Cities worldwide want to be more innovative because innovation is a driver of economic growth. The Innovation Cities Index shows cities where they’re doing well and where they’re doing badly relative to other cities. Hear from Index creator Christopher Hire about the importance of having policies that are good for entrepreneurs and just how bad red tape is for innovation. You’ll also learn how the prevalence of coffee shops is a good predictor of innovation. And you’ll hear from Christopher about what cities are hot right now.
Christopher Hire is Director of Data at 2THINKNOW, publishers of the Innovation Cities Index, a ranking of 500 cities for innovation, published since 2007. Christopher has given talks on cities and innovation to the OECD in Paris and the UN in Geneva. He’s a globally recognised expert on what makes cities innovative.
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Transcript: Innovative cities, coffee shops & entrepreneurs w/ Christopher Hire – EP165
N.B. This is a lightly edited version of a transcript originally created using the AI application otter.ai. It may not be 100 percent accurate, but should be pretty close. If you’d like to quote from it, please check the quoted segment in the recording.
Gene Tunny 00:00
Coming up on Economics Explored.
Christopher Hire 00:02
Coffee shops are a driver of innovation because how many people who right now probably listening to the podcast or how many people that are writing a paper or working on something or new ideas are sitting in a coffee shop.
Gene Tunny 00:18
Welcome to the Economics Explored podcast, a frank and fearless exploration of important economic issues. I’m your host gene Tunny broadcasting from Brisbane, Australia. This is episode 165 on innovative cities. My guest is Christopher Hire, director of data at two things now, publishers of the innovation Cities Index, a ranking of 500 cities for innovation published since 2007. Christopher has given talks on cities and innovation to the OECD in Paris, and to the UN in Geneva. He is a globally recognised expert on what makes cities innovative. So I’m really glad he’s come on to the show to share his insights. Cities worldwide wants to be more innovative because innovation is a driver of economic growth. Christopher’s innovation Cities Index shows cities where they’re doing well, and where they’re doing badly relative to other cities. Hear from Christopher about the importance of having policies that are good for entrepreneurs, and how bad red tape is for innovation. You also learn about how the prevalence of coffee shops is a good predictor of innovation. And you’ll hear from Christopher about what cities are hot right now, including Dallas, Fort Worth and Seoul Korea. Please check out the show notes relevant links and clarifications and the details of how you can get in touch with any questions or comments. I’d love to hear from you. Right now for my conversation with Christopher higher on innovative cities. Thanks to my audio engineer Josh Crotts for his assistance in producing this episode. I hope you enjoy it. Christopher. Hi, welcome to the programme.
Christopher Hire 01:49
Thanks a lot for having me on your economics podcast. It’s a real pleasure Gene.
Gene Tunny 01:53
excellent. Yeah. Great to have you on. Christopher, one of my listeners, Dave attended a recent talk you gave. And he mentioned that you’ve done a lot of really interesting work on cities, you’ve got an innovation Cities Index. And I’d like to ask you about that today. But first, would you be able to give us a sense of the broad range of work that you do, please, Christopher?
Christopher Hire 02:18
Yeah. So currently, for the last over a decade now I’ve been working, running a small group analysts doing data about cities. So basically, we gather data from cities and we answer research questions. Now anybody who’s in economics or in the data field, and and I’m sort of I’m a combo I’m like, data math guy, and also a data science guy, but I was data science before they invented the term data science. Many of your listeners probably remember analyst programmers, yeah. Power, before Power BI it was Cognos, all those sorts of things, you know, the old, old stuff that it’s really the same thing. The Emperor with a new set of pyjamas some days. But yeah, so So basically lots of different data gathering about cities, difficult research questions, and usually who we help is if somebody has a research question about how to compare cities globally, there’s lots of data on how to compare Australian cities on the abs. But there’s not a lot of data on how to compare cities globally. And if you try to dig into the French system, you’ll hit some walls. And then if you dig into the Spanish system, you’ll hit some walls. And we’re sort of good at that. So we go through and we standardise global data kind of thing for cities. And it’s about 500 cities. And we do answer research questions. And we’d like to, you know, we’d like to do interesting things. So somebody gives us an interesting challenge. It’s quite fun.
Gene Tunny 03:40
Great. Yeah. keen to chat about cities. The one the indexes that I’ve noticed in the past are the rankings I’ve noticed in the past. The Economist, The Economist has a or maybe they, I’m pretty sure they still do a cost of living survey or across different cities in the world that’s aimed at I think it’s aimed at executives or professionals, what’s the what’s their cost of living in different cities. And also Monocle has a city’s index, what’s the best city to live in and that’s based on the Monocle, Tyler Brule’s magazine, exactly how cool they think the cities are. And one thing that’s interesting is that there was another index or another ranking of suburbs I saw the other day, which had Fortitude valley where my office is, which is one of the top 50 suburbs worldwide. But I think that’s in terms of some measure of coolness. But anyway, I want to ask you about your, your, your ranking or your index you you’ve got this innovation Cities Index. Could you tell us a bit about that, please, Christopher?
