Startups Are Spiky

Paul Graham speculates that startups may herald a new era of political economy:

Startups may represent a new economic phase, on the scale of the Industrial Revolution. I'm not sure of this, but there seems a decent chance it's true. People are dramatically more productive as founders or early employees of startups--imagine how much less Larry and Sergey would have achieved if they'd gone to work for a big company--and that scale of improvement can change social customs.

He notes that startups are highly clustered in certain cities:

Startups are a type of business that flourishes in certain places that specialize in it--that Silicon Valley specializes in startups in the same way Los Angeles specializes in movies, or New York in finance.

And he's concerned about what this means for society:

If so, this revolution is going to be particularly revolutionary. All previous revolutions have spread. Agriculture, cities, and industrialization all spread widely. If startups end up being like the movie business, with just a handful of centers and one dominant one, that's going to have novel consequences.

The spiky nature of our era - evident in everything from startup clustering to rising economic and geographic inequality - is among the most critical issues of our time. The crisis creates the opportunity to address it. But for some reason, U.S. and global policy-makers are unable or unwilling to take it on. The consequences will surely come back to haunt them sooner or later.