The Depopulation Bomb

Almost 50 years ago Dr. Paul Ehrlich published a book called The Population Bomb. Today, demographic hysteria concerns too few people.

Theme: Ironic demographics

Subject Article: "Are People Really Leaving Illinois In Droves?"

Other Links: 1. "The Rachel Carson Homestead."
2. "The Unrealized Horrors of Population Explosion."
3. "Redemptive existentialism and Berkeleian metaphysics: a synthesis in Beckett’s plays."
4. "Where does Chicken Little invest?"

Postscript: The population bomb never went off. The population bomb never existed. The same is true about the depopulation bomb. Population change is neither a metric of success, nor is it a useful policy goal.

The New Geography of Jobs: Talent Production Versus Knowledge Production

Pittsburgh is the best place in the United States to flip property. What explains the real estate boom?

Theme: Geography of innovation

Subject Article: "Carnegie Mellon Reels After Uber Lures Away Researchers."

Other Links: 1. "Pittsburgh becoming 'flip' city as real estate market heats up."
2. "From Metals to Minds: Economic Restructuring in the Rust Belt."
3. "The New Geography of Innovation."
4. "Do Jobs Follow People or Do People Follow Jobs?"
5. "Rust Belt Chic: Harvey Pekar."

Postscript: If you get a chance, do read The WSJ article about Uber poaching talent from CMU. I think a new economic geography is developing before our eyes. Explaining the real estate boom:

Pittsburgh missed the national housing boom of the early to mid-2000s, being a region where property values in many communities have either remained flat or grew at a snail’s pace. Historically, residents here also were less inclined to relocate from one house to another.

But in recent years, many neighborhoods throughout the city such as Lawrenceville have seen housing values appreciate by double digits as demand has been driven up by workers in medical, technology and the oil and gas industries, and as investors have swooped in to take advantage of the low prices and the high demand.

A lot of gentrification is amenity driven, and thus ephemeral. The gentrification of Pittsburgh neighborhoods is driven primarily by economic restructuring. Wages from global jobs are pouring into the city.

The New Geography of Innovation

Jobs don't follow talent. Jobs follow knowledge production.

Theme: Economic restructuring

Subject Article: "Uber gutted Carnegie Mellon’s top robotics lab to build self-driving cars: A 'partnership' based on poaching."

Other Links: 1. "Pittsburgh And Migration Mesofacts."
2. "LycosBurgh."
3. "The Power of Eds and Meds: Urban Universities Investing in Neighborhood Revitalizationand Innovation Districts."
4. "The Economic Geography of Tech Talent."
5. "It’s Not the People You Know. It’s Where You Are."
6. "From Metal to Minds: Economic Restructuring in the Rust Belt."
7. "Knowledge Spillovers from Research Universities: Evidence from Endowment Value Shocks."

Postscript: For the blog post title, I'm openly ripping off Enrico Moretti's book, "The New Geography of Jobs." The economic geography Moretti describes is in decline. More technically, it is converging, "Soaring housing costs forces talent to flee Silicon Valley." The jobs that once clustered in just a few winning places are diffusing around the country. The same industry cycle that took down manufacturing:

But what about the original question—whether it's possible to build a technology platform company outside Silicon Valley. A platform company builds technology used by other technology companies, from the iPhone that runs other applications to the Facebook login we use to access other websites, compounding each employee's leverage. This is why Facebook's market value exceeds $20 million per employee.

These companies don't have to worry about expenses much. As my first mentor in Silicon Valley, Kirill Sheynkman, once explained to me at a French restaurant, the point in an innovation economy isn't to spend less, it's to make more. And for a platform company, the value of being close to the technology companies that build on your platform is priceless.

But as our industry matures, the pressure will be on profits, not just revenues. And few high-tech companies get as much leverage as Facebook from each employee. Even a platform company like Twitter is worth about four times less per employee than Facebook. With less equity to burn, Twitter has had to be the pacesetter in raising San Francisco engineering salaries, which is why its stock is now under so much earnings pressure. Only the techiest of tech companies—and only their tech people—don't feel the pinch.

Not only is it possible to build a technology platform company outside of Silicon Valley; the financial bottom line demands it. So eroded Detroit's competitive advantage in the automobile industry. So eroded Pittsburgh's competitive advantage in the steel industry. What's next? Read "From Metal to Minds: Economic Restructuring in the Rust Belt."

The Economic Geography of Tech Talent

The tech talent apple doesn't fall too far from the university tree.

Theme: Emerging economic geographies

Subject Article: "The truth about life in 2015 at Stanford, where 21-year-olds are offered hundreds of thousands of dollars right out of school."

