Entrepreneurship Lives!

9 January 2011 at 7:59 pm 6 comments

| Scott Masten |

At the ASSA meetings in Denver this weekend, O&M impresario Peter Klein gave a typically (for him) enlightening and entertaining presentation on “Institutions and Entrepreneurial Opportunities: A New Approach.” (An audience member gushed afterward that it was one of the best presentations she had ever seen. Perhaps Peter can provide a link to the paper.) To illustrate one of his points, Peter used images of ruins from once-glorious buildings in Detroit such as this one:

Peter’s point was that, though on its face, such abandoned structures would appear to present unrealized entrepreneurial opportunities, such opportunities were probably illusory in light of Detroit’s decline.

In fact, Peter, in a rare lapse, simply failed to look deeply enough into the question. Entrepreneurship is alive and well even in Detroit!

(Sources: top; bottom)

Entry filed under: Entrepreneurship, Former Guest Bloggers.

Impressive Lunch Bunch History of Economic Thought Revival?

6 Comments Add your own

  • 1. Avinash Mulye  |  9 January 2011 at 10:13 pm

    The question – Entrepreneurship is alive and well even in Detroit ?

    Who has the best information to be able to answer this question? My answer – Venture Capitalists. One way would be to try to identify the rate of growth of venture capital activity (especially those focused on investing in Michigan based start-ups). One Ross MBA 2010 (who is a former Intel employee) formed a venture capital firm in Michigan recently. During my stay in Ann Arbor between 2007 – 2010 I came to know that a number of VC firms were set up in the past 10 years.

    The other way to look at it is rise in the activity of business associations (complements) such as Michigan Israel Business Bridge. MIBB attempts to connect and facilitate networking (coordination problem ??). e.g. This allows Michigan based businesses to outsource medical devices production to Israel.

    If fixed costs remain high (Glaeser, Kerr, Ponzetto) because of the pension liabilities and unionization then Entrepreneurship may face major hurdles. But Detroit is a world-class (despite recent woes) know-how based business cluster for Auto (like London/NY as finance center.). And production can be outsourced to China, India, etc and only the most efficient areas (e.g. design, customer engg.) could be kept in Detroit.

    As for supply of entrepreneurial talent – My assumption is that – Michigan has excellent educational infrastructure in sunrise areas such as life sciences, material science and information technology.

  • 2. Peter Klein  |  10 January 2011 at 11:06 am

    Thanks, Scott! I can’t believe I missed the obvious punch line.

  • 3. Michael E. Marotta  |  10 January 2011 at 2:55 pm

    It is true as Avinash Mulye said that ANN ARBOR is a magnet for venture capital. Michigan does have two Big Ten schools with robust programs from undergraduate to post-doctoral in materials, biomedical research, and computering. Those are among the reasons why it is important to understand that Ann Arbor’s distance from Detroit is demographic, not geographic.

    Detroit’s city government closed two its eleven wards: no city services will be guaranteed. The mayor would like a workable plan to remove the remaining survivors from those areas into wards that are still active. In the dead zones, the remnant good people are the ones who burned down the abandoned houses in order to deny opportunities to criminals. As the Motor City, Detroit never had good public transportation. The former tricounty metro area is now a five county region, with the core Wayne County looking like Rome in the Dark Ages: lots of great old buildings and no one to use them.

    Turning the Mchigan Theater into an indoor parking lot is entrepreneurial, indeed! That kind of energy does not attract the venture capital that so easily finds the bright ideas at the U of M engineering college and hospital.

    Right now, the best opportunities in Detroit include farming. Square miles of vacant land await … just as in the Dark Ages, farmers found fertile ground in the Coliseum, thinking that its blood-soaked soil was blessed because crops grew so well.

    Such as it may develop, venture capital for entrepreneurship in Detroit will be decidedly innovative, perhaps finding its paradigm in William Gibson’s cyberpunk science fiction.

  • 4. Peter Klein  |  10 January 2011 at 3:20 pm

    This fall I met with a group of entrepreneurs in East Lansing (courtesy of Ross Emmett). They were very enthusiastic about local prospects, in part because they saw the auto industry’s decline as providing them an excess supply of skilled and semi-skilled labor. But this was East Lansing, not Detroit….

  • 5. Peter Klein  |  14 January 2011 at 10:24 am

    NPR had an item this morning about the theft of a $140,000 BMW from the Detroit auto show. For that price, noted the host, you could buy several houses in Detroit.

  • 6. Scott Masten  |  14 January 2011 at 10:38 am

    Heh. You have to wonder (i) how someone manages to accomplish a theft like that, and (ii) what the heck the thief can do with it short of taking a joy ride.

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Peter G. Klein, The Capitalist and the Entrepreneur: Essays on Organizations and Markets (Mises Institute, 2010).
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