Five points stood out to me:

• The unit of analysis in discussing economic growth is not the nation but the city and its surrounding area.
• Cities should maximize diversity in their economies in order to enable lateral innovation.
• Specialization is good for efficiency but locks in the existing set of niches and damages the potential for innovation.
• Competition between cities at roughly the same level of development provides healthy stimulation for innovation, but can be damaging when the cities are at radically different stages, since the products of the more-developed city can be too advanced for the less-advanced city to improve.
• The best corporate structure for innovation is one that encourages spin-outs. This can be accomplished through corporate culture, democratic accountability to the workers, or government policy.

The steady march towards urbanization makes Jacobs’ focus on cities especially relevant today. Urbanization brings up a wide range of issues, adroitly summarized by Stewart Brand in his City Planet talk and in his just-released book, Whole Earth Discipline. The developed world’s cities have done most of their growth, while the developing world has the booming mega-cities could easily become tomorrow’s cultural and economic centers of gravity. They are in active development and the way that they grow will make a significant impact on the coming century.

A personal reason I found her ideas so interesting is that they stand in direct contrast to the theory of development that we use at Monitor’s economic competitiveness practice. We advise governments on the creation of economic “clusters,” groups of industries that we’ve deemed complementary, based on HBS professor Michael Porter’s theory that complementary industries should be located in the same city. Jacobs would object to this idea, since it only makes sense if you think the goal of a city’s development should be to find its niche in the current order. Specializing, even by picking a cluster, means favoring a certain set of industries rather than cultivating the widest possible diversity. In her view, that means you’re increasing the potential for doing today’s work at the cost of diminished chances for creating innovations that will provide a competitive edge in the future. According to a study that Ellerman cites, which surveyed the economies of 170 U.S. cities between 1956 and 1987, Jacobs’ theory holds true. I don’t know the details of Monitor’s cluster analysis, but I wonder whether our consultants might be able to learn something from Jacobs.

When I described these ideas to my girlfriend she noted that diversity is often promoted in the developing world as a means of insuring a city against the shifting winds of the global economy. Many developing-world regions will specialize in a single crop, such as coffee or cacao, only to find that some change in the global economy leaves the entire region without income at the same time. Jacobs mentions this as one of the dysfunctional relationships between cities that ought to be avoided. She would argue that diversity is not only good for creating economic security but also for turning an otherwise slow-moving city into an engine of innovation. Gaining security is clearly appealing, but I image that the dream of becoming truly competitive would be even more inspiring. This is the aspect of Jacobs that I found the most subversive: she believes in a world where today’s slum-ridden mega-cities can become tomorrow’s wealthy and sophisticated urban centers. To the extent that Ellerman is right that the current prevailing view is that the developing world’s goal should be to simply increase its efficiency as a supplier to the developed, then this is a very important shift in mindset. Personally, I couldn’t agree more.

There’s one aspect of Jacobs’ theory that I find particularly challenging to connect to practical reality. She points out that inter-city competition for innovation is only healthy when the cities are at roughly the same developmental stage, arguing that competition between ill-matched cities is damaging for those on the lower end of the developmental ladder. That may be true, but are there any levers available to prevent that damage? Of course, one could construct some kind of ranked index of cities’ developmental state and propose a tariff regime that protected less-developed cities from “unfair” competition… and even my unschooled ears hear that as not only impractical but also unsustainable. But if it’s not that, are there other ways to create that protection?

I also wonder: are Jacobs’ ideas really opposed to those of mainstream economics–or are there economists in the mainstream who believe her? I have no technical background in the discipline, but these ideas seem too obviously correct for every respectable economists to dismiss.

What will this actually mean? Will they charge for search engine listings? Will they require payment from everyone, or just those that make ad revenue? Will software be effective at tracking down the majority of the AP content? All of these questions will make a big difference but are unanswered as yet. The AP’s goal is simply to generate revenue for itself and the many newspapers that are part of its cooperative, so it would make the most sense for them to target the cash cows of Google and Yahoo’s ad services and the sites who make money from them. I first saw this story today when my friend Kaizar at NewsTrust tweeted today that he was worried the AP might sue them out of existence, which is a reasonable concern since the New York Times reported that “the A.P. will also pursue sites that reproduce large parts of articles, rather than using brief links.” Perhaps NewsTrust could simply link to the stories and avoid paying a fee. But NewsTrust does not make money off of ads and is also a nonprofit, so perhaps they’re in the clear.

