OVERCOMING IMPLICIT BIAS

June 20, 2016

THE BLOG

Overcoming Implicit Bias

 06/20/2016 12:11 am ET
John Pepper is the retired Chairman & CEO of The Procter & Gamble Company. He serves as the Honorary Co-Chair of the National Underground Railroad Freedom Center and, until 2012, served as the Chairman of the Board of The Walt Disney Company.
Robert: John, you’re someone for whom I have a lot of respect, so I was anxious to get your opinions for this short blog series on race and race perception. There is a great deal of turmoil in the news these days. As a longtime leader in Corporate America, I imagine you’ve done your share of crisis management. I have a couple “What would you do” type questions, but I want to ask them in the context of Implicit Bias. Implicit bias refers to: the attitudes or stereotypes that affect our understanding, actions, and decisions in an unconscious manner. Implicit bias is also the theme of a new exhibit you’re now opening at the National Underground Railroad Freedom Center in Cincinnati, Ohio.
THE NATIONAL UNDERGROUND RAILROAD FREEDOM CENTER
Implicit Bias Exhibit
Why is it important for the Freedom Center to focus on implicit bias at this point in time?
John: Understanding the reality that we all have implicit biases, and always will, and taking actions to address these implicit biases, lies at the very heart of the Freedom Center’s purpose. That purpose embraces the importance of each of us recognizing one another’s individual dignity and the value of our working together and not being separated by stereotypical views of one another.

For me, the history of the Underground Railroad brings to life the willingness of people, different in race and class, and not knowing one another, to risk their lives, to come together to help one another achieve freedom.

Today, in this country, we continue to see the plague of implicit bias in our commercial, social and political worlds. We see ethnicities being stereotyped. We draw impressions of others based on their gender, body size, skin color, sexual orientation and dialect.

“Implicit Bias” allows us to understand these biases that we hold. They don’t reveal us as “bad people.” They reveal us as human. We need to look through them to understand the “other” person as worthy of our respect. I always counsel myself: “try to see the other person in myself and myself in the other person.”
Robert: Most of us reject bias on a conscious level. But how can media reports and the divisive words of prominent entertainment or political figures affect our views subconsciously?
John: They can give us a warped, stereotypical view of other people and the roles they play. Say, every time we see a doctor, we see a man; maybe we have trouble envisaging women playing that role. What if we see a scene of violence in a depressed neighborhood and someone makes the comment, “there they go again, those poor African-Americans.” You hear this kind of thing day in and day out. And it can affect your view. Generalized perceptions grow out of repeated individual reports. We fail to examine each situation and look at each person individually.
Robert: What can we do either personally or as a nation to fight negative bias, stereotyping, bigotry or, what is termed as, racism?
John: First and foremost, we can become aware of our own implicit biases. Take the “implicit association test.” You will find it free on the web. Just click here. If you are like the majority of people, you will find you are biased. That doesn’t make you a bad person, but, if you are like me, it will sensitize you to the need to look beyond what might be a generalized impression of other people to understand the individual, as an individual, to look at this man or woman as a person who, just like you, is pursuing the opportunities and challenges of life, with a background you may not understand, giving them the benefit of the doubt.

By far the best way to come to understand people who are different than we are is to come to know them personally, especially by working toward a common goal. There are so many activities in my life—in business and in the community—in which we have been able to achieve success only because of the diversity of the people around the table, men and women with experiences, perspectives and insights far different than mine. It is in working toward common goals that I have come to develop respect for people who are different than I am and be able to look past (as least better than I otherwise would) the generalized stereotypical perceptions that I might attach to race, ethnicity, gender, and thinking style.
Robert: It sounds like taking the time to understand other people might go a long way toward solving many of our “misunderstandings” in the world and in the U.S. today.
John, I know you’re a history buff. Did implicit bias contribute to the institution of slavery in America? How so?
John: When it comes to slavery, of course, we had explicit bias, not just implicit. The belief that African-Americans, men and women with dark or brown skin, were inferior, biologically, ran deep. There were even readings from the Bible which were cited as evidence to justify the subservient role of Black people.

