Circulate on Fridays: Cities will dictate the future and too much finance!
Welcome to another edition of Circulate on Fridays, where we bring you our weekly selection of circular economy related articles, videos and more to consume during your weekend. Today, we’ve picked out a piece from The Economist, which looks at the importance of balance in the financial sector, we’ve also got articles claiming that it will be cities and not countries that dictate the future, and a focus on the challenges of being a start-up in the increasingly brutal on-demand economy.
Are cities more important than countries?
Is the probability of London separating from the rest of the United Kingdom at some point in the future impossible? Maybe not according to Fast Co-Exist’s Ben Schiller, who has analysed the growing economic, social and philosophical divides between city and rural residents in North America and Europe. He argues that cities actually have a longer established history as points of power, compared with the the 19th century emergence of the nation state. Indeed, following the Brexit vote, one in six Londoners supported independence from the UK. While this could be seen as a somewhat emotionally led poll at the time, it is interesting to note that London actually has more wealth and infrastructure than Scotland. With around 60% of the global population predicted to live in urban areas by 2050, this article perhaps emphasises the importance of the questions being asked about the future of cities.
Growth and the financial sector
Concerns about the financial services and the potential negative impact on the “real” economy are increasingly being backed up by hard data. Stephen Cecchetti and Enisse Kharroubi have convincingly argued that growth in the finance sector does not have a positive impact on the rest of the economy, both in terms of wealth and employees, especially if out of proportion with what’s happening in the productive sector. This is a bit of golden oldie from The Economist, but it continues to be a critical topic in debates about the future of the global economy.
Another “Uber for X” folds
There’s a lot of talk about the success (at least in terms of exponential growth) of Uber and Airbnb, but for every success story, there are plenty of examples of start-ups that fail and the new on-demand economy is a difficult place to find success. In an article for Vanity Fair, Maya Kosoff tells the story of Washio, a start-up that picked up dirty laundry and returned it to customers clean and folded. The company raised over $16 million in venture capitalist funding in just three years and generated millions in revenue, but ultimately shut down its operations at the end of August. It isn’t a particularly unique story for an on-demand app-based company, in fact even Uber is still reportedly losing significant amounts of money. These kinds of businesses simply aren’t automatic moneymakers and have very low margins, especially early on. Kosoff concludes that investors are becoming more and more cautious with these kind of on-demand start-ups, which could have significant implications for the future of these emergent models.