Innovation Nation

A research firm released an "innovation heat map" last week - using a variety of factors to identify where new and exciting advances were taking place across several industries. Not surprisingly, Silicon Valley was the most innovative area of the United States. But somewhat troubling is they way innovation is tanking in some of our major cities: Philadelphia, Pittsburgh, Chicago, and other industrial cities are simply not keeping up with the times.

Washington, D.C., with its culture of federal government and bureaucracy, isn't even on the radar for this - which is no surprise, and which is probably a big reason why the tech team that funtioned so freely and successfully on the Obama campaign is meeting so many challenges during the Obama Presidency.

Washington's premium on the status quo and aversion to innovation will taint any aid failing industrial cities receive - and worse, will prolong those cities' economic woes.

Since it's March, imagine a young basketball player with bad shooting habits. The only way that player will get better is if he changes his or her shooting motion to adapt to the game. The federal government solution might be to replace basketball rims with hula hoops or lower backboards, but none of these will actually make the shooter better - and eventually, he or she will get to a level where the rules can't be changed.

(By the way, this is not some sort of clever metaphor for why the Washington Wizards and Georgetown Hoyas suck this year.)

Sunday Funnies: Prize Patrol!

The folks at Right.org are giving away stimulus/bailout checks! And they're also giving out stimulus/bailout invoices...

Incidentally, if you think you can make a better video panning the stimulus, you should enter Right.org's contest to do just that. Grand prize is $27,599 - your share of the stimulus.

Girl Scouts 2.0

The Girl Scouts understand two concepts which have escaped the people at the controls of the economy: supply and demand.

The Girl Scouts of America have announced sweeping changes in order to boost membership. Recognizing that this isn't 1955 anymore, the concepts of campfire sing-a-longs, sewing and cooking, and even merit badges are being replaced by video conferences, financial responsibility training, and a leadership development curriculum. With more girls socializing online, blogs and online networks are emphasized (which gives the Girl Scouts a chance to teach about online safety, too).

Breathe easy, those peanut-butter-and-chocolate cookies aren't going anywhere.

Of course it's sad when traditions are phased out, but the Girl Scouts are reacting to the reality of dwindling membership - the organization was forced to change to meet the needs and demands of today. By clinging to those traditions, the Girl Scouts could serve nostalgia-seekers, but not the young girls who need them - and they would slowly die out.

Any industry seeking a bailout should heed the example of the Girl Scouts. And if the parallels aren't readily clear, maybe they could go door to door selling thin mints for a week or so - apparently, you can pick up pretty sound economic lessons that way.

EXCLUSIVE: Preview of tonight's comments on the stimulus

Okay, maybe President Obama won't shed the Washington Blue Suit Uniform for Matthew Lesko's "I want to be the Riddler in Batman III" duds. But Mr. "Free Money for Everyone!" has been paying attention to the legislation passed by President, uh, "Free Money for Everyone!" - and he's already trying to make money off it, as reported by Mitchell Blatt.

(Of course, Lesko doesn't report that you can get your own stimulus check from the Bank of Obama.)

More interesting to me will be the tone the President takes tonight. Early reports indicate that the speech will be more forward-looking than his steady drumbeat of sour economic predictions that began before his inauguration; some have called on Obama to sound more positive.

(It will also be interesting to note whether "forward-looking" will mean more jabs at the previous administration; my money is on "yes.")

From its President, the country sure could use some good news. But politics is about managing expectations - so the more dire the current economic situation appears to be, the more credit Obama can take when the economy ticks back upward in a few years - likely just in time for his re-election.

It's a little like Groundhog Day (the holiday, not the movie): if during tonight's speech, the President sees a shadow, it means four more years of campaigning-by-governing.

Lessons from the Calvin Coolidge Snack Bar: Diet Sprite, the Stimulus, and Creating Demand

I took two economics classes at the University of Massachusetts. One was ECON 103, a course in basic macro economics that taught freshman how to draw basic supply and demand curves. It was taught by a professor in a big lecture hall with smaller sections on Friday mornings (which were mercifully taught in classrooms that were just a few hundred yard from my dorm). I slept through most of it, and if it had been the only economics class I took, I might be shrugging my shoulders right now and saying "Stimulus? Sure, why not."

The second class I took was in a building named, appropriately, after Calvin "Silent Cal" Coolidge (a staunch supporter of free market economics) when our dorm's House Council decided to found a snack bar in the 19th floor lounge. I was one of the nerds involved in House Council - a quasi-governmental body which, up to that point, had focused on putting on educational and social programming that no one cared about and no one went to. We decided to put the tax money we had collected to a better, more productive use by launching a social hub for Coolidge residents. It also taught me a great deal about how business works.

We launched simply in Spring 1998, and sent one of our volunteers out to buy the first run of supplies. She came back with one twelve pack of every type of soda she could find - assuming that we needed variety. We learned that demand didn't call for a wide variety - people were just happy to have a place in the building where they could get soda cheaper than the vending machines. We also learned that no one likes Diet Sprite. To get rid of the supply, I gamely purchased about eleven of the ten cans our supply director bought (so I can personally attest to how horrible it was - seriously, don't ever buy Diet Sprite).

