SOPHISTICATED FINANCE

Government in Crisis?

Interesting quotations from Cafe Hayek today:

"All government policies adopted to meet a crisis presume that the government knows how to effect the rescue it seeks. If the crisis arises from an attack by foreigners, the government purports to know how to mount military countermeasures that will defeat or disable the enemy. If the crisis consists of economic malfunctions, the government purports to know how to alter its spending, taxing, or regulation so that the economy will be restored to sound operation. These presumptions are in general counterfactual." Delusions of Power by Robert Higgs

"Public policies are determined and laws are made by small minorities playing upon the fears and imbecilities of the mob – sometimes minorities of intelligent and honest men, but usually minorities of rogues." H.L.Mencken

Education and Social Inclusion

The quote below by Richard Wolin in the May 21, 2012 issue of The Nation explains the relationship between education and social inclusion.

"For the first time, men and women of diverse social backgrounds were afforded the opportunity to cultivate the knowledge and self-understanding necessary to surmount the oppressive constraints of class, race and gender."

The reference is to the GI Bill that paid for WWII veterans to attend college in the U.S.

Related articles

• Social inclusion is vital to a well-functioning society (nemoo.wordpress.com)
• Theories and Economic Development (sophisticatedfinance.typepad.com)

City-States and Romer's Idea of Urbanization

Paul Romer Français : Paul Romer Deutsch: Paul Romer (Photo credit: Wikipedia)

In a recent post "The Digital Age is Not a Solution" I argued that perhaps we need to redefine the role of federal government to meet the challenges from increasing population density. An alternative to that approach which I thought about but did not include in the post was to re-establish city-states.

An additional three billion people will move into cities in the next forty years and the percent of urban population will be well in excess of 50%. This trend will bring population density to unheard levels, which should force humans to re-organize in a significant way, such as changing the current form of federal governments.

It should also be noted that the number of large cities, over 30 million population, will increase dramatically and these cities will be larger than many countries. These cities will have significant economic interests to protect, which may not be consistent with the objectives of their countries. Therefore, we could see the emergence once again of city-states. 

This might appear to be a perfectly crazy idea, except for economist Paul Romer's idea. Romer has proposed the idea of charter cities, "economic zones founded on the land of poor countries but governed with the legal and political system of, often, rich ones". Romer proposed the idea as a means to create economic growth in poor countries. These charter cities would not be subject to the existing cultural, social and political constraints of many poor countries by establishing independent cities governed by more advanced legal and economic systems. Sounds like city-states to me.

More on Romer's idea of charter cities here.

Related articles

• Who Wants to Buy Honduras? (nytimes.com)
• The TED Talk That Could Spawn A City (wnyc.org)

The Digital Age is Not a Solution

I have written frequently about the changing role of the individual in the Digital Age (here and here to cite two posts). In Einstein's Ideas and Opinions he describes how the Renaissance was a period where individuals made the significant contributions. As population became more dense, the need arose for organizations, as the means to address society's problems. These organizations developed the technology to make themselves more effective and efficient. In summary, as population density changes humans reorganize to address the new problems and develop supporting technology.

Basically, I think we are at another one of those inflection points based on population density. My reasoning is as follows:

• The population will increase by approximately 50% by 2100 to 10 billion
• Over 50% of the population now live in cities and the rate is increasing
• Wide spread discussion of public private partnerships to address social problems indicates a need for a new form of organization
• The easy gains in productivity improvement from computer technology are over because computing technology is now fully developed. (See article here.)

