As we explored in my last post from the beginning of our republic there has been predictions of the coming demise of high-density big cities. All of them have been wrong. The same is almost certain to be the case of today’s post-pandemic predictions of doom for big cities.

There are two main reasons why those predictions are always wrong. First concentrated talent working face to face significantly boosts productivity. And second, people––particularly young professionals––want to live in high-density, high-amenity urban neighborhoods where you do not have to own a car. It is almost certain the current pandemic will not alter those realities long term.

My last post focused on productivity advantages of high-density big cities. In this post we will look at talent wanting to live in high-density, high-amenity urban neighborhoods.

Evidence of the enduring attraction of big cities and their high-density, high-amenity neighborhoods is present today in the midst of our current pandemic. In a post for City Observatory entitled The exodus that never happened, Joe Cortright writes:

Our recent report, Youth Movement, confirmed the depth and breadth of the long-term trend of well-educated adults moving in large numbers to close-in urban neighborhoods. And the real-time data from real estate market search activity confirmed that cities were still highly attractive, gaining market share in total search activity from suburbs and more rural areas, according to data gathered in April by Zillow and Apartment List.com

Now, with even more data in hand, the picture remains very much the same.  Apartment List.com economists Rob Warnock and Chris Salviati have done a thorough analysis comparing the pattern of apartment search activity in the nation’s 50 largest metro areas between the first and second quarters of 2020; basically the period just before the pandemic struck with full force, and then the three months during which much of America was reeling from the virus and stuck in lock-down, with lots of time to consider possible new living locations.

Bottom line:  As revealed by apartment search activity, interest in cities actually increased in the second quarter compared to the first, relative to other locations, including suburbs, other less dense cities, and rural areas.

What is it about high-density, high-amenity neighborhoods that make them so attractive to young professionals? Then New York City Mayor Michael Bloomberg described it this way in a Financial Times column:

Many newly successful cities on the global stage – such as Shenzhen and Dubai – have sought to make themselves attractive to businesses based on price and infrastructure subsidies. Those competitive advantages can work in the short term, but they tend to be transitory. For cities to have sustained success, they must compete for the grand prize: intellectual capital and talent.

I have long believed that talent attracts capital far more effectively and consistently than capital attracts talent. The most creative individuals want to live in places that protect personal freedoms, prize diversity and offer an abundance of cultural opportunities. A city that wants to attract creators must offer a fertile breeding ground for new ideas and innovations.

In this respect, part of what sets cities such as New York and London apart cannot be captured by rankings. Recent college graduates are flocking to Brooklyn not merely because of employment opportunities, but because it is where some of the most exciting things in the world are happening – in music, art, design, food, shops, technology and green industry. Economists may not say it this way but the truth of the matter is: being cool counts. When people can find inspiration in a community that also offers great parks, safe streets and extensive mass transit, they vote with their feet.

Since Bloomberg wrote this column in 2012 young professionals are concentrating more in big cities. And as Cortright documents in his Youth Movement report concentrating particularly in high-density, high-amenity near-center-city neighborhoods.

The lure of “places that protect personal freedoms, prize diversity and offer an abundance of cultural opportunities” and provide “great parks, safe streets and extensive mass transit” remains as strong today as it did pre-pandemic.

The current predictions of the death of high-density, high-amenity neighborhoods are driven by the belief that high-density makes one far more susceptible to the coronvirus. But as Corthright writes that turns out not to be accurate:

… People might naturally assume that because New York is our densest city, and Coronavirus hit hardest there, that there was some connection. It turns out however, that within the New York metro area, rates of reported cases are actually higher in the suburbs (including Rockland and Westchester counties) than in the five boroughs of New York City. It’s also the case that in the city itself, the hardest hit neighborhoods actually are much less dense than those least affected.

While New York has dominated the awful statistics and headlines of the pandemic, today, the hardest hit area in the US is far away, and far different:  the Navajo Nation.  In the past week, New York’s rate of infection has been surpassed by that on the Navajo Nation, one of America’s least densely settled areas.  The nation covers an area larger than Ireland spread across three states—Arizona, New Mexico and Utah—and consists overwhelmingly of very low density housing.  But its rate has grown to more than 2,449  cases per 100,000 population even higher than New York City’s 2,300.

