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Tuesday, October 5th, 2010

Constantin Gurdgiev: Knowledge Economy and Dublin Water Woes

[ Dr. Constantin Gurdgiev is an economist in Dublin who blogs at True Economics. This piece struck a chord with me because I constantly hear cities talking about how they intend to create a robust knowledge economy, while consistently delivering extremely poor public services and indeed not even intending to deliver even fairly basic service levels. The particular example here might not sound like a big deal, but I think it shows the way this mentality trickles down to the ground floor, so to speak - Aaron. ]

It is beyond any doubt that Ireland has had its share of bizarre unlucky events and disasters:

  1. Man-made crises: economic recession, banking collapse, fiscal meltdown, construction/property bust and policy/regulatory legitimacy, a schism between the public sector and the ordinary folks trying to make a living (yes, it is back – industrial strife is now clogging our transport and threatening our healthcare system);
  2. Natural: swine flu, measles pandemic (remember that one?), floods, a snow storm, a freeze, most current – vomiting bug is apparently back;
  3. Natural/man-made: water shortages (with parts of the country still covered in floods).

There have been severe costs imposed on people and the economy at large. And there are lessons to be learned and, hopefully this time around – a few people responsible for (1) and (3) to be punished.

But one lesson has not been discussed to date. Recall a year ago, the Government came out with a grand plan for creating a ‘knowledge’ economy in Ireland. This plan is still alive (as plans go), although, of course, nothing has been done to deliver on its promises. Now, the EU is about to come out in February with a comprehensive platform for building a brighter better Union through 2020. I’ve seen the document. It too aims for ‘Knowledge Economy’ thingy.

So now to the lesson of our crises: ‘Knowledge Economy’ needs functional, efficient and excellent services. Public and private. Functional, efficient and excellent services is what our public sector simply cannot deliver.

That was, of course a two part proposition.

Let us take the first part: ‘Knowledge Economy requires functional, efficient and excellent services”. I hope this is pretty much apparent:

  • PhDs and high quality entrepreneurs who will fuel the ‘Knowledge Economy’ will require good housing (as opposed to substandard shoe-box apartments we built for cheaper laborers during the Celtic Tiger boom), good on-time and on-schedule transport systems (as opposed to completely random travel times at Dublin Bus), cheap and quality air connections to the rest of the world (as opposed to what passes for airport out on the North side of the city), high quality health care (as opposed to waiting lists for tests and procedures measurable in light years instead of days), affordable and superior in quality education for their children (as opposed to schools where teachers do not engage in any post-university life-long training and where doors are shut after 3 pm – when the rest of us, mortals – have to be at work) and so on. They will require parks that are safe and pleasant, the sea front that is free of industrial rubble and incinerators. And air that is clean.
  • PhDs and high quality entrepreneurs who will find these services wanting in Ireland will require either a much higher rate of pay, making their output, no matter how much ‘Knowledge’-infused it might be, uncompetitive in the world markets. Alternatively, they will simply move on to build ‘Knowledge Economy’ somewhere else – in Paris or Singapore or Hong Kong, where such services (also known as inputs into the ‘quality of life’) are better and more efficiently supplied.

Agree? Ok, second part of proposition needs to be proven. Does it? Really? Anyone still believes that our public sector delivers excellent services? Or that the shambolic quality of these services has nothing to do with knowledge economics?

Instead of proof – an example. We all can agree that our nation’s top university is and must be at the centre of the ‘Knowledge Economy’ activity. It must be its heart. Well, the speed of the body is related directly to the speed of the heart beating. Here is a snapshot:

From today’s email to faculty and students (this is a second such notice this week):

As we are all aware following the severe cold weather…

Within College we use a large amount of water and must during this period make an additional effort to reduce our water consumption. …The following water saving tips should be considered by all:

  • In laboratories reduce water consumption for vacuum pumps and water cooled condensers
  • Ensure all water supplies are turned off when experimental work is complete
  • Only run dish washer, glass washers and autoclaves when full
  • Consider can any experimental work consuming water be stopped during the current water crisis

Of course, conserving water is a good practice – it is a scarce resource and should not be wasted. But if three days of snow and -3 degrees temperature can stop experimental work and lead to reduced operational capacity of our best University, are we really getting the public services that can support ‘Knowledge Economy’?