Christopher Hire 04:49
Sure. Look, most people know cities rankings as the livability indexes, and they are actually as you correctly identified, in the case of The Economist, more related to cost of living for wealthy expats, then really livability, but the marketing departments of cities love, just churning it out as were the most livable. But it’s really about cost of living a lot of the time. So Mercer and The Economist make those two. And then there’s a series of other rankings that we’ve often sometimes worked on, we’ve worked on Smart Cities rankings for IESE, and a couple of other rankings published by consulting firms that use our index as an input. So ours is a bit different. Because it’s not based on a utopian idea of cities. It’s based on the idea that you do the best you can with what you’ve got. And you try to create innovation. So in 500 cities that we measure, and we started off with 22 cities in 2007, because 500 is a heck of a lot. And we never thought we’d actually get there anyway. But the 22 cities we started with, we expanded it to 500. That kind of gives you a pretty good barometer of what’s happening in the world. And it’s a broad base concept innovation. So in other words, it’s looking at where you would like to live, where you might belong, where you might work or play, it’s sort of a broader space sense of innovation on what places are dynamic and water really good. But it’s answering that in a more systemic way than just, I happen to think this city is cool or not. And I think there’s a lot of newspaper ones, they really are all about who’s cool, who’s not. And it’s more about should be more about data. So we use data and quantitative and qualitative methods, but we use quantitative methods to create the index. So we have an algorithms that basically create the rankings.
Gene Tunny 06:42
Right. Okay. And what does it tell us? Christopher? What are the cities that are at the top of it? And How stable is the index? So the ranking? Is this something that is relatively stable over time, that you mentioned that it’s not just what people you know, what the analysts think is cool, it says its based on data, so these are these? These are data that have a lot of reliability? Or they don’t? You know, they’re not they’re not moving around a lot over time? Is there a? Yeah, what are your thoughts on that as well? As well as what’s the what are the ones at the top? Sorry? Yes,
Christopher Hire 07:20
yeah. So I’ll go, I’ll sort of unpack that in a few parts. And if you want to interject with a clarifying anything, if, if it doesn’t make sense, one of the things that many of us in this field suffer is reading too many PDFs. And with the $50 words, with a $5 word we’ll do and it rubs off on you after a while. So I’m trying to get out of the $50 words. So basically, the main thing about it is, is that the, you’re really comparing cities on their potential for innovation. And the way that you’re doing that is if I answer the second part, about the how we do it in a moment, but basically, you’re comparing the cities for innovation, based on looking at the conditions for innovation in those cities. And to do that we gather 162 indicators, and they have around 800 data points that we gather, and they’re very, like the indicators, the way the design is quite stable. So in other words, I have to put a little asterisk next to that. So the answer is it depends. But certain cities like Singapore, are highly stable. So cities that do very, very well in our index over time, don’t vary a lot. And you’ll see the same cities towards the top as long as they don’t shoot themselves in the foot. For example if they keep good government policy on innovation, like Malcolm Turnbull’s, federal government policy was very good. And I haven’t, I won’t go into that yet. But, but in effect, good policy on innovation, they keep a structural sort of a series of conditions for innovation, and they help encourage it, then they tend to be stable. So Singapore has done a very good job. Now, the first thing somebody in government said here is when I say Singapore has done a good job, how do we copy Singapore. And so that’s where our index is a bit different. We don’t say you should copy Singapore, we say you should be the best version of yourself. So Tokyo has also done an excellent job. But Tokyo is tied up in its culture. You can’t take Tokyo and just take some part of Tokyo say like, right, we’re going to copy all the vending machines in Tokyo and their robotics department. And we’re going to become Tokyo, a Sydney cannot be Tokyo. It doesn’t have the same structure doesn’t have the same culture doesn’t have the same transport system, spatial geographics, all these things, you just can’t be like that. So what we would say is each city should be the best version of itself and the cities that do the best that over time, like Barcelona historically has done very well except thing COVID basically cities like Singapore have always done very well. Seoul has been doing really well for a long time. Now. Dallas Fort Worth is another city that’s been climbing up our index for a long time. And I’m not mentioning Australian cities because people get into the Sydney Melbourne debate. So I’m just saying globally, Austin is doing very well, it has been for a long time. So our index picked up Austin early on in the piece. And we see it sort of cresting now. So Dallas is hotter than Austin in some ways. And Miami is another city that’s doing well with the exception of property prices. So each of these cities have a balance of factors. And if they do that, well, they remain remarkably stable. If they go off into left field and start creating dramatically bad policy, and I would say some of New Zealand’s cities are an example there, where they haven’t, they have the potential to be really great world leaders. And on a per capita basis, they’re amongst the best in the world. But they haven’t been doing good policy for a little while. And so they’ve lost their momentum. You know, it’s really, it’s a bit of, it wouldn’t take much to get him back. But it’s just that they, I think the, you know, when without the COVID thing, they’ve lost a bit of momentum. And the same with some Canadian cities, although the French speaking parts are doing quite well in Canada is bouncing back a bit now. So it’s hard to keep candidate down. So in effect, we’ve got these sort of great cities around the world. And if they get all their policy settings, right, but not perfect, then they go up. If they get their policy settings, bad, then they go down. And so in effect, our index over time, it has a thing called a five year average. And that five year average is pretty consistent. And so and it doesn’t matter how we run the algorithm, it can run, we run the algorithm to get a stable result, basically, relative to last year, we ran it 31 times. And at the end of 31 times we’ve got a pretty stable result. Bearing in mind there was COVID happening. So that’s a lot of answers to your question, sort of a junked points, but I’ll let you led on from that.
