Saturday, January 04, 2014

Ideas matter

Acemoglu and Robinson argue that ideas matter for economic growth and a way has to be found to get them into economic theory. Of course.

To do this, economic growth discussions must include cities and spatial organization. Most spatial organization is within cities. The spatial organization that we get within cities is prompted by continuous and decentralized search by large numbers of firms and households. Each one seeks to contain transactions costs (including access costs) while navigating among all of the externalities encountered because of all of the proximities involved in any location choice. Positive externalities are sought and negative ones are avoided. Balancing these three is how bids for sites are formed. Land markets process all the bidding.

Chief among the positive externalities included in this story are opportunities to be located in ways to access useful "buzz". 

New ideas are recombinations of old ideas.  Better to access the old ideas from the brains of many others as well as our own.  Paul Romer said as much  many years ago (in Daedalus, 1994, not available online).  I cited this in my discussion of ideas, growth and cities hereJane Jacobs wrote about it many years ago.


Witold Rybczynski notes that "placemaking" is much more complex than we hear from planners and designers.  Jacobs wins again.


The evaluation of sites is more complex than ever because we can network and access electronically as well as physically.  Today's WSJ includes "Football Fans Forgo Tickets, Prefer View From the Couch ... NFL Struggles to Sell Seats to Some Playoff Games While TV Ratings Soar."