Creative Class

A new study (h/t: Kevin Stolarick) by Stat Can’s Desmond Beckstead, Mark Brown and Bruce Newbold finds that people with university degrees are not only more prevalent in big cities, they are growing more rapidly there.  The study also finds that:

high rates of degree attainment across urban
populations are related to both the ability of large cities to attract degree
holders and higher rates of degree attainment in large cities … The relatively high rate of growth
in university degree holders in cities has stemmed from net migratory flows. But
the more dominant force has been the higher rate of degree attainment within the
cities themselves.

Karin Fisher has this detailed report on partnerships between how smaller colleges and their communities in the Chronicle of Higher Education:

Old mill towns and declining manufacturing centers, in the Rust Belt’s
former company towns and in the rural South, small, private liberal-arts
institutions like King’s are assuming a greater responsibility for community and
economic development. They and their alumni are raising money to purchase
abandoned buildings. They are relocating college facilities, like bookstores and
residence halls, to buoy up urban cores. They are working to better connect
faculty experts with local entrepreneurs …

But unlike research universities and land-grant institutions, which have long
viewed regional economic development as central to their missions, most
liberal-arts colleges are relative newcomers to this work, and they face real
constraints. In contrast to powerhouse institutions like the University of
Pennsylvania, which is largely credited with remaking West Philadelphia, these
smaller colleges may not have the wealth to make upfront investments or to
absorb the risk incurred in such deals.

The modest size of their endowments … mean that money spent on community projects must also benefit those on the campus. Faculty members are often expected to carry heavy teaching loads, leaving them with little time or inclination to engage in economic-development
efforts. In addition, small colleges typically lack the administrative structure
to support such efforts.

Harvard’s Greg Mankiw writes in response to proposed plan by Massachusetts
to impose a 2.5% annual tax on college endowments that exceed $1
billion.

If this were to pass, here is what I would consider:

1.
Instead of expanding the university into Alston, Harvard could create a
second campus in another state. Call it Harvard South. (Put it in a
better climate than Boston, and I would be one of the first faculty to
volunteer for the move.)

2. Transfer much of the endowment to Harvard South. Support Harvard North by slowly selling off land in Massachusetts.

3.
Eventually, make Harvard South the main campus, and Harvard North the
satellite. If Massachusetts state lawmakers remain hostile, close
Harvard North down entirely.

I have often wondered what the
efficient scale of a university is and, in particular, whether it would
be better to create a second Harvard with the university’s wealth than
to expand the first one. Maybe the Massachusetts state legislature will
give the powers-that-be at Harvard an incentive to consider more
radical expansion plans.

And if states and cities are willing to pony up billions for convention centers and stadia, and hundreds of millions in industrial incentives for factories, how much do you think they much come up with for a Harvard, or MIT, or Stanford, or Oxford relocation. Universities are already setting up foreign campuses. Trust me, it’s just a matter of time until this game gets big.

Harvard macro-economist, Greg Mankiw growing economic inequality and its causes in the NY Times (pointed from Mark Thoma):

The best data on the superrich comes from Thomas Piketty … and Emmanuel
Saez… They report that … the superrich have been getting an increasing slice
of the economic pie. In 1980, the top 0.01 percent of the population had 0.87
percent of total income. By 2006, their share had more than quadrupled to 3.89
percent, a level not seen since 1916 …

Also, the trend toward increasing inequality has been fairly steady, despite
changing political winds. The income share of the richest families increased
substantially both during Ronald Reagan’s eight years in office and during Bill
Clinton’s.

The best diagnosis so far comes from … Claudia Goldin and Lawrence F.
Katz… Their bottom line: “the sharp rise in inequality was largely due to an
educational slowdown.” According to Professors Goldin and Katz, for the past century technological
progress has been a steady force not only increasing average living standards,
but also increasing the demand for skilled workers relative to unskilled
workers. …

But recently things have changed. Over the last several decades, technology
has kept up its pace, while educational advancement has slowed down. …

While education is the key to understanding broad inequality trends, it is
less obvious whether it can explain the incomes of the superrich. Simply going
to college and graduate school is hardly enough to join the top echelons…

Education can explain part of growing inequality: the fact that a household of two college-educated earners has gained considerably on a family of one blue-collar breadwinner or two service-economy workers. It explains the growing economic distance between the Northern Virgina suburbs and say western Pennsylvania. But it does not explain the difference between Central Park West or the Upper West Side in Manhattan, Beverly Hills or Malibu in greater LA, and Palo Alto and the upscale suburbs of Silicon Valley and everywhere else. The fact of the matter remains that a significant percentage of the self-made richest people in America and around the world do not have college degrees, Bill Gates being the most obvious case in point. So what accounts for the incredibly rising tail of the income distribution – the fact that Bill Gates and company are so much richer than a family with two college-degree wage earners? Education fails to explain this.

