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Wednesday, August 15, 2007

Sunburned Economy Must Look North (2005 article)

The US economy is based on innovation and creativity. The tie to top research universities and urban economic growth is important. Those college rankings are a lot more important than many realize since they are based largely on the criteria of research money, quality of research professors and perceived quality of students.

Charlotte has become what it is because of Duke and UNC as well as Davidson. Atlanta relies heavily upon Georgia Tech and Emory. New York City has Columbia and NYU with Yale and Princeton less than an hour away. Los Angeles has UCLA, Cal Tech and USC. Chicago’s research centers are Northwestern and University of Chicago. Boston has MIT and Harvard. Nashville may be known for music but it is Vanderbilt and its ties to Oakridge National Laboratories that has fueled its economic growth. It is no surprise that Austin and Houston have developed a tech corridor when one of the largest premier research universities, University of Texas /Texas Tech (They share endowments and research funding) are leaders in public and private research dollars and Rice is the largest recipient of federal research grants in the deep South. Washington, DC has Georgetown, Johns Hopkins and UVa. I could offer numerous other examples but there is one example that states the case definitively. The Bay Area and its research universities, Stanford and Berkeley; no two schools have surpassed them as technology incubators and birth place to tech start-ups.

Miami has something that some of these cities do not. The city and the university share weather and beaches that enable it to attract talent for less pay than other regions.

UM, thanks to a failure of leadership has proven mind bogglingly adept in recent years at frittering away this advantage. A young university, for years Miami struggled to increase its name recognition and to shed the negative implications that came with its image as “Suntan U”. Early university leaders hoped to follow in the aggressive strategy that allowed some West Coast universities to vault their East Coast counterparts.

Miami also tried to convince Fortune 500 hundred companies’ Southern operations that Miami was a viable option for regional headquarters. Miami has long been said to be Los Angeles twenty years ago. Miami mimicked that city's attempts to encourage families to relocate through a network of development and business councils (GMCC and the Beacon Council). The Orange Bowl Parade, like the Rose Bowl Parade was identified as a method to advertise glorious weather and a prosperous city to workers and potential students. It integrated Blacks into leadership (albeit grudgingly) and ended segregation rather than risk the image of racial strife. (This attracted a significant amount of black professionals from throughout the region.)

The "Non-Group" led the way. This organization of business and civic leaders fashioned after "LA’s Committee of 25" and Charlotte’s simply monikered "The Group" and Boston’s "The Vault". Not surprisingly these leadership groups from each of their respective cities often met and shared ideas, visions and advanced trade.

As a result, Miami had one of the fastest growing economies in the nation. And each decade Miami roughly doubled in population, from it’s inception until 1980. Almost half of American GI’s from World War II trained in Miami and many moved to the city with their families following the war. They were said to have had “sand in their shoes”.

When Miami’s power landscape shifted, and Miami experienced crisis after crisis the Anglo elite left, taking their businesses and networks with them. It was a sign of the times when the huge media conglomerate Knight Ridder, publisher of the Herald decided to move to San Jose.

Today, well educated, ambitious and creative people, like the GI’s from years earlier still get “sand in their shoes”. What vacationer does not envision a life in America’s only large tropical city? (Sorry, LA you are a paved desert with a cold, dirty ocean.) The problem is that Miami has developed an attitude of insularity, distancing itself from domestic trade and talent.

This has a multiplying effect. The Anglo or African American Harvard grad who applies to a City of Miami job is turned down, perhaps because of ethnicity perhaps because of being an “outsider”. She does not move here with her MIT educated husband that is active with a start up utilizing nanotechnology or the like. A chain of talented people are turned away with each act of insularity and discrimination in hiring practices.

Again, even though Western Europeans and Canadians continue to be the largest foreign investors in Florida and US residents (not a few of them Black) are the largest source of tourism, local leadership has decided that as the self appointed Capital of Latin America its priorities lie elsewhere.

Effects: Miami’s banking sector has went from the headquarters to a number of flourishing regional banks to a bilingual forward sales force for banks headquartered in other cities. Light manufacturing has all but been replaced by freight forwarding for American items made in other places.

So, the Miami-Dade government and business community, ever looking southward, gives the cold shoulder to Scripps, claiming that it cannot do anything about the lack of available real estate for a research campus, while pushing the Urban Development Boundary back to make way for urban sprawl. Palm Beach, instead of Miami, cashes in on nearly a half billion dollars of incentive funding offered by Governor Bush to jump start Florida’s lagging tech sector.

How bad can it be? The Amazons, Genentecs, Googles, Microsofts, Facebooks, Yahoos, eBays, Def Jams, Tasers, AOL, Ciscos, Dells, Suns, Oracles, etc., formed by college students and recent graduates from elite universities continue to create a new economy based on information technology, communications and entertainment. Billions of dollars in research money go to universities that attract the finest students and professors regardless of background. As research spawns new technology and products industry is created that serves their surrounding economies.

This is not just an issue of shutting out the “new” economy. The older industrial based economy already has shored up its relationships with research universities and new tech companies. Non-tech professional, marketers, advertisers and designers continue to do business where they have the access to broadest and most qualified source of human capital.

Manufacturers and retailers, formerly the less technology dependent players in the economy now are dependent upon highly technical distribution systems. Product design is also technically driven in an economy where product shelf life is shortened and manufacturing is global. America is not a manufacturing economy but a design and innovation economy. Technology has allowed large talent pools in metropolitan areas to exchange ideas. These talent pools are dependent upon the educational and research infrastructure for their training, support and regeneration.

Miami is at the bottom of large cities for the percentage of adults with high school diplomas, bachelor degrees, and has the highest percentage of those for who English is a secondary language. (Florida has the lowest graduation rate in the nation.) This is a particularly worrisome state of affairs in a world that has made post graduate degrees the necessary professional qualification and English the world’s lingua franca. Miami now leads the nation in poverty, and disparity of income and housing prices. This is no secret as the Manhattan Institute, The International Journal for Economic Development and the Brookings Institute have all made exhaustive studies focusing on the poverty, crime and drug use tied to the lack of a well educated populace. Can you imagine Fortune 500 execs lining up to move their headquarters to Miami?

Here is another illustration of the need to look beyond Latin America northward. FIU's Graduate School of Engineering created a recruiting program including full scholarships and housing, in an attempt to recruit from Latin America and the Caribbean. This was to make up for a shrinking pool of Asian and African graduate students who would rather attend colleges with more research opportunities and a welcoming local economy post graduation. FIU found it nearly impossible to find qualified graduates from any part of Latin America or the Caribbean save Jamaica and Trinidad (Most of these students had been planning to go to England or the Northeastern U.S.)

The upshot is that until Miami welcomes the most qualified people in public and private sector hiring and lures national businesses to compete for our public contracts, it will continue to be the poorest city in America. Outside talent is, however only part of the solution. We must strengthen our educational infrastucture. This will take lots of dollars. It will also take the de-politicization of educational leadership.

The other side of this coin is that we must broaden our focus in trade. Miami must not value our trade ties with desperately poor Caribbean and Central American nations where there are five of the hemispheres poorest countries (Haiti, Nicaragua, Jamaica, El Salvador and Guatemala). We must also recognize that South America is looking inward, investing in its own economies. Even if this were not the case, Sao Paolo, Buenos Aires and Caracas hardly look to Miami as the capital of Latin America.

Miami must open its eyes to the largest market in the World. The death of the FTAA should have been a clarion call to General Jeb and his Dade junta who have continued this blind march into the Caribbean.

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