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TiB 117: How progress happens; remote work and the end of Silicon Valley; how to allocate R&D spend; and more...

This week: how progress happens; remote work and the end (or reinforcement?) of Silicon Valley; how t
June 2 · Issue #117 · View online
Matt's Thoughts In Between
This week: how progress happens; remote work and the end (or reinforcement?) of Silicon Valley; how to allocate R&D spend; and more…

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How does progress happen?
It’s been a traumatic week in a traumatic year for America. Weeks like this prompt reflection on the idea of progress (a frequent topic in TiB) and how it happens. Ada Palmer, historian and sci-fi author, has a really superb essay on this from 2016, which I re-read often. It includes this line, which seems especially relevant this week:
One of my favorite social progress metrics is: “What portion of the population of this society can be murdered by a different portion of the population and have the murderer suffer no meaningful consequences?”  The answer, for America in 2017, is not 0%.  But it’s also not 90%.  That number has gone down, and is now far below the geohistorical norm.  That is progress
There’s lots to love about this essay, including the claim that the fascinating Francis Bacon (more people should read his The New Atlantis) invented the modern idea of progress (Much more here, if you like long podcasts). The best section, though, examines how to reconcile the Great Man theory of history, which implies that individual human agency matters, with the Great Forces view, which suggests it doesn’t. 
Palmer describes a simulation of a papal election that she runs in one of her history classes (which sounds incredible). Every time she’s run the simulation, “great forces” have determined the broad thrust, but individual action determined the details - and the details turn out to matter a lot. As Palmer describes it, “progress” is a complex system that’s hard to influence in the specifics. But we can - and people have - nudge it in the right direction. That’s a reason for optimism, perhaps, in a week that needs some. 
Will remote work end Silicon Valley's dominance?
We talked last week about the second order effects of remote work. One element we didn’t touch on was its impact on innovation. Innovation theory puts a lot of emphasis on positive spillovers from physical proximity - hence the success of clusters like Silicon Valley - so one plausible hypothesis is that a more distributed workforce is a less innovative one. I wrote an article for Wired this week arguing the opposite, however: remote work could herald a more innovative world.
The core thesis is that innovation clusters have drawbacks as well as benefits - above all rents and wages spiralling - and that, if remote working is normalised post-pandemic, the upside of vast new pools of global talent will outweigh any friction created by distance. One implication I suggest in the article is that the dominance of existing physical clusters might wane.
Another interpretation is possible though. The same day my piece came out, the EIU published this excellent post by innovation economist Matt Clancy, which makes a similar argument and adds a lot more data. Clancy shows that the impact of remote work is highly uneven: the average impact on productivity is negative, but high-skill, R&D intensive companies see positive effects. Remote work, in other words, will likely accelerate tech becoming an ever bigger and more profitable part of the economy. And, of course, incumbent tech companies’ HQs - and profits - will remain where they are now. Silicon Valley wins again?
How should we allocate public R&D spend?
A frequent preoccupation of TiB is the problem of slowing productivity growth. Back in December, we discussed an excellent paper by Richard Jones on how public R&D spend can boost productivity and address regional inequality. Jones now has a new paper (and interactive tool), co-authored with Tom Forth (whose Twitter summary is great). It’s UK-centric, but raises interesting questions that will apply in any developed country.
Governments face a tricky trade-off in balancing R&D investment in areas that already have excellent research versus trying to stimulate poorer regions. The former approach creates a Matthew Effect: public R&D spend “crowds in” private investment, which in turn boosts research excellence, which attracts more public investment, and so on. This, as Forth points out, helps explain why Elon Musk - who’s having a good week - chose Berlin over Birmingham for his Gigafactory: it has six times the public R&D spend.
What governments can avoid, though, is letting proximity to the capital city drive allocation of R&D spend. The Matthew Effect suggests that small disparities in R&D spend compound. If distance from the centre contributes, even accidentally, to lower initial public R&D spend, over time more remote regions will end up with much less public investment - but it will look like that that gap is justified by differences in research excellence. There’s a simple solution: decentralise R&D spending decisions. It’s no panacea, but might get us better research and less regional inequality. 
Quick links
  1. Keep Calm… and delete Grindr? Striking data on the correlation between app usage and happiness.
  2. How progress (in semiconductors) happens. Fascinating thread from Jason Crawford on the history of transistors.
  3. Just when you thought things couldn’t get worse… Troubling data on the resurgence of ISIS in 2020.
  4. Lost decade, Italian edition. Every income percentile in Italy is worse off than it was in 2008.
  5. Police brutality round up. Evidence that police militarisation does not reduce crime or increase officer safety. Research-based policies to reduce police violence. The challenges of police unions, from 2018 (there are some interesting similarities here to pre-Reformation Benefit of Clergy, which is not an encouraging parallel)
BONUS: I recorded a podcast with Nasos Papadopoulos, in which we discuss many themes from the last year of Thoughts in Between. If you like the newsletter, you’ll probably like it.
Your feedback
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Until next week,
Matt Clifford
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