Dynamic Economies

A lot of work from both the Brookings Institute and from the Mercatus Center at George Mason University comes across my radar. Oftentimes the perspectives of the two think-tank centers differ quite a bit, but one area where they align is on local economies. Brookings (a center-left think tank) and Mercatus (a Libertarian leaning academic quasi-think tank) both agree that local economies depend on dynamic innovation and thriving centers where people actually want to be. Both agree that attracting competitive companies and driving innovation requires investments in placemaking, not just tax breaks and financial incentives for firms.

Bruce Katz and Jeremy Nowak (both from Brookings) write, “A globally dynamic economy requires that any locality that wants to thrive must invest in the qualities of place that attract and retain residents and firms, in human capital, and in an enterprise environment that enables innovation and business growth.” Mercatus also suggests that places focus on infrastructure and development to attract firms and encourage people to move to them. Mercatus is likely to encourage this growth in an organic invisible hand manner, while Brookings is more encouraging of using the state to intentionally develop infrastructure and systems for growth and network development.

The important lesson is that economic growth and development require meaningful investments in infrastructure. Human capital is the heart of networks and the key to innovation and growth. In order to attract people and to attract companies that can compete in a globalized world, cities need to make themselves livable and attractive to young and dynamic people. Tax incentives are not enough to attract companies for the long term. A company that is willing to move for a simple tax break, is not a company that is in it for the long run. Stable companies that want to grow and develop in one place will want places that are interesting and offer the amenities needed for a thriving 21st century lifestyle. Companies that are looking to make long-term and winning investments need human capital, and in order to attract human capital they need dynamic places where people want to live and set roots.

Competing in a Global Economy

“While competing in this global economy requires new thinking, many cities continue to pursue zero-sum economic development strategies that subsidize stadia and steal businesses rather than incent innovation,” write Bruce Katz and Jeremy Nowak in The New Localism. Our world’s globalized economy scares a lot of people. Add to globalization new technological innovations and the automation of a lot of jobs, and we find threatened people, threatened cities, and threatened industries. The proper response to such threats is adaptation and change, but a more common human reaction is fearful recalcitrance. Rather than go through reinvention, rather than develope new skills, and rather than embrace new changes, cities, states, countries, and the people within them double down on the familiar and the known, using policy to entrench themselves in the familiar jobs of yesterday.

 

Katz and Nowak continue, “These strategies are rarely aligned with smart education and workforce strategies that give workers the technical skills they need to succeed in growing occupations. And reinvestment in neighborhoods, downtowns, and water-fronts still has a long way to go to make up for decades of disinvestment, depopulation, and decentralization.” 

 

Stealing jobs, offering tax incentives to get companies/sports teams to move, and passing policy which prevents companies from automating away common jobs is not a strategy built for success in a globalized world of changing technology. To be competitive in a world where companies can move easily, where ideas can take root anyplace, and where jobs and technology are changing the way we work, cities and governments need to find new ways to build human capital and new ways to get innovative ideas into the economy quickly. Approaching the world and the economy as a zero-sum competition prevents innovation and encourages the short term thinking that leads to the poor strategies mentioned above.

 

The only way to truly adapt to the changing globalized world is to innovate. Protectionism leads to eventual disruption and greater anger on the part of the people whose industry and jobs are being disrupted. Those who lose out to automation without any training or skill development to help them adapt are understandably frustrated, but the proper response is not to dig our heels into the dirt to pull back on innovation and change. The proper response is to embrace change and help people innovate and learn alongside new technology, new jobs/industries, and new institutions.

Cities and Environmentalism

Cities can look like dirty places with no greenery or living plants among the concrete, asphalt, and towering buildings. At the same time, however, cities can be much more efficient and environmentally friendly than rural or suburban places. I live in the Western US and we expend a lot of energy just to move things from one place to another. A lot of the energy we produce just goes into moving water around. For us to get from our homes to our places of work can require a lot of driving by ourselves in a car. And because the West has so much open space, we have built large neighborhoods with houses spaced out from one another, requiring more concrete for sidewalks, more asphalt for roads, and more copper for electric lines.

