Other people had deeper and more fundamental concerns, particularly about the role of technology, analytics, and the Internet of Things in our society—the well-known issues of privacy and security. In this book, we have described how new technologies can help bring major societal challenges closer to a solution, in a positive way. We have talked about how 3D printing and robots will change production processes dramatically and how sensors and chips, via the wireless Internet, will provide a digital infrastructure that can connect everything.
But the concern we heard was about the price we may pay as technology plays an ever-greater role in our lives. Will we become a servant to a technological monster that takes away jobs and, increasingly, makes important decisions for us? There is no doubt that new technologies will have a major impact on us and on the way we live. That will raise ethical questions and privacy issues, which will generate heated debates among politicians, researchers, companies, and NGOs. Ideally, these discussions will lead to new agreements and understandings that will prevent us from being buried by an avalanche of undesirable or uncontrollable technologies.
That societal discussion may take time to reach actionable decisions, and when necessary, it would be wise for participants to take a pause in the deployment of new technologies and products. A striking example of this was the call by a group of biologists in the spring of 2015 to establish a moratorium on the use of a new genome-editing technique that would alter human DNA in a way that could be inherited.11 Not enough was known about the possible benefits and risks.
Technology, as the film director Fritz Lang—whose movie Metropolis depicted a grim industrial dystopia circa 2027—put it, is in itself soulless. Only human beings can direct the course of technology into positive channels that benefit human society and prevent a divisive, techno-driven world.
One way to do this is to rethink one of the organizing principles that has driven us for the past half century: money. In this period, achieving financial gain has been the primary motivator and key success indicator of human activity, particularly in the United States. The primacy of money has led to the development and use of a technical language and set of metrics that have limited the discussion to an elite, largely composed of technocrats. Financial flows have determined social and political life. Financial growth has become the standard for what is right or wrong, what is valuable and what is not. In 2008, the financial crisis was a wakeup call. Suddenly we had to ask ourselves: is this what we want? Is this how we want to judge ourselves and motivate our children? For more and more people, the answer is no.
So what should the organizing principle be if it is not about money? In the coming decades, two new forces will play a determining role in the relationship between human beings and technology: the Internet of Things and the need for the sharing of brainpower. Those two forces make human beings indispensable, because of our knowledge, expertise, and empathy. The opportunity then is to base our activities around what best realizes our potential as human beings and as a society, not what puts more money in our pockets and portfolios.
But this new understanding of how people and technology should move forward together will not develop on its own. Technology gains soul only when we make the decisions that make that happen. That is why the brainbelt regions are so important. As we developed our understanding of what was happening there, we came to see that a brainbelt is far more than a region or a collection of physical facilities. Rather, it is a metaphor for a way of thinking and acting, a description of the new form of global competitiveness and a technological development with deep social consequences. It would seem that the sharing of brainpower in collaborative teams discourages excessive income inequality and winner-take-all mentality. So, although we acknowledge the concerns regarding privacy, security, and even morality, we believe that the only way to address the critical issues that we face is through the most diligent and rigorous application of multidisciplinary sharing of brainpower.
And that is why we do not say “beware” of the brainbelt but rather offer this “welcome” to a smarter, more collaborative, more effective world.
ACKNOWLEDGMENTS
Both of us—Antoine and Fred—have spent our careers as participants in and observers of the financial sector. Antoine worked as a banker, development banker, and investment manager, witnessing firsthand how the Third World developed faster than anyone expected into emerging markets and how their hard-charging companies became competitive players in the global marketplace. Fred worked as a journalist and followed European monetary developments for more than a decade. He came to recognize how the economic and financial debate was actually a political struggle centering on the question of the principles on which a united Europe would be organized.
Over three decades, we saw a whole new global financial order take shape—and then risk falling apart in the financial crisis that began in 2008. Although the decline of traditional industries was obvious, especially in the United States, we did not buy the notion that manufacturing in the developed world was a thing of the past but instead saw the first signs of a very different trend. Cheap labor was losing ground as a competitive trump card in favor of added value from smart innovation.
This book would not have been possible without the help of many people who encouraged us to write it and helped us in clarifying our thoughts, pointing us in new directions and challenging our ideas. We take full responsibility for the ultimate outcome.
In the book, we talk about the importance of “connectors.” It turned out that we had two important connectors on this project. The first was Jan Fred van Wijnen, the editor who originally brought us together. The other was John Butman, who stepped in at a critical moment when our muse had left for vacation and put the book back on track with his consummate editing skill. He also came up with the idea of the final book title after we had gone through and rejected many others. We owe him huge thanks. Peter Osnos of PublicAffairs immediately encouraged us to write this book. We are grateful that our editor, John Mahaney, made sure we stayed focused on the big picture and was both flexible and encouraging when Fred had to stop working on the book for a number of months because of a serious illness. Shena Redmond was our project editor and ensured that nothing went wrong during the final stages. We were lucky that meticulous copy editing was in the skillful hands of Michele Wynn.