Implicit bias has sadly carried on long past the formal abolition of slavery. It exists today. It is that which we must overcome.
Robert: You and your colleagues at the Freedom Center are certainly contributing to overcoming bias -  implicit or otherwise. I’m excited about my next trip to Cincinnati so I can visit your new exhibit. Thank you!
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WHY I LOVE HISTORY

June 7, 2016

WHY I LOVE HISTORY 

Although a half-century ago, I can still remember, as if it were yesterday, the course and the teacher who launched me on my lifetime love of history.  The course:  the History of the Development of the West; we called it “Cowboys and Indians”.  The teacher: Howard Roberts Lamar; he later served as President of Yale.  Professor Lamar introduced me to the heroes and the dynamic story of westward expansion, the Indian tribes and Indian wars, and the diplomatic dealings with the British and the French.  He introduced me to the complexities and the continuities of history.  He showed us the intertwining relationships of long-term movements and of new ideas; of geographical realities, and personal leadership and sheer chance in determining particular outcomes.
I have been a lover of history ever since.   Why?  
There is the sheer drama of it all:  the understanding of how the lives of famous people came to be and how events like World War I or the evolution of the modern Russian state developed as they did.

There are the sobering and often inspirational lessons history teaches, particularly through the lives of individuals, the choices they made, the values they embodied, the risks they took, the challenges they overcame, and those they didn’t, all of this making it clear that progress is possible but not inevitable.  That there are some causes and effects that can be influenced by man, and some that can’t.  That life is not straightforward nor foreordained, but nor is it beyond our control.

My love of history has influenced my life in many ways.  It has instructed me in how I’ve tried to lead Procter & Gamble, which I was a part of for 40 years.  For example, it has influenced me as I have contemplated how long and how much to invest to create entirely new businesses and establish strong organizations in a country like Russia.  I have done this recognizing that major victories are never easily won.  I’ve seen that courage and persistence count for everything as I’ve learned about the lives of Lincoln, Churchill, Nelson Mandela, Vaclav Havel and many others.

My awareness of China’s history, for example, led me to appreciate the remarkable culture and history of this country.  Because of that awareness, I was able to relate to the government leaders in China with a knowledge and a respect otherwise not possible.  
My love of history has been a driving force in my commitment to help create the National Underground Railroad Freedom Center.  The Freedom Center reveals the stories of heroes who fought for their own freedom and others who helped them along the way.  While anchored in the history of the Underground Railroad, it brings the story to contemporary times, with the purpose of inspiring and challenging us to take steps for freedom in our own lives today.

My commitment to this institution was inspired by people who I had read about who fought for their freedom; people like Harriet Tubman and Frederic Douglass; and others, like Thomas Garrett, who in the courtroom where he was being fined for having helped a slave escape said, “Let this fine serve as a license for me to help every other slave that comes to me.”  These are all examples of the courage, cooperation and persistence we seek in our own lives.  

My reading of history and my writing about it have led me to recognize the importance of meticulous research and the pursuit of truth, even as I recognize what is seen  as “truth” in one generation may not be seen the same way in the next.  This recognition has permeated how I’ve tried to approach business and every other aspect of my life.  There is no substitute for deep knowledge nor for the recognition that continued learning must be a way of life. 
Paraphrasing a former Yale president and classmate of mine, Bart Giamatti, I love history because I have come to see that without a knowledge of the past – its realities and its causative relationships – we cannot hope to construct an action agenda able to lead us to a better future.

As I write this, I think of some of the recent books that I’ve read, the values they reinforce and the lessons they teach, and their relevance to our everyday life.  I think of Walter Russell Mead’s “God and Gold,” with its perceptive exposition of how the co-existence of rapid changes and unchanging traditions have benefited the development of the Anglo-American world.  I think of the memoirs of Vaclav Havel, relating his brave resistance to communist rule in Czechoslovakia, his unexpected ascendency to the Presidency, the challenges he encountered in that office, and the honesty of his examination of his strengths and frailties.  I think of Bart Giamatti’s treatise on the value of a liberal arts education in his book “A Free and Ordered Space”.  I think of Professor Saidiya Hartman’s poetic recollection of her trip to her home country of Ghana to trace the roots of the Middle Passage and the institution of slavery.  Her reflections on that trip cast a shining light on the pursuit of freedom today.  

In the end, I guess I love history because of the joy the acquisition of knowledge brings and because of what it teaches.  There is joy in understanding the drama of lives and events unfolding; in seeing the connectedness of things; in the role of individual choice and the contingency of events; in the interface between long-term trends and human intervention and chance as well.  There is the learning that comes from both understanding the worst that man has done (e.g., slavery, genocide), hoping it will steel us to not repeat it, and appreciating the best that man has done (e.g., the pursuit of freedom, courage in the face of insuperable odds), with the hope it will provide knowledge and inspiration to help us create a better future for ourselves and for those whose lives we touch.
 
