William J. Holstein

What Florida Suggests About The Future of The U.S. Economy
Dec. 15--I've been on a short working vacation in Florida and offer my readers these reflections. I was in the Ocala area, Orlando and then St. Augustine.

Florida seems to represent the type of economy that Americans have been building in the past 15 or 20 years. It is based on the premise that people will keep moving to Florida, so real estate is a no-lose investment. It is based on a never-ending stream of tourism. And it is based on a huge retail infrastructure.

But that is precisely the kind of game that is winding down, because it was all built on Americans and Floridians having access to cheap, or free, money.

So there is a lot or real estate available. You can buy a condo in Orlando for about half of what it would have cost a couple of years ago. Driving along the ocean south from St. Augustine toward Daytona, I saw dozens of real estate developments and expensive homes that were either for sale or almost vacant, and this was during the peak season for Florida. All over, we drove by vast shopping centers with parking lots only partially occupied. Many stories have simply been shuttered. Dollar General seems to be everywhere, specializing in large quantities of cheap stuff. They're doing well because that's all many Americans can afford.

I didn't go to Disney or Universal, but I understand that their volumes are down sharply. Which is entirely predictable.

Overall, Florida has experienced its first outflux of people. Some retirees are still moving in, but other people are moving out, presumably in search of brighter economic futures.

So if the old model doesn't work, what does? I spent some time interviewing business and educational leaders in Orlando, for my book. It turns out that they are well-advanced in building what I consider to be knowledge-based economic activity. There are more than 100 companies there specializing in simulation. The roots of this industry reach into the huge defense sector as well as into Disney and the entertainment complex there. The University of Central Florida, which is hardly known nationally, has emerged as a major engine of simulation research, and some of that is being commercialized. In short, Orlando is nursing a "hot spot" of true innovation. It is attempting to give birth to a new industry, which has huge potential for education and medicine. That's the good news.

I submit to you, dear readers, that Florida is a microcosm. As a nation, we have to wean ourselves from forms of economic growth that were comfortable and easy for the past 15 years, and refocus our energies and resources on creating new industries.