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From “College Town” to Big City

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From “College Town” to Big City

10 Blocks podcast February 6, 2019
Education
Technology and Innovation
Economy, finance, and budgets

Aaron Renn joins City Journal associate editor Seth Barron to discuss how some big public universities are expanding their tech departments to major cities to maximize their economic impact—creating new political battles in their states.

A senior fellow at the Manhattan Institute and contributing editor of City Journal, Aaron Renn writes on economic development and urban policy in America. “The Tech Campus Moves Downtown,” his article examining recent expansions of universities into city centers, appears in the Winter 2019 issue of City Journal.

Audio Transcript

Brian Anderson: Welcome back to the 10 Blocks podcast. This is Brian Anderson, the editor of City Journal. Starting in the late 19th century, states across the U.S. built massive public universities far away from many major cities leading to what we know in America as the "college town," but today many of those schools are moving their operations back to central cities and it's causing some political battles in states like Illinois and Michigan. To talk about that, my colleague Seth Barron interviewed Aaron Renn to discuss his new piece, Aaron's new piece, "The Tech Campus moves Downtown."

But before we get started, just a couple of announcements: First off, City Journal readers will be happy to know that our Winter 2019 issue is hot off the press. Among the highlights, we have James Meigs on the future of nuclear energy, Oren Cass on vocational education. Charles McElwee on the Catholic Church's struggles in the Rust Belt, George Kelling on community policing, and much more.

Lastly, this week marks the third anniversary of the 10 Blocks podcast, so thank you to all our listeners for tuning in and we hope you'll tell your friends to subscribe to the podcast and maybe give them a copy of City Journal while you're at it.

That's it for me. The conversation between Aaron and Seth begins after this.

Seth Barron: Hi everyone. Welcome back to 10 Blocks, the official podcast of City Journal. This is your host for today, Seth Barron, associate editor for City Journal. The United States has a fantastic network of large, state funded research institutions that are among the best in the world and they have trained and launched the careers of many well known tech innovators, but we never hear about the quad cities tech hub or about all the venture capital firms in Ypsilanti. Joining us today is Aaron Ren, senior fellow at the Manhattan Institute and Contributing Editor to City Journal. Aaron writes widely about urban planning, technology and growth in mid-sized American cities. His most recent piece in the Winter 2019 City Journal issue is called "The Tech Campus Moves Downtown." Thanks for joining us. Aaron.

Aaron Renn: Thanks for having me, Seth.

Seth Barron: Well, in your piece, you start off talking about the University of Illinois in Champaign-Urbana and all the tech talent it's spawned. Can you fill us in on, on this?

Aaron Renn: Yes. The University of Illinois is one of the most renowned computer science and computer engineering programs in the world. I think their graduate computer science program is ranked fifth, I think the ranking, it may not even be as important as the fact that not only is it high ranking, but it's also a very, very large institution, a much larger than say Carnegie Mellon's, just a very large institution. And so huge percentages of America's top computer people have come out of there and including a lot of the people who founded many blue chip silicon valley names. So Tom Siebel who founded Siebel Systems, which was a kind of a customer relationship management ERP type system within there. Larry Ellison who founded Oracle, didn't graduate from there, but he did attend there. Jawed Karim and Steven Chen who founded Youtube, Jerry Stoppelman from Yelp, Jerry Sanders from AMD, Max Levchin, one of the co-founders of Paypal, many, many, many people from there and most famously is a guy by the name of Marc Andreessen who essentially invented the modern web browser as we know at while he was at the University of Illinois. He was working for something called the National Center for supercomputing applications. He wrote a program called Mosaic, which was the first modern web browser. And then ultimately he moved out to Silicon valley and commercialized that as Netscape. He's now a big venture capitalist. So from the standpoint of the school, they can feel very good at all this incredible talent that they've produced, but from the standpoint of the state of Illinois, they're like, why aren't any of these people starting their companies in the state of Illinois? And one of the reasons that they've hit upon is that the University is located essentially in a college town in the middle of the state, Champagne-Urbana, and the state's major economic engine, where you would most typically starting to run a big company is Chicago, which is two, two and a half hours away. So that was kind of the genesis of my thinking about this piece.

Seth Barron: So is it real, is that really what it comes down to? Geography or is it a question of finances, culture?

