Monday, November 19, 2012

Read here how Seattle re-invented itself as the high tech hub it is famous for. Oh, wait, what? It did not do ANYTHING? Ok, then they should AT LEAST reimburse Bill Gates for the U-haul rental that made it possible...

Decaying cities looking to revitalize often make pilmages to successful cities to learn how "they did it" and to see if they can copy that success at home.

Often there is no "they did it" at all.  It was luck and spontanaiety.

Seattle is a nice example. Seattle was not always the clean, high tech, progressive, shining city on the hill that we all know and love today:
"...But in the late 1970s, Seattle was in very different conditions. Seattle as an economy was heavily focused on traditional manufacturing, and services for lumbers and [?] industries. As you can imagine, in the 1970s, these were not great industries to have. The only innovative part of their economy was Boeing. But Boeing was struggling in the late 1970s, laying off people by the thousands. So the economy was in really poor shape, and people were leaving the city by the thousands..." (Source: EconTalk)
So, what did the governing Fathers (and Mothers) of the city do to re-rev its engines?  Well, nothing, to be exact:
"...But there's something that happened that changed the history of the city forever, and it has to do with Microsoft. Microsoft was not founded in Seattle. At the time it was in Albuquerque, New Mexico. Albuquerque at the time was more high tech than Seattle. And in fact the main reason Microsoft was there was that their first client was there. Microsoft stayed there for four years and was doing fine, was prospering. But in 1979, Bill Gates and Paul Allen, the founders, decided that they wanted to be close to their families--who were in Seattle. So they relocated the company back to Seattle. Now, at the time this was a small company, 15 employees. And nobody really paid attention to this move. But in retrospect, that was the seed that was responsible for the growth of the high tech sector in Seattle and the complete reshaping of the local economy, and the rebirth of the city both economically, culturally, and in terms of amenities...."(Source: EconTalk)
 
So, a fateful decision by 2 young entrepreneurs who had an idea, ambition and just wanted to be closer to home, saved a city and revitalized a region. 

Adam Smith put it this way (emphasis on the last sentence):
“Every individual is continually exerting himself to find out the most advantageous employment for whatever capital he can command. It is his own advantage, indeed, and not that of the society which he has in view. But the study of his own advantage naturally, or rather necessarily, leads him to prefer that employment which is most advantageous to society... He intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was not part of his intention” ― Adam Smith, An Inquiry into the Nature & Causes of the Wealth of Nations, Vol 1
 
Or dumb luck. Either one.  :)

Note: I heard this story from a podcast at EconTalk.  If you need something to listen to on long walks or a jog/run I recommend there podcasts. Each last about an hour. The Host, Russ Roberts, comes from the Libertarian-leaning point of view but he often has guests on the "other side".
 

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