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Notes from Innovation Policyworks
I'll admit it. I'm not a happy camper. I went to bed on election night with the realization that Trump was going to win, and when I woke up in the morning, it wasn't just a bad dream. You can count me among the many Americans who voted for a different outcome.
I hope that in the Trump presidency that we don't lose sight of the importance of innovation and creativity as the key underlying ingredients that can create prosperity for all of our neighbors, not just the elites. This means that we need to figure out how to make sure that we don't just applaud new ideas, but also be mindful of how new ideas can leave people behind, and how to help those harmed by "creative destruction." MORE
Cathy
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Book Review:
The Entrepreneurial State, by Mariana Mazzucato
Professor Mazzucato's book could not be more important in the face of a Trump presidency. She argues that the story line we hear so often, of the wealth creators and job creators in the private sector, and the "state" as only a wealth extractor with no role in innovation, is as wrong as it is widespread. She discusses the many instances where the "state" has been a critical investor to creating and shaping markets. Mazzucato cites examples such as the Internet, nanotechnology, biotechnology and clean energy. All of these represent mega-shifts in technology, took significant public investment to start, and enabled private companies to launch from a well-developed platform. This is an essential book to read to understand the roles that different actors play in supporting innovation.
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What to Expect from Trump on Energy Policy
Under the heading of, "Don't Freak Out," David Victor has advised that many existing energy policies and regulations will turn out to be too difficult for President-elect Trump's administration to overturn. So, while we can expect that some of Obama's executive orders will be nullified right away, the effects of Trump policies on oil, gas and coal will likely be less important than market forces. Victor's strongest statement is about coal: "I suspect there is no fuel for which the Trump victory will be more irrelevant than for coal. . . natural gas is so inexpensive that it is clobbering coal without taking into account environmental regulations." And, market forces are also strongly behind renewable sources of energy, although the production tax credits are now unlikely to be extended beyond their 2020/2021 expiration dates. MORE.
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What Trump Needs to Know About Innovation
If you believe that America's economic future will depend upon successfully driving innovation, productivity growth and competitiveness, then this is for you. The Information Technology and Innovation Foundation (ITIF) has compiled a set of actionable proposals that could advance the economy. Most are wicked "inside the Beltway" and focus on how the federal bureaucracy works. Others are more broadly acceptable, such as focusing on improving digital infrastructure (i.e. broadband) as much as roads and bridges, especially in rural areas, and reducing regulations that directly impact competitiveness. MORE
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Why Are Men Leaving the Workforce?
Hard on the heels of the analysis of election results that showed 67 percent of men with less than a college degree voted for Trump, we have a report from the Council of Economic Advisors that noted there are 10 million men ages 25-54 not in the labor force who haven't worked in more than a year - that's one in six, worse than the Great Depression. The factors that are linked to these guys: lack of a college degree, being single or being black. Apparently having a criminal record is also a factor - there are 20 million Americans with a felony conviction, mostly men. The report suggests, "
increasing the 'connective tissue' in labor markets via reforming community college and training systems to help place people into in-demand jobs."
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"Make America Great" at the Local Level
Six years of a Trump-like Governor in Maine have taught us that real economic development innovation is happening not at the federal or state level, but at the local level, in communities and on Main Street. While many important public functions, like national defense, foreign policy and funding basic research and development must happen at the federal level, other matters are primarily local: entrepreneurial support, education, infrastructure, vibrant spaces and skilled workers, to name a few. Bruce Katz of Brookings makes this point in a new paper about the role of cities and metro areas. We think it applies to all communities, not just metros, witness the many initiatives for community-led broadband and solar that are filling in for a lack of federal or state leadership. And, as Katz rightly points out, it is at the local level that ways to bridge the chasms that seem to divide us will be found, not in Washington, DC.
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Disputing Auto Making and Transportation
Four technology trends are shaping and disrupting auto making, and likely, place making, in the foreseeable future. The trends are: electrification, autonomous driving, diverse mobility (e.g., car and ride sharing, rentals) and connectivity. These technologies will interplay with consumer preferences and completely change how automakers compete, since cars will become computers on wheels. But bigger disruptions will come as ride sharing and autonomous cars will displace rapid transit with individualized commuting solutions that require substantially less capital investment than rail-based options. Large numbers of electric vehicles will change the location of and nature of the load on the grid, some of which can be offset by solar charging stations and other generation options. Read
MORE and
MORE.