If the choices to address the population density problem are two-- individuals or organizations-- and organizations have reached their point of maximum efficiency and effectiveness with current technology: then we have three choices:

1. Find new technology that addresses the need for greater effectiveness and efficiency in the current forms of organization. Perhaps the use of outer space is the answer (Go Get an Asteroid Academic VC). Some experts say that we have waited too long and no technology can save us from population growth.
2. Redefine the individual through technology. Some might argue that crowd sourcing and (social) networking are proof that the role of the individual is again changing, but neither of these examples produce any meaningful gains in productivity or efficiency. To improve the effectiveness of the individual we have to harness a greater percentage of their intelligence or their physical productivity. Perhaps embedding computing devices inside the person is the answer. 
3. Redefine government, as a significant form of organization, perhaps returning to minimal government. Government originally emerged as a means to prevent unfair interference to people and markets. Over time that role expanded and government became  a substitute in many ways for individual empowerment. Perhaps we need to return to an environment where the individual is more responsible and the government is a referee and not a player.

In conclusion, this is not a post about the dangers of population growth. Human beings re-organize when population density changes (Einstein). I think we have exhausted the benefits from the current forms of organization. We have maxed out the benefits of current computing technology. My guess is we need to re-design the effectiveness of the individual or mankind will fail to address a new era of population density. While the Digital Age is getting all the press, I now think that it is not the technology to address a new era but rather the dramatic end to the last era. Opportunities still exist to better use computer technology, e.g. education, but the bigger opportunities may be in recognizing a new era in the history of mankind. Whether existing governments with their bureaucracies focused on the status quo will permit the necessary changes may be the biggest challenge.

Image credit: bangladesh.um.dk

Related articles

• The World's Population Density, Visualized [Visualizations] (gizmodo.com)

Thoughts on Humility

Gaston Acurio at Madrid Fusion 2006 (Photo credit: Wikipedia)

On a recent flight all my electronic devices needed a charge so I read the American Way magazine in Spanish. One story featured renown Peruvian chef Gaston Acurio. When asked to what he attributed his success, he said humility. Humility enabled him to objectively evaluate the results of his cooking and spot the errors.

This point struck a cord because the night before I heard Mohammed Yunus speak at the Hult Global Case Challenge in New York. As a Nobel Prize winner and probably the inventor of social entrepreneurship, the man has some accomplishments to tout. However, the most noticeable quality about Professor Unus is his humility. In a thirty minute speech he never used the word "I" to describe his accomplishments in Bangladesh.

Unus sounded very much like Albert Einstein. I have been reading the arts and letters (not the physics) of this very accomplished thinker. The book is titled Ideas and Opinions. One consistent theme in Einstein's writings and speeches is the fun he poked at organizations (and himself) that gave him awards. Again, humility comes through as one of the strongest messages.

In the matter of 24 hours I have three great examples of world class practioners, all in very different disciplines, but all demonstrating the value of humility. I suspect that you do not become humble after you become world class, but rather humility facilitates world class work. By not being so self-centered you have an easier time to spot your errors (Acurio) and you probably devote more time to your work and less to self-promotion. 

Another benefit of humility is you worry less. All of the students presenting at the Hult Case Challenge were jazzed up and very nervous. Not uncommon at a big event with many people presenting. In a perfect world maybe they were so excited because they did not want to fail their team members, but I suspect that there is another reason. They were all worried about looking bad in front of the audience. Humble people do not worry about such matters and just do the best they can.

Want to worry less. Be more humble.

Related articles

• Humility and Anxiety (memoirandremains.wordpress.com)

Strategic Events in Myanmar

Strait of Malacca (Photo credit: Wikipedia)

In Robert Kaplan's very well done book, Monsoon, the author discusses the strategic importance of the Indian Ocean in the next fifty years. The basic idea is that the entire flow of natural resources from Africa to satisfy demand in India and China must cross the Indian Ocean. For the goods to reach China they must pass through the Straits of Malacca near Singapore (shown to the right), which is a potential choke point of strategic importance. Kaplan speculates that China will make significant investment in Myanmar, Thailand or Malaysia to create an alternative to the sea route through the Straits of Malacca.

This story in Big Think suggests that Myanmar (formerly Burma) may be the site of such investment. The Chinese are investing in a port project in Dawei shown below and a new road north to the Chinese border. 