 
 

"WANTED A WORLD PERSPECTIVE": CAN WE SAVE OUR PLANET?

May 4, 2016

 
"Wanted: A World Perspective"
Can we Save our Planet?
 
In the course  of the past week, I was impacted by three readings:  Martin Luther King’s last Christmas sermon, delivered in December of 1967; an op-ed published dated May 2, 2016:  “The Refugee Crisis is Humanity’s Crisis” by Brad Evans and Zygmunt Bauman; and a history of the Spanish Civil War, 1936-39, “Spain in Our Hearts” by Adam Hochschild.
 
These readings were juxtaposed against the divisive and xenophobic policies being articulated by the presumed nominee of the Republican Party for the 2016 presidential election, Donald Trump.  
 
What draws these threads together?  Most simply and poignantly, the failure for us and the world to act on and make real the vision powerfully prescribed by Martin Luther King in 1967: “Our loyalties must become ecumenical rather than sectional.  Our loyalties must transcend our race, our tribe, our class and our nation; and this means we must develop a world perspective.  No individual can live alone, and as long as we try, the more we are going to have war in this world.”
 
Now, almost 50 years later, in 2016, Zygmunt Bauman casts perspective on the plight of the Syrian refugees, describing them as “worldless in a world that is spliced into sovereign territorial states, and that demands identifying the position of human rights with state citizenship.  This situation is further complicated by the fact that there are no countries left ready to accept and offer shelter and a chance of decent life and human dignity to the ‘stateless’ refugees.”  Bauman correctly observes that the issue of refugee has been transferred from the era of universal human rights into that of internal security.  “Being tough on foreigners in the name of safety from potential terrorists is evidently generating more political currency than appealing for benevolence and compassion for people in distress.”
 
Once again, the nation state is failing us on the global scale.  We are seeing that nation states are not proving fit to tackle the challenges arising from our planet-wide interdependence.  Benjamin Barber is more pessimistic than I am but there is a lot of truth in his assertion that they are “too inclined by their nature to rivalry and mutual exclusion” and appear “quintessentially indisposed to cooperation and incapable of establishing global common goals.”
 
There have been many failed efforts to bridge this gap.  In more recent history, they have included the League of Nations and the United Nations which, while having accomplished some good, has proven incapable of bringing countries and different ethnic and religious groups within countries together to achieve peace.  The Israeli-Palestinian conflict, and the tragedies we are now witnessing in Syria and throughout the Middle East and so many places in Africa give sobering evidence of this.
 
In his sermon, Martin Luther King asserted that, “If we are to have peace on earth and good will toward men, we have to affirm” without violence, the “sacredness of all human life.  Every man is somebody because he is a child of God.  Man is more than a tiny vagary of whirling electrons who wisp of smoke from a limitless smoldering.  Man is a child of God made in His image and, therefore, must be respected as such.  Until men see this everywhere, until nations see this everywhere, we will be fighting wars.”
 
Despite the effort of countless religious leaders and prophets like Martin Luther King, this glorious outcome has not come close to being realized.
 
Today, in the 2016 presidential campaign, we hear Donald Trump trumpeting (forgive the pun), “America first.”  He is advancing a recipe for economic nationalism that cannot possibly be implemented as he presents it, but even the effort to do so risks trade wars that will lead to worldwide depression. Even worse is his vilification of other nationalities and ethnicities and religious beliefs. I cannot imagine an American political leader whose views run more counter to what Martin Luther King espoused.
 
*****
 
Why have I joined the Spanish Civil War to this narrative?   Because that war represents a historically understandable event which in many ways mirrors what we see happening today in many parts of the world, most immediately and disastrously in Syria where, in just the last two days, thousands of women, men and children in the nation's second largest city, Aleppo, have been killed.
 
The people of Spain in the 1930s were separated by deep beliefs (one in a highly authoritarian government, led by Franco; the other a duly elected socialist government). There was great cleavage in religious belief and economic status.  Both groups were mutually committed to annihilating one another with ascending almost mindless fury.  Like Syria, each group was supported by external allies:  in the case of the socialists, an International Brigade composed of Soviet, French, British and American volunteers.  On the authoritarian, ironically called "republican” side, there was the support for Franco from government troops and military equipment provided by Nazi Germany and Fascist Italy.  
 
