Ad Nauseam Entrepreneurialism

John Torinus has an interesting article, UW System Needs New Kind of Leader, which raises pertinent issues and offers some reasonable options.

The only area I have strong disagreement with is his recommendation to "Emphasize entrepreneurship on each campus. Entrepreneurs re-invent economies, which Wisconsin will need in the rebound from our deepening recession. Some campuses are well down this path."

Entrepreneurship, entrepreneurialism, etc. has been pushed ad nauseam over the past few decades. This serious-sounding talking-point has little supporting evidence. This idea that everyone is a business mogul and everyone should be investing and/or starting a new business or venture, is a big reason this country is so ill-informed, ill-prepared, has crumbling infrastructure, and has seen the environment continually degraded.

The UWM Center for Economic Development performed an exhaustive study debunking the myth of the entrepreneurial university. The Hechinger Report echoed similar findings in Think universities are making lots of money from inventions? Think again. Derek Lowe found similar results for his article Innovation, at Universities and in Industry. Two others whom have studied the issue extensively, Matthew Wisnioski and Lee Vinsel, have noted identical results, most recently in The Campus Innovation Myth.

The "entrepreneurialism" drum is one that we should have stopped pounding long ago.

If Only Slogans and Buzzwords Were Needed For Economic Growth

David Haynes, editorial page editor of the Journal Sentinel, opines a lengthy list of platitudes as a prescription for economic growth in the area. He holds up the Research Triangle in North Carolina as a best practices example or guiding post.

The Research Triangle area of North Carolina — with Durham, Raleigh and Chapel Hill at its vertices — has long turned good ideas into business enterprises. World class universities attract an enviable supply of talent. and a range of companies — from startups to Cisco, BASF and GlaxoSmithKline — keep that talent anchored. The Triangle has one of the highest levels of educational attainment in the nation.

The Milwaukee region is not the Research Triangle and shouldn't try to be. Southeastern Wisconsin has to call on its own strengths, starting with an economy forged by industry leaders such as Northwestern Mutual, Rockwell Automation, GE Healthcare and Fiserv as well as a growing research presence at its academic institutions.

Marc Levine addressed this leap of faith in The False Promise of the Entrepreneurial University:

In short, university research parks are anything but sure-fire investments in urban or regional economic prosperity. Success is relatively uncommon, as Wallsten’s impact study makes clear. “Game-changing” success – the kind that remakes a regional economy—is even more rare, the product of unique historical factors, good luck, and timing. For example, the North Carolina Research Triangle Park’s oft-cited (and oft-emulated) success, “was built around its first-mover status in the field of science parks,” generous state and federal funding, and a uniquely patient multi-decade commitment by political leadership – and even with all those difficult-to-replicate factors in its favor, it took more than 30 years to see evidence of the cluster development attributed to the park (Weddle, 2007, 7). Universities that cavalierly pursue and oversell URPs as “transformational” economic development investments risk creating white elephants and misallocating millions of dollars that could be better invested bolstering the core missions of their institutions.

Now, Haynes does say we shouldn't try to be the Research Triangle, but that we do need to foster more entrepreneurial activity, and then he uses numerous Research Triangle examples to illustrate the path we should emulate.

The region's poor entrepreneurial performance matters: Research has shown that new businesses account for nearly all net new job creation, according to the Kauffman Foundation, and they juice local economies by boosting competition and innovation. If a region isn't creating enough new companies, it will likely have sluggish growth.

A vibrant entrepreneurial ecosystem that supports people who want to take the leap from idea to business formation is one essential element of a strong ecosystem for business development. So is the support of business leadership in the community. These are deep strengths in the Research Triangle.

Research has also shown that new businesses account for most job loss.

The claim that most net new jobs came from new firms conceals the fact that existing firms added tens of millions of jobs in this 25-year period. Of course existing firms also lost tens of millions of jobs. We can say that the net job creation for existing firms was zero, but if we did not have an environment that was conducive for the job adders to grow (how many jobs did Microsoft, Apple, and Intel create after their first 5 years of existence?), then existing firms would have lost tens of millions more jobs.

And, of course, Haynes had to mention venture capital, another one of the economic-clubs pundits continually beat us with whenever they're trying to sell these unsupported ideas.