Image credit: Wikipedia

Related articles

• China wants sanctions lifted on Myanmar following election (ctv.ca)
• Rewarding Myanmar reform‚ US to relax sanctions (thehimalayantimes.com)

Further Thoughts on Shared Value

Last week I spoke on a panel on shared value at HBS. I described Michael Porter's shared value in a previous post, "Social Entrepreneurship, Corporate Social Responsibility and Shared Value":

"Corporate strategies must be adapted to service social needs. By combining the creation of economic value and serving social needs "shared value" is created. "For profit" companies are well suited to solve social problems while at the same time serving their shareholder's interest to maximize investor returns."

I now believe that shared value is basically a trivial idea. To forego social responsibility in favor of maximizing shareholder return is really just an excuse to be socially insensitive. Maximizing shareholder return is not some sort of mathematical certainty but rather the more practical but vague notion that company earnings have to match stock analyst earnings estimates (as a surrogate for shareholder "expectations"). Spending could support social objectives or income generating activities as long as the shareholder expectations are met. For example, no one criticizes Wal-Mart for annual charitable contributions in excess of $600 million.

This post was inspired by this story on opensource.com, "Reimagining capitalism—as principled, patient, and truly social". I do not agree that "capitalism degenerates into narrow self-interest without a strong ethical foundation". Companies make many social contributions such as job creation and tax payments regardless of ethical foundations. The more constructive objective would be to make businesses more aware of the good "business" opportunities that exist in solving social problems or serving the underserved.

Fixing What's Wrong with U.S. Politics

A recent article by HBS professor David Moss correctly identifies the problem in current U.S. politics as the inability of both political parties to put the country first. The HBS Working Knowledge abstract is below.

Fixing What's Wrong with U.S. Politics

Author:	David A. Moss
Publication:	Harvard Business Review 90, no. 3 (March 2012)

Abstract

In America today there's a growing sense that the political system is broken and that its ineffectiveness is a major threat to U.S. competitiveness. Why do so many think the political system is not working? Research shows that in Congress, Republicans and Democrats are more polarized than ever. They seem pulled apart by two starkly different conceptions of government: one viewing the government as inefficient, invasive, and easily corrupted, and another seeing it as a vehicle for solving people's problems. Yet the ideological divide may not be the true source of the breakdown. A look at U.S. history shows it's not new. Moreover, sharp ideological battles have often proved highly productive in policy terms, delivering the best ideas from both sides. In the 1840s, for instance, state politicians who were deeply skeptical of government pushed hard for balanced budget amendments while politicians at the other end of the spectrum demanded free public schools for all. In the end many states adopted both policies-a combination that proved enormously powerful. The problem today is that too many have come to view politics as war, where victory is paramount and "compromise" is a dirty word. This take-no-prisoners approach, which came into sharp relief during the debt-ceiling debate, threatens to cripple the best-of-both dynamic. Revitalizing America's culture of democracy-where the health of the nation comes first, above economic interest, party, and ideology-is essential. Business leaders must play a large role in this effort, because the implications for the economy are so great.

Read the article: http://hbr.org/2012/03/fixing-whats-wrong-with-us-politics/ar/1

 

One Year After Fukushima

Peter Kim sent me this video about Japan one year after the Fukushima nuclear disaster.

I worked in Japan for ten years. Makes me sad every time I see the destruction from the nuclear accident.

Related articles

• One year after Fukushima our nuclear industry remains ever vigilant (thehill.com)
• Japan's nuclear power plants all going offline by summer (theglobeandmail.com)

Non-profit Mergers

Image via Wikipedia

I recently gave a talk on social ventures, which included some trends that I see in this increasingly competitive space.

