The King and $1

For someone who follows both sports and business avidly, I actually know very little about sports business. But this article, linked to from Marginal Revolution, piqued my interest: "The Discount Dynasty." The author, Chris Ballard, argues that Cleveland Cavaliers uber-star LeBron James should re-up for $1 a year. The parallel he makes is Steve Jobs working at Apple for $1, but the analogy isn't strong enough: because of the NBA's salary cap rules, LBJ earning $1 is actually a huge competitive advantage for the team he plays for, because they can use that cap space to get a lot more talent than would otherwise be allowed to co-exist with him.

Not that this guarantees a championship - you still have to play the games - but you wonder why athletes who rake in big bucks in endorsements don't do this more often. Salaries become marginally useful even if you like the high life, whereas championships are the scarcest of resources that may be worth sacrificing those marginal dollars for.

Ballard is right that it makes particular sense for LBJ, a trailblazing and iconic figure if there ever was one. In fact, I wonder why his people haven't auctioned off the idea as part of a "Follow LBJ" reality show, in which his every move - sports-related, business-related, and so on - is captured on film and manipulated to help craft the image he works so hard to polish. So c'mon, LeBron: play for a $1, pick your favorite Robin to your Batman, and let the championships roll in. I'll be telling my grandkids about a very short list of basketball players I saw when I was growing up - Magic/Bird, MJ, the Dream, Shaq, Duncan, Kobe, AI - but with a run of titles under your belt, you could be the G.O.A.T.

California's Dreamin'

Having lived in California from ages 3 to 18, I have tons of family and friends there, easily my densest aggregation of loved ones outside of Philadelphia. Almost all are solidly upper-middle-class, not tottering on the brink of financial or social disaster. So you can forgive them for not conveying any panic about California’s deteriorating fiscal situation. And, doomsday scenarios notwithstanding, there’s something to be said about a place that has beautiful weather, beautiful people, and a sunny, can-do spirit.

And yet. Is California the happy frog slowly boiling to death in the pot of water? Political gerrymandering, imposing unions, and tight environmental regulations have led to a panoply of simmering challenges, from a state budget on the brink, overcrowded prisons, underfunded schools, intrastate disputes over water, and population declines to lower-cost regions. City Journal responds to Time Magazine’s rosy outlook on California (“Despite Its Woes, California's Dream Still Lives”) with its own, more guarded take (“Time is On California’s Side, but Time is Not”).

It is often said that as California goes, so goes the rest of the nation. And some of the “frog in boiling water” mindset can be seen at a national level as well: “We’re America: people will always want to live/work/play here!” I don’t subscribe to the whole “this is the end of the American hegemony,” but neither do I think we can coast from here on out and hope that our contenders will shoot themselves in the foot before they eat us for lunch.

I’ll say this about California like I think about the US as a whole: so long as people are sufficiently motivated to work hard, innovate, and be engaged, and so long as governments are properly held accountable to do what only they can do and tread lightly where they have the possibility of doing harm, I’m bullish. There is too much pent-up creativity, entrepreneurship, and freedom-loving in Californians and Americans for me to think otherwise. And yet, I see signs that the water temperature is slowly creeping up, and I am worried; and I am even more worried that the frog in the pot hasn’t yet noticed the rising temperature.

The City of Brotherly Yuks

The results are in, and the Greater Philadelphia Tourism Marketing Corporation’s recent “With Love, Philadelphia” ad campaign was a roaring success. Seeking to soften Philly’s edges, and offer a soothing voice amidst so much panic in the world, this campaign was a series of letters from Philadelphia to potential visitors. It exuded humor and warmth, poked fun at itself, and left viewers laughing out loud or (even harder to do) smiling knowingly. (Of course, my favorite had a little swagger to it: “Dear World Champions: oh wait, that’s us.”) Well done, GPTMC, and to those who haven’t yet made the trip, consider Philadelphia for your next vacation.

Times Two

Two New York Times columnists I try to follow are David Brooks and Tom Friedman. In fact, this year I was able to enjoy two books by each, all of which I recommend: Brooks' "Bobos in Paradise" and "On Paradise Drive," and Friedman's "The Lexus and the Olive Tree" and "The World is Flat." While I might not agree with everything they say, I appreciate that they're thinking about the things I'm thinking about, and bring perspectives far wiser and layered than mine.

This week, Brooks nails an issue I had been discussing with a co-worker over lunch, which is the value judgments inherent in our current health care reform debate: "The Values Question ." The $64 trillion question, for which there is no right answer but plenty of thought-provoking discussion, is what we want our security/vitality balance to be. Or, as I put it to my co-worker in noting that Social Security was created at a time when life expectancies were only a few years past 65, "If we want to have our lives be a third childhood, a third working, and a third retired, we need to be willing to pay a whole lot more in taxes." In fact, this is how much of Europe works, which is great if you like having six weeks of vacation but not so great if you think about all of the innovations that spill out of American brains, labs, and offices.

Friedman notes that what will determine whether the 21st century belongs to America or China is innovation and governance: "Advice from Grandma." I agree with the sentiment but not with his conclusion: that America has China beat on innovation, but its governance has become so flawed that its lead may be in jeopardy. Friedman laments that the way we've organized politics keeps us from doing the right thing; those authoritarian leaders in China, in contrast, can just decide what's right and make it happen. I think it was Churchill who said democracy is the worst form of government except for all the others, and I subscribe to that. For it is our decentralized approach to power that frees us to be the best both in innovation and governance: creativity is stifled when people are impaired in responding freely to opportunities, and governance is compromised when power is overly centralized. I admit we have to run faster to keep up with China, but we should be leery and not jealous of its ability to make big decisions in a centralized way.

But that's just my two cents. Keep those columns coming, Messieurs Brooks and Friedman. At a time of great shouting from the media, this reader appreciates the calm and measured words you two produce.

Buying Opportunity: Urban Places

Last week, I attended one of this region’s more popular Urban Land Institute events, the Emerging Trends in Real Estate conference. The speakers presenting on national trends verified something I’ve been hearing a lot of from experts around here in Philadelphia, which is that a lot of developers are winding down their suburban portfolios and looking to rebalance with more urban assets. My take is that this is a confluence of a number of forces, some that are related to the current recession and some that are more long-narrative in nature:

• A lot of cities have essentially completed their very painful transition from manufacturing centers (pre-truck and pre-Interstate Highway, stuff got built in cities because we used rail to move it to the customers) to knowledge centers (because that’s where the universities, hospitals, and research institutions are). That doesn’t mean crime, schools, and corruption aren’t still a problem, but it does mean that many cities have stopped free-falling and some are enjoying quite a renaissance.

• Looking more narrowly at housing, it’s the suburbs that are overbuilt, both in terms of volume as well as in mix, namely a glut of single-family unattached units; meanwhile, any demographer will tell you the rising demand will be for smaller, multi-family products. On a related note, this go-round’s foreclosure crisis is unprecedented in its particular devastation in auto-centric places like Florida, Nevada, Arizona, and California.

• Energy costs and related uncertainties make auto-dependent regions very dangerous, and developers are taking notice. By the way, have I mentioned I live in a city that is an easy day trip to both the nation’s financial capital and its political capital, without ever once stepping in a car? I promise you that that kind of access is going to get increasingly accounted for in real estate values over time.

• Furthermore, people are at their breaking point when it comes to nightmarish commutes. Dearer gas prices, time becoming a more precious commodity, and more cars piling onto highway infrastructure that isn’t keeping up - all of this points to untransited locations becoming far less popular. You do know that I walk to work, church, and school, right?

• Finally, it used to be that cities had the higher barriers to entry, between union dominance, Byzantine regulations, and brownfield issues. But suburbs are catching up: in large part because of nervous neighbors unwilling to allow even the thought of increased density, developers are seeing the amount of time from concept to completion rise in suburbs to the point that it is just as high if not higher than in cities.

So the next you hear about someone going from a suburban location to an urban location, don't think they've lost their head or are following their heart. Rather, it might just be because they see a buying opportunity.

Green in the Balance

If there's anything we economists understand - and it's fair to say there's a lot we don't - it's that life is about trade-offs. I have been particularly fascinated with the extent to which this truism intersects with the current "green" movement. In our "you can have it all" culture, it is tempting to want to brush aside the "inconvenient truth" about trade-offs. But I think that does a disservice to the movement's very noble objectives, and lead me to worry that its proponents are either more interested in looking green than being green, or that they have deluded themselves into thinking that somehow this particular topic is not bound by the physics of trade-offs. If I may offer but three quotes from articles I've recently read, which challenge some of the incomplete thinking we often see on green issues:

* That LEED-certified buildings must necessarily be the greenest way to do office. "How green can it possibly be when every employee is driving 30 or 40 miles to arrive at a LEED-certified office building?" – “City Prepares for Green-Building Conference in 2012,” Philadelphia Inquirer (October 15, 2009).