Aaron Renn: Right. Well, there's a, I will say there are a lot of things that go into creating a tech hub other than that location. I mean they're, the culture of Silicon Valley is, is very unique. Um, there are only a handful of major tech hubs in the country, so I don't want to oversell location, but that is one of the things that they have a sort of alighted on as a potential cause. Yes. They would say there was no venture capital or tech ECO system in the state of Illinois, even in Chicago back when a lot of these companies were being founded. That's not the case today. There are others, venture capital in Chicago. There's much more of an ecosystem of tech corporations. They're, you know, groupon. A, although somewhat has fallen from its peak, was, was founded in Chicago. Grubhub, which owns Seamless in New York is a big company based out of Chicago. So there's, there a lot of tech companies doing business there, a lot of Silicon Valley companies planting their flag, but there's still a perception that a lot of the students at the University of Illinois are headed straight out to Vilicon valley to work there instead of staying in state and starting companies. And I was there over the summer and I actually asked some students and yeah, they were like, we're headed to Silicon Valley and that's because that's what's on their mental map.

Seth Barron: So is the problem that the university was not put in Chicago? Why is the University of Illinois in Champagne-Urbana? And why do state universities, why are they located where, where they are?

Aaron Renn: Right, well, universities are essentially located where they are by and large because of accidents of history. The University of Illinois is what's called a land grant college. In 1862 There was a law called the Morrill Act, um, that granted 30,000 acres of land in each state from the federal government to the states, either for them to put a university on it or they could sell it and use the funds to, to roll into a university. So the idea was to essentially seed universities that would study the agricultural and mechanical arts essentially. This is why a lot of those schools, they all have big agriculture schools and they all tend to have large engineering programs. So a lot of these were set up, you know, 150 years ago basically when the world was a very, very different place. And you know, we were still somewhat in a preindustrial not, not entirely preindustrial, but a somewhat preindustrial economic geography of how these places were set up. You know, Chicago for example, was not the enormous colossus that it would be by the end of the 19th century. And so a lot of these states, you know, had big competitions, different communities, just like you'd think about where a plant might locate today and there's all these fights over who's gonna get it. It was the same thing. These states, a lot of competitions between cities to decide where they're going to be. And frankly a lot of these universities were located where they were for purely short term financial considerations because some local business man or a local group of people anted up some money, in order to put it there. So, Purdue University in West Lafayette, Indiana, which is about 75 miles from Indianapolis because John Purdue and some local people anted up $150,000 and some additional land, you know, the University of Missouri, Missouri is in Columbia because they've raised $118,000 for it. So a lot of these places really, they were just, it's whoever came up with the most money or had something. In Champagne-Urbana. I believed there was some partially constructed buildings, or some buildings that had been built from previous attempts to start some kind of a school and so there were, may have already been some facilities there. I don't believe Chicago even bid to host the university. And so what happened over time is, in some cases the place where the university was, it either was the state capital or the state's economic center or grew to become the state's major economic center around some of these universities, not all land grants. You know, you think of Ohio State University in Columbus, Ohio, the University of Minnesota in Minneapolis, St Paul area, the University of Washington, which is not the state's land grant school, but it's the flagship school in Washington state and Seattle, the their land grants to a Washington State is actually out in the eastern part of the state. But those became big essentially economic centers, in other cases it ended up that they just remained essentially college towns like West Lafayette or, or like Urbana-Champagne. They're economically successful cities, but they're fairly small and because of the small size of the communities, there's just a limit to how big you can get in these places. It's pretty rare to be able to build a company of 5,000 people, I say, in a town that size now. Am I saying that it physically can't be done? No, but when you have a thinner labor market and a very college dominated environment, it's just not a major economic major economic center. Certainly they're most college towns, very prosperous in a sense, but they're not always the these major economic hubs and so in state, so in Illinois there's a major disconnect in that. The state capital is in Springfield, the state's primary university is in Urbana-Champagne and then the state's financial center, its business center is in Chicago. So those have been all geographically dispersed and so one of the things that various people have been trying to do is to try to better connect Champagne and Chicago and what spurred my piece was this latest iteration, which was somebody called the Discovery Partners Institute, which is an attempt to open a, a research institute that would be not just a regional campus but part of the main University of Illinois campus in Chicago, which would not only have essentially its own faculty, but essentially faculty would rotate through there, students would come study there, and they would partner with corporations and the idea is essentially I think to expose people, the students at the University of Illinois, with the Chicago environment and what is there and hopefully create more stickiness that would ultimately it keep the talent and spin off more companies.

Seth Barron: So how's that working? Are they, I mean there, there is a university campus at the University of Illinois in Chicago. Is it connected to that?