Daniel Huffman, Antoine’s research assistant, was immensely helpful in preparing background information for our interviews. He also shaped Google’s translation of some of Fred’s writings into readable English and was on hand for most of the early editing. Cathryn Hunt, Antoine’s assistant during the final stages of the book, helped with the huge task of selecting and obtaining the photos in the book. Other colleagues at Garten Rothkopf—Yuxin Lin and Jonathan Goldstein—also provided helpful research. At an earlier stage, James Gerstenzang helped us lighten and focus the story.
Many friends and colleagues provided helpful comments on various drafts, including David Rothkopf, Claire Casey, Strobe Talbott, Bruce Katz, Mark Muro, John Hauge, Rita Lun, Steven Silver, Carl Peck, Bob Kaiser, Hamilton Loeb, Thees Peereboom, and Rien van Lent, and many of those we interviewed for the book were kind enough to check (and sometimes correct) the accuracy of what we wrote down, learned, and observed. Peter van Agtmael took Antoine’s author photo for the back cover and ventured into the cleanroom in Albany.
Antoine is also profoundly grateful for what he learned from his colleagues at the World Bank Group, EMM, and the Strategic Investment Group as well as discussions at Brookings, NPR, and the Peterson Institute for International Economics. Fred feels similar gratitude toward his colleagues at Het Financieele Dagblad and the European financial world.
We traveled around the United States and Europe, researched books and articles, spent numerous hours writing at the computer, and were preoccupied to the point of obsession, none of it designed to make us popular at home. Antoine is grateful to Emily, and Fred to Frances, for (again) putting up with all of this. You d
eserve better.
ANTOINE VAN AGTMAEL is senior adviser at Garten Rothkopf, a public policy advisory firm in Washington, DC. He was the principal founder, CEO, and CIO of Emerging Markets Management LLC; previously he was deputy director of the capital markets department of the International Finance Corporation (IFC), where he coined the term “emerging markets”; and a division chief in the World Bank’s borrowing operations. Antoine is the author of The Emerging Markets Century (Free Press, 2007) and Emerging Securities Markets (Euromoney, 1984). He was an adjunct professor at Georgetown Law Center and taught at the Harvard Institute of Politics. Van Agtmael is a trustee of the Brookings Institution as well as co-chair of its International Advisory Council. He is a board member of Magnum Photos, the Smithsonian’s Freer-Sackler Gallery, and the NPR Foundation (where he was the chair and a board member of NPR). He is on the President’s Council on International Activities at Yale University and a member of the Council on Foreign Relations. He has an MBA from the New York University Stern School of Business, an MA from Yale University, and an undergraduate degree from the Netherlands School of Economics/Erasmus University. Photograph by Peter van Agtmael/Magnum
FRED BAKKER, until his recent retirement, was a journalist specializing in monetary and financial affairs with Het Financieele Dagblad, the “Financial Times of Holland,” serving as deputy editor, editor in chief, and CEO. In addition to his writing and editing duties, he helped expand the company from a newspaper publisher to a multimedia company, developing several websites, a business-news radio channel, and a quarterly business magazine, FD Outlook, and he established FDIntelligence. Photograph by Binh Tran
Praise for The Smartest Places on Earth
“An absolutely fascinating tour of cities in the United States and Europe that were once traditional centers of manufacturing which are now reinventing themselves as hubs of innovation. If you want to understand how economies at the local level can transform themselves, this is the book to read.”
—Liaquat Ahamed, author of Lords of Finance
“Van Agtmael and Bakker paint an exciting picture of the future based on progress made possible by cooperative processes they call ‘brainsharing.’ Citing unheralded developments in specific places and specific industries, this extraordinarily well researched book challenges the conventional view of a developed world in relative decline. The authors make a compelling case for the role of connectors, who bring together a diverse collection of players required for collaborative success. This compellingly argued and lucidly written book is a must read for anyone who cares about the future of the planet.”
—David F. Swensen, chief investment officer, Yale University
“A lively, lucid story of innovation and transformation powered by brainpower and business, academe, and regional governments working together… the smartest book on one of the most important and promising trends in the American and global economy.”
—Strobe Talbott, former president, Brookings Institution
“In every chapter of economic history, unexpected places have cultivated the dynamism that transforms society at large. Antoine van Agtmael and Fred Bakker describe how the next generation of emerging hotspots are located in unlikely places, as industry connects with the energy of universities and academic medical centers to transform rustbelts into ‘brainbelts.’ This scouting report will interest students of the future taking shape today.”
