Thriving from the Center: Freeing Urban Innovation from Ideology

With patience, with equanimity, and with discernment, we can identify new potentials to provide opportunities for growth and prosperity to everyone.
Matt Krieg
By Blake Everett (Own work) [CC0], via Wikimedia Commons

San Francisco’s innovation ecosystem has long been the envy of cities everywhere

In last Autumn’s edition of City Journal, Harvard economist Edward Glaeser set forth a conservative agenda for urban progress, which bemoaned a perceived resurgence of interest in redistribution and regulation across America’s urban centers. Today’s civic challenges are not unique in their need for balanced, accountable, and equitable solutions; requiring a combination of mindful reforms with sincere hope for more egalitarian prosperity. Glaeser’s unabashed partiality makes it difficult to accept his proposals without a degree of skepticism. Although littered with parochial right-wing barbs and talking points, his plan does embrace some innovative solutions that can responsibly achieve civic progress. We are left to separate the efficacious wheat from the ideological chaff.

The first prong of Glaeser’s agenda calls for policies that will promote and support entrepreneurship, which includes evaluating public loan programs and lifting burdensome new business regulations. His call for evaluation, though well-intentioned, seems somewhat biased toward failure, as he cites his own statistically insignificant studies that nevertheless suggest loan ineffectiveness. Glaeser further suggests pooling several loan programs together, accepting applications from a large sample size of qualifying businesses but only providing loans to a select group in order to compare those that received public financing to those that did not. Despite difficulties for controlling the differences in competition and markets across cities, using a randomized approach could help make the case for public loans.

Regulatory relief, however, is an immediate and commonsense approach to fostering entrepreneurship. The examples of cumbersome and archaic permitting processes that Glaeser references are indeed unacceptable examples of inefficient government procedure. If a one-stop permitting agency can effectively streamline the process of starting a business without sacrificing public safety, it could prove to be an economical and straightforward improvement to a city’s entrepreneurial environment. To the extent that administrative fees can be removed, it could also have a determinative impact on potential founders with meager startup capital.

Glaeser’s advocacy for continued experimentation with competition and choice in education is sound, but as with other issues he presents, it’s important that implementation does offer a wider range of solutions for students and families as opposed to the limitations of the current charter school movement. While charter schools have shown to be effective in many urban situations across the country, it is important that we continue to seek improvement and do not take their future success for granted. Continuous, objective evaluation and improvement measures will be critical as the number of stakeholders and independent institutions, both public and private, interact in novel and dynamic ways.

The push for increased vocational training – Glaeser notes could take the form of software development and coding – is interesting when framed within the current debate pitting the liberal arts against STEM education. High-level politicians, including President Obama, have recently questioned the value of a liberal arts education, insinuating that it does not sufficiently prepare students for productive careers. While the assumption underlying such statements – that workforce readiness is the sole purpose of an education – is false, a romantic attachment to the liberal arts belies the economic needs and practical necessities of many young Americans today.

If we can generally agree that we do not need to teach kindergartners to code, and that the necessity to specialize in a more practical field will typically increase with the level of schooling, we should be able to reach a reasonable consensus on when and how to guide students toward career-centric education. This is why Glaeser’s proposal to augment a broad high school curriculum with vocational training, rather than replace it, seems so appropriate. It may require more innovation and a greater degree of collaboration between public schools and private organizations, but it will ultimately avoid some of the pitfalls that he mentions such as tenured teachers and the stigma sometimes attached to vocational training.

Finally, in his discussion on affordable housing and the minimum wage, Glaeser provides – using Jack and the Beanstalk as an example – some basic lessons on free market economic theory. In his story, a king demands that wizards sell a certain amount of their magic beans at affordable prices, but rising market prices eventually drive the wizards to other, better markets. While the theory is sound, it oversimplifies the complex mix of economic goals and societal realities that must be considered when crafting sound policy. Following his penchant for fairy tales, let us imagine what might happen if his policies were implemented unequivocally across America’s cities. What would those cities look like from a cultural perspective or an aesthetic perspective? Would they possess the dynamism that catalyzes entrepreneurialism? Would the immigrant communities that have “historically benefitted” from that entrepreneurial spirit still be there? Could they afford to be? We cannot ignore the market truisms that Glaeser presents, but we must acknowledge that the communities we want to engender require a more nuanced approach.

Glaeser’s position on a variety of nuanced issues reflects much of our policy discourse today in its tendency to flee to the safety of an extreme. Extremes are easy. For example, a belief in the free market, which may seemingly be rooted in critical thought, can entrench itself as an unshakeable worldview that is uncontestable. The same ease that draws one person toward it, eventually draws a hoard, and soon we can look around and feel doubly reassured by standing in a crowd. But the aims and the needs of the Thriving City are far too complex for such an artless approach to policy. Unfettered economic development should not be pursued to the detriment of the vulnerable, just as the irresponsible tax and spend policies of yesterday must be left behind to the less sustainable practices of the past.

How then, do we bridge the gap? How do we foster an environment that allows for responsible economic growth while at the same time pursuing social accord? With innovation. By unleashing the free-market forces of competition, evaluation, and accountability on our toughest social challenges. By connecting capital, resources, and knowledge from disparate sectors that have not collaborated in the past. Glaeser espouses some of these same ideals, but they are clouded by an adherence to an ideology. The ideas are there, but the tone and the message are tainted. And message matters. In today’s polarized political climate, it is critical that good ideas flow freely, without the baggage of partisan attachment. To move forward effectively, we need to abandon our tired default drives and ask how we can harness the power of markets and use it better. With patience, with equanimity, and with discernment, we can identify new potentials to provide opportunities for growth and prosperity to everyone.

Matt Krieg is a graduate student at the Darden School of Business at the University of Virginia. Prior to business school, he taught English in Cambodia and spent four years working in investment banking and private equity. He studied classics and business administration at Washington & Lee University.