Other Links: 1. "Ernest George Ravenstein: The Laws of Migration, 1885."
2. "Economic Geography Of Talent Production."
3. "Stanford University Is Dying."
4. "From Metal to Minds: Economic Restructuring in the Rust Belt."
5. "Silicon Valley is already dead."
6. "Comparative Localization of Academic and Industrial Spillovers."

Postscript: Private firms don't cluster near each other to reap some sort of density dividend. They aim to be as close as possible to a research university seeking proximity spillovers from the knowledge production for public good. Density doesn't drive innovation. It is an effect of innovation.

Technological Innovation Begets Migration

In a virtuous circle, migration and innovation make the world go round.

Theme: Innovation geography

Subject Article: "In the age of disruptive innovation, adaptability is what matters most."

Other Links: 1. "Space and the city: Poor land use in the world’s greatest cities carries a huge cost."

Postscript: This post was inspired by the latest paper from Chang-Tai Hsieh and Enrico Moretti, "Why Do Cities Matter? Local Growth and Aggregate Growth." Artificial housing supply constraints are deemed to be a drag on economic output. That assumes lower housing prices would allow more people to live in the most productive places. That is, lower housing prices would beget higher population. Which raises the question, how much do housing prices affect inter-regional migration and population change?

Stanford University Is Dying

You go where you know. You went to the wrong college and spent too much money.

Theme: Innovation geography

Subject Article: "How to Survive the College Admissions Madness."

Other Links: 1. "Silicon Valley Is Already Dead."
2. "From Metal to Minds: Economic Restructuring in the Rust Belt."

Postscript: The a-ha moment came while reading about how the regional economy in Waterloo, Ontario thrived despite the demise of Blackberry. The pursuit of tech transfer is the holy grail of economic development. Pittsburgh desperately tried (still tries) to hit on its own Blackberry. This quest spurred world class knowledge production at Carnegie Mellon University. That asset, as it turns out, drives economic restructuring.

The Third Globalization: Human Capital and Demographic Decline

Half of the world lives in a country where the number of births fails to replace those who die.

Theme: Ironic demographics and globalization

Subject Article: "Investing in People as an Economic Growth Strategy."

Other Links: 1. "The Rise (and Likely Fall) of the Talent Economy."
2. "Extensive and Intensive Globalizations: Explicating the Low Connectivity Puzzle of US Cities Using a City-Dyad Analysis."
3. "Boston Versus Silicon Valley: Advantage Beantown."
4. "From Metal to Minds: Economic Restructuring in the Rust Belt."
5. "Peak Talent."

Postscript: "Rich countries' populations are beginning to shrink. That's not necessarily bad news":

Demographic decline worries people because it is believed to go hand in hand with economic decline. At the extremes it may well be the result of economic factors: pessimism may depress the birth rate and push up rates of suicide and alcoholism. But, in the main, demographic decline is the consequence of the low fertility that generally goes with growing prosperity. In Japan, for instance, birth rates fell below the replacement rate of 2.1 children per woman in the mid-1970s and have been particularly low in the past 15 years.

As economic prosperity diffuses, so will demographic decline. How we manage that demographic decline will define economic geography.

Pioneer Migration

Attract one person and an entire village will follow.

Theme: Brain drain is economic development.

Subject Article: "The Salvadoran town where migrants are hotly debated folk heroes."

Other Links: 1. "Baltimore puts out welcome mat for immigrants, hoping to stop population decline."

Postscript: In recognition of persistent urban poverty, Baltimore's stated goal of population growth is indicative of the dysfunctional politics in that city. How about better schools? Population data are an indicator, not a means to an end. Stop treating immigrants like a number and recognize that people develop, not places.

The Economy After Labor and Capital

Workers of the world unite and retire.

Theme: Economic restructuring

Subject Article: "New World Order: Labor, Capital, and Ideas in the Power Law Economy."

Other Links: 1. "Steris Corp., Philips Healthcare to move total of 200 jobs to Northeast Ohio."

Postscript: There's a new economic geography in town. If you are interested in finding out more, watch "Biotech's real estate boom."

Make Knowledge, Not Widgets

Zero manufacturing employment: Coming soon to a regional economy near you.

Theme: Economics of knowledge production

Subject Article: "The pioneering continent: Innovation is increasingly local."

Other Links: 1. "The life, death, and rebirth of BlackBerry’s hometown."
2. "Silicon Valley Is Already Dead: Waterloo's tech boom went bust, revealing the rise of the intangible economy."

Postscript: "Does Rust Belt Manufacturing Have a Future?":

However, it should be obvious that we cannot run an economy by giving each other haircuts or exchanging chats and photos. Information has no value in isolation. Uber is worthless without cars, Airbnb worthless without housing.

Michigan Ross Professor Bill Lovejoy has the value trend backwards. The worth of a good is less and less about the manufactured product. Which means manufacturing companies must find ways to reduce labor costs in order to be profitable. See agriculture.