—Richard Brodhead, former president, Duke University
“This eye-opening account of innovation in unlikely places will raise the spirits of anyone discouraged by the gurus who keep telling us the future belongs not to the established democracies of the capitalist world, but to emerging powers mostly in Asia. No, van Agtmael and Bakker tell us, the ‘smartest places on earth’ may be in little-heralded cities in the United States and northern Europe, where business people, scientists and creative managers are inventing smart new products and ingenious new ways to manufacture them. They tell us that many of the old economies of the developed world ‘are entering a revolutionary new phase’ because ‘the global competitive advantage is shifting from cheap to smart.’ I found their arguments, and the facts they have gathered to support them, both intriguing and convincing. And their book is fun to read.”
—Robert G. Kaiser, former managing editor of the Washington Post and author
“This book upends conventional wisdom about how the global economy works and which places are primed to thrive and prosper. Van Agtmael and Bakker capture the complex market dynamics that are revaluing the formidable assets of U.S. and European older industrial cities: advanced industries and networks of universities, companies and governments that collaborate to compete. These are refreshing insights that build on real world experience and evidence rather than antiquated group think.”
—Bruce Katz, Brookings Institution Centennial Scholar, coauthor of The Metropolitan Revolution
“The authors offer a compelling and insightful look at how companies and communities are turning ashes into silicon valleys.”
—Harold L. Sirkin, senior partner, The Boston Consulting Group (BCG)
“The riveting story of how failing rustbelts in the United States and Northern Europe have transformed themselves into emerging brainbelts through the triumph of collaboration and ingenuity to become promising models of bottom-up innovation.”
—Hilda Ochoa-Brillembourg, founder and chairman, Strategic Investment Group
“Antoine van Agtmael and Fred Bakker have written a serious book that anyone with an interest in business, technology, innovation, or the future of the world economy should read. It looks at the trends that are redefining the way the world works but have not yet been fully appreciated or understood—but that will drive future growth and the creation of new opportunities. Given van Agtmael’s exceptional record as an investor and major trend spotter throughout his career, his views and insights deserve special attention.”
—David Rothkopf, CEO and editor of the FP Group
“Van Agtmael and Bakker take us on a joy ride to understand the importance of smart people forming bonds of trust in far-flung places. Welcome to the new world of manufacturing, where freedom to innovate trumps cheap labor, putting the US and Europe back at the center of the global economy.”
—Jessica Einhorn, former dean, School of Advanced International Studies at Johns Hopkins University
BIBLIOGRAPHY
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Atkinson, Robert D., and Stephen J. Ezell. Innovation Economics. New Haven: Yale University Press, 2012.
Barber, Benjamin R. Mayors Ruled the World: Dysfunctional Nations, Rising Cities. New Haven: Yale University Press, 2013.
Berger, Suzanne. Making in America: From Innovation to Market. Cambridge: MIT Press, 2013.
Blom, Philip. The Wars Within: Life and Culture in the West, 1918–1938. London: Atlantic Books, 2014.
Brouwer, Jaap Jan, and Guido van der Zwan. The Dutch Industrial Landscape: Fifty Inspiring Business Cases. The Hague: Dutch Government Publication, 2011.
Brynjolfsson, Erik, and Andrew McAfee. The Second Machine Age. New York: Norton, 2014.
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Bussgang, Jeffrey. Mastering the VC Game. New York: Portfolio, Penguin Group, 2010.
Comfort, Nicholas. The Slow Death of British Industry: A Sixty-Year Suicide, 1952–2012. London: Biteback Publishing, 2013.
Cortada, James W. The Digital Flood: The Diffusion of Information Technology Across the US, Europe, and Asia. New York: Oxford University Press, 2012.
Dauch, Richard E. American Drive: How Manufacturing Will Save Our Country. New York: St. Martin’s Press, 2012.
Gertner, Jon. The Idea Factory. New York: Penguin Books, 2012.
Gladwell, Malcolm. The Story of Success. New York: Little Brown, 2008.
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Khanna, Parag. Charting a Course to the Next Renaissance. New York: Random House, 2011.
Liveries, Andrew N. Make It in America: The Case for Reinventing the Economy. Hoboken: John Wiley and Sons, 2011.
Moretti, Enrico. The New Geography of Jobs. New York: First Mariner Books, 2013.
Pisano, Gary P., and Willy C. Shih. Producing Prosperity: Why America Needs a Manufacturing Renaissance. Boston: Harvard Business Review Press, 2012.
Schmitt, Eric, and Jared Cohen. The New Digital Age. New York: Knopf, 2013.
Reports
Battelle Memorial Institute and R&D Magazine. “Global R&D Funding Forecast 2014.” December 2013.
Center for American Progress. “Sequestering American Innovation.” December 2013.
Council on Competitiveness. “Global Manufacturing Competitiveness Index.” Deloitte Study, 2010.
. “Ignite 1.0: Voice of American CEOs on Manufacturing Competitiveness.” 2011.
Greenstone, Michael, and Adam Looney. “A Dozen Economic Facts About Innovation.” The Hamilton Project, August 2011.
Information Technology and Innovation Foundation. “Federally Supported Innovations: Twenty-Two Examples of Major Technology Advances That Stem from Federal Research Support.” January 2014.
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