 Welcome back to the creative life from the American Creativity Association on Think Tech Hawaii. I'm your host, Phyllis Bleece, and today we'll have a show discussing cities that are left behind in high-tech innovation. You can send questions by email to questionsatthinktechhawaii.com. Slide one, please. Our guest today is the co-author of this Brookings Institute report on the high-technology innovation innovative sector in the United States. The call to action says it has become clear that while the future of America's economy lies in its high-tech innovation sector, that same sector has widened the nation's regional economic divides. This sector fuels a growing gap between the nation's dynamic superstar metropolitan areas and most everywhere else, most notably just five top innovation metro areas, Boston on the East Coast and then Seattle, San Francisco, San Jose and San Diego on the West Coast, accounted for more than 90% of the nation's innovation sector growth for 2005 to 2017, over 10 years. They increased their share of the nation's total innovation employment from 17% to 22%. In contrast, the bottom 90% of all metropolitan areas in the United States, that's over 343 metropolitan areas, they lost economic share. This report says that the nation needs a major push to counter these dynamics. And our guest, Rob Atkinson, is the president of the Information Technology and Innovation Foundation, a public policy think tank based in Washington DC, which promotes policies in innovation economics. He's here to describe how to close the divide through creative self-sustaining growth centers. So to talk about this and the problem, Aloha Rob and welcome to the creative life. Aloha Phyllis, nice to see you. Thank you. Could you first tell us a little bit about what you do and what the ITIF is? Sure, so ITIF is a think tank, a little bit unique in the sense of where a think tank is focused only on innovation and innovation policy. So we've been around since 2006 and we're ranked the top science and technology policy think tank in the world. And what we try to do is help policymakers at the local, state, federal and really all around the world levels to understand the importance of innovation and how to maximize it in their local areas. And that was why we did this report along with the Brookings Institution on growth centers and innovation and why we think it's a problem. So I'm happy to talk about that. Thank you so much. You know, we have an intersection today between technology and think your work, think at Hawaii and the American Creativity Association's interest in creativity and innovation. So I'm hoping to explore all three areas but do it with a serious focus on this economic divide that you're talking about. And you're talking about it specifically in this innovative sector. What is that in the US? How do we think about that? Yeah, so there's a lot of different definitions. What we were really looking at were what were termed the advanced technology sector. So these are sectors of the economy where they employ a lot of scientists and engineers and they spend a lot of money on R&D. Now, does that the same as the creative economy? No, people like Rich Florida have talked about there's all sorts of parts of the economy that are the creative economy, if you will. Arts, for example, are very creative. But this is a sort of, maybe if you think about a Venn diagram overlap of the creative economy and the technology economy, these are the most advanced sectors, so these would be sectors like aerospace, biotechnology, certainly internet and computing, telecom equipment, these kinds of industries. Now, why that's important is that they really have been the growth engines for the US economy over the last 20 years. Older sectors have lost market share to China sometimes and so we've been able to grow these new sectors but the challenge is that we've been growing them only in certain parts of the country and leaving a lot of the rest of the country maybe grasping for air maybe or falling behind to some extent. Well, thank you. On slide three, we've got a visual from your report that picture tells 1,000 words, we could look at that. And you tell us a little bit about these, looks like the big blue circles for the audience has got Boston up in the upper right-hand corner on one coast and the four other areas that have received 90% of the economic wealth of this industry on the West Coast. What are you seeing here? And I guess this is where you started with the report. Yeah, so this was basically what you're seeing there is the circle is the size of how many of these advanced technology jobs are in a particular place and you can see places there in the Midwest, for example, like Chicago, St. Louis, Kansas City and the blue are the places that have gained the most and the dark red are the places that have lost the most. So you can see places you talked about Seattle and San Francisco and all, but you can also see in there, Salt Lake City, Boulder, Research Triangle Park, there's a few other places, it's not like that's the only places but you see a lot of other places that have lost ground. Now some of those places have been doing well, Texas is doing well, but that's partly on the growth of other sectors. But a lot of the Midwest and Northeast that historically has been an advanced technology sector, if you go back 30, 40 years, that was where most technology was in the US and that's now hollowed out somewhat and it's moved over to the edges, if you will. So Rob, you say not only has it moved out, but the pace of it is accelerating that the gap is getting wider. Can you talk a little bit about that before we get into what the solution is? I know we wanna get there, but what is feeling that I mean, those other areas look pretty robust. I'm in Austin, Texas, we have a robust- Austin is a very, I think if you look at that map, you could see Austin, it's just a smaller circle because it's a smaller place, but Austin should be blue there. You might not be able to see it because it's overlap with something else, but no, Austin is a thriving place, Research Triangle Park in North Carolina. There are places like that, but the big, big places, so why is