The importance of where we live

Pareto efficiency

I am a strong believer in Globalization. As the importance of free trade was observed by David Ricardo and the mechanisms of optimal wealth allocation was discovered by Vilfredo Pareto in the Pareto principle, globalization brings wealth, as the global economy becomes even more efficient and traversing the spectrum toward pareto-optimal resource and wealth allocation.

Sure, there will be painful changes as the economies adapt, as is experienced in Greece, Spain and Italy among other European countries in the recent year and gradually in the entire western world in the recent decade, but this is all the pain of transition, not the pain of long term decline.

I like economic theory. As we all know, theory is a simplified image of reality that allows us to deduct conclusions which would otherwise be far more complex to understand without the simplification of economics. Much of economic theory, especially financial economics is built on not-so-solid foundations and then strong conclusions may be fundamentally wrong to make. See my earlier blog post about the recent economic crises and “Margin Call” for an example.

It is a mantra of the age of globalization and economic theory that it does not matter where we live. We can innovate just as easily from a ski chalet in Aspen or a villa in Provence as in the office of a Silicon Valley startup.

Richard Florida - Who is your city
According to Richard Florida, this is wrong. Globalization is not flattening the world; in fact, place is increasingly relevant to the global economy and to our individual lives.

Where we live determines the jobs we find and the careers we have access to, the people we meet and the spouse we mate . And everything we think we know about cities and their economic roles is up for grabs.

In the book Who’s Your City? Richard Florida offers the first available city rankings by life-stage, rating the best places for singles, families, and empty-nesters to reside. Florida’s insights and data provide an essential guide for the more than 40 million Americans who move each year, illuminating everything from what those choices mean for our everyday lives to how we should go about making them.

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