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Main Street is Holding Up Our Economy
Entrepreneurship means starting a new enterprise and working for oneself, regardless of the size or nature of the business. While some new businesses will grow very rapidly, others remain small or follow a more gradual growth path. The Kauffman Foundation calls these latter companies Main Street entrepreneurs, the leading researchers on entrepreneurship. They have found that 63 percent of all businesses in America are small businesses, more than five years old and with 50 employees or less. (In some places, the number is much, much higher.) However, Kauffman has also documented the challenges facing these businesses, especially since the recession. For instance, lending by small banks has shrunk dramatically while larger banks loan even less to Main Street companies. Policies that limit competition, such as occupational licensing and procurement processes give benefits largely to incumbents, not new businesses. Lastly, the cost of compliance with regulations continues to grow for Main Street businesses, which have fewer resources to manage the red tape. See the suggestions to help Main Street businesses HERE.
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Recognition for Greg, N-Squared Project
Congrats to our client, Greg Reibman, Newton-Needham (MA) Regional Chamber, for being named one of the Boston Business Journal's Power 50: Game Changers. Greg was recognized for "spearheading the N-Squared Innovation Districts' economic development and marketing strategy which studied opportunities along a 500-acre areas along Interstate I-95/Route 128." I was part of the Camoin Associates team that did this study with Greg.
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Why are Immigrants More Entrepreneurial?
Immigrants to the US are twice as likely to become entrepreneurs as native-born US citizens. Immigrants represent 27.5% of the country's entrepreneurs, and about ¼ of all technology and engineering companies started between 2006 and 2015 had at least one immigrant cofounder. This pattern holds true for many other countries. While it's likely that entrepreneurs are more likely to emigrate, and many face discrimination that leads to starting companies as a way to be employed, there's another facet to this. Cross-cultural experiences also stimulate creativity. Interacting with multiple cultures helps entrepreneurs combine diverse ideas, solutions and customer problems in order to create something entirely new.
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"
If your determination is fixed, I do not counsel you to despair. Few things are impossible to diligence and skill. Great works are performed not by strength, but perseverance.
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Samuel Johnson
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Happiest Workers in America
For the record, I really hate it when people make up new rankings based on dubious indicators. However, here's one where Maine comes out on top, so I have to tell you about the states with the Happiest Workers. Hawaii, West Virginia and Maine are the top 3, with New Mexico, Pennsylvania, Washington, Rhode Island and Vermont coming in as the bottom 5. The data comes from 250,000 people surveyed about their career paths. Note, by the way, the complete lack of correlation between the Happiest Workers and the Best Places to Do Business!
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Are Labels like "Millennial" and "Boomer" Obsolete?
The short answer is, "Yes." In an era where we have the ability to pinpoint individual preferences and belief with astonishing accuracy (note what ads come up when you are surfing the web), the use of broad demographic categories that really only pinpoint what year a person was born is really a lazy shorthand. According to Canadian marketing professor Niraj Dawar, segmentation by generation is "mostly nonsense." Read his blog HERE.
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Nevadans Vote to Dismantle Electric Monopoly
Seventy-two percent of Nevadans voted to allow customers to chose their electric utility. This is step one in a three-step process to amend the state's constitution to require a competitive electric utility market. The movement is partially a reaction to a decision a year ago to revoke incentives for solar power. Major solar companies as well as companies like Tesla, MGM Resorts, Patagonia and Wal-Mart also voiced support for the amendment. What's not clear is whether deregulation will help or hurt electric bills, or whether one or the other is more environmentally friendly. MORE
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Transparency May Be Coming to Tax Incentives
For about a year now, observers have been heralding the changes that would come about when states and municipalities will be required under new national accounting rules to report all economic development incentive programs as foregone tax revenue. This means that when they give a company a break in order to lure them to move to their town, they will need to account for the taxes that don't get paid. Today, most places can't answer these questions, and lack the systems to collect the data. So, the impact of this requirement isn't likely to be felt right away.
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