Economic Engines: At What Cost?

"This is the first stride towards making SUNY the economic engine that it can be and should be for this state. SUNY is poised to be a great economic engine." That was New York State Governor Andrew Cuomo last August, signing a bill that gave the four SUNY centers $140 million to drive regional economic development.

Since I work there, it’s the case I’m most familiar with, but SUNY is hardly the only school to label itself an economic engine in recent years. Indiana University, the University of Iowa, Rutgers University, Ohio State University: there’s hardly a public university out there that hasn’t let legislators know that investing in it will pay off economically.

The "economic engine" model implies a certain story about why the university matters. Universities do the research that drives technological innovation, the story goes. The inventions of faculty are spun off into start-ups, or transferred to existing companies, where they create new products, jobs, industries, and economic growth.

In some ways this is true, of course. Google was started at Stanford University, Genentech at the University of California at San Francisco. But lately, selling the university as an economic engine seems to be the only way to gain legislators’ support in a climate of scarcity.

Metaphors matter. If we think of universities as economic engines, we’re going to encourage some activities — like technology transfer and public-private partnerships. And these may indeed be things we want to
encourage. Choosing some priorities, though, means not choosing others. Some implications of the economic engine model, like the defunding of the humanities, are fairly obvious. Others, though, get less attention. Here are five reasons we should think twice about what we lose, as well as gain, when we turn our universities into economic engines.

The short-term beats out the long-term. The private sector, reasonably enough, wants to collaborate on research that will impact the bottom line within a few years. But sometimes it’s the research that will take a decade or more to bear fruit that matters most.

Take public plant breeding, for example. Big agricultural companies have huge programs that support research in plant breeding. But they only focus on a handful of commercially viable crops, and while they fund some academic science, they’re mostly interested in research that will have short-term results.

But plant breeding is slow work — after all, generations of crops have to grow. Though genomics is speeding things up, developing a new crop variety can easily take 10 years. And it’s the ambitious, long-shot research — on perennial grains that could make better use of marginal lands, or minor crops, like millet and tef, that are important to the developing world — that won’t get done unless academics do it.

Yet public plant breeders are rapidly becoming an endangered species. Plant breeders attract six-figure salaries in industry, but face declining budgets in academe, even though they’re probably among our most important scientists. By valuing short-term priorities that work for industry over longer-term investment, the current model pushes them closer to extinction.

Profitable products are favored over more diffuse benefits. The economic engine model focuses on discrete inventions that can be transferred to the private sector for development. What it deprioritizes is research whose economic benefits are not so easily captured.

Universities are very fond of research on pharmaceuticals and medical devices, for example. A blockbuster drug, while a long shot, can result in payoffs in the hundreds of millions of dollars from licensing revenues.

But the payoffs from public health interventions, which often keep people from getting sick in the first place, can be just as large. Yet public health research is chronically underfunded in relation to medical science. Improvements in workplace safety, disease prevention, infectious disease control, and food safety transformed life in the twentieth century. But no one will ever launch a campaign for universities to drive economic
development by studying how to prevent heart disease. There’s just no money in it.

Not all economic growth is created equal. The purpose of an economic engine is to drive economic development. But development is good because it creates human benefits, not for its own sake. Making
economic development the mission of the university doesn’t distinguish between the kind of growth we want, and the kind that deserves our skepticism.

The American Economic Review, for example, recently published an article on the environmental externalities created by different industries. Nicholas Muller, Robert Mendelsohn, and William Nordhaus estimate
that the air pollution produced by some industries, notably oil- and coal-fired power plants, costs more than the economic value they create.

Universities, then, might want to think twice about the real benefits of the growth they hope to create. Hydraulic fracturing, for instance, creates opportunities for public-private partnerships that many universities would like to take advantage of. But using the university to drive the expansion of fracking before its environmental costs are clear is not a winning strategy.

Innovation is prioritized over education. In the economic engine model, universities’ impact comes from their scientific inventions. But research is only one part of what universities, even research universities, do. And in a zero-sum budget climate, sinking support into scientific research can come at the expense of education.

To pick an example close to (my) home, the State University of New York at Albany is very proud of its College for Nanoscale Science and Engineering. It has attracted many billions of dollars in investment from
companies like IBM, Intel, and Samsung, and has world-class facilities. President Obama stopped by recently to hold it up as an example of what the U.S. should be doing more of.

But the CNSE is almost purely a research operation. The $1.2 billion contributed by the state of New York over the last 11 years has produced only 135 graduates to date.

Now, education is clearly not CNSE’s main purpose. But while it expanded, the rest of the university — whose budget is separate from CNSE —  lost 30 percent of its state support, some $30 million, over three years. Notoriously, this resulted in plans to close three language departments, classics, and theater.

There are lots of reasons CNSE has received so much money from the state, not least that it’s attracted even more from the private sector. And it’s not like someone stole the funds from French and gave them to CNSE. Yet at some level these tradeoffs are real — we’re choosing to fund innovation, but not education.

Non-economic benefits are discounted entirely. All the tradeoffs above are, in some sense, economic. But there is one more tradeoff that is at least as important. By focusing on universities’ roles as economic engines, we devalue their noneconomic contributions.

Universities produce not only workers, or technology, but citizens— ideally, ones who can think clearly, critically, and independently. Having more such citizens is vital to our democracy, not just our economy. And at their best, universities transform people’s lives through the love of learning and the pursuit of knowledge, not just by improving their job prospects.

When the economy is stagnating and university budgets are being cut, it may make sense, strategically, for universities to declare themselves economic engines. It may even be inevitable. But if we do, we should be
very aware of what is lost, as well as gained, when we make this call.