 

The amount of resources needed to build suburban and rural connections between people is much greater than the per capita need within cities. As Jeremy Nowak and Bruce Katz write in The New Localism:

 

“The linkage between culture and cities also has to do with environmental sustainability and how its associated values translate into imperatives to re-purpose legacy places. Cities are ideal places for environmental stewardship, which is important to the culture: urban dwellers are not as car dependent as people in the suburbs, and urban life can be more energy efficient. Urban dwellers can use public transportation, walk, or ride a bicycle to work. Thus urban civic activism based on retrofitting the older built environment emerged in concert with an environmental ethos.”

 

I live in Nevada which is a state with a lot of rural space. I live in one of the two major metropolitan regions, but in the smaller of the two and toward the outskirts of town where the suburban starts to give way to the rural. I currently have an incredibly long car drive to work. The people I live around generally don’t seem to be as worried about environmental concerns, or if they are, then like me they may chose to ignore them or to accept living with a feeling of guilt because our way of life is in some ways very costly and resource demanding. The challenge is that it is hard to change and do much about our environmental impact, and we like our space, our quiet neighborhood, and our affordable homes.

 

People who live in the middle of a city don’t have as many of the same barriers to living a more energy efficient and environmentally considerate life as I do. When car reliance is less pronounced, it is easy to go without a car and decry the damage done by cars to our environment. When you spend less time in traffic and have more ability to use your time, you can engage in more pro-social and pro-environmental movements. Given the state of climate change, this is a positive aspect to cities. People can live more efficiently and be more inclined to advocate for a more environmentally considerate way of life. A shift in what we view as a good life (away from the picket-fence-two-car-garage-and-a-dog-in-a-yard to a life of greater connections in a city with less individual space) is a change in values, and is something that is leading to a revival of city centers and urban societies across the country. As networks and connections matter more and more, living close to people and having more interactions is becoming more valuable than having one’s own space and things.

 

Another important aspect in Katz and Nowak’s quote is the focus on rebuilding and re-purposing. Cities have existing infrastructure that needs to be updated as people move back into and begin to redifine their cities. This gives cities the chance to establish themselves as cleaner and better versions of what they have always been. The way that streets, buildings, and open spaces are used can be reimagined during this transition, allowing them to become more environmentally sustainable and more economically inclusive. This helps reduce the overall carbon footprint of city residents and helps them become places where people can actually live, work, and enjoy their time.

City Strengths

Cities are incredible organizational units that human beings organically developed long before larger political boundaries and units could be conceived. Cities were the first forms of collaborative human living for our ancestors, before we could think of nations or states. But even though the idea of cities is ancient, they are still dynamic and evolving. In an age where everything is online, where virtual human connections are common, and where goods, services, and products can be obtained from almost any couch in the United States, cities are nevertheless growing. Despite video chat and meet-up software, companies still like to have private offices and there still seems to be value in face to face communication and interaction. Cities, it seems, are here to stay in our globalized and digital world.

 

In The New Localism authors Bruce Katz and Jeremy Nowak lay out a vision of new structures of governance that hinge on the flexibility, adaptability, and inventiveness of cities. The authors explain why they think cities are natural and fitting leaders to manage globalization and help drive solutions to the problems that face the entire globe.

 

“The ability of local communities in the United States to become effective problem solvers should not come as a surprise. Cities and towns developed in the absence of any intentional federal urban policy during most of the nation’s history. Historically, city building was more of a bottom-up and relatively chaotic enterprise, involving builders and investors, merchants and workers, civic associations, immigration and immigrant entrepreneurs, and local government. It was never the result of a top-down policy so much as it was a self-organizing market and civic practice.”

 

Top down solutions to problems in the United States have not been super successful in recent years. The most pressing problems we face as a planet don’t have a structure that allows them to be addressed in a top down manner. Cities, however, operate best by adjusting to local pressures, demands, and opportunities. In a bottom-up way, cities are well positioned to respond to the challenges the world faces and to develop new technologies, new trends, and new organizational structures that can respond to threats. The chaotic and constantly evolving nature of cities can lead them to be administratively hard to wrangle and can make many of their decisions appear non-rational, but it also allows them to adapt and coalesce around shared goals that can drive the innovation that the planet needs for progress.

