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Transcript
Rob Johnson:
Welcome to Economics and Beyond. I’m Rob Johnson, president of the Institute for New Economic Thinking.
I’m here today with a long-time friend of INET, Danny Breznitz. He’s a professor and co-director at University of Toronto. He’s a co-director of the Innovation Policy Lab and the Munk chair of innovation studies. He’s also a co-director of a program at the Canadian Institute for Advanced Research pertaining to innovation and social equity. He has written a book that I will say the founders of INET, Bill Janeway, Jim Balsillie, and myself have found to be spellbinding. It’s what I think the doctor ordered as an exploration for some of the deep social tensions. And sometimes, like if you’re a sailor, you’re out in the ocean and all of a sudden, you look at the chop and waves and you know the charts aren’t right. And if somebody is a better navigator, you’re thankful. And that’s who I think I’m with today.
Danny, the book that you’ve written is called Innovation in Real Places, Strategies for Prosperity in an Unforgiving World. As I was exploring this, what I always felt was we had a bit of a hubris as humankind. We used to believe in gods and spirits. And then we got to the point where we were in control of our own destiny. People like Christopher Lasch, The True and Only Heaven, The Religion of Technology by David Noble, all of these false worships gained so much strength that we got everything out of our way, except worshiping them as though that was deliverance. You’re really pulling it together here. And I’m really grateful that you came to this podcast and I look forward to hearing your views. But let’s start with, what tickled you inside? What inspired you to write this book? You’ve written many other interesting books, but what got this one off the launching pad in your heart?
Dan Breznitz:
So it’s both good will and a lot of anger at the same time. And the reason is, I was writing those other books, as you said, and working with a lot of governments. And I realized that on one side we have a lot of knowledge about innovation-based growth and how to actually have better and more prosperous communities, on the one on side. And on the other side, there’s a reality. And we never tell, we meaning public, a scientist, social scientist, public and private universities never really translated and say, “Okay, so this is a research. What does it actually mean for people who wants to change their community for the better?” There is a dissonance.
And because we don’t do that, there is myths of what you should do, that leads to a waste of trillion dollars on one hand and to actually increasing inequality on the other, which made me quite angry. And I started writing this book saying, “Okay, so let me write a different book from the other books that I’m usually writing.” And this book is, yes, it’s based on the best research of mine and others and regional research. But it’s not just, “Here is a puzzle, here is my answer, here’s why my answer is correct. Goodbye.” Instead, it says, “Here is our finding about the world, and here is what it means for somebody who actually want to effect change.”
And I have to say, it’s a humbling experience. I have much more respect for people who try to write those books now, books that policymakers in both the private and the public spheres can write, people that interested citizens can read their book and says, “Okay, that’s actually helped me to do something.” This is a very hard writing exercise, much harder than all my academic books.
Rob Johnson:
Yes. And I would imagine you’re mindful of the structure of social power that you’re stepping in and confronting, what we might call that as courageous, but mounting the courage to go after, which you might call the taboos and the norms. Some people are not mindful of the power structure, they just adhere to it because they can feel it’s the path of least resistance. But I’m curious, in your contemplation, you are seeing these things and I’m kind of reminded when I first met Jim Balsillie, because he obviously was at Research In Motion, enormously successful. But because he was outside of the American system, he was very sensitive to the global design and how tenuous his intellectual property protection might well be.
And so there are obviously little smoke signals that I got from meeting him and interviewing him a couple of times in panels and learning from him, that you seem to, how would I say? Be on the same track, perhaps more vividly now, but how do you say? Inspired by the same dilemmas or similar dilemmas, I should say.
Dan Breznitz:
Yeah. And I have to say, living in the US, in different places. So, Boston, but then I moved to Atlanta for eight years. You also see that the story that New York and Silicon Valley likes to tell the rest of America is not a story the rest of America should adhere to because it does not necessarily give the rest of America a path forward for a more prosperous society and community for them. And I think in know it, coming from Detroit.
Rob Johnson:
Yes.
Dan Breznitz:
Speaking about places, were once rich and are no longer that successful.
Rob Johnson:
Yes. I live in New York. My family has a home in Northern California and I’m from Detroit, what we call Flyover America. And-
Dan Breznitz:
Exactly.