The underlying problems in the Navajo Nation are not density, but rather poverty, a lack of health care, and housing over-crowding. Interestingly, these same factors were identifies as correlates of Covid prevalence rates within New York City by a Furman Center analysis of zip-code case data.

And as Emily Badger explores in a New York Times article entitled Density Is Normally Good for Us. That Will Be True After Coronavirus, Too. high-density cities have many health related benefits. She writes:

Since the 1990s, researchers and planners have increasingly come to argue that dense urban environments, derided historically as diseased, can actually foster health. They don’t mean overcrowded tenements, but places where people live close enough to one another to walk where they need to go and to support one another. Such environments offer an alternative to sedentary, car-dependent sprawl, an antidote to growing health problems like obesity.

… In practical ways, density makes possible many of the things we need when something goes wrong. That is certainly true of hospital infrastructure — emergency response times are faster, and hospitals are better staffed in denser places. When one store is closed or out of toilet paper, there are more places to look. When people can’t leave home for essentials, there are alternative ways to get them, like grocery delivery services or bike couriers. When people can’t visit public spaces, there are still ways to create public life, from balconies, porches and windows.

The subtitle of Edward Glaeser’s Triumph of the City summarizes well the enduring value of cities and their high-density, high-amenity neighborhoods: How Our Greatest Invention Makes Us Richer, Greener, Healthier, and Happier. That is not going to change in a post-COVID world.

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In a summary of the research the Brookings Institution writes: “A look at men without jobs across the country illustrates large differences in the rise of American non-employment across regions and the hardening of America’s geographic divisions. In 2016, 51 percent of 25- to 54-year-old men in Flint, Michigan were not employed. In Alexandria, Virginia, it was 5 percent.

When you look at the Brookings map of male joblessness you quickly see that this is not just a Flint problem. With among the nation’s highest male joblessness in northeastern Lower Peninsula Michigan and high rates through out much of northern Michigan.

Michigan is tied for 37th in the proportion of those 16 and older who work, in large part––but not only––because of high levels of male joblessness. By comparison if Michiganders worked at the same rate as Minnesotans (2nd) there would be 725,000 more Michiganders working today. Mississippi is 49th.

That Michigan would end up with an economy that is grouped with Mississippi is not a surprise to us. In 2011 Dave Waymire wrote a post for our blog entitled Follow the dashboard to Michissippi –– or Michesota. He wrote:

What do winner states have in common? Well, readers of this blog should have guessed by now. They are among the nation’s leaders in education attainment. They grow, retain and attract college graduates. They use brains as a magnet for knowledge industry businesses. Smart people earning good money in the knowledge industry hire plumbers, build new homes and shop in retail stores, benefiting all. And college attainment is a decent proxy for long lives.

Unfortunately, it seems that Michigan is doing all it can to ignore the policies of these states. Instead, we are focused on cutting taxes, cutting education, and becoming a so-called “economic growth” state. The problem is that those states tend to look a lot like Mississippi (dead last in per cap income for generations, shortest life expectancy, high poverty rates) than Minnesota (very low poverty rates, top 15 per cap income, one of the leaders in long lives.

Preparing, retaining and attracting college graduates will help get you the Vulcan ideal: Live long and prosper.

Low taxes will get you Michissippi.

Also in 2011 Paul Hillgonds, a Michigan Future Board member then and now, in a speech at Grand Valley State University drawn largely from our 2006 A New Agenda for a New Michigan said: “We all would like Mississippi’s taxes and Minnesota’s social and economic infrastructure, but there is no state in the nation that has both. Which fiscal strategy will we choose?”

By and large, our fiscal strategy has been to follow the Mississippi path. Austin, Glaeser and Summers document the results, as does the Michigan Association of United Way’s ALICE report that found in a strong economy 40% of Michigan households––across the state––cannot pay for basic necessities. If we want not to be Michissippi, as Hillegonds and Waymire noted seven years ago, we need to start following the Minnesota strategy.