Gene Tunny 12:07
Yeah. I was just wondering how it comes together. You mentioned Tokyo was Tokyo at the top of your most recent index.
Christopher Hire 12:17
It’s been at the top a couple of years in the last few. So it’s one of the cities perennially has won. We’re the first index, I think put an Asia city at the top. We’ve also got Seoul near the top, and Singapore near the top.
Gene Tunny 12:30
And Sydney. Sydney’s top five at the moment?
Christopher Hire 12:34
Yeah, yeah, at the moment. That’s an outlier year, that’s largely COVID related. At the time we were doing the data, they were doing the best on COVID. And that sort of affected the COVID variables affected that but Sydney should be top 10 in the world. And Melbourne should be in there in the mix, too. But it depends on policy settings. And, and it’s complicated, because there’s not just councils and state governments often responsible for different things, and there’s community organisations responsible. So it’s a multi stakeholder thing that makes a city, whereas Brisbane has one council, which is much easier.
Gene Tunny 13:12
Right, What are the most important indicators, Christopher? Or what are the most important? Yeah, the most important indicators that distinguish between different cities? Is it governance? Or is it the amount of skilled labour you have? Or is it the museums or the art galleries? The what would you call them trying to think what you’d call that? I’m trying to think about? Cultural? Cultural? Exactly. Yes. Yes, those factors? Yeah. What are the most important? Are there a few that are much more important than the others? I mean, you’ve got it sounds like you’ve got a huge range of data. Perhaps what I’m getting at is what are the common factors? What Look, you’ve got all of these different indicators? A lot of them are going to be highly correlated or getting at the same thing. Can you give us a sense of what the most important data items are?
Christopher Hire 14:04
Well, the indicators don’t necessarily. So the indicators overlap in different ways. And so they’re designed to make it difficult to game. The problem with a lot of rankings is they can be gained easily by just announcing filings. And you’ll see this where cities that are capitals nationally become very prominent, you get these weird outlier cities and the outlier cities you think how did that make the list? That outlier city sometimes is caused by data, for example, for the whole country being filed in one city. So you get these sort of weird data problems? I think, realistically speaking, it’s best way to look at it is to look at what does it mean underneath and it means that individuals and businesses and stakeholders are broadly decentralised into different categories. So in a sense, it’s, it can be a central city if it’s a small place, like Singapore. But in many cases, there’s a lot of entrepreneurship happening in Singapore. And so you have to bear that in mind. So, in general, the correlation is to dynamic, entrepreneur driven cities, not centrally planned resilience. For those from an urban planning, background, Brasilia was a wonderful looking city from a from a photograph. But it didn’t work as an urban planning city. And just centrally planning everything, you can’t make a perfect city, what you have to do is you have to devolve some elements to different indicators. So by taking all the indicators, and looking at them broadly, there are some certain commonalities. So for instance, we have 14 transport related indicators, which would indicate the transport or mobility, and most of those are public transport. And so mobility is extremely important, as we saw during lock downs. So there is a correlation between mobility and creativity. If people stay in their cubicle, you don’t get many creative ideas. You don’t get creative ideas sitting in a cubicle. Most people, if we asked a group of people this question, they’ll say, Oh, I get a creative idea from going out into the bush, that’s one of the common ones. In the shower. The other one is that I get a creative idea of museums and art galleries. So that’s the that’s where the ideas come from. So if you don’t have those ideas, how are you ever going to keep up with China where they, they think tanks have IQs of an average of 150. And they select the very, very best and brightest people to go in their think tanks, yes, they might have procedural things. But they do give some leeway within their think tanks. And they have 150 IQ emission standards or some of the think tanks. So, you know, I don’t see some of our media, Talking Heads competing with the Chinese on the intelligence level, that they have their analysis, but they can compete on the creativity level. So that less we and one of the biggest, biggest, most annoying things you see when media talk about innovation is they keep talking about control and centralization. The problem with that is you kill the goose that lays the golden egg. It’s actually you have to decentralise the non strategic parts of it in order to allow it to function. If you centralise everything, you’re really