September 28, 2010
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Quote of the Day for 28 September 2010
The textures of life that so fascinate dynamists are full of such historical surprises. Consider a strange fact about doughnut shops in California: More than 80 percent are owned by Cambodian immigrants. Doughnuts are not a Cambodian food; indeed, Cambodians don’t even like them that much. But when Ted Ngoy fled to southern California in the 1970s and got a job in a doughnut store, he realized the possibilities. Here was a niche that matched his skills (or lack thereof) and had potential to grow. The business required hard work but little start-up capital and little English. Ngoy soon owned several doughnut shops. He hired and trained many other refugees, who then started their own stores, hiring and training still more immigrants. Over time, the community developed special expertise and suppliers, making it much easier for a Cambodian immigrant to California to get started in the doughnut business than in other ventures. By 1995, Cambodians ran almost 2,500 of the doughnut stores in California. They also expanded the market, giving Los Angeles one doughnut shop for every 7,000 residents—ten times the concentration in Phoenix.The doughnut story is surprising, but not a random accident. It represents a complex order of selection and feedback: A perceptive entrepreneur discovers an opportunity. His knowledge spreads through communal networks, which develop specialized product, labor, and capital sources. More and more Cambodians learn how to make doughnuts, and how to make them well. Competition among shops improves doughnut quality, and the mere presence of so many stores reminds potential buyers of their product, leading to more sales. This legacy, an example of what economists call “path dependence,” does not keep non-Cambodians from owning doughnut stores or block Cambodian immigrants from other businesses. It was not predetermined, nor does it guarantee any particular future. But it makes some choices more likely than others.
– Virginia Postrel, The Future and Its Enemies: The Growing Conflict Over Creativity, Enterprise, and Progress, pp.49-50
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