Fire and Ice: The Knowledge Century and the Urban University

August 10, 2007

In 1609, Henry Hudson sailed into New York harbor for the Dutch East India Company, dreaming that he would discover a northwest passage to connect Europe and Asia. Departing from Amsterdam, his world's center of commerce, he encountered an island that centuries later would become a global hub of commerce and ideas, its influence reaching farther than even the most ambitious of Hudson's voyages.

The Amsterdam from which Hudson sailed was home to the most progressive and culturally diverse society in Europe. Small but remarkably vital and adventurous, Amsterdam was the source of half the world's published books throughout the seventeenth century and sent expeditions to uncharted waters and lands unknown to Europeans.

Reflecting these origins, New Amsterdam would become New York, the prototype for the American experiment: open to immigrants, enriched by many cultures, and always striving. In his marvelous history of Dutch Manhattan, Russell Shorto reports that New Amsterdam was restless, ambitious and polyglot: "It was Manhattan right from the start."

Urban universities draw their life force from their surroundings—the magnificent cities that house and nurture them, cities that are rich reservoirs of intellectual and cultural talent. All of us who lead these universities share a common institutional DNA, one that reflects what I call our "locational endowment" in global cities: a concentration of mind and matter, an entrepreneurial spirit, an embrace of complexity and openness, a connection to the world beyond our walls. Indeed, our campuses are literally without walls. We are, to borrow Shorto's words, "islands of learning at centers of the world"—both historically and in the ways we live and learn.

At its creation in 1831, New York University offered a new kind of higher education. Like its model, the University of London, NYU accepted the charge of educating not only a small elite but the emerging middle class. Both institutions were committed to doing so by drawing on the environment of a great city rather than retreating to a secluded pastoral setting. For that era, the choice was revolutionary.

Albert Gallatin, who with eight others founded NYU, could have fashioned this new university after any of the great universities of his day. As Secretary of Treasury to Thomas Jefferson and James Madison, Gallatin knew Oxford and Cambridge, as well as the Ivy Leagues—all models of withdrawal, contemplation and privilege.

In contrast, Gallatin wanted to establish "in this immense and fast-growing city a system of rational and practical education fitted for all and graciously opened to all"—a university that would be "in and of the city."

New York was then relatively small. With a population of 200,000, it had only recently surpassed Philadelphia to become the largest city in the country. The United States was still an agrarian society; above 14th Street, the Manhattan we know was farmland. Yet Gallatin anticipated a university for the urban future, an institution of higher learning designed to capture the fullness of human experience.

Scholars of urban life have offered various explanations of New York's uniqueness. Our city, from its birth as a Dutch harbor to the construction of the Erie Canal, was first a gateway economy for the importing, manufacturing and distribution of goods. When other cities surpassed New York as a port and manufacturing center, New York became America's preeminent location for more modern forms of commerce, focused on three crucial industries: finance, insurance and real estate—what came to be called the FIRE sector of the economy.

Like the gateway economy, the FIRE sector flourished because of New York's "locational advantage." In an economy fueled by the stock market, businesses found real opportunity in being situated near the trading floor, allowing them to conduct daily, and even hourly, transactions. Insurance followed finance, and real estate thrived. The international impact of the FIRE sector combined with high-paying jobs propelled the city's growth and validated New York's claim as the world's capital.

Yet halfway into the first decade of the 21st century, the number of city jobs in finance, insurance and real estate dwindled—down 9 percent from 1990 to 2005. Looking ahead, we know that cyberspace will increasingly deny oxygen to New York's FIRE sector. Today's chief executives can conduct business from Aspen or make deals from the Caribbean. They plan their lives and the locations of their businesses accordingly.

