Fixing Our Broken Business Model to Unlock Cleveland’s Full Potential: Richey Piiparinen


CLEVELAND – Knowledge drives economic growth. It does this in two ways: by being applied to existing processes so that there are efficiencies in the manufacture of goods and the provision of services (think robots and car making); and fueling innovation, leading to higher order processes (think artificial intelligence and driverless cars).

Successful cities have knowledge-based economies. The regions with the highest per capita incomes in the country – San Jose, California; San-Francisco; Boston; Seattle; and New York – are all recognized as innovation “hot spots”.

That a city can succeed implies that its economy evolves. This development has been described as follows: the global economy has experienced a “primary” stage focused on natural resources; leading to a “secondary” stage which has been carried out industrially; followed by a “tertiary” stage, which is the provision of services.

In Cleveland, that meant an economy supported by companies such as Standard Oil in the late 1800s, Ford in the mid-20th century, and Cleveland Clinic today.

The last economic stage, “quaternary”, is a little different. Added value today is not so much a good or a service, but the “capital” of data derived from this good or service. Amazon is not very popular because it is a delivery service. Facebook? They don’t profit because you “like” baby photos. Rather, their ratings are derived from the data they “mine” as people use their respective services. For example, more than 60% of Facebook’s revenue comes from the data it collects and which is then sold to advertisers, according to an analysis described by Robert J. Shapiro in the Washington Monthly.

Richey Piiparinen is a writer and senior researcher at the Maxine Goodman Levin College of Urban Affairs at Cleveland State University

The rise of the Quaternary economy, however, brought problems, especially economic displacement. Namely, there are those who automate using data and AI, and those whose work is automated – and only one of those groups is paid well.

“[CEOs] are looking to hit really big numbers, ”Mohit Joshi, technology consultant, told The New York Times. “Previously, they had progressive targets of 5-10% to reduce their workforce. Now they say, “Why can’t we do it with 1% of the people we have?” “

This means that an evolving economy does not exclude a declining society. As noted in a recent New York Times analysis, the most prosperous cities are also the most unequal. “Economic inequalities have increased everywhere…”, writes the author. “But it’s grown a lot more in booming places that promise big income for engineers, lawyers and innovators,” including New York City, San Francisco and San Jose.

You can’t help but wonder where as a collective are we going with this. Cleveland also wants to be a hotbed of innovation. But for what purpose?

Tracing a course correction implies realizing that a knowledge economy is not the same as a “knowledge society”, described as a society which generates and makes available to people. all knowledge of citizens that can be used to improve the human condition. Instead, the knowledge economy today uses individual know-how as an input To innovation, as opposed to a production of innovation. In other words, the objective of economic activity is always a thing or a service to be consumed by people with means, and not the production of knowledge that enables people to increase their capacity to have means. .

We have created a healthcare industry that thrives through innovations in the treatment of a progressively sick population, an epidemic of ill health linked to innovation in the food processing sector that led to production mass of nutritionally deficient foods. Meanwhile, the housing industry – through “innovations” in the subprime market – has increasingly benefited the few at the expense of the many. Then there is the economic development industry, the aim of which is to help cities succeed in the knowledge economy. The strategy here is one of “brain gain” and “brain drain” – for example, what places can do to attract and retain talent – when the real problem is “brain waste”: potentialities unrealized in the backyard of a city.

There has to be a better way of doing things – a more humane way of using human ingenuity.

In his recent state of the city, Cleveland Mayor Frank Jackson said so. “If all the growth and prosperity this city has gained doesn’t translate into your well-being,” Jackson said, “then that doesn’t mean anything to me.” Mayor Jackson has dubbed the standard growth model “the beast” – consuming as it was designed to consume.

Coming from Cleveland’s elected leader, the mayor’s speech is expected to be a watershed moment locally. For he recognized the paradoxes of progress, while rejecting the temptation of the status quo to become a better version of a failed self. Whether this means Cleveland can forge its own path remains to be seen. But the first step in solving a problem is to emphatically recognize that there is one.

Richey Piiparinen is a writer and senior researcher at the Maxine Goodman Levin College of Urban Affairs at Cleveland State University.

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