* That the labor-intensive nature of green energy is a salve in times of high unemployment. “To be sure, there are very real benefits from limiting climate change. But if it takes more jobs to produce ‘green energy,’ that is a net cost to the economy, not a benefit.” – “Green Jobs,” Marginal Revolution (October 19, 2009).

* That locally produced food is necessarily better for the environment. “Localism ‘is not always the most environmentally sound solution if more emissions are generated at other stages of the product life cycle than during transport.’” – “Food That Travels Well,” New York Times (August 6, 2007).

One can make very valid counter-arguments to all three of these points. My point is not to refute these and other green sentiments wholesale. I am not some anti-green, reactionary hater, reveling in poking holes in the latest fad (although I know some of that type, and find conversation with them absolutely delicious). Rather, I want the same things as the greenies; I just think that without introducing this notion of trade-offs, we either don't advance the cause or, even worse, hinder it further. As labeled previously, the above statements are not wrong; they are just incomplete, missing some key counter-points that must be accounted for if we really want to make some progress.

This topic has intensified in heat of late, and unfortunately has caused people to close off, rather than open up, to opposing arguments - witness the heat over the global cooling chapter in SuperFreakonomics, or the hacked Climate Research Unit server. Let's all agree, even if we disagree, that we're trying to achieve the same things; and, for once, listen to each other so we actually learn a thing or two, figure out what can and should be done, and advance the football on this issue. Unless, of course, you care less about the environment and more about either looking good or defending your ideology; then I have no time to just blow hot air.

Microphone Fiend

How does an Asian kid from suburban San Jose end up living and raising his own kids in inner city Philadelphia? The urban setting of one of the world's premier business schools is one obvious answer, since it was Wharton that drew me to Philadelphia in the first place. And of course one can credit God's shaping and molding me to have concern about city issues and city folks as I evolved in my understanding of the Bible and my adherence to it.

But, as Robert Clinton's "The Making of a Leader" points out, Christian leaders have in their childhoods hints of what is to come, in the form of what Clinton calls "sovereign foundations." That is to say, God weaves fascinating narratives as He thrusts us through our life trajectories; and He plants some hints along the way that we might not have picked up at the time but in retrospect make sense as part of the preparation for what is to come.

In my case, though I had mostly Asian friends and lived in a relatively white part of town, I tended to gravitate towards blackish themes: listening to KMEL (think Digital Underground and LL Cool J) instead of modern rock (think Cure and New Order), learning about African-American history, and quoting Malcolm and Martin in speech and debate assignments. Maybe I was having an identity crisis, not proud enough of my own heritage and shallowly trading off of another in the name of seeking to be different or cool. Maybe I was woefully naive or even insulting in my forays. Maybe I was just a dumb teenager, forgivably curious and experimental.

Whether I ought to be scolded or sainted, I dabbled in many urban influences. And however ludicrous (not Ludacris) I must have looked, God was doing some sovereign foundation-building in preparing me for a more mature exploration of urban themes as a Christian transplanted into a city setting.

It was during my teen years that one of my adored MCs, Chuck D of Public Enemy, noted that rap music was "the black CNN," and despite the frequent use of profanity and, um, let's just say not so godly topics and terms, one can argue that God used the likes of NWA and Too Short to provide me with early exposure to urban black culture. I will never know what it means to be black in America, let alone poor and black and marginalized in America's most desperate inner city settings; but, through hip hop, I at least got to hear a little bit of what it was like.

(At one point, I even used a $20 tape recorder and whatever rap song instrumentals I could scrounge up to lay down a whole track of rap songs under the moniker of "MC True." I'm embarrassed to release any lyrics from those tracks that involved me bragging or swearing, so I'll share one from my one song about my newfound Christian faith: "Each of y'all gotta know about the G-O-D, so listen to me, here's a story 'bout the J-C; Jesus Christ, the Messiah, a vision of love like Mariah." In case you had forgotten, Mariah Carey's single, "Vision of Love," went #1 during my junior year in high school. Good God, I'm old. At the time, I thought it was so clever that I had made a Mariah Carey reference and rhymed her first name with "Messiah." OK, now I'm just babbling.)

If there was ever an MC whose skills I respected, who channeled me into the ethos of the young urban black man, it was Rakim. Which is why I enjoyed Ta-Nehisi Coates' recent commentary about the 18th Letter and in particular the way his sensational "Microphone Fiend" typified the swagger needed to survive on the street: "Feed Me Hip-Hop and I Start Trembling." Again, I do not claim to know the first thing about the experience of so many young black boys living in urban America. But in order for me, a geeky Asian kid from suburban San Jose, to eventually journey in Philadelphia as an urban Christian, it was paramount that I heard early exposure to that narrative. Thanks to Rakim and others for expressing it so eloquently and poignantly, and to God for using even my non-conforming interests during my teen years to prepare me for my adult life.

God is So Money

A provocative cover story for this year's Atlantic Magazine: "Did Christianity Cause the Crash?" The article's thesis is that the places and groups where the so-called "prosperity gospel" ("God wants to make you rich if only you'll believe") coincided with the very places and groups that over-leveraged in pursuit of the good life. Indeed, riches are seductive; and when your local holy man is telling you not only not to stifle or temper that itch but to pursue it as an act of faith, you can see how people might get carried away.

Of course, the main take-away for many believers, in this country at least, should be the opposite of the prosperity gospel. Not that being rich is inherently bad. But it is downward mobility and not upward mobility that many of us ought to interpret the Bible inviting us to pursue, given our relative wealth and how it threatens to insulate us from the kind of dependence on God and connection to those in need that the Bible clearly describes as the path we ought to take. This is a far cry from the weeping televangelist's invitation to make a donation to his/her ministry, and "watch God multiply that donation in your life," as if the ultimate end is financial riches, and the act of giving merely the means to that end.

And yet, in our loathing of these manifestations of the prosperity gospel, let us not forget that God does indeed reward those who give. John Piper, in speaking directly to his congregation about giving to the church, quotes Malachi 3:10: "Bring the full tithes into the storehouse, that there may be food in my house; and thereby put me to the test, says the Lord of hosts, if I will not open the windows of heaven for you and pour down for you an overflowing blessing."

The important wrinkle in this astounding promise is Piper's point earlier in the sermon, that it matters where we put our money. In the passage from Luke that he is riffing off of, Jesus accuses the Pharisees of focusing on tithing (giving 10 percent of their income) instead of on justice; but Pastor Piper correctly points out that Jesus doesn't dis the tithing itself. Rather, giving 10 percent is good; it's just that the other 90 percent wasn't being used to advance justice issues.

This is a principle I appreciated my former pastor stressing in his sermons: to follow Jesus means giving 100 percent. The church may get 10 percent of my money (and 5 percent of my time), but it matters for eternity what I do with the other 90 percent of my money (and 95 percent of my time). It is an act of faith to give God the first 10 percent of our incomes, for it means we are trusting God that the remaining 90 percent is sufficient for what we need to live. And if that faith follows through to the remaining 90 percent, in consecrating it for seeking justice and doing mercy, then in fact there is a sense that God rewards our tithing by making provision for our needs.

Ultimately, as with all such issues, the difference between this sort of feedback loop and what is sold under the label of "prosperity gospel" is in who gets glory and what ends are being pursued. The prosperity gospel does not attempt to dissuade our innate desire for comfort and riches, and uses God and the Bible as a means to achieve what we believe is best for us. In contrast, the real gospel does not present God as a miserly tyrant who revels in our discomfort and poverty; but as one who does merit our complete trust and praise, who asks for 10 percent for the administration of the church and 90 percent for the advancement of justice and mercy, who sometimes uses seasons or even entire lifetimes of discomfort and poverty to shape and mold us towards those purposes, and who promises, in riches and poverty, in comfort and discomfort, to be all-sufficient in provision and protection for those who trust in Him.

In this day and age, that is a peculiar message, and one many choose not to believe, some by overt rejection and some by assuming that being a Christian can mean something else. But this is the Christianity I see when I read my Bible, and I believe it to be the path to life.