just going to you control it, but you end up controlling less and less innovative economy. So, in effect, the main things driving this decentralisation in some respects, and centralization and others is okay. It’s a kind of interplay between all these things. And there’s lots of research into various things. Like, for instance, coffee shops, are a driver of innovation, because how many people who right now probably listening to the podcasts, or how many people that are writing a paper or working on something, or new ideas are sitting in a coffee shop, how many people are doing that, and coffee actually inspired the whole age of enlightenment, and was coffee houses that inspired all that. And there’s a lot of interesting texts, which I’m sure we’ve, we’ve we’ve read or videos we’ve watched about that. So coffee is a very important part of the Enlightenment, and coffee houses and Lloyds and all that sort of thing. So I think coffee houses incredibly important innovation, but they’re not really considered very often. So that’s a small indicator in our mix of indicators. But it clusters around people coming up with ideas and making the environment conducive for the person that’s, that’s, that’s ready, who has the means to come up with ideas to create innovation, and to develop things. You know, the best ideas often don’t come from the expert in the field. The best ideas come from, from random people who basically have some part of the expertise they need. And they invented. I mean, what the steam engine wasn’t invented by wasn’t invented by a professor was invented by a boiler maker, you know, it’s often but he was in that university environment is a boilermaker. So it’s often you need randomness for things to work, you know. And so, our index is designed to measure conditions for creativity. And it builds on a whole series of texts and papers and things that people wrote over, you know, from the period of about 1990s till about 2008. A lot of it. And there’s lots of great stuff out there. I mean, this. Thomas Stewart wrote a great book, Joel Kotkin writes some great stuff. There’s a whole series of papers by a guy called books by Nigel Harris, David Landis from Harvard. There’s a whole series of interesting things you can take, and you can extrapolate it, but our model kind of saves time and puts it into one place. So it’s not so complicated. I mean, you can read 5000 books or you can read use a model.
Gene Tunny 20:02
Okay, we’ll take a short break here for a word from our sponsor.
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Gene Tunny 20:36
Now back to the show. Christopher, can I ask? Are the the indicators that you use? Have you got a list of them somewhere? Or is it proprietary?
Christopher Hire 20:49
Yes, the indicators are all on the website. And people can order the data. Okay, so it is possible, we don’t sell the data, we don’t provide the data for free. Because we wouldn’t exist if we did. But we sell the data. And we also sell the data to city governments to benchmark themselves. So that’s how we get some money for doing the index. Otherwise, it would be the world’s greatest charity project. Well not the world’s greatest but it would be a big charity project. So you get some infamous revenue from selling the data to cities and benchmarking cities. And corporations use it like insurance companies and, and banks and those.
Gene Tunny 21:28
Oh, good. And so you’ve got coffee shops, per square kilometre, or cafes per 10,000 people or something like that. It sounds like.
Christopher Hire 21:39
There’s about four or five Cafe variables, the cafe indicators. And we have a special algorithm that say forget outliers and cafe shops per square kilometre. And you can get outliers and total number of coffee shops. And you can get outliers in there’s no matter which variable you use, you can get an outlier in it. So we have a way of sort of kind of nutting that down to what’s a good score from that and then giving a score for cafes. And I was just looking at the cafes data this morning. That’s why I had primacy in my mind. Yeah. And it was interesting to note that the lockdowns saw some cities reduced one in five coffee shops, one in five coffee, close, you think about the flow on effect of that through the economy. It’s one in five coffee shops shops in some major European cities. Interestingly enough, some cities grew by 12%, which means one in eight coffee shops open. So that’s really interesting. And it’s not it’s an it changes the narrative about so it tells us something about the economy as well as coffee shops. So it’s all their small businesses and that and that their economic activity and how confident people are when people don’t buy coffee, if they’re not feeling relatively confident. They might cut back on their coffee. Yeah, avocado toast, as it became, yeah, smashed avocado. We don’t buy them anymore or something. So what was
Gene Tunny 23:01
So what was that time period you’re talking about there you mentioned? Some cities actually, there are more coffee shops. I’m just trying to remember this year. Okay. So post COVID.