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“Included in my standard presentation is this quote from Harvard economist Edward Glaeser: In the long run, America will be richer than China only by having smarter citizens, and that requires the skills that come from schools and cities, not dispersed factories.

It is great summary of our approach to economic development. In an increasingly knowledge-based economy, human capital/talent is the asset that matters most. And the policy levers that have the greatest impact on prosperity at the state and regional levels are those which prepare, retain and attract talent. So schools (from early childhood through college) matter most for preparing for the economy of the future. And cities are essential because increasingly that is where mobile young talent wants to live and work after college.

I’ve recently read two pieces that lay out well what we need to do to have the kind of schools we need to prepare our kids for the economy they will live in and the kind of cities we need to attract mobile young talent. Both highly recommended. And both with visions that are widely different than the path we are on now, as a nation and, even more so, here in Michigan.

Vishaan Chakrabarti, the director of Columbia University’s Center for Urban Real Estate and a partner at SHoP Architects, wrote for the Design Observer Group an essay entitled “Building Hyperdensity and Civic Delight“. It makes a compelling case why we need much more dense cities. He writes:

Because hyperdensity — defined as density sufficient to support subways — contributes to the health, prosperity, and sustainability of cities, the densification of our built and social environments will to a large extent determine our strength as a nation. Compared to most forms of human habitation, dense cities are the most efficient economic engines; they are the most environmentally sustainable and the most likely to encourage joyful and healthy lifestyles.

Talk about a vision contrary to conventional wisdom––particularly here in Michigan! Where most citizens believe cities are a drain on the economy, rather than the engine they are. And those who do believe in vibrant cities want low density. Chakrabarti lays out the reasons why hyperdense cities are the direction we need to go in.

On schools, Elizabeth Green’s Building A Better Teacher is terrific. Probably the best book I have read on k-12 eduction. Its a must read. Green makes the case that teacher quality is the ingredient that matters most to student achievement. And that teacher quality is dependent on the profession being viewed as a craft developed over a career. That great teachers are developed, not born with innate skills. That pedagogy matters and can be learned.

Much of the book is about cutting edge work done at the Ed Schools at Michigan State University first, and now the University of Michigan. And how those ideas have been implemented far more in Japan than here. Here, by and large, both traditional schools and what are labeled reform schools, don’t pay much attention to improving the quality of teaching. With very predictable results: little improvement in student achievement. No matter what the policy, testing or assessment changes/reforms.

Like Chakrabarti, Green lays out a vision that is contrary to the path that we are on. A different way of organizing teaching and learning; a different way of preparing educators; and a much different way of assessing and holding teachers accountable. But a vision that is far more likely to lead to much higher student achievement than the path we are on now. If you care about k-12 education please read this book.”

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The reason they are important to economic growth is both they are the most mobile and that knowledge workers––professionals and managers––are now, and will increasingly be, the core of the middle class. They will play the same role in the economy as high wage factory workers did for most of the 20th Century when they were the core of the middle class.

Their purchasing power will create demand for housing, retail, hospitality, etc. which will increase jobs in all those sectors. Not just in the neighborhoods where they live and work, but throughout the region and even the state when they vacation and purchase second homes. For most of the 20th Century Michigan policy was focused on meeting the interests of those high paid factory workers. Everyone understood they were the anchor of the stateʼs economy. No one argued that focusing on them was either trickle down or elitist.

Now we have data on how much college graduates add to local economies. The data comes from Jonathan Rothwell of Brookings. He calculates “the average bachelor’s degree holder contributes $278,000 more to local economies than the average high school graduate through direct spending over the course of his or her lifetime; an associate degree holder contributes $81,000 more than a high school graduate.”

Specifically Rothwell calculates that households where the highest educated member has a masters degree or more spent in 2014 $41,000 in the local economy and paid almost $8,000 in state and local taxes, compared to $32,000 and $5,000 for households with someone with a bachelors degree; $25,000 and $3,000 associates degree; $22,000 and $2,000 some college and $19,000 and $2,000 high school degree.