Lessons in Executive Leadership

Living in Philadelphia, one can’t help but make some connection between a young and vibrant president elected on a mandate for change and a young and vibrant mayor elected on a mandate for change. So I could not help but think both locally and nationally when it came to this recent article by Phil Goldsmith, former managing director for the City of Philadelphia: “Mayor at Mid-term: How's He Doing?”

To maintain a sense of neutrality, given my work life’s close connection with the Nutter Administration as far as our various engagements with the City, I won’t say to what extent I agree with Mr. Goldsmith’s interpretations and conclusions. But I do think he highlights some leadership do’s and don’ts that I would agree with, and it makes for stimulating discussion to evaluate whether Mayor Nutter or President Obama have effectively heeded them:

1. Executive leadership is not a popularity contest. Which is dissonant with the fact that campaigning is. A majority of people voted for Nutter/Obama because they like him; and, even if they now disagree with his performance, they continue to like him. But executive leadership means making tough choices, which may upset individual groups or even a majority of people. So needing everyone or even most everyone to like you is a bad trait for executive leaders.

2. Look forward, not back. Again, dissonant with the fact that effective campaigning involves caricaturing the current administration to demonstrate the need for change. But once in office, an identity needs to be forged that isn’t “I’m not like the other guy.” We’ve already forgotten the other guy; we want to know, “Who are you?”

3. Process vs. projects. I’m as process-oriented as they come, but executive leaders need to create momentum via signature initiatives, which are reflective of the ethos of the moment and which are tied together by some unifying and motivating theme. Where process comes into play is making sure those under you know their roles, don’t step on each others’ toes, and have ample room and resources to get stuff done. (I’ll withhold, at least in this public forum, my take on whether Obama having so many czars facilitates or impedes inter-departmental cooperation, or to what extent Nutter’s top-ranking officials do or do not collaborate where issues naturally intersect agencies.)

Color Conscious

I've often wondered when and how Jada would perceive race. We have tried to put her in as many multi-cultural settings as possible, so she can interact with and observe people from a wide range of skin tones, socio-economic backgrounds, and professions, and not build up any incorrect or unhelpful stereotypes. It helps that our neighborhood, church, and closest playground and park are all pretty balanced.

Important to this discussion, we have not had as many opportunities to be near other Asian folks. For example, her past two schools were all black kids except for her and Aaron, and her current class has six white kids, six black kids, and only one other Asian kid. We tend to see lots of Asian people when we visit my parents in San Jose, but we only get out there once a year.

So Amy and I were intrigued when, one evening last week, Jada announced that one of her new friends at school was "dark," and another new friend was "white." Amy and I looked at each other, and then Amy asked, "And what are you?" Jada replied confidently, as if it was patently obvious, "I'm dark white." When I asked about another Asian friend of hers, she said, "She's dark white, too."

Dark white? I love it.

A Difficult Statement

Every once in a while, I get to a passage in the Bible that, upon reading it, I close the book as fast as I can. Earlier this week was one of those moments, as I came across this verse:

"If anyone wishes to come after Me, he must deny himself, and take up his cross daily and follow Me." (Luke 9:23)

"Taking up your cross" has been effectively sanitized in a society that is predominantly Christian in its stated belief and in which wearing a shiny gold or silver cross is not at all unusual. If you actually take the time to think about it a little more, you may arrive at some somewhat noble platitude about self-sacrifice and endurance.

But, transported back to Jesus' day, your ears would hear these words and cringe. The Romans did not invent the cross as a form of execution, but they made it into a torturous, humiliating, and graphic sentence. The condemned were further demeaned by being made to carry the T-shaped pieces of wood on their backs to the place where they would be nailed to it and left to die a gruesome and public death.

Though Jesus, immediately before this statement, announces in no uncertain terms that he too will suffer and die, there is likely no thought in his listeners' heads that it will be by crucifixion. Even those well-read in the Law and the Prophets would not necessarily see any obvious foreshadowing of the Messiah dying in this way.

In other words, we have the luxury of knowing that when Jesus says, "take up your cross and follow Me," He is inviting us to participate in the same road and consequence that He did. But Jesus' contemporary listeners had no such perspective. To them, He may as well have said, "To follow Me means that every day you will experience the worst form of pain, suffering, abasement, and death that is available today."

Not the sort of response a religious figure expects to be met with lots of hands going up saying, "Oh yes, sign me up for that!" And, later on in the gospel of Luke, Jesus tells a story that is intended to challenge those who sought to follow Him to "count the cost," and again He references that brutal Roman torture device: "And anyone who does not carry his cross and follow me cannot be my disciple" (Luke 14:27). (I wonder if any PR professionals back in the day ever pulled Jesus aside to instruct Him that such statements weren't going to help Him win the "most followers" award any time soon.)

So you can understand why I wanted to close my Bible as soon as I could. We who have the perspective of the entire narrative neatly printed in one book cannot claim that there is uncertainty about the journey set before us. If in fact we want to be followers of Jesus, it is akin to lugging all the equipment for capital punishment on our backs, strapping ourselves in, and facing death - on a daily basis, and in a public way.

At least here in America, this is not the sort of lifestyle that is often seen in modern Christians. Can anyone differentiate us, or are we no different in seeking our own comfort, our own glory, our own happiness? Have we reined in our impulses for self-preservation and instant gratification because of our greater desire to live lives consistent with what we believe? Or have we instead figured out how to fit Christian tenets upon a foundation that is uncomfortable with things like denial and sacrifice and death?

Don't get me wrong: there is nothing spiritual about dourness and ascetism. Christianity of all religions can be argued to be the earthiest and most physical and material. God became flesh. Song of Songs in the Old Testament would give most of today's erotic literature a run for its money. In Deuteronomy 14, the Law commands God's people that if you live too far away to give your harvest contribution to the temple, you should instead convert it into silver and then buy whatever you want with it to have a raging party.

As with all things in our faith, we do well to look at Jesus. His first miracle was to quietly make more alcohol when a bride and groom faced embarrassment at their banquet when they ran out of wine (John 2). And yet His last act was to remain silent and stoic as He was rammed through an unjust legal process, condemned as a criminal, spat on and mocked, and left to hang and die on a cross. And, tellingly, the writer of Hebrews tells us that it was for joy that He endured it all (Hebrews 12:2).

What about us? Are we so into our temporary pleasures and our own self-determination and self-satisfaction that we are disqualifying ourselves from a far greater pleasure, exaltation, and comfort? Do we live lives that respond properly to Jesus' statement that only those who die daily can truly follow Him, or have we built our lives upon some other foundation and tried to figure out after the fact how to stick our favorite Christian principles on top of that? Do we present a sanitized, watered-down version of the Christian story because we think it will be more palatable to modern ears, or do we offer a more accurate description of what it means to be a Christian, no matter how dissonant and unpopular it might sound?

I would rather not have to answer those questions for myself, although without much thought I think I know the answers; and I am not happy with them. Which is why I closed the book so quickly earlier this week. And which is why I haven't been able to stop thinking about it since then.

Lazy Linking

Back from a blog-free weekend (not counting the massive rehash of old stuff I'm finally getting around to putting in this space), I will continue mailing it in by offering some lazy linking: worthwhile stories that I have no more than one sentence to say in response, with no cohesive theme to unify them all together. Enjoy!

* Nice to see Penn elevate water to the important status it deserves as a social, political, and economic issue: "Water is Next Year's Academic Theme."

* I did not like the Asian jokes put forth by new talk show hosts George Lopez and Wanda Sykes: "Talk, Talk, Talk."

* An important element of the non-profit sector's challenge in growing young leaders is the whole work/life balance: "Young Chief Executives are Finding Few Peers."

* Out of the "bests" of the decade, at least according to Paste Magazine, I have heard at least one song on two of the 50 albums, watched four of the 50 movies, seen at least one episode of four of the 20 TV shows, played none of the 20 video games, read two of the 20 books, seen none of the 20 music videos, and seen none of the 25 documentaries; in other words, I'm kind of out of it.

* Netherlands is correctly making more of car ownership a variable cost rather than mostly a fixed cost: "Netherlands to Levy 'Green' Road Tax by the Kilometre." [Hat tip to Greg Mankiw's blog for the link.]

* My firm's local real estate price index, all the way up to Q3 2009, is now available on our website: "Philadelphia Regional House Price Indices, 2009 Q3."