Christopher Hire 23:12
So as of now, as of now, last month, okay, yeah. And more coffee shops opened, but they’re not. They’re interestingly ones that didn’t lock down as much or they went into the lockdown sooner and came out sooner. So that’s the sort of thing or they have. There’s a couple other explanations, but yeah, its interesting.
Gene Tunny 23:33
What are some of those, you know, off the top of your head what some of those cities are.
Christopher Hire 23:38
So I don’t want to misquote because I just looked at the data. There are cities in a couple of most that London has suffered from, the UK has suffered not long, I can’t say for sure London, I don’t remember the number. But UK has suffered shrinkage. And in generally in the coffee shops. And a lot of the French cities have suffered shrinkage in their cafes, but growth in some Swedish cities and want to say, East European countries. So Sofia has had some growth, Tallinn apparently. But that can also be that some people have decided that casual dining now is more profitable. So there’s a shift from some of the cities have shrinking numbers of bistros and growing numbers of cafes. So what they’ve done is they’ve converted to a cheaper business model where they can operate coffee shops, so they they sell coffee once upon a time we would have sold only meals. Yeah, so they convert their classification to a coffee shop, but continue trading rather than closing their doors and they get rid of all the white tablecloths and napkins which happened in Melbourne. You know, a couple of decades ago. So it’s it’s sort of an interesting thing that’s happened in but there’s growth in a lot of Eastern European cities per coffee shops, and shrinkage in a lot of West European cities. And a couple of German cities have grown, I think Dresden has grown a little bit, but I can’t have been a huge amount. But most of the rest have shrunk. The lockdown has really affected the small to medium sized enterprise, which has a flow on effect to the money multiplier through the economy and a whole series of other stuff. So it’s really, it’s not just coffee shops, it’s like there are bellwethers for small business and startups and all that stuff.
Gene Tunny 25:22
Yeah. One city that people have been concerned about is New York City, because it was very badly hit by the pandemic. And I don’t know, one in five small businesses or something like that closed down, maybe that’s an over estimate. That’s the number I think James Altucher quotes on his show. And he was basically saying New York City’s dead, right. It’s all over. And I don’t know if you’ve got any thoughts on what’s happening with New York, how it’s performing in the index?
Christopher Hire 25:53
Well, we’re doing look, the interesting thing is, I believe that narrative as well, to some extent, because there are some very strong numbers that showed people leaving New York prior to the pandemic. So one year prior, people were leaving New York, and people had continued to leave New York throughout the pandemic. And when I say New York, I’m referring to the five boroughs definition. But then you have to consider that some of those people have moved out to metropolitan New York, and then move back to the five boroughs. So it’s, it’s not as clear cut as all that. So New York still continues to do well, which surprises me greatly. And it may be that there’s just some lag in the data, but we are getting the data we’re getting in his COVID data, and COVID period, data’s 2021, some 2022. And it’s really quite interesting that, that they’re still they seem to be, it always bounces back. I mean, it’s one of those cities, it’s a perennial city like Paris, London, New York. And I think that always bounce back, you know, they don’t seem to ever stop being the great cities of the world. And you may think the data may do something, but then some other indicator compensates for it, they seem to be like a magic machine. I don’t know exactly how to describe them. But Melbourne has this attribute as well, to some extent, in the end, it bounces back. But, you know, New York is still up there in our list. And it’s not, it’s not totally and utterly. I’m surprised when I’m looking at the data because I expected to for more. And I made the point that I think there was so much movement to my hand Miami of capital and things during the pandemic. But that seems to be a biting now. And Miami does very well. I mean, we did this thing of industry diversity. And Miami is amongst the most diverse. There’s a certain way we measure this, but it’s showing up as a bellwether sort of happening economy, but the property prices are very high. So that might be putting a cap on it. And it’s I’m interested to see what will happen next year with that I don’t know what’s going to happen way. I mean next year, but Miami has been climbing our index and everybody says Miami, Miami, but it’s been climbing to index well before people started noticing and moving there during the pandemic. So it’s got a very good free enterprise and entrepreneurship vibe and in Florida in general, and Texas also, of course, they both support entrepreneurship. So surprised they do much, much better than cities of equivalent population. They do much better than they should basically, because they’re open to entrepreneurship, and cities that are kind of being you know, everything under control. And the Karen’s are in charge for lack of a better word, Karen’s with clipboards, measuring and monitoring everything. They’re killing the economy, and they’re killing. They’re killing their own wealth in the long run. So it’s not exactly intelligent. You know, how do you how do you take a how do you make a two bedroom house? You take a four bedroom house and divide it in two? Did you soak up your wealth and be more wealthy no matter what you do? Yeah. Eventually your tennis court gets cut down. So it’s sort of like you have to you have to let the economy run.