Brutal killings, family against family, brother against brother, peasant against land owner, atheist vs. clergy, leaving scars that lasted for generations, which were only contained by Franco assuming control of the country as a dictator. 
 
This is all too similar to what we see today, especially in Syria (but also in Egypt, Libya and Iraq).  Within Syria external forces (Russia, the U.S., Turkey, Iran, Saudi, etc.)  supporting warring sides separated by long smoldering resentments and persecution and search for power only partially explained by differences in religious belief leading to hundreds of thousands of deaths and millions of refugees.  It was chilling for me to read the words of perhaps the most famous photographer to cover the Spanish Civil War, Robert Capa: "I have seen hundreds of thousands flee (carrying their possessions in valises) and I am afraid to think that hundreds of thousands of others who are yet living in undisturbed peace in other countries will one day meet the same fate.”  How horribly true Capa's fearful prevision has proven to be. 
 
*****
 
I have to say that this brief if superficial survey of history and our current political environment leaves me with all too little hope.  Of course, I not only  hold out the hope but  I take responsibility in my own life to make good as well as I can on the fundamental call of every religion--to treat one’s neighbor as one’s self.  However, while we must never stop spreading and living God's most basic commandments, history does not make me optimistic that this alone will do it. 
 
I believe a true breakthrough in creating the will and determination to work together across (and within) nations toward common global and humane goals awaits the emergence of leaders from the leading countries of the world who come to recognize this such cooperation is essential to the very life and existence of their own countries as well as that of the world.  What will it take for this to happen?  I hate to say it, but I have come to believe it may take a horrific--and I mean really horrific--global disaster, an even greater wakeup call than the horror of terrorism which we are already experiencing.  It may take a nuclear disaster that has global impact. In a longer view, this disaster could also emerge from climate change, and this is certainly an area where nations must work together. Otherwise our planet as we know it is surely at risk.
 
There is an alternative which is very obvious but very hard to realize. 
 
I pray that the most important leaders of the world are wise and prescient and courageous enough to see the threat of nuclear annihilation and take action on it.  I hope the fear of nuclear annihilation which has become even more real with terrorism, will be enough to bring the leaders of the leading nations of the world together.  To do this, we must make the public aware of the devastating destruction and the everyday proximity of the risk of nuclear war.  It has been too long since we saw those mushroom clouds and the city of Hiroshima being wiped out in seconds.  
 
At the moment, I see no sign of there being leaders on the scene or a climate of public opinion in the most influential countries--e.g., the United States, Russia or China--that make it likely this will happen.  To the contrary, a level of distrust and animosity between the West/U.S. and China and Russia are at higher levels than decades.  It is so unnecessary.  No sane person could believe that Russia and China are trying to export their systems of government as occurred with Communism.  And they certainly don't need more land.  And every country has major domestic challenges to deal with.  And, yes, we do face common threats (nuclear proliferation/disaster, failed states, climate change and terrorism) which, if we are not working together, can destroy us all. 
 
We have united before.  It happened during World War II as Stalin, Churchill and Roosevelt, and most of the rest of the world united against the threat of Nazi Germany and the Empire of Japan. To be sure, the alliance was temporary and a matter of expedience, but you have to start somewhere (common threats) and, very importantly, the threats today are very different:  in this case the threats are on-going and continually world threatening.
 
In eight months, we will have a newly elected President of the United States. I hope and trust it will be Hillary Clinton.  Even as she works to make progress in the many things that demand progress in our country (education, jobs, racial and gender equality, infrastructure, poverty, etc.),  I hope and pray that the President will reach out to the other world leaders to create a wise and prudent "world view" as Martin Luther King called for--a view which will avoid creating enemies among nations where none need exist (as we too often do today), which will respect the sovereignty of other nations and all peoples and which will unite the leading nations in taking action to avoid the most important threats which imperil the very existence of  all people and our planet. 
 
 
 
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REVISITING "WE HAVE TO WALK AWAY FROM THIS ROADSHOW"

I posted this blog over 2 months ago.

We have obviously not walked away yet. 

We must look to Hillary Clinton to provide the leadership I describe in the third from last paragraph. 

The stakes could not be higher. I believe you'd have to go back to the election of 1860 to think of one of such consequence. Our future and that of the world depend on it. Some will say that it is impossible to really predict what Trump would do as President. I agree. That very uncertainty makes his election totally unacceptable.