In that previous post I cited a New Times column by Harvard economist Edward Glaeser. I wrote: “Where talent concentrates you get more job creation. In a New York Times column entitled “Teach Your Neighbors Well”, Edward Glaser writes that the unemployment rate for all was lower in metropolitan areas with the highest proportion of adults with a four year degree or more. So the more college educated the region the lower the unemployment rate is for those without a college degree.

Rothwell’s findings are consistent with Glaeser’s. More local spending leads to more jobs for all including those without four year degrees.

The post The college grad multiplier appeared first on Michigan Future Inc..

It is great summary of our approach to economic development. In an increasingly knowledge-based economy, human capital/talent is the asset that matters most. And the policy levers that have the greatest impact on prosperity at the state and regional levels are those which prepare, retain and attract talent. So schools (from early childhood through college) matter most for preparing for the economy of the future. And cities are essential because increasingly that is where mobile young talent wants to live and work after college.

I’ve recently read two pieces that lay out well what we need to do to have the kind of schools we need to prepare our kids for the economy they will live in and the kind of cities we need to attract mobile young talent. Both highly recommended. And both with visions that are widely different than the path we are on now, as a nation and, even more so, here in Michigan.

Vishaan Chakrabarti, the director of Columbia University’s Center for Urban Real Estate and a partner at SHoP Architects, wrote for the Design Observer Group an essay entitled “Building Hyperdensity and Civic Delight“. It makes a compelling case why we need much more dense cities. He writes:

Because hyperdensity — defined as density sufficient to support subways — contributes to the health, prosperity, and sustainability of cities, the densification of our built and social environments will to a large extent determine our strength as a nation. Compared to most forms of human habitation, dense cities are the most efficient economic engines; they are the most environmentally sustainable and the most likely to encourage joyful and healthy lifestyles.

Talk about a vision contrary to conventional wisdom––particularly here in Michigan! Where most citizens believe cities are a drain on the economy, rather than the engine they are. And those who do believe in vibrant cities want low density. Chakrabarti lays out the reasons why hyperdense cities are the direction we need to go in.

On schools, Elizabeth Green’s Building A Better Teacher is terrific. Probably the best book I have read on k-12 eduction. Its a must read. Green makes the case that teacher quality is the ingredient that matters most to student achievement. And that teacher quality is dependent on the profession being viewed as a craft developed over a career. That great teachers are developed, not born with innate skills. That pedagogy matters and can be learned.

Much of the book is about cutting edge work done at the Ed Schools at Michigan State University first, and now the University of Michigan. And how those ideas have been implemented far more in Japan than here. Here, by and large, both traditional schools and what are labeled reform schools, don’t pay much attention to improving the quality of teaching. With very predictable results: little improvement in student achievement. No matter what the policy, testing or assessment changes/reforms.

Like Chakrabarti, Green lays out a vision that is contrary to the path that we are on. A different way of organizing teaching and learning; a different way of preparing educators; and a much different way of assessing and holding teachers accountable. But a vision that is far more likely to lead to much higher student achievement than the path we are on now. If you care about k-12 education please read this book.

The post Cities and schools appeared first on Michigan Future Inc..

In his Free Press interview Sugrue says: “It’s a pretty commonplace assumption that if you gentrify neighborhoods, if you bring new investment to downtown, that its benefits will trickle down to the majority of the city’s population. There are benefits from new investment, including job creation, increased tax revenue and safety in the city, but on the other hand, the kinds of jobs that are being created by a lot of the downtown redevelopment are jobs for folks who have significant education, skills and means already. They’re not, by and large, creating stable secure jobs for folks down the ladder, for working-class folks in particular. Gentrification brings all sorts of small businesses, coffee shops, trendy bars, restaurants, art galleries and a vitality and energy to neighborhoods that have often been bereft of commerce for a long time. But again, these aren’t places that are bringing back the jobs that are essential to the city’s future stability and possible growth.”

