Competitive Advantages - Recruiting
August 24, 2018 (pseudopolis)
The key hurdle to overcome is that a city needs to recruit inhabitants and businesses. There are strong network effects, which make bootstrapping in competition with existing cities difficult. It will largely be a game of financially incentivizing early adopters, either directly or indirectly. However there are also some key advantages that are important to note.
The first advantage is that recruiting is simply more straightforward for Pseudopolis. If a traditional city wants to attract any particular people or businesses, it has to be done indirectly - for example, figuring out how to provide a set of tax breaks that entices some relevant industry. They’re also constrained with what usages of public money will be accepted by voters. In contrast, Pseudopolis Corp can just directly provide free offices, or even straight-up cash. And since it’s Pseudopolis Corp’s money, there’s no need or reason to answer to voters over how it’s spent. Another example would be offering free houses specifically to desirable individuals with good careers and income - something that would never fly in a traditional city. This flexibility is a huge advantage.
The second advantage is that Pseudopolis Corp is better able to capture the value generated from recruiting and growing the city. This is analogous to the point with infrastructure projects. If a company moves in and starts attracting workers, that value won’t be soaked up by whoever happens to own property nearby - it will be soaked up by Pseudopolis Corp, because Pseudopolis Corp is the landowner. That means that not only does Pseudopolis Corp have the practical means to outbid traditional cities, it also has more reason to because the equivalent investment will return more money.
A third advantage is that Pseudopolis Corp can bootstrap by itself being a major employer in the early days. In the long term network effects and third parties will dominate the economy, but in the short term, a huge part of what’s going on will be building the city itself - and the people doing it may as well be the first people to live there.
A fourth, one-time advantage is in choosing a location. Cities can’t move, so this is impossible to retrofit into any existing city. When choosing a location, there is an opportunity to seek some particular advantages - for example, a particular climate or a low-tax jurisdiction.