Sunday’s Super Bowl between the San Francisco 49ers and the Kansas City Chiefs pits two high-powered offenses. It also pits two cities with very different economic stories, both of which offer lessons for communities in this part of Virginia.
First up: San Francisco, which by any measure ranks as one of the world’s foremost technology capitals. The 49ers actually play their home games 45 miles away in Santa Clara, smack in the center of Silicon Valley. Many business rankings, though, count Silicon Valley as a separate entity from San Francisco. Still, there are enough technology companies based in San Francisco proper that the distinction hardly matters for our purposes today.
We think of San Francisco as the classic technology city today but once it was a classic manufacturing city. In 1880, the city had the nation’s 9th-biggest concentration of manufacturing workers. So why isn’t San Francisco today part of the Rust Belt?
The short answer is that San Francisco was lucky enough to make the transition to a post-industrial economy long before it even know that American manufacturing would be undermined by forces beyond its control — from automation to lower-wage workers overseas. The beginnings of the city’s economic transformation can be traced back to a single event. In 1884, a 15-year-old boy from California died of typhoid fever. That wasn’t unusual in those days. What made the untimely death of Leland Stanford Jr. noteworthy was that he was the only child of Leland Stanford, one of the richest men of the day. In grief, Stanford told his wife: “The children of California shall be our children.” They donated $40 million — the equivalent of more than $1 billion today — to establish what we know today as Stanford University. Would Silicon Valley have happened without Stanford University? We don’t know but we do know this:. In 1909, a Stanford grad named Cyril Frank Elwell founded a telegraph company that created the world’s first global radio communications system — and later signed a big contract with the U.S. Navy. Today we don’t remember the name of Elwell’s company — the Federal Telegraph Corporation – but we know the company that it became part of it: ITT.
Elwell was just the first of many Stanford grads who helped build a technology community in the San Francisco Bay Area. In 1938, two Stanford grad students started making oscilloscopes in a garage. Their names were Bill Hewlett and David Packard and the company they founded is still very much around. Drawn by a big naval presence in the Bay Area, the ’30s and ’40s saw lots of companies — especially ones with military contracts — locate in the region to do work with all sorts of new-fangled technologies. When the Soviets spooked the United States with the launch of Sputnik in 1957, President Dwight Eisenhower did two things. He created NASA. He also funded research into aerospace electronics. One of those companies receiving federal funds was a start-up in the Bay Area that had the idea of making semiconductors with silicon rather than germanium, which was then the industry standard. That company was Fairchild Semiconductor and you can probably figure out the rest. And yet there’s more: In the 1960s, the Defense Department wanted to create a national network of computers. Three of the original four test sites were in California, with one of them at Stanford. What was known then as the Advanced Research Projects Agency Network we know today by another name: the internet. Now you should definitely be able to figure out the rest.
There are multiple lessons here — some encouraging, some not so much. First, San Francisco’s evolution into the global technology capital was completely accidental. No government planners sat around years ago in a community visioning exercise to say “you know what, let’s take this manufacturing port city and create an entirely new economy here.” That’s the chastening part. As other communities elsewhere try to figure out how to gain a piece of the new economy, they are often told: You can’t build another Silicon Valley. That’s true. However, that’s not really necessary. Seattle and Boston, for instance, are also tech hubs but they don’t look anything like Silicon Valley — but they’ve all figured out how to leverage the new economy to their advantage. So can we?
Here’s where some intentionality can help: Federal research funding. Jonathan Gruber and Simon Johnson, both professors at the Massachusetts Institute of Technology and authors of “Jump Starting America,” say that “almost every major innovation” following World War II “relied in an important way on federal government support, provided by both Democratic and Republican administrations.” They want the U.S. to repeat that level of research spending — but spread it around the country to help grow more tech hubs. Several Democratic candidates for president — most notably Elizabeth Warren and Pete Buttigieg — have embraced some version of that. Presumably that would be good for Virginia Tech, which in turn would be good for the New River and Roanoke valleys. This isn’t just a Democratic idea, either. The Republican legislators from the coalfields are pushing an energy research center, which they hope would have the same economic effect.
If there’s one lesson the modern economy makes clear over and over, it’s the importance of a major research university in growing a regional economy. The biggest asset that this part of Virginia has is Virginia Tech — not just for the economic impact that the university has simply as a major employer, but because of the research spin-offs it generates and the students who pass through it. Blacksburg may have been unhappy about Tech’s surprise “over-enrollment” this past school year but government leaders in other localities were secretly pleased – sometimes not so secretly. The more students Tech has, the more who are likely to stick around after graduation, helping localities reverse negative demographic trends and broaden local talent pools to make them more attractive for new employers. Likewise, the more that UVA-Wise can grow its research capacities, the better for the coalfields.
Now, for another chastening observation: San Francisco’s economic evolution took decades. That can either paralyze politicians, or hasten their decision-making. Perhaps voters should be asking: Which politicians are looking four years ahead, and which ones are looking 40? That’s the lesson from San Francisco. Tomorrow we look at Kansas City.