Sugrue, in addition to attracting immigrants, offers an alternative: “The most important interventions to deal with poverty and underemployment are creating jobs and improving public education. And those have to be at the core of any effort to turn Detroit around. … Job training programs that are geared toward growing sectors of the economy, that allow for a retooling of worker skills to adapt to the new economy, those are good.”

Lets start with Sugrue’s assertion that concentrating young talent doesn’t bring jobs to others. The reason they are important to economic growth is both they are the most mobile and that knowledge workers––professionals and managers––are now, and will increasingly be, the core of the middle class. They will play the same role in the economy as high wage factory workers did for most of the 20th Century when they were the core or the middle class.

Their purchasing power will create demand for housing, retail, hospitality, etc. which will increase jobs in all those sectors. Not just in the neighborhoods where they live and work, but throughout the region and even the state when they vacation and purchase second homes. For most of the 20th Century Michigan policy was focused on meeting the interests of those high paid factory workers. Everyone understood they were the anchor of the state’s economy. No one argued that focusing on them was either trickle down or elitist.

Unlike high paid factory workers of the past, young professionals also grow the economy by being creators of new businesses and, where they are concentrated, attracting businesses. Those new businesses, just as those created by the immigrants Sugrue celebrates, create new jobs for more than knowledge workers. In addition, unlike high paid factory workers of the past who moved to where the jobs were, increasingly knowledge-based employers are moving to where the talent is. Talent being the most important asset to their enterprise and in the shortest supply.

Where talent concentrates you get more job creation. In a New York Times column entitled “Teach Your Neighbors Well”, Edward Glaser writes that the unemployment rate for all was lower in metropolitan areas with the highest proportion of adults with a four year degree or more. So the more college educated the region the lower the unemployment rate is for those without a college degree.

As Don Grimes and I laid out in our The New Path to Prosperity report all the job growth in America from 1990-2011 came in services. And the high wage growth was concentrated in knowledge-based services. Over those two decades manufacturing lost nearly six million jobs while knowledge-based services added more than 16 million jobs and other private services added 22 million jobs. Its almost certain these trends will accelerate, not reverse.

These are the sectors that retaining and attracting college educated Millennials will help grow. They are the growing sectors of the economy that Sugrue wants to train city residents for. Regions with vibrant central cities that are attractive places for mobile young talent will have more of those jobs than those who don’t. That is why retaining and attracting young talent should be an economic development priority for the city, region and state.

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Both make the point that the chief cause of Detroit’s collapse is the region (not just the city) not moving away from the economy of the past for way too long. That its over reliance on the auto industry –– and particularly auto factories –– dooms the region to slow economic growth. And slow economic growth makes almost inevitable financial woes not just for the industry but also for local governments particularly those where the poorest in the region are concentrated.

This analysis is that the fundamental challenge for the city and region is economic, not political. Yes corruption, mismanagement, legacy costs, state budget cuts, white flight, etc. contributed to the bankruptcy. But at its core the region and city are not going to have prosperous citizens and local governments, schools, etc. until and unless metro Detroit becomes a competitive 21st Century economy rather than relying (more like wishing and hoping) on the old auto factory economy that made us one of the most prosperous places in the last century.

Forbes writes: “Put simply, Michigan and its city most known for the rise of the automobile clung to a business – car manufacturing – that was long ago rendered yesterday’s commercial news. And just as Silicon Valley would be destitute too if its companies used limited U.S. labor to manufacture computers that anyone can make, Detroit is bankrupt because its biggest employers still manufacture – as opposed to simply design – cars that anyone can make. The mainstream punditry will talk about unions, crime and high taxes as the causes of Detroit’s bankruptcy, but the real answer is rooted in something far more basic: cars are easy to make, and Detroit’s biggest employers make cars. Detroit will revitalize itself once its biggest employers migrate toward that which isn’t so simple.”

Samuelson writes: “In the countless Detroit post-mortems, many potential villains have emerged: the ineffectiveness of Coleman Young, mayor from 1974 to 1994; white flight (from 1970 to 2008, the white portion of the city’s population fell from 56 percent to 11 percent); costly government workers’ pensions. But at bottom, Detroit’s failure resulted from its success. It became a prisoner of its dependence on the auto industry. … But what made short-term sense spelled long-term suicide — for companies, workers, Detroit and Michigan.”