Please Dehumanize Cancer Care

Decreasing the cost of health care is economic development.

Theme: Eds and meds

Subject Article: "IBM Aims to Make Medical Expertise a Commodity: Big Blue thinks its Jeopardy! champion Watson can make money by offering health-care providers new expertise without hiring new staff."

Postscript: The economic geography of health care:

Across Greater Minnesota, nursing homes are in a bind, trying to keep nurses from being scooped up by better paying jobs, often at hospitals. That's especially true in southeast Minnesota where nursing home workers are often lured away by higher-paying jobs and working conditions at Mayo Clinic.

Hospitals that export services and conduct research can pay employees more. Such institutions are fishing in a global labor market for talent. Most health care providers are fishing in a local labor market for talent. Wages must be kept down, operating costs low. Few places, such as Rochester, Minnesota, can center an economy on eds and meds.

Boston Versus Silicon Valley: Advantage Beantown

A few decades ago, Silicon Valley beat out Boston for tech dominance. Today, Boston is emerging as the epicenter of a new economic era.

Theme: Economic geography of health care

Subject Article: "Could Massachusetts lose its edge in life sciences?"

Other Links: 1. "Where Innovation Thrives."
2. "The Great Creative Class Migration."
3. "Silicon Valley Is Already Dead."
4. "Regional Advantage: Culture and Competition in Silicon Valley and Route 128."
5. "Zero-Sum Creative Class."
6. "Tom Ross: The real value of higher education."
7. "Searching for Silicon Valley in the Rust Belt: The Evolution of Knowledge Networks in Akron and Rochester."
8. "Could Big Pharma's appetite for local biotechs hurt independents?"
9. "From Metal to Minds: Economic Restructuring in the Rust Belt."

Postscript: Since the summer of last year, Richey Piiparinen and I have been working on "From Metal to Minds: Economic Restructuring in the Rust Belt." We agonized over every paragraph. The research journey was full of twists and turns. What we discovered wasn't what we expected to find. The final product was very different from the paper we set out to write. This is the first post explaining to the reader the economic geography we unearthed.

The Hubris of Social Science

I'd like a dollop of ketchup on that paradigm.

Theme: The politics of policy

Subject Article: "The Ketchup Conundrum: Mustard now comes in dozens of varieties. Why has ketchup stayed the same?"

Other Links: 1. "The Birth of the Clinic: An Archaeology of Medical Perception."
2. "Trust in Numbers: The Pursuit of Objectivity in Science and Public Life."

Postscript: Ideologically, social science can or it cannot. Likewise, urban planners can or they cannot. People debating policy usually fall into one of those two camps. A third way, to which I subscribe, allows for social science to improve. With the failures of logical positivism in mind, I believe the time has come to recognize that social scientists and urban planners can.

Stranger Danger: How Community Stifles Innovation

Free-range kids are economic development.

Theme: Geography of innovation

Subject Article: "‘Free-range’ kids and our parenting police state."

Other Links: 1. "How helicopter parents are ruining college students."
2. "Free-Range Kids: How to Raise Safe, Self-Reliant Children (Without Going Nuts with Worry)."
3. "Why Designers Should Care About the Mechanics of Mixing."
4. "My own private metropolis."
5. "#LittleKnownFact Calvins dad and @Cliff_Clavin_ are related somehow."

Postscript: More evidence that greater density doesn't catalyze innovation:

Could a designer reverse-engineer a public space to support social mixing by cracking the code of places that already mix people well? We know the opposite can be true: Plenty of urban spaces suppress interaction and empathy between people by seeming unsafe, uncomfortable, just plain too crowded … or not crowded enough. But if we really understood the mechanics of mixing, could we design for it?

"Alone in a crowd" is a cliché for a reason.

'The Handmaid's Tale' Is Economic Development

In Europe, women are valued for their fertility, not productivity.

Theme: Demographic decline

Subject Article: "Sex Education in Europe Turns to Urging More Births."

Other Links: 1. "Haunted by The Handmaid's Tale: It has been banned in schools, made into a film and an opera, and the title has become a shorthand for repressive regimes against women."
2. "An Immodest Proposal: Foucault, Hysterization, and the 'Second Rape'."
3. "Margaret Atwood’s The Handmaid’s Tale – in pictures."
4. "Where there's smoke: If you think there's something ditsy about Julie Delpy, prepare for a sock in the mouth. She puts Ryan Gilbey straight on acting, men, and why her new script features plenty of castration."
5. "Want More Women Working in Tech? Let Them Stay Home."
6. "I'm gonna lean in and put this on some muscle tees."

Postscript: I tagged this post about demographic decline as "Intangible Economy". The realities of a declining birth rate demand better productivity, greater workforce participation, and pushing retirement to an older age. The intangible economy (i.e. eds and meds) concerns these outcomes. Instead of growing GDP, we should aim to generate more disposable GDP per capita. Without getting into the nuances of amassing intangible capital, think of getting more out of education and health care while spending less on it.