Periods of economic transformation, like the one we are going through from the industrial to the creative economy, or from agriculture to industry a century or two ago, are marked by rising economic inequality.  The reason is that the mechanisms for generating wealth change dramatically during such periods. MIT economists Frank Levy and Peter Temin make the important point that a key reason for rising economic inequality is the breakdown of old institutions (the New Deal broadly construed) that mitigated economic inequality.

But what most ignore is that the basis for economic wealth-creation and thus inequality have shifted massively today. That’s Mankiw’s main point, really – the massive growth not in the upper-middle class or even the growing numbers of “millionaires” but the incredible growth in the distance between the super-rich and everybody else.

In today’s idea-driven, creative economy super-wealth comes increasingly from control over royalties derived from specialized intellectual property in one from or another (new technology, new forms of entertainment, new investment vehicles and so on). And it is the growing distance between those at the commanding heights of the royalty economy and the rest of us who derive income from wages that is a key dimension of growing economic inequality.

In my view, the key to mitigating economic inequality rests on a two part strategy. On the one hand, new institutions are needed that can generate less skewed distribution of the proceeds from royalties. On the other new mechanisms will have to be found to increase the earnings of those at the very bottom by improving the productivity and in turn the wages, benefits and working conditions of those who work in the low-wage service economy (as was done in the previous era for blue-collar work).

Your thoughts.

In early March, under the leadership of SOCHE, Richard, Steven, Lou, Rana, and I worked with 32 catalysts in Dayton, Ohio. The energy of the people, the strength of the art community, the leading universities, and the culture of innovation (from the Wright Brothers to Wright-Patterson) made for an exciting couple of days.

I recently came across a great example of the Dayton’s creative assets in action. This article from the University of Dayton highlights the winner of their recent business plan competition.

From the piece:

Salud del Sol, an innovative new business from a team of University of Dayton
students aimed at bringing the ‘health of the sun’ to medical treatment
in developing countries, took home the $10,000 first prize to help get
the venture off the ground.

Winning the 2008 University of Dayton Business Plan Competition, the team of
Lauren Dokes, Lori Hanna, Daniel Hensel and Anna Young
created a business plan to develop and market solar cookers and
solar-powered sterilizers.

Salud del Sol tapped other expertise at the University including
engineering, international development and social entrepreneurship,
according to project member Lori Hanna, a mechanical engineering major.
The project – the basis of her senior honors thesis – grew from an
internship in rural Nicaragua through UD ’s Engineers in Technical
Humanitarian Opportunities of Service-learning (ETHOS) program.

“Nurses have to travel to bigger health centers or hospitals to use
sterilizers, sometimes traveling long distances by bus and spending
precious time and money to have access to the equipment,” she said.

This type of social entrepreneurship is becoming more and more of a calling card/career choice of members of the creative class and places that offer combinable creative assets – including universities, mega region/international linkages, entrepreneurial institutions, and scientific talent – will see sustainable growth and improvements in quality of place.

Dean Dad is an academic and blogger who’s just read Who’s Your City? He’s well-aware of the trade-offs between the energy of spiky places and the lower living costs and availability of academic jobs in other areas.

Any advice on where he should go – or how to manage these trade-offs?

