Joe: For decades, the story was simple: jobs went overseas for cheap labor, and the West's industrial heartlands rusted over. Well, that story is now officially out of date. The most potent economic threat to a factory in China might just be a startup in Akron, Ohio. Lewis: Hold on, Akron, Ohio? Seriously? I thought the story was pretty much written on places like that. Great in the 50s, but now... it's the 'rustbelt' for a reason. What could possibly be happening in Akron that would scare a global manufacturing hub? Joe: That's the exact question that sets up the book we're diving into today: The Smartest Places on Earth: Why Rustbelts Are Becoming the Innovation Hotspots of the 21st Century, by Antoine van Agtmael and Fred Bakker. It’s a book that completely flips the script on what we think we know about globalization. Lewis: Now that you mention it, that first author’s name, van Agtmael, rings a bell. Wait a minute… isn't he the guy who literally invented the term 'emerging markets' back in the 80s? Joe: That's him. The ultimate irony, right? The man who gave Wall Street the language to describe the massive economic shift away from the West is now the one announcing its powerful return, but in a completely new form. He spent his career convincing people to invest in places like Taiwan and Brazil, and then something happened that made him turn his attention back home. Lewis: Wow. Okay, that’s a hook. When the prophet of emerging markets starts telling you to look at the rustbelt, you listen. So what did he see? What was the moment that changed his mind?

Joe: It started with a conversation that shouldn't have happened. In 2012, van Agtmael is traveling through Asia, doing what he does best—taking the temperature of the global economy. He sits down with David Ku, the Chief Financial Officer of Mediatek, a massive Taiwanese company that designs the chips in millions of smartphones. Lewis: Right, a classic 'emerging market' success story. A company that thrived in that world van Agtmael helped define. Joe: Exactly. So Antoine asks him the standard question: "What are your biggest challenges? Who are you worried about?" He's expecting to hear about some new, hyper-competitive rival from Shenzhen or another part of China. But David Ku gets this worried look on his face and says something stunning. He says, "We are facing much stronger American competition again." Lewis: From America? In 2012? That’s not the answer anyone would have expected. Who was he talking about? Joe: He named a company called Qualcomm, based in the U.S. And the reason he was scared wasn't about price. It was about something much more fundamental. He told van Agtmael, and I'm quoting here, "Their R&D is so advanced, so far ahead of ours... They can easily squeeze us." Lewis: Whoa. That’s a total reversal of the narrative. The whole point of offshoring was that the West had the ideas, and Asia had the cheap, efficient manufacturing. But this CFO is saying the American ideas are now the unbeatable weapon. Joe: Precisely. It was a lightbulb moment for van Agtmael. He realized the game was changing. The competitive advantage was no longer about who could make things the cheapest. Cheap labor was becoming a commodity. The new frontier, the new competitive edge, was who could make things the smartest. And that, he discovered, was happening back in the very places everyone had written off. Lewis: So this is the birth of the 'brainbelt' idea. It’s not about bringing back the old, dirty factories of the 20th century. It’s about creating something entirely new on top of the ruins. Joe: You've got it. A brainbelt is a region that transforms its industrial legacy into a collaborative ecosystem. It’s where universities, government, big corporations, and scrappy startups all get together to solve complex problems. They stop guarding their secrets and start what the authors call 'brainsharing'. Lewis: 'Brainsharing' sounds a little like a corporate buzzword from a bad team-building retreat. What does it actually mean in practice? Is it just people having coffee and talking about big ideas? Joe: It’s much more structured than that, and it often requires a catalyst. It's about creating a physical and cultural space where a scientist from a university can work directly with an engineer from a corporation and a programmer from a startup, all on the same problem. And that leads us to the perfect example of how you build one of these from the ground up.

Lewis: Okay, I'm ready for it. 'Smart innovation' is a great phrase, but it still feels a bit abstract. What does one of these 'brainbelts' actually look like? How do you build one, especially in a place that's been economically devastated for decades? Joe: You go to Akron, Ohio. In the mid-20th century, Akron was the undisputed "Tire Capital of the World." It was home to giants like Goodyear and Firestone. It was a classic American manufacturing powerhouse. Lewis: And we all know how that story ends. The industry declined, and the jobs went elsewhere. A classic rustbelt story. Joe: A brutal one. The city was hollowed out. But then, in 1999, a new president takes over at the University of Akron. His name is Luis Proenza, and he is the perfect example of what the authors call a 'connector.' Lewis: A connector. So, a leader who brings everyone together? Joe: More than that. A connector is someone with a vision who can persuade people from totally different worlds—skeptical academics, profit-driven business leaders, and cautious politicians—to trust each other and work together. Proenza looked at the wreckage of the tire industry and saw a hidden asset: decades of deep, world-class knowledge about polymer science. Rubber, plastics, advanced materials—it was in the city's DNA. Lewis: Ah, so he didn't try to turn Akron into something it wasn't, like a financial hub. He found the unique strength that was already there. Joe: Exactly. He created what he called the 'Akron Model.' He declared that the university would no longer be a closed-off ivory tower. It would become an open-source engine for the entire region's economy. He tore down the walls between the university and the city, building a new research campus focused on polymer science and inviting companies to set up shop right there, working alongside the professors and students. Lewis: That’s a radical idea for a university. They’re usually very protective of their research. Joe: It was. And it worked. The university became the hub of a new ecosystem. Startups began to pop up, founded by former tire industry engineers who now had a place to apply their skills to new problems—medical devices, advanced coatings, new types of plastics. Big companies came to tap into the research. Lewis: And the outcome? Joe: The book reports that over 1,000 new companies emerged in the area. And here's the kicker: those new companies eventually employed more people than the four big tire companies had during the region's manufacturing heyday. Akron had transformed from a rustbelt into a brainbelt. Lewis: That is an incredible turnaround story. It really does sound like it all hinged on that one visionary guy, Proenza, the connector. Is that the secret ingredient? One person with a powerful idea? Joe: He was the spark, for sure. But the fire caught because the whole community—the university, the local government, the entrepreneurs—bought into this idea of 'brainsharing.' They created a culture of trust and collaboration that was more powerful than any single company. But you're right to ask the next question: what are these people, in Akron and other brainbelts, actually making?