Oil: Resource Curse or Launchpad?

Lawyers striking it rich in St. John's, Newfoundland.

Theme: Economic development

Subject Article: "St John's: Big-city practice, small town lifestyle."

Other Links: 1. "The Natural Resource Curse: A Survey."
2. "Borderlines: Oh, (No) Canada!"
3. "What Dutch disease is, and why it's bad."

Postscript: A few weeks ago, a Texas magazine asked me to write about the impact of low oil prices on the migration to the state. Migration patterns are surprisingly resilient. Over time, persistently low oil prices would reshape U.S. migration. But we are probably talking decades, not months. Domestic migration is more dynamic than international migration. Thus, I expect Houston to continue to boom as an immigrant gateway. More importantly, the oil boom has gathered considerable brain power and wealth in Texas. I see it as the new California concerning the aspirational geography of choice for the location-fickle. Texas is much more than a petro-state, at least within the Triangle of metros the attract people from across the nation and around the world.

Demographic Decline in Atlantic Canada: The Relationship Between Population Change and Health Care

Shrinking communities deserve more health care, not less.

Theme: Ironic demographics

Subject Article: "Nuanced thinking about urbanity this morning."

Other Links: 1. "Long-term economic growth stimulus of human capital preservation in the elderly."
2. "Trailer for the 1959 film "The Mouse that Roared" starring Peter Sellers and Jean Seberg."

Postscript: Concerning the other half of the intangible economy equation, the article title says it all, "Fix university funding, invest in schools that keep grads in Nova Scotia":

Unfortunately, we lack data on which programs at which universities produce graduates who are most likely to stay in the province and contribute to our economic renaissance. Put another way, we have no way of proving or disproving the hypothesis that what we have created in Nova Scotia is a wonderful machine for adding value to the human talent we nurture in our universities, but a machine that nevertheless recycles or exports large proportions of that talent westwards.

Invest in schools, not people, in order to grow the population. What a bizarre way to view higher education.

Demographic Decline in Atlantic Canada: Shrinking to Promote Economic Growth

Population decline is a positive economic indicator.

Theme: Ironic demographics

Subject Article: "How the Maritimes became Canada’s incredible shrinking region."

Other Links: 1. "We need to talk about population."
2. "Demographic Decline in Atlantic Canada: It's the Economy, Stupid."
3. "Hitler and 'Lebensraum' in the East."

Postscript: With today's data dump from the U.S. Census, the usual suspects are lamenting demographic decline. Instead of worrying about how to grow the population or retain college graduates, consider how to maximize the resident labor force:

The chances high school graduates will enroll in college after high school are lower in many rural counties, where the percentage of adults with degrees is lower.

Many rural counties struggle with population loss and often turn to retention "strategies" (i.e. crackpot schemes and boondoggles). Why not skill up those who decide to stay, invest in them? Smarter people working later into life can more than compensate for those who seek greener pastures.

Demographic Decline in Atlantic Canada: It's the Economy, Stupid

Atlantic Canada is reportedly dying. I'll spend this week explaining why that isn't the case.

Theme: Ironic demographics

Subject Article: "We need to talk about population."

Other Links: 1. "Portland Is Dying."
2. "Portland Is Dying, Revisited."

Postscript: Net inmigration can be a negative economic indicator, "Will Growth Kill Portland?":

Aaron Benson, 24, is a motorbike mechanic from Austin, Texas. He moved to Portland last August. “I wanted to live somewhere that would be close to mountains and adventure, but would still be just as cool and weird as where I grew up,” says Benson.

For a lot of young people, Portland is home because they like it, not because it’s prosperous. “I didn’t have any kind of job set up,” continues Benson. “I have a pretty varied skill set, so I was just going to wing it and keep my dreams in mind.”

Yes, more newcomers means greater population. And greater population means higher rents. But the greater population doesn't mean more jobs and higher wages. Portland, Oregon is a lousy model for economic development.

Aspiration to Migration

Migrants leaving home inspire others left behind to become better educated.

Theme: Brain drain is economic development.

Subject Article: "Migration Experience, Aspirations and the Brain Drain: Theory and Empirical Evidence."

Other Links: 1. "Americans' Local Experiences."
2. "Staying Close to Home, No Matter What: Fewer than half of Americans say they're likely to relocate, even if they think their town is headed in the wrong direction."
3. "Breaking Away conclusion."

Postscript: In general, particularly within the realm of policy, people misunderstand migration. Migrants aren't leaving your community or your state because something is wrong with those places. Aspiration, not place failure, drives migration. Thus, projects designed to help retain residents are boondoggles, a waste of resources.