Dean Dad writes:

The conceit of the book seems to be that once you understand what goes into
making an area hot or cold, you can use that information to locate yourself
where the action is likely to be. Better life options, real estate appreciation,
and general coolness await those who correctly spot the next Seattle. To that
end, the book includes a series of (admittedly nifty) maps, and several top-five
lists broken down by stage of life and sexual preference …

As an academic, though, there was something both
frustrating and troubling about the whole enterprise. As Florida acknowledges in
passing, certain professions aren’t particularly place-specific. Education,
health care, and law enforcement, for example, can be found pretty much anyplace
you find a significant number of people. In higher ed, below the superstar
level, many of us take jobs where we can find them. When a relatively flat
national market confronts a ’spiky’ economic landscape, you have a choice: have
decent purchasing power in an out-of-the-way or out-of-fashion place, or
struggle mightily somewhere where other people are in hot industries. Buy in a
cold area, or rent in a hot one.

The top R1 universities can pay top dollar to lure
superstars despite the price of housing in, say, Berkeley. But that’s a very
narrow segment of the higher ed market, even though it gets most of the
attention. Community colleges, for example, can be found in all sorts of
communities, both hot and cold. And most of them define part of their mission as
serving the community in which they’re located.

If the community seems to be in decline, should
part of the mission of the cc be to facilitate individual escape? Given
Florida’s correct insight that age-based losses are hard to recoup, doing right
by individual students could have the unintended side effect of hastening the
decline of the service area. That’s a tough sell to local taxpayers. “Help us
drain this festering craphole of young talent!” It doesn’t look good on a
billboard.

That’s not Florida’s fault, of course. But the
idea that you should simply go where the action is strikes me as impracticable
for most of us in higher ed, and of dubious wisdom even for those who could. In
my grad school days, I was physically close to a great deal of sophisticated
culture, but couldn’t afford almost any of it. Ever since, I’ve been a little
skeptical of the idea that it’s ‘hot metro region or bust.’ Given the income
scale non-superstar academics face, it seems to me that there’s something to be
said for the cheaper regions. And that would be true of any industry in which
paychecks tend to be modest. Being house-poor (or apartment-poor) in a hot area
renders you unable to take advantage of most of what makes it hot.

Without quite meaning to, I think Florida walked
directly into a really fundamental dilemma: the economic world is spiky, but the
nation-state is flat. The two don’t play well together, and higher ed is just
one sign of that (and a minor one, at that). Self-help is fine, but those best
situated to take advantage of it need it least. There’s a much bigger issue at
hand here. I’m glad Florida did so much to outline the problem. I just don’t
have a clue how to solve it.

DD makes two very important points here. The first one is micro – where
should I go? The second more macro – this spiky world thing is a  big
problem, how do we collectively deal with it.

I think the book shows its worth right
here in the way DD frames his own location problem.  I wrote the book
not just to illustrate the spiky world but to give people – like DD – a
framework with which to understand it, think it through and make the
best possible decision. There is no one best solution, only a series of
real tradeoffs – that DD identifies – facing all of us. I, btw, was in
a very similar place as DD twenty or so years ago during my PhD program
at Columbia.  I never, ever thought I would leave NYC.  But I went to
Buffalo, then Columbus and then Pittsburgh, spending more that two
decades essentially moving for work. My grad school associates who
refused to move from NYC and turned down jobs at midwestern
universities made a different decision and mainly  moved out of
academe.  And after more than two decades studying and also living
through these locational tradeoffs, I believe a book like this one was
very much needed.  Honestly, it seems like DD – as frustrated as he may
be – has used the book more or less exactly as I had hoped.

The second issue, the macro one, I also
tackle in the book and have been discussing here. Try as we might no
individual – and no city – can “solve” the spiky world problem. This is
a national -no, at bottom, it’s a global – problem.  On this level the
book serves as a wake up call: it’s goal is to get beyond flat world
mythology and encourage economic and policy-makers and all of us,
really to look at the world as it actually is. Left to its own devices,
I argue, the world is only going to get spikier. The ambitious and the
resourceful may be able to navigate this spiky terrain, but many, many
more will become stuck. This will lead not just to rising economic and
geographic inequality but rampant political polarization, a greater
cultural divide, increasing fear and anxiety, declining social cohesion
and greater political and social instability. How do we deal with it?
We build institutions to pump up the valleys – this is a core mission
of the Prosperity Institute, and we are working closely with the
Province of Ontario and Toronto region to develop mechanisms to do just
that. If mayors and local leaders are aware of it, why are national and
global leaders literally asleep?

Back to the main point: Anyone have some practical advice for Dean Dad?