that? It's because the advanced technology industry is really unlike other industries in the sense of it's almost like a sports team where if you get a better player than other players wanna join the team that are really, really good and then they get the greatest coach because the coach wants to be there and then they get more fans so they can pay the players more and get a better workout facility and they just keep getting better and better and better. And that's what economists call a very wonky term, agglomeration economies. In other words, the more you have, the better you do. And so places that I give you an example, my son got a computer science degree and is in artificial intelligence or machine learning and where is he? He moved to Silicon Valley. That's where he wanted to be because that's where everybody wants to be. That's where the innovative startups are and why are they there? Because the people wanna go there and the companies are there and it just builds on itself. Seattle did the same thing largely because of Amazon and Microsoft, sort of accidental choices but once those were the anchors there, really building on Boeing over a long period, it just started to grow. Boston been doing that for a long time because of MIT and some of the government funding and it's just growing because of that. So it's one of those things where it takes a long, long time for that to get so problematic that it stops growing. Even with the housing prices in Silicon Valley, you can go to some places there, $1.7 million is the median house price in some of these communities. You compare that to say Columbus, Ohio or Indianapolis and people would go crazy but people survive out there and they live that way. It's interesting. A lot of people would think, let's build on what's working and you're right and they will move to those areas and there becomes a whole culture around it. And yet at the ITIF and with your work in Brookings, you would like to see the wealth spread and one of the things that attracts me to your idea is that there are creative forces, people who are creative and diversity is very important to the creative process. And I know my son works for Google X and he's in the Waymo division based in Mountain View. My daughter with Square in San Francisco. There you go, yep. You know, we're drinking the Kool-Aid and yet I'll tell you that my daughter in particular and my son is right there. There isn't a great culture and ethos for women in that community. Despite where we are in 2021 and meet the Me Too movement, women culturally, they always look like men if I go on to their campuses. The women are looking, you know, and maybe an androgynous look is very millennial anyway and that has its own benefits. But from a creativity and innovation standpoint, we really lose diversity. When we concentrate in these areas and it is a question and maybe you know it from running your models and simulations, it's a question to me whether you need those economies to scale in order to optimize your, the world is benefiting so phenomenally from high tech. We don't even know a world without it anymore and we're bringing that long tail as Chris Anderson says in Wired Magazine, he talks about that long tail that the social economy is bringing to producers, entrepreneurs, anywhere in the world that can now find a market. So the benefits in the economy and for their pocketbook and bringing wealth to small places throughout the world, even though they're not an innovative sector, they're benefiting from it. I wanna see that really explode. So talk to a little bit about the difference and why you think the dynamics are gonna help to move away, the economies to scale don't outweigh the benefits of closing this gap in these other areas. You're talking a little bit about that. Why is that even economically wise? Well, you know, the view of most people while you do this because you wanna be nice to people, you wanna be fair, you wanna help people with opportunity, absolutely. But that's not the only reason you do it. You do it because you will get more innovation, you will get more creativity, you will tap into more people's talents. So there's really two reasons for that. One is there's a lot of good evidence that if you're exposed to and you're around people who are innovative and doing creative work and technology work, you are more likely to wanna do that. So if you take some of that critical mass away from communities, people might not wanna be starting as much as businesses in this space because they don't have the role models. Kids, girls and boys might not wanna be going into these areas because there aren't the companies in the area. So you sort of just damper a whole part down. You don't let them see the opportunities. But the second reason is because it's not as if these companies put all of their eggs in the one basket of Silicon Valley, they go move to other places that cost less. The problem is they wanna go to places that are also tech hubs that have other technology firms and all that. The problem is they go to places like Shanghai or Tel Aviv or Bangalore. And they do that because it costs. But you know what's really funny or strange now is it costs less to go to Indianapolis than it does to go to Shanghai. So if we could create opportunities where the next the next Google lab instead of going to Shanghai it goes to Indianapolis, it can save money and it can get all the creative talent it needs. So this is partly about helping those regions but it's also partly about helping the US be even more competitive and innovative. Well, that's right. We're talking at the sector level now. And when you look at the whole sector which will float the whole boat from the US economy I get that. So let's look at slide four and some of the areas that your report is focusing on is are these the highest and best bets for building your and you might wanna talk at this time a little bit about what are these self-sustaining growth centers? So love to hear your thoughts. Sure. So there's a, I received my PhD in city and regional planning at UNC Chapel Hill but my focus was really on economics and technology and business and all but in that there was a concept from the 