Wednesday, September 13, 2006

Casting For A Better Future In Economic Development Depends On Casting Off The Past

We subscribe to a John Calipari theory of economic development – it’s all about talent - and a Fred Smith model of public investment – it’s all about entrepreneurship.

Everything else is pretty much a distraction.

Memphis needs a new strategy for economic growth, and we begin by casting off our traditional economic development thinking, the thinking that seems rooted in the belief that our city’s future can be found in the old economy and that creating a low-skill, low-wage workforce in the age of a knowledge-based economy makes sense. In other words, we need to resist the temptation to fight for jobs that are no longer competitive, because Memphis’ long-standing precepts about the economy are now our biggest obstacles to success.

Cities are sometimes like members of a dysfunctional family. Even when they realize things are bad, it’s hard to change, because it all feels so familiar. That’s always been a problem in Memphis, because although it’s becomes clear at times that we are ill-prepared to compete in the new creative economy, we just can’t make a clean break from the past. As a result, Memphis has been slow to adapt and compete in a global economy transformed by the dual mega drivers – technology and globalization.

Losing Ground

Now’s the time for new thinking.

Memphis is not only losing ground in today’s economy, but key indicators for the future economy are pointing in the wrong direction. In the Milken Institute rankings, Memphis is now ranked 159th, down 25 places from only a year earlier (Nashville is # 52, Knoxville #54, and Chattanooga #112).

Worst of all, many cities have already embarked on this journey and are already executing “creative city” strategies, the kind that converges art, technology and commerce to create a cauldron of innovativeness that spills over into all that it does.

Creative cities have a strong sense of place, and its people have a shared narrative. It’s the kind of place that develops, attracts and retains the most coveted workers in the new economy – young, highly-educated professionals. The connection between a high percentage of adults with college degrees and success of cities in the knowledge economy couldn’t be clearer, and that’s why we need to get serious about tracking the in-migration and out-migration of these workers, and building policies around them to attract and keep these creative workers.

The Regional Platform

Meanwhile, it’s no surprise that the new platform for economic competitiveness is the region. What is surprising is how little progress Memphis has made in this regard. After all, Memphis has spent a decade talking the talk of regionalism, but little has been done to walk the walk. Today, state economies are all but irrelevant, because they are political entities, and regions are now are economic units of competition.

In other words, the need for a new agenda right now couldn’t be more compelling. And it’s an agenda that has to focus on knowledge-based jobs in an entrepreneurial economy that depend on creative talent. If we haven’t quite figured out yet that we can’t compete with China and India for low-skill jobs (98.73% of workers in transportation, material moving and distribution are below the mean U.S. household income), we surely aren’t prepared for a future when these same countries will compete with U.S. regions for high-skill industries.

That’s why we’re paying the price right now for state government’s cuts in funding for higher education in the past. At the precise time when higher education, and more to the point, higher education research, is the key competitive necessities for creative cities, our universities have cut enrollments, hiked tuitions and reduced courses.

Entrepreneurial Universities

Memphis will never reach its potential as an entrepreneurial city as long as the University of Memphis is mired in the anti-entrepreneurial educational bureaucracy of the state. In this regard, it’s past time for every one in Memphis to tell Governor Bredesen that their support for his reelection hinges directly on his pledge to reinvent our state’s higher educational structure.

More to the point, our state universities should be given the autonomy that allows them to serve their regions more effectively and more entrepreneurially. Our universities have to be as resilient and flexible as the economy in which we compete. Meanwhile, we need to turn loose Superintendent Carol Johnson to innovate in ways that teach the coursework and soft skills needed for success in the interconnected world in which we live and work and produce the principals and teachers uniquely prepared for this mission.

More independent higher education institutions are as vital to our infrastructure as transportation, airports, communications and water. Included with universities in a higher position of importance to Memphis are other elements of infrastructure that have been largely ignored, such as a “green infrastructure,” a network of outdoor recreation, parks, waterways and greenbelts that are pivotal in the successful recruitment of talent.

Qualities Of Place

Quality of place has never been more important. It’s a definitive factor in attracting new jobs and companies. And yet, as important as the tangible quality of life are intangibles like tolerance (a distinct problem for Memphis), and being perceived as welcoming to all religions, ethnic groups and people of all sexual orientations. Because attracting immigrants is more and more a factor in a city’s success, these are more than just admirable characteristics. They are in very real ways economic benefits for cities, and in a world characterized by nothing so much as its diversity, Memphis should trumpet its diversity as an asset for our future, rather than running from its future as the nation’s first majority African-American MSA.

But as successful cities have shown, there is absolutely nothing more important to economic growth as new leadership. That’s because transforming Memphis’ attitude toward economic development demands that every one gets off the sidelines and into the game – politicians, business leaders and nonprofit leaders.