* If, like me, you've been waiting for a good article on how to make the most of all-you-can-eat buffets, your wait is over: "The All-Inclusive All-You-Can-Eat Buffet Guide." [Hat tip to Marginal Revolution for the link.]

Old Post: On Basic Research

[Originally posted December 2005]

One of the most important principles in economic growth is synergy. That is, if I have “1” and you have “1,” then together we have “2”; but if we can come together and somehow make our “1” and “1” into “3,” then we have achieved growth. That is what makes Donald Stokes’ book, Pasteur’s Quadrant, so important to those in government who seek economic growth, for it illustrates why and how science and government can form a richer, more synergistic compact.

Stokes describes how much of government’s relationship to the scientific community over the past sixty years has been shaped by Vannevar Bush’s report, “Science, the Endless Frontier.” Commissioned by Franklin D. Roosevelt in 1944, the report was to cast a vision for science’s peacetime role after World War II. Bush’s description of scientific research was a linear one, from basic research to applied research and from scientific knowledge to technology transfer. It fit with the existing separation between pure and applied science, and was affirmed by the US’s massive funding of science during the war, most notably in the basic nuclear research that resulted in the development of nuclear weapons. Although many of Bush’s proposals were rejected, by and large government accepted his view of a pipeline, in which hefty investments in basic science on the one end would lead directly to important innovations on the other.

Stokes finds this one-dimensional perspective to be both inconsistent with historical scientific research and overly simplistic for our modern world. He laments the loss of genuine dialogue between science and government, and thus offers a new, two-dimensional paradigm, in which “use-inspired basic research” is upheld as an important middle ground between pure basic research and pure applied research. Pure basic research, typified by the work of Niels Bohr, is concerned with fundamental understanding and not with issues of use, while pure applied research, typified by the work of Thomas Edison, is concerned with issues of use and not with fundamental understanding. In contrast, use-inspired basic research, typified by the work of Louis Pasteur, seeks both understanding and use, and by linking the two offers richer pay-offs to science and technology, as well as the chance for science and government to better connect.

There is now a heightened urgency to renew this compact. Pure basic research is an important foundation from which countries can respond quickly to political threats and economic trends. However, the end of World War II and now of the Cold War has many believing that scientific research is less about national security, an inherently governmental function, and more about global competitiveness, which many believe is better left to the private sector. Moreover, it is easier for the public to appreciate science for what it does, not for what it is, and to see scientists seeking government funding as just another interest group looking out for itself.

Use-inspired basic research, then, offers a way for science and government to invest in pure basic research but also make the connection to societally important solutions and technological innovation. Japan after World War II, for example, saw more easily the grays between pure and applied science, and invested heavily in basic science linked to practical solutions, resulting in impressive science-based technology gains, industry leadership, and economic growth.

A new compact between government and science, then, would renew government’s support of pure basic research, connect it with practical applications, and infuse it with political authority. Bifurcating pure inquiry from practical use is inferior to blending the two, funding research that seeks a duality of goals, and demanding results that advance both agendas. Use-inspired basic research also opens the door for science and technology to better support one another, rather than information and lessons flowing only in one direction and for one purpose.

Most politicians think they understand the link between technological innovation and economic development, but to them that means recruiting existing technology companies, for the jobs and tax revenues they represent. Stealing a tech firm from another city may make a big splash in the local papers, but if “1” and “1” only add up to “2,” that’s not growth, just redistribution.

“1 + 1 = 3” synergies come from true technological innovations, which require a hearty mix of pure basic research, pure applied research, and use-inspired basic research. Easier said than done – how many politicians have announced fancy biotech initiatives with great fanfare but with little substance. Yet governments can and should play an important role in catalyzing efforts on all three fronts, both in direct agency work and in support of private sector work.

The state of Maryland is a good example of dynamic collaboration between the public and private sector. Maryland boasts excellent academic and research institutions, proximity to federal government opportunities, and vibrant business clusters in industries such as homeland security, aerospace, and biosciences. The state understands the interplay between technological innovation and economic growth, as evidenced by fruitful public/private partnerships that span the spectrum between pure basic research, pure technology transfer, and use-inspired basic research. Whether the work is done by Johns Hopkins University, the National Institutes of Health, the Maryland Technology Development Corporation, or a for-profit company, the state of Maryland is committed to fostering the kinds of dialogue between science and government that Stokes suggests is necessary for technology and innovation. When you can support the work of the Bohrs, the Edisons, and the Pasteurs of the world, and get them to talk to each other, like Maryland has been able to, now you have yourself an effective technology policy.

Old Post: On State Economic Development

[Originally posted December 2005]

Dear Diary,

I can’t believe I’ve been asked to be the new DCED secretary. I also can’t believe I’m going to say yes, because even though this is my dream job, it also looks to be a nightmare of a job. To begin with, the state serves such a wide range of industries (both Old and New Economy) and communities (urban, suburban, and rural), as well as countless businessmen, politicians, and neighborhoods far too used to seeing DCED as a conduit for some special program for them.

And in many ways, Pennsylvania is showing its age. We’re in the top quintile for science and engineering grads but in the bottom half for “gazelle” jobs and 47th in overall employment growth . We ranked 19th in a recent New Economy poll, which sounds good until you see that all of our neighbors were in the top ten (Maryland #5, New Jersey #6, Delaware #9, New York #10) . We lost over 100,000 young people ages 25 to 34 between 1990 and 2000, the most of any state . And state finances are becoming strained by rising health care and pension costs.

I’m not even sure I can define success. Is my job to make residents richer? Get the Governor reelected? Create new jobs? Spend lots of money? Or just stay out of trouble? I don’t think I can do all of these things simultaneously. If our workers become more productive, that might mean less jobs in the state, which won’t go over well come election time. And if “economic stimulus” here means politically intervening into business matters, I know I’m not smart enough to always make the right call on what to invest in and where. Plus, there are so many other factors out of my control – like national trends, mass transit, and public education – that have a far greater impact on the state’s economic health than anything I can do from my seat.

So I’ve got a tough job in a tough economy with tough competitors. So what? If I had gone with my colleagues who were recruiting me to help them start their IT company, I’d be in the exact same place. In fact, it’s the challenge that gets me up in the morning – the challenge of creating something from scratch, against all odds. If Pennsylvania could attract, retain, and produce more entrepreneurs like this, we’d be a much more competitive and thriving state.

Easier said than done. At least in my new role, I can do a few things to help make that happen. First, I can work with the Governor and the Secretary of Education to get entrepreneurship into more of our high school curricula. I may not know how to support the hot sectors of the present or what are the hot sectors of the future, but I do know that an educated workforce is a more productive one, especially one learned in topics like business formation, financial literacy, and market innovation. Not only will we be seeding the state with future entrepreneurs, we might even attract some current ones who want their kids to learn what they do in school.

Second, we have to find a way to attract, engage, and retain our college grads. I heard that Philadelphia keeps 29% of the college grads not originally from there, while Boston keeps 42% . I’m a believer in Schumpeter’s idea of “creative destruction” – that long-term economic growth happens when entrepreneurs innovate and old sectors are transformed or replaced altogether. If we could just match Boston’s numbers, we’re talking 2500 to 3000 more college-educated “imports” per year, just the kind of injection of innovators we need to shake up our economy.

But with all this talk about the young and energetic, let’s not forget about what a great asset we have in our elderly and disabled. They, too, can be mobilized in this effort to increase the amount of entrepreneurship that is taking place in the state. SCORE, of which Pennsylvania has 14 chapters, is just one way startups are tapping into the wealth of knowledge contained in our older businesspeople . And the disabled start businesses at twice the national rate . So we ought to do more to get the elderly and disabled in on this “creative destruction.”

Lastly, we must push the Internet as a way to make business, education, and government faster and more efficient. Even our stodgiest firms can thrive if they harness the Internet to manage inventory, coordinate logistics, and connect with customers. I love how Drexel has made its campus wireless and given every student a laptop – now professors can communicate more easily, and the school doesn’t have to invest as much in computer labs and library books. We can use e-government to further accelerate commerce, by streamlining the process for applying for licenses, filing taxes, and doing business with the state. Speed begets more speed; whether it’s new production methods, new products, or new markets, it’s good for economic growth.

It’s a big risk to walk away from our current strategy of developing programs to attract sexy industries and appease important constituents; at least then, you can point to big deals, money spent, and jobs created. But I’m convinced that it’s time to go a new way in Pennsylvania. By promoting entrepreneurship to our high school kids, our college grads, and our elderly and disabled; by supporting the use of the Internet to make business, education, and government faster and better; and most importantly, by letting the market decide which industries are hot and where capital should be invested – we can do better. Sounds like a dream job to me.

