Thursday, May 7, 2015

Who Creates New Jobs?

The conventional answer to this question is "small businesses". As we discussed in this podcast, there is a more refined answer. In short, all net job growth can be attributed to new companies. Granted, most new companies start out small, but not all small companies are new. This research is a key insight from the Kauffman Foundation.
Any entity attempting to spur economic development should study the important new details about job creation and destruction released by the U.S. Census Bureau in recent years. The Business Dynamics Statistics have shattered conventional thinking about who creates jobs.  Between 1987 and 2005, startup companies (those which did not exist the prior year) added about 3% annually to the existing job pool.  Over the same time period, total job growth averaged 1.8% per year.  This means all existing companies, grouped as a whole, reduced the number of jobs by 1.2% per year.  Stunningly, all net job growth can be attributed to startup companies.  For example, in 2005 startups added 3.5million net new jobs, but the economy as a whole added only 2.5million net jobs.  As a group, existing businesses lost over 1million jobs that year. 

Here's a letter  I wrote on this topic to my local paper more than three years ago.

Monday, May 4, 2015

PieFarmer Podcast Episode 3, Arnobio Morelix of the Kauffman Foundation

The podcast returns with another discussion on entrepreneurship. This week, my guest is Arnobio Morelix of the Kauffman FoundationIn this conversation, we review some research on the fastest growing companies on the Inc. 500/5000 list, some false stereotypes, and some insights.  Our discussion is based on a presentation Arnobio gave at Startup Oasis @SXSW

Please note, I used three pieces of music to spice up the podcast. All three works are by the artist  And Other Things and are licensed under a Creative Commons Attribution 3.0 Unported License.  (CC) 2006-2013. I found the music at Opsound.

Lara Lay is used in the open, MIMO is used after my introduction, and Just Like You ends the podcast.You can find more works by And Other Things at

To hear the podcast, use the player below. You can download the MP3 here.

Arnobio is an analyst in Research and Policy for the Ewing Marion Kauffman Foundation, where he supports the department's research initiaitves in entrepreneurship, public policy, and education. He previously worked as a research assistant at the University of Kansas School of Business, providing research assistance for faculty in the finance and international business departments.

Morelix graduated with honors from the University of Kansas with bachelor’s degrees in economics and business administration, with concentrations in international business and entrepreneurship. He has a certification in global marketing from the Asian School of Business in Thiruvananthapuram, India, and has completed coursework in economics at the Universidade Federal de Minas Gerais, in Belo Horizonte, Brazil.

Arnobio blogs at Growthology. You can follow him on Twitter @arnobiomorelix.

Thursday, April 30, 2015

Research Dollars

An interesting note related to this podcast, is how it began. Dr. May penned a blog post arguing for more public funding of research and development. I emailed him to disagree, essentially arguing the US is way down the list on R&D funding but very high on lists of innovation and growth. It lead to a discussion in his office, which lead to my interview. 

In the podcast, I chose to focus more on his college and how they are making future innovators. I purposely chose not to debate public funding in the episode, as I thought the topics we did discuss had broader appeal. However, in the episode, Dr. May mentions that public research has been reduced the past several years (and may now be starting to rebound).  In private conversation with him outside the podcast, I challenged his take. 

I went to the site and looked up federal spending on research and spending from the National Science Foundation. Here are a few charts from the data (click to see larger image).   

The below chart suggests total R&D spending did dip slightly after 2009.

Basic R&D at universities surged in 2009, then pulled back but remained on trend throughout.

Applied R&D spending also jumped in 2009, then pulled back, but remained on trend throughout.

Below we see that applied R&D at universities surged in the 2000s, so the recent decline is minor.

Lastly, consider the percentage of applied research and total research that flows to universities. 

Saturday, April 25, 2015

PieFarmer Podcast Episode 2, Dr. Gary May of Georgia Tech

After a significant delay, I'm pleased to release another episode of the PieFarmer Podcast.

My goal here was originally to be focused on Classical Economics. However, many of the guests I've lined up for that effort are tough to schedule. So I am filling episodes with broader economic topics. 