Rob Johnson:
So those tensions are very much there. And I’ll say, I know we were both MIT alumni, but when I showed up at MIT, I took my first economics class and the teacher started talking about equilibrium and I wasn’t trying to be a smart-ass, but I raised my hand and said, “Isn’t that like assuming a happy ending?” And he kind of growled at me, but-
Dan Breznitz:
Yes. Yes. Well, I had a teacher who once told me when we asked him about whether my model actually represents reality. He completely seriously said, “Well, reality is just another model.
Rob Johnson:
Grow your own.
Dan Breznitz:
Exactly. So that’s why I like to call myself a political economist.
Rob Johnson:
Yeah. When you walk into a bookstore, do you file it under fiction or nonfiction? He doesn’t know how to store the books, right?
Dan Breznitz:
Exactly. Yes. Or science fiction.
Rob Johnson:
Yeah.
Dan Breznitz:
One of my favorite genres. Yeah.
Rob Johnson:
Yeah, that’s good.
Dan Breznitz:
Exactly.
Rob Johnson:
That’s good. Well, let’s go into the, how do I say? The structure that you share with the audience in this book. There are various things, start with the difference between invention and innovation. How do you see those processes or those as not synonymous, but more textured?
Dan Breznitz:
Yep. So we have to remember why we care about innovation, right. And we care about innovation because it’s impact on human welfare and growth, economic growth. But also we have Corona now, we cannot fight Corona without innovation.
Rob Johnson:
Right.
Dan Breznitz:
But then we have to remember what innovation is. And innovation is not invention. It’s not me, and you sitting in a lab at MIT and coming up with a new idea. It’s not even the first iteration about idea in the lab. It is the actualization of ideas in the real world, all across a production chain or network, from ideation to after service, including innovation in production, innovation in a second-generation improvement, recombination, design, assembly, all of them. And we can see it in two things. One is the vaccines. I mean, it’s wonderful that somebody, two companies, one in Germany, one in the US, came with a new mRNA, molecules.
In order for that to actually become a vaccine, we had… If you read the protocols of operation rap speed, it’s, we had to overcome all the questions of production, actually how you produce it, how you move the vaccines into the human body, then how you put it in different vials, different kind of glasses and then issues of distribution. And now we know that we have to innovate in order to produce those vaccines into the billions of units, and then distribute them around the earth to everybody who needs them, more or less every six months. And only when we do that, we can really say that Corona is under control.
Dan Breznitz:
So it immediately shows you where innovation and why it’s important. It’s important because it’s continuous, not because you had like a moment of Europe. It’s important because it’s continuous, it’s because you hit reality again and again, and you change it. It’s what makes us human, right? To come up with ideas of how to do new proofings and do them in reality. The second is that in my hand and you, in your hand, hold something that was a super computer only 15 years ago. And you and I talking on the riverside, it could be on Zoom, which was complete science fiction, 15 or 20 years ago.
And our professor at MIT talking about deep learning, what we call artificial intelligence now, have said how stupid of an idea it is because it’s so resource-demanding. And yet because of innovation in CPUs, in memory, in data transformation, all of those things now are so cheap that we don’t even think about how miraculous it is that we use them. If we didn’t have this continuous innovation, you and I would still have a big, wooden box behind us and you and I will call and ask a human how to connect us, for five minutes of voice, which will cost more than all of this video put together.
Rob Johnson:
Yep. Yep. So you don’t want to throw out the baby with the bath water, innovation matters. It has potential. But the other thing is to use a religious parable, the servant cannot be your master. Technology and these things are brilliant means to social and human ends. And when that is forgotten, that they are in service, just like markets are in service to social evolution and vitality and wellbeing, which you might call, the causality goes in the other direction, preservation of structures of innovation, or of how markets are organized. Then we get into much more, which you might call, demoralizing and therefore treasurer social zones.
Some of when Donald Trump was elected in America, which many people find very haunting, came from his riding around in saying, “The system is rigged.” And people who were suffering said, “I’ve been waiting to hear that for a long time. Finally, we got a guy that’s going to talk. I don’t know if he seduced and abandoned the American people.” But there was a deep sense, maybe not a knowledge like you are presenting in this book, but there’s a deep sense in many places in the world, that something’s off course.
Dan Breznitz:
Yeah. Something is off course, or more importantly, I think, our understanding of how innovation and how action translate to local prosperity, local economic growth are wrong. And the reason is that we do not have a good understanding of how globalization, right? And here, I’m talking about the global system of front-mended production change the way in which we, and at least until COVID, most people didn’t realize it, changed the way we do stuff. It also change the way we innovate. And it’s more importantly, or at least as importantly, changed the way in which innovation translate to good jobs, prosperity and economic growth in different places, depending on which state of innovation you actually focus on.
