Friday, November 5, 2010

Transatlantic Crankiness

I linked to an article earlier about the British government’s plan to turn East London into a tech hub, that seems to be fairly well received by the relevant people. If it works, it’s a great thing for just about everyone: entrepreneurship isn’t a zero-sum game and PM Cameron’s comments seem to acknowledge that (“Right now, Silicon Valley is the leading place in the world for high-tech growth and innovation. But there's no reason why it has to be so predominant.”).

On the face of it, London is a perfectly good place to start. Unlike cities in America, London is more on the European-model of city to country relationship: one dominant city (i.e. London), several cities on a second tier; the practical consequence is that talented people tend to get attracted to the dominant city inexorably. So that bodes well. What doesn’t bode well is London’s prices: as a tourist trying to bum my way through the town in the middle of London’s financially exuberant period, I found the prices for stuff to be absurdly high, higher even than New York City’s. (I don’t recommend doing what I did, which was walking literally everywhere. By “literally”, I mean “literally,” in that I solely relied on walking to take me from northern London near Notting Hill all about the city, i.e. to the Tate Museums, British Museums, etc. This meant several miles of walking per day.) At any rate, I don’t think super-high prices are a conducive atmosphere for nurturing startups, which generally rely on its founders and workers agreeing to defer their rewards into a theoretical future.

The big problem, however, is Britain’s new anti-immigrant attitude. Cameron promises to make available an entrepreneur’s visa (which would be a useful supplement to our own baroque immigration laws), but there’s a squeeze on the numbers of people who will be allowed to immigrate, as the British Home Secretary is announcing a crackdown on the number of people afforded the right of “permanent settlement,” which I imagine is similar in intent to a green card:
The home secretary, Theresa May, is to end the right to permanent settlement for more than 100,000 skilled workers and overseas students who come to Britain each year.

In her first major speech on migration, the home secretary also disclosed that she intends to drastically reduce the flow of 160,000 overseas students who come to the UK to study on below degree-level courses in further and higher education colleges.

Apparently, this is the “moderate” solution to the anti-immigration agitation in Britain, which is perhaps an unfortunate preview of immigration policy here in the United States. The problem in both instances with restricting entrepreneurship to pre-approved foreigners is that the beauty of tech startups and what makes them work is their unpredictability, something that may not be captured by the process outlined by Cameron (it also raises the question: what happens if someone’s first company fails? Are they summarily booted out of the country? Besides the lack of fairness there, it’s also not terribly sensible: some people don’t succeed until the second or third startup.) The cross-purposes at work here illustrate the problems of a shrinking economy: people become cranky and think about fighting over turf rather than expanding everyone’s opportunities, making it easy to fall in a accelerating cycle of crankiness, decreasing opportunity, more crankiness, and so on…which is why it’s absolutely incumbent on just about everyone with some power to figure out how to make this economy work.

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