Tag Archive for: innovation

The Next Entrepreneurial Revolution

The coronavirus pandemic has altered the future of American business. The virus-driven disruption has proved more profound than anything imagined by Silicon Valley, costing more jobs than in any year since the Great Depression. But there’s also good news, as Americans’ instinctive entrepreneurial spirit is driving growth and innovation: 4.4 million new business applications were recorded by census data in 2020, compared with roughly 3.5 million in 2019. Self-employment, pummeled at first, has recovered more rapidly than conventional salaried jobs, as more Americans reinvent themselves as entrepreneurs.

To be sure, the initial impact of the pandemic favored big chains and accelerated the already dangerous corporate concentration in technology—Amazon tripled its profits in the third quarter of 2020 and the top seven tech firms added $3.4 trillion in value last year. This in turn has made all business, as well as ordinary Americans, subject to manipulation by the handful of “platforms” that control the primary means of communication. Meanwhile, lockdowns drove an estimated 160,000 small businesses out of existence and left those that survived to face “an existential threat,” according to the Harvard Business Review.

Like pandemics of the past, the current one, according to Berkeley economists Laura Tyson and Jan Mischke, has already driven new investments in technology that could reverse the long-term decline in U.S. productivity. Low real estate prices could spark a return to street-level enterprise, even in places like Manhattan that have long been ultra-costly.

But the focus of opportunity is more likely to be found in the suburbs and exurbs, as well as in the middle of the country. The movement of populations away from the big urban centers started before COVID, but a recent study in CityLab notes that it has since accelerated in places like California’s Inland Empire, the Hudson Valley, and the New Jersey suburbs. Overall, according to demographer Wendell Cox, offices on the fringe have recovered far faster than those in the largest urban cores like Manhattan, San Francisco, Chicago, and Houston.

The geography of work has changed as well. Upward of 30% of those who plan to work remotely after the pandemic, notes a recent Upwork survey, plan to do so outside the house: in coffee houses, coworking spaces, or other office environments closer to home. This has created a new market for suburban office spaces, real estate investor Andrew Segal told me. He sees remote offices filling with workers who may be tired of working at home but do not want to go back to their long commutes. Segal has recently purchased properties in the suburban commuter sheds around Chicago, New York, Phoenix, and Colorado Springs. “The problem is called COVID, but it’s really about commuting,” suggested Segal, who is based in Houston. “People now know they can get their work done from somewhere else that’s easier to get to than Manhattan, downtown Houston, Chicago, or Los Angeles.”

Businesses are following the trend. Between September 2019 and September 2020, according to the firm American Communities and based on federal data, inner cities experienced nearly a 10% loss in jobs, while outer suburbs, exurbs, and rural areas fared far better. According to Jay Garner, president of Site Selectors Guild, companies are looking increasingly at smaller cities and even rural locations rather than in the big core cities. Indeed, seven of the top 10 midsize cities preferred for new investments include not just sunbelt boomtowns but heartland cities like Columbus, Des Moines, Indianapolis, and Kansas City.

Analysis by Zen Business this year found that the best places for small businesses in terms of taxes, survivability, and regulation were overwhelmingly in the South, parts of the Great Plains, Utah, and across the Midwest. Places like the Bay Area, New York, and Southern California crowded the bottom of the list. In some cities like San Francisco, even opening an ice cream shop has become subject to unendurable, endless regulatory reviews. Many heartland cities are exploiting this opportunity, with some offering generous bonuses to telecommuters from the coasts.

Read the rest of this piece on Tablet Magazine.


Joel Kotkin is the author of The Coming of Neo-Feudalism: A Warning to the Global Middle Class. He is the Presidential Fellow in Urban Futures at Chapman University and Executive Director for Urban Reform Institute. Learn more at joelkotkin.com and follow him on Twitter @joelkotkin.

Homepage photo: G. Keith Hall via Wikimedia under CC 3.0 License.