Josh Lerner, of Harvard, has found the number of exceptional venture capitalists is very small. Harold Bradley, of the Kaufmann Foundation, believes venture capitalists have plenty of money, but allocate it very inefficiently, and therefore should not be receiving additional public dollars with the hope of boosting a local economy. Bradley and Carl Schramm, in an article for Business Week, write that the current focus on fees has promoted start-up flipping rather than nurturing.

In 2013, The Legislature overwhelmingly voted Tuesday to provide $25 million in taxpayer money to start-up companies. And we all know the booming job creation the Scott Walker regime has presided over since then.

Haynes closes with, "That's thinking like an entrepreneur. And it's the kind of thinking we could use more of in Milwaukee."

Let's start with the fact that a lot of economic momentum for a city or region is impacted by state and federal policies. Scott Walker killing the train, which would have better connected businesses and citizens in the region, was definitely not thinking like an entrepreneur. That infrastructure investment would have improved efficiencies, bolstered existing businesses, encouraged start-ups and increased the attractiveness of the region as a place to work and live. It would have been an investment of more than a billion dollars into the economy. I think we would have seen quite a bit of venture capital, start-ups, entrepreneurial activity and the like with an injection of a billion dollars.

So, maybe when our leaders stop cutting off our nose to spite our face we can have a real discussion about what's best for job growth.

For Further Reading:
Another False Idol: Venture Capital
Starting Up More Trouble
Faulty Excuses
A Steaming Pile of Boldness
Venturing Aimlessly
Venturing Wisconsin's Money
Selling Entrepreneurialism
Starting-Up More Trouble 

The False Promise Of The Entrepreneurial University

Entrepreneurial University Hype

An Inherently Capitalistic Approach May Not Be A Good Thing

Recent history (the last 40 years, and more specifically, the last decade or so) should have given "free markets", "capitalism" and "running it like a business" a cumulative black eye. From increased market volatility, to insecure retirement, to rising health care costs, and stagnating wages, running everything like a business and allowing blind faith in the "free" market has been a spectacular failure for 99.9% of the population.

But, leave it to Republicans to beat and ride that dead horse into the ground.

Just recently in the Journal Sentinel, Dan Steininger (of BizStarts Milwaukee, Wisconsin Early-Stage Fund and Successful Entrepreneurs LLC), in an effort to laud the supposedly impressive economic power of research parks, claimed that, at the end of the day, we should all push for more public dollars being used for more private speculation because it is an "inherently capitalistic approach."

Research parks are claimed to "kick-start" economies and create jobs "that attract new companies to the region."

Steininger exclaims, "The University of Wisconsin-Milwaukee's Innovation Park is now under construction in Wauwatosa. Its goal is to become the largest driver of economic development for southeastern Wisconsin in the 21st-century, knowledge-based economy."

Investment in research and development (R&D) is great. Increased educational spending, also, great stuff, in the general sense of things.

Although ... The "largest driver of economic development"?

I'm just saying there should be some perspective to counter the overblown rhetoric. There are many worthwhile endeavors and programs, which are important to a majority of citizens.

Government spending is wasteful when it goes to the poor, to teachers, or to public transportation. But there's never enough money for stadiums, research parks, and other private-interest pet projects. The projects that generally benefit a select few at the expense of many.

Small cabals of "entrepreneurs" are the ones who told us to run things like a business, cut taxes, and pump more money into private investment schemes. Yet, nothing has trickled down. Wages are down, health care costs are up, and retirement is increasingly unstable and/or out of reach. I don't know about you, but to me, that's not economic growth nor job creation.

