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Feature

The bucks start here

Universities look to pull the Midwest together economically

By Deane Morrison

July 3, 2008

It's time for Midwestern states to put aside unproductive rivalries and start working together to raise the region's economic profile. That message reverberated through the Federal Reserve Bank in Minneapolis last Friday (June 27) as provosts from the Committee on Institutional Cooperation (CIC)--a consortium of the Big Ten universities plus the University of Chicago--vowed to join forces to help put its economic house in order. The summit, "Developing a Regional View of the Midwest Economy: Breaking Down Barriers That Impede Regional Progress," attracted leaders from universities, banks, government, and businesses. The University of Minnesota sponsored the event, along with CIC and the Federal Reserve Bank. "Incremental moves won't be enough," said University of Minnesota Provost Tom Sullivan. "We must have bold, creative steps." "Bold" describes the critique of the region by Richard Longworth, a member of the Chicago Council of Public Affairs, who stressed that the Midwest must come together economically. Speaking about "the balkanized Midwest and what to do about it," Longworth noted instances where the states duplicate efforts instead of combining resources. For example, each state has its own bioscience organization; if they were joined, then the Midwest could "lead the world" in this area. And the same goes for money from the tobacco settlement, which could go a lot farther if pooled. "Globalization affects all [Midwestern] states the same--it sweeps across state lines," he said. "The states are too small to compete [in a global market]. We're all in this together, but you'd never know it." Longworth also took issue with some states' habits of "discriminating against cities" and high-minority areas in particular when locating state-funded projects, plus deciding how local schools and governments will work.

"Globalization affects all [Midwestern] states the same--it sweeps across state lines. ... We're all in this together, but you'd never know it."

"This is not a partisan issue. Cities should be cut free from state restraints to forge their own future," he said. As cities and states pursue economic development, they should keep in mind that there are right ways and wrong ways to do it, said Arthur Rolnick, senior vice president and director of research at the Federal Reserve. One "wrong way to do economics" is bidding wars between cities for companies, such as when St. Paul lured a company and its 500 jobs away from Minneapolis. "It moved jobs from Minneapolis to St. Paul, but there was no gain to the state," Rolnick said. "But money was spent to lure them." An even better example of wasted effort, he said, is the spectacle of states vying for professional sports teams.

The best investment

Instead, cities and states should invest in an area whose "real returns" beat the stock market hands down: children. Rolnick lauded the Perry Preschool Project for 3- and 4-year-olds in Ypsilanti, Michigan, as an example of how investment in high-quality pre-kindergarten learning programs can make a measurable difference in the futures of children in poverty and at risk of failing in school. A sampling of statistics shows that at age 27, young people who had been in the program had significantly higher monthly earnings, percentages of home ownership, and schooling compared to a control group. Schooling rates were especially striking for females: 84 percent of program children completed 12th grade or higher vs. 35 percent for controls. Among males, 12 percent of the program group had five or more lifetime arrests, compared to 49 percent of controls. In St. Paul, the Saint Paul Early Childhood Scholarship Program aims to do the same for 1,200 low-income families in the Frogtown and North End neighborhoods by giving them information and scholarships to help them choose, pay for, and stay in high-quality child care and early education settings. (Call 651/641-6604 for more information.) The key to a good program, said Rolnick, is that it must be high-quality and scalable, and it must start early in a child's life. "Relative to other public investments, we don't think you can do better with your next dollar," he said.

An ensemble cast

As for how Midwesterners can best put their heads together to boost regional economic development, Longworth suggested a "Midwest think tank" as the hub of activity. He also brought up the idea of a high-speed rail connecting Midwestern cities and universities, along with more joint appointments of professors at regional colleges and universities and in-state tuition for any Midwest student. But if the Midwestern states are to help each other economically instead of always competing, that brings up the issue of how to distribute the benefits. For example, if Iowa and Indiana were to contribute resources for Illinois to develop a particular industry, how would those good neighbors reap any rewards? University of Minnesota geography professor Judith Martin, who is also co-director of the U's University Metropolitan Consortium, says that the Twin Cities' fiscal disparities law could be a model. The law covers the seven-county metro area. "[It] shares the commercial and industrial tax base generated by new development on an annual basis," she explains. "A percentages goes to a metro pool and is redistributed to communities that lack opportunity for commerical development. Maybe states could do something similar." The conferees agreed that the Midwest is rich in educational resources and physical assets such as the Great Lakes. But the switch away from a manufacturing economy has been uneven, and its assets must be better harnessed to compete with other regions for investment. And soon. "This [summit] was about the tension between cooperation and competition," Sullivan said. "It is time to act together."