So Silicon Valley, and we can talk more about it, it’s the optimum of supposedly innovation success, but it’s a model that leads to unbelievable high inequality. And in order to understand all of this, and that’s what the book is trying to do. We have to merge our understanding of innovation, economic growth, with an understanding of how the global system actually work. And then it actually shows all of us that we have communities, and here I’m talking about cities, from Detroit, to Hamilton, to Winnipeg, to states and provinces to actually reach local prosperity on innovation-based growth. But in order to do that, we have to understand what are the choices and how we maneuver, navigate to get to each one of those choices and models.
Rob Johnson:
When you talk in the book, I remember there are four stages that you described. The first being invention, and then later on there’s more in the process, and some related to, what you might call the context, the social ingredients, institution’s, educations, to nurture those further stages. And I’ll just start at the beginning. One of our professors from MIT, emeritus now, Peter Temin, who was working with me on a conference in 2016 in Detroit, ended up writing a book and it’s called The Vanishing Middle Class. And he was concerned how otherness, racial and gender, animosity and things was demoralizing the, which you might call political enthusiasm for public schools. And so just as we were moving from a manufacturing culture to what I’ll call high margin and low margin services.
More than 70% of the population was now employed in low margin services, but as W. Arthur Lewis talked about, getting from the farm, to the factory, metaphorically, getting on the road up the ladder of education to perhaps make more competition in high value added services, but broaden the quality and experience of employment and value added that the population could make, was just being extinguished by all of this in-fighting. I mean, that’s a long-winded on-ramp, but how do education, how do other institutions contribute to invention, but then that longer process of innovation that you have in the next three stages?
Dan Breznitz:
So let’s first map the stages. And I think the one good way of doing that is looking at the industry, and an industry that everybody is excited. I did a lot of research about, but a lot of people are now really excited because we don’t have it, semiconductors. And if you look at places, so Silicon Valley, Tel Aviv in Israel, Taipei, Hsinchu, Taiwan Seoul in Korea, Shenzhen and other places in China. And you look at semiconductors and you see that all of those places have unbelievably successful semiconductor industry. Not only that, but in each of those places, you see the same companies operate, but then you look at what actually happened in each of those places and you see that it’s completely different.
So in Tel Aviv and Silicon Valley, it’s basically that moment after invention, it is coming up with new ideas to put on Silicon. But then when you actually want to put them on Silicon, it all goes to Taiwan, as we now know, because we Americans have forgotten how to innovate in the production of silicon chips basically. Silicon Valley is now without Silicon. And because of that, we now could not produce cars, speaking about Detroit. So Taiwan is the place in the world where they focus on innovation of production and second-generation of those chips. And then you look at Korea, they opted for a different strategy, memory and touch screens that you love so much. And indeed some has the second highest profits on every iPhone, and iPad, and Apple device, Samsung has the second highest profits because of, they control critical components in the production.
And then you go to Shenzhen and you see that those companies know how to take those, sometimes, tens of thousands of components, constantly changing materials and produce and innovate, and actually come up with a real product that you can buy. And it’s not a surprise that from Shenzhen, all those companies like ZTE, Huawei, DGI, if you have a drone, because they came, they know how to produce, they innovate in the production itself. And then you look at each of those places and you say, “Okay, so what is the business model?” Right? How those companies work, how they make money, and more importantly, who is employed and how they’re compensated.
And you can see on one head Silicon Valley, and even more so, Silicon Valley and steroids, which is Tel Aviv, Israel, where the real industry is the industry of, not technology and production, but it’s coming up with companies that you buy cheap and you sell for a lot of money, as quickly as possible. So they invent and innovate as soon as they have a proof of concept of something that is useful by being grabbed by multinationals, or if they’re even more successful, go to an IPO, they never go to any of those other stages. So the only people that they employed are the geek elites, the graduate of the best universities.
And the only people that actually enjoy any financial success and profits are those geek elites, a few celebrity chefs and of course the financiers. The rest of the population is not even involved in this game. And this game, when it go high tilt, which it does in Silicon Valley and Tel Aviv, is the economic engine for the whole of society. Okay. And Israel has become vastly richer because of that. But Israel has also become unbelievably unequal, currently, one of every five households, so one of every five families don’t have enough money to buy food at the end of a month. And this is a society that two generation ago was the second most authoritarian among Western democracies. And by the way, it’s okay if you know that this is the choice you are making.