“We Have to Walk Away From This Road Show”
 
These are among the words with which Pulitzer Prize-winning author Marilynne Robinson concludes her book, “Mother Country.”  It was published in 1989.  She was writing about a somewhat different challenge then.  She described it as a “decline in national self-esteem.”  But in a way, it wasn’t different.  In a way, we are facing much the same challenge today.  I describe it as a “decline in confidence in our institutions.”  
 
Because of this, we are witnessing a campaign by a candidate for the presidency of the United States by Donald Trump unlike any other we have witnessed in my lifetime.  A campaign that relishes in sweeping, categorical defamation of other people, such as Muslims and immigrants.  A campaign that takes delight in pushing the boundaries of outrageous pronouncements, whether that be in vilifying an entire group of people or accusing a former president of the United States of “lying.”  We are perversely taken by Trump’s authenticity, his fearlessness and his complete and utter rejection of political correctness.
 
Trump is feeding off a space filled with the potent mixture of boredom, frustration, hopelessness and anger and the all-too-present human attraction to witness, and indeed even revel, in the bizarre.  His impact is fueled by a media frenzy producing unending coverage and the inability of even the most seasoned, tough-minded interviewer to overcome his steamrolling, self-guided verbosity.
 
Without articulating any policy much beyond “building a big wall, which we’ll have Mexico pay for” and “making America great again” in ways weakly defined, he emphatically says, “Trust me.  I’m great at making deals.”  
 
He has the insidious talent of demeaning, indeed trashing, “others,” while making those he is addressing feel special, valued, even “loved.”  He gets away with this in no small measure because he is so obviously delivering what he says with gay abandon.  He is really enjoying himself.  
 
All of what I’ve written here has been easy to write.  But what is not easy and has never been easy in times of challenge of the kind we face today is to find and support the leader who can bring us together, who can offer a vision for the future and plans to support it that realistically offer an improved life for all and to find a role for our country in the world which advances as far as possible the peace we need while avoiding nuclear disaster and the threat of terrorism.
 
Returning to Ms. Robinson, she closes her book with words I resonate to:  “My greatest hope is that we will at last find the courage to make ourselves rational and morally autonomous adults, secure enough in the faith that life is good and to be preserved, and to recognize the greatest forms of evil and name them and confront them.”  
 
Paraphrasing her conclusion, we have to walk away from this road show which Donald Trump’s campaign represents.  We need to “consult with our souls, and find the courage in ourselves, to see and perceive and hear and understand.”
 

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WHY AMERICA'S VARYING GROWTH RATES AND THE CHALLENGE WE FACE IN THE FUTURE

April 6, 2016

WARNING:THESE EXTRACTS COVER SIX PAGES BUT I BELIEVE YOU WILL 
FIND THE CONTENT AND REFLECTIONS TO BE WORTH THE TIME

The Rise and Fall of American Growth
The U.S. Standard of Living since the Civil War
By Robert J. Gordon

The following extracts from Robert Gordon’s new book try to capture in a short six pages the essence of the argument he makes in a 600+ page book.  I, of course, have shorthanded it tremendously and have not tried to develop all of its themes. 

The two principle themes I have chosen to emphasize have been:

1.     The role of transformative innovation and entrepreneurship in dispersing that innovation.  This is something that we must keep in mind in every business or initiative we undertake.

2.     The reality of the “headwinds” we face in America in sustaining a rate of real growth that approximates what we had during the middle part of the 20th century.  Those headwinds include growing inequality and the challenge of sustaining the pace of the “unique” innovations that came into play during that period. 

The most compelling challenge for me is the one Gordon develops on the related issues of education and family formation.  You’ll see the shocking statistics that show the decline in births to married couples as well as the decline in the relative educational capability of the American workforce.  I come to this book with tremendous conviction in the importance of addressing these issues where we must:  at the very earliest age of a child, pre-natal through five, and also then changing the ways in which we finance elementary and secondary education to provide a more-even playing field to children and their families regardless of income.

Enough said.  I hope you enjoy these notes and that they encourage you to delve more deeply into this book.
*****
The Great Leap Forward from the 1920s to the 1970s
Our task in this chapter is to shed light on this fundamental puzzle in American economic history:  What allowed the economy, particularly in the 1950s and the 1960s, to so unambiguously to exceed what would have been expected on the basis of trends estimated from the six decades before 1928?