Aaron Renn: No, it would be, it would be a separate initiative. So there is the University of Illinois at Chicago which as many find programs of its own. This would be something that's much more tightly connected to the mothership in Champagne. It's not, it's, it's at this stage, it's already in development, you know, the state has appropriated $500,000,000, that would, that would go towards this and they've signed some deals with some, some universities in Israel, but they have, they haven't fully launched it yet, so it's still somewhat being defined what it's going to be a. But obviously it was in part inspired by Cornell Tech in New York City, which was a similar type of project

Seth Barron: Well tell us about Cornell Tech because, I mean, it's been about 20 years now I guess since New York City tried to brand, the Silicon Alley, you know, to make New York City a tech hub. I gather that's worked to some extent, but what is the story with Cornell Tech?

Aaron Renn: Yeah, well, you know, New York, again with the DOTCOM era coined this term Silicon Alley. There was sort of a boom, then there was a major bust that happened after that time, New York's tech tech hub has come roaring back, you know, by some measure, you know, New York is now the number two city behind Silicon Valley area in terms of venture capital. So it's considered a major tech hub obviously with Amazon coming here that that's a, you know, a big vote of confidence in New York's tech ecosystem. Mayor Bloomberg basically said, you know, New York is an amazing talent attractor, but the city needs to do more to produce talent. What he saw as he looked out at Silicon Valley with Stanford and Berkeley looked up at Boston and he saw MIT and he's like, we need to have institutions like that in our city. So he said, I'll, I'll give $100,000,000 in city money and free land to a university to come set up shop here. So there was a big competition, you know, Stanford bid on it, other people bid on it and Cornell in partnership with a University of Israel called Technion, which is a technology institute won. They created a technology campus on Roosevelt island called Cornell Tech. And, it is at this point, it's, it's purely a graduate school. So it's graduate school, it's research and, there are minting degrees, there. And you know, Cornell is an interesting case. It's a private college with a Private Ivy League school, but it has a sort of a unique status in that it was also the land grant school for the state of New York, so they have an agriculture college and things that you don't necessarily associate with, with Ivy League schools now, but they're an upstate Ithaca and they've got a great college environment down there. And what they would, they obviously decided was that, you know, New York City would be a good place for them to tap into some additional opportunities that weren't all available in Ithaca. They're very happy in Ithaca. Obviously they wanted to stress that when I talked to them. But just like as their medical school has long been here, the ability to partner directly with corporations that are based in New York, to access the talent in Newark. And then also to work on many of the problems of emerging technology problems which are about the problems of cities. We're living in an urban, essentially an urban age and so much of what is going on, whether it be talks about driverless cars or transportation network companies like Uber and Lyft, things like the Lincoln YC Internet kiosk and data and big data and smart cities and all that. The city is the venue in which many of these problems are being worked out. And so it, it made sense for them to essentially expand their footprint to take, to take in, take in New York as well. And being a private college, they were free from many of the political headaches that affects state university located location decisions. Like in Illinois, one of the big challenges has been obviously the people in downstate Illinois and Urbana-Champagne are, you know, completely opposed to anything that they view as maybe potentially taking resources away from them. So there's a lot of things that need to go on there.

Seth Barron: So how portable is this model? And also to what extent, I mean, state universities have a pretty, pretty good budget from the state. Are people in say, oh, I don't know, Kansas or Iowa, are they upset about the idea that people are educated at state expense and then leave to go to the coasts to pursue their careers? And how portable is this model? Could every state have a tech hub? Is that a goal? Is that realistic?