I personally don’t think so. So why on earth have our policymakers – wise enough to set numeric targets for PhDs well into the first half of the century and capable of producing tomes after tomes of white papers on ‘Knowledge’ economics – have so utterly failed to even mention the need for proper electricity supply (yes, TCD routinely warns staff that the University is teetering on the top edge of its supply capacity and that ESB supply might be disrupted) and decent water supply?

Before science and technology policy proposals, shouldn’t we be first served with a decent emergency response system that can make sure flooding is contained when it happens, roads are gritted when the icy conditions advance and water/power/communications/gas/energy are delivered when adverse weather hits? It might be not ‘Knowledge’-intensive and not too glamorous of a task, but it would serve a much greater purpose.

This post originally appeared at True Economics. Reprinted with permission of the author.

6 Comments
Topics: Economic Development, Public Policy, Talent Attraction
Cities: Dublin

6 Responses to “Constantin Gurdgiev: Knowledge Economy and Dublin Water Woes”

  1. Steven J. Lee says:

    This whole piece basically reminded me of the expression, “If you build it, they will come.” Attractive cities are going to attract those with the most flexibility to live where they please, and given that many jurisdictions offer tax incentives etc. to high tech then they can be choosy. Like the article says, Singapore, Hong Kong and Dublin are all competing – first comes the basics of a good life and business atmosphere, everything else is secondary.

  2. Chris Barnett says:

    The writer seems to be arguing that “the finer things” are irrelevant when the provision of basic public goods (such as potable water, electricity, drainage, road maintenance, and public transit) is lacking.

    Clearly, for world citizens who might choose from among different cities, “basics” encompass a much larger suite of public and private goods, but there is no hope of attracting such folks when the real basics are questionable in consistency and quality.

  3. Eric says:

    Steven J. Lee touches on that critical tradeoff that must be carefully made:
    How do you deliver “high-quality” public services (from reliable power and water delivery to good schools and quality healthcare) without destroying your tax base and driving businesses and residents to locate or live elsewhere, due to the tax burden?

    There’s the question. I know my politics lean leftwards on the question, but I now begin to doubt as the South’s economy booms as the Midwest and coasts stagnate.

  4. Alon Levy says:

    @Eric: first, the South’s population may be booming, but its economy is in shambles. Atlanta, supposedly a success story, had negative real per capita income growth between 2000 and 2007.

    Second, high-quality public services coexist with high economic growth in multiple developed countries. To name just a few: the Netherlands, Sweden, Norway, Finland, and Denmark. If you do not require those public services to include a good welfare system, and instead only demand basic infrastructure, then add Singapore, Hong Kong, South Korea, and Taiwan to the list. All it takes is competence, a quality that Anglophone governments are sorely lacking in.

  5. Marc says:

    @ Alon Levy: Those examples are not really representative of the “big” picture, these are countries with low levels of population and high urban densities… Some of them also have access to a wealth of natural ressources. They are not really representative of most countries’ issues.

    It is true that it is often forgotten that access to “basic” services may foster growth, rather than seeing the relationship as solely unilateral: growth fostering the means for basic services.

    To me the interesting side of this article is not related to attracting or creating this “creative class”. As the author points out, only a few cities can have a claim to attracting them. So instead of expecting the unrealistic we should focus on what everyone needs, rather than on the needs of this so called creative class. Not every city can claim to be New York or Paris.

  6. Alon Levy says:

    It doesn’t really matter what the population is. If the US splits into 50 states, every current government dysfunction would remain in place. After all, Ireland, with the same basic idea of how to run government, is failing to provide basic services, in exactly the same way as the US.

    Norway has a wealth of natural resources. Denmark and the Netherlands have a little bit. The rest have nothing. And even Norway, Denmark, and the Netherlands were quite successful before oil was discovered in its territorial waters. In the Netherlands they sometimes view their gas resources as a bad thing, leading Dutch industry to wither in face of higher costs; it’s called Dutch Disease for a reason.

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