This episode is kind of a bridge, as the entrepreneur is the key actor in the classical economics model. One interesting way to discuss entrepreneurship is to see how traditional entities are trying to incorporate innovation into their systems.  Georgia Tech has a unique approach and I was very fortunate to get to spend some time with Dr. Gary May (full bio below). I continue to learn about editing, so please excuse the volume fluctuations which were necessary to make sure Dr. May's answers could be heard.

Please note, I used three pieces of music to spice up the podcast. All three works are by the artist  And Other Things and are licensed under a Creative Commons Attribution 3.0 Unported License.  (CC) 2006-2013. I found the music at Opsound.

Lara Lay is used in the open, MIMO is used after my introduction, and Just Like You ends the podcast.You can find more works by And Other Things at
To hear the podcast, use the player below. You can download the MP3 here.

Some links mentioned in the podcast:

Time Stamps: 
00:30 Welcome and Introduction
03:25 Interview with Dr. May begins
04:20 How Georgia Tech attracts and nurtures minority engineers
06:30 How to grow Science, Technology, Engineering and Math
08:00 Trade school or Research Institute
09:45 Tech programs for Entrepreneurship 
12:50 Grand Challenge Scholarship Program
14:35 Research Funding and process
17:25 Balancing research and entrepreneurship
18:50 Building community support
20:20 Venture Capital
22:40 Inventure Prize
24:35 Using technology to deliver education

Dr. Gary S. May is the Dean of the College of Engineering and Professor of Electrical and Computer Engineering at the Georgia Institute of Technology. In that capacity, he serves as the chief academic officer of the college and provides leadership to over 400 faculty members and to more than 13,000 students. The College of Engineering at Georgia Tech is the largest producer of engineering graduates in the United States. In the most recent rankings by U.S. News & World Report, Georgia Tech’s engineering program ranked fourth.

Prior to his current appointment, Dr. May was the Steve W. Chaddick School Chair of the School of Electrical and Computer Engineering at Georgia Tech. At the conclusion of his leadership in 2011, graduate programs in electrical engineering and computer engineering each ranked sixth, the computer engineering undergraduate program also ranked sixth, and the electrical engineering undergraduate program ranked fifth. All of these rankings represented the highest in the history of the School up to that point.

Dr. May’s field of research is computer-aided manufacturing of integrated circuits. He has authored over 200 technical publications, contributed to 15 books, and holds a patent on that topic. He has also participated in the acquisition of over $49 million in research funding, and he has graduated 20 Ph.D. students. In 1993, Dr. May was named Georgia Tech’s Outstanding Young Alumnus, and in 1999, he received Georgia Tech’s Outstanding Service Award. Dr. May has won two international Best Paper awards from IEEE Transactions on Semiconductor Manufacturing (1998 and 2000). In 2004, Dr. May received Georgia Tech’s Outstanding Undergraduate Research Mentor Award, as well as the Outstanding Minority Engineer Award from the American Society of Engineering Education. In 2006, he received the Mentor Award from the American Association for the Advancement of Science (AAAS). In 2010, he was named the Outstanding Electrical Engineering Alumnus of the University of California at Berkeley. Dr. May is a Fellow of the AAAS and the IEEE.

Dr. May created the Summer Undergraduate Research in Engineering/Science (SURE) program, for which he has been granted $3M from the National Science Foundation (NSF). SURE annually hosts minority students to perform research at Georgia Tech in the hopes that they will pursue a graduate degree. More than 73% of SURE participants enroll in graduate school. Dr. May was also the co-creator/co-director of the Facilitating Academic Careers in Engineering and Science (FACES) and University Center of Exemplary Mentoring (UCEM) programs, for which he has been granted over $17M from NSF and the Sloan Foundation to increase the number of underrepresented Ph.D. recipients produced by Georgia Tech. Over the duration of FACES, 433 minority students have received Ph.D. degrees in science or engineering at Georgia Tech – the most in such fields in the nation. As a result of these efforts, Dr. May received the Presidential Award for Excellence in Science, Mathematics and Engineering Mentoring from President Barack Obama in 2015.

Dr. May is a member of the Board of Directors of Leidos, Inc., as well as Executive Vice President of the National GEM Consortium and a member of the National Advisory Board of the National Society of Black Engineers.

Dr. May received his B.S. in electrical engineering from Georgia Tech in 1985 and the M.S. and Ph.D. degrees in electrical engineering and computer science from the University of California at Berkeley in 1988 and 1991, respectively.

