1st Year Presentation

June 4, 2009

At Aalborg University PhD students are required to give a 1 Year progress report. A professor (different from the supervisor/s) acts as opponent. A discussion about the project usually follows with other professors and students. In my case there were 15 people and I obtained critical feedback for my project, from professors and students. For these I’m very grateful.

Here it is my presentation, not all slides were presented as I didn’t want to surpass the 25 minutes. I had some technical problems, but of course with presentations, we always have to count on Murphy’s Law.

Anyways, I welcome any other idea.

AAG Conference 2009. This week (22-27 March) has been an excellent learning and networking experience. All imaginable subjects related to geography had their opportunity to show their state-of-the-art. I enjoyed many good presentations and debates in the field of economic geography, and many other interesting areas. There were 6500 geographers, from 60 countries (1500 non-American).
The only thing that I missed was that this year in Las Vegas (2008 Boston, 2010 Washington D.C.) there were not enough entertainment activities in the area. Just kidding.
This was my presentation, I was one of the 15 people who presented on the strand of Entrepreneurship and Geography, part of the Economic Geography section.
I have learnt many things, and I will give you a summary of things that impressed me the most, especially for my research area. But this will be in 2 weeks, right now I’m on vacation. I’m in California visiting good friends.

Last week, Mikael Kau the Director of the Project EnergiByen (The Energy Town) in Frederikshavn, came to give a presentation about the city. It was organized for a lecture for the Urban Planning students, but many phd students (some of them friends of mine working in this project or similar), professors and few other well dress people join the meeting. We were around 50 people. He made a presentation in English, because the master level is taught in English and maybe almost half of the students are usually non-Danish speaking.

I really enjoyed the presentation and following discussion. It’s a great project. It gives an identity to the town to be the “be the first medium-sized city in the world to be exclusively supplied with electricity, heat and power for transportation from renewable energy sources”. The date for this will be 2015, and the 25.000 people of the main city, also called Frederikshavn (out of the 65.000 of the municipality), will be getting al the energy from renewable sources. One of my favorite features it’s the citizen interplay with the project, which I believe it’s crucial.

The city was greatly impacted in the mid 90’s when the shipyards closed and 7.000 direct employments were lost. This was a great shock for the city. Around that time it started loosing population and many feared for the fate of the town. In 2006, the Energy Camp, where many energy specialists join, recommends Frederikshavn, for its characteristics to become a renewable energy town. The city officials embraced the project and the national government supported them.

We all hope this is not only a Public Relations project, this has to be a real one. In one way reminds me when Kennedy told the American people, who were feeling depressed by the Soviet Union having the total lead of the spatial race, that the USA will put the man on the moon. In its proper scale people of this small city can feel they can become a beacon for the renewable energy planning.
Out of the many technical questions that I did not get, one professor criticized the project saying that it’s not actually 100% renewable, because out of the trash that will be incinerated, much is not renewable (plastic and paper), but anyways, I think it would be impossible to separate what is renewable and not. The other issue is the cars and trucks. The city can not force the public to have electric cars, but they at least will offer the possibility of stations of hydrogen and/or methane (I’m not quite sure about these resources right now).
Until the end of this summer when the speculation forces put the oil price from almost 200$ to 50$; During these recent years the European zeitgeist has focused on renewable energy because of the global warming. Nobody knows what will be the consequences of the climate change, the Americans are more skeptic about it, while in general the Europeans are more afraid of its consequences (from what I’ve seen specially the Spanish and Dutch… no comments). You can clearly see the difference in a low consumption car advertisement in the US and in Europe. In the US, says “you will run more miles”, and the pundits like to say that the Arabs are the ones getting advantage of the American people (sic). While in Europe this car commercial will say something like: “A greener car, no contaminant”. With the European pundits saying that the global warming is imminent. Anyways, the point is that this EnergyByen project, has been quite influenced by the global warming thing, but regardless of what would happen, I’m confident that Frederikshavn is on the right track. Of course, now we have to hope that private and public interests, with the citizens make it happen.

This project affects the story of Frederikshavn, and I’m sure that if successful will put the city in the map. The city will be attractive for citizens and tourists. I hope for the best.

Today Sterling.dk has bankrupt. On Friday, Martin Profesional lights, in Frederikhavn, laid off 140 employees (of 500), etc. These are the consequences of the financial crisis of 2008. In mid 2007, business analyst, started feeling it, although it was not until late 2007 that media started to report about it heavely. So some people now are getting surprised, but I, and many business/economics students are not getting surprised at all. This affect us all, but I have to say that the sky is not falling. It’s part of the creative destruction. Of course, now it’s WAY easier to say it, now that I’m working for the public sector, instead of private consulting, but it’s the truth.

