Wishful thinking is a dangerous drug. Some pundits and policymakers believe that, if your intentions are pure and you have the “right” people in power, all government needs to do is sprinkle a little pixie dust (in the form of billions of taxpayer dollars) and magical things will happen.
Of course, reality has a funny way of throwing a wrench into the best-laid plans. Which brings me to the question I raise in a new 2-part series for
Discourse magazine: Can governments replicate Silicon Valley everywhere?
In the first installment, I explore the track record of federal and state attempts to build tech clusters, science parks & “regional innovation hubs” using state subsidies and industrial policy. This is highly relevant today because of the huge new industrial policy push at the federal level is building on top of growing state and local efforts to create tech hubs, science parks, or various other types of industrial “clusters.
At the federal level, this summer, the Senate passed a 2,300-page industrial policy bill, the “United States Innovation and Competition Act of 2021,” that included almost $10 billion over four years for a Department of Commerce-led effort to fund 20 new regional technology hubs, “in a manner that ensures geographic diversity and representation from communities of differing populations.” A similar proposal that is moving in the House, the “Regional Innovation Act of 2021,” proposes almost $7 billion over five years for 10 regional tech hubs. Meanwhile, the Biden administration also is pitching ideas for new high-tech hubs. In late July, the Commerce Department’s Economic Development Administration announced plans to allocate $1 billion in pandemic recovery funds to create or expand “regional industry clusters” as part of the administration’s new Build Back Better Regional Challenge. Among the possible ideas the agency said might win funding are an “artificial intelligence corridor,” an “agriculture-technology cluster” in rural coal counties, a “blue economy cluster” in coastal regions, and a “climate-friendly electric vehicle cluster.”
In my essay, I note that the economic literature on these efforts has been fairly negative, to put it mildly. Continue reading →
The Cato Institute is seeking a “researcher to support a campaign to educate the public and policymakers on the implications of biometric identification systems related to immigration policy reforms.
The better applicants will know how many different governmental systems work—legislation, appropriation, regulation, procurement, grant-making, and so on—and have zeal to chase down all the ways the national ID builders are using them to advance their cause.
Immigration reform legislation in the Senate that features a vast expansion of E-Verify is yet another reason to join the fight against having a national ID in the United States.
I have a blog post up at Cato@Liberty today about Senate Democrats’ national ID plans. The thing is nine printed pages long. It doesn’t get my recommendation that you read the whole thing—unless you really jones for identity-systems talk. Here’s a summary:
The plan is confusing, disorganized, repetitive, and sometimes contradictory. Summarizing it is a little like trying to piece together the egg when all you have is the omelet, but three themes emerge: First, this summary backs away from an earlier claim that there would not be a biometric national identity database. There will be a national biometric database. Second, repeating the word “fraud-proof” does not make this national ID system fraud proof. Third, this national ID system definitely paves the way for uses beyond work authorization. This is the comprehensive national identity system that people across the ideological and political spectrum oppose.
I pity the Hill staffer who had to write the national ID parts of the plan. He or she almost certainly doesn’t know enough to write sensibly about the design of identity systems, and the demands of politics require the plan to talk about impossible things as if they’re possible, and even easy.
So reports the Wall Street Journal:
Lawmakers working to craft a new comprehensive immigration bill have settled on a way to prevent employers from hiring illegal immigrants: a national biometric identification card all American workers would eventually be required to obtain.
It’s the natural evolution of the policy called “internal enforcement” of immigration law, as I wrote in my Cato Institute paper, “Franz Kafka’s Solution to Illegal Immigration.”
Once in place, watch for this national ID to regulate access to financial services, housing, medical care and prescriptions—and, of course, serve as an internal passport.
It’s bad enough that America educates the world’s best and brightest, only to send them home for lack of visas. But to drive away immigrants who come to the U.S. and start businesses is just unconscionable. I hope Paul Graham’s idea for a “Founder Visa” takes off: 10,000 / year for founders of companies that are started in the U.S. Brad Feld has a great column on this today, answering questions about how the visa would work.
As the Economist said on the related issue of H1-B visas for skilled foreign workers:
SILICON VALLEY, as the old joke goes, was built on ICs—Indians and Chinese that is, not integrated circuits. As of the last decennial census, in 2000, more than half of all the engineers in the valley were foreign-born, and about half of those were either Indian or Chinese—and since 2000 the ratio of Indians and Chinese is reckoned to have gone up steeply. Understandably, therefore Silicon Valley has strong views on America’s visa regime.
I suspect the demographics for entrepreneurs are similar, especially in Sillicon Valley, which has long been driven largely by “enginpreneurs” rather than MBAs.
What an absurd country we live in: We accept, for better or worse, massive illegal immigration across our porous southern border as a fact of life, but can’t muster the political will to give legal status to the most creative and innovative from around the world drawn to the Land of Opportunity made possible by capitalism. So, being dutiful and law-abiding, these “Talented Tenth” go home to suffer under the dead weight of bureaucracies even more oppressive, incompetent and corrupt than our own. How sad.
A few gems from George Gilder’s 1990 masterpiece Microcosm: the Quantum Revolution in Economics & Technology as I work my way through the book:
Predatory Pricing. Gilder details how early microchip manufacturers created wholly new markets put Say’s law into action: supply creating its own demand. Not only did these companies introduce new technologies, but they created demand by slashing the prices of those technologies by multiple orders of magnitude (10-10,000x) even before they figured out how to lower production costs enough to make even a small profit. While such practices would later give rise to charges of “predatory pricing” and “dumping,” Gilder explains:
Selling below cost is the crux of all enterprise. It regularly transforms expensive and cumbersome luxuries into elegant mass products. It has been the genius of American industry since the era when Rockefeller and Carnegie radically reduced the prices of oil and steel. (122)
The Learning Curve: Gilder explains the dynamic by which prices drop so consistently in innovative new industries:
Early in the life of a product, uncertainty afflicts every part of the process. An unstable process means energy use per unit will be at its height. Both fuels and materials are wasted. High informational entropy in the process also produces high physical entropy.
The benefits of the learning curve largely reflect the replacement of uncertainty with knowledge. The result can be a production process using less materials, less fuel, less reworks, narrower tolerances, and less supervision, overcoming entropy of all forms with information. This curve, in all its implications, is the
fundamental law of economic growth and progress. (125)
The Curve of the Mind: Gilder explains the broader implications of the Learning Curve to the competitiveness of the market economy, and how easily yesterday’s giants can become tomorrow’s easy prey: Continue reading →
The 111th Congress and the new Obama administration should scrap “E-Verify.” The federal government’s inchoate immigration background check system is the culmination of 20 years’ failure to create a tolerable “internal enforcement” program for U.S. immigration law. Rather than building on past failure, the new Congress and president should pull the plug on E-Verify and reform immigration law so that it aligns with the nation’s economic need for labor.
More here.
Arnold Kling on the Sergey Brin effect and inequality:
Income inequality in the United States consists of two gaps. The first gap is an upper-lower gap, between those with a college education and those without. The second is an upper-upper gap, between those with high incomes and those with extraordinarily high incomes.
The upper-lower gap reflects changes in the structure of the economy. New technologies place a premium on cognitive ability. Harvard University economists Claudia Goldin and Lawrence Katz have dubbed this “skill-biased technological change.” In today’s economy, more value added comes from knowledge work, and relatively less comes from unskilled labor.
The Technology Liberation Front is the tech policy blog dedicated to keeping politicians' hands off the 'net and everything else related to technology.