It’s worth asking how we ended up in the strange situation where an association of the world’s major newspapers gives away its content for free to outlets that compete head to head with the newspapers themselves for attention online. A wonderfully long and thoughtful answer to that question is spelled out in the latest American Journalism Review under the title “A Costly Mistake?” It turns out that the AP made the decision to provide its content online back in 1998, and the author finds a wide range of opinions that characterize that choice in terms ranging from the sympathetic to the vitriolic. The AP themselves justify the choice in terms of its need to compete with Reuters and Agence France Presse, which would be a valid argument except that those services have never had the resources of the AP’s 3,000 reporters who cover the globe and reach half of its inhabitants. Assigning the blame gets even foggier when you account for the fact that newspapers themselves started giving away content around the same time and continued the practice after early failures to charge. The result: many of today’s biggest attractors of eyeballs in the news business are not the news organizations who created the content but the tech companies who index it and the filters who cater to a niche audience.

Then again, Internet advertising is dead anyways, according to a much-discussed post on TechCrunch. Perhaps the AP will find itself milking a dead cow.

Jones makes the interesting pitch that this should not only appeal to social justice advocates but also to environmentalist leaders. The environmental movement has a problem: where it has traditionally sought support from the white middle and upper class, its current project of taking action on climate change needs support from the mainstream, including many poor families who are mostly concerned with putting food on the table. That’s tough. How do you convince a working-class single mother that she should spend any time and effort doing the right thing for the environment? Especially if she’s black and the only signs of environmentalism she’s ever seen are being sported by wealthy whites in the form of expensive Priuses, high-quality organic produce at Whole Foods, and solar panels that cost tens of thousands of dollars? Jones argues that winning those hearts will not only expand environmentalism’s base of support but also greatly amplify the amount of innovation in response to environmental problems:

We cannot afford that kind of moral shortfall. To solve our global problems, we need to engage and unleash the genius of all people, at all levels of society. Some of the minds that can solve our toughest problems are undoubtedly trapped behind prison bars, stuck behind desks in schools without decent books, or isolated in rural communities. A green economy that is designed to pull them in—as skilled laborers, innovators, inventors, and owners—will be more dynamic, more robust, and better able to save the Earth.

We’re not just talking about getting a better bunch of suggestions on how to conserve energy. We’re talking about environmentalism becoming a genuinely populist movement with the power to motivate hundreds of millions worldwide. This is big.

Much of Jones’ message was echoed in Obama’s promise to create five million green jobs, which brings up the question: are green jobs the way to escape our downward slide? Many politicians are promoting the idea, which the Wall Street Journal examined earlier this month and found lacking, an argument echoed on the blog Environmental Economics. (The stimulus package is only creating somewhere around a million jobs, and the nation lost about half a million in January alone.) But how many green jobs are we talking about? The subtitle of the book is “How One Solution Can Fix Our Two Biggest Problems”; while the “dual crisis” that Jones describes is that of social inequality and the destruction of our ecosystems, he also explicitly references the recession. When Fast Company published its list of the top 10 best green jobs for the next decade, it explicitly referenced his book.

Up to this point his and Obama’s visions ride the same wavelength. But when Jones describes the economic shift we need to fight climate change he strikes the same note asMakani Power’s Saul Griffith and calls for an all-hands-on-deck economic mobilization on par with World War II. That’s where it becomes clear that the vision of green jobs as an economic saviour has to be discussed differently in the short term and the long term. The short-term case is dubious, as the Journal describes. But the long-term case looks rock solid. If we can make carbon expensive, there will be massive new demand for renewable energy, which might well be the industry that keeps the American economy on top for the next few decades. After all, as Jones points out, there’s the same number of parts in a wind turbine as there are in a car. Whether Obama will push us that far or not, he is pushing for both cap-and-trade and heavyweight participation in the 2009, as noted in today’s New York Times (”Obama’s Backing Raises Hopes for Climate Pact“). Here’s hoping he succeeds.

This really had me worried that there could be reason to doubt the science. After all, the report was issue just last month and claimed that it was just in 2008 that the group of consensus-deniers had really begun to grow in numbers, so it could easily have been a twist in the climate debate that I’d simply missed with my eyes turned to other concerns.

Then I started looking around for anyone who’d discussed the report, and boy was I pleased to find that Climate Progress debunked it nose to stern the day it came out, ending with the conclusion: “There is no news in Inhofe’s new report — just a recycling of long-debunked denier talking points and padded, irrelevant lists of names.”

Thank God — now I can get back to the real business of figuring out what the debate looks like about how to solve the problem and where the commercial demand stands for green products and services.