Old Post: On Transportation Investment

[Originally posted December 2005]

I am writing today to exhort you to consider investing in improvements in fixed-route transportation between Pittsburgh, Harrisburg, and Philadelphia, and to offer a framework for analyzing and developing such a proposal. This initiative, if studied and implemented correctly, will accrue numerous gains in both the short and long run.

We begin by defining fixed-route transportation. According to the Federal Transit Administration, such systems operate along prescribed routes according to fixed schedules, and include such means as buses, subways, light rail, and intercity rail.

Next, we must establish the objectives of pursuing such an initiative. I can think of four:

• Economic growth. We can achieve greater output per capita when we have greater efficiency in moving people and cargo, by lowering transport costs, optimizing supply chains, and making labor more mobile. Also, good fixed-route systems can be a key factor in states retaining, attracting, and incubating high-performing businesses.

• Personal productivity. More and better choices for commuters increases their quality of life, saves their precious time, and enables them to be productive during and after their trips to and from work, in comparison to crawling through rush-hour traffic.

• Environmental conservation. Greater reliance on fixed-route systems takes cars off the road, which reduces emissions, fuel consumption, and highway wear and tear. According to the Transportation Research Board, Americans wasted 3.6 billion hours and consumed 5.7 billion gallons of gas idling in highway traffic in 2004.

• Political gains. In your position, half of the people will complain that you’re spending too much money, and the other half that you’re not accomplishing enough (some will do both). A smart proposal on enhancing fixed-route systems, with its careful cost-benefits analyses and its diverse gains, promises to satisfy a broad range of critics.

So how do we make such a proposal? First, I suggest you commission an inventorying and reviewing of existing fixed-route improvement proposals, as well as a request for new proposals. In order to translate desired outcomes into actual outcomes, we must have as many good alternatives to choose from, and take a good look at each of them.

Second, we must continue to gather data quantifying the impact of improving fixed-route systems on economic growth, personal productivity, and environmental conservation. This body of support data will help us conduct a careful analysis of the alternatives. It will also prove useful when we monitor actual work that has been commissioned.

Third, we should initiate a process for determining our selection criteria, a process that should have two elements. Technically, we must engage transportation experts who can help clarify issues of environmental impact, cost-benefit trade-offs, and resource allocation. Politically, we must huddle with advisors to decide our priority of outcomes and geographic areas and to strategize the public relations aspect of this initiative.

Inherent in determining criteria is the need to prioritize between competing outcomes. Our current political and fiscal environment constrains us from pursuing all gains in all places equally. Politically and technically, then, we will have to ask ourselves, the experts, other decision-makers, and the general public what it is that we want. What our fixed-route improvement plan looks like will depend on whether this is a geographic play, an environmental play, or a productivity play. If we are most interested in geography, we should give more weight to proposals that benefit certain areas. If we are most interested in the environment, we should give credence to the principles of the “smart growth” movement. And if we are most interested in productivity, we should look more closely at key lines and modes that can accelerate the movement of people and/or cargo and in doing so improve our chances at catalyzing economic growth.

Ultimately, an investment in improving fixed-route transportation in Pennsylvania can be a beneficial one, for you politically and for the state economically. It is the kind of initiative toward which we can and should apply thorough technical analysis. And it offers a myriad of potential benefits to a diversity of stakeholders. It is because of these many possible gains that we should undertake a careful prioritization of outcomes, which will determine the nature and location of our investments in this work. Whatever we decide, I am confident that such an initiative will be favorable for your political prospects and economically beneficial for the Commonwealth of Pennsylvania.

Old Post: Burglarized

[Originally posted September 14, 2001]

Our house was broken into last night. While we were sleeping, someone came in through an open window and took cash, wallets, passports, and other important items. We have had to change our door locks, cancel our credit cards, and assure our tenants. Right now, even as I type this, I am sitting in a room where an unknown burglar came in, took things, and then left.

Amy is alternately distraught and enraged, sometimes upset that sentimental things were stolen from her and sometimes ready to find the culprit and execute vengeance. Me, I’m just numb. This has all been too much for me to process in one week.

I was supposed to be in Seattle this week. My flight was scheduled for Wednesday, the day after the twin terrorist attacks. I was supposed to be at a conference. I was looking forward to staying with a college friend of mine, seeing some of my relatives, and enjoying the sights in the city in which I was born. Earlier this week, I was praying for God to care of my baby while I was out of town, as I know that she struggles when I am away.

I let my mind wander into the land of what-if. What if I was already in Seattle, and then stranded by the ban on commercial air travel? What if I was apart from my wife when all of us had to deal with the emotion of horrific media images, lost friends and family, the threat of terrorism at our doorstep? What if Amy was alone when that burglar entered our house? What if she was sleeping downstairs, as she often does when she can’t sleep in her own bed, in the room that the burglar entered to get inside?

I take solace in the fact that Amy and I are safe, that nothing that we lost can’t eventually be cancelled or replaced, and that I was here and not thousands of miles away. But I am also numb. You can know in your mind that burglary takes place, that there are people out there who are willing to break into other peoples’ houses and take things that don’t belong to them.

But when it happens to you, there is a sense of violation. There is a feeling of sacredness about our house that is no longer here. There is an uneasy feeling that someone out there has our social security numbers and passports.

These are indeed the times that try our souls. And mine is weary. May God bless us all.

Old Post: 9/11 Prayer Requests

[Originally posted September 13, 2001]

There is much to pray about in the face of the twin terrorist attacks earlier this week. Although I could not stay for the duration of Tuesday evening's impromptu prayer vigil, I was first struck by the fact that our first reaction as a congregation was to come together and pray. You can learn much from people and groups from how they respond to crisis. We can say all we want to say in our vision statements, but when the rubber hits the road, what is our gut response? I am proud that I belong to a church body whose first response in crisis is to come together and pray.

I cannot catalog all that deserves prayer in this time of sorrow and need, but my heart is heavy with two requests:

1. Even as our hearts demand justice for the atrocities that we see played out on TV, we must be sobered about our own need for mercy. We might argue that the evil in our own hearts is of much less magnitude than that in the hearts of these perpetrators, but we cannot rightly argue that it is of a different nature. All of us have sinned and fallen short of the glory of God. All of us are deserving of condemnation. "If you did mark iniquities, O LORD, who could stand? But with You there is forgiveness that You may be feared" (Psalm 130).

2. Politically, the world is very unstable right now. I am personally not a pacifist; I believe that there is sometimes justification for war and even for killing. But I believe such courses of action must be entered into prayerfully, purposefully, and considerately, and not out of revenge, impatience, or passion. And I believe that such action has severe consequences. Although I trust in God and believe that He is LORD over history and its rulers, I honestly fear for the future of our world. May God bless America; may God bless us all.

Old Post: On Taxing Online Sales

[Originally posted December 2005]

It takes discipline and intelligence for legislators to forgo today’s revenue for tomorrow’s growth. This brief exhorts you to exercise that discipline and intelligence and oppose any measures to tax Internet sales. Such a tax would be logistically challenging, philosophically antithetical to the nature of the medium, and fiscally incorrect. Most importantly, it would be detrimental to economic growth because it would hinder, rather than help, a technology that effectively catalyzes innovation, entrepreneurship, and productivity.

To be sure, it is certainly tempting to want to support such a tax. Forrester Research reports that B2B and B2C transactions in the US totaled almost $3 trillion in 2004. It is not surprising that states, which generate a large portion of their revenues from sales taxes, are beginning to wonder why such a large and growing proportion of commercial transactions taking place within their borders is tax-exempt. In fact, this summer 18 state tax collectors met to call for an end to the moratorium on Internet sales taxes, a moratorium first instituted by a 1992 Supreme Court ruling prohibiting out-of-state retailers from collecting sales taxes.

