Increasing American Economic Growth and Competitiveness

Remarks prepared for the Congressional Black Caucus Commission on the Budget Deficit, Economic Crisis, and Wealth Creation

by Algernon Austin, January 27, 2011

Currently, there are over 14 million Americans who would like to work but cannot find work. This is the most important immediate problem facing the country. Although African-American workers only make up 12% of the American labor force, blacks make up 20% of the unemployed. Our ability to create jobs—sooner rather than later—matters a great deal for the well-being of millions of American families. Our failure to create jobs causes people to lose their homes, produces increases in family stress, and leads children to drop out of school.

A serious longer-term problem is the economic decline of the United States relative to other nations. In the 1950s and 1960s, the United States led the world on many important measures. Today, the United States has fallen behind. If we fail to invest in our people, in our infrastructure, and in research and development we will continue to fall behind. Even worse, we will stand by as we watch our country literally fall apart.

The good news is that we can go a long way to address these two problems—the immediate problem of a high rate of joblessness and the longer-term problem of America’s declining competitiveness—with one solution—smart investments now. The federal government needs to make investments rapidly in education, infrastructure, and research and development to make us more competitive globally. These investments if done quickly and substantially will create millions of jobs to address the current jobs crisis.

Falling Behind and Falling Apart
Below are just a few examples of how the United States is currently failing to make the necessary investments in education, infrastructure, and research and development.

  • A 2008 UNICEF report ranked the United States 20th out of 24 countries in providing early childhood education.
  • Fifteen year olds in the United States ranked 17th out of 65 countries in the 2009 Program for International Student Assessment reading test. U.S. students were 23rd in science and 31st in math.
  • The College Board found that the United States ranked 12th out of 36 countries in the college completion rates of 25- to 34-year olds in 2007.

  • The American Society of Civil Engineers estimates that two-thirds of U.S. roads are in poor or mediocre condition.
  • 27% of U.S. bridges are “structurally deficient” or “functionally obsolete.
  • 29% of all transit assets are in poor or marginal condition.
  • Each day in the United States, there are about 700 water main breaks, we lose 7 billion gallons of water from water main leaks, and we put the public at risk from contaminated water.
  • An analysis by the 21st Century School Fund finds that we have neglected nearly $300 billion of required maintenance in our public schools.

Research and Development
  • The United States falls behind seven other countries—Israel, Sweden, Finland, Japan, South Korea, Switzerland, and Iceland—in terms of research and development spending as a percent of GDP.
  • The Economic Policy Institute found that the United States ranked 15th out of 30 nations in broadband penetration in 2007.
  • McKinsey estimates that the total savings from revamping health IT across the U.S. provider landscape could be as much as $40 billion annually.

Rising to the Sputnik Moment
If the United States wishes to remain a leader in the global economy we must make significant investments in education, infrastructure and research and development. If we make these investments now, the jobs created will help reduce the high levels of unemployment the country is currently facing.

Investments in Education
Disadvantaged children tend to begin school already behind their more advantaged peers, and these achievement gaps only widen through the children’s educational career. To increase America’s educational performance, we need to break these patterns.

We need to make the necessary investments:
  • in early childhood education so that all disadvantaged children attend high quality pre-kindergarten.
  • to increase the quality of teachers serving disadvantaged children throughout their educational careers.
  • to increase the number of teachers serving disadvantaged students so that these students attend classes with a low student-to-teacher ratio.
  • so that our public colleges and universities do not have to raise their costs out of the price range of low-income students because of state deficits.
If we begin to make these investments now we will create a substantial number of jobs in the education field, push the U.S. workforce back into a top position educationally, and increase the economic growth and competitiveness of the nation.

Investments in Infrastructure
The infrastructure needed for the productivity, safety and health of the nation is falling apart. We need to make the necessary investments:
  • to repair, replace, and upgrade our deficient roads, bridges, water systems, power grids, and sewers.
  • to repair, replace, upgrade and expand our public transportation systems.
  • to modernize our school infrastructure so that all our students have access to 21st century technology and instructional resources.
If we begin to make these investments now we will create a substantial number of jobs in construction, transportation, and technology, and we will be laying the foundation for U.S. competitiveness for the rest of the 21st century, just as similar investments helped to make the United States a dominant economic force in the 20th century.