The traditional measure of the pace of innovation and technological change is total factor productivity (TFP)—output divided by a weighted average of labor and capital input.  Gordon documents that the annualized growth rates of total factor productivity increased about fourfold during the fifty year period 1920-1970 (1.89%/year) versus prior years and versus the rate that has persisted since then.  Wood examines what was the cause of this “Great Leap.”

The most novel aspect of this chapter is its assertion that World War II itself was perhaps the most important contributor to the Great Leap.  We will examine the beneficial aspect of the war both through the demand and supply side of the economy.  The war created household savings that after 1945 was spent on consumer gods that had been unavailable during the war, the classic case of “pent-up demand.”  A strong case can be made that World War II, however devastating in terms of deaths and casualties among the American military (albeit much less than the greater toll of deaths and wounded among other combatants), nevertheless represented an economic miracle that rescued the American economy from the secular stagnation of the late 1930s.  In fact, this chapter will argue that the case is overwhelming for the “economic rescue” interpretation of World War II along every conceivable dimension, from education and the GI Bill to the deficit-financed mountain of household saving that gave a new middle class the ability to purchase the consumer durables made possible by the Second Industrial Revolution.

The supply effects are more subtle and interesting and include a vast expansion of the nation’s capital stock as the government paid for new factories and equipment that were then operated by private firms to create aircraft, ships and weapons.

The explanation of the Great Leap then turns to the innovation of the 1920s that had not been fully exploited by 1929, as well as to the additional inventions of the 1930s and 1940s.  By some measure, the 1930s were the most productive decade in terms of the numbers of inventions and patents granted relative to the size of the economy.  Previous chapters of this book have pointed to technological progress during the 1930s, including in the quality and diffusion of electric appliances, improvements in the quality of automobiles, the arrival of commercial air transport, the arrival of network radio programs available in every farm and hamlet, the culmination of growth in motion picture quality and attendance, and continuing improvements in health with the invention of the first sulfa drugs.  Inventions in the 1930s and 1940s also occurred in other areas not explicitly treated in previous chapters of the book, especially chemicals, plastics, and oil exploration and production.

Gordon also makes the case, one which challenges my own long-term thinking, that the history of immigration and trade during this period also are important factors in this “Great Leap” forward.  Let me explain. 

Between 1870 and 1913, roughly 30 million immigrants arrived on American shores; they crowded into central cities but also populated the Midwest and the plains states.  They made possible the rapid population growth rate of 2.1 percent per year over the same interval, and the new immigrants created as much demand as supply in the sense that there was no mass unemployment caused by their arrival—and in fact the unemployment rate in 1913 was only 4.3 percent.  All those new people required structures to house them, factories to work in, and equipment inside the factories, so the new immigrants contributed to the rapid rise of capital input.

Contrast this with the shriveling up of immigration after the restrictive immigration laws of 1921 and 1924.  The ratio of annual immigrations to the U.S. population dropped from an average 1.0 percent per year during 1909-13 to 0.25 percent per year during 1925-29, and the growth rate of the population fell from 2.1 percent during 1870-1913 and 0.9 percent between 1926 and 1945.

Both the immigration legislation and the draconian regime of high tariffs (the Ford-McCumber tariff of 1922 and the Smoot-Hawky tariff of 1930) converted the U.S. into a relatively closed economy during the three decades between 1930 and 1960.  The lack of competition for jobs from recent immigrants made it easier for unions to organize the push up wages in the 1930s.  The high tariff wall allowed American manufacturing to introduce all available innovations into U.S.-based factories without the outsourcing that has become common in the last several decades.  The lack of competition from immigrants and imports boosted the wages of workers at the bottom and contributed to the remarkable “great compression” of the income distribution during the 1940s, 1950s and 1960s.”

Thus the closing of the American economy through restrictive immigration legislation and high tariffs may indirectly have contributed to the rise of real wages in the 1930s, the focus of innovative investment in the domestic economy, and the general reduction of inequality from the 1920s to the 1950s.

Can the Innovations of the 1920s and 1930s Explain the Great Leap?
The two most important inventions of the late nineteenth century were electric light and power and the internal combustion engine, and these are often described as a “General Purpose Technology” (GPT) that can lead to the creation of many subinventions.

