Seattle has long been identified as a tech hub with best practices that could help other metros wanting to improve their economies. But translating the complex and long-standing roots of success here to another city isn’t easy in practice.
The report reads, “Seattle is in the midst of a new Gold Rush that has resulted in the creation of thousands of new companies in rapidly growing software, biotech and electronic commerce industries. …”
It is not an assessment of today’s Seattle but from December 2000: “10 steps to a high-tech future,” a paper prepared by the Evans School of Public Policy and Governance at the University of Washington for the Brookings Institution and CEOs for Cities.
The goal was to use Seattle as an ideal example of the best practices other metropolitan areas might adopt to thrive in the — forgive the quaint term — New Economy.
I remember. At the time, I was a columnist at The Arizona Republic newspaper in Phoenix, and the report was well received, and well studied, by the economic-development community there and elsewhere.
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Although the 1990s had produced the longest, strongest economic expansion in modern American history, it also sharpened the differences between places that were capitalizing on advanced technology and others that depended on legacy industries, many of them fading.
The Greater Phoenix Economic Council (GPEC), the major economic-development organization there, was beginning to realize that the enormous population growth of the previous decade had not translated into wider strengths.
Phoenix had suffered its worst downturn since the Great Depression in 1990, when an overbuilt real-estate market and criminally operated savings and loans crashed. In the aftermath, the state had set up regional organizations such as GPEC and pushed for clusters in advanced industries.
But by 2000, leaders saw that the cluster strategy had failed, at least partly through neglect. Although the Census Bureau named Phoenix the nation’s fifth-largest city in the mid-2000s (it fell back a notch in the 2010 count), it punched well below its weight.
The region’s tech economy consisted of semiconductor manufacturing. In other sectors, low-wage jobs in homebuilding, tourism, call centers and retail were the norm. Most of the major headquarters companies had been lost to mergers or, in the case of Dial, to a Wall Street vendetta.
No wonder the case study of Seattle seemed so appealing. It became more so when Arizona fell into a sharp recession, never mind that the dot-com bubble that had buoyed Seattle also battered it when it burst.
The paper laid out 10 steps that officials interested in encouraging the development of a high-technology economy can take:
• Understand high-tech firms in your region and your city’s competitive advantages.
• Invest in human capital.
• Create a research-and-development presence.
• Invest in physical capital (i.e. infrastructure).
• Invest in quality of life.
• Streamline permitting, planning and other services.
• Adapt other local laws (such as special tax policies and administrative procedures).
• Provide venture and seed capital.
• Create support programs for entrepreneurs.
• Apply information technology in the public sector.
Whether you believe this was always the case here, then or now, the road map made sense to many cities, especially with their economies stuck in a ditch.
It was unrealistic to become the next Silicon Valley. Too much federal investment, too many decades of unique private-sector strengths and leading universities put that out of reach. Replicating Boston is similarly impossible.
But follow the footsteps of rainy Seattle? It seemed doable.
But it wasn’t the real world.
Fifteen years later, Phoenix has still not fully recovered from a shattering recession as one of the epicenters of the subprime and housing bubbles. Seattle has been enjoying a gold rush that makes the dot-com era look puny by many comparisons.
To be fair, before the collapse Phoenix made a start in biomedical research and built a light-rail line. Arizona State University gained new respect under its dynamic president, Michael Crow. Intel maintains operations in the area, and Phoenix increased its startup rate.
On the other hand, it continues to lag in attracting capital and talent. Downtown Phoenix has improved, but many of its best old buildings were clear-cut in the 1970s and 1980s.
Its sprawl isn’t conducive to what the report called “vibrant, esthetically appealing urban settings” and an authentic downtown needed to attract talent.
The biggest impediment was a disconnect between the aspirations of those seeking to raise the metro’s economic performance and both political reality and entrenched interests.
Tax cuts and light regulation are the ideological preference of state leaders. They resist making investments with taxpayers’ money, aside from new freeways. Education funding has been repeatedly cut, including for universities. The tolerance that top talent craves was not on display with the controversial measures aimed at illegal immigration.
Meanwhile, the most powerful private-sector players want to perpetuate building on the metropolitan fringes. For them, Phoenix’s competitive advantages are sunshine and affordable housing.
I dwell on Phoenix because I lived through the biggest push to make change, and it came up short. But it is far from an isolated example.
In reality, America’s technology-star metros have been frozen in place for two decades. The rankings may shift a bit, but the leaders are consistently Silicon Valley, San Francisco, Boston, Seattle, Washington, D.C., Austin, San Diego, Denver, Salt Lake City and North Carolina’s Research Triangle. Portland is strong in the second tier.
This doesn’t mean improvement is impossible for the rest. Smaller college towns are particularly promising. But reaching the commanding heights takes decades of sustained work.
The same was true in Seattle. Speaking of which, we might want to revisit those 10 points to keep our game up.