Tag Archives: Paul-Romer

Create new Silicon Valleys by exploiting regulatory arbitrage

Marc Andreessen is co-founder of the venture capital firm Andreessen Horowitz. Marc has a very smart article out last week on what works and doesn't work to grow centers of innovation in new locations. He titled this piece aptly Turn Detroit into Drone Valley as you can see here [emphasis mine].

Imagine a Bitcoin Valley, for instance, where some country fully legalizes cryptocurrencies for all financial functions. Or a Drone Valley, where a particular region removes all legal barriers to flying unmanned aerial vehicles locally. A Driverless Car Valley in a city that allows experimentation with different autonomous car designs, redesigned roadways and safety laws. A Stem Cell Valley. And so on.

There’s a key difference from the if-you-build-it-they-will-come argument of yore. Here, the focus is more on driving regulatory competition between city, state and national governments. There are many new categories of innovation out there and entrepreneurs eager to go after opportunities within each of them. Rethinking the regulatory barriers in specific industries would better draw the startups, researchers and divisions of big companies that want to innovate in the vanguard of a particular domain—while also exploring and addressing many of the difficult regulatory issues along the way.

Why this approach? Compared with previous innovation-cluster efforts where governments contrived to do something unnatural, this proposal flows from what governments naturally do best: create, or rather, relax laws.

This is one of those ideas that seems completely obvious once you have seen it. We can quibble with that last phrase “what governments naturally do best: create, or rather, relax laws.” because governments are terrible at relaxing laws. But the possibility was demonstrated in America by airline and telecom deregulation.

I see this sort of regulatory competition as a variation on Paul Romer's theme of Charter Cities. I've not succeeded to think of a way to apply Romer's concept directly to an advanced economy which is being drowned by a mountain of obsolete law and regulation. There are far too many powerful forces who like the status quo just fine. But perhaps Marc's ideas could be implemented at sufficiently small scale that the regulatory reform could be implemented before the status quo interests squashed the innovation.

There is much more to this Andreeseen essay, so be sure to read the original at Politico.

For background on why this will be so hard to implement in the US see Steven Teles on Kludgeocracy.

Homework assignment: how can we structure such a proposal so that politicians would be motivated to take on the change?


Charter Cities: Paul Romer interviewed by Rolph Dobelli on Zurich Minds

Last night we watched the remarkable interview of Paul Romer on Zurich Minds. The interview was conducted by founder/chairman of Zurich Minds, Rolf Dobelli. Rolf was thoroughly prepared and is one of the best interviewers we’ve observed. Rolf asks very short questions in an appropriate explanatory sequence, then he doesn’t interrupt while he allows the interviewee to answer completely.

Just splendid. Paul Romer also did a more recent December 2011 Zurich Minds formal presentation on Charter Cities – in the style of a TED Talk. And FYI, Paul has at least three TED Talks on record, including the most recent Paul Romer: The world’s first charter city? which offers some particulars on Honduras.