Who has to leave and who gets to stay

When I was on contract with USU in 2000 to assist with the commercialization process, I came face to face with a phenomenon that I really hadn't understood when I was younger, when it applied to me. I realized that though USU prepares our youth for professional careers in a variety of fields -- particularly in business -- they basically need to leave once they develop themselves because of the nature of the local economy. There are exceptions to this in the case of family businesses, medical professionals, and a couple of other options, but opportunities are largely restricted to low-paying jobs where you don't really get to apply what you have learned even if you get the job. You know, the "new-fangled idea" problem.

Of course, this is in large part the story of what higher education provides. People from rural backgrounds get educations and go to the city. In my parents' generation, for example, all of my uncles on my mother's side grew up in Brigham City, went to war, got college degrees mostly from USU, and ended up far from here. They have had successful careers in a wide variety of fields. None, however, lived out their lives in Northern Utah, though they loved it here.

The issue I faced in discussing commercialization prospects from technology developed at USU was that there was great concern in the local business community that the development of new businesses here would hurt the economy -- at least the economy that they knew. A rising income level is apparently viewed by such individuals as a threat. Hiring overqualified employees because of a desire to stay is a compelling prospect that is habit forming. As a result, we found that there was little support for the idea of capital formation and new venture development, themes that I will return to on occasion.

In the general public discourse, it is challenging to know how to present the case for something like capital formation. In the case of Cache Valley, the weight of recent history is overwhelming. People think that things are the way that they are out of necessity. It has been a long time since major entrepreneurial efforts that increased local income levels were the mainstay of the economy, but Northern Utah has a stellar entrepreneurial tradition in that of the Eccles family and earlier than that the Thatcher family. Of course, both families as entrepreneurs and bankers had many partners and collaborators. In Ogden, the Brownings were successful on their own and with the Eccles.

The best entrepreneurial tradition is represented by the careers of David and Marriner Eccles, father and son. The scope of their work is largely unheralded. David's pioneer success story should be heralded in song and story, but few know of the details the the story that started in Scotland, that led them through to Eden, to Oregon, and to Ogden and Logan. His unexpected death necessitated strong actions by Marriner, who as a recently returned LDS missionary to Scotland took his training from Brigham Young College and became one of the most critical industrialists and policy makers in the 20th century. He built Hoover Dam. He was the Chairman of the Federal Reserve Bank. He originated and promoted the wide scale works projects that lifted the United States from the Great Depression. With his brother George and with Joe Quinney, he invented a whole new way of organizing banking, a widely copied innovation in that field. Finally -- and importantly -- he managed family accounts such that we are left with an array of family foundations and endowments that are legally committed to the support of research, the arts, and social needs.

This is an important point to understand. By innovating and establishing state-of-the-art organizations and financial institutions, Marriner Eccles in particularly established a process that enriches us in Northern Utah year-by-year. The point is that the Eccles family foundations are legally bound to make the kinds of contributions that they make. Isn't that a gift that keeps on giving?

Now, there are several very successful entrepreneurs in the region. A number of their companies persist here. There have even been some companies that have spun off from USU. Several companies exist in environmental measurement technologies, Hyclone, now a part of Thermo Fischer Scientific, continues to grow in the region, and the Thiokol snowcat endeavor was a definite success story in its time. Icon is successful on a large scale, the result of an effective branding strategy. I had a particular role in the Thiokol story in the DeLorean era that I will recall at some point.

Why, then, is income low -- at least all but a thin veneer of medical professionals, local businesspeople, the Thiokol engineers and university professors? The answer can be found in economics. What is it that we produces the other people buy? More particularly, what is it that we produce that others spend a lot of money to buy where there are high margins that can translate into high salaries. The answer is not many things. Even the highly successful integrated circuit industry locally -- started by Ezra Lundahl and his farm equipment enterprise that was located on the current site of Joann's on 2nd South and Main in Logan -- brings business, but without high margins.

To get high margins and high prices, we need to look to new technologies. Hence, the importance of university spinoff ventures. And who is going to create such ventures? Well, who has the energy for such endeavors and the inclination to assume associated risks? Well, our high-achieving young professionals, armed with educations and a veneer of experience. How do they accomplish such tasks? Well, not very well to this point, a problem faced throughout the state. I will address the venture capital/capital formation issue later. For now, the issues is straightforward. Do we want to support such developments?