U of M’s value

A thought experiment: Assume the University of Michigan/Ann Arbor decides – as MSU did with its medical school – to take offers to relocate all or part of its operations. But not just someplace else in Michigan, any place on the planet. How much would the incentive packages put together by communities and countries be?

What is almost certain is that there would be bids from every state in the U.S. and most countries across the planet. And the odds are high that the total incentives offered would, by far, break all records in the US and would be amongst the largest ever offered on the planet. Can you think of another Michigan enterprise that would command a larger incentive package? Maybe the entire GM or Ford Michigan operations.  I can’t think of anyone else that would be close. Can you?

Yes a public enterprise would be valued by communities and countries as one of, maybe  the, most valuable enterprises in Michigan. So much for private enterprises drive growth, public enterprises hinder growth.

Why would UM command such a large public investment from communities and countries around the globe? Because world class research universities are a  – if not the – key engine in building a prosperous economy of the future. And that fact is widely understood by both political and business leadership nearly everywhere on the planet. Regions and nations everywhere are trying to create what we have here: one of the best universities on the planet. (As I wrote in a previous post, UM is considered in all the major global rankings to be a top 25 university.)

They understand that world class research universities in and off themselves bring big economic benefits. UM/Ann Arbor has $5.6 billion in annual revenue and 40,000 employees. Worth a lot to a community and country without any spinoffs. But there are major spinoffs. New enterprises that come from commercializing  new knowledge, greatly expanding the human capital of a community and country,  helping create the kind of community that attracts talent from across the planet, and where talent concentrates so comes knowledge-based enterprises from across the planet as well. It is that combination that makes world class research universities such powerful economic engines.

What wouldn’t be included in those incentive packages? Calls for administrators to reduce their salaries. Calls for faculty to reduce their salaries and increase their teaching loads. And most certainly, no one would demand lower tuition without offsetting it with even higher public investments.

Makes one wonder what planet our state’s political and business leadership is living on. Here what would be on the table worldwide – big new public investments in a world class research university – is off the table. In fact here we get the opposite – record cuts in public funding for UM on top of a decade of cuts. And what is off the table elsewhere – calls to reduce administrator and faculty pay, tuition cuts, etc. – are on the table. In fact they seem to be the only items the legislature and new Administration care about. UM as just another bloated, inefficient public institution. What nonsense! If any public institution in Michigan has a long-term sustainable (actually growth) business model it is UM. Believe me they are far better managed than state government.

To make matters worse, the business community is missing in action. What a mistake! Because if political and business leadership here doesn’t understand the role a preeminent research university plays in building a knowledge-based economy  our chance of creating Michigan 3.0 isn’t great.

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