What has happened to places that stayed siloed is tragic. In 1985, for instance, the Michigan legislature passed an antitrust bill that also mistakenly repealed an 80-year-old open-competition statute (a law that had helped to spark the US automobile revolution in the early 1900s by letting engineers at big motor companies trade employees). Since the repeal, employees who have learned field-specific skills or built strong customer relationships that might help elsewhere have had to either take unpaid time off or leave the state. Job changes in Michigan have decreased by 8 percent among inventors across all industries—not just automotive—and by 16 percent among technically specialized workers. And that’s bad for innovation. Managers don’t need to pounce on great ideas; it’s not like they can be taken elsewhere.
The other result in Michigan is brain drain. Inventors who hold patents have been 256 percent more likely to move out of the state than their cohort in other places, MIT’s Marx says. He found that inventors who change jobs flee to states that permit them to take new positions in the same field or launch startups. Not surprisingly, places like California have become more attractive to talented workers than, say, Michigan.
Emphasis added. "Places that stayed siloed" are states that allow noncompete agreements. Companies can use the force of law to retain talent. This stifles innovation and encourages outmigration. Michigan's brain drain "problem" is Michigan. Being business friendly is driving away business.
Noncompetes are a metaphor for the zero-sum game between regions vying for talent. The crying about brain drain is ubiquitous. If your prodigal daughters and sons leave, the community is doomed. The community is doomed thanks to all the crying about brain drain. Millions of dollars are wasted on retention. Real estate boondoggles promising a cooler downtown abound. You'll do anything to keep your children from leaving.
Plugging the brain drain stifles creativity. Too much talent churn erodes social capital. Positive or negative net migration poses a unique set of challenges. Resist the urge to make normative judgments and remember that people develop, not places.
People develop, not companies. As with cities, we tend to forget that businesses are made up of people. Talent is the new oil. The freedom to move spurs tremendous growth. Silicon Valley towers over Boston's Route 128 because its workers are more geographically mobile. The Google Diaspora is just as valuable as the Burgh Diaspora.