Nevertheless, taxing the Internet is not a good idea. We’ll save the most important consideration, economic growth, for last. First, let’s consider a number of other perspectives:

• Logistically, it is an enormous challenge to calculate and collect taxes on transactions for which the physical location of buyer and seller are irrelevant (and in some cases, impossible to determine) and in which multiple states (and thus multiple tax rates) are involved

• Legally, the US Supreme Court already established the “physical presence” standard when they ruled on mail-order catalogs in 1992, and e-commerce has not been seen as different

• Philosophically, the Internet is open-source by nature and consumer purchasing data is private information; excessive government intrusion would violate both principles

• Fiscally, states should be decreasing and not increasing their reliance on sales tax revenue, since the source is highly volatile and is more regressive than other taxes

The most important reason to oppose taxing the Internet, though, is that such a tax would trade tomorrow’s growth for today’s revenue. Although the dotcom mania’s promises of new paradigms and the death of old economy firms were inflated, the Internet’s ability to radically transform our economy has not been lost. In fact, even relatively early in its life cycle, the Internet has already had a noticeable impact on productivity and growth, by driving down transaction costs, increasing the efficiency of managing value chains, and improving the lot for both buyers and sellers through better information and greater competition. It is estimated that these factors contribute half a percentage point annually to US Gross Domestic Product.

Bear in mind what this economic growth is that we all seek. It can be defined as steadily rising productivity, or sustainable increases in output per capita. Transformative technologies like the Internet can exponentially increase the amount of output that can be produced with the same input because by nature they make possible the “new combinations” that economist Joseph Schumpeter argued were necessary for innovation, entrepreneurship, and growth. In particular, the Internet has sparked the development of new products, accelerated the opening of new markets, and transformed the management of production processes and supply chains.


Taxing the Internet, while providing some immediate revenue for states, would diminish the Internet’s role in achieving these new combinations and in stimulating innovation and growth. States that tax the Internet may find themselves with a new source of revenue, but at the cost of being seen as (and of being) a place that is not about new combinations, innovation, and entrepreneurship. These states, relative to others that are more accommodating to technology and entrepreneurship, will enjoy less economic growth as a result.

Perhaps I am divulging my party affiliation in putting it this way, but whatever you tax you provide a disincentive for, and whatever you subsidize you provide an incentive for. Because of the Internet’s role in catalyzing economic growth, it is a medium that ought to be subsidized, not taxed. The states that are clamoring for taxation of Internet sales have, to date, focused on streamlining the logistical process of calculating and collecting the tax itself. While this is certainly an important challenge to overcome, it misses the point that the problem with taxing Internet sales is not fundamentally an administrative one, but rather one of economic growth. Such a tax might net some revenue today, but at the expense of growth tomorrow.

(A useful background read on the subject of the Internet and economic growth is Robert Litan and Alice Rivlin’s Beyond the Dotcoms: The Economic Promise of the Internet. Litan and Rivlin understand that the transformative potential of the Internet was never about selling pet food online, but rather about catalyzing the kind of frictionless commerce and technological innovation that is necessary for economic growth to take place. Litan and Rivlin’s book was used heavily in preparing this brief.)

Old Post: On Economic Growth vs. Economic Development

[Originally posted December 2005]

Picture this scene: two toddlers fidgeting at the kitchen table, each with a piece of cake before them. They look at the now-empty cake tin and, realizing they are partaking of the last two pieces, begin to eye their own piece and that of their sibling’s. Immediately, they begin to complain – “His piece is bigger!” “No, hers is!” – oblivious to the fact that another cake is baking in the oven. Forks flying, they desperately try to steal bites from each other. The older sibling ends up with a little more than the younger, most of the cake has now crumbled to the floor, and neither will be enjoying the freshly baked cake now because of their misdeeds.

This is what passes for urban economic development nowadays: politicians and localities stealing “bites” from each other, with most of the “crumbs” landing on the floor. When agencies are asked about their economic development strategies, they respond with words like “attraction” and “retention.” New Jersey tried to woo CIGNA to its side of the river, while Philadelphia hustled to keep Comcast downtown, all in the name of “economic development.” But while we fight over pieces of the cake, who’s trying to figure out how to make more cake?

Maybe we should focus less on economic development, in which all too often we settle for political interventions to redistribute existing resources, and more on economic growth, which Princeton University defines as “steady growth in the productive capacity of the economy.” Increased productivity leads to all sorts of good things, just as partaking in a freshly baked cake is much better than fighting over an increasingly crumbly cake. As explained by Robert Litan and Alice Rivlin in their book, Beyond the Dotcoms, increased productivity means higher profits, which can lead to one of two things: higher wages or lower prices. In both cases, our purchasing power increases, and we can therefore enjoy a higher standard of living.

Economic development without economic growth does not lead to increased productivity and often leads to decreased productivity. Just as fighting over cake sometimes leaves you with crumbs on the floor, fighting over businesses and jobs costs time and money, not to mention the adjustment costs that are incurred if those businesses and jobs relocate. No matter to our politicians: what counts is that we have more businesses than our neighboring locality, that we were able to close the deal, and that we were able to create new jobs for our citizens. Only we didn’t really create new jobs, we just relocated existing ones. It all seems a wee bit childish.

So how do we achieve economic growth? And how do we get our politicians to quit fighting like toddlers and calling it economic development? As for the first question, the answer lies in stimulating innovation, which usually happens via technology, entrepreneurship, and education. The US Bureau of Economic Analysis tracks national productive output by a measure called Gross Domestic Product (GDP). On the expense side, GDP is the sum of consumption, investment, government purchases, and net exports. On the income side, GDP is the sum of compensation, taxes, corporate profits, and capital costs. No matter which side of GDP you are looking at, you’ll increase that number not by moving businesses, activities, and jobs around, but by creating new businesses, activities, and jobs, or upgrading the ones that already exist.

That’s where innovation comes in. For example, Litan and Rivlin speak of the Internet’s ability to drive down transaction costs, increase efficiency in managing value chains, and improve market competition by increasing the number of buyers and sellers and the transparency of prices and information. They estimate the Internet will account for a $125 to $250 billion impact on GDP over a five-year period, adding a ¼ to a ½ percent to GDP.

The Arkansas Science and Technology Authority understands the importance of investing in the kind of innovation that will stimulate economic growth and not just economic development. In a 2003 study entitled “The Keys to Growth in the New Economy: Investing in Discovery, Engineering, and Entrepreneurship,” John Ahlen and Mark Diggs stress the creation of new firms as a vital component in a multi-dimensional approach to economic growth.

Finally, both Litan and Rivlin as well as Ahlen and Diggs highlight education as an effective way to achieve economic growth. Litan and Rivlin use the phrase, “human investment,” while Ahlen and Diggs speak of “maximizing the potential of individuals through education.”

So innovation through technology, entrepreneurship, and education is the gateway to economic growth. But how do we get the politicians to help? An important but underrated answer is to quit fighting. Just as Mother won’t give a new cake to two warring toddlers, economic growth doesn’t happen as easily where politicians are refusing to collaborate. Secondly, politicians can certainly do things to stimulate technology, entrepreneurship, and education, although I am loath to hold government responsible for responding nimbly and accurately to market trends.

Finally, economic development and economic growth are not totally unrelated. In a 1998 study, the Center for Policy Initiatives found that the lower the level of urban poverty in a region, the more robust its economic growth, inferring that efforts to reduce economic inequality can and do lead to improved regional economic performance.

So there is a role for the politicians to play: make sure the cake gets divvied up somewhat fairly, create welcoming climates for innovation via technology, entrepreneurship, and education to take place, and don’t fight too much with your sibling politicians. It sounds like a piece of cake.

Old Post: On Eminent Domain (2)

[Originally posted December 2005]

In a recent issue, The Economist reported that 90% of Americans disapprove of the kinds of property seizures allowed by the recent Supreme Court ruling in Kelo v. New London. As a practitioner in the field of economic development (albeit still a naïve one), count me among the 10%. What makes the case so relevant is that it gets at the vital questions facing us in the field: what is economic development, what does success look like, and how do we achieve it?

Through a non-profit agency called the New London Development Corporation, the City of New London in Connecticut sought to redevelop its Fort Trumbull area in response to decades of economic decline caused by dying industries. It created a comprehensive plan for the area, which included a state park, retail, and 80 new residences, as well as infrastructure in support of a Pfizer research facility next to the development area. After passing through the appropriate review channels at the city and state level, it initiated condemnation of the properties of owners who refused to voluntarily sell. These owners filed suit, claiming such seizures violated the “public use” restriction in the Constitution. The case made it all the way to the Supreme Court, where in a 5-4 decision, the Court held that New London’s intentions qualified as “public use.”

But any win by the city and those in favor of eminent domain has come at the cost of heated public outcry against this expansion of government power. The Economist suggests that the Kelo case will galvanize property-rights activists like Roe v. Wade did for the anti-abortion movement some thirty years ago. Several states have already passed “anti-Kelo” legislation, limiting funding for municipalities who use eminent domain. And New London and NLDC, the “victors” in the case, have had to play defense as the media portrays the ruling as enabling governments to conspire with big business to bulldoze historic homes and displace the poor.