The most important invention of all time was the discovery of how to transform mechanical power into electricity, which then could be transported by wires for long distances and then retransformed into whatever form of energy might be desired.  This passage is interested also for its perspective on how much of the modern world had already been invented at the time of its writing in 1932.

Without it not only would the street car again be horse-drawn, but the automobile and the airplane would stop.  For without electromagnetic sparking devices, how could gasoline engines function? 

Thus every source of growth can be reduced back to the role of innovation and technological change.

Few descriptions of the role of risk and chance in the process of invention are as evocative as that of D.H. Killeffer, writing in 1948:

Inventions do not spring up perfect and ready for use.  Their conception is never virginal and must be many times repeated.  One seldom knows who the real father is.  The period of gestation is long with many false pains and strange forebirths…Few of the children of the mind ever survive and those only after many operations and much plastic surgery.

William Baumol offers a related caution.  Entrepreneurs contribute to economic growth far more than the narrow word “innovation” can convey.

The 1870-1970 century was unique.  Many of these inventions could only happen once, and others reached natural limits.  The transition from carrying water in and out to piped running water and waste removal could only happen once, as could the transition for women from the scrub board and clothes lines to the automatic washing machine and dryer.  After 1970, innovation excelled in the categories of entertainment, information and communication technology:  Television made its multiple transitions to color, cable, high-definition, flat screens and streaming, and the mainframe computer was joined by the personal computer, the Internet and the World Wide Web, search engines, e-commerce and smartphones and tablets.


The Challenge Ahead of the U.S. – Strong Headwinds – Devastating Statistics
The timing of the stream of innovations before and after 1970 is the fundamental cause of the rise and fall of American growth.  In recent years, further downward pressure on the growth rate has emerged from the four headwinds that are slowly strangling the American growth engine. Rising inequality has diverted a substantial share of income growth to the top 1 percent, leaving a smaller share for the bottom 99 percent.  Educational attainment is no longer increasing as rapidly as it did during most of the 20th century, which reduces productivity growth.  Hours worked per person are decreasing with the retirement of the baby-boom generation.  A rising share of the population in retirement, a shrinking share of working age, and longer life expectancy are coming together to place the federal debt/GDP ratio after the year 2020 on an unsustainable upward trajectory.  These four headwinds are sufficiently strong to leave virtually no room for growth over the next 25 years in median disposable real income per person.

Gordon underscores the challenge which an almost unbelievable change in family structure represents.

For white high school graduates, the percentage of children born out of wedlock increased from 4 percent in 1982 to 34 percent in 2008 and from 21 percent to 42 percent for white high school dropouts.  For blacks, the equivalent percentages are a rise from 48 percent to 74 percent for high school graduates and from 76 percent to 96 percent for high school dropouts.  Not only is the rate of marriage declining, but almost half of all marriages fail.  The number of children born outside of marriage is drawing equal with the number of children born within marriage.  June Carbone and Naomi Cahn summarize the implications for the future:

The American family is changing—and the changes guarantee that inequality will be greater in the next generation.  For the first time, America’s children will almost certainly not be as well educated, healthy, or wealthy as their parents, and the result stems from the growing disconnect between the resources available to adults and those invested in children.

Much of this reflects the importance that females place on having an employed spouse, as well as that there are only sixty-five employed men for every 100 women of a given age.  Among young African Americans, there are only fifty-one employed men for every 100 women, reflecting in large part the high incarceration rates of young black males. 

Charles Murray’s most devastating statistic of all is that for mothers aged 40, the percentage of children living with both biological parents declined from 95 percent in 1960 to 34 percent in 2010.  The educational and inequality headwinds interact, leading to the prediction of a continuing slippage of the United States in the international league tables of high school and college completion rates. 

Other sources support Murray’s emphasis on social decline in the bottom third of the white population.  A recent study showed that between 1979 and 20009, the cumulative percentage of white male high school dropouts who had been in prison rose from 3.8 percent to 28.0 percent.  For blacks over the same time interval, the percentage who had been in prison rose from 14.7 percent to 68.0 percent.  That is, fully two-thirds of black male high school dropouts experience at least one spell in prison by the time they reach 40 years old.  For black graduates from high school (including those with GED certificates), the percentage in prison rose from 11.0 percent to 21.4 percent.

Any kind of criminal record, and especially time in prison, severely limits the employment opportunities available to those whose prison sentences are ending.  According to the FBI, no less than a third of all adult Americans have a criminal record of some sort, including arrests that did not lead to convictions; this stands as a major barrier to employment.