1960s for how do you help regional places how do you places that have been in decline? And the notion was you can't just spread money around like peanut butter. There have to be a few places that are called that are growth centers that as they get more growth then they've attracted even more growth. We're trying to apply that concept now to the 21st century innovation economy and one of the places that you need and it's a little bit like a Goldilocks strategy. We obviously don't wanna help San Jose grow even more they're doing fine. They're on autopilot, Boston's on autopilot but at the same time it really makes no sense to pour money into some middle of nowhere place that has a few old factories and no technology workers and no university, they're too far down, they're too far back. So there's a sweet spot, not too far back not too far forward. And those are things like you have an airport you have to have an airport if you wanna be a tech hub doesn't have to be O'Hare but it has to be a reasonable airport. You have to have a research university doesn't have to be Stanford, doesn't have to be MIT but it has to be reasonably good. You have to have already a few technology jobs and a culture of that. And that was in our attempt on that map to say using the model we did which is airports and tech workers and all of that these are the places that appeared like they would be likely possibles. We weren't trying to say, oh, if you're not on that forget it, you can't do it but we were just trying to give Congress and the administration sort of a guide how do you think about that Goldilocks strategy if you will? Hmm. Of course, we're on think tech Hawaii and we don't see Hawaii there and it's, we didn't create a map today. Did you, and I apologize I didn't ask you to pull your numbers. Do you even remember what the Pacific basin added or you had the stat along the West coast that's the Pacific ocean. That's not far from Hawaii. Hawaii's got a major university there. It's got the airport. It's got think tech Hawaii and technology. How in Hawaii profile for being a growth center keeping in mind that we have the East West center there too at the University of Hawaii bringing culturally the East and West together like no other state in the union is positioned to do. Yeah, no, I've enjoyed working with the East West center over the years. I would say this map was not definitive. It wasn't saying this is the only places. So I don't remember exactly where Hawaii was. Certainly it's airport is good. It's adequate university is good. It may have been a little bit low on technology jobs. That may have been the reason but certainly there's a technology economy in Honolulu where there's technology jobs and entrepreneurs and you've got the Navy there as well which adds to some of that. So I wouldn't read that map as saying, no, no, there's no way Honolulu could do this. Now, could the big island, I'm not a big Hawaii expert but could the big island be the hub? No, it would have to be Honolulu because that's really where the action is there but certainly you could imagine Honolulu being a hub. Yeah. Well, we can't ignore that on think tech election. So I want to keep that in mind. I'm thinking about your report and I may not fully understand what's going to power these growth centers. I love the idea of self-sustaining but I think I did see your recommendation for federal support and I assume some federal funding. Is that to jumpstart the process so that the self-sustaining growth centers can become self-sustaining? Exactly. Could they be paying the money back? No. And then how does this $250 billion Biden bill that just passed the Senate, the US Innovation and Competition Act, which is an interesting title. I want to come back to that. It has an Iran sound to it when you talk about when I'm not sure how that goes, whether it's promoting innovation and competition and we're trying to dampen it down. No, it's promoting it. It probably should have been innovation and competitiveness act is really what it should have been called but I think they picked competition to refer to competitiveness. All right. So talk a little bit about what would get these growth centers going and how the audience, this is a global audience on think tech Hawaii. How would they get out to support the self-sustaining growth centers? What are the ways you can vote? Who would you write? What would you follow? Is the individual person powerless than where they're going? Well, the idea here was, if you think about the fact, I'm on the board of a group called the State Science and Technology Institute, SSTI.org, and it's a membership organization of state governor's offices and other state agencies and universities that work to promote the technology-based economic development. I'm sure Hawaii is a member. Problem is, you've had states and local governments that have been doing this for 40 or 50 years and I'm not knocking what they're doing. It's very interesting, but very few people have been able to go from this level up to that next level to be able to be self-sustaining. Austin has done it. I'd say Austin's on a research triangle starting in the 60s. It took them a good 25 years. Not very many other places have done it. Now, why is that? It's partly because of a peanut butter approach. There's only so much tech activity that can go around. It's bigger than we think, but it's limited. And because of agglomeration, if you spread it out too thin, you don't get to that critical mass. Now, think about the Amazon headquarters too process. They had a big competition. They were deciding where were they put their second headquarters. They ended up picking Washington, D.C., and then New York, but not New York. And why D.C.? The safe bet, great airport, good universities, okay universities, lots of tech workers, the government, all that. But if they'd picked Indianapolis, let's say, or Columbus or Birmingham or other places, Minneapolis, Honolulu, it would have put those places. They didn't pick those places, frankly, because they don't wanna be the only one going there. They want the assurance that if they're gonna make a big leap there, that they're gonna be surrounded by other technology