Gene Tunny 29:17
Yeah. So in terms of indicators, then you could have things like tax rates, you could have things like that. Yeah. How easy it is to start up a business or how quickly you can start up a business economic freedom. Yeah, yeah, that sort of thing. Okay, that’s all good
Christopher Hire 29:32
Company, we’ve got a really good company set up indicator that’s better than the World Bank’s one. It does use World Bank as an input. But when I say that is a lot of people have problem with the ease of doing business index. There’s been a lot of complaints about it. It’s kind of methodological black hole in there. And so we have a better way of capturing that. We do manually, and we’ve been doing that for a while. And we sell that quite a bit of that one. And the also, as you mentioned, The economic rights of what you consider as city level economic growth could calculate some version of that. And or estimate some version of that. And we have whole series ones around the setup of companies and different things. Yeah, the sort of things you mentioned.
Gene Tunny 30:17
Yeah. Okay. Now, you said before New Zealand has had some New Zealand cities have had some bad policies, what type of things? Would you say there are bad policies in those New Zealand cities?
Christopher Hire 30:30
Well, there’s a lack of focus on growing the economy. And there’s been a whole series of aborted social programmes that haven’t achieved. I mean, the housing initiative that was federal government in New Zealand just didn’t achieve anything. I mean, so the problem is, it’s not enough to say chair in policy and expect chair to happen. You know, a lot of people who are naive on policy, they think you can say something hasn’t happened. And something’s just not possible. You know, you can say that your concern no child wants is going to live in poverty, poverty, as Bob Hawke or and Bush have said, but whether it’s achievable or not, what you’re better off doing is making some incremental improvement. So an incremental improvement is making sure that 100,000 kids get laptop computers. So that’s a good policy, right? That’s a policy that is tangible, measurable, and you can say, well, we’ve got 100,000 Kids laptop computers, as long as they’re reasonably recent laptop computers and Celoron’s from five years ago. But so you’re better off focusing on stuff you can achieve and grandiose statements that just just don’t get anywhere. And I think New Zealand’s had a lot of grandiose stuff, and it hasn’t really, it’s that desire to be the most important and, and, sort of, you know, little is that is the tyranny of distance. It’s that Australia gets into it, too. We want to be the world leader in something and then you go over to France and, and Spain and you talk to them and they don’t care. They’re like, what we don’t care. You know, a lot of stuff we do, they don’t care. We think we’re impressing them with they don’t care. The French and the Spanish don’t care, European Union don’t care, the OECD don’t care. They might we think we’re impressing them by being this great leader in something, when we’re actually just talking to an echo chamber of ourselves and a bunch of media talking heads. I mean, we really, we just, sometimes I feel like you turn on the TV 20 years ago, you hear the same conversation, don’t you about, about everything, and it’s still the same now, you know, you’re still having the same conversation about the same issue going on about same thing. And you just think, well, I just turned it off and 20 years later to see if it’s still there, and nobody’s done anything. So it’s better to do small incremental changes that help. It can help people like so if you know, do something about domestic violence phones is that programme is doing that’s a practical thing, you know, practical stuff helps. And I think airy fairy stuff, you know, airy fairy announcements that never can be achieved or never be verified or loved by politicians, but, but not much used to the average punter.
Gene Tunny 33:00
Yeah. So Chris, you mentioned that your indexes of the data and your behind your index has been purchased by many different customers by city governments, presumably? Do you have any examples? Or have you noticed? Well, has it been a wake up call to any particular cities the data and has that inspired action? Have they changed things on the basis of this index?
Christopher Hire 33:31
We have, we don’t always know 100%. Because sometimes we do work by consulting firms. And so we’re not always sure of who the customers are. We know we had a lot of input into the UK’s innovation strategy, because we went through a consulting firm, and it got soaked up by that consulting firm, and it got passed into their innovation strategy. So we know we had a lot of input into that. A lot of input came in, we had some input from Australia’s innovation strategy at times because various policy things that I wrote, got picked up and implemented, but we don’t always get credit for it. But specifically, where we’ve helped, we’ve got credit, we’ve we’ve had done quite a bit of good work in the Emirates, and in the United Arab Emirates, we helped with some innovation policy there and they’ve, they’ve really run with it, and particularly in things like safety and, and areas such as road toll and things like that. A number of years ago, we had workshops that help them innovate, and they came out and then met some Australians who reduce the road toll here and we helped connect them up and we gave them a process for innovating in that area. So they rode top fell, it has stabilised, but it’s not as good as it should be. I mean, you can literally see people dying on their roads, still, but it’s better than it was. So that’s something where we provided the data. We provided innovation methodologies that helped them and we developed we work with them on, not specifically on that, but on the innovation methodologies that help their the government. And yeah, so we find that that’s been a really good, was a really good example from the past. And a number of clients, a number of people who attended training I’ve done have won awards in their particular for innovation in their particular finance related or insurance related roles. So we’ve done that sort of thing as well.
