We were on the right track a few years back when Washington began boasting that it had grown beyond its government base to become a diverse, private sector-oriented economy.
The tech bust revealed that the rhetoric had gotten a bit ahead of the reality. But it would be a mistake to read too much into Washington's current prosperity, based as it is on an unsustainable surge in government deficit spending. In reality, we caught a lucky break that gives us a couple of years to come up with a credible economic development strategy.
Don't get me wrong: Most regions would kill for the economic assets we have, including the presence of the federal government. But still missing are a few first-tier research universities and graduate programs capable of attracting top students and teachers from around the world and really juicing the local economy.
This is not meant as a knock on the region's fine schools, many of which have been moving up in the national rankings. Only a few aspire to world-class status, however, and even those that do don't have the resources to achieve it.
Roughly speaking, universities in this region have a combined endowment of less than $2.5 billion. Compare that with $18 billion for Harvard, $8.6 billion each for Stanford and the University of Texas and $5 billion for MIT. In Baltimore, Johns Hopkins alone has $1.7 billion.
Why does such a wealthy region have such impecunious universities? One theory is that because Washington's economy has done so well by relying on the federal government, there hasn't been the need to develop other economic engines. And because that economy has been so reliant on government, the region still lacks the kind of entrepreneurial companies and large personal fortunes that, in other places, have bankrolled great universities.
It also doesn't help that we are dealing with three different "state" governments -- one of which has no money, and two others that, for political reasons, can't (or won't) concentrate their educational resources in the Washington suburbs.
Happily, Washington has begun to sprout the kind of companies and successful entrepreneurs that could bring Washington's top universities to the next level.
On the medical school front, I rather like the idea now quietly making the rounds of closing down Georgetown Hospital and moving the staff and medical school to a new campus anchored by Children's Hospital and the Washington Hospital Center. Anyone who has been to Pittsburgh lately has seen what first-class hospitals working with cutting-edge medical schools can do for an urban economy. But it won't happen here unless someone like B.F. Saul, NVR's Dwight Schar or the Rales brothers throw serious money into the pot and dragoon their fellow tycoons to join them.
Construction magnate Jim Clark has already led the way in helping to make the University of Maryland one of the country's top engineering schools. And as a veteran of the University of California system, Maryland President Dan Mote knows how to foster the kind of close relationships between university researchers and entrepreneurs that sustains Silicon Valley and the Research Triangle. But to date, Mote has been unable to get that kind of commitment from the Washington tech community, which can't seem to get over silly geographic hang-ups and get behind College Park.
Finally, Washington's new role as a center of public sector management, international finance and economics, and private equity would be helped by a top-tier business school downtown. Both Georgetown and George Washington aspire to the role, with both planning new business school campuses. But neither is likely to make the grade without the kind of deep commitment that Booz Allen Hamilton, Capital One or the partners at the Carlyle or Perseus groups might provide.
Up to now, local business leaders have thought of local university support under the category of philanthropy. But if Washington is to be something more than a government town, they need to start thinking of it in terms of investment in regional economic development -- an investment with proven long-term payoffs.
Steven Pearlstein can be reached at pearlsteins@washpost.com.