Ground Level Problem Solving

Bruce Katz and Jeremy Nowak, in their 2017 book The New Localism, argue that problem solving and policy solutions to our pressing problems will not be found at the national level as we move forward, but rather at the local level. Large, established, and nationalized organizations will be less able to take on the problems of our new economy and evolving societies, but smaller, more responsive, and more local organizations and arrangements can address these challenges.

 

The authors write, “problem solving close to the ground rather than policy-making from a remote national or state capital has the tangible benefit of customization. A local solution can be a more efficient use of resources since it is more aligned with the distinctive needs of a particular place.”

 

Cities and states across the nation have competing and conflicting problems. What might be a major challenge in your city may not be a problem at all in another city. The solutions that would work to address a problem in your city might be completely ineffective someplace else. Economic structures, environmental concerns, resources, and human capital will all shape how a problem can be addressed, and every city and metropolitan region in the nation has a different mix of these variables to use to address challenges.

 

Even within a state, conditions can be drastically different from one region or county to another. I live in Reno, Nevada, and we are having major housing challenges as we receive an influx of companies and employees from the Bay Area in California. Our housing challenges, and the resources we have to address our problem is completely different than the problems being faced in Las Vegas. Introducing policy on a state level to address the issues we face in Reno may cause entirely different problems in Las Vegas housing markets.

 

If you are not going to address problems purely with policy from a state legislature or from Congress, then you need to address problems with local stakeholders and organizations. This includes philanthropic organizations who can back projects that don’t have a clear ROI and would be risky for a government agency to support. Local problem solving also includes local businesses and organizations that can coordinate and align on development goals. Public agencies have a role to play by ensuring that expertise and resources are being used in a way that is consistent with state law and policy. Each group of actors can help coordinate and push different parts of the solutions that individually they could not propel forward. This is what allows local problem solving to be efficient, effective, and innovative in tackling today’s problems.

Lets Consider Our Standards for Life

In Letters From a Stoic Seneca writes, “Let us try to maintain a higher standard of life than that of the multitude, but not a contrary standard; otherwise, we shall frighten away and repel the very persons whom we are trying to improve.”

 

On an initial quick read, this quote seems to be saying, live better than the masses but don’t act like you are better than everyone else. That’s good advice that has been said so many times that it is basically useless. We already all believe that we are morally superior to other people and we are especially likely, according to Robin Hanson in an interview he gave on Conversations with Tyler, to say that our group or tribe is morally  superior to others. If you give the quote a second thought however, you see that there is a deeper meaning within the idea being conveyed.

 

The first thing we should consider is what it would look like to maintain a high standard of life. In his same letter, Seneca advises that a high standard of life does not mean that one wears the nicest possible toga or that one has silver dishes laced with pure gold. A high standard of life is not about maintaining exorbitant material possessions. Advertising in the United States would make you think differently. A high standard of life is advertised to us as driving the finest sports car, demanding the best possible wrist watch, and having exquisitely crafted faucets. Seneca would argue that these things don’t create a high standard of living, but just show off our wealth. I would agree.

 

A high standard of life, Seneca suggests and I would argue, is a well ordered life in which we can live comfortably but don’t embrace the mindset that it is our possessions that define our success and value. A high standard for life means that we cultivate habits which help us be more kind and considerate. We pursue activities and possessions that help us be more effective, less impulsive, and allow us to better use our resources and intelligence.

 

Maintaining this version of a high standard of life can have the same pitfalls we may associate with the Real Housewives of LA if we don’t give thought to the second part of Seneca’s advice. Maintaining high living standards can lead us to selfishness and self-serving decisions if we don’t think about other people and how we operate as a society. Seneca’s advice is about becoming a model for other people and helping become a force that improves lives by encouraging and inspiring others. This idea was echoed in Peter Singer’s book about effective altruism, The Most Good You Can Do. Effective altruists want to direct their efforts, donations, and resources in the direction where they can have the greatest possible positive impact on the world to help the most people possible. One of the ways to do that is to inspire others to also strive to do the most good they can do. No one would follow an effective altruist who gave away all their money and lived a miserable life. But someone would follow an effective altruist who gave a substantial amount of their money to an effective and meaningful charity and still lived an enjoyable and happy life.