Aaron Renn: Well, I would say every state is concerned about what they call "brain drain" and the idea that, exactly what you said, you know, we have kids that grow up in the state, we educate them in the state and then they leave, you know, I have always maintained that that is overblown as a problem, but it's clearly a huge perceived issue in almost every place. Can every state be a tech hub? Probably not, but nevertheless, it's like, it's just like biotechnology and the life sciences, this, this idea of Silicon Valley style startups. It's basically that's the economy and people feel like they have to go try to get their piece of the action. And we do see, um, I, I do see a couple things. One, that tech industry today is much more urban than it used to be. The traditional thinking of a tech company was to be out in essentially suburban, Silicon Valley, which is very suburban environment or route 128 around Boston. Those places are still there, but today it's in places like lower Manhattan. It's in San Francisco, it's in Cambridge. They're in the tech tech business today has become much more urbanized in a lot of ways and with many of the young people and others wanting to be in cities, you know, the universities have fact more and more been looking at being much more in downtown environment. So I also cite the example of Michigan state already located in not a small town, state capital East Lansing, that they built a huge medical campus in Grand Rapids, the city, the second largest city, and essentially the medical school, they didn't close East Lansing, it's still there and they maybe even expanded it, but technically their medical school's now based in Grand Rapids. And then we're also seeing the University of Virginia's Darden School of business, which is their graduate school of business, open a big office in Rosslyn and Arlington, Virginia, right outside Washington DC, right along the metro lines there and so a lot of their executive MBAs are there. And so moving, we do see a lot of people moving into to, to, into these major metropolitan areas. There's a thing in and um, it's not in the piece, but in Chicago they have this concept they call loop you, which is a collection of 30 plus universities that are all located in downtown Chicago or have expanded into downtown Chicago that have something like 60,000 students, like it's an enormous numbers of students are actually going to school there. That includes the school, the Art Institute of Chicago. Even campuses of DePaul and Northwestern, schools that are in the area already, they have a downtown campus. The University of Chicago has the Gleacher Center in downtown. So there is this migration to downtown. What you see though is to date they've all been graduate programs and that makes the most sense because so much of the undergraduate experience is tethered to the experience of the campus. So you really can't replicate the feel of being an undergraduate at the University of Illinois in some sort of a Chicago type, it would be a completely different campus, it would be a different thing. Whereas the graduate, the graduate programs seem to be what are much more graduate programs and essentially kind of executive type program like executive MBAs tend to be looking at this. And I would say it's probably on the radar of a lot of schools thinking about their, their strategy. And um, again, I focus on engineering, but you can also think about MBA schools. I know it's on their agenda. When you look at the top schools like Harvard, which is located in Boston, I mean a, a University of Chicago, Northwestern located in Chicago. A lot of the schools that are not located in one of these major business centers with access to the corporations and the CEO and the airports and part of that business, it puts them in a little bit of a disadvantage in terms of being able to be competitive because they can't always have all these CEOs lecturing in their classrooms all the time, like, like they have when they're, when they're the big city. So people are paying attention to this. I think it's early days. We'll see what can be done. I don't think that anybody's going to pick up a university, simply relocate it in a different city, but we're going to see incremental moves. And another one, it's, it's not in the article I wrote a, I wrote it in a different article about, um, about Grand rapids was there's a state university, they're Fair State, this, the major pharmacy school in State of Michigan. They, um, they opened a facility in Grand Rapids where the third and fourth year of the pharmacy program are done in Grand, Grand Rapids. We are, you're kind of, I guess doing clinicals or something like that. And so it's out there. It's being examined. What will happen to it, I don't know, but this a better aligning of states aligning their educational and research institutions with the economic geography of the state is one of the, I, you know, I think compelling agenda items for the 21st century.

Seth Barron: Let me ask you one final question and maybe this is a little too broad. Um, the whole dream of the tech revolution was a disaggregation, disintermediation. There's going to be, you could do your work on the beach, you could be in the mountains, um, but nevertheless we have these hubs and everything seems to be centered around particular places like, you know, a southern California in the Bay Area, maybe New York City to some extent, route 128. Um, so do we have different tensions operating here or things will things break apart? Will we, will we fulfill this dream of people just sitting on a mountain somewhere in Montana? Um, you know, running a huge business, huge tech business, or are we going to see more and more centralization?

Aaron Renn: Well, that, that is a broad question. I think there's a little bit of both. I think this idea that the internet was going to enable everybody to just work remotely from a farm somewhere, didn't come to pass. The world was flat as, as Tom Friedman famously put it, but mostly for things like manufacturing and raw materials and call centers and things of that nature. But the globalization of the world, um, this was a thesis most famously put by a sociologist named Saskia Sassen said, look, when you have this complex global environment, it actually promotes centralization of the executive functions, essentially executive functions, producer and financial services that if you have a global network that you need to run, you want to be at the central hubs of the global network and where the human capital of people who understand international trade law and international accounting, international marketing, are located. Where's that? That's New York, right? That's Chicago, that's London, that cities like that. And so the same thing is true of technology in that you need to have access to that labor force and that labor force has increasingly congregated in these select hubs. So to the extent that you are a smaller location or you are someplace, Provo, Utah or Boulder, Colorado, where you have a significant base of human capital in this industry, you sure you can have something of a tech cluster and have a boom. But if you don't, you know, the idea that one person in industry makes is not that clear? Yes. There are people who take their, Amazon or Microsoft salary and are now moving into eastern Washington or even in the Idaho because the cost of living is lower and, you know, but those are one offs and they haven't really turned into, you know, industries in those places yet. But, you know, potentially could at some point. But as of now, it seems to be that a lot of it is still is still in the big cities, or you know, in big cities that are sort of a Texas type model cities, but still not necessarily small places.

Seth Barron: Very interesting. Don't forget to check out. Aaron's work city-journal.org or at aaronrenn.com. We would love to hear your comments about today's episode on Twitter @CityJournal, #10blocks. If you like our show and want to hear more of it, please leave ratings and reviews on iTunes. This is your host for today, Seth Baron. Aaron, thanks so much for joining us.

Aaron Renn: Thanks for having me on.

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