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Universities as baseball teams

There's no doubt that a good university system makes a positive contribution to the economy, and that a poor system limits the scope for economic development. But as Chicago's Austan Goolsbee points out in today's New York Times, one can take this observation too far. Goolsbee points to a $2.5 billion scheme to expand university-led research in Texas beyond Austin to places like San Antonio and Arlington as one example. This is likely a case where the metaphor of the university as engine of economic development has gone too far.

Goolsbee prefers the university as baseball team metaphor. Schools are out chasing the research stars, but there are only so many stars to go around.

Trying to make some town into the next Silicon Valley by attracting the best scientists is rather like trying to start a new baseball team and turn it into the New York Yankees. If dozens of sports-mad billionaire team owners can't do that, how easy would it be for the economic development office at the University of Texas, Arlington?

What is worse, it is a safe bet that as these development incentives become a primary motivation for financing higher education, the competition among universities for stars will start looking much more like today's baseball scene. Ambitious state university systems will find it easier to steal the stars of another team than to develop their own prospects. As a result, salaries will go through the roof -— just as in baseball.

And while everyone pays more, only a tiny number of cities will ever win the World Series. One will increasingly hear about how the costs of college are rising everywhere and that local economies have little to show for it.

Goolsbee also points to research which shows that the students, in addition to the research stars, are highly mobile. There are many ingredients in the economic development cocktail, and just building a better University is not enough. If a state's overall policy mix retards the ability of entrepreneurs to succeed, the stars and their students will ultimately play ball elsewhere.