The Potential for Policy Changes to Boost Productivity and Combat the Headwinds
The potential effects of pro-growth policies are inherently limited by the nature of the underlying problems.  The fostering of innovation is not a promising avenue for government policy intervention, as the American innovation machine operates healthily on its own.  There is little room for policy to boost investment, since years of easy monetary policy and high profits have provided more investment funds than firms have chosen to use.  Instead, educational issues represent the most fruitful direction for policies to enhance productivity growth.  Moreover, overcoming aspects of the education headwind matters not only for productivity growth.  A better educational system, particularly for children at the youngest ages, can counter increasing inequality and alleviate the handicaps faced by children growing up in poverty.

Gordon goes on to document the growing inequality of our nation’s educational outcomes.

Throughout the post-war years, starting with the GI Bill, which allowed World War II veterans to obtain a college education at the government’s expense, the United States was the leader among nations in the college-completion rate of its youth.  But in the past two decades, the United States has stumbled, with its college completion rate now down to tenth or below.  College completion for households in the top quarter of the income distribution rose between 1970 and 2013 from 40% to 77%, but for those in the bottom quarter, it increased only from 6% to 9%. 

Education problems are even deeper in U.S. secondary schools, which rank in the bottom half in international reading, math and science tests administered to 15-year-olds.  We now rank 12th among developed nations in terms of the percentage of 25-34 year-old age group who have earned a BA degree from a four-year college (32%).

Most serious is the high degree of inequality in reading and vocabulary skills of the nation’s children at age 5, the normal age of entrance into kindergarten; middle class children have a spoken vocabulary as much as triple that of children brought up in poverty conditions by a single parent.

Toward Greater Equality of Opportunity – Preschool Education and the Financing of Elementary and Secondary Education
Though preschool is universal for 4-year-olds in countries such as Britain and Japan, in the United States, only 69 percent of that age group is enrolled in preschool programs, ranking U.S. participation as number 26 among OECD countries, with the poorest children least likely to be enrolled.  The Unites States is ranked 24th for the fraction of 3-year-olds participating in preschool programs, with a 50 percent enrollment parentage as compared to at least 90 percent in such countries as France and Italy.  The United States ranks poorly not just in the age at which children enter preschool but also in class sizes and per-pupil expenditures.

The benefits of preschool education apply to all students, but particularly to those growing up in low-income families.  Children of poor parents, who themselves have a limited educational attainment, enter kindergarten at age 5 suffering from a large vocabulary gap that limits their performance in elementary and secondary education and that leads to high dropout rates—and often to criminal activity.  Age 5 is too late for the educational system to intervene in the learning process, for by then, the brain has already developed rapidly to build the cognitive and character skills that are critical for future success.  Poor children lack the in-home reading, daily conversation, and frequent question/answer sessions so common in middle-class families, particularly those in which both parents have completed college.

Preschool comes first, because each level of disappointing performance in the American educational system, from poor outcomes on international PISA tests administered to 15-year-olds to remedial classes in community colleges, reflects the cascade of underachievement that children carry with them from one grade to the next.  No panacea has emerged in the form of school choice and charter schools, although there has been much experimentation—with some notable successes in which children from low-income backgrounds have earned high school diplomas and gone on to college.  An important component of the inequality and education headwinds is the U.S. system of financing elementary and secondary education by local property taxes, leading to the contrast between lavish facilities in rich suburbs which coexist with run-down, often outmoded schools in the poor areas of central cities.  A shift of school finance from local to statewide revenue sources would reduce inequality and improve educational outcomes.  Ideally, schools serving poor children should have the resources to spend more than those serving well-off children, rather than less as at present.



Book Exceprts_TheRiseandFallofAmericanGrowth

MY VIEW ON WHY THE U.S. AND RUSSIA MUST WORK TOGETHER

March 11, 2016

THIS ARTICLE FROM "THE NATION" PRESENTS THE ARGUMENTS I MADE IN A PANEL DISCUSSION ON WHY IT IS IMPERATIVE THAT THE UNITED STATES WORK WITH RUSSIA IF WE ARE TO SUCCESSFULLY CONFRONT THE ENORMOUS CHALLENGES OF FAILED STATES, TERRORISM, CIVIL WAR AND NUCLEAR PROLIFERATION.

 http://www.thenation.com/article/beyond-a-new-cold-war/