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It seems to me like we have an issue around creating jobs that bring wealth into a community. I don't know economics so I don't know the correct phrases and pr
by rmrm 15y ago
It seems to me like we have an issue around creating jobs that bring wealth into a community. I don't know economics so I don't know the correct phrases and probably am butchering the ideas. But..
If you draw a circle around an area, money flows into that area from outside in one form or another. My current living area has 4 main sources of money from outside.
1.) Agriculture. Specialized monoculture that is high value (wine) that is suited for this area. Gets exported all over the world.
2.) Technology. Networking equipment, gets exported all around the world. High margin, high paying specialized jobs. We have a comparative advantage that stems from things that happened decades ago, whereby we have a large concentration of people with experience in this domain. A talented labor pool.
3.) Bedroom community. We are located 45 minutes from a major international hub (SF). We experience a natural amount of runoff from this wealth, in that people that work there live here and bring their money back here to spend.
4.) Tourism. Being located where we are and having natural beauty we experience a high amount of traffic and dollars get spent from outside.
Pretty much all other jobs in this community exist as service to these primary drivers for the community. The money comes from the above, and it gets cycled through the community because those primary jobs have money to spend on restaurants, oil changes, cars, coffee, clothes, real estate, etc etc. Everyone that works in those other jobs (the majority of people) are reliant on the 4 basic primary economic movers above.
It seems to me that all communities must work this same way. Primary drivers bring money in from outside. Of the list above, at least 2 of them, maybe 3, have little or nothing to do with anything particularly industrious or inventive, they are happenstance. Some peculiarity that isn't necessarily shared widely that happens to be profitable and high margin for the community.
When most people think about starting a small business, the think about starting something relating to a service business. These are in essence the easiest to grok and that easiest to understand. People around you have lawns, start a lawn care business. People need to eat, start a restaurant.
Driving through a depressed area, an area that does not seem to have any particular advantages -- and thinking about the business owners struggling there to run these service type businesses, particularly after a factory or mill has closed, which was the prime economic driver for the economy (someone who exported goods and imported money), I am struck by the difficulty in creating new prime drivers.
If I am born and raised in Kansas somewhere, how do I get plugged into the very complicated, fast moving, heavily optimized world economy in order to bootstrap a primary industry. How do I understand and know what is needed, and how to compete successfully? The barriers to understanding how to begin are large.
I think the issue of low hanging fruit is valid, whereas I could 100 years ago create a prime mover perhaps by understanding that which exists around me, for most places nowadays it seems that understanding that which exists around you is not near enough to create any sort of primary driver, something that brings in wealth to the community. Because what exists around you is not very relevant. The barriers to entry are lower in some sense, but the complexity and specialization required are both increased, as are the number and ability of competitors. That acts as a very real barrier to entry.
- macrael 15y agoWhat was that economic theory that most of the colonial empires were run on, where the prime directive was that more gold needed to be flowing into the country than flowing out? It was later abandoned, but I don't recall exactly why. That might be an interesting parallel to your observations.
- dctoedt 15y ago> What was that economic theory that most of the colonial empires were run on, where the prime directive was that more gold needed to be flowing into the country than flowing out? You may be thinking of mercantilism: "Mercantilism is the economic doctrine that says government control of foreign trade is of paramount importance for ensuring the prosperity and security of a state. In particular, it demands a positive balance of trade. ...It also was a motive for colonial expansion." [1] [1] http://en.wikipedia.org/wiki/Mercantilism http://en.wikipedia.org/wiki/Mercantilism (emphasis added).
- sixtofour 15y agoVery nice analysis. Perhaps part of the solution is that the circles get smaller, even down to single individuals. The small circles or individuals "export" their work product, be it software, consulting, content or piece work. They import money into their bank account and thence to whatever community they happen to live in at the moment. The primary driver then becomes their particular skill and the ability to market it. Their circle goes with them when they move.