1. The number of non-profits in the U.S. is too large, over 1.5 million, which results in many incremental approaches and too few large scale ventures
2. Competition in social services is increasing as for-profits enter the space, driven by large market opportunities, Michael Porter's shared value and the popularity of social entrepreneurship.
3. The concept of "social" is becoming very cloudy as more and more people realize that objectives can be achieved without any consideration of the "do good" tag

The discussion of my ideas was very vigorous as the attendees basically stopped the speech to discuss some of the ideas. First time that ever happened. One idea that got a fairly thorough debate was the idea that non-profits should merge in order to reduce overheads and achieve larger scale. M&A in the non-profit world...what is this world coming to.

If you think this idea is far fetched, this story in Concurring Opinions talks about a "hostile takeover" of a foundation. 

Of course, the best example of this merger concept may be that Warren Buffett put his billions in the Gates Foundation. Mr. Buffett understands capital efficiency and scale.

 

Related articles

• Another Look at Social Entrepreneurship (sophisticatedfinance.typepad.com)
• Teaching at MIT Sloan School (sophisticatedfinance.typepad.com)
• Aaron Hurst's View on Running a Non-profit (sophisticatedfinance.typepad.com)
• Social Venture Checklist (sophisticatedfinance.typepad.com)

Educating Young Entrepreneurs

I have written frequently about the need to start entrepreneurship education at a much earlier age, perhaps as early as middle school. (Previous posts are here and here.) Two stories support this trend:

1. A prep school in Miami recently received an anonymous grant of $7 million to establish an entrepreneurship program
2. The Academy for Software Engineering, a new NYC public high school, is recruiting its first class. More detail in this post from AVC.

The related articles below talk about programs supported by the Kauffman Foundation and the University of Chicago. The quality of the people experimenting in this space and the exceptionally insightful early stage programs suggest that this trend should quickly become mainstream. 

Early takeaways from these programs:

• Focus on individual empowerment and student-centric learning approaches
• Make entrepreneurship an integral part of the curriculum or its own track
• Make real world mentors an important part of the program (VC and PE folks are probably better than small business owners or corporate types)
• Provide access to startup capital

If anyone needs an advisor on such a program or an easy to read book on developing a new business concept, you might look here.

Image credit: business.wsu.edu

Related articles on high school entrepreneurship programs

• The Ice House Entrepreneurship Program Facilitator Training (kauffman.org)
• Money Think (Moneythink.org)
• Good Maker Winner (Good.is)

Coffee Substituted for Coca Production

Time reports that Bolivian coca growers are switching to coffee, helped in part by a US AID program. As pointed out in the article, for poor farmers it is simply an economic decision. Coffee is a more valuable crop than coca when coffee prices exceed about $3 per pound. Coffee prices have been rising steadily since 2003, as shown in the chart below. 

Source: Wolfram Alpha

Is Capitalism in Crisis

Interesting article by Richard Posner on the Becker-Posner blog on the effects of advanced IT on capitalism and government. Some writing should just be quoted:

"I think there may be a looming crisis of capitalism, though one that has nothing to do with banking, but rather with technological progress, and specifically with the effect of that progress on income inequality. Technological progress in recent decades has included not only the well-known advances in computerization, communications, and medical treatment, but also important advances in marketing, including political influence and manipulation, and management. The overall effects of these advances on many fronts have included a sharpening of competition, an increase in government debt to finance middle-class entitlements, particularly medical, a reduction in the demand for manual labor, and an increase in the financial returns to IQ and to higher education (which are correlated). These developments seem to be increasing the inequality of income and wealth and creating sharper class divisions than the nation had become accustomed to in the decades following the end of the 1930s depression. 

There is nothing in the economic logic of capitalism, any more than in the biological logic of evolution, that drives an economy toward income equality. The basic logic of both systems is competition, and competition produces losers as well as winners. A class of workers can become extinct, just as a species can. The difference is that the combined effect of envy and democratic politics can result in policies that distort competition in order to increase the welfare of the losers in the competitive struggle. Such policies tend to be inefficient and thus to retard the smooth operation of capitalism as an economic growth engine. Evidence for this proposition is found in the sluggish economic performance of many European nations."

