The Green Gap

In the Cold War, we feared a Missile Gap was a strategic weakness. Nowadays, we must awaken to the fact that the Green Gap is true strategic weakness: the nations whose economies will thrive in the coming years will not be those with the biggest factories, but those with the most sustainable, efficient, and ecological markets. What we require is a Strategic "Green Reserve" of ecological design to weather the coming changes that both climate and resource scarcity will force on the international economy.

Saturday, 19 February 2011

Jane Jacobs

I just started reading Cities and the Wealth of Nations right after finishing The Economy of Cities. I have to say, the one led very well into the other and I am enjoying it immensely. Her arguments are plainly laid out, and it almost sounds like she's your professorial aunt telling you the fundamentals of economic life over tea and biscuits. The tone is personal, direct, and easy to read.

I was talking to someone today about one of the concepts that Jane rails against as being a false kind of economic growth: transplants. Jane basically says that the only real kind of economic growth is import replacement. Import replacement happens in a city when it has enough money from exporting to be able to import stuff. It then develops a capacity to build the import locally. One of her more favourite examples is Tokyo - originally they imported foreign bicycles. Since they were expensive, a lively bunch of repair shops opened up to service the clientele who couldn't afford to buy more than one bicycle. These repairmen started fabricating spare parts. Some genius decided that with enough spare parts, he had a whole bicycle, and poof! Import replacement.

Transplantation is what happens when a branch plant moves into another city. Boom, all of a sudden people have jobs, there's more money, it looks like the economy is picking up... until the branch plant closes down. The branch plant brings all its "stuff" with it for support - it comes pre-made and self-contained. In Tokyo, the infrastructure to buid bicycles appeared naturally, and evolved into bicycle manufacturing that was appropriate to the time and place it appeared. A transplanted factory is just that: something that comes out of nowhere with no natural evolution involved.

It appeared to me that this could be illustrated really easily by a zoo analogy. What Jacobs is arguing is that a healthy economy is a healthy ecosystem. Healthy ecosystems naturally allow for the gradual support of higher and higher order creatures until the food chain is immensely deep. Tokyo was like a healthy economic ecology: the natural support systems for the higher-order organisation of "bike manufacturing" grew natually out of an existing market need (repair), which grew out of an existing market need (transportation), which grew out of an existing market need (city expansion)... and so on. In the case of a transplant, it's more like "hey, Clem, check out my corn- HAWT DANG, A FACTORY!"

So what we have is, in fact, a difference between nature and a zoo. The bicycles were built in an economic "nature", a place that naturally fosters a continuous lifecycle of business. It grows and evolves over time, as a system, to diversify and deepen its economic interrelationships and strengthen its overall ecology. Like a herd of elephants on the savannah, there is an entire network of interrelationships keeping the food in their bellies. Elephants die, elephants have sex and have babies, and so there are always elephants. In the case of the transplant, it's a zoo. You put the elephant in the zoo. You have to feed the elephant. You have to clean up the elephant's poo. The elephant dies or runs away. Either you get yourself a new elephant, or you close the zoo. That zoo-like mentality is easy to see in modern cities that have seemingly no economic future. Offer tax cuts to lure the branch plant. Get the people jobs.  Look the other way when they make a mess, or use tax dollars to clean it up. Give them anything they need in order to stay. What's a branch plant's best way of getting concessions?

Simply tell the municipal government "we're thinking of offshoring some of our more costly support services"...

Say no to transplants.

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