Samuelson goes on the explore the way out. Once again its primarily economic, not political. He interviews Edward Glaeser, the author of the terrific Triumph of the City. Samuelson continues:

“What cities do is transfer information,” says Glaeser. They’re incubators for new ideas and industries. This describes the Detroit of the early 1900s, when dozens of car companies formed annually (peak year: 1907 at 82). Though it doesn’t mirror post-war Detroit, it does suggest what the city and state need to become. They aren’t alone in suffering economic dislocation. In 1971, two Seattle realtors posted this funny-dreary billboard: “Will the last person leaving SEATTLE — Turn out the lights.” Employment at Boeing had plunged from 100,800 in 1967 to 38,690. In the late 1960s and early 1970s, New York City lost more than 300,000 manufacturing jobs, led by the garment industry, reports Glaeser. But the losses weren’t fatal. The Seattle area now has Microsoft, Amazon and Starbucks; New York has recovered, led in part by a resurgent (and maligned) financial industry.

Samuelson concludes: “What Detroit teaches is that those who deny economic change often become its victims.“

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Here is the framework I presented:

“The purpose of the exercise: It is not simply to reduce the deficit, but to ensure prosperity. Solvency is vital, but it is not enough.”  Thomas Friedman and Michael Mandelbaum, That Used To Be Us

Friedman and Mandelbaum set out the purpose of policy: to ensure prosperity. That is the goal. Economic development should be about a rising standard of living for Michiganders. Everything else are options for how to achieve prosperity.

“In the 20th century, the most valuable assets to job creators were financial and material capital. In a changing global economy, that is no longer the case. Today, talent has surpassed other resources as the driver of economic growth.” Governor Rick Snyder, Special Message on Talent

Governor Snyder describes what matters most to obtaining prosperity: talent. Do everything else we think of as economic development and don’t increase the concentration of talent in Michigan we, almost certainly, will remain a low prosperity state.

Harvard economist Glaeser describes the levers available to state and local policy makers and economic developers that matter most in developing the talent concentrations needed to achieve prosperity. Schools to better prepare talent and cities because that is where talent is increasingly concentrated and where it is most productive. So economic development priority #1 for Michigan must be to prepare, retain and attract talent.

When we apply this framework – the purpose of policy is prosperity, talent is the driver of prosperity and schools and cities matter most to concentrating talent – we developed a five part agenda:

• Building a culture aligned with (rather than resisting) the realities of a flattening world. We need to place a far higher value on learning, an entrepreneurial spirit, and being welcoming to all.
• Ensuring the long-term success of a vibrant and agile higher education system. This means increasing public investments in higher education. Our higher education institutions—particularly the major research institutions—are the most important assets we have to develop the concentration of talent needed in a knowledge-based economy.
• Creating places where talent—particularly mobile young talent—wants to live. This means expanded public investments in quality of place, with an emphasis on vibrant central-city neighborhoods particularly in the city of Detroit
• Transforming teaching and learning so that it is aligned with the realities of a flattening world. All of education needs reinvention. Most important is to substantially increase the proportion of students who leave high school ready for higher education.
• Developing new public and, most important, private sector leadership that has moved beyond a desire to recreate the old economy as well as the old fights. Michigan needs a leadership that is clearly focused, at both the state and regional level, on preparing, retaining, and attracting talent so that we can prosper in the global economy.

The details of our agenda are laid out in our 2006 A New Agenda for a New Michigan. Clearly we have ended up with an agenda that is much different than the one being pursued in Lansing now and for at least the last decade. Policy makers of both parties have been focused on the financial and material capital that Governor Snyder wrote are no longer the chief assets for job creators. Primarily through tax cuts. But in a world where “talent has surpassed other resources as the driver of economic growth” making smart public investments in education and quality of place are much more likely to lead to prosperity.

