Jim O’Neill, when retiring to his homeland after many years as chairman at Goldman Sachs, decided to take a stand at the large economic gulf that exists between the cities of the north of England and the south, particularly London, of course, which is prospering. Initially he headed an enquiry as to the causes and what might be done to alleviate the situation. He came up with the idea of the Powerhouse of the North to be assisted mainly with infrastructural changes, mainly improved transport..
George Osborne, the Chancellor, followed this up with promises of big grants to the northern cities so long as they carried out many taxation changes and also petty ones such as people voting for the mayors of the larger cities so that, hopefully, more dynamism could be injected.
Dr Madsen Pirie, founder of the Adam Smith Institute (ASI) has followed up this further with special reference to the jobless young who are steadily accumulating. He’s come up with the idea of Charter Cities, particularly in the north, which would have additional benefits from London so long as they gave additional benefits to the young, such as relief from some taxes.
I liked his ideas but I thought that not enough attention is sill not being paid to the young — and, in particular, the brightest of the young who normally make a bee-line for London if they have more than usual enterprise and vitality. So I wrote a comment to Sr Pirie’s post on the ASI blog as follows:
I much like this idea. On the evidence that by far the most significant ideas == in the arts, sciences or business — occur to individuals under the age of 30 (for males, 25 for females) — by which time their frontal lobes are fairly fully developed — then there’s little hope for a Powerhouse of the North unless the Charter Cities concentrate hard on retaining, or attracting, the brightest young people.
All good ideas originate in one mind only (even though, as Newton said, they may stand on the shoulders of others beforehand). Yet the vast majority of good ideas fall by the wayside — usually immediately — because the innovator doesn’t have any friends or contacts who would take the idea seriously. While venture capitalists reject most proposals that are put to them for intuitive reasons, they also reject many ideas that they think are first class. These ideas perish because the innovator also doesn’t supply a team who are already committed to the idea and will manage the business in its early years. ‘Pure’ venture capitalists are not interested in managing schemes, only in capital gain.
I would therefore like to amplify Dr Pirie’s excellent idea by suggesting that Charter Cities should also have access to venture capital, or make it available from their own resources, and do what the professionals do — be available for business proposals. Existing venture capitalists would, I am sure, be agreeable to lend one or two of themselves to any assessment panel that a Charter City may convene from time to time — for their own possible purposes as well as the Charter City’s.
My suggestion is subject to a few constraints:
1. Proposers must be under 30 (or 25) years of age;
2. Proposers must also supply a management team of no more than six named individuals — the maximum group size for effective decision-making — who are willing to be interviewed and who want to take part in developing the business;
3. Proposers and their named teams must have lived in the particular Charter City for at least a year before making the proposal, and preferably since childhood — that is, when cultural loyalty to the City is mostly laid down — and also commit themselves to keeping the putative business there for at least five years;
4. The investments will be open-ended — subject to competition between different Charter Cities — but, apart from financial audits, no further assessment is made for three years.
Although Jim O’Neill is undoubtedly committed to the idea of the Powerhouse of the North, I wonder just how much George Osborne is — considering that he’s setting himself up to be next Prime Minister. In any case, their idea heavily weighted from the infrastructure angle. This is necessary but not sufficient while some missing ingredients — the huge potential of the young — are still under-appreciated. It’ll fare no better than several schemes of governments since the 1920s.