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Richard Florida quotes Scott Page (The Difference) on the causes of innovation (paraphrased by me):

If you want to know where innovation comes from, you have to understand cognitive diversity - cognitive diversity is critical for innovation. And an easy route to cognitive diversity is through demographic diversity - diversity in ethnicity, nationality, place of birth, gender, sexual orientation, age groups. Benefits from such result in the clustering force.

Most of the people I know who criticize the paternalistic policies of modern Asian nations are bent on replacing that paternalism with another paternalism of their own design. Pluralism requires a bigger cognitive jump, I think.

At 53:30, Florida explicitly mentions the missing element in trying to create Silicon Valleys by combining universities and venture capital - you are still missing the tolerance for diversity, which is left out because of its subversive potential.

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Diversity is not all good, however - according to Robert Putnam (KSG), there is evidence that diverse neighborhoods exhibit more social isolation. That study is consistent with "Who's Your City" in determining a positive correlation between diversity and creativity/economics, but finds that social trust is lowered by diversity.

Went to Ikea today. Ikea really supplies from many countries - the labels I read had China, USA, Israel, Indonesia, Bangladesh, Thailand, Portugal, Spain, Italy... and probably more that I have forgotten. I had a fun time running around and guessing before looking.

After listening to this podcast and reading the associated article, I think I finally understand the difference between political and free market competition. The issue clarified was rent seeking, both how it is defined and why it is harmful. Robert Tollison, an American economist who specializes in public choice theory (wikipedia):

Rent seeking is the expenditure of scarce resources to capture an artificially created transfer.

Basically, it is harmful to give things away for free. This is because people will compete to influence your choice (of who to give to), but since you refuse to accept money, they will spend on things which do not increase your ability to conjure up more of the supplied good, e.g. a more convincing proposal or a more extravagant charity event. The surplus from the exchange is thus partly dissipated away. This type of behavior is known as rent seeking.