I would like to share this video from Tim Harford, first because I liked one of his book on economics (probably it would be good to get the last one “Adapt”), and second, because this video has an interesting teaching that can not be enough remembered by all of us. It’s about an illness [not really an illness] that a smart doctor, with experience in the Spanish Civil War and WWII, found among our species.

Anyways, here below is the way Tim Harford explained about him. Below I typed the part when he specifically introduces this specific illnes.

“Archie Cochrane all his life fought against a terrible affliction, and he realized it was debilitating to individuals and it was corrosive to societies; and he had a name for it, he called it the ‘god complex’. Now I can describe the symptoms of the ‘god complex’ very easily, so, symptoms of the ‘god complex’ are… no matter how complicated the problem, you have an absolutely overwhelming belief that you are infallible right in your solution. Now, Archie was a doctor, so he hangs out around with doctors a lot, and doctors suffer from the ‘god complex’ a lot. Now, I’m an economist I’m not a doctor, but I see the ‘god complex’ around me all the time: in my fellow economists, I see it in our business leaders, I see it in the politicians we vote for. People who in the face of an incredible complicated world, are nevertheless absolutely convinced that they understand the way the world works. (…) The world is simply far too complex to understand in that way.”

I love this quote, and the whole speech.

Unfortunately, I think like all of us, he’s not free from this illness. In the same speech to prove his point he mentions than 10% of the American business disappear every year. That is for him an example of the crucial trial-and-error process.

Trying to explain the entrepreneurial dynamics only through these entrepreneurship rates… it’s as he would say: “simply far too complex to understand in that way“.

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PhD Pre-Defence

July 4, 2011

There are different types of Pre-Defences. In Aalborg is a voluntary event that some people do after delivering the thesis as a rehearsal of the presentation, others do it 1 or 2 months before delivering the thesis. I have done the latter. It was very good and 15 people from different fields participated. I asked them to read different sections of my first draft. I was very pleased.

The presentation here, it was done with the purpose to spur comment.

One of the interesting things is that many criticized the subtitle that I had. I was not sure about it, and at the end I asked for a vote to drop it or not (even though it is not a democratic process). No one voted in favor to have it. So I dropped it from this version.

Now I have a little more than a month to finish it.

This is a continuation of my last post: Reflections on the IEDC Conference

I attended the roundtable “How effective are today’s incentives in tomorrow worlds?”. There were 9 roundtables simultaneously and this was the largest. It had around 25 people, all from local governments (no State). It was remarkably directed by a gray haired facilitator. I loved the way he facilitated the conversation and asked interesting questions. Now I will transcribe my notes:

Facilitator: Who has free land for potential new comers? 6 out of 28 people.
Who would like to have it? 5 raise their hand.

Who has cash incentives? The majority. In the last 10 years, they have given 500,000$, 2million and one guy said 10 million.

Facilitator: They looked at how much money they have given in the last years, and how much they have collected. They have only gave 600,000$, but that they have got 16 million dollars in tax revenues. “A pretty good return of investment”. (later he changed to over 10 million dollars, so I’m not sure about the figure).

Most of the incentives (which can be tax abatement or other types of support – it is not always cash), is usually done over 3 years. Some said in 7 years or 10.

Usually money is for potential incomers, but sometimes they would give money if a company is planning to leave, and or they have an offer on the table from another place.

They all offer workforce training programs.

They all have guidelines, that is no strict policies (check list)

Tax benefits were usually based on investment, but in today’s economy the main thing is jobs.

They know big companies receive training to get governments money. They know the lingo, etc.

But they know that companies will hardly leave only because of the money. They also know that sometimes they just want attention, not money. “If they call you to complain about traffic, for example, it was advised not to excuse yourself by saying that this is not your department! You have to be the facilitator and help the firms!” (I loved that answer).

One Mayor of a small city in Milwaukee: “I was impressed yesterday, about what the keynote speaker said, that people first choose a city, then a job. I never though in that way!” (Richard Florida influences :)

Lady: How can we promote quality of place?

Facilitator: that’s very interesting, but it’s another subject, let’s stay focused.
Lady, a little in doubt: But, quality of place is also an incentive to bring companies! We have a great living standard, but we don’t know how to market it.
People agreed, this was also important, and the facilitator let them talk a little about it. (they use images with sailboats and kids with tricycles in their pamphlets).