As with any political issue, different interest groups have different agendas based on their different viewpoints. After all, as I learned at Fels, “where you stand depends on where you sit.” So I could dissect the Kelo case from a number of perspectives. If I’m fighting a similar battle with my locality, like the residents of Ardmore who would be affected by a transit-oriented development proposed by the township, I’d be upset that the expanded definition of “public use” has opened the door for governments to wield eminent domain in more situations. If I’m a legal scholar, I could pore over Justice Stevens’ opinion and the briefs filed by Justices Kennedy (for), O’Connor (against), and Thomas (against), and weigh the city’s actions against legal precedent and constitutional interpretation. Or I could consider the perspective of the private developers, whose job has been made simultaneously easier by the streamlined approach to land assemblage and harder by the backlash against public/private eminent domain actions.

But my perspective is as an economic development practitioner, one employed by the City of New London. And the Kelo case informs my answers to those three questions I asked earlier:

1. What is economic development? At its best, a political intervention to redistribute and expand the economic pie. I’m glad I took that Politics, Technology, and Economic Development course at Fels, because economic development has everything to do with politics and technology. Any time you redistribute existing resources, you’re going to have to get political. And if you want to grow new resources, technology can provide the tools to increase productivity (i.e. output per capita). So any economic development strategy must be political and technological. In a paper published after the Kelo ruling, NLDC delineated an economic strategy that was both political (reasoned appeals on the importance of creating high-end jobs and expanding tax base) and technological (positioning New London for competitive advantage, particularly in biotech and pharmaceuticals) in nature.

2. What does success look like? A fair and growing allocation of resources. A good political strategy ensures that there is a fair and open review process so that those who have a stake in any economic development plan have a say in if and how it is implemented. And a good technology strategy ensures that citizens are improving their productivity by supporting processes and industries that create value. Eminent domain, if exercised with intelligence in terms of politics (safeguarding the poor from under-reviewed and unwanted seizures of property) and technology (creating well-paying jobs in high-end businesses in fast-growth industries) is not just about relocating existing innovation. Instead, it can make possible the kinds of coordinated projects and dynamic settings that attract outside innovators and sharpen homegrown innovators, creating a critical mass of innovation for future growth.

3. How do we achieve it? Be nimble and make sure the market works. In his World Bank survey, Economic Growth in Latin America and the Caribbean, Norman Loayza applauds Chile for its efforts to deal with external shocks and deepen market reforms. New London is struggling because it did not respond nimbly to industry shifts. The city, and the state whose laws circumscribe it, understand the importance of creating jobs and expanding its tax base, particularly given the hurdles it faces: aging infrastructure and dying industries, decaying urban neighborhoods, and nearby competition for businesses and residences. Eminent domain, when exercised prudently, gives it greater agility to work with the private sector to make New London a place of innovation and of economic growth. In contrast, allowing the narrow interests of a few dissenters to take precedent over the city’s broader prospects is an unhelpful deterrent to economic growth, for it slows New London’s ability to respond to external opportunities and threats, and thus from its ability to provide fertile ground for human capital to take root and innovation to flourish.

Old Post: On Local Politics

[Originally posted December 2005]

Dear Diary,

I find myself unusually nervous about speaking at tomorrow’s gathering of the Felstown Neighborhood Association. I don’t doubt that it was a good idea for me to set this up, but I’m uncertain about what to say and how I’ll be received. I’ve already rubbed a few of the members the wrong way. I think they think I look down on them. Maybe I do: it’s hard for me to hide my contempt when they mention their big SUV’s and their credit-maxing shopping sprees. What can I say – my parents taught me to conserve energy and to save every penny, so of course I’m going to bristle up. Maybe I should give up trying to fake it, and just light into them tomorrow night: “Of course you can’t be a check on our profligate township; you’re too busy being profligate in your personal spending!”

I have a feeling that won’t go over well. I don’t think I can even appeal to something more noble: “Just like presidents who run up huge deficits are socking our kids with a huge bill, we’re doing the same when we let our township’s spending get out of control!” After all, while I don’t doubt these guys care about their kids, it’s hard to see them being able to think that far ahead in their fiscal discipline. Plus, when it comes to government spending, pushing our financial obligations into the future has lost most of its stigma. Another new resident tried this approach a few months back, so I was told, and was met with blank stares. So guilting people into cutting costs isn’t going to work, either.

Ironically, I heard from an old Fels classmate of mine who moved back to Oregon and successfully got her neighborhood association to work with their commissioners to get their costs under control. And she used the exact same lines of thinking I described above. I guess the people there see their township’s budget as a public trust, and it’s their job to ensure those funds are prudently spent for the township’s long-term good.

Here in Felstown, of course, we have an entirely different set of rules. Politics here is individual and it is transactional. Even political influence is transactional: if I want to persuade someone to do something for me, I have learned that it is not by selling them on the merits of my position as much as it is by framing my request in such a way that the person I’m asking will get something out of the deal.

So here’s a thought. Rather than trying to appeal to an innate thriftiness that isn’t there, or make impassioned but empty pleas to “think about the children,” I should frame my points so that people can clearly see the benefits that accrue to them from supporting a more restrained spending posture. I could talk about how too many years of spending more than you take in will inevitably lead to rising taxes. I could relate horror stories of townships who went down this path and found themselves in a vicious cycle of higher taxes and deteriorating services. I could tell people their house values could plummet.

Most of all, I could stress to my audience that spending out of control will invariably lead to a loss of control. Felstowners may not care about conserving natural resources or saving for their children’s college tuition, but they’ll get riled up if they think they’re losing control over their government. That’s a fear that translates in any political culture.

Once I’ve gotten their attention, I have to talk some specifics. Even though I’m a penny-pincher, I get that it’s easier to spend a dollar than save a dollar, especially when there are so many agencies and activities that could use that dollar. Felstown is a tight-knit community, so everyone has heard firsthand that the police needs a new interrogation room, the recreation department has to upgrade its pools, and the commissioners want to install videoconferencing equipment in their boardroom. No one wants to be the one who says we shouldn’t pay for this or that, lest they find themselves needing help in the future from someone who had their budget slashed and who wants to return the favor.

Maybe I can win some points with my audience by acknowledging this fact, and asking for help in figuring out how to work towards more disciplined spending while limiting anyone’s exposure to being perceived as the bad guy. After all, I’m not asking the association to lobby for a swing to the other end of the spending pendulum, just enough of an adjustment to ensure we don’t go down that slippery slope of higher taxes and poorer services. If I can be persuasive enough about how overspending will cost us dearly, they have to be willing to make some tough political decisions, right?

Going through this process has made me more thankful for my parents, who taught me well about spending and saving money. I just wish I could convince my neighbors and my commissioners to be as fiscally disciplined as I am, but I know that’s not going to work. Having written out my musings above, I feel a little better that tomorrow’s speech will help mobilize enough support in the township for more controlled spending. But just to hedge my bets, maybe I’ll encourage some of the local pastors, rabbis, and imams to talk to their congregations about being good stewards of their financial resources.

Old Post: On Non-Profit Administration

[Originally posted December 2005]

Dear friend,

I am honored that you would seek my advice, as I have heard of your many years of faithful service in various social services capacities. I too come from the non-profit sector, and although my career span is dwarfed by yours, I too have come across the same pattern for public programs that you described to me last week: cheerful rhetoric in the beginning, gradual disappointment in the middle, and fatigue at the end. So I hope we can keep up this dialogue so we can both become more effective leaders.

May I indulge you in some stories from my life in non-profit? I trust you’re too mature for pithy encouragements, and that you’re wise enough to take my stories and extrapolate the underlying principles to your situation, rather than simply repeating what I did. I also want to exhort you to reach back into your past experiences for situations you were in and decisions you made that can help you figure out what to do in the present.

Let me organize my examples by using an old Roman phrase: “quis, quid, ubi, quibus auxiliis, cur, quomodo, quando” (who, what, where, with what, why, how, when):

Who? The first question to ask in cracking a tricky situation is to identify all the players and understand their perspectives. When I first became Executive Vice President at The Enterprise Center, I met with each person on staff, from president to janitor, to get to know them better, find out what made them tick, and learn their take on the agency. Many people appreciated the gesture, seeing it as a way I was reaching out to all staff and making them feel their opinions counted. I certainly did those interviews for that reason. But I also did it so I could know better how to influence people to do what I needed them to do to benefit the organization. You too may need to take an audit of the key people involved in this non-profit and in this new initiative. Particularly with the new director, you’ll want to find out what’s driving her, so that you can better persuade her.