And then as you said, you can start like our old professors, start to think about what institutions and other modes you have, so the other 85% also have a future. And then you can choose it, but you have to understand that this is a choice and that there are other choices to reach prosperity and innovation-based. And, and that’s why I talked about TSMC and Samsung power, real critical power in the global system.
Rob Johnson:
Mm-hmm (affirmative). Yeah. I remember there’s three pieces that you talk about later in the story, that if you are… Well, just to go to your four stages. Your first stage is invention, then you’re trying to figure out what products to create, then you’re trying to build and evolve those products. And then there’s a kind of more larger vision in the fourth stage, which I’m not sure I’m as clear on after reading the first time through the book. But then building the institutions to nurture this process and so forth runs into something which you kind of… I don’t know if you called it evils, but three things, intellectual property rights and finance, and I can’t remember the third, but-
Dan Breznitz:
The data.
Rob Johnson:
The data. And these things became what you might call systems of protection, right, and wrong, whatever, intertwined with globalization, where we don’t have a global government. And you warned people not to be what you might call too fantasy, like euphoric about these possibilities, because they didn’t have the power to change some of those challenging contours. So in a kind of fourth stage, how do we implement this for society? How do I bring you to a group I’m involved in, every year called, homecoming Detroit, and talk about what do we have and where can we go? But we got to look at it in that context of financialization and intellectual property rights and data. I say, what do you advise? How do we get out of this cage, if you will?
Dan Breznitz:
So there’s two, as the book is structured, right? The first and the long part of the book, the longer, is a constructive advice, is understanding what is innovation, what is invention and understanding the four stages and how communities can sort of choose those stages. And as you said, talk about the institutions that you need to nurture in those stages. And I think that’s really important to understand once you innovate in one of those stages, right? Once you are Taiwan or Silicon Valley. It’s not just because you decided, but you build a whole system of finance, education, regulation, connection to the global networks that then makes you better and better and better and excel in those, and you have a whole system of business models. Okay?
So it’s a real choice in terms of that. And you need to figure out how to build all those complementary institutions to help the only two agents of innovation in a capitalistic society, which are companies and individuals, which we tend to cover entrepreneurs. So it’s hard. It’s a choice because it’s hard to change, but it’s also a choice, because each one of them have different distributional outcomes. The second part of a book talk about three things that are really important for innovation, but a community, and I would say even the president of the United States have very little ability to change, because there are global systems set in various ways, and currently, if you are Detroit, not if you are a really, really, really successful VC or banker in New York, or the world best patent rule.
Okay? But if you are from Detroit and you want to change your future trajectory of Detroit, you’re going to be hit by them, based on innovation. So one is our global system of intellectual property rights, which has now become helper, but even more so a hindrance to innovation, especially for the companies that come and build around technology that already exists. Okay? They will be immediately attacked by either the incompetence or patent rules trying to get rents, for example. But it’s not just patents. We have technology standards and IPR embedded in those technology standard. Whoever embed that technology basically have rents for life. I don’t know, if you look at trademarks lately, but they have been exploding even faster than the number of patents in all languages.
So we should watch out what words we use, Rob, in this interview, because depending on the way we use them, we might be open to being sued. And then there’s a whole world of copyrights, trade secrets, on and on, and on and on, which limits the ability. Then you have finance, which we talked a little bit about, but especially in the US, if you and I would say, “Wow, these TSMC people are really smart, we also want to have those business models in the US.” You will find that it’s almost impossible to do it under our current financial system and current regulatory system, if you’re a public company. And the ability to change those two are, I mean, good luck.
What you need to do in those two is playing a strategic game of, A, being extremely savvy about how they work and using, if you want to call it, very instrumentally, the system to protect your own companies. One way of thinking about it is thinking about the IPR, it’s not just patent rules, but IPR players, especially those that want rents, are very much like bullies. So they will go to the place of list resistance, like water and electricity. So it’s not nice to a world, but if you create a system in which they know that if they attack your companies, it’d be really hard to get anything, and you might even attack back, they will prefer to avoid your companies because there’s so many easy targets out there, because of the disruption of the other system.