Essentially, I subsidized the purchase of a product no one wanted. If we had only looked at raw data about which sodas sold quickest for our next supply run, we might have thought Diet Sprite was selling like hot cakes and bought more. Luckily, we were a tight knit group, so I could express my distaste for Diet Sprite. (Have I mentioned it's sickeningly sweet? Stay away from Diet Sprite.) What I had done is artificially create demand.

Eleven years later, our economy is lagging and President Barack Obama - in a phrase uttered last week that has been retooled for this week's speeches and press conferences - is blaming lost demand. People are simply not spending money, so the government will start spending for them.

When I created demand, it was 50 cents per can and I spent my own money. But now, with this stimulus plan, we're all chipping in.

And this is the problem with any government action under the umbrella of a so-called "stimulus package." Government doesn't seem to understand the world of business - which is why President Obama can say, with a straight face, that an entity with a trillion dollar operating deficit "is the only entity left with the resources to jolt our economy back to life." (Seriously - he actually said that.)

Since government doesn't understand business, and doesn't operate by the same rules, how can we expect government activity to turn the business world around? Maybe Obama is wrong to say doing nothing is not an option. Maybe doing nothing - for a change - would be the best option.

In the meantime, I hope you like Diet Sprite; since no one is buying it, we're going to buy a whole lot more of it.

NOTE: After some cursory research, it appears "Diet Sprite" is the same product as Sprite Zero. You're warned.

SOMEONE has to be making money...

An economic recession is difficult on a personal level. I know several people who are looking for work right now, and still more who are worried about whether their job - or even their entire company - will exist next week.

That said, slow economic times provide a chance to make needed corrections. In his pro-stimulus stand up act at last week's Democrat retreat, President Obama mentioned our economy losing trillions in demand. The stimulus, he said, is a way to artificially create demand.

There are, however, industries which are growing by leaps and bounds. Aging baby boomers are making assisted living and home health care major growth industries. Demand for office administrative services is growing - probably because top-heavy companies are recognizing that two or more cheap, administrative-level workers get more work done than an expensive partner-level executive. Outplacement firms are booming, helping laid-off workers with career changes.

I've worked at a company that went through what was called a "right-sizing" - and while some employees saw that term as a euphemism for down-sizing, it seemed appropriate to me. Tough times force belt-tightening and discipline - whether in personal finances or a national economy. It promotes efficiency. And the industries that thrive are usually stronger because they find demand that transcends the difficult times - versus boom industries, like late-1990's dot-coms or mid 2000s real estate, that are based on people gambling to make a quick buck.

I drive less now than I did a year ago. The $4/gallon gas prices this summer led me to be more economical, and now I fill my gas tank usually about twice a month and no more. Similarly, I spend money a lot more intelligently now than I did four or five years ago with the knowledge that, even if I don't get laid off, raises and bonuses that I was used to in the past may not be available now - realities also make me work harder and strive to expand my job-related knowledge.

As I work with fellow conservative activists to build new organizations, we realize that we cannot rely on an influx of donations to help fund our efforts so we must be streamlined and put an emphasis on providing a deliverable service to potential donors.

Tough times are leading to the development of good habits for me. Hopefully the same will be true nationally.

Economic Policy presented by the Kids in the Hall

With all the talk about the stimulus package this week, I thought it might be useful to review some basic concepts of government intervention in the economy.

First off, government spending programs are frequently wasteful - Canadian broadcasting, for instance, is all publicly funded:

Second, handout programs may seem helpful to some people, but may have different consequences for others:

Finally, it's nice to have outside-the-box thinking when dealing with problems, but eventually the bills will come due:

Sunday Funnies: Economic Dysfunction

Thanks, Washington!

Recent comments on the economy have shown just how much confidence we can place in our representatives. There are lots of companies out there that are failing or in debt because of irresponsible spending. Now that those companies are being supported by the taxpayers, President Obama and his pals are setting strict regulations - for instance, the people who caused this mess aren't allowed to give themselves raises. And they've come out strongly against those fancy "retreats" that are really just subsidized vacations.

It's good to see that folks with business sense are making decisions on the economic recovery.

Garth, do you smell bacon?

In order to beg for a piece of the stimulus pie, the U.S. Conference of Mayors released their list of "shovel ready projects" that they feel are good candidates for pork spending with funds from the stimulus package.

StimulusWatch.org is a great way to look at what America's mayors think is a good idea to spend other people's tax dollars on. More than a simple listing of projects in the Conference of Mayors report, Stimulus Watch is a wiki that allows citizen involvement - you can vote whether a project is necessary or not, list points for and against it, and make comments.

It seems to be working. Users are leaving comments and actually discussing the reasons for and against many of the projects. And while there are a few proposals which are drawing positive support, most are getting voted down. Citizens are also giving a bit of valuable: in response to a $3.5 million plan to refurbish the sidewalks in Old Town Alexandria, Va., one resident reveals that the city already makes regular repairs.

As Ars Technica notes, by opening the process up with a wiki-style interface, Stimulus Watch is light years ahead of the Obama Administration's definition of "transparency."