 

Our high standard of living in the end should be one that drives us toward continual improvement. A life that makes us more considerate, more thoughtful, less judgmental, and less impulsive. It should encourage others to live in a way that helps them be happier and healthier, rather than living in a way that suggests that having expensive things and showing off is what life is all about.

Building Models and Examining the World and Our Thoughts

This morning listening to an episode of Conversations with Tyler, Russ Roberts, the guest on the show said something that really stood out to me, “I used to believe that…my models described the world, as opposed to gave me insight into the world.” We operate in a world where there is no way for us to ever have complete information. There is simply too much data, too much information, to much stuff going on all around us for our brains to perfectly absorb everything in a reasonable and coherent way.

 

You do not notice every blink, you could never possibly understand every chemical’s smell that makes up the complex aroma of your coffee, and you can’t hold every variable for that big business decision in your head at the same time. Instead, our brains filter out information that does not seem relevant and we key in on what appears to be the main factors that influence the world around us. We build models that sometimes seem like they describe the world with spectacular clarity, but are only a product of our brain and the limited space for information that we have. Our models do not reflect reality and they are not reality, but they can give us an insight into reality if we can build them well.

 

No matter what, we are going to operate on these models in our daily lives. We develop a sense of what works, what will bring us happiness, what will create well-being, and how we will find success. We pursue those things that fit in our model, toss those things that don’t fit in the model to the side, and somewhere along the line begin to believe that our model is reality and criticize everyone who has a model that doesn’t seem to jive with ours.

 

A more reasonable stance is to say that we have developed a model that gives us insight into some aspect of reality, but is open for adjustment, improvement, or could be scrapped altogether in favor of a new model if necessary. The only way to do this is to be an active participant in our lives and to work to truly understand ourselves and the world around us. The quote from Roberts on Cowen’s podcast aligns with the quote that I have from Colin Wright today. From Wright’s book Becoming Who We Need To Be I have a quote reading, “It’s not enough to just smell the fragrances that drift our way every day. We have to take the time to pull those aromas apart, to figure out what components go into them, and compare and contrast them with others. We have to be awake and aware, not just alive. We have to be participatory in our own lives, and give our mental capacities a reason to keep operating and expanding, otherwise they will, quite understandably, if we’re using biological logic, begin to shut down to save energy.”

 

Deciphering the aromas is a metaphor for understanding how we are interacting with the world and how the world exists around us. If we retreat to safety and comfort by believing that our models are correct and perfect, then we fail to improve our understanding of the world and our place in it. Our mind atrophies, and the potential we have for making the world a better place is continually diminished. Simply believing something because it benefits us, makes us feel good, and is what people similar to us believe can drive us and the world into an inefficient place where we fail to do the most good for the most people. There is nothing wrong with that world, it is an option, but if we believe that human flourishing is worth striving for and if we believe that we can help improve the living standards for ourselves and the rest of humanity, then we must use and expand our cognitive capacity to better understand the universe to improve the world for ourselves and the rest of humanity. Your model is incomplete and gives you insight into one aspect of reality, but you must remember that it is not a perfect description of how the world should be, and you must work continuously to build a better model with better insight into the world.

Most Trouble is Temporary

One thing I have been working on recently is better seeing and understanding the opportunities around me in my life. Often times when I have made a decision to do something, my choice has felt as though it is final, as if there is no going back. In reality, most of our choices are never really final. We can start over, go back, or try something different as if we had put on an outfit, walked outside, and decided t hat the weather wasn’t going to fit what we had grabbed.

 

This same idea of more opportunities than we realize also applies to how we think about success and failure. Things for me have often felt like an ultimatum, either I succeed at this thing in front of me, or I will never be successful in life. This is my only shot and if I don’t get it right this time, then I will never have another chance in the future. However, most of the time a failure is either a temporary set back or an opportunity for us to change course. Unless we are competing in the Olympics or are at the end of a college sports career, we will have more opportunities to find success. Ryan Holiday writes about this in his book Ego is the Enemy, “Only ego thinks embarrassment or failure are more than what they are. History is full of people who suffered abject humiliations yet recovered to have long and impressive careers.”

