Rock climbing and the economics of innovation
Suggested by Anton Howes, economic historian and author of Age of Invention, a newsletter about the causes of Britain's industrial revolution.
Richard Jones provides a fascinating explanation for how modern rock climbers, often without any ropes or gear to support them, have managed to surpass even the wildest feats of their predecessors.
Contrary to what some might think, the key has been new technology. From cheap air travel, to better rubber soles, to superior ropes and ways to secure them to the cliff face, today's astounding free climbs are made possible by the ability to practice, practice, and practice before doing them without the ropes.
It's time to reverse the Beeching Axe
Suggested by Sam Bowman, principal at Fingleton Associates and author of Reviving Economic Thinking on the Right
The last fatal rail accident took place when Tony Blair was still Prime Minister, with one fatality. Since then, 23,000 people have died on our roads.
Niall Gooch makes the case that the Beeching Cuts, which closed hundreds of miles of suburban and cross-country railways during the 1960s, were the turning point when we gave up on public transit and surrendered to the motorcar. That’s led to huge expenditure on roads, including highways straight through once-booming metropolises like Birmingham.
Today we’re rebuilding some of the most valuable lines killed by Beeching – HS2 recreates the Grand Central Main Line, and the old Varsity Line between Oxford and Cambridge is being brought back too. Many more may be worth reviving if we’re serious about plugging in ‘left behind’ towns to booming cities near them so that they can grow as well.
There may be one thing to add to Gooch’s piece. Apart from a few toll roads and London’s congestion charge, roads are effectively free at the point of use. That creates a lot of traffic congestion, which makes buses unreliable. If we’re serious about moving people onto trains and buses, and out of their cars, we’ll need to get serious about road pricing, too.
Give Me Your Tired, Your Poor, Your High-Skilled Labor: H-1B Lottery Outcomes and Entrepreneurial Success
Suggested by Sam Dumitriu, research director at The Entrepreneurs Network
A new study allows us to quantify the value to startups of being able to hire high-skilled workers. In Give Me Your Tired, Your Poor, Your High-Skilled Labor: H-1B Lottery Outcomes and Entrepreneurial Success, researchers exploited the lotteries used to allocate H-1B skilled worker visas to businesses in the US. While economists typically can’t conduct randomised controlled trials on immigration policy, the H-1B lottery, while arguably a bad way to allocate visas, created a natural experiment that allows us to see just how important access to talent.
They find that a one standard deviation increase in the H-1B visa lottery win rate for a company is associated with a:
1.5pp (23%) increase in the probability of IPO.
4.5pp (10%) increase in the probability of receiving additional external funding.
2.9pp (20%) increase in the probability of a successful exit over the next five years.
4.8% increase in the number of patents filed and a 4% increase in quality adjusted of patent citations.