Please Stop Trying to Be Silicon Valley

Everyone wants to be Silicon Valley these days. From cities to countries, people keep claiming this or that is either going to be "the next Silicon Valley" or "the Silicon Valley of such and such region". In fact, some economic powerhouses (Taiwan and Japan have been mentioned) are willing to sacrifice their current industries to jump on the software bandwagon. The allure of pretty screenshots and massive market caps of Google and Apple and the likes prove quite irresistible.

Frankly, this saddens me from time to time. I am really really ticked off when people from developing countries (India is often mentioned, but some other countries too) assert that software and Silicon Valley model will somehow lift them off poverty. I mean, it's their countries and cities, so I don't want to be rude. But, really?

Development of a powerful software industry has quite a few drawbacks. Those are:

• Software is a non-essential product. In other words, you can't feed people with software; you can't shelter people in software; you can't warm people with software. This means that even if a region gets rich doing the web, it may still have food, clothing, and shelter shortage. In fact, Silicon Valley has quite a shelter shortage right now!
• Software requires high level of technologies to boost productivity. This is less obvious than above, but holds just as much importance. Let's say that if India wants to improve its food production capacity with software. Well, that requires farmers to use systems that can run these fancy software. But if the farmers have those systems, India would not be a developing countries.
• Software does not require much. This sounds like a good thing, but it's not. Because it is so easy, infrastructure are not properly built. India, again, stands as example. For all of those booms in software and service outsource, Indian infrastructure, including essentials for software system like internet, is still patchy. Driving toward Silicon Valley, thus, will not raise the bar for the whole economy; it will only create a few newly-rich.
• Software increases economic dependency on outsiders. It, after all, needs hardware to run, and hardware industry is something totally separate from software. More subtly, its output also depends on outsiders. See 2nd point above: for developing countries, other industries can't readily take advantage of the new software, so the industry would be stuck doing dirty works for foreign corporations.
• Software has low barrier of entry. This low barrier entices cities to be Silicon Valley. However, it also invites massive competitors. This means that hard-fought economic edges can vanish overnight. Furthermore, this also means that there is a strong drive toward lower prices, which reduces the economic gains for the successful cities.

Thus, a country can't get rich doing Silicon Valley. In fact, I have doubt if a city can stay rich doing Silicon Valley, given how hard-won economic edges may be taken away easily.

So, what should a city drive for?

First, finance. You know, 2008 really gave banks and financial services bad names. However, finance underlines an economy. As Niall Furguson argued in The Ascent of Money, every economic revolution is preceded by a financial revolution; every super power is preceded by a financial center. In fact, Silicon Valley's real miracle is its financial prowess. These days, people talk about venture capitalists and investments and such, but they forgot how revolutionary these things are. The investors essentially take strangers' money, then give it to other strangers, some of whom are twenty-something with nothing more than a good presentation. Humans, by nature, distrust strangers. And yet, just look at modern American financial arrangement.

Thus, more cities should aim to be New York, London, and Frankfurt. Such move would lay down the foundation for all other industries. It also fosters better, more connected, more trusting societies. After all, when one can trust the whole life saving to others, one learns how to judge people by more than bloodlines.

Second, agriculture. Food is the foundation of human progress. Cheap, abundant, and nutritious food fuels people to grow, to work, to innovate, also to learn, to love, to explore, and to make better lives. Improvement in agriculture not only nurtures the consumers, but also the producers: they can aspire to compete on a global scale. It also brings food and economic independence to developing and crowded countries. Agriculture is also likely to encourage development of other industries. For example, farmers require financing (eg. loans and mortgages), machines, stocks, refrigeration, transportation, etc. Each of these has its own requirements (eg. making machines need metallurgy, casting, steel, etc.).

By the way, agriculture does not need to be low tech. Biology engineering, breeding, environmental research, chemical engineering, and gene engineering are vital players in production of agriculture. Storage, planning, and transportation of the products require further modern technologies and innovations. Marketing, consumer education, brand building involves modern media and communication channels. Agriculture has been with humans for a long time, and will continue to do so for imaginable future. As such, it can scale up and down the technological scale without any issue.

Third, hardware and robotics. Now, software is a silo industry, which does not drive the development of other industries. On the other, hardware and robotics demand much more. To produce chips takes a lot of precision. To produce them at scale require massive investment in infrastructure, building, and technologies. Also, different from software, hardware needs serious financial investment. And, finally, hardware and robotics enable much more than software. Well targeted, they (with the virtue of being physical) can be employed in different fields with minimum extra technology investments.

Finally, I think more places should pick up the lead in energy innovation. Our modern world survives on electricity. However, we have yet to find anyway to produce it without ruining our environments. Plus, transportation of electricity is quite inefficient and requires intensive maintenance.

Energy production will probably encourages financial investments (did I mention that finance underlines economy?), chemical engineering, physics, probably precision engineering, metallurgy, etc. It also provides the foundation for modern lifestyle and the foundation for modern industries. It also provides energy security and independence for its host countries. An excellent choice.

All in all, there a choices. Interesting choices, compared code and software. And I for one sincerely hope that people will look beside the latest trend for their hometown development.