Economic Development as a Zero-Sum Game

I heard the following story from an acquaintance at Tuesday's mashup. It may be apocryphal, but it has the ring of truth.

A native of Pittsburgh finished graduate school here and went off to New York to make his fortune. The fortune wasn't made, but solid career success arrived. With some money and a spouse, he returned home to start a family and continue his career. In fact, he was going to set the Pittsburgh business world on fire with his New York City acumen. He called a high school classmate, now a successful accountant in Pittsburgh, hoping to establish a networking relationship. The accountant said this: I have a book. It has two pages. On this page, I list people I owe. On the next page, I list people who owe me. You? You're not in the book.

The lesson is a familiar one, and it's not just that it's hard for an outsider to break into the closed circle of business relationships that dominates Pittsburgh. The lesson is that if members of the Pittsburgh business community look at economic development as a zero-sum game -- if I give something to you, I lose something of my own -- then the region will continue to flounder economically. Growth requires giving without expecting an immediate return. Give, and you may get something back down the road; hoard, and you won't.

I don't care that people are selfish. In the business world, selfishness is often fine, even good. But "you're not in the book," or "I've got mine," aren't just manifestations of selfishness; they're manifestations of *feudal* selfishness. "Feudal* selfishness says "I am my own Lord, master of my domain." A growth-oriented economy depends on *market* selfishness. *Market* selfishness means my success depends on trading with you. And it assumes that development isn't a zero-sum game. If I trade with you, we can both make ourselves better off in the long run.

Comments

5 Responses to "Economic Development as a Zero-Sum Game"

Jim Berardone said... 5/11/2006 6:35 PM

Mike,

We published an article on networking recently in which Rod Stoll, a serial entrepreneur, echoed your comments about not looking for payoffs when networking. He's recognized this mentality as a key difference in the cultures between Pittsburgh and Silicon Valley. "It’s a mentality that I think is key to being a good networker: it’s that they listen well and their first reaction is ‘how can I help this person?’ as opposed to ‘what can I get from this person?’ That’s one of the characteristics of a good networker – that they’re a net giver.”

The full article is available at:
www.productstrategynetwork.org/magazine/Networking.html

Chris Arnold said... 5/12/2006 2:59 PM

When I was a child, my grandmother's pantry was stocked with enough food to last a nuclear winter. I often asked my mother why our house was not flush with the same quantity (and quality) of food. Her repeated response was that Grandma had lived through the depression (and that she was crazy).

My grandmother's value system was formed in a culture of scarcity. It seems to me that the Pittsburgh business community operates under a similar value system.

Assuming the foregoing is even remotely true, the questions become:

(i) Can a value system change without a cultural change (i.e. can business leaders share deals when deals are as rare as chocolate in 1930)?

(ii) Can a value system change with a cultural change (i.e. even with deals-a-plenty, will business leaders continue to hoard opportunities)?

At this point, I have only questions and no answers.

But, for what its worth, my grandmother's cupboards still are far from bare.

Ashes77 said... 5/12/2006 4:03 PM

interesting post and comments. I often think that the role of the "feudalist" mentality is under-appreciated when thinking about pittsburgh's history and culture. As the birthplace of the 20th century's mega-corporations, or at least the place where they first put their cloven hooves on the ground, Pittsburgh has a lot of examples of top down management and open warfare against thinking free-agents. Whenever I tell people where I am from, after the sports memories, I here tales of geographic beauty and cultural oddity and disjuncture. Doesn't make me think less of the place... but one has to wonder.

Amos_thePokerCat said... 5/15/2006 6:07 PM

Of course, if there were a reasonable number of people moving into the city, this by itself would do alot to break up the "futile" system that has evolved here in the absence of immigration.

Mark Rauterkus said... 5/23/2006 10:16 AM

I too post about the feudal Pittsburgh. That is the one with LORDS and SERFs. There are favorite ones and then everyone else. The Humpty Dumpty falls, and the king's horses and men can't put him together again.

Much of that is 'rooted' (pun intended) into "land." Hence, another reason why we need to tax land and not income.

But, as to networking, more of the theme you set, I like to talk about the "lump of coal" approach. If I have it, you don't. If I sell it, it is yours. It is a carbon based transaction. Bankers in Pgh are quick to invest in iron (i.e., printing press) but won't touch an author/publisher, even with only an Olympic Gold Medal to prove one's viability.

In the "digital" economy, I have an idea and share it with you -- sell it perhaps -- and we both still have that idea. You get it, but I don't loose it. And, if it is valued, we both have MORE value. If it is flawed, my bottom line is not inflated with false hopes of percpetion in value.

So, we come to a better discovery of the real value of ideas only after they are shared (and/or understood) by others -- in a digital world.

Then, the real value resides in the relationships. My trust gets a boost in your realm for a tip that made sense.

This becomes and 'open source' way as well. We all prosper when real solutions are leveraged and crafted.

This gets to why downtown development, IMNSHO, is a joke with O'Connor. His cronie gets the deal, based on the land, and it is a carbon-based mine vs yours folly.

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Pittsblog 2.0 is written by Mike Madison, a law professor at the University of Pittsburgh. Send email to michael.j.madison[at]gmail.com. Mike also blogs at Madisonian.net, on law and technology. Chris Briem of Null Space drops by from time to time.

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