Pittsburgh ruled the first machine age from 1880–1920. U.S. Steel was the dominant company with the region enjoying a divergent advantage. Either you were in Pittsburgh or you were nowhere. Detroit (with Ford at the center) ruled the first machine age from 1920–60, albeit a convergent economic geography. Many cities, not just Detroit, got rich on manufacturing. Detroit’s decline also signaled the end of the first machine age. Silicon Valley and Intel ruled the divergent second machine age from 1960–2000. The popping of the dot-com bubble signaled the onset of convergent times with tech booming in other markets such as Austin, Texas. Here’s the question I posed in “The Second Machine Age Is Dying“:
Silicon Valley made computing processing power, a raw value added good like steel. A few people got rich. We’re waiting to see what the analogy to the Detroit automobile will be. Silicon Valley is the Pittsburgh of the second machine age. Which place will be the Detroit of the second machine age?
I’ve taken a month or so to ponder the next Detroit and Ford. I’ve settled on Seattle and Amazon. Recently, Seattle was compared to Detroit as a cautionary tale. Detroit’s lack of economic diversity put too many eggs in the automotive basket. First, Chrysler was too big to fail. Later, General Motors would be too big to fail. Similar to Detroit, Amazon now dominates Seattle.
Worldwide, Amazon has more employees than Microsoft and Google, combined. As the company exploded, so has the population of Seattle. For 2012–13, Seattle was the fastest-growing large city in the entire United States. Amazon, rightly so, gets the credit (or blame) for the influx of new residents.
But Amazon’s employment boom doesn’t make it Ford. Seattle’s population boom doesn’t make it Detroit. How Henry Ford transformed the economic geography of the world:
Henry Ford was a revolutionary. He changed all of 20th-century America. We’re living in Henry Ford’s world right now. …
… Transportation in America was terrible once you got away from the railroads. Terrible! It was an enormous burden. I mean if you’re living on the farm, getting around on land is one of the biggest problems people have.
The Ford Model T solved the big problem of getting around on land, breaking the link between economic prosperity and the railroad. Ford re-shaped the geography of the country. How is Jeff Bezos and Amazon re-shaping U.S. geography?
Amazon’s Model T is the cloud. Amazon Web Services sells computing power, akin to Ford selling horsepower. The cloud breaks the link between labor and firms, labor and geographic job markets. Software engineers don’t need to move to Silicon Valley to find Silicon Valley work. They could be in Bangalore, India. The cloud doesn’t care.
When Pittsburgh was king, physical geography determined the economic geography. Wealth diverged. Detroit leading the way, automobiles obliterated that natural advantage. Silicon Valley enjoyed a different kind of divergent advantage. Stanford University innovation was unencumbered by legacy costs and development. California was the frontier, where the ambitious could escape the stifling ways of the old guard. First the integrated chip and then the microprocessor, Silicon Valley was the epicenter of the computing revolution. Wealth diverged. Seattle leading the way, the cloud is undermining historical happenstance. We are living in the world of Jeff Bezos right now.
Jim Russell, a geographer studying the relationship between migration and economic development, writes regularly for Pacific Standard.