The expansion and modernization of our public transportation systems are particularly important for our low-income population. These improvements to these systems will allow low-income workers greater access to jobs. Increased use of new and efficient public transportation has the additional benefits of reducing our dependency on fossil fuels and on foreign energy.

Investments in Research and Development
In the State of the Union address, President Obama stated, “In America, innovation doesn’t just change our lives. It is how we make our living.” Yet, the United States is falling behind in its investments in research and development. We need more investments in R&D to ensure that America continues its innovation leadership.

Can We Afford These Investments?
America cannot maintain its leadership position in the world without these investments. America will not continue to be a vibrant, healthy and safe society if our infrastructure continues to decay. Our roads will not stop deteriorating, our water mains will not stop breaking without the necessary investments. In the long-term, the economic growth that these investments will produce will make us a stronger and richer nation. We will have more and stronger businesses and a better and more prosperous workforce. Our history and the history of other nations show that strong economic growth can effectively reduce a country’s debt load. The greatest risk to the United States is economic decline. And we will decline if we fail to make smart investments.

There are many options for generating revenues to pay for these investments. A few of these options are to reduce defense spending, to tax capital gains and dividends as ordinary income, to repeal the Bush-era tax cuts for top earners, and to adopt a financial speculation tax. For additional options and details see Investing in America’s Economy by Rebecca Theiss and Andrew Fieldhouse of the Economic Policy Institute.


Worth Reading [January 23, 2011]

Broad Racial Disparities Seen in Americans’ Ills
  • White people in the United States die of drug overdoses more often than other ethnic groups.
  • Blacks die of heart disease much more commonly than whites, and die younger, despite the availability of cheap prevention measures like weight loss, exercise, blood-pressure and cholesterol drugs, and aspirin. The same is true for strokes.
[Read more]

Poor Reason: Culture still doesn’t explain poverty
Notwithstanding the election of Barack Obama, the last 40 years have been a period of racial backlash. The three pillars of anti-racist public policy—affirmative action, school integration, and racial districting (to prevent the dilution of the black vote)—have all been eviscerated, thanks in large part to rulings of a Supreme Court packed with Republican appointees. Indeed, the comeback of the culture of poverty, albeit in new rhetorical guise, signifies a reversion to the status quo ante: to the discourses and concomitant policy agenda that existed before the black protest movement forced the nation to confront its collective guilt and responsibility for two centuries of slavery and a century of Jim Crow—racism that pervaded all major institutions of our society, North and South. Such momentous issues are brushed away as a new generation of sociologists delves into deliberately myopic examinations of a small sphere where culture makes some measurable difference—to prove that “culture matters.”
[Read more]


White Privilege and Illicit Drugs

The vast majority of drug users are white. This fact has been true for the entire "war on drugs." Many whites live in majority white states. Most whites live in segregated communities. How do these millions of whites get their drugs?

Dorm Room Dealers: Drugs and the Privileges of Race and Class by A. Rafik Mohamed and Erik D. Fritsvold is the first piece of research that I've seen that has taken a serious look at the white drug trade. Specifically, it examines the white, middle-class, college-student drug trade. It is a fascinating and highly readable investigation.

Before going into Dorm Room Dealers, it is useful to have some context for thinking about illicit drugs among the college-aged population. The rate of illicit drug and substance use is comparable among white and black youth, but generally it is slightly lower among blacks. Among 18-to-25 year olds, the 2009 National Survey of Drug Use and Health reports that 39 percent of whites used an illicit drug in the past year. For blacks, the rate was 34 percent. Some of these youth are experimenting with illicit drugs, and some are fairly regular users. The estimates for regular users are 23 percent for whites and 21 percent for blacks. This age group has the highest rate of illicit drug use.

What this means a bit more concretely is that there are about 5 million white 18-to-25 year olds who are regular illicit drug users compared to about 1 million black users. Given that there are roughly five white drug users for every one black drug user, it is incredible that nearly half of all people in state prison for drugs are black. This is an amazing criminal "justice" accomplishment. It is also a remarkable achievement of our culture that the strereotype of a drug dealer is a young black male, when it is fairly certain that at any given time the number of white dealers outnumbers the number of black dealers.

