Tuesday, February 12, 2013

Zero-Sum Creative Class

I highly recommend watching the American Experience episode about Silicon Valley. It's all about talent migration. Specifically, you'll learn how brain drain is an engine for talent attraction:

The eight were Julius Blank, Victor Grinich, Jean Hoerni, Eugene Kleiner, Jay Last, Gordon Moore, Robert Noyce, and Sheldon Roberts. They contacted the New York investment banking firm of Hayden, Stone & Company because Kleiner’s father had an account there.

They asked the bank to help them find a corporation interested in hiring the group of them to help establish a semiconductor operation, preferably, on the San Francisco Peninsula. This attracted the attention of Rock, an analyst at the investment bank. Rock in turn introduced them to Sherman Fairchild, who at that time was IBM’s largest shareholder. Fairchild was interested in redirecting his camera company towards the field of electronics and data processing. Together they created Fairchild Semiconductor in Palo Alto in 1957, the first venture to work solely with silicon.

Over the years, the departing “Fairchildren” helped to create the semiconductor industry. Between 1966 and 1969, no less than 27 new chip ventures were formed by Fairchild émigrés. Two the eight, Noyce and Moore, started Intel Corporation in 1968 and Rock also funded them with $2.5 million.

The novelty of Fairchild Semiconductor concerned talent management. Rigid hierarchies and employee loyalty were the norm. That legacy lives on via noncompete agreements. Brain drain is bad. The company that develops human capital owns that human capital. For Silicon Valley companies, brain drain is good. The Fairchildren changed the world.

The contemporary example of Fairchildren is the Google Diaspora. Ex-Googlers are changing the world. That can't happen in places such as Boston where brain drain hysteria is a chronic affliction. Instead, metros look to Richard Florida and his zero-sum thinking about the Creative Class:

In Miami, we talk a lot about the “brain drain”, where we lose talented people to places like New York and Los Angeles —

Florida: The overriding concept I like is “brain circulation”. It’s not brain drain, it’s not brain gain, it’s brain circulation. So what I think Miami should do is bring people in and send people out. The more people who go out and say, “Miami is this amazing laboratory for urban transformation, and I thought it was fabulous,” the better for Miami. My hope would be that some of those people figure out a way to incubate start-ups [in Miami]. Not just high-tech start-ups — social innovation, social enterprise, urban transformation, arts and cultural organizations. ...

... The concept of brain circulation is very interesting because we tend to harp on the “drain” part of the cycle.

Florida: I just look at the people I know that are choosing to live here. The net in is better than the net out. So I think Miami is winning. It’s really quite amazing, our ability to do brain circulation, and I think we minimize that. We look at every young person who leaves as a big loss, instead of saying, “They’re going out, they’re getting skills, they’re learning the world, and we’re attracting a lot of people.” There are very few regions in the world that have this net in that we do.

That's an odd answer coming Richard Florida. Just a few weeks ago, he stated the following at Atlantic Cities:

Matt, you've hit upon what urbanists sometimes call the giant urban sorting machine. The problem for cities like yours is that young people are the most likely to move. A 25-year-old college graduate is three to five times more likely to move as someone in their 50s. Many cities think they can lure young people back as they get older and have families, and while this may work to a certain extent, the simple math suggests they can never recoup their losses of young people.

What can they do? As I argued long ago, Number 1 is to try to stem the losses. Figure out ways to retain that age group. I'm not saying that only that group matters, but if they cannot be kept or captured it will be hard to stem the sorting problem, as you describe. In fact, this is exactly the problem both Boston and Silicon Valley confronted a half century ago — talented young people were leaving Cambridge (MIT, Harvard, etc.) and Stanford for better jobs, etc., elsewhere. This is why university leaders (not mayors and economic developers) decided to support high-tech development. It could provide a source of employment for these new grads.

Emphasis added. I guess what is good for Miami is bad for Des Moines. Richard Florida is having a hard time keeping his ideas straight. For place-centric thinkers, talent migration is a zero-sum game. Miami is a winner. Des Moines is a loser. Listen to Richard Florida so your city can win, too:

When I wrote The Rise of the Creative Class and I identified these three Ts — technology, talent, and tolerance — I said cities that did all three had an economic edge. And I said that’s Silicon Valley, Austin, Boston, Seattle, on and on. And I used Pittsburg as an example of a city that had great technology but lacked tolerance and talent. And I used Miami, in that book, as an example of a city that was tolerant in lifestyle but lacked technology.

Ah yes, Florida conflating correlation and causality. Again. Cities don't have agency. People do. Talent that migrates, particularly across international borders, has an economic edge. Wherever they end up, talent always wins and the global economy is better for it.

1 comment:

Allen said...

It's been awhile since I listened to it but I'm pretty sure Steven Levy in his Into the Plex book claimed that Google expects to loose the grads from it's executive tract program within 5 years. They know they're talented. Taht's why Google picked them to start with. But they know they're going to have other interests and eventually move on.