Young fellow: We’re trying to focus on certain industries.
Facilitator: Yeah, we all are trying to do that.
Young fellow: We in Anytown, Colorado, we’re trying green energy, etc.
Facilitator: Yeah, we all try to target industries, the cluster idea, but boy if there is a bakery that will hire 25 people, we all run like…

Facilitator: In a very hypothetical case, that the federal government will ban cash incentives. Would you agree? Yes = 8. No=3. Undecided= A few.

Facilitator: It would be good, because at the end of the road, we’re fighting against each other (Some nodded) But why would it be bad? Let me ask among the ones who said -no-.

Man who raised his hand fastest when answering no: We will lose firms… In this globalized and competitive world, they will leave us.
Facilitator: So you’re saying that other countries will out-compete us with financial incentives.
Man: Yes.
Facilitator: Could not they do it now?
Man: Errr… yes. But… it would be worse…

Facilitator: Many here have not participated. Any of you have any comment?

I raise my hand.
“I’m a phd student, researching on LED, so I’m really happy to be here, because you’re the guys running the real show. My perspective from the academic research is somewhat different. Most research is very skeptical of incentives. Mainly for two reasons, first because as you said, you’re fighting against each other, and second, it’s really difficult to measure the impact of them. I mean sometimes it can be done (pointing with my hand to the facilitator’s example) but it can be very biased”.

(small silence)

3 old guys, including the facilitators, were hard on me.

Experienced man: “You got your research wrong!! In terms of recruiting, we have got many jobs because of the incentives we have given…. ”

Me: “Just to clarify, I’m talking about cash incentives”.

Experienced man: “Cash incentives, we rarely do it, but they are important…”

Facilitator (looking at me): “I tell you, we gave so little money, and we have got so much! It really works!!

Another guy also was hard on me, I could see his lips moving, but at that point I could not really hear much more nor take notes.

It would have been completely futile for me to quote authors and years, to prove a point, like in an academic conference. These people, they knew, they have been there, they have seen it with their eyes…

Two worlds. I hope you get my point, regardless of what field you come from.

One of the most interesting questions was when the facilitator asked who will increase/the same/decrease their cash incentives the short term future.
Decrease = 8 (our current economic situation won’t let us do it)
Increase = 8 (we have to do it, we have no option)
The same = 4

What a great topic for research, uh!! It would be great to see in 5 years, how these cities have performed in several aspects. It would be such an interesting and publishable paper :) I thought about asking for their business cards, but first I ran out of biz cards (I forgot to bring extras!), and after my controversial question, I don’t know how happy they would be to give me info. I’m sure, like always, some researchers have already done that. I have to find these papers… For my post-doc :)

This morning I attended the funeral of Henrik*, a friend of the family. He is Danish and we met him when he started going out with our good friend Isabel. They dated a couple of years and last summer they got married. He, like his wife, was a superb economist. Henrik graduated from one of the best, if not the best business school in Scandinavia. He successfully worked in a major trading company, but having in his genes the potential to be a highly successful entrepreneur, he started his own company with the support of some friends. He was the managing director, and work hard hours for the business to take off. A few months ago, we invited them for dinner, but only she could come, he stayed working.

This week he committed suicide. He left letters with kind words to his family and wife. He assured them it was not their fault, that he loved them and knew they loved him, but that he could not take it anymore.

As today was his funeral, I could say many good things about him, but honestly, he was a good man. I though he loved a lot our friend Isabel.

This is a very personal story, that I’m sharing here. But I feel I have to write about it. As this blog is about economic geography, local development and entrepreneurship, many times I have talked about the complexity of this issues. Recently I added a post about how hard it is to be an entrepreneur. Some will say, that they have never said it was easy. I say, policy makers and academic gurus, should not only avoid to say “it’s easy” (even though many times they imply it), they should clearly say that it is usually really hard.

Probably Henrik did not took his life because of his occupation, but because of a mix of reasons beyond our comprehension. However, knowing a little the situation, his entrepreneurial edge seems to have played a role in this tragic situation.

This experience today, should remind each of us the challenges of entrepreneurship. Something, that sometimes researchers, and probably everybody, forget.

