To create the new jobs needed in our nation, and make sure our world-leading creativity and innovation ends up creating new businesses, we need deeper pools of venture and early stage capital.
Nowhere are jobs needed more than in the Midwest manufacturing belt. A recent Brookings Metropolitan Policy Program report authored by Cleveland’s Frank Samuel suggests how we might better link new technology discovery going on in the ‘Rust Belt” to new firm creation. It turns out the industrial heartland reaching from Minneapolis, Milwaukee, and St. Louis in the west to Cleveland, Pittsburgh and Buffalo in the east produces on metrics associated with innovation: 33 percent of all national R&D, 35 percent of all nationally competitive National Institute of Health (NIH) grants; 30 percent of all U.S. patents awarded; and educating 36 percent of all U.S. scientists and engineers.
However only 12 percent of the nation’s venture capital gets invested in the region to convert technology discovery to new firms and jobs Even more disturbingly, the Rust Belt’s deep pockets in terms of sizable state and local pension funds that do put money into VC, are essentially sending it to the coasts. Fully 47 percent of the nation’s public pension fund venture money comes from the Rust Belt--but only 13 percent of that money is reinvested in Great Lakes region commercialization.
This dearth of early stage capital is not just a regional problem--but one of national significance--and a threat to the U.S. position as the world’s innovation engine.
This is the opening shot of The Picture--my new, biweekly column. I’m not planning to restrict myself to the visual arts here, although they will certainly be a central concern. I want to range more widely than I have in the past, writing about the interlocking worlds of books and pictures and culture that are my lifeblood, my passion. I may describe a forgotten novel that I picked up in a secondhand bookstore. Or salute the life and work of a friend who’s not around anymore. From time to time, I'll dedicate a column to a painting that's excited me in a museum in Milwaukee or San Francisco. But I may also want to say something about a movie or praise an actor's performance. I’m certainly going to discuss the perilous state of our print media world. And comment on any other aspect of the cultural universe that annoys the hell out of me. I hope that The Picture will become a chronicle of one critic’s works and days.
Has everybody forgotten that the arts are recession proof? Yes, of course, revenues shrink, contributions dry up, and expenses continue to rise. Those are the problems that numbers crunchers are put on earth to deal with. But the arts—the play of the imagination, the need for this parallel universe with its dream logic and its moral reverberations—are not affected by shifts in the housing market or the Dow. The value of a painting has never been established at auction. The power of a novel has never been determined by the advance the author happened to receive or by the number of copies that eventually sold. The greatness of a theatrical production has nothing to do with how many people attend. Dancers who can barely make their rent go on stage and give opulent performances. Poets, with nothing but a pencil and a piece of paper, erect imperishable kingdoms. And there are millionaires who chose to live with the barebones beauty of a Mondrian or a Morandi.
So the White House has finally announced the full list of where that $8 billion in stimulus money for high-speed rail is going. Here are the two big, headline-grabbing projects:
As January comes to a close, it’s safe to say that it’s been a rough first year for the Obama administration. On the right, he is hammered for being a big government liberal, and on the left for being too cozy with big business and Wall Street (and don’t forget the two wars). Yet, there is at least one realm where the administration has received rather broad support, and deservedly so: education policy.
With the first round of competitive grant applications due earlier this week, the “Race to the Top” program will give states grants for implementing positive reforms like allowing charter schools to be created at all, or more easily, or be funded at parity with non-charter schools. The National Alliance for Public Charter Schools has endorsed the plan, as have leading policy experts.
Unsurprisingly, it has drawn the ire of an interest group that the Obama team is wont to placate in other circumstances--teachers unions. They resent that charter school teachers and administrators are not subject to the same restrictions and pay as contracted unionized teachers. Unfortunately, any system which pays based on seniority rather than talent discourages the latter. This isn’t just an abstract hypothesis; rather it is the conclusion one reaches when reading the work of one of the most talented economists and education experts in the country: Caroline Hoxby.
Hoxby is famous for demonstrating that competition increases educational performance. In a more recent paper, she finds strong evidence that teachers’ unions have led to a perpetual loss of talent in the teaching profession by compressing wages and driving away many skilled people, who find their ambitions stifled in public schools. This builds off her earlier work, summarized nicely by Robert Barro here, in which she finds that unionization increases the high school dropout rate above what it would otherwise be if unionization was random, and it does so despite increasing school funding.
If your image of Milwaukee is largely derived from Laverne and Shirley re-runs, think again. My recent visit with leaders of Milwaukee’s Water Council showed me how communities in the Great Lakes are beginning to tap the “magic” of water for economic revitalization (the words of Milwaukee Mayor, and maybe-gubernatorial candidate, Tom Barrett).
The Milwaukee River running through town used to be a mess, and the only thing that looked out on it was the backs of factories. Metropolitan Milwaukee Association of Commerce CEO Tim Sheehy explained, “We opened it up for development; now it is lined with shops, restaurants, condos and offices. When we bring CEOs to town, we don’t put them in a car. We put them in a boat and show off our city.”
These efforts in Milwaukee and other Great Lakes metros are getting a major shot in the arm with President Obama signing a bill that provides $475 million in Great Lakes cleanup dollars. This “down-payment” on a long term multi-billion dollar federal-state-local plan to clean water and reboot municipal waste systems (so beaches are open and not closed for weeks during the year); to cleanup toxic hot spots still lingering in Great Lakes harbors and rivers, and protect and reclaim wetlands and scenic areas was promised by then-candidate Obama last year.
The promise he made during the campaign to follow up on a Bush-era Great Lakes clean up plan that had been languishing in Congress, was muscled forward, aided by the Healthy Waters, Strong Economy economic analysis of its prospects.