Sound like income inequality is a structural feature of the new economy. A change in education may be the only alternative to change this outcome. Further thoughts on these themes are here in a post titled "The End of the Industrial Age".

Related articles

• The biggest driver of income inequality: capital gains (theneteconomy.wordpress.com)
• Poll: Capitalism In Trouble Due To Income Inequality (miami.cbslocal.com)

How Entrepreneurship Flourishes

Image via Wikipedia

Recently I heard a lecture by a professor at the Harvard Graduate School of Education. The lecturer was discussing worldwide trends in education. Fostering creativity was a major theme, which was not being fulfilled. However, the country-by-country analysis failed to consider that certain failing countries were centrally controlled governments. Such governments typically prefer for the government to provide the "creativity" through a form of central planning. This approach is particularly prevalent in economic development.

This article from the NYT, "Entrepreneurial Spirit Awaits its Moment in the Middle East”, cites Joi Ito, the new Director of the MIT Media Lab, on entrepreneurship in the Middle East:

 “In five to ten years, I think this will be a very vibrant entrepreneurial hub [Middle East and North Africa], but when it is going to happen will depend a lot on how much the governments and big companies are willing to allow those small companies to grow here.”

I would point out that the Middle East and North Africa has a long history of centrally controlled governments.

When one considers the countries where entrepreneurship flourishes, the U.S., Israel, Brazil and Singapore immediately come to mind. Two of these countries have long histories as democracies, the third has been a successful democracy in recent years and the fourth is probably the most progressive centrally controlled government in history. However, I do not draw the conclusion that we should foster democracy in order to encourage entrepreneurship. Rather I think we should foster entrepreneurship recognizing that it is much more challenging in centrally controlled governments.

Entrepreneurship requires certain support in order to flourish:

1. Great universities (MIT, University of Singapore, etc.)
2. Access to capital (independently managed firms for seed, venture capital, private equity)
3. A class of "business" people (barter does not support entrepreneurship)

The good news is that the people exist everywhere. Access to capital can be arranged, with perhaps Israel offering the best example. To encourage entrepreneurship, the Israeli government allocated a significant amount of money to be run by foreign private sector venture capital firms. The Brazilian government tried the same approach but elected to manage the money itself and failed.

The challenge is in fostering great universities, especially in the areas of science, technology and maybe business. Perhaps Joi Ito plans to use the considerable expertise and resources of MIT to address this issue in northern Africa and the Middle East.

 

Why Western Civilization Succeeded: Lessons for U.S. Politicians

The Washington Post has a review of the new book by Niall Ferguson, "Civilization: The West and the Rest". Ferguson is a noted historian and professor at Harvard. In explaining the success of England and most of Europe post 1500, the reviewer cites Fergueson's six "institutional arrangements":

1. "Competition, meaning a decentralization of power among nations and within them, necessary to create the right environment for capitalism
2. Science, whose discoveries laid the basis not only for the Industrial Revolution but also for overwhelming military advantage
3. Property rights, which provided a framework for the rule of law and laid the foundation for shared political and economic power
4. Medicine, which led to a dramatic rise in life expectancy
5. A consumer focus to economic life that fueled demand for modern industrial products
6. A work ethic that provided a moral framework for savings, investment and hard toil"

These six themes also explain the success of the U.S.

It would be nice if U.S. politicians from both parties addressed these issues in the upcoming elections. Then the discussion would be on the role of states rights (1), smaller government (1) the environment (2), how to share economic and political power (3), the future of medicine (4) and individual responsibility (5,6). For example, "how to share economic and political power" might be a better discussion than budget deficits, wealth inequality and superpacs.  "The future of medicine" might lead to a better discussion of healthcare. A discussion of states rights might allow us to address certain issues at the local level where consensus might more easily be found, such as abortion, same sex marriage and education .