Rest in Peace, brother.

*The names have been changed for privacy considerations.

Just browsing the news during lunch I see the conservative American radio-tv commentator Glenn Beck, apologizing or something he said. This picture is shown in the article:

I focus in the poster behind this gentleman. Entrepreneurship it says, and then two hands trying to grab or magically making float a light bulb.

I have the impression that this is a promotion of the classical idea of Entrepreneurship. The 1000 times repeated mantra that anyone can have an idea, work hard and become rich. The proof is the thousands of individuals who have done it.

Light bulb is a popularly known icon for an idea. This was “coined” by Alva Edison. I mean, I don’t think that anyone took a picture with a light bulb before him :)

We all have seen this picture below. And perhaps listened to the stories of how patience he was. How he tried his experiments over and over… Persistence is the key ingredient to success…. bla, bla, bla…

They have put in our mind the idea of Edison working in his lab, coming up with something that we all admire. Sure, he was a genius, but he was not alone.

Successful entrepreneurship is about working with people. Even though Edison is alone in the pictures, there should have been a picture of many. He had a strong network of people who provided valuable ideas, not only for the light bulb, but many other inventions. See for example the article in Wikipedia: Edison Pioneers.

Entrepreneurship is not about individualism. I thought that, but I was wrong. Ideas are good, but are worthless until someone get things done. That is an entrepreneur. But entrepreneurship lives within a system. And if we want economic development, and progress we need the right socioeconomic innovation system. An environment, that I would say in most of the times it’s not necessarily accord to the ideas aired by Beck.

I come from a family of entrepreneurs, some firms did ok but the majority failed. I know how the lives of these people are, because it was mine. The vast majority (for example in the US, every year 2 million Americans start their own business) is a bad life. It really breaks my heart to see people buying the story of a successful individual, and just keep trying day after day, without the right network. Let’s not encourage wrong ideas about entrepreneurship.

So, Mr. Beck, I really like this promotion of entrepreneurship. But maybe you could have, instead of two hands reaching the light bulb, maybe a diverse team holding it…

If you have problems wathing the video, just click on his name.

Ed Glaeser was last night at The Daily Show with Jon Stewart. A comedy show based on news that I always find funny. I started watching it when I went to study to the US in 2003, a that time I was surprised how they criticize the Bush administration. Anyways, yesterday Glaeser went to the show, one of the economists I like to follow. So Ed Glaeser and Jon Stewart, a perfect mix. He was promoting his very interesting book “Triumph of the City: How Our Greatest Invention Makes Us Richer, Smarter, Greener, Healthier and Happier” Penguin. I think it’s a book I’d like to read. See today’s book review at The Economist. I would say his approached looked a little bit like Richard Florida’s love for urban areas, and that’s great we need many more guys supporting the concept of the cities from different points of view

I was surprised how young he is. I always pictured him as a 60 yeard old guy.

Here it is a podcast of Ed Glaeser in Freakonomics: Why Cities Rock. From February 18. I really liked it. I didn’t like some stuff, but I enjoyed the idea of building up in San Francisco Bay Area.

Yesterday there was an article about Vallejo in the Financial Times. It says:

For an image of the future that is guaranteed to chill US civic leaders and bondholders alike, there is no better place to look than among the potholed streets and boarded-up houses that litter the Californian city of Vallejo.

It made me feel good that last year I went to the city to make a case study about it. I stated at Univ. of California, Berkeley during the whole Spring semester 2010. A few days ago I finished writing a paper called “VALLEJO, CALIFORNIA. FROM THE FRINGES OF THE CITY, A CASE FOR THE ‘CITY REGION SYSTEM OF SURVIVAL’. I wrote it to present it at the DIME-DRUID ACADEMY Winter Conference 2011, this week.

This paper is very heterodox, and is a paper on progress. The main purpose of it was to make a summary of theories I learned about Local Economic Development at the Berkeley libraries. I then tried to connect the case of this city (or district) of the San Francisco Bay Area, and its significance to entrepreneurship and innovation policy. Innovation from a broad sense, for the ones that now what I’m talking about.