Lewis: Exactly. So you have the ecosystem, the collaboration, the brainsharing... but what does a 'smart factory' in a brainbelt actually produce that's different from the old factories? What does this new kind of manufacturing look like on the ground? Joe: This is where it gets really cool. The authors define 'smart manufacturing' as the fusion of digital technology with the physical world. Think robotics, 3D printing, and the Internet of Things, all working together. And the best way to understand it is through another story, this time about a robot named Baxter. Lewis: Baxter. I'm picturing a giant, menacing arm from a car factory. Joe: Think the opposite. Baxter was developed by a Boston-based company called Rethink Robotics, which is located in another brainbelt. Baxter isn't a huge, million-dollar machine that needs to be kept in a cage. He's a human-sized robot with two friendly-looking arms and, get this, an animated face on an iPad screen that shows what he's thinking. Lewis: An iPad for a face? Okay, that's definitely not the old model of industrial robot. What does he do? Joe: He's designed for small and medium-sized businesses. He's cheap—costing about as much as a worker's annual salary—and you don't need a PhD in computer science to program him. You literally grab his arm, show him the motion you want him to do, and he learns it. He can do simple, repetitive tasks like packing boxes, sorting parts, or tending a machine. Lewis: A robot for the little guy! That's fantastic. So the goal isn't to replace all the human workers, but to give them a tool that lets them compete with the giant, fully-automated factories overseas. Joe: You nailed it. It’s about augmentation, not just automation. A small company in Ohio can now use a Baxter robot to handle the boring stuff, freeing up their skilled human workers to do the more complex, creative problem-solving. It allows them to produce high-quality, customized products right here in the US, efficiently and affordably. Lewis: And I assume this connects to the other technologies, like 3D printing? Joe: Absolutely. With 3D printing, that same small company can design and print a custom part in a few hours, instead of waiting weeks for it to be shipped from a supplier overseas. And with the Internet of Things, all these machines—the robot, the 3D printer, the milling machine—are connected, talking to each other, monitoring their own performance, and even predicting when they'll need maintenance before they break down. GE's chief economist called it the 'Industrial Internet,' saying it makes machines "not intelligent, but brilliant." Lewis: It’s a complete paradigm shift. Manufacturing is no longer about a long, slow, global assembly line. It's becoming local, fast, intelligent, and incredibly flexible. Joe: That's the revolution. It’s the engine that powers the entire brainbelt concept. It’s why a company in Akron can now out-innovate a competitor halfway around the world.

Joe: So when you put it all together, you see this incredible story unfold. First, there's the great reversal—the surprising shift in global competition from cheap to smart, signaled by that worried CFO in Taiwan. Lewis: Then there's the secret sauce for how to capitalize on that shift—building a brainbelt through collaboration and visionary connectors, just like they did in Akron. Joe: And finally, there's the engine that drives it all—smart manufacturing, with tools like the Baxter robot, that empowers local businesses to create the innovative products of the future. Lewis: You know, the big takeaway for me isn't just about economics or technology. It feels like a more hopeful story about community and place. The old model of globalization was about disconnection—breaking up the process, offshoring pieces of it to wherever was cheapest, and hollowing out communities in the process. Joe: That’s a great way to put it. It was a model based on fragmentation. Lewis: Right. But this new model, the brainbelt model, is the exact opposite. It's about reconnection. It’s about bringing the university, the factory, the startup, and the local government back together, in the same physical place. It's about rediscovering the immense value that comes from proximity, trust, and collaboration. It’s about realizing that the smartest place on earth might just be your own hometown, if you can get the right people in a room together. Joe: It's a profound shift in thinking. The book got mixed reviews, with some critics saying it's a bit too optimistic and that not every city can be an Akron. And that might be true. But the core principle is powerful. It makes you wonder, what forgotten strengths exist in our own communities? What unique knowledge is hiding in our local universities or in the minds of retired factory workers? Lewis: What could we build if we started sharing our brainpower instead of guarding it? That's a powerful question. And it makes me curious about our listeners. What's happening in your town or city? Do you see signs of a 'brainbelt' emerging? Are there connectors trying to bring people together in new ways? We'd love to hear about it. Joe: This is Aibrary, signing off.