Rather than depending for their effectiveness on physical proximity, the channels of commerce are becoming primarily fiber-optic cables and network servers. A stock-market trade by a specialist takes an average of 12 seconds longer than an identical trade in cyberspace. Those seconds can translate into millions of dollars. While neither the specialists nor the New York Stock Exchange is likely to become obsolete—specialists will still be needed to control volatility, and the Exchange will adapt and evolve—the value of geographical proximity will diminish in a market that can be accessed virtually from anywhere.

The consequence of this change to New York is potentially profound. Although FIRE will remain important for some time, it seems unlikely to be viable as a long-term strategic base. Yet to find a replacement for this sector is not simple: The solution does not lie in relative tax and cost advantages, whether Route 128 in Boston or the Research Triangle in Raleigh-Durham, N.C.

Instead, New York is reinventing itself once again, drawing on a different source of advantage, the unique assets that, regardless of the FIRE sector's future, will sustain it as a world city. Our intellectual, cultural and educational (ICE) strengths—already among the world's greatest—are becoming the essence of New York's global identity. The creative economy of New York is once again a gateway economy, as ICE assets originate here to influence and shape our world.

Consider a few statistics: New York State has become the leading destination for freshmen leaving their home state for college. Our state ranks with California as home to more of the top 50 universities and top 50 liberal arts colleges than any of the other states; seven of our universities house research medical schools that rank among the nation's top 50.

New York City's universities drive much of this advantage. There are more college students in our city than in any other. New York is the capital of the world in fields as diverse as philosophy and soft-condensed-matter physics. The concentration of intellectual activity here is vividly evident in science: 128 Nobel Laureates in science; 146 active members of the National Academy of Sciences; the highest concentration of science students and postdocs; 11 major academic medical research institutions; and 5 biology Ph.D. programs.

The strength of these academic assets is greatly increased by New York's extraordinary array of cultural and artistic assets—its wealth of museums, libraries, theaters, concert halls, galleries, studios, and workshops. From its historic Settlement Houses on the Lower East Side to United Nations Headquarters to the New York Botanical Garden, the city's revered institutions reflect its abundant cultural riches, much as the entire city serves as the magnificent backdrop for its power and prominence in the film industry.

Indeed, the city is a cultural treasure for the talented men and women who come together daily, in the workplace, in a drive to create something new, in the desire to prosper or provoke, in pursuit of leisure activities, in conversations large and small. New York continually draws people who bring to the city their ingenuity and drive.

Of course, the ICE sector itself provides jobs, jobs that require a high degree of expertise and training. Indeed, from 1990 to 2005, the number of jobs in this sector rose 17 percent. But ICE is essential to the city's future not simply as an engine of employment. Rather, ICE can keep FIRE from being extinguished. New York's distinctive intellectual, cultural and educational assets not only attract people to this city, but have the power to anchor exceptional workers and creative jobs.

These assets will influence those who decide where to locate businesses. In turn, the ICE sector will electrify a gifted and knowledgeable work force to support its own businesses. Real estate, too, will come to depend on ICE, on the desire of people to live here when they don't have to do business here—but choose to. Many elements of the FIRE sector will survive and prosper in New York, but only if the city intentionally cultivates its ICE-sector advantage.

A strategy for New York of the 21st century must focus on the ICE sector—on the life of the mind that makes New York a hub that cannot be replicated in cyberspace; on the creativity that will retain commerce and those who engage in it; and on educational institutions that generate pathbreaking and profitable research.

What is vital to the success of New York over time is the soul of the city. To nurture that soul, we must turn to the many centers of learning and invention in New York that sustain intellectual and artistic life. These centers will enrich not only those within the academy's walls, but all who are drawn to the life of the mind and the imagination. I have no doubt that our capacity to secure New York as the intellectual and cultural capital of the world will be central to New York's continued global preeminence.

This confidence derives not only from our fierce love for this city. It is imperative that New York and other great world cities thrive as robust arenas for learning, as "idea capitals" that advance not only our achievement, economy and specific professions, but the character of civilization. Thus our charge is both exhilarating and essential—an endeavor filled with huge responsibility and immense promise.