David Perry, who gave me my first job as a visiting professor at the University of Buffalo, says universities are reconnecting with their communities (h/t: Kevin Stolarick via Planetizen):

Perry, director of the Great Cities Institute and professor of urban
planning and policy at the University of Illinois at Chicago, … contends universities are undergoing a cultural shift as institutions stop acting like enclaves, reconnect with communities and in the process acknowledge and promote the ability to drive urban development. “It’s a movement that sees a university as a wholly vested urban institution,” Perry said.

More here.

I pushed for this at Carnegie Mellon and written about the need to enable the Michael Dell’s and Bill Gate’s of the world to develop their companies in their dorm rooms rather than have to drop our of school to make their dreams a reality.  The University of Waterloo has done it, by:

giving over one of its residence halls to Velocity, a new incubator where students can collaborate on Web, mobile, and digital media applications with their fellow budding
tech entrepreneurs and perhaps help breathe some life back into the
incubator model …

The renovations will include Wi-Fi access, server
space, increased bandwidth, and a 12-foot projection screen. Each of
the three common areas will be transformed into a necessary space for
the beginner businesspeople, including a mobile device lab and a
corporate-style boardroom for product presentations …

[There will be] a boot camp at the beginning of term where
the students can meet with corporate and consulting entities, checking
out recruitment possibilities and getting real-world feedback on their
ideas. An end-of-the-term symposium allows the residents to present
their offerings. During the term, there will be additional one-day
training sessions with role model types as well. …

To get into the Velocity project, students need to answer several in-depth questions
about their technical and entrepreneurial savvy, and undergo a lengthy
interview … It’s not just the techies who’ve been
angling for a spot in Velocity: “Students from all sorts of backgrounds
have been applying (in addition to computer science and engineering
students), like from arts, environmental studies, mechanical
engineering, sciences, and business” …

A comprehensive review of American education finds that:

[A] record number of Americans are going to university – while an increasing number are dropping
out of high school. This poses major social challenges for the United States.

Not good.

The New York Times reports that Harvard will vote today on providing open and free access to faculty research papers.

“In place of a closed, privileged and
costly system, it will help open up the world of learning to everyone
who wants to learn,” said Robert Darnton, director of the university
library. “It will be a first step toward freeing scholarship from the
stranglehold of commercial publishers by making it freely available on
our own university repository.”

Under the proposal Harvard would
deposit finished papers in an open-access repository run by the library
that would instantly make them available on the Internet. Authors would
still retain their copyright and could publish anywhere they pleased —
including at a high-priced journal, if the journal would have them.

I hope they go for it. The current system is terribly flawed. Right now, it takes a year or more to get a paper through the review process. As many scholars have argued, the peer review process – which has many merits – can be extremely arbitrary.  There are few good standards for reviewing, and reviewers or even editors who don’t take to a subject, idea, or method can reject it more or less out of hand.  Good – and great – papers are frequently rejected, and can take 2 or 3 years or more to find a home.  It’s a tightly-knit guild like system, actually. Supporters will counter that there is a hierarchy of journals, and that publication in higher-rated or top journals reflects better quality.  But this is a hard case to make when so many truly great papers suffered initial rejections.

The sands are shifting right before our eyes.  The best people get their papers out there well in advance of publication in journals.  In economics, groups like the National Bureau of Economic Research have extensive working papers’ series.  Many departments, institutes and research centers have their own working paper’s series.  Otherscholars (me included) make their papers available on their websites.  Often I’ve found the original versions are better, stronger and more tightly argued that the reviewed and revised versions which must deal with a whole slew of (often arbitrary) reviewers’ points.

The simple solution is to just open the process up.  Release papers on-line (with their data sets) and invite other scholars and perhaps interested persons to comment or even rerun and verify the analysis.  The authors can respond on-line and post revised versions of their papers.  Others can continue to comment. This way there is a rolling on-line, published commentary.  The entire process is open and transparent. Good papers – and great papers – will find their path, through citation and reference by other scholars.

Sooner or later the journal system would catch up and compete to lure the best papers.  Instead of authors submitting in advance to journals and having their work bottled up for years, journals would bid on the online papers they want to “publish.”

Like it or not, I am confident this is where the future of scholarship is headed – a more open and transparent open-source system. The sooner the better, actually.