The EconomistJuly 25th 2020 Special reportThe Midwest 92
11980s a Japanese adviser showed car-suppliers Toyota’s lean tech-
niques. She leads forays to Germany to study “Industry 4.0” (high
tech in factories) or Israel to see how to work with startups.
As important, foreign investors are urged to come to Grand
Rapids. Again, the German connection helps. She says there are 136
foreign companies, including 50 from her former homeland. The
city “makes a point of attracting foreign, especially German” firms,
she says, “as we saw something in common”. The results are excep-
tional. The Grand Rapids metro area has more than 1m residents
today, up from 740,000 in 2000. New types of manufacturers
flourish, such as makers of medical devices and equipment. Ms
Klohs’s group lists 79 suppliers of personal protective gear, such as
face shields, masks, hand-sanitisers, swabs and more, currently in
high demand.
The city is a model for deployment of social capital. Research-
ers have tried to understand why some collaborative efforts suc-
ceed but not others. Part of the answer is that, as with the Mittel-
stand, many firms in the Midwest are owned by families with a
passion for their home towns. Mr Katz says Midwesterners benefit
from a “deep commitment to place”. He notes how many institu-
tions with huge endowments there are, including MacArthur in
Chicago, Heinz in Pittsburgh, the Cleveland Foundation and the
Howard G. Buffett (son of Warren) foundation in Decatur.
One research paper contrasts the fortunes of Allentown in Le-
high Valley, Pennsylvania, with the dim outcomes in Youngstown,
Ohio, in the years since the 1970s. In Allentown the main concern,
as in Grand Rapids, was to create conditions so firms would stay
and grow. In Youngstown (as with Foxconn in Wisconsin) there
was a narrower focus on helping a particular industry, in its case
steel. The long slog of creating the right eco-system seems more
likely to pay off than the short-term effort to pick a winner in a de-
clining business. 7T
o build agreat city is simple, the politician Daniel Patrick
Moynihan once said. First create a university, then wait 200
years. By that logic, the Midwest has decent assets. It is home to
lots of excellent universities, and hordes of more modest ones. All
influence the cities around them. Those that thrive often have a
university at their core; educated places do well long-term. Edward
Glaeser of Harvard cites examples. If fewer than 5% of adults had a
college degree in a city in 1940 then, 60 years on, no more than 19%
did. In cities where more than 5% were graduates in 1940, the later
share was up to 29%. Gains made early are felt for generations. He
divides the Midwest in two. States in the west, such as Minnesota,
Wisconsin, Iowa and Illinois, are better educated than those in the
east and have prospered more.
John Austin, at the Chicago Council of Global Affairs, has writ-
ten a study arguing that the Midwest’s institutional brainpower is
exceptional. He says 15 of the world’s 200 top-ranked research uni-
versities are there. (In fact, by defining the Midwest expansively,
he counts 20.) The “big ten” state universities, which oddly num-
ber 14, have 600,000 students, 50,000 faculty and draw annual re-
search funds of $10.6bn, more than the Ivy League and Californian
universities combined. The Midwest has 16 of the country’s 50 top-
ranked medical schools, five of the 25 best computer-science ones,
and 17 of 63 leading research universities. It does not do so well in
stemsubjects, claiming just six of 25 top-ranked stemcolleges. Mr
Austin tots up 21% of America’s patent filings, by companies and
universities in the region. Almost a quarter of National Institutes
of Health federal grants for developing drugs and medical technol-
ogies go to Midwestern institutions.
They in turn spread prosperity, in three ways. One is to bring in
young people, often a city-sized population. Mayors want to revive
town centres, so luring youthful consumers is a big plus. As a natu-
ral experiment, ask how they suffered when covid-19 sent people
home. A resident of Columbus, Ohio, laments how the absence of
30,000 students and staff sapped demand for local businesses. An-
other example is South Bend, Indiana, where Pete Buttigieg often
presents revival as mostly about political leadership. But he con-
cedes that nearby Notre Dame university (where his father taught)
mattered. Having 8,500 students beside a city of 100,000, includ-
ing active ones who volunteer in local schools, is helpful. It was a
boon to deploy researchers’ ideas, for example to fit wifi-enabled
sensors in sewers to monitor water flow and save money. “We have
a Beta City concept, we take intellectual property from the univer-
sity and apply it,” he says.
Second, universities pool employable talent. Not all graduates
hang around their alma mater, but cities that keep them outdo ri-
vals. Rahm Emanuel boasts that, when he stood down as Chicago’s
mayor last year, 39% of its adults had four-year degrees, far above
the national average. No big city has more, he says, though that
rests on defining big. In Minneapolis over 49% of adults have a de-
gree; in Madison 58%. This helps explain why both cities have
flourished, especially in medicine and pharmaceuticals, which
need educated workers. On average, 32% of Americans (25 or older)
have at least a bachelor’s degree. Of 12 states in the broad Midwest
only Illinois, Kansas and Minnesota surpass that. The least educat-
ed state is Indiana, where barely a quarter have a degree. That is aFromrustbelt to brainbelt
How higher education can drive prosperityUniversities