And I would say very cynically as a political economist, that if you do it enough in enough places, you will start to have change in the system. The same is for finance. And in for finance, and I’ve talked about Israel and the US that have similar problem with financialization, you basically need to do two things, play a delay game, so that companies grow as much as they can in your local and figure out, and that’s something, I think this is crucial for the US, figure out what is the new financial vehicle to invest in innovation. If you look throughout history and you look at our old professor at MIT and Harvard, they will teach you that in every hour or period after industrial evolution, the place that became really successful also figured out new way to finance innovation.
Right? From the French bank, the German bank, English. Since the sixties, more or less, we have venture capital, but it’s running out of steam and it have been working only in one stage and only in two industries, biotech and ICT. The world right now is ripe for an innovation in finance and especially innovation in how you finance innovation. So we should work on that, but most places should realize that the system is now dysfunctional from their point of view, and you play a defensive game of growing your companies, delaying their need to go to the global financial markets. So very cynical and not to win.
Rob Johnson:
Yes, I think it’s very important what you’re saying, because as you say, the concentration of power around who are the winners in this system or game that we’ve allowed to evolve is perhaps on the side, as I alluded to Donald Trump, but you could talk about the AFD in Germany, Marine Le Pen, the Brexit voter, whoever, the attraction to what you might call angry protesting, and potentially authoritarian alternatives is not the pathway, or at least it is a pathway that frightens me. And when I look at what I often call the commodification of social design and enforcement, you call yourself a political economist, but there are many people who treat economics like it’s a separate domain from politics, whereas I see them as intimately intertwined, and what’s now the complication of globalization where countries can play off against each other or powerful people can play off, one country against another more accurately.
And it is very daunting to imagine how a country that the International Office of Migration projects, not a country, a continent, the continent of Africa, they project will move from something like 1.7 billion to 5 billion people between now and 2075. Equatorial region, climate, burning out subsistence farming. What’s the development model for broad-based prosperity? Or is the world prepared for desperate, large scale migration on the level of billions of people coming out of Africa, not to mention even more importantly, the turmoil within the continent of people escaping despair. So I think the stakes upon which you are exploring and raising a flag really matter to humanity. It’s not just an arm wrestle among this tech company or that, or the people who own this medicine patent versus others, or even whether you get your CDs and your DVDs copied without your intellectual property rights.
Those things are all there and they affect incentives. But I think you’re digging much deeper into this. And let’s talk for a second about climate change. I get the feeling particularly after the pandemic, that more and more people are terrified, the IPCC and others come at us, that we’re not on course. And then you have some people talking about ESG or these other people talking about, “Just get back and let the market solve it.” But the collective good in a timeframe, which includes your and my children’s lifetime is a very daunting challenge. How do we take the lessons of your work, so we rise to that challenge more effectively than we appear to be doing right now?
Dan Breznitz:
So there’s two twin challenges. So first of all and especially after the pandemic and with a rising global tension. We have to realize that this global system of production that we talked about is one of the worst system we can have for climate change. So I don’t know how bad it is, where you live, to get even wood for construction, now, since COVID, but in Canada, is beyond belief, right? Because if you look at even the trade wars between Canada and the US, half of it is about wood, and yet Canada does not have now wood, which is not very high technology, right? Wood in order to, people want to refurnish their home, or build. And the reason they is, we now have a system which you take the wood from Canada, put it on a ship, it moves… It’s the most polluting ships, possible.
They move 5,000 miles to Asia. Then they go through processing, which is very simple for about an hour or so, then they’re being shipped back on the same ship to who go back, polluting all the way twice. So one of the hopeful things that might come of this pandemic is a rethinking about the real cost and consequences of this massive global system, and then taking the goods out of it, right? Because that system is very effective when you are specializing in different stages and thinking about diverse, regional system of production. Okay. Politically, I think, in the US is now called French [showing 00:35:57]. So creating a North America system, creating European system, we will still have a global system, but, A, we won’t be so much dependent on it, and second, hopefully we’ll produce a lot less of a climate change, gas-emitting and various other pollution.
In that system is also a really hopeful system, because as I said in my book, communities can choose those models and work and get to be part of that global system. But it’s a hard work. When the world, and now we have this period of openness to it, is reconfiguring in its global production networks, there’s actually more windows of opportunity for communities all around the world who get their game together beside what stage and what industry they want to play and go for it to actually find a place because it’s an opening, you’re not fighting for your place against others. Okay? I would also say that if we don’t do that and forget climate change for a moment and go back to the politics, if we don’t figure out how to offer hope in the future for people, that their future will be better, but even more importantly, that the future, they work hard, so the future of their children is better.
