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The Opportunity of the City-State in the Data Age

To varying degrees most any adult understands the truth of: ‘everything is cyclical’. The following suggests that there is a case to be made for our civilization tactics and rationale circling back around to the city-state in the data age. The idea grew fuller for me at a Churchill Club event last week entitled ‘A World Awash in Data: Risks and Opportunities’, the speakers of which were Gordon Crovitz (partner NextNews Ventures, previously WSJ) and Anthony Scriffignano (Chief Data Scientist, Dun & Bradstreet).

Fittingly, the evening’s conversation started out with a mention of Hong Kong, and specifically that the Minister of Finance (Financial Secretary) in this free market amongst free markets did NOT maintain significant economic data in decades past. The rationale being: ‘if such data was maintained, than people would want to use it’. My first response to this was ‘that’s a very simplistic, even naive approach’. My second inclination was that while that may work for the localized economy of a city-state like Hong Kong, there is NO way you could run a complex regional and national economy by what amounts to shooting from the hip. Or rather, by allowing member corporations and other organizations to conduct business literally as they see fit. That would be the equivalent to asking your central bankers to bat blind with their hands tied behind their back. But upon thinking closer, there’s something interesting there when overlaid with the information and data age, and I’m not referring to some libertarian dreamland. I’m referring to the inverse relationship between the opportunity to scale and the size of the autonomous entity.

City-states like Hong Kong, Singapore, Monaco, and also places like Luxembourg, Taiwan, and even Vatican City, have a distinct advantage in a data-driven, real-time world. They can activate, actuate, and actualize far faster. Now perhaps you’re thinking ‘that’s always been the case, but the overwhelming mass of resources provisioned in larger nations more than outweighs the nimble advantage’. That has historically been true for many centuries, but in the world of tech (if nothing else) we can now do more with far less. A city like Singapore for example is already a regional economic power, but pair that with being a poster child for IBM and GE’s dream of a ‘smart city’ and you begin to see the opportunity. It is ironically nothing short of enormous. Small [and agile] becomes more and more beautiful as the data age progresses.

City-states like Hong Kong, Singapore, Monaco, and also places like Luxembourg, Taiwan, and even Vatican City, have a distinct advantage in a data-driven real-time world.

In addition to the advantages of low acreage, Hong Kong’s previous data-deprived economic policy also reveals the more obvious point that collecting data can have [unintended] detrimental effects. The rebuttal of course is that until you collect data you’re not likely to know the difference, good or bad, but it gets tricky when that distinction becomes blurry. What if a dataset (the Truth) seemingly points to policy that 2 or 3 steps/turns/years down heightens or even requires stagnation? The point is: data is a two-edged sword. It should be viewed as such instead of this almighty savior so many like to relish in. In no example is this more apparent than the term ‘big data’, when in fact it is ‘big data filters’ that should give people solace. Those programs, applications, protocols, languages that allow us to easily if not automatically go from ‘big data’ to ‘good data’ are those to be applauded and rewarded. Data: it can be used to make your life orders of magnitude better, or it can ruin it. [Bring on Quantum Computing!]

I want to be clear, my position here is in no way against regulation. In a world of complex derivatives and high-frequency trading, where latency advantage can be measured as a function of proximity to the server processing the transaction, we most certainly need oversight. As the financial meltdown in 2008 taught us, ‘innovation’ should be encouraged right up to the point that it does NOT threaten the entire system. If you can’t demonstrate that with a certain confidence-interval to a group of well-respected, peer-nominated, third-party economists/finance/technology experts, than there should be restrictions on your ability to come to [and shape] market(s). The bar here does not have to be gruesome, uncharted territory is exactly that, but if you are unwilling to bring your tech/algorithm/financial tool before some type of externally vetted group, than perhaps you don’t get to play in certain markets where from-the-hip just doesn’t fly from a risk-mitigation standpoint. If you’re more of a day-trader genius hacker type/firm, there’s a place for you, but for the truly cutting edge high-risk, high-return categories, it is a luxury and priviledge to get to shape/build/set the standard(s), not a right. If you don’t want that type of oversight/responsibility, fine, stay cost-cutting status-quo to the day you retire; but if you’re out to change the game, there should be steps put in place to make sure you don’t (in)advertently end it for everyone.

What I AM attempting to convey is that city-states can and will be used as advanced experiments. In no other field will this be more apparent than in genetic testing, customized medications, medical innovations overall, and health care/procedures in general. If you think you resent tech now, just wait. People will be lining up. My recommendation would be to get onboard sooner rather than letting divisiveness exclude you later. Most any [tech] innovation is first available to those that can afford it, and then it gets commoditized. Fighting the initial onset is a futile gesture. Let’s say a genomic procedure that inhibits certain aging processes is developed in Seoul and then approved in Singapore and Luxembourg, what effect would that have almost overnight? Those two city-states will flourish even further.

I think we should develop our own in the quasi-City/States of Boston, Mass and neighboring Providence, Rhode Island. Perhaps with Harvard and MIT, Boston/MA could focus on medical innovations, and then Prov/RI for more financially focussed applications. I do not begin to know how this would shake out legislatively or otherwise, but it is not difficult to visualize an advantage for State governments that can easily fuse with that of its major City/Capital. [Perhaps after Boston begins to show results, Sacramento could be petitioned/directed to give SF more autonomy.]

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(Source: IMF)

Other BITS and Pieces

Resisting the pressure to “become an approximation”, as quoted by Mr. Scriffignano, may be growing more and more difficult in a World[wide web] of aggregate data, but what about a City thereof? More local calibrations/policies could prove incredibly valuable as ‘super-computing’ becomes more commonplace in a city/region’s toolbelt. Mr. Scriffignano and Mr. Crovitz also brought the Red Queen hypothesis into the conversation [in which ABC would be short for ‘Always Be Changin’], an interesting hypothesis that reveals continuous integration/improvement as the baseline to stay ahead. In a system such as this, changing one’s perspective [first] can be just as important as changing the actual inputs. A more specific example of this was in identifying AI’s current status as far closer to SI (symbiotic intelligence). In general, ‘AI’ is more usefully seen in the light of freeing us up from the frivolous to focus on far bigger and more interesting challenges. When our nation was born, 98% of its citizens were farmers. We’ve inverted that statistic and look at all that has been accomplished. Now, thru the advancement of computers, we’re taking civilization even further. The reason so many are alarmed stems from the rapid rate of change. And for good reason, in the span of a couple generations SO much has changed. Look at the baby boomers compared to the millennials, are they even the same species? I believe so, but I also think we could use far better tools to transfer knowledge, particularly tacit, from the former to the latter. Which perhaps brings up political questions as much as technological, and speaking of that intersection …

Peter Thiel spoke at the Republican Convention. Why do you think that is? It’s certainly not because he agrees with people like Pence in principal, it’s because he sees and senses the great rift in one of America’s two political parties. He intends to use the rupture to his advantage. And Thiel if nothing else envisions a world where bureaucracy does NOT inhibit our ability to innovate. A party and movement created by the likes of him and Elon and Bezos? I think places like SF, LA, and Seattle would find themselves more data-centric in fairly short order.

This was my first Churchill event, but I have to say, I think he would be proud of the content and ideas his namesake continues to generate.

About The Author
Jeremiah Shackelford
Jeremiah Shackelford
Jeremiah Shackelford, Business & Market Developer