I found the book review on Arts & Letters Daily.

 

 

 

How to Survive the End of the Industrial Age

Many have recently written on the end of the industrial age of mass production and the new economy that is emerging. Seth Godin's article is particularly good and another post from Business Insider is equally thoughtful. My first post on the subject, "A Future of Individuals", is here.

Most commentators agree that jobs in big business (and perhaps government) will be greatly reduced and that individuals will need to manage their economic survival much more aggressively. Few have offered plans for how to do this, so I share a few thoughts:

• Ideas will be the product of the 21st century. Executable ideas will be the most valuable because they produce economic and social benefits. Pure theory in general will be less valuable because there is so much data and information available to quickly test theories.
• Successful people will demonstrate great skill in using digital media to disseminate there ideas, whether it be e-books, blogs, webinars or old fashion conferences. Success may be more dependent on digital media skills than on the quality of ideas. Remember several people typically have a new idea at the same time. As the world becomes more connected greater access to information will spawn more ideas....and more entrepreneurship.
• Qualifications will no longer be the exclusive domain of universities. The various approaches of online learning and app stores will create a much more "informal" system of recognition and certification that may become the norm. The lower cost of these offerings may accelerate the trend.
• Entrepreneurship and self-employment are the strategies most likely to succeed if you are not inclined to do manual labor (which will always be required). Such approaches put the responsibility for your economic and social well being squarely in your own hands. Israel Kirzner explained entrepreneurship as "the asymetry of information" or in the vernacular as "a unique insight". As information proliferates and is more widely available the opportunities for an "asymetry" should increase greatly. This is perhaps the good news, but remember there will be a lot more people looking for these asymetries.
• Solutions to social problems will increasingly be the "big market opportunity". The social problems are scaling much faster than the resources governments can bring to bear. While "do good" is popular today, in the future the slogan may be "it's a market, not a mission". C.K. Prahalad introduced this idea perhaps as early as 2002 in his book "The Fortune at the Bottom of the Pyramid". Prahalad argued that market driven solutions could alleviate poverty and its related problems.
• Capital organization has traditionally been viewed as silos: government, non-profits, Wall Street type capital markets. For many of the opportunities of the 21st century, I think this silo system will breakdown and different sources of capital will come together. Social entrepreneurship and certain investment theses at Deutsche Bank may be examples of this trend. Organizing capital in this multi-dimensional environment is a new and valuable skill which should spawn a new branch of the finacial industry. Doing this capital organizing at different requirement levels will generate a lot of new jobs in much the same way that investment banks of all sizes have proliferated in the last ten years.

 "However, what has vexed Mr. Obama as well as economists and policy makers is that Apple — and many of its high-technology peers — are not nearly as avid in creating American jobs as other famous companies were in their heydays." New York Times Not just the manufacturing jobs but all the design, engineering and logistics jobs.

"In any democratic nation with the freedom of speech, information can never be as strongly regulated by the public as our food, water, and air. Yet information is just as vital to our survival as the other three things we consume. That’s why personal responsibility in an age of mostly free information is vital to individual and social health." Clay Johnson The Information Diet: A Case for Conscious Consumption from Brain Pickings

“One of my central mathetic tenets is that the construction that takes place “in the head” often happens especially felicitously when it is supported by construction of a more public son “in the world” – a sand castle or a cake, a LEGO house or a corporation, a computer program, a poem, or a theory of the universe. Part of what I mean by “in the world” is that the product can be shown, discussed, examined, probed, and admired. It is out there.” Seymour Papert The Daily Papert

 

Related articles

• If You're an Average Worker You're Going Straight to the Bottom (businessinsider.com)
• A Future of Individuals (sophisticatedfinance.typepad.com)

China Econotracker

The Wall Street Journal is following a strategy to provide value added from data analysis of difficult to obtain sources. The Econotracker provides graphical information on China's economy from Chinese government data sources. Sample below.

