Brookings Institution Global Cities Initiative

March 21, 2012
By C. L. Max Nikias

It is a pleasure for me to welcome so many of Southern California’s civic leaders to the heart of Los Angeles today. I’d like to thank the Brookings Institution for organizing this important Global Cities Initiative series. I’d also like to thank J.P. Morgan Chase for making this event and initiative possible.

Let us consider the future in light of the past: When USC was founded in 1880, Southern California was a remote dusty outpost of the American West, thousands of miles removed from the power centers of this nation.

Who was the educated woman or man of that era? It was someone who had a grasp of events and history in North America and Europe—a knowledge of the Eurocentric Atlantic region. For most of this time, Asia and the Pacific were valued for their rich natural resources rather than their astonishing intellectual and cultural capital.

Yet the center of gravity in our world has been shifting. Today, this region is America’s new gateway to the world, a physical and cultural and commercial connector to a Pacific Century that bears little resemblance to the world we have known.

Forty years ago, the economic relationship between Germany and South Korea was like that of a full-grown adult and an infant—Germany had a GDP per capita advantage of 7 to 1. Today, the ratio is more like 3 to 2, more like that of an older sibling and a younger sibling, with the younger one growing at a far faster rate.

Today, East Asia alone has a GDP roughly equal to all of North America. South Asia alone has a GDP equal to Western Europe. And Latin America now has an economy equal to Western Europe. We may ascribe some of the Asian success simply to the gigantic size of China and India, which alone house close to 40% of the world’s population. But even if we exclude those two nations from Asia, the rest of that continent would remain competitive with Europe.

We may indeed be witnessing the “rise of the rest of the world”—but recent history shows this need not be bad news for the United States.

According to the Gallup Organization, a little over forty ago, most leading economists—whether liberal or conservative—predicted that American economic growth would fall behind Japan and Germany by 2007. They typically estimated that Japan’s annual gross domestic product would be roughly $5 trillion by now, with Germany at around $4 trillion, and the U.S. lagging behind at roughly $3.5 trillion.

The predictions for Japan and Germany were reasonably accurate. However, America’s GDP grew to $13 trillion.

How did the U.S. nearly quadruple the estimates of the world’s best economists? One key is that these economists had based their guesses on a nation’s quantity of natural resources, not on the quality of its intellectual capital or its ability to put that intellectual capital to use.

America’s surprising economic growth has been traced back by the Gallup Organization to some 1,000 key innovators, entrepreneurs, rainmakers, mentors and creative geniuses—some 60 percent of whom were foreign-born persons who were educated at American universities. This meant that the U.S. had a unique edge in terms of the talent and the environment that was necessary for growth.

The revolutions of technology—in electronics, in space technology and satellite communications, in personal computing, in medical devices, in the Internet and in information technology—were all American revolutions. The U.S. innovated while others imitated.

A repeat of this success will require forward-thinking strategy and investment in the face of an emerging Asia and stiffer competition around the globe.

Allow me to offer some perspective on the commitments that the University of Southern California has made in light of this new era. They reflect the same Southern California strategy that gave birth to USC 132 years ago. USC was founded by men and women who believed a great university could move Los Angeles from the status of a dusty village to a great national center. And USC provided the manpower and womanpower and the intellectual capital for this rapid rise.

Today, I believe that Southern California promises the next gold rush, intellectually and culturally, for all of us. This is because of the interplay of elite institutions such as USC and Caltech and UCLA and many other colleges.

This is because of Southern California’s position as the headquarters for the global digital media revolution that is reshaping every aspect of how human society connects and communicates.

As one of the world’s most powerful media executives told me recently: When it comes to digital media, no city has the talent, the brainpower and the groundbreaking new companies that you see in Los Angeles. This local power is powerfully supplemented by California’s overall technological pre-eminence, from San Diego to Silicon Valley.

One of our chief goals is to generate powerful new ideas—and then to take the next step and transform those ideas into something solid, something that can impact human lives.

This approach has led to a total of 44 active startup companies based on USC research innovation and intellectual property. These companies raised more than $800 million in venture capital money in the past decade. In fact, in 2008, during the depths of the economic downturn, just 16 of our startups were able to raise $300 million and create more than 500 high-quality jobs. The Wall Street Journal wrote an article about this success.

This is a sign of how a research university can be an economic engine for a region such as this. But we all benefit too from this region’s cultural diversity: Today, Southern California is a microcosm of the new Pacific world that is emerging.

The Los Angeles basin could be considered the largest Korean city outside of Korea; the 2nd largest Chinese city outside of China; the 2nd largest Japanese city outside of Japan; and the largest Vietnamese city outside of Vietnam

Similar statements could be made about our Armenian and Iranian populations, to say nothing of our vast and growing Hispanic-American population.

My university, USC, is home to the nation’s largest enrollment of international students, from 115 countries in addition to all 50 states. These students represent 90 different religious views, all engaged in a truly magnificent encounter and dialogue on this campus. It is a global encounter moderated by USC’s core values of freedom of inquiry, freedom of speech, tolerance and mutual respect.

At USC, we love that this city, which USC did so much to build, is now the greatest and most dynamic laboratory for the Pacific future. I tell our alumni that after 132 years, our location works to our advantage, and to the advantage of everyone who capitalizes on Southern California’s intellectual and social capital!

In an earlier age, the Age of the Mediterranean, it was said, “A thousand roads all lead to Rome.” As the world tilts from the Atlantic toward the Pacific, we want all intellectual roads to lead to Southern California and, of course, to USC.

While USC is a distinctly different enterprise that imitates no one, I do believe my university, as an American research university, has the chance to serve as an intellectual and cultural engine in this century, in much the way Oxford University emerged earlier as the intellectual engine of the British commonwealth nations.

USC is at the forefront of experimentation of “East-West” ideas. We bring the best American and international talent to Southern California, to be refined in a unique intellectual crucible, within a dynamic blend of the arts and humanities and culture; cutting-edge medicine, science and technology; and social sciences and professions.

We want our students to be skilled world citizens in training. We want our domestic students and our international students to share a fluency in one another’s cultures and values.

This, then, captures USC’s own lofty, some would say, audacious goals for the coming years.

Such goals will require persistence and determination and ongoing re-invention. After all, the person or organization or institution who is adequately suited for the challenges of the year 2015 may not be suited for the challenges of 2030. So many of our assumptions will have to be cleared away.

Ours is a time of renewal, for ourselves, our families and our nation. A time of renewal, in the midst of uncertainty and even chaos. But what is uncertainty? It is the beginning of adventure.

Who can bring “cosmos” from the chaos? Who are the entities, the organizations, the institutions, who can play Promethean roles in the coming era?

They are our civic leaders, whether they work in government, industry, education or the nonprofit sector.

Some say this will be the Century of Mega-Cities, in which the interaction of great global cities will be more relevant than trans-national transactions. And the people of this city and this region have a starring role to play in this regard.

Here in Southern California, our best entrepreneurs are shrewd and nimble.

Here, our best research universities are powerful innovation engines, and they are also society’s most enduring institutions.

Here, our best government leaders bring energy and imagination to serving their people.

All of us have the opportunity to work together, here at this moment and in this place, to do what we cannot do on our own.

All of us can work inter-dependently, so that we address our greatest challenges—and so we can generate untold new possibilities, for ourselves, for our communities, and for posterity.

Thank you!