We are going to end up with horrific political ramification. Trump would look like, to American, as a mild-mannered, gentle person. We have already seen it playing out in multiple places. We have already seen what happens with migration to Europe, for example, and we are talking about just a war in Syria. Can you imagine, and that’s like few millions a year. Can you imagine what’s going to happen because of climate change and others, it will be tens of millions, forget hundreds of millions. We will become a very nasty, brutal world where humans will kill and destroy other humans just because they’re not part of their tribe. And we have done it throughout all our history. So we shouldn’t have any illusion about what will happen if massive immigration happens because of critical needs.
So we need to figure out a way to offer all of those communities hope for future and prosperity, which is not just by massive immigration. And that’s another reason why I wrote this book. The other thing about climate change, it also gives an opening to rethinking innovation. So the promise of climate change, that we sell to everybody, it’s not only that it will be cleaner, but you’ll have a green-tech revolution that will create growth and prosperity. In order to do that, we, especially we in the United States, have to rethink our model of innovation, so we will bring prosperity for all Americans and not just to people like us who finished MIT, Stanford, Berkeley, in our finances.
Rob Johnson:
In your book I’m always moved about the story of an earlier globalization, the transformation, seems to be underscore repeatedly in the epigraphs you choose for the chapters, from The Wizard of Oz. And what I found fascinating because, my children would tell you, this is my favorite film of all time, and that I would vote with them. But the idea that’s coming forward, that you keep seeming to say, is that all these wonderful people who already have these abilities are not recognizing the abilities within themselves and fantasizing about some other place like us. And I just thought your quotes were really penetrating because it’s almost like you’re saying to us, Frank Baum can show you that the pathway is hiding in plain sight, and we need to pull back the blanks, take off the green glasses and see false gods than see what healthy social design looks like.
And as you’d said in some of the metaphorically, in the quotes you chose, the 10 men had a heart, the lion was courageous and the scarecrow was brilliant. How do we recognize and excavate from the depths of what one of my Chinese friends calls the invisible Republic of the spirit and bring these things into a place where they re-inject confidence and hope and which you might call a pathway that takes the sting out of what might bring the even more violent authoritarian government to the surface, whether here or in China or in parts of Europe or Russia? I think you’re teasing us beautifully with art, but how do we bring the confidence of our potential onto the, which you might call, onto the whiteboard and the design pathway?
Dan Breznitz:
So the book, and that’s why I’m reading it in that way, talks to people who want to really change their communities. So as I said, up to the level of a state in the United States, but really a city or an area around the city, a region. And I think the first thing that those kinds of people, local leaders need to do is to understand the real choices, right. There’s a myth that what you want to become as a Silicon hyphen, right. We can go around the world and we’ll find that every place claim it’ll be the Silicon something, from the Silicon Peach in Atlanta, to the Silicon Valley of the North, to the Silicon, whatever aisle, whatever you want. And that’s just wrong vision to have, right.
We just talked about how Silicon Valley, assuming you’re successful, and in the book I also explain how difficult it is to ever become Silicon Valley, partly because the global already have a Silicon Valley. If you do that, you’re going to end up with massive inequality. So places need to open their eyes. Or I shouldn’t say places, people needs to open their eyes to the other opportunities that are there and understand that, A, they’re feasible, and, B, they are much better for local prosperity. Once you do that, as you said, you realize you actually have a lot of what it takes, and you can map what you need in order to excel a long time. And that’s where I think we lack vision. And here, I’m not talking about those grand visions from Hollywood or the media, or even Silicon Valley, I’m talking about, okay, you go back to Detroit and you and I go back to your friends in Detroit.
And the first thing that I think we need to do or they need to do, and maybe we can help is, okay, if you’re successful, we’re successful, how Detroit look like in 15 years, what kind of companies are there? What kind of people they employ, how they’re connected to global markets, right. What do we supply to a global networks and what kind of information, data, whatever you want, they need from the global networks. And then we can map up innovation policies to reach that knowing that we need to pivot over time, because we’re talking about innovation, we’re not talking about the car industry. We’re talking about figuring out simulating agents, companies, and individuals to do things that we cannot know in advance, right?