For Further Reading:
The False Promise Of The Entrepreneurial University
Research Parks
Research, Science & Technology Parks: Global Best Practices
Technology In The Garden: Research Parks & Regional Economic Development
University Related Science Parks
UWM As Economic Engine? Dream On

Sunday Reading

Competitiveness Is About Capital Much More Than Labor
Decades Of Decline In Employer-Sponsored Health Insurance Coverage
Gary Oldman
Medicaid's Big Spenders, In One Chart
No Shortage Of Rental Housing, Rents Not Rising Rapidly
Representatives & Senators: Trends In Member Characteristics Since 1945
Right-Wing Plot To Undermine Science In Public Schools
SuperPAC-Men Playing For Big Payday
The 10 Worst Things About The Oscars
Universities In Innovation Networks
You're Not Paying The Tax Rate You Think You Are

Midweek Reading

An Inconvenient Truth
The Case For Congestion
The Corporations That Occupy Congress
2011 Milwaukee: Year In Review
The Origins Of Financial Innovation
The Past, Present, & Future Of Venture Capital
The Price of Extremism: Wisconsin's Economy Under The Walker Administration
The University & the Start-Up: Lessons From The Past Two Decades

Weekend Reading

Citizens United V. America's Citizens
Myth Of Charter Schools
Reconciling Economic Growth And Fiscal Responsibility
Rich Declare War On The Middle Class
Schakowsky Alternative To Simpson-Bowles Deficit Reduction Plan
Study Says Most Corporations Pay No U.S. Income Taxes
The University And The Start-Up
What Causes Deficits?

Where The Bread Is Buttered

It seems blind faith and self-interest has paid off well for Michael R. Lovell, dean of the UWM College of Engineering and Applied Science. He was behind Carlos Santiago's growth plan and a supporter of "a massive infusion of investment dollars into his department." Now that Santiago is leaving, Lovell has been appointed interim chancellor. I guess the movers-and-shakers behind the growth plan feel Lovell knows the talking-points well enough to see this boondoggle through.

Professor Marc Levine, UWM history and urban studies professor, has shown that the entrepreneurial growth strategy centered on a university is largely an illusion. Yet, the Journal Sentinel is again pushing the idea that this initiative will be a huge spin-off and job creator. All based on purely anecdotal evidence.

The media and the well-connected always gripe about public spending, public employees, and any project that actually tries to do good and help workers and those in need. We can't do it. It's too much. We can't afford the debt. But when it's a playground for the rich, a research park, or some other speculative white elephant, we can't afford not to do it.

I'm all for the expansion and development of UWM as a university and research hub. But much of this growth plan should be tweaked, moved, or discontinued. Some of this funding could obviously be better spent, especially now, during these tough fiscal times.

For Further Reading:
College: Cash Cows?
Don't Stop Believing
Water Down Corporate Accountability

Save Our City

We are finally beginning to publicly discuss UWM's "entrepreneurial" strategy, specifically their proposed engineering school on County grounds near Wauwatosa. Too bad much of the dialogue is condescending and superficial. The cabal of power brokers hell-bent on pushing forward with the suburban location are rather dismissive and disdainful of anyone questioning such a move.

Their well-reasoned and sound analysis, supporting such a suburban locale, comes in such stellar verifications as, "may offer," "difficult to measure," and "there is no guarantee that new research will bear fruit." Alongside such airtight assurances, platitudes such as, "Milwaukee needs to take a risk," and "we have to get in the game," are paraded out by sympathetic cheerleaders.

The "long-term potential is very strong," claims Rita Cheng, UWM vice chancellor for academic affairs. Just saying so, they seem to feel, makes it so. And, in the same article, Tom Daykin of the Journal Sentinel reports Michael Lovell, dean of UWM's College of Engineering and Applied Science, agrees. What a surprise that the dean of an engineering school would agree with an massive infusion of investment dollars into his department.

Their sloganeering and incessant boosterism is reminiscent of the lottery: "You gotta get in it, if you want to win it!" The problem is, the chances of UWM and Milwaukee winning with this investment are similar to the odds of actually winning the lottery. Faced with an actual analysis revealing the experience of the majority of universities over the past few decades attempting an "entrepreneurial" strategy has been a poor return on their investment, the cabal, like Pollyanna, bury their collective head in the sand and reaffirm, Stick To The Plan.

For an urban university to march forward with expansion plans in the suburbs, in this age of environmental awareness, borders on criminal. Growing within the City and encouraging others to do such...talk about an opportunity to have a long-lasting, sustainable, and community-friendly impact.

There is nothing quite as intellectually dishonest as academics, supposedly schooled in the scientific method, showing an aversion to data collection and analysis, open debate, and allowing the research to lead us to the most optimal conclusions. No. The cheerleaders will have none of that.

