“who are put up cheap”
The whole Shoreditch\Hoxton thing is overrated anyway. There are far more innovative and original companies outside the M25 than in, mostly because any real talent gets tempted away by the City or the media empires, which are only a stones throw away. If you want to set up a proper tech hub, do it somewhere where no one expects, but is reasonably handy. Southend-on-Sea would be my choice, but the Kent town of Margate, Deal, Herne Bay or Hythe are all within an hour of London and cheaper to live and work. Kent is handy for the continent, too.
Because UK students will go on to form part of the British economy and pay taxes that pay for that public infrastructure. It’s a generational thing.
And subsidising startups does make sense because when they grow they too will be able to pay taxes (at least employment taxes, these days corporation tax is a joke) that supports that public infrastructure.
Not all transactions have immediate benefit - something that capitalism is particularly poor at coping with.
The trouble with Margate or any other little Kent towns is that they don’t have a pool of talent there already so they would have to work very hard indeed to tempt startups to set root there. The bigger problem is that once they started growing they would quickly outstrip the local infrastructure and have to uproot and move again.
I disagree. These towns (I’m thinking Southend, really, rather than Kent, but still…) are dormatory towns for London, full of commuters. Give people the excuse not to have to make the long, expensive trip into town and they would have your arm off at the elbow. You could even excuse lower wages on this idea. It cost me £5K a year when I did it, and I gained a fairly low opinion of the commuter species. It just needs backing from local councils and chambers of commerce, backed by the London-based Central Govern… oh yeah, that might be a problem.
British students may go on to form part of the British economy, but they also pay much less tuition. And when they are contributing down the road they will also be consuming government services that international students never will: I don’t think there’s any level of calculus in which international students are contributing less to the economy than British students are.
And the problem with startups is that they almost all fail, and they pay almost nothing in the early stages. The compensation, when it arrives, is likely to be in stock options or another form of capital gains (taxed at lower rates) as those who got in on the bottom floor cash in as the company is bought up by a major player. If growing the income-tax base is really the objective, then encouraging in-house R&D at major companies would probably be a more effective way to do so, as these jobs will start at much higher salaries and be fully taxable. I mean, do you think that, over a 20 year period, the state will raise more income tax from 100 Google/IBM/Microsoft/Apple engineers or from 100 startup employees?
I disagree. If anything startups are one of the best ways of getting money out of the hoarders’ hands and back into circulation. That investment that funds startups is essentially new money back into the economy that would otherwise just sit in a bank and do little more than add kudos to its “owner”.
And you seem to be blind to the irony in including Google (not that long since it was a startup) as well as Apple and Microsoft (still well within my lifetime). Where do you think these big companies come from?
Startups pretty much have to cluster to become successful - Cory makes this point quite explicitly in the column. It’s hard to get people to cluster into a critical mass of “startupness” in Ipswich (no offence to Ipswich or Ipswichians intended) - the supporting resources aren’t there to attract the young, mobile, talentend people who make up startups. In London you have everything from strong cultural industries, universities, through to big business and concomitant startup funding - from angels to venture.
The network effect is critical to startup success.
Sure, they were once startups, but their value as employers comes not from their startup stage but from their post-startup stages. I mean, if they never existed (and I’m pretty sure they don’t owe their existence to the presence of startup-heavy neighbourhoods with subsidized rents) other companies would fill the void. IBM or RCA or GE or something.
I don’t know how this makes sense. It’s not like rich folks are deciding that if they can’t do VC they’re just going to stuff their millions under their bed. They’re still going to invest, just in other vehicles. Apple, Amazon, whatever.
Except that they will invest in property or gilts or other non-productive means to stuff their millions - pretty well the same as stuffing it under the bed. London is particularly suffering the effect of money being parked in property - the money does no good and everyone else gets priced out of the market. The flaw in this form of capitalism is that there is not an infinite amount of land to take up the supply.
Someone with the risk profile to invest in startups is unlikely to consider property as the next-best alternative.
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