But we can know what kind of companies, what kind of industries, but especially what kind of stage we want to play in and how to build those capacities and then stimulate those companies and individuals to actually operate. And then we have a map and then navigate, and then we can do reverse engineering. Instead of what happens now, which people say, I ask them, “Okay, so you want to have innovation-based economy? How do you think is success?” And they will tell you, and I’m sure a lot of them told you, “We need more patents.” They will say, “We need more VC per capita.” They have no idea how success looks likes to their community. And they have no idea about the options. So open the eyes, understanding what is successful for you, not as a success in the dream for the New York times in 10 or 15 years, and then reverse-engineer a plan to get there.
And, again, it needs to include what kind of finance, what kind of education, what kind of public and semi-public goods you have, what kind of… And most importantly, what kind of relationship you have to the global network of production and how you create a system that evolved and co-evolved to succeed in that because what you need in stage one where you have very few companies, if at all operating that way, and what you have when you are truly successful or call 15 years later is quite different. Right now most places are not even in the game.
Rob Johnson:
Yes. And it’s interesting. I read Bill Janeway’s review of your book that was in Project Syndicate. And he talked about, what you might call, way in which you’re taking this beyond the Patreon model, the creative destruction, as though it was just like a random cauldron, by bringing these human dimensions in and the ingredients that are embodied in people that can be nurtured. With that 15 year timeframe, it really, how would I say? It doesn’t seem so frightening and chaotic. It feels like a humanistic path that, how would I say? Could calm our nerves, and in doing that, calm our politics. And have our politics reinforce these visions and these achievements of greater community? I think you wrote, how’d I say? You didn’t write too soon, because I think the despair has been crawling up around us fiercely in these last few years.
And as I said at the outset, I think you’re kind of what the doctor ordered and what the, how would I say? I don’t know how we chased away the wicked witch of the east and the west, which I believe was a metaphor that pertain to finance on the East and West Coast at the time that was written. But this way of seeing, we’ll meet with resistance, we’ll meet with obstacles, people, but it doesn’t feel to me like a fantasy. It doesn’t feel like romantic, foolishness and delusionary. It feels like exactly what’s got to go on down in the trenches. In this Homecoming Detroit group that I’m involved with, which was ex-pats from Detroit, going home to see how we can help or contribute, is getting the right at the cusp of that design process.
And I even heard a beautiful talk by Jim Farley who runs Ford Motor company, about batteries and electric cars and things. And he concluded by saying, “And this might bring things back to Detroit, not what you might call a resurrection of the old model, but become a source of nurtured expertise in a dynamism that they haven’t experienced in 60 years.” So how do I say? I think I’m going to buy other copies of your book and send it to all my friends that were at that conference in Detroit and see if we can get you involved in some of the strategic planning with the teams from Homecoming Detroit. And I’m sure there’s homecoming Atlanta, and there’s homecoming Houston and all the other places too.
Dan Breznitz:
I’ll be delighted. I wrote this book in order to effect change, move a needle even a little. Detroit, which is now a neighbor, right, to Toronto and Hamilton, I would love to help, but also I would… As you know, I’m a friend of INET, and please think about me as a tool. Okay. So if you think, okay, this is, as you said, what the doctor orders, we need to add 10 CC of innovation in real places, just use me as a tool, I’ll be delighted, and whenever you want.
Rob Johnson:
Well, excellent because we do have a young scholars initiative that’s well over 12,000 people now, all around the world and with global governments in what you might call the common vision of them being exposed and then going to work and building on the framework that you’ve created in this book, maybe they can make a bigger difference in, how do I say? Join the parade that you’ve started. Danny, thanks for being here. This is really, like I said, there’s a time when inspiration feels good and then there’s a time where it feels necessary. And I think the inspiration you provided, it goes very deep and is the starting place for a very, very constructive agenda.
And I look forward to following your evolution contributing to awareness, but right now I would just want to thank you and know that we’ll come back and make another episode in a few months as new challenges unfold or new insights appear in your imagination. And ironically, you talk all about innovation, but you’re also a mental adventure. And how would I say? Perhaps I can help integrate it forward into the other three stages.
Dan Breznitz:
Thank you so much, Rob, for having me here. And may I hope that we have many of those, maybe even face-to-face soon, with the help of innovation.
Rob Johnson:
I’d look forward to that as well. Thanks, until next time.
Dan Breznitz:
Mm-hmm (affirmative). Cheers.
Rob Johnson:
Bye-bye. And check out more from the Institute for New Economic Thinking at ineteconomics.org.
