Thursday, January 14, 2010

Michigan Diaspora

I've got some great blog fodder in the queue. But with the latest issue of the Economist now available online, I'll hit one of the highlights. Doom and gloom in Michigan is one of the more interesting stories, ending with (as far as I am concerned) a perfect twist:

Given this climate many young educated workers are fleeing the state. About 40% of Michigan-born graduates leave each year, according to a two-year-old survey. It is not through lack of local pride. On any Saturday during football season, graduates from the University of Michigan cram into Duffy’s bar to cheer on their beloved Wolverines. Duffy’s, though, is in Chicago.

In the wake of my reading of "Hollowing Out the Middle", I'm trying to take to heart all the failed brain drain initiatives and book's policy prescription. I've gone back through my own blog and tried to critique my own ideas. After all, Iowa's tried just about everything to address the population decline problem.

Despite the humbling review, I still see opportunity in the Duffy's dynamic. The "high-flyers" cheering on the Wolverines in a Chicago bar are the perfect entrepreneurs to reinvent Michigan. I'm not talking about trying to get them to return home. Empower them to lead Michigan's transformation from afar.

The idea that talent that moves somewhere else is no longer a state asset is parochial thinking. Iowa's small towns are efficient exporters of the highly-skilled. Universities and colleges have figured out how to benefit from talent production, but the hosts of these institutions have not. That's not to say it can't be done. There are plenty of international examples that offer a model of best practices.

To offer one, consider the "New Argonauts". Talent that leaves India for Silicon Valley mutually benefits both places. When the arrow points in the other direction, there is still a dividend in Silicon Valley. But can that work on a sub-national scale?

At this point, Pittsburgh’s remaining gap seems to be an insufficient supply of traditional venture capital from VC firms and active angel investors to support the companies that are being spawned. Unfortunately, as long as the managers of pension funds and endowments (and the investment advisors of high net worth families) believe the conventional wisdom that the best ideas and “safest” VC investment opportunities are located in Silicon Valley, the money will continue to be concentrated in the brand-name VC firms, and those firms will continue to invest in their own backyard.

The New Argonauts demonstrate how venture capital can escape Silicon Valley and travel around the world, finding valuable new markets of investment. Via diaspora networks, "safe" ideas can be found. Whatever is lacking, surely it could be found among expatriates.

Moving back is all well and good (and I still think there are a few stones left unturned), but provide your diaspora with other avenues to express their pride. Many don't want to return, but that doesn't mean they don't care. Ironically, the authors of "Hollowing Out the Middle" limit the policy choices by focusing on residence. If you no longer live in a rural small town, then you are part of the problem and not the solution. That kind of zero-sum thinking is doomed to failure.

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