 

Yesterday I wrote about the ways that our work has become tied with our identity. As part of our identity, a workplace failure takes on new meaning, and almost grows to represent some type of moral failure of us as a human being. However, this pressure is just a story created by our ego. In reality we will have more avenues for success in the future and our failure is only permanent if we allow it to drag us down. We can experience terrible failure and grave mistakes and still take steps forward. We may need to be creative and find new avenues to move forward toward success, but we never need to live with failure in a way that prevents us from ever having goals and dreams in the future. Our Ego prefers to avoid potential failure altogether by never trying or by continually deflecting any criticism to others, so that we never have to accept any blame or reveal any flaw in our own skills and abilities. By failing to accept failure and by failing to move forward from failure, we stop ourselves from learning and probably put ourselves in situations where we make bad decisions and drive ourselves toward the failure we fear.

Training Daily

Life is hard and each day can be its own struggle and battle, but learning measured approaches to life can give us the tools and training that we need to face those challenges successfully. We all hope to have success, to have an easy life with plenty of opportunities, but we know we will face failures, frustration, confusion, and stagnation. If we can build a solid routine, we can face these obstacles nobly and act accordingly to move forward.

 

In his book, Ego is the Enemy, author Ryan Holiday writes about the daily effort to prepare ourselves for the challenges life will present us with. Holiday writes, “My friend the philosopher and martial artist Daniele Bolelli once gave me a helpful metaphor. He explained that training was like sweeping the floor. Just because we’ve done it once, doesn’t mean the floor is clean for ever. Every day the dust comes back. Every day we must sweep.”

 

Anyone who has ever gone to the  gym knows you don’t leave looking like an Avenger after just one workout. It is continual effort that slowly gets us where we need to be. Accordingly, for us to build our mental fortitude and prepare for failures and successes, we must build our self-awareness, focus on disarming our ego, and concentrate on growth, learning, and improvement daily. If we do not, the skills that will help us climb from our low point will grow dusty and be buried in the daily grit of life. Each day doesn’t need to be a grueling exercise, but we do need to continually dust off our skills for approaching life.

Helping Yourself by Helping Others

In The Ego is the Enemy, author Colin Wright encourages us to get beyond our own selfish thoughts and desires. He encourages us to be aware of our ego and the times that our ego kicks in to run the show and determine what we do. The Ego, Holiday writes, seeks things for our own self-interest, and puts us in situations where it actually becomes harder to achieve what we want or to live the life that we want. Rather than pursuing our ego, Holiday suggests that we work toward or goals by helping others first. He suggest that we practice humility and put in the grunt work, tackling projects that are small and seem unimportant but will help us learn and grow over time.

 

He writes, “Imagine if for every person you met, you thought of some way to help them, something you could do for them? And you looked at it in a way that entirely benefited them and not you. The cumulative effect this would have over time would be profound: You’d learn a great deal by solving diverse problems. You’d develop a reputation for being indispensable. You’d have countless new relationships. You’d have an enormous bank of favors to call upon down the road.”

 

Helping others in this way truly does help ourselves. It puts our short term self-interests aside as we assist other people and show that we care about them. People want help and are more likely to give you opportunities to grow when what you are doing is serving them rather than serving yourself. To pursue this type of strategy, you have to accept that your work may be kept in the background and that other people may get more credit than you for the work you do or the ideas you produce. Holiday encourages us to be confident that this approach will still lead to long term success even if it feels we are being overlooked in the short run.

 

This strategy aims toward is positive results in the world, your company, or in your family. What matters most is that you are part of a successful team and that the world is made better with your actions. Where we can be confident is that in the long run we will be recognized as the source of the great ideas, or as the person who put in the hard work to keep things moving in a positive direction. But even if we are not, we still benefit in the long run by a rising tide that lifts us with the other people in our company, family, or group. Pursuing success and helping others become the best versions of themselves will ultimately help us more and create more cohesion among the groups we belong to than will our selfish attention seeking ego.