companies. And that young people like your son and daughter and my son are gonna wanna move there. So the idea is, let's help these places for a limited period of time. Let's get them up to that level. So the next Amazon HQ, whoever is doing it, is gonna be thinking about those places and wanting to be in those places. One of the key parts of that is also to raise up the universities. If you look, for example, at universities in some of these places, like, let's say, Pittsburgh or St. Louis, they're around 800 million a year in university research. You compare that, maybe a little bit more. You compare that to San Francisco or Boston where they're around 2.2 billion. So if you could get that up to 1.5 billion, let's say, and really build up that research, you start to become self-sustaining. And that's really what we were shooting for. Now the idea was, and what we were able to, we worked quite closely with Senator Schumer's office and Senator Todd Young, who's a Republican from Indiana, Senator Schumer, obviously Democrat, the Democratic leader in the Senate, to put a provision in this USICA bill to create this tech hub program. And what it would be would be a competition. And so a place like Honolulu or Birmingham or Oklahoma City can apply, assuming this bill passes has to be a house provision too and then the president has to sign it. They would then apply for this program in a competition. And part of winning it would mean that you locally have to be thinking about innovation. You have to be thinking about how you can be creative as a local region. Are you thinking about a refashioning your school system? Are you wanting to be a smart city? All these things that would help you, you would compete and then they would announce up to 20 winners. Although I think what they're gonna do is probably like 10 bigger places and 10 smaller places, mid-sized places. And then you'd get support for five years. We wanted it for 10, but I think believe the Senate bill is five years. And then after that, you'd be on your own. Hopefully that would get you up to that level of becoming a much stronger tech hub. So Rob, is this apples to apples? Is this competition built into the Biden bill the same as your social standing growth centers that you wanted federal support for? The metrics for becoming one and being selected as one, is it even approved yet or is it just a plan? Is there any recommendation? But it isn't like built into a bill and passed and really gonna happen. So it's a little different than what we proposed because we proposed adding a whole set of other sort of incentives. For example, some tax incentives. So we proposed if you're in one of these hubs, it would be easier to get foreign STEM worker visas. Those didn't get into the bill, but a lot of the other provisions did, including funding for training and research and universities and the like. So that actually is in the Senate bill that passed with 62 votes a week ago. A lot of times people say Congress is dysfunctional now. No, they were actually, they got 62 votes to pass this bill, authorized a significant amount of money for this program. Now, as you know, in our Congress, in our system, the house has to pass something and then it goes to what's called conference committee. There's a lot of support for this in the house, this idea. So I'm modestly optimistic, cautiously optimistic that they'll also put something in their bill. Then that goes to the conference committee and that goes then up to the president. The White House is very support, the Biden administration is very supportive of this concept. So I don't think there's no problem there. So, you know, fingers crossed, we could see a program like this in place by the early next year, where there'd be a competition and places could start to apply and really think about their future. Well, let's talk a minute about you. Is, I don't know how many years you've been working on this particular report or it's a series of reports, but are you at a place where somebody's interested in technology and helping spread the joy and economically spread throughout the world and see its benefits, is doing something like what you do with the ITIF of filling way to do that and talk a little bit about it. Yeah, so there's, you know, I always say there's two kinds of people. There are the kinds of people who like to do and there are kinds of the people who like to think and that's probably two, we're probably a combination of the two. But I look at my son, for example, it sounds like your children, your two children, he's actually building software that's gonna change the world now. He's working for this cool company. I really love what they're doing. I'm not doing that. What I'm trying to do is get policymakers to put in place the right rules, the right provisions, the right programs and also to avoid the wrong ones. That's a big part of this is oftentimes policymakers can be convinced that doing something is the right thing to do when actually it's exactly the wrong thing to do when it comes to innovation. So I find that really satisfying. It's partly because I like the world of ideas and concepts and that. And I like trying to convey that to policymakers and try to get things across the finish line. So we've been able to do that in the past on a fair number of things. And, you know, it's a hard process sometimes because Congress is divided and there's lots of different voices. But, you know, you can make a difference. And so people who are interested in that part of wanting to do that, I would encourage them to think that through. We actually have a couple of job openings right now on our website. Okay, that's good to know. And I appreciate you just weighing a little bit in about you, about Rob and your role and what you enjoy about it. And we are in our last 30 seconds of the show, which is just flown by. I want to say to the audience that we'll leave it here. You have been watching The Creative Life on Think Tech Hawaii. And today I've been discussing the tech divide across the United States with our guest, Rob Atkinson. Thank you viewers for tuning in. I'm Phyllis Bleece. We'll be back in two weeks with another edition of The Creative Life. Aloha.