In a visit to Cornell on Monday, New York Federal Reserve President William Dudley called for a marriage between higher education and entrepreneurship to boost recovery from the recent economic downturn and to improve the local economy by commercializing University research.In a visit to Cornell on Monday, New York Federal Reserve President William Dudley called for a marriage between higher education and entrepreneurship to boost recovery from the recent economic downturn and to improve the local economy by commercializing University research.
“The amount of research dollars that are expended at Cornell is very, very high, but the amount of start-up companies and employment growth that stems from that is low relative to those dollars,” Dudley said in an interview with The Sun on Monday.
If the University and the broader Ithaca community can find ways to attract more businesses and venture capital, the corresponding investments and new jobs will lead to long-term growth in the local economy, according to Dudley.
To improve the regional economy, Cornell and other universities need to take a longer-term perspective, Dudley said. For example, when a faculty member invents something and a university holds the patent, he said, the school could sell the patent rights to someone outside the community who will produce the product elsewhere, or it could sell the patent to a local company doing business nearby. Granting patent rights to local companies will lead to job creation, stimulating the local economy and attracting more skilled workers, he said.
In the longer term, both the university — which would have an easier time attracting students and faculty — and the community would benefit from solutions that forge partnerships with nearby businesses.
“There are a lot of win-win possibilities in the world; it’s not just win-lose, lose-win,” Dudley said.
Although the New York Federal Reserve cannot do much to directly create those business and university partnerships, Dudley said the Fed could “be helpful in trying to change the tenor of the debate a little bit from ‘education good, business bad’ and make it … less antagonistic.”
Dudley met with Cornell administrators Monday and discussed a University document exploring how to create partnerships with businesses. Dudley and other members of the New York Federal Reserve who accompanied him offered advice on the document.
“We had some conversations today that suggest there is some venture capital money [invested in the Ithaca community], but it’s all local money, and that Ithaca hasn’t really tapped into the bigger pockets of venture capital funding that are available elsewhere,” Dudley said. “But I think the prospects for success over time are actually pretty good because the actual University itself is extremely vibrant and extremely successful on the research side.”
Dudley said that this partnership between universities and businesses can be effective partly because it combines the United States’ biggest competitive advantages.
“No other country in the world has the quality and depth of higher education like we have, and Cornell is one of the top institutions in the United States,” he said. “[And] the culture of the U.S. is very supportive to entrepreneurship. The goal is to marry those two.”
Dudley noted that, while Ithaca was impacted by the economic crisis, it does not have as far to climb as other areas of the country. He attributed this relative stability partly to the economic impact of the University as well as a lesser dependence on the housing sector.
“Because population growth in the [Ithaca] region is much lower than the country as a whole, there is less housing construction activity, and so housing is less important as a source of employment. And so when housing collapsed, there were a lot fewer job losses, so it insulated the region a little bit,” he said.
Dudley added, “This is not to say that the region didn’t suffer. The region did suffer, but just not as bad as [other parts of the country].”
In addition to the stability the University creates in the Ithaca economy, Dudley explained that the Ithaca community itself helps keep the area economically stable.
“I think a huge positive for Ithaca is how loyal people are to it,” he said. Spending isolated winters in Ithaca with not much to do creates a stronger community, he noted.
Monday afternoon, Dudley spoke to a crowded Call Auditorium, delivering a speech about the state of economic recovery in the U.S. and fielding questions from students, faculty and other members of the Cornell community.
Dudley highlighted projects that the N.Y. Fed is currently working on as well as its present and future goals for economic recovery, including efforts to reduce unemployment and stabilize inflation.
In order to restore financial stability, Dudley said, the market must provide incentives for economically sustainable actions, rather than excessive and potentially dangerous risks.
“We don’t want banks engaging in excessive risk-taking in terms of their activity because excessive risk-taking can lead to financial instability and end up hurting all of us,” Dudley told The Sun before his talk.
To minimize risk in the economic environment, the Fed is focusing on creating robust regulatory systems for institutions like AIG, Lehman Brothers and Bear Stearns — companies that are deemed “too big to fail” under the Obama administration’s Troubled Asset Relief Program — to prevent drastic government intervention in future economic crises, Dudley said.
“I don’t think we’ve solved everything, and every financial crisis is different … but I think we’ve done a lot,” Dudley said. “If we carry this out with consistency over time, [if] we don’t forget the lessons of the [recent] crisis, we’ll be able to have a financial system that’s a lot more secure, a lot less volatile, and we’ll be able to resolve a lot larger institutions in the future.”
Dudley reiterated the national economic climate’s impacts on local economies and business partnerships with institutions of higher education.
“To the extent that we are good stewards of the economy and we conduct monetary policy in a way that leads to a good macroeconomic environment, that by definition will be helpful for these kinds of private-public partnership of education with start-up companies [that can stimulate local economies],” he said. “If we do our job well, we’ll be helpful.”
Original Author: Dani Neuharth-Keusch