How Declining Fertility Rates May Deliver Us to Oblivion

For much of the last half-century we have been living, even cowering, under the threat posed by what Paul Ehrlich in 1968 called the “population bomb.” In Ehrlich’s scenario, widely adopted by the environmental movement and its corporate supporters, ever-increasing numbers would overwhelm the resource base and the food supply and would cause dystopian mayhem across the planet.

Yet it turns out that the “explosion” is heading toward an implosion, as data reported by the World Bank indicates. Rather than being doomed by a surfeit of humans we may be experiencing, certainly in the West and in East Asia, dangerously low fertility rates that threaten to slow world economic growth and innovation.

This also reflects a dangerous shift in civilizational values, with more focus on the self and abstractions and less on the basic relations upon which all civilizations have been built. Conversely when fertility rates drop—for example in imperial Rome, renaissance Venice and early modern Amsterdam—it’s a sure signal of societal decline.

As world poverty has eased, the world fertility rate has plummeted. When Ehrlich published his alarm, the average woman had 4.92 births in her life (total fertility rate). By 2018, the fertility rate had dropped by more than one half, to 2.41. Perhaps the best indication of this is fast-growing, poor Bangladesh, formerly East Pakistan, which has seen its fertility rate drop by more than two-thirds, from 6.94 in the 1960s to a 2018 figure of 2.03, which is below the replacement rate of 2.1. Many of Ehrlich’s other predictions turned out to be at best exaggerations, as resources did not wear out as predicted and mass starvation has been reduced dramatically since his book was published.

This is not to say that lower population numbers, particularly in developing countries, are an unwelcome sight. But the decline could prove troublesome for the world economy. China’s expanding workforce—by 350 million between 1980 and 2012, according to the China Yearbook—drove a world-shattering economic boom. Now, the National Bureau of Statistics indicates that from 2017 to 2018, the birth rate in China dropped more than 10 percent, despite the repeal of the one-child policy. It stands at a historic low, down more than one half since the early 1980s. Over time, we will see the already shrinking workforce accelerate and drop 20 percent by 2050.

The situation is even more dire in two of the world’s most affluent regions: East Asia and Europe. Japan had long been leading this trend, with the oldest population of any major country, and decades of a stagnant economy. Similar challenges are emerging elsewhere in East Asia: Hong Kong, Taiwan, Singapore, Hong Kong, and South Korea, which has the lowest birthrate of any society on Earth, one third below that of Japan, according to the World Bank. Europe too has experienced plummeting birthrates. And the United Nations projects population losses of one-third in Southern Europe, one-quarter in Eastern Europe, and just a few percentage points in Western Europe, mostly due to immigration, between now and 2050.

Until recently, North America—the United States and Canada—faced a healthier demographic outlook, posed by both a less dense population (almost everywhere high-density areas have low birthrates) and rising immigration. Migrants accounted for 14 percent of the population in the United States and 22 percent in Canada.

But more recently legal immigration has declined, and prospects for more newcomers has declined with the pandemic-era economy. The latest wave seen at the U.S. southern border is made up largely of poor and destitute people from south of the border. This situation seems rife with instability, as even Latino Democrats have raised alarms about the new influx, particularly in the light of high COVID rates in Central America.

Read the rest of this piece at the Daily Beast.


Joel Kotkin is the author of The Coming of Neo-Feudalism: A Warning to the Global Middle Class. He is the Presidential Fellow in Urban Futures at Chapman University and Executive Director for Urban Reform Institute. Learn more at joelkotkin.com and follow him on Twitter @joelkotkin.

Photo: Ahmet Demirel [Public domain], via Wikimedia Commons.

Flight of the Icons: California Anti-Business Policies Driving Out Innovation Industries

Anti-business policies are driving flagship firms out of California.

It’s hard to say the word “innovation” and not think of California. Technology has paced the state’s growth in everything from agriculture and oil to housing, entertainment, and aerospace. California has always been the harbinger of the American future, the promise of ever-greater economic and social progress. Read more