And in keeping with the regional realities of the global economy, the new leadership must be developed on a regional basis, particularly if we are to have the clout to get concessions and funds needed from state governments in Tennessee and Mississippi on regional issues like transportation infrastructure and air and water quality.

Racing To The Finish

The lesson of the Governors’ Alliance on Regional Excellence – announced with great fanfare about eight years ago and whose report cost almost half a million – is that if there is no strong regional ownership of a regional agenda, its recommendations are destined to become an impressive tome on shelves with little action taken to change things.

Finally, failed policies concerning tax policies and tax freezes are overdue for reforming. They are nothing but vestiges of the old economy thinking that we need to reject. There is little evidence that tax cutting and tax freezes work as an economic growth strategy. If they did, we wouldn’t find that states that have higher taxes also have above average per capita income and more knowledge-based companies.

The race for economic growth in the future will be the hardest competition Memphis has ever been in. But we begin by abandoning the old and embracing the new. It’s a race to the finish, and cities that compete by the same old rules have already lost.


Carol said...

Well said, Tom.

Just a note... CEOs for Cities will be releasing a new set of metrics for cities on September 27. We call it City Vitals, and it includes 20 metrics built around four necessary dimensions of urban success today: Talent, Connections, Distinctiveness, and Innovation. It will give us a much richer way to think about our opportunities for success and the areas in which we need to improve.

LeftWingCracker said...

You're on the right track, to be sure. However, we need to ensure that our schoolchildren are proficient in the basics at an early age, and make sure that they have access to all that they need, no matter where they may live.

Without that, we can only produce a low-wage workforce. That, my friends, will take far more money than we as a society seem willing to spend these days on governmental functions like these.

Smart City Consulting said...

Leftwingcracker: We didn't want to make short shrift of the importance of P-16 education, but in the context of economic growth, it's worth remembering that cities that are outstripping us in growth, investments, etc., also complain about their poor school systems. We'll write about it soon, but it looks to us like Memphis City Schools and other urban districts are doing as well as they can in light of the cruel realities that confront these students in the rest of their lives. We need to have a comprehensive youth development program for Memphis. As you know, schools are a key part, but they aren't the entire puzzle.

Thanks for the comments, which are always sound.

LeftWingCracker said...

Well, I bring it up because while I certainly share your desire to make this city a more attractive place for high-wage employment and employees, it's even better to grow those employees in your own back yard.

Smart City Consulting said...

And it's more important to grow our own entrepreneurs. After all, it is often homegrown companies - think Nike and Microsoft - that create the real jobs growth, and for that reason, homegrown strategies are important.

gatesofmemphis said...

How do you think the state bureaucracy is holding back the University of Memphis' entrepeneurial efforts? I don't disagree, but would like to hear more details.

Smart City Consulting said...


First and foremost, thanks for a great blog, always interesting and insightful. You'll be interested in this week's Smart City interviews on design.

As for higher ed, we're not really serious about talent until we're really serious about the U of M. Any possibilities of it responding to the talent needs of Memphis are lost in the bureaucratic world in which it has to exist. Responses to local problems and innovative programs often fall prey to the the political calculations that take place on the Board of Regents as UM needs are assessed in a frame that also includes Austin Peay, East Tennessee, community colleges, etc. Not to put too fine a point on it, but it's insulting to this entire city that our major state university is grouped in this conglomeration of institutions.

That's why it's way past time for the U of M to have its own board of regents whose singular focus is on how it responds and serves the interests of Memphis. The potential of autonomy in decision-making is crucial not only to the university but to the future of Memphis itself.

We have to do something that elevates it in the eyes of academicians and in the life of Memphis. How about something truly groundbreaking: giving U of M control over its own tuition, free it up to recruit whoever it wants without the absurd out-of-state premium for students (we need to recruit them here to study if we're ever to have a chance to recruit them here to stay), making better decisions over their own facilities (although we probably can't blame the state bureaucracy for the awful architecture that greets us on the north side of Central with the Wilson College and the acres of concrete), determining its own curriculum (without worrying about the political fallout from not giving East Tennesse the same courses), and setting up more programs that connect professors and researchers with the city itself.

With more control over its own destiny, the U of M would have to compete in the marketplacel for revenues and this too could transform the culture there.

Most of all, we would argue that the flowering of the knowledge economy in Austin, the Research Triangle, etc. is directly tied to the emphasis and investment in its universities. And yet, the state educational bureacracy adopts the language of "research universities" without doing anything to create a great research university here. We've got to move beyond thinking that never seems to see this as a major economic development asset.

gatesofmemphis said...

Thanks for the quick reply and the compliment.

I wonder if the bureaucratic calculations you describe might be responsible for Memphis' not having a professional architecture school. Perhaps someone's worried that it might "compete" with UT's architecture school, ala ETSU's Med School "competing" with UT's Med School. As though Tennessee's having more doctors and architects could ever be a bad thing.