I live in Greenfield, Massachusetts, which due to poor planning and bone-headed decisions by town government a couple decades or so ago, is a little bit of the rust belt in New England. But it wasn’t always so! In 1912, I’m told, Greenfield had the highest per capita income of any town in the U.S., due to the highly skilled blue-collar and professional workforce associated with the cutting tool industry here.
This afternoon my wife and I spent several enjoyable hours at The Museum of Our Industrial Heritage, which chronicles the cutting tool industry and its central role in opening the West in the early 19th century through its role in winning World War II (I had no idea my home town played such a critical role in that war). What was perhaps most interesting was the map of the relations between the various companies in that industry that grew out of one another over the years. A group of talented engineers in one established company would get a bright idea, work on their own time to perfect it, attract capital, and then open their own cutting tool company down the street. This scenario played out time after time for generations. That sounds like Silicon Valley today, and it’s not exaggerating at all to say that little Greenfield was the Silicon Valley of its day.
The lesson in seeing how industries have always innovated and grew is that we don’t want to lose that ability. Capitalism is a messy thing—it has aptly been called a process of creative destruction—but its very messiness is one of its chief virtues. Whether innovation in the industries on the horizon means a couple people in a garage starting a new firm with $10,000 of their own money, or a couple hundred people starting a new company with a billion dollars in venture capital, the ability of capital and people to flow to innovative new ideas must not be impeded.
As the nature of our economy evolves and changes, that is one thing that we must preserve, and take great care not kill with regulatory, political, bureaucratic, or legal impediments.