For example, I’m involved in the experience economy. Many are worried about the current financial situation. Ok, here I would like to share something I wrote in April 2008. In a nutshell: We need to see the big picture.

The issue of how recession can affect experience activities is not trivial. Many consultants and entrepreneurs specialized in the experience economy have started to worry. For example, in February, Stephanie Weaver ( 2008 ) in her blog “Experienceology” dedicated the whole month to explore the question, “What happens when the experience economy meets the recession economy?” Specialists and bloggers were invited to share their views. The public took the question seriously. Even Joe Pine (co-author of “The Experience Economy”), who was invited to participate was actively involved in sharing his opinion. They all probably have some bias and tended towards easing people’s fears. This is understandable since these people have allocated years of learning this subject. In Weaver’s blog, all answers defending the importance of the experience economy were quite reasonable (I also participated); however it seems that at the moment participants have forgotten to take into account the importance of the big picture. Andersson and Andersson (2006), give clear examples to explain the demand for the arts and entertainment products through time. Although it is quite hard to make economic comparisons over time, when looking at the economic trends during the last century, it seems clear that “the impact of economic growth on the consumption of recreational goods and services has been substantial” (ibid).

One issue is to look at arts and entertainment consumption, as percentage shares of the total consumption expenditures in developed market economies. From 1975 to 2002 there has been a considerable increase in arts and entertainment consumption in all countries* surveyed (OECD, 2004). Another main factor chosen by Andersson & Andersson (2006), are the annual hours of work from 1870 to 1979. Western Europe and North America have a strong increase in leisure hours, “the most pronounced case being Sweden where the number of working hours decreased from 2.945 hours to 1.461 hours after a century of industrialization.” (ibid.) An increased life expectancy must also be taken into consideration. In 1900 it was 49,2 and in the year 2000 it is up to 77,3. By 2050 it is calculated that the average life expectancy will be 81,9 years (ibid).

These and other factors, such as the progressive increment of years people spend on education before working, show that in the earliest phase of industrialization 30% of a person’s lifetime was spent working, and 40% of one’s time was spent sleeping and eating. Therefore “little free time remained for entertainment, the arts and other recreational activities for members of the working class. A young person can today expect, after education, to work less than 9% of the total expected lifetime.” (ibid)

Yesterday I had the opportunity to present to the Team Project at Frederikshavn. My supervisor and my colleague Isaac were with me. I’m really excited with the project, meet the people and specially getting an outstanding feedback. I have to say that this is a raw presentation that will be improved after the discussion we had.

Unemployment in Denmark.

August 14, 2008

Crazy low unemployment in Denmark

( 2006-2008 ) Crazy decrease of unemployment in Denmark

Unbelievable. I always heard that unemployment rate could never be below 3.5% or so, because that is frictional unemployment. But during these last months is going quite low. I guess is because the way they measure it at Statistics Danmark. Or is sound proof of my macroeconomic class 101 about the Phillips Curve, that is the direct realationship between a high employment and high inflation.

I just read the book “Who’s Your City” by Richard Florida (2008). He basically builds upon the theories he explained in his last books (2002 and 2005) and recent articles. For the record, I have to say that since I read “The Rise of the Creative Class”, as a mandatory reading for an Economic Development Class at Georgia Tech, I did not like his “theories”. However, the more that I read from him I think he has some very good points.

I already watched a video of a recent presentation, so many things he said were familiar to me. I put a link to the website of the book. Here I’m writing some of the things that I considered while I was reading the book. I will later share other ideas about the book.

 

This is NOT a book review.

Because the book was published in 2008, it was nice to read updated information. The idea of the mega-region or megacity is very compelling. I’m sure that anyone reading his book has to believe that, if interested in innovation, there is not a chance to avoid living in a big metropolis. Besides, “the share of the world’s population living in urban areas increased from just 3% in 1800 to 14% in 1900. By 1950, it had reached 30%. Today, this number stands at more than 50%. In the advanced countries, three-quarters of people live in urban areas.” (p. 18-19, quoting UN reports)

Although I do not fully agree with his explanation about the economic growth theory (p. 61-67), I found it very useful. He explains how the economy is tied to geography since prehistorical times. He quotes A. Smith, D. Ricardo, A. Marshall, Schumpeter, R. Solow, P. Romer and finalizing with Jane Jacobs. I have read some of each one, but I have never read anything from Jacobs, so I think her book “The economy of cities” is going to be in my list, although for now, the insights of Florida will do.