Dr. May, a native of St. Louis, Missouri, is married to LeShelle R. May. They have two daughters, Simone and Jordan (ages 20 and 18, respectively). 

Monday, March 9, 2015

Oppressive Government

From The Way the World Works :

In Durant's The Complete Story of Civilization he recounts a tale from the life of Confucius that marvelously equates voting and migration:
Returning to Lu, Confucius found his native province so disordered with civil strife that he removed to the neighboring state of T'si, accompanied by several of his pupils. Passing through rugged and deserted mountains on their way, they were surprised to find an old woman weeping beside a grave. Confucius sent Tsze-loo to inquire the cause of her grief. "My husband's father" she answered, "was killed here by a tiger, and my husband also, and now my son has met the same fate." When Confucius asked why she persisted in living in so dangerous a place, she replied; "There is no oppressive government here." 
"My children," said Confucius to his students, "remember this. Oppressive government is fiercer than a tiger."


Saturday, February 21, 2015

Don't Pay the Teachers, Compensate Them

In complex issues, simplification is common but improper. On the issue of what teachers are paid, it is a gross over-simplification to focus on their salaries. Yet that is all anyone ever talks about. I try to point out this flaw in a recent letter.

Dear Editor:
Friday's MDJ reported on the level of salary for some Cobb County school teachers and compared those salaries to what is offered in other area school districts. Although I have sympathy for the idea we should pay our (Cobb) teachers more, there are three key concepts missing from this discussion.
First, the focus of the discussion centers on salary, instead of total compensation. A proper analysis would measure all the ways a teacher is compensated. This would include other monetary factors such as paid time off, insurance benefits, and, importantly, retirement compensation (pension, insurance, etc). This would also include non-monetary compensation, such as work environment (class size, safety, quality of students, facilities, quality of co-workers and supervisors, opportunities for advancement, etc.). And a proper comparison would take into account the cost of living. Just as a teacher in Wyoming can live an equivalent lifestyle on less compensation than one could accept in metro Atlanta, teachers in Cobb enjoy a lower cost of living than many surrounding areas.
Second, the analysis should include some comparison to other available jobs, not just teaching jobs. Could a recent graduate with an education degree earn more or less in other professions? And if the district's goal is the pay enough to hire the best, shouldn't it pay enough to be competitive with other industries?  Is the goal to hire the best math teacher or the best mathematician; the best science teacher or the best scientist?
Third, it appears the analysis treats all employees at a given level as identical. In many other professions, employers pay varying amounts even to rookie employees based on many factors. Perhaps if the system had flexibility to pay those with better resumes more money, the district could hire better employees without a significant increase in total cost. I understand there maybe collective agreements prohibiting this, but it should be acknowledged these practices are sub-optimal.
Russ Wood
West Cobb

Monday, February 16, 2015

PieFarmer Podcast Episode 1 - John Loud of Good for Cobb

Edit: I think the sound issues are finally fixed acceptable. 

It's official, the internet has reached the point of absurdity. I now have a podcast, making me one of the last 100 folks on earth to do so.

Anyway, I like to talk economics, and this is just a way for me to talk with interesting people who might not otherwise take my call. My original objective was to do a small series on Classical Economics. I've decided instead to add local economic issues and conversations. 

My first episode fell into my lap, when several folks I know launched a new advocacy group. I was able to speak with their Co-Chair, John Loud about their group, Good for Cobb, and about economic development at the local level. John is founder of Loud Security.

I have a voice built for pantomime, and my editing skills are poor, but here's my first effort. I don't have any specific timeline for the next one, but several are in the works. 

Please note, I used three pieces of music to spice up the podcast. All three works are by the artist  And Other Things and are licensed under a Creative Commons Attribution 3.0 Unported License.  (CC) 2006-2013. I found the music at Opsound.

Lara Lay is used in the open, MIMO is used after my introduction, and Just Like You ends the podcast.

You can find more works by And Other Things at

To hear the podcast, use the player below. You can download the MP3 here.

 Time Stamps:
00:30 Welcome and Introduction
03:35 Interview with John begins
08:20 John's take on the local economy
11:50 How Good for Cobb emerged