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Talk about contrary to conventional wisdom! The best economic development strategy may be to attract smart people and get out of their way sure isn’t how state and local policy makers and economic development officials approach the task of growing the Michigan economy. Their focus, almost exclusively, is on attracting business investment. And yet the evidence is on Glaeser’s side.

The fact is that the single best predictor of regional and state prosperity is the proportion of adults with a four year degree or more. Cities – the theme of Glaeser’s book –  are the driving force of economic growth in large part because increasingly college educated adults are concentrating in big metropolitan areas anchored by vibrant central cities.

One city – and region – that gets that attracting talent is central to prosperity and is reaping its benefits is Denver. Tami Door, CEO of the Downtown Denver Partnership, in a must read Denver Post guest column, writes:

Door writes that the Denver has made its priorities “amenities, transportation infrastructure, educated population, (downtown) residential growth, innovation and entrepreneurship, and emerging green economy — that make the urban core of the Mile High City an attractive place for these younger workers.”

And metro Denver has repeated big benefits from making attracting mobile young talent a priority. In 2009 (still the latest available data), metro Denver among the 55 metros in the country with a population of one million or more is 9th in per capita income and, maybe most importantly, 7th in private sector employment earnings per capita.

The lessons Denver, and as I have written about previously  New York City, Chicago and Pittsburgh, have learned that creating vibrant central cities that attract mobile young talent is essential to economic growth is a lesson that we have not, but need to, learn here. The simple fact is without concentrated talent you cannot recreate a high prosperity Michigan.

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Rick Haglund in an insightful Mlive column reviewing Governor Granholm’s new book makes the same point:

Her prescriptions are heavy on government partnerships with industry, and a focus on “clean energy” and advanced manufacturing. But Granholm says precious little about the areas where most of the good-paying jobs in a changing knowledge economy are being created — information, health care, education and financial services. Nor does she say much about the need for an urban strategy and boosting state financial support for higher education — two areas that are critical in attracting and retaining the young talent Michigan needs. But state government has been cutting revenue sharing to cities and university appropriations for years, a practice Gov. Rick Snyder has continued. Reversing those trends will be hard at a time when Snyder’s fellow Republicans want to abolish as much government as possible. But if Snyder fails in his pledge to make our cities more attractive and our workers smarter, he may find himself hiding behind sunglasses and a ballcap as his days as governor wind down.

Skills that come from schools and cities. Think about how different that is from the normal approach to economic development. Most policy makers and practitioners would think you are from Mars if you suggested that schools and cities are the levers that matter most for economic success. They almost exclusively focus on retaining and attracting businesses.

The evidence, in an economy being constantly transformed by globalization and technology, supports Glaeser’s central conclusion: concentrated talent is the most important ingredient driving economic growth. And where are college educated adults concentrating? Big metros anchored by vibrant central cities.

We found in our just released progress report on Michigan’s transition to a knowledge-based economy that high prosperity is occurring chiefly in those places where knowledge-based enterprises across many sectors are concentrating. They are concentrating in areas with a high proportion of adults with a bachelor’s degree or more.

In 2000, at the end of the boom years, Michigan still ranked 18th in per capita income. We were 34th in four-year degree attainment. In many ways, 2000 marked the end of an era when you could have high prosperity with low education attainment. No more! In 2009 Michigan ranked 36th in college attainment and 37th in per capita income — 13 percent below the national average, our lowest since the federal government started keeping statistics in 1929.

Our basic conclusion: what most distinguishes successful areas from Michigan is their concentrations of talent, where talent is defined as a combination of knowledge, creativity and entrepreneurship. Quite simply, in a flattening world where work can increasingly be done anyplace by anybody, the places with the greatest concentrations of talent win. States and regions without concentrations of talent will have great difficulty retaining or attracting knowledge-based enterprises, nor are they likely to be the place where new knowledge-based enterprises are created. The knowledge-based economy is now the path to prosperity for Michigan.

Michigan has lagged in its support of the assets necessary to develop the knowledge-based economy at the needed scale. The assets that matter most: a quality and agile higher education system and big metropolitan areas, anchored by vibrant central cites, where talent want to live and work. These are two areas the state has been disinvesting in this decade. Not smart!

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