Image credit: WSJ.com

The Miami Gambling Conundrum?

New York City made a large step forward with the announcement of the new Cornell Engineering School campus on City Island. This project is intended to serve as a stimulus for high tech startups and related jobs in NYC. Honolulu takes a different but equally innovative way to improving their city and creating jobs. CityCampHNL is described in OpenSource.org as:

"The CityCampHNL Hackathon is a free event that is open to anyone with an idea or an interest in contributing to tools that can better connect citizens with government information and services. Whether focused on traffic, trash pickup, community events, or neighborhood statistics, the possibilities are endless. Cash prizes are provided by event sponsors and will be awarded to the teams that develop the most innovative and useful application."

Better access to information is a fundamental driver in entrepreneurship.

Now we come to the plans in Miami. Miami is debating an initiative to allow casino gambling. Casino gambling creates minimum wage jobs and related jobs tend to be low paying or unsavory. In contrast to the modern ideas of NYC and Honolulu, Miami is considering an idea that dates back over 4000 years. Given the vitality of Miami and its role as the "capital" of Latin America, one would think we could do better than the pedestrian idea of casino gambling to create jobs and drive economic growth.

The leadership of Miami in government, education, business, non-profit and religious sectors need to come together and create a plan for economic development and job creation. The plan should recognize the importance of the digital era, environmental sustainability, the modern logistics infrastructure in the city and the uniqueness of Miami rather than being reactive to a 4000 year old idea. Quality of jobs should be an important consideration.

Related articles

• Genting: Our Miami casino won’t be the largest in the world (MiamiHerald.com)
• Cities Need to Foster Entrepreneurship (Sophisticated Finance)
• Urbanization: A New Business Opportunity (Sophisticated Finance)

Good Writing--Andrew Sullivan

Image via Wikipedia

We might digress into the common debate of liberals and conservatives, but we have countless recent examples of the futility of such efforts. Therefore, I merely post below a quote from a recent article in The Daily Beast that I found through 3quarksdaily. The quote is from Andrew Sullivan, who writes for The New Republic. I find the quote noteworthy for the quality of the writing. 

"...I did so not as a liberal, but as a conservative-minded independent appalled by the Bush administration’s record of war, debt, spending, and torture. I did not expect, or want, a messiah. I have one already, thank you very much. And there have been many times when I have disagreed with decisions Obama has made—to drop the Bowles-Simpson debt commission, to ignore the war crimes of the recent past, and to launch a war in Libya without Congress’s sanction, to cite three. But given the enormity of what he inherited, and given what he explicitly promised, it remains simply a fact that Obama has delivered in a way that the unhinged right and purist left have yet to understand or absorb."

I would take exception to some of the views expressed in the quote, but the writing is exemplary.

Cities Need to Foster Entrepreneurship

As promised in this first post, I am going to discuss urbanization more in 2012. To refresh your memory, over 50 percent of the world's population now lives in cities. However, many cities lack the resources to provide modern infrastructure on the required scale. Such inadequate infrastructure impedes job creation, which is already imperiled by the shift from the industrial production model to a digital model. This article from Business Insider discusses the difficulty in new job creation.

Tech Crunch takes up the urbanization theme in this article, "A City is a Startup". Not surprising perhaps, they argue for entrepreneurship as a means to transform cities into viable, modern locations. They cite the recent announcement by New York City of its new Cornell Engineering campus on City Island as evidence. 

Universities and particularly engineering schools are critical to the future viability of cities. (Did I mention I teach at two engineering schools?) However, it should also be pointed out that there are other requirements:

1. Modern transportation and logistics infrastructure
2. Access to equity capital and particulalrly seed money for new ventures
3. An environment of non-exclusion regardless of race, religious affiliation or national origin
4. A robust digital infrastructure (interesting report here)
5. Adequate public school system
6. Financially stable municipal government largely free of corruption

I will come back to these themes in future posts.