Gene Tunny 35:28
Okay, but it’s not just one more question if you’ve got time, Christopher, I’m interested in this. Yeah. What makes for a thriving or prosperous cities? I’m just trying to understand your insights, what you’ve discovered from your analysis, and you mentioned decentralisation. So you mentioned entrepreneurship. So I’m guessing you’re low. Low taxes and charges, I’m guessing. Yeah, the we talked about ease of doing business.
Christopher Hire 36:02
Yeah, yeah, there’s low taxes and charges. So that’s, that’s where we get into trouble. Because what it is not a pure policies, policy prescription. So for example, if I was a full on Republican, I’d say, get rid of all taxes and charges and the economy will do better. And if I was a full on, Democrats say, No, we have to have social programmes and social programmes will create the great economy. And if we don’t have the great society won’t have the great economy. And in truth, I think there is an element of yes, Dublin, for example, has done very well in our index, but they’ve hit a ceiling in some respects. And that’s because they did reduce their tax rates. So I don’t I don’t think we’re really saying reduce a purist would say reduce tax rates to zero. And yes, that’s one way you could do it. And that might work for, say, Dubai, or an Gulf country. But they have a resource backing for that. So we’re not sort of being idealistic, we’re saying, it’s a balance of things. And one of the things so if we’re talking about Australia, for God’s sake, get off people’s backs about entrepreneurship and mid sized corporations allow midsize corporations to grow. There’s an element in Australia where we favour large corporations constantly in every area, and that creates an issue where we don’t have, we just don’t have new companies being added to the ASX, we just don’t have that growth that we should have. And we can do that. But we just got to allow the policy settings to do that. We’ve got to allow manufacturing, we’ve got to encourage manufacturing, not follow this silly notion that we shouldn’t manufacture stuff. I think we’ve I think we’ve been disavowed of that, after during the pandemic, when you couldn’t get toilet paper, and you couldn’t get a face mask, and you couldn’t get medication. If someone I know couldn’t get their heart hasn’t been able to get their heart medication for three months and has to take a generic, the generic doesn’t work. It doesn’t reduce blood pressure. So I mean, it’s really problematic that we don’t manufacture things. And so if I was talking specifically about Australia, we need to in that particular situation, we’d need to keep our tax rates reasonable and increase our reduce the bureaucracy. And the problem we have is we have too many things the government is controlling and monitoring. And the problem with that is that takes up too much time from the business owner, therefore they can’t focus on innovation, they’re focused entirely on compliance. The only companies that survive compliance are big companies, where compliance is a much smaller percentage of the operating cost of the business. So if you’re, you know, you’re turning over 6 million a year or more, then it’s still a pretty big burden. If you’re turning over a billion a year, then compliance is just something you outsource to KPMG. And you can get away with that or someone similar or VAs or something. So you can outsource it to a middle small or large accounting firm, but, but to some extent, we just we put too much burden on business in Australia. And that really is the thing that does damage. And we need to encourage people to think outside the existing power paradigm of businesses, you know, we need to think of new and interesting types of businesses and create new and interesting business. And we need to just enable those conditions. So the conditions really are that you basically give people a little bit less bureaucracy, but it’s not just you can set a tax rate of 21%, you can set a tax rate of 28%. There’s pluses and minuses. But increasing sales tax, for example, would be very bad for the economy. But on the other hand, you could do that if you reduced compliance burdens elsewhere. So there’s always trade offs and everybody who’s in this field. Probably sympathises empathises and feels pain you say to her trade offs, but but that’s what it is. There’s trade offs, but Australia should basically encourage more dynamic manufacturing related industries and not promote so much very single minded large corporations controlling everything we have. We have a bit of a problem with that we’re going to we’re going to hit a hit a wall one day if we don’t watch ourselves.
Gene Tunny 40:16
Right, I’d like to ask also about how housing policy or urban development policy is one problem in Australia, and also some other cities while other countries and their prominent cities around the world. It’s becoming so expensive to live in them. And some economists are saying, well, that’s because of zoning policies which prevent developing redeveloping existing properties. There’s all this protection of existing a world heritage or character properties. Is that an issue?
