ownership] as the centerpiece of our collective aspirations might be among the healthiest, most liberating steps we can take.

Mobility over ownership. The traditional American Dream of home ownership may be hindering economic growth and individual mobility. In a rapidly changing economy, the ability to move for job opportunities is crucial. Renting, rather than owning, can provide the flexibility needed in today's economy.

New housing models. The reset calls for new approaches to housing that balance the desire for stability with the need for flexibility. This could involve new forms of rental housing that offer more security and customization than traditional apartments, or new financial products that make it easier to transition between owning and renting.

• Advantages of increased rental housing:
  • Greater workforce mobility
  • Reduced financial risk for individuals
  • More efficient use of housing stock
  • Potential for innovative housing solutions
  • Decreased vulnerability to housing market fluctuations

8. Education must evolve to nurture creativity and innovation

We need a learning and development system that is in sync with the new creative economy.

Fostering creativity. The current education system, designed for an industrial economy, is ill-suited for the creative economy. A new approach to education should focus on nurturing creativity, critical thinking, and problem-solving skills rather than rote memorization and standardized testing.

Lifelong learning. In a rapidly changing economy, education can't end with formal schooling. The new education system must embrace the concept of lifelong learning, providing opportunities for people to continuously upgrade their skills and knowledge throughout their careers.

• Key elements of a new education system:
  • Emphasis on creative problem-solving
  • Integration of technology and digital skills
  • Project-based and experiential learning
  • Flexibility to adapt to changing economic needs
  • Partnerships between education and industry

9. Government's role is to enable and accelerate organic economic shifts

Government's central task is to enable and accelerate these shifts by helping to create the fertile environment in which they can grow and develop.

Facilitating, not dictating. While government has a crucial role to play in economic resets, it cannot drive the process alone. Instead, its primary function should be to create an environment conducive to organic economic shifts, supporting emerging trends rather than trying to preserve outdated economic models.

Strategic investments. Government can play a key role by making strategic investments in infrastructure, education, and research that lay the groundwork for future economic growth. This includes supporting basic research, developing new infrastructure systems, and updating regulations to accommodate new economic realities.

• Key areas for government action:
  • Investment in infrastructure (e.g., high-speed rail)
  • Support for education and workforce development
  • Funding for basic research and innovation
  • Regulatory reform to support new business models
  • Policies to promote economic mobility and flexibility

Last updated: October 10, 2024