>> the last paragraph makes sense. otherwise, the author commits the post hoc ergo propter hoc fallacy. <<
June 27 (Bloomberg) -- Time for a brainteaser.
You're a patriotic American with a 17-year-old daughter, and you just won $102,000 in a lottery. One catch: The rules say the money must be spent for the public good.
You could give Uncle Sam the cash to repair roads and bridges. It turns out, though, that $102,000 is the total average cost of a four-year college degree, including tuition, fees and foregone earnings. Can you justify investing the money in your Goth child?
Absolutely, judging from "The New Geography of Jobs," Enrico Moretti's persuasive look at why some U.S. cities have prospered in recent decades while others have declined.
The short explanation for these diverging fortunes is that towns such as Seattle are teeming with college-educated workers in high tech. So giving your daughter the right education could boost both the economy and her earnings.
Tune out, for a minute, the grim news about student-loan debts reaching $1 trillion and graduates struggling to find jobs. Investing in a four-year degree produces an inflation- adjusted annual return of more than 15 percent, according to research from the Brookings Institution in Washington.
Moretti is a professor specializing in labor and urban economics at the University of California, Berkeley. He has combed through U.S. census data and teased out a secular trend.
Over the past three decades, education has become a great divider, he says. Even as communities desegregated racially, they became more segregated scholastically.
Conurbations with many college graduates, including Boston, San Jose and the Raleigh-Durham research triangle in North Carolina, have become "brain hubs." They offer higher wages and longer life expectancy.
At the other extreme are traditional manufacturing centers such as Flint, Michigan. In between stand cities that could flip either way, he says.
This sounds blindingly obvious. Yet the winnowing has profound implications for today's gnawing debate about why inequality has reached a level not seen since before the Great Depression.
Joseph Stiglitz and others have framed today's income disparity as a conflict between the top 1 percent of earners and the remaining 99 percent. For Moretti, the more consequential divide lies elsewhere -- between the 45 million workers who have a college education and the 80 million who don't.
Education has long been a driver of a productive economy. That's one reason why the U.S. made such rapid gains after public high schools became widely available early in the 20th century, Moretti says. Today, innovation is becoming what manufacturing used to be, America's "main engine of prosperity," he argues.
Without question, innovation is throwing off dream jobs. Moretti introduces us to a digital programmer who designed a starship for "Avatar" and a mathematician who blended colors for "Ratatouille" and "Toy Story."
Not everyone can create video games or discover breakthrough medications, of course. Only some 10 percent of U.S. jobs are in the innovation sector, Moretti says. Yet the presence of these workers creates demand for local services, which provide the vast majority of today's jobs.
Luring biotech scientists and software engineers to town creates more work for plumbers and yoga instructors. Everyone in town winds up earning more than they would elsewhere.
One drawback is that the cost of living also runs higher. Nor is there an easy fix for the Flints of the world, contrary to what Richard Florida suggested in "The Rise of the Creative Class."
If all it took to ensure success were a flood of creative, college-educated kids, uber-cool Berlin wouldn't have such high unemployment, Moretti says. To get a Silicon Valley cooking, you need an intellectual star like William Shockley to draw a bunch of "hot minds" to your startup in the orchards. One thing leads to another and, sure as Moore's law, California ends up producing more patents than any other state, with New York and its Silicon Alley a distant second, Moretti says.
To show how these forces play out, Moretti recalls what happened to Seattle. Three decades ago, the city depended heavily on manufacturing: Think Boeing Co. and truck maker Paccar Inc. Employers were scaling back and unemployment was high.
Then Bill Gates and Paul Allen decided to move their software company to the city of their youth. So Microsoft Corp. put down roots near Seattle.
As Microsoft grew, Seattle became a magnet for other high- tech companies, including Amazon.com Inc. What's more, millionaire Microsoft alumni set up some 4,000 new companies, a majority of them around Puget Sound, Moretti says. By his estimate, Microsoft can be credited with creating 120,000 jobs for workers with limited education and 80,000 for those with advanced degrees, including doctors and architects.
So how can we boost the number of innovation workers in America and, by extension, create more jobs for everyone else? The answer should be clear: import them or grow our own.
Giving work visas to more foreign engineers and scientists would be a cheap solution. Educating more Americans would be costly, yet good for the nation's future, assuming students can be persuaded to major in computer science, chemical engineering and microbiology.
Why not do both?
"The New Geography of Jobs" is published by Houghton Mifflin Harcourt (294 pages, $28). To buy this book in North America, click here.
(James Pressley writes for Muse, the arts and leisure section of Bloomberg News. The opinions expressed are his own.)