The Journal Sentinel editorial, as usual, is right behind, beating the drum. They believe UWM is "right to stick to the plan." They never corroborate why UWM must stay the course, provide any research findings or data collection of their own, or quantify why this facility, at this location, is a can't-miss and a must-do for Milwaukee.

The Journal editorial is a collection of anecdotes. The Journal, along with fellow boosters, completely ignores the actual return other universities have experienced regarding such developments [not] initiating collaborative efforts and [nor] attracting venture capital. All this in addition to the fact that the other supposed outcomes these snakeoil salesmen are promising have not been the results for the majority of other universities.

This doesn't mean not to build new facilities somewhere, or that the programs are somehow undeserving of investment. But maybe they can be scaled back a bit. Let's possibly revitalize older buildings or blighted strips in older neighborhoods of the city. (Which could spur investment in the most needy areas of the city, while also moving the university forward.) The investment could also be spread out over more of the departments at the university, capitalizing on numerous strengths, rather than putting all the eggs in one or two baskets.

There are more options available. There is no need to rush ahead with the suburban proposal. The University and the City need to look at this a bit more carefully before they make any decisions that will affect our City and it's largest public university for many generations to come.

Colleges: Cash Cows?

Marc Levine (University of Wisconsin-Milwaukee history and urban studies professor) has released a report, The False Promise of the Entrepreneurial University, questioning the validity, efficacy, and opportunity cost of UWM's 'university as economic engine' development strategy.

He is not stipulating that universities do not have any affect on economic development outcomes for their surrounding areas. As some have wrongfully, stunningly, and incoherently ranted. He merely shows the data which - when measured by a variety of socioeconomic indicators - exposes few of those whom have attempted such a strategy have reaped benefits to justify the cost.

John Torinus - Serigraph Inc. chairman and tax-avoider, and Journal Sentinel business-class mouth-piece - belittles the research. He sites Madison's University Research Park as one such 'entrepreneurial university' project that has worked, and therefore, forget the numerous examples and statistics that Levine has gathered, we should continue blindly moving forward, pumping money into ill-conceived, poorly planned, and empirically unsubstantiated ventures. Facts and well-reasoned discussion be damned!

John Wiley, chancellor emeritus University of Wisconsin-Madison, takes swipes at the research. Using much of the same anecdotal, status quo-clinging, vested-interest, economic development talking-points that have been mistakenly used over and over again in city after city.

I also see many commenters, whom I have to assume only bothered to read Levine's Journal Sentinel piece and not his full report, complaining that Professor Levine doesn't acknowledge UW-Madison's successes. Although, he mentions Madison numerous times in his report.

Simply wishing and hoping to be like another university (in this case, Madison) that has achieved entrepreneurial success, or throwing money at a "good bet," does not automatically make it happen. Taking risks can pay off. There are always risks in investing. But most want to minimize their risk and not just do something for the sake of doing something.

Also, I'm always a bit perplexed by those knocking the research of academics - the "cheap seats" as John Torinus put it. Or as one commenter said about Levine, "...directs a few campus centers and does not appear to have any major leadership experiences." Directing an academic center is not leadership? Who teaches those whom will become managers, executives and CEOs? Isn't it academics and professors? If professors don't know what they're talking about and they're not "leaders," why are we investing in the engineering and Water Institute professors? After all, they come from the "cheap seats," too.

Attack the message, not the messenger. If one can find holes in the methodology and analysis, fine, pick it apart. But to try and demean Professor Levine because he has raised questions regarding UWM's development proposal is childish and does nothing to substantively address the concerns he has documented.

UWM is on the right track in many regards. The University has made great strides in academics and in the community over the last few decades. But that doesn't absolve them from criticism and open discussion of their policies and community investment decisions.

Many detractors have made this into a Levine versus Santiago melodrama. That's too bad. The real point should be a discussion about what is the proper amount to invest, where, and toward what activities. Levine's research indicates we may want to look at other options for our limited investment dollars. We do not have to simply jump at any idea Mr. Santiago, his associated commercial interests, and the cabal of local power brokers pushes forward.

[Disclosure: I was formerly employed by the Center for Economic Development under the directorship of Marc Levine.]