 

People: Rooted or Mobile?

Another thing of the book I found interesting was his concept of the people who are rooted or mobile (although I think income per capita has a big influence). Something that really shocked me was that 40 million people in the U.S. who move every year; 15 million make significant moves of more than 50 or 100 miles (p. 6) Of the people who move, 52% of them do it to find new housing (up/down grade, etc.). Another 26% say the move for family reasons and a 15% of the Americans move on account of work (p.83-84). Florida says “Still the notion that we move for job persists, despite evidence of the contrary. Ever since I became interested in the question of how people choose where they live and work, I’ve routinely asked my students where they plan to go after graduation”.

After reading this I wonder how big the difference in Europe is. How many million Europeans travel more than 100 kilometers a year? My first thinking is that only a tiny fraction of the American 15 million. I also wonder how many of them don’t do it for job purposes. However, I keep finding more and more younger people who might break this European historical trend. For example, my younger brother and wife just graduated from the university, I asked them where they would like to move, and they had consistent answers with what Florida describes. My brother would like to move in Paris, but not to hypothetical well paid job in Teruel, Spain. In fact not only my brother, many other students here in Denmark that I asked, want to move to cool places, referring to Copenhagen, Berlin, London. For the record my sister in law would like to move back to her native city, which explains the value given to live close to family and friends. This relates to the 2007 study by Powdthavee, which says that you should make 85,000 GBP a year, just to make up for the lack of unhappiness you feel from being far from family and friends (p.87)

 

Do you really want your city to grow?

Florida also addresses one of my doubts, that is, when cool places keep attracting people, there is a moment when certain population of the creative class — the ones that are not well paid, that is musicians, bohemians, etc, against engineers, architects, etc. —  can not afford to live in a more demanded area. Then what happens; can still this city be creative? He answers “escalating real state prices can inhibit innovation” (p. 140).

 

Here lays a conundrum of urban development. Many small cities dream to grow, in fact they are loosing population and they’re afraid they will disappear. All of them dream of glorious past times when the city was in the map. They want their young people to stay, their population to grow and the employment to thrive. However, no matter what they do they keep getting small. Then in the other hand we have other small cities, that for x or y reasons they keep getting bigger and bigger, growing and growing. For example, the project that I’m involved in is Frederikshavn, a provincial city in north Denmark, that has been decreasing in importance during the last decades. I compare this city with my hometown, Alcalá de Henares. A city that has been growing to a tremendous rate. People are happy that there is more money in the city, and unemployment is low. In the case of Frederikshavn, the housing is extremely cheap, while in Alcala is extremely expensive, this gets accentuated comparing by their income averages. That is, I guess that in Frederikshavn people use 25% of their income in housing while in Alcala the expense more than a 50%. But is there a limit? Perhaps we have already reached it. Policy makers in each city have a tremendous role to keep the city alive (Florida explains this in the section “leaders of squelchers” p. 180-181).

It’s a question to analyze if a city really wants to grow or not. I think this should be the first question for a running mayor. Do you want the city to grow? At what cost?

 

In a city like Frederikshavn, they would love to see their houses prices rise. But what happen when people keep moving in, and moving in and housing prices became prohibitively expensive? In certain way that’s what happened to me. I had a nice consulting job in Alcala, close to my family, but my wife and I were not willing to pay  300.000 Euros for a small two bedroom apartment. Many people like me, either leave the city or live there struggling. Therefore a city should be careful with what they ask for. Population pyramids, immigration and industrial trends need to be considered.

 

Something between own and rent

Florida considers that the idea of homeownership might belong to an expired industrial era (p. 142-143). Everyone says that renting is throwing the money out of the window, while buying a home is probably the hardest decision to take in someone’s life –“where”- (although it impact you more, choosing what to study right after high school –“what”-  or falling in love with someone –“who”- , does not seem very analyzed decisions). Buying a house limits yours mobility.

 

He follows “The creative age may well require alternative forms of housing – something between ownership and renting”. It’s quite interesting that this type of housing already exists in Denmark, this is cooperatives or Andelsbolig (Andel means “a part of something” and Bolig means apartment or house). I found this type of housing an excellent option and we have been seriously looking at several andelsbolig. To the best of my knowledge this form of housing does not exist neither in Spain, Germany, USA nor Latin America. I wish they had this type of housing more widespread everywhere. I think Florida got it right on this one.

 

Another main subject of the book that I can mention is the “Geography of Happiness”, an exciting subject, although obviously somewhat shaky. I also enjoyed reading about the different rankings for places where to live.

I will later use some of its argument, quotations and bibliography for my work. I’m grateful for his work.