Christopher Hire 40:48
I’m not so knowledgeable in that I’m not so knowledgeable in zoning, I did attend an excellent presentation. I can’t remember his last name is Italian gentleman, you should have him on the show. Sergio. He from where he’s from, I can send you his details. He’s written a book called The End of the Australian dream or something along those lines. And I’m sorry to say, Gee, I can’t remember the exact title it is sitting on my desk, but I haven’t had an exact title or something like that. He talks about greater density housing and things like that, I think I think more I would probably lean his understanding of that. I would say there’s an optimum rate of density. And there’s an optimum population size for cities before you get problems. So when cities go over 4 million pop, they hit problems. And I think there’s rings a population that makes ideal size cities. And so Melbourne’s problem started once it got a bit above 4 million, and didn’t have the infrastructure to support the extra million. And that’s sort of course Melbourne. transport infrastructure, you drive three kilometres and it takes you 45 minutes, you get a transport three kilometres, it takes you 35 minutes, it takes you 37 minutes to walk. So you’re almost better off walking if the tram breaks down. So if you’ve got to walk, if you cycle, but you’ve got to change clothes, and you’ve got to, you know, have a shower probably, or at least end of trip facility size, it’s very becomes a very difficult problem for when you hit that extra million. I don’t envy the public servants got to solve it.
Gene Tunny 42:23
Yeah, gotcha. Okay, Christopher to wrap up, is there anything we’ve, we’ve missed it or anything important that you’d like to, to explain or to talk about, regarding your innovation Cities Index?
Christopher Hire 42:36
Yeah, I’ll probably just give a summary because there’s a lot in it to unpack. But I would say that it’s an index that basically measures the ability of cities to have conditions for innovation. So it’s sort of correlates to where you would want to live, where you might want to work and play. And if you’re using it just in a general way, you’d look for cities where your language that you prefer, if it’s not English, is dominant. So if you were Spanish speaking, you might move to Barcelona, you might look at Barcelona, if you were speaking various dialects of Chinese, you might look there’s a list of Chinese cities in there, which are favourable, and and might depend on a whole series of characteristics. But =in the end, you might look at the politics to say, well, I want a Democrat city or a left leaning city, then you end up in Chicago. But if you are New York or something like that, but New York’s a bit more complicated, but if you want a more right leaning city, you might end up in Miami, or you might end up in Dallas, Fort Worth so so it’s sort of it’s there’s a balance for everyone in there. And we’re not trying to judge too much. And force anything, we’re just saying, there’s a general tendency mathematically, for cities that do a bunch of things. Well, but not best. You don’t have to be perfect. You just do them well enough, you will actually get ahead and the cities will become better places. And that’s really what we’re saying is they’re the sort of perennial cities like Paris and London always do well, because hey, everybody moves there, no matter what happens, you read a book about 1940s Paris, and pay it how horrible it was. You read a book about 1980s, Paris 1990s. There was a period in the 90s when Paris went for route, dark decade, I think, and then bounces back you know, so people will move to New York again, people will move to London again, their perennial cities and just the same as Tokyo is the Japanese perennial city and I think Seoul is becoming a perennial city now. So and I think Sydney and Melbourne will eventually be perennial cities as well. So Brisbane is on its way.
Gene Tunny 44:38
Yeah, because they get that critical mass you get the or the accumulation of knowledge and know how in the city, you get these established businesses and yeah, and so it’s a matter of population and skills and and the right policy settings. So, yeah, okay, well, that’s great, Christopher, I’ll put a link in the show notes to innovation Cities Index. And I’ll have another look through the, well, I’ll have a look through the, the all of the different indicators that go into it.
Christopher Hire 45:18
I could send you some links that people can download the actual indicators, not the data, obviously, we sell that, but the list of indicators. And also, I’ll send you a link to a newsletter we putting out we’ll start putting out on substack. So oh, it’s much easier to put it out in a newsletter format. It’s still early stages in the newsletter, but it’s just that we’re putting that out in stages, because it’s better than trying to put it out as one big block. Once a year sort of thing. So we think it’s better to trickle it out. And we go.
Gene Tunny 45:49
What’s your substack newsletter called?
Christopher Hire 45:53
Innovation cities. innovations.com hasn’t got a dash in that line, because they won’t allow a dash in that one. So and websites got innovation-cities.com, but the substack just innovationcities.substack.com
Gene Tunny 46:06
Good one. Okay. So, Christopher Hire, thanks so much for your time. I’ve really enjoyed talking about innovation cities. It’s been terrific. Thank you.
Christopher Hire 46:15
Thank you very much, Gene. And thanks to your listeners for listening to the podcast to the end. So I’ve heard this message, they heard the end. Thanks a lot. If anybody’s got any questions, they can hit me up.
Gene Tunny 46:26
Excellent. Thanks, Christopher. Okay, that’s the end of this episode of Economics Explored. I hope you enjoyed it. If so, please tell your family and friends and leave a comment or give us a rating on your podcast app. If you have any comments, questions, suggestions, you can feel free to send them to firstname.lastname@example.org And we’ll aim to address them in a future episode. Thanks for listening. Until next week, goodbye
Thanks to Josh Crotts for mixing the episode and to the show’s sponsor, Gene’s consultancy business www.adepteconomics.com.au.
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