Maybe I need to move ...

Saw this post on /. and the article it linked to. In it, the authors discuss human capital, the density of “smart people” (which they define as those with baccalaureate and graduate degrees). Using their particular definition (I won’t say if I do or do not agree with it right now), Detroit area, where we are, is near the bottom of the long tail. I can say that the places they indicate at the top of the heap … SF, NYC, Minneapolis, Chicago, Seattle, Boston, Miami … all places I have spend time working in with customers and users … I’ve very much enjoyed my stay. These are vibrant, active places. Usually many good schools, many good companies around there. Detroit and Michigan in general, we have 3 significant research universities (UofM, MSU, and Wayne State), several good smaller universities (MTU, OU, WMU, EMU, CMU), and quite a few more regional level univerisites and colleges. There is nothing wrong with any of these BTW, I know folks at quite a few of these schools, and their size and perceived stature may not be well aligned with the quality of their teaching and research staff (usually excellent, highly innovative, …). Their budgets aren’t quite what the bigger schools have. They don’t attract as many students as the larger schools. But they also turn out excellent scientists, engineers, researchers. Great teachers. Wonderful colleagues. What seems to be the issue, using the metric above, is that not enough of the population is going to school, or not enough of the graduating class stays.

The Chief Economist of Comerica bank noted the latter problem. He’s asked many graduating seniors in Michigan if they were planning on staying or leaving after graduating. For many years, most said they are leaving. This is a blue collar state. Manufacturing used to be king here. The state had lots of tax revenues, and nary a worry to save for a rainy day. Or a depression in everything but name. Then economic reality set in when one economic bubble bursting exacerbated a long term slow structural economic change. Manufacturing always seeks out the lowest cost providers … of parts, of raw materials, of wages. None of those will be found here. It is dishonest in the extreme to imply otherwise … though many of our politicians have been doing this, pandering to their favored constituencies for decades, never talking about the pink elephant in the room. That is, until said pink elephant began stamping all over things. What has this got to do with the ‘density of smart people’? A few things: First, I dispute that smartness is inherently measurable by graduate degrees or even by degrees in general. I’ve met some very dumb Ph.D.s and M.S. . These are folks you really don’t want doing research. I’ve seen some extraordinarily bright high school graduates, who could easily out-think/out-work/out-perform some of the aforementioned Ph.Ds, on hard skull-sweat type tasks. Second, based upon long experience with Ph.D.s and other graduate degree holders, I’ve personally found little to zero real correlation of ability and pedigree. That is, coming from a “good” school is not a reliable predictor of intelligence, nor of ability. So while I dispute the fundamental basis for their measurement on ascribing “density of smart people” by use of a measuring stick based upon degree obtained, I note with dissatisfaction that they are on to something here … not necessarily smart or dumb. The areas towards the bottom of the curve are areas that are hard pressed to find venture capital, or any sort of company formation capability. I can say with all frankness that Michigan is effectively barren in this regard … there is little in the way of company formation or growth capital around these parts. Conversely, if you didn’t tell me what this chart was, I’d swear it reads almost like the amount of investment capital by city. Job formation comes from company formation. We in Michigan have no choice but to re-invent our economy. Or if we choose not to, pull an ostrich, and pretend it will get better, we run the risk of becoming like West Virginia from an economic standpoint. [update] I have nothing against West Virginia … it is a fantastically beautiful state (I like the gentle Appalachian mountains), most of the people I have met there are wonderful. It just stuck in an economic rut, with little significant positive directions going forward … environmentalists can’t stand its principal product. And that plain old sucks. Some of the initiatives pushed by our government are very poorly thought out, and are obviously sops to the politicians constituencies (advanced manufacturing anyone?) Some are of dubious value as we don’t control the resources required to get there (advanced energy/green energy … China owns most of the rare earth metals we need for this, and they are cutting back exports to help their own companies own this market) Some have never been given the capital they need, and many of them have been wasted on having the state become the next NSF/NIH granting agency. Rather than create real jobs, we built university labs. And this benefitted us … how? Many of the jobs in those labs were soft-money. Once the grant expired, so did the job. And this benefitted us … how? What the chart shows me is that we don’t have enough people here clamoring for capital to build companies. We don’t have enough capital here to build companies. Our government (local anyway) makes investments of dubious value, more for political purposes than actual state benefit. But of course, asking a politician to do the right thing rather than the thing to get re-elected … I dunno. I shouldn’t be so negative on this. I like Michigan. I really enjoy Traverse City area, the peninsula, the Mackinac area … Canton is a great place to raise a family, Ann Arbor is an awesome town, and despite its myriad of issues, Detroit has its charms … This is a great state. I simply wish the folks who have the ability to make or influence policy took the long view, looked at this chart as a symptom of what it represents, and then took firm actions to create capital for company formation here, to encourage small companies to start and grow here, to encourage relocation of startups to here … Maybe this is my “and I want a pony too” post.