What? This may be the most important question you’ll ask yourself: what am I trying to do here? Is it to do what you think is best for the organization? Is it to please your boss (in this case, client)? Is it to advance your career? I know all too well that sometimes it’s hard, if not impossible, to simultaneously accomplish all three things. One time, I had calculated that our agency would need to lay off three people to stay afloat. I had to sell my boss on the decision to do layoffs, which she was loath to do, and on the three people to lay off, at least one of whom she was close to and did not want to let go. I had to answer for myself that my job was not to carry out my boss’ preferences, or to do what was easiest for me, but to make the hard decision because it was best for the company. My story has a happy ending: the layoffs, though painful, helped us survive, and hindsight has proven them to be the right move. Even better, my boss respected me for holding firm to the decision despite her misgivings, and I grew as a leader from the experience. It sounds like you’re facing a similar dilemma as I faced. Before you can effectively weigh your options, you have to answer for yourself what your job is.

Why? I’m going out of order from the Roman list because this question follows logically from the previous one in your case. In other words, as I’ve exhorted you to ask yourself what you’re trying to get out of this situation, so you should press the new director about what she’s trying to accomplish. Why is she doing this? Sometimes, in asking this question, you can better please your boss/client without having to do something you think won’t work. Like you, I had a boss who loved setting unrealistic goals, to the point that I would cringe when she would speak in public sometimes, lest she make a bold statement that my staff and I would then have to back up. It was only after I learned the “why” behind her claims – it was to push her and her employees to shed complacency and stretch towards greatness – that I was able to integrate this part of her leadership style with my work under her. If you simply ask your client, “why,” the answer you get might help you know what to do with this program you’re pessimistic about.

Where? With what? When? I’m lumping these three questions because together they form a possible hedge for your situation. In other words, if your client insists on a splashy new program that you think is destined to flop, you can contain the fallout by being strategic with the “where,” the “with what,” and the “when.” I had a situation, the details of which I’m not at liberty to share with you, where a key staffer had an idea for a program that I quickly gathered was not worth doing. But I also gathered, for various reasons (sorry I have to be so vague), that it would be worse to squelch this idea than to let it proceed. So I contained the potential damage by making sure it rolled out at a time and place that would cause minimal fanfare, and I limited the financial and human resources we allocated to the activity. You too might want to think about how you can work the “where,” the “with what,” and the “when” if you think you’re stuck with a lemon.

How? Sometimes, no matter the people, motives, or resources, it boils down to how you do something. This last question integrates all the others, in that you have to answer all the others so that you know “how” to proceed. Again, I encourage you to consider my examples as well as those from your own career, not to repeat the same actions but to draw out the right lessons. At this stage in your career, you can afford to trust your instincts; having analyzed the situation using the questions and examples above, you can be confident that you’ll find the answer to the question, “how?”

I conclude by wishing you luck. You and I both know that sometimes it does boil down to luck, but that you can make your own luck by doing things the right way and being ready. I sincerely hope that my comments will help you make your own luck. Keep me posted on what you decide to do, and don’t hesitate to call on me again. Good luck.

Old Post: My Political Journey

[Originally posted December 2005]

My Political Journey: A Monologue by Lee Huang

Act 1 – Possibility
I’ve always swum against the current. While my high school classmates in California opted for nearby schools like Berkeley and Stanford, I headed east and found a home at Penn. While my Wharton peers got jobs at Wall Street i-banks, I chose a tiny non-profit business incubator in West Philadelphia – and stayed there for ten years. And after I had achieved success there, rising to the level of Executive Vice President, I left to go back to school. Why did I make these choices? Idealism. The chance to do a new thing, not what everyone else was doing. To live by my values, not by the world’s. To swim in a bigger pond, not settle for a smaller one.

But when it comes to city politics, I’m in for a rude awakening.

Act 2 – Conflict
I learn that city politics is ugly. The pie is dwindling. And the players, all hungry for a slice, have fundamental differences of opinions. So you’re going to have some nasty disputes.

How did this happen? Let’s start with that dwindling pie. We can talk about the pie as city residents, tax base, or political power. In each case, Philly’s pie is getting smaller. Immigrant migration patterns, subsidization of mortgages, and massive highway construction aided suburban growth after World War II, draining older cities of a valuable middle class base. Economic factors, like the mechanization of manufacturing, the globalization of industry, and the rise of the service sector, led to a gradual erosion of businesses and jobs for cities heavy in Old Economy activity. Cities face a double whammy of decreasing tax revenues and increasing demand for social services, so neighboring jurisdictions work hard to diminish the political influence of those cities at the state and national levels.

You can imagine, then, why there’s so much conflict. The haves and the have-nots fight, the cities and suburbs clash, and political parties as well as ethnic groups have their scuffles. But it’s not just about battling for a piece of a shrinking pie; it’s also a matter of differing political cultures. The individualists see politics as a business, meant for professionals only. They view politics as a brokerage of private interests by various competing groups. The moralists see politics as a commonwealth, meant to be for all the people and by all the people. They favor nonpartisan local government in which concerned citizens act altruistically for the public good . Elazar, Banfield, and Wilson, among others, have all written about these cleavages. They go back several generations, and like physical canyons have been formed by repeated waves of erosion. So anyone who tries to get the two sides to come together is asking for it.

So much for idealism. The pie is shrinking and the fists are flying. How am I going to carve out my place of influence and impact without getting punched in the eye?

Act 3 – Resolution
There is no resolution. There is, however, renewed resolve. Idealism ungrounded in reality is just fanciful thinking. Idealists don't shun reality because it's messy; they embrace it because it helps them get stuff done. So here's what I'm going to do to improve my political career here.

First, given what I now know about the evolution of older American cities, I'm going to quit trying to make Philly into what it'll never be, and work to make it what it can be. For example, last year I went to Phoenix on a leadership exchange program, which I described to a friend as a "political spa." Public and private sector leaders enjoyed helping one another, city agencies fussed over how to work better for citizens, and elections had a tenth of the campaign spending and the dirty deal-making of Philadelphia's. But as much as I was tempted to just bash Philly, I realized that Phoenix's situation is different. The city's physical and political infrastructure is newer, its political culture more moralistic, and it isn't constrained by union pressures. Besides, I left Phoenix feeling grateful for Philly in many ways: we run circles around Phoenix in terms of night life, a walkable downtown, and historical and cultural sights. So my political message isn't going to be about bashing Philly or trying in vain to make it Phoenix; rather, it's going to be about celebrating Philly's uniqueness and playing to its unique strengths and opportunities.

Second, I’m going to be a bridge between warring factions. There’s still a future in this city for bridges, even if a noted reconciler once said that all that means sometimes is you get walked on from both sides . Indeed, in this town, when you’re in between, sometimes you get the elbow intended for the person behind you. But given how divisive city politics is, you might argue that you can’t get anything done unless you are a bridge; that is to say, unless you are able to work between factions and get people to cross alliances to be on your side. Take the recent proposal to change the way property taxes are calculated in Philadelphia. I happen to believe this is a good idea for the city as a whole, but I realize the plan will have its winners and losers. By eliminating fractional assessments and taxing against current market values, residents in booming neighborhoods will now be paying higher property taxes than before. If I want to help get this proposal passed, I’m going to have to bridge over to those constituencies and to their representatives. But there’s a second set of winners and losers: the politicians themselves, and related power people in the city. After all, politics, like life, is all about mushy things like relationships and egos and saving face. So you also have to consider where the power people are coming from. Who gets the credit if it goes well? Who gets the blame if it doesn’t? Who will be able to keep their people in line, and whose people will break ranks? Who needs a win to get reelected? Who can't stand to agree with someone else, and who will have to disagree with someone whose favor they're trying to curry? To break through on these issues, you have to understand what political culture people and groups are operating under, and how those cultural rules dictate how they’ll act and who they’ll agree and disagree with.

I understand that in the city the pie is shrinking and the fists are flying. Some idealists conclude that means it’s time to get out. And some conclude that means now is just the right time to get in, and to take that understanding of why the pie is shrinking and why the fists are flying to get in there and make a difference. Count me in the second group. Wish me luck!