I got much help from the locals of Vallejo, and one of them, the editor of the popular Vallejo Independent Bulletin, asked me to send him a copy of the article when I would finished it. Keeping my word I sent it to him, and he has published it online.

My article at the Vallejo Independent Bulletin

I am grateful he did it, because I got a few comments from the citizens. This made me realize that my ideas are still quite confusing. So I wrote a comment. It seems it has an anti-spam feature, I told the editor. For now I’ll put it here.

Since I read the comments of Ab and SomeoneElse on my paper about Vallejo and the Bay Area, I have been thinking a lot.

I am grateful for the comments. In particular, because I have realized that I have not made a good job to express my ideas. This is hard, as English is not my native language. But also because of the internal fight I have had. I am a PhD student specializing in local economic development, but it is the case of Vallejo that has made me changed many of my preconceptions. Now I would like to comment on the comments.

Ab says: -“the last line is spont on”- and then quotes me: -“Vallejo … end up like many cities in third world countries, where a few (police and firefighters?) live in affluence while the vast majority of citizens live and die in misery”- [police and firefighters added by Ab].

There are two things. First it should be understood that even though Vallejo has been a city, since the 19th century, I refer in the paper as a “district” of the city-region of the Bay Area. I know this may sound weird for any local (of the Bay Area), but coming from abroad I can clearly see that the Bay Area is a large metropolitan area, highly connected in its economic geography.

The second thing is that I don’t necessarily say that police and firefighters are the few, or the elite of Vallejo, nor of course the elite of the city-region. True, they are an interest group, and as I referenced in the paper they have a well known “symbiotic relationship” with the political power of the city. But going back to my first point, one has to look beyond the city limits of Vallejo. Making $150,000 as a safety employee it’s certainly high, but what about the bankers and real estate leaders who make 10 times or more, in the different districts of the Bay Area?. This is probably a stupid comparison, but what about the profits of a company of the city region, like Apple making 100,000 times more. But still, what is their responsibility towards their neighbors?

“Someone Else” points out we need to think outside the box. I’ll try to do it. There is so much anger against the public safety employees, and probably with a reason. But this is not going to solve the problem of Vallejo. Thinking outside the box… What about a Bay Area police? After all, the criminals operate in all the Bay Area, not only in one particular city. I am NOT an expert in safety, but I see that the New York City Police Department, covers 8 million people, more than the 7 million of the Bay Area. The Bay Area has already the BART police, that would fall inside the Bay Area Police. The 9 counties police departments (sheriffs), a heritage from a bygone era could also be reduced. I repeat, I have no idea about this field. But as an economist I would think that cities (and their tax payers) would avoid the “competition” among them. And that is the idea: work more towards collaboration, than competition.

Of course, safety should not be the only thing. In fact should be the least. The most important things would be towards, education. I had the chance to be in UC Berkeley, one of the most amazing universities in the world. Also visited friends in Stanford. Great places. I know all these ideas have been said many times before, even from the former Governor (I still can’t believe people voted for an European actor). But there should be more mechanisms to get more funding for the rest of more ordinary higher education. However, what I think is of really concern, is the high inequality in the school districts across the Bay Area. In Europe we have many problems, don’t get me wrong! but with the exception of a few countries (like UK), every child has the same amount of money allocated for education, regardless in which neighborhood was born. There is an urgent need for a more cohesive education across the Bay Area.

More cohesiveness should be as well for access to justice, healthcare, transportation, innovation and entrepreneurship policy, etc in the Bay Area. That’s what I am trying to say in the paper. Because the different parts of the city region are so interdependent.

The same goes to having X or Y Mayor. Sure, many question if Davis should be the Mayor. But I think it does not matter if X or Y, or Z would be Mayors. Neither if Vallejo hires the best consultants, or the best City Manager. My hypothesis is that it does not matter who is in the leadership of Vallejo. The city will not survive.

Unless, they realize that: 1) Vallejo is dependent of the city-region. (This does not mean surrender). 2) There is need of active coordination, at local (Vallejo) and city-region level. That is stop fighting at local and inter-local level, and start collaborating.

If not, and now I clarify, the city region of San Francisco, will become more and more as third world country, “where a few live in affluence while the vast majority of citizens live and die in misery.”. Many in the elite, as the mentioned Andy Grove in the paper, have noticed it.