• Consumers are gradually transitioning away from ascetic, medicalized eating styles, “quick fix” diets or supplements, and so-called “better for you” packaged foods and practicing a more mindful eating style via engaging, higher quality experiences
• Retailers are seeing growth in local products, fresh produce, and high-quality products — though a plateauing of interest in organic and some temporary spending cuts to adjust to the recession
• Several forward leaning grocery retailers have initiated “grocer grown” and “store grown” programs to ensure a steady supply of local, high-quality produce
• Several major retailers (Tesco, Wal-Mart & Safeway) have launched small-format grocery retail chains (Fresh & Easy, Marketside & The Market) emphasizing ease of use and convenience as well as fresh & prepared food offerings.
• CSAs have already spread into the mainstream in many major metro areas and is now reaching minor cities as well
• Mainstream chain restaurants are emphasizing local produce, seasonal menus, and heirloom products
• Small portions and small-plate dishes continue to grow in popularity
• A movement is afoot among chefs to reimagine fine dining in a less-pretentious form with the use of communal dinners, fixed menus set by the chef, “underground restaurants” that happen as a series of dining events with no fixed location, gourmet street food, and even new scientific cooking methods.

Where can you find that? Technology innovation for the short term and new infrastructure for the long term. If the government just pays American companies to do things that they would be doing anyways, the stimulus amounts to frog-marching the American public down to the shopping mall, handing them last year’s tax dollars, and telling everyone to spend it all on whatever strikes their fancy. That would be a tragic waste of effort. The real potential of the stimulus lies in funding projects that will open up new areas of growth and the best example for the short term is clean energy technology. Cleantech of every kind needs a boost in demand in order for the technology to become fully scalable, and government spending could provide cleantech firms with the funds they need to become cost-competitive with other sources of energy. In the long term, Obama’s project to roll out broadband to rural America could also have a tremendous impact, opening up the opportunity for tens of millions of workers to find work in the information economy without relocating to a city. Defense spending, which Feldstein advocates in the Wall Street Journal, would primarily amount to providing demand for military contractors to provide their usual products for the armed forces. Unless we’re talking about upping the funding for DARPA (not a bad idea in itself), giving the military a shopping trip to the defense-contractor mall isn’t going to get us the best value for our trillions of tax-collected dollars. 

If a businessman rakes in a hefty profit while doing good works, is that charity or greed? Do we applaud or hiss?

Applaud, of course. They’re helping. But call them by a different name if you’re finding it confusing to put profit-takers and donation-takers in the same bucket. In his column, Kristof goes on to describe a number of profit-driven organizations whose operations help social causes. One example is the Starbucks Corporation which has shaped its business operations in a way that creates great benefit for African coffee-growers. Others are the organizations that put on the AIDS Ride and the Breast Cancer Three-Day, which are profit-driven companies whose market niche is events that provide social benefit. The CEO has been pilloried by some for his near-$400K salary, which is low by corporate standards but astronomical for the social sector. Does he deserve to be? After all, isn’t he doing much the same thing as the pittance-paid heads of major nonprofits who run based on foundation grants and individual donations? Shouldn’t his organizations be plowing most of that $400K a year into doing more good?

I tend to think not. I think it’s ingenious that he’s found a way to provide social benefit through the pursuit of profit. That sounds like an oxymoron, or at least a corruption of social benefit. One might wonder what kind of social benefit we’re likely to get when the people going after it are motivated by money rather than morals. But I think we’ve seen a credible answer in his organizations and others like them: sometimes people will pay money for services that give social benefit, and a commercial firm has the advantage of bringing the quick-footed responsiveness and risk-hungry mindset of business to bear on the problem. It’s hard to find those rare opportunities — we should encourage entrepreneurs to find them, and give them their own term to honor the effort. Perhaps “conscious capitalist” would do.

He fired his seven Pasadena staffers — including five reporters — who were making $600 to $800 a week, and now he and his wife direct six employees all over India on how to write news and features, using telephones, e-mail, press releases, Web harvesting and live video streaming from a cellphone at City Hall.

“I pay per piece, just the way it was in the garment business,” he says. “A thousand words pays $7.50.”

This is the most revolutionary idea I’ve heard in news since I saw David Cohn’s new start-up spot.us, which is pioneering a community-funded model for local reporting. It’ll be interesting to see how well this works. Clearly quite a bit of reporting can be done from afar. As with any matter of outsourcing, the real question is: what can’t be done from India?

…the immediate result of the Mumbai terror attacks will be a further hardening of inter-communal relations within India. The latest attacks will also increase the likelihood that in national elections slated for early 2009, the result will be a BJP-led government, as Hindus, who comprise the overwhelming majority of Indian voters, take on another layer of insecurity.

Internationally, this event will further aggravate Indian-Pakistani relations, making it harder for the incoming Obama Administration to effect a rapprochement between the two countries, necessary for progress in Afghanistan, where the two subcontinental states are engaged in a proxy struggle that goes on behind the immediate conflict between the United States and al-Qaeda.