Dorm Room Dealers provides a view into this large and important but typically missing part of the story of illicit drug use in America. It shows how young, middle-class, white drug dealers manage to avoid prison and the stigma of drug dealing without even trying.

As mentioned above, the college-aged population has the highest rates of illicit drug use nationally. The students that the sociologists Mohamed and Fritsvold study do not challenge this finding. The campus drug dealers, if anything, struggle with the problem of having too many customers. Mohamed and Fritsvold report that among these white, middle-class college students,
The propensity for illicit drug use . . . was readily apparent in the seemingly unyielding demand for marijuana within this network. Throughout the course of the study, there was never a situation in which a drug dealer at any level was suffering from a customer shortage or had to actively seek out customers to support his or her illicit enterprise. Rather, on several occasions, we observed customers who were unable to locate an adequate supply of marijuana and were subsequently mired in the doldrums of "weed wait." (p. 20)
Because of the strong demand for drugs, dorm-room dealing is an easy, low-risk and profitable enterprise for white, middle-class youth.

Dorm-room dealing is low-risk because white, middle-class youth are "anti-targets" in the "war on drugs." In other words, they are invisible to law enforcement because they do not fit the popular stereotype of a drug dealer, or their drug dealing is consciously ignored by collegiate authorities. Despite "selling large enough quantities of marijuana and other drugs to warrant serious stretches of incarceration under current drug-sentencing schemes" none of the thirty dealers the authors studied was ever incarcerated "even when people in positions of formal authority were clearly aware or otherwise suspected them of illegal drug trafficking" (p.34). The dorm room dealers operated almost completely in the open and with impunity.
. . . dealers carelessly operated out of their apartments or from on-campus housing. And, with few exceptions, the majority of their illegal business was on full display and in plain view upon walking through their front door. . . . [U]pon arrival to one of our interview and observation sessions with one of the largest dealers in the sample, it was noticed that ounces of marijuana, scales, large sums of cash, customers, and drug paraphernalia were visible from a relatively busy off-campus beach community street. (p. 138)
One of the larger dealers, Brice, was particularly brazen:
[Brice] was momentarily detained at the checkpoint and asked by a Border Patrol officer, "You don't have any marijuana in there, do you?" Of course, as was usually the case with Brice, he did have pot in the car. However, almost amusingly and consistent with the notion that members of this affluent, primarily white drug network were anti-targets relatively immune from law enforcement scrutiny even when off of their home turf, Brice boldly replied, "I'm not that type of person." (p. 30)
But Brice was, in fact, precisely the type of person who both uses marijuana heavily and sells large quantities of marijuana.
On numerous occasions since his graduation, police stopped Brice for speeding. During each of these stops, he was in possession of several pounds of marijuana and also, as was more typical than not for him, under the influence of the drug at the time. Nonetheless, and characteristic of the experiences of most of our dealers, during these stops, his vehicle was never searched, he was never asked to consent to a search, and he was never arrested. (p. 31)
Thus, if one is white and middle class, one can be a significant drug user and dealer and be ignored by the "war on drugs."

While public law enforcement might be ignorant and oblivious to the dorm-room dealers, on-campus authorities are in many cases aware but choose to ignore the dealers' activities. On-campus authorities have strong incentives to go this route. For a university,
a major drug bust is bad for business in two significant ways. First, in a competitive climate where reputation is everything, drug arrests and publicly acknowledging the existence of an on-campus flourishing drug market clearly would not do much for short-term new student recruitment. Further, if students like LaCoste who come from well-to-do families were treated by university officials like garden variety corner boys, any endowment growth or other capital development plans specific to their families would most certainly be dashed. (p. 57)
Universities run the risk of being hurt financially if they wage a war on the student drug trade. While there is an intense "war on drugs" off-campus, illicit drug use is in practice de-criminalized on campus.

Dorm Room Dealers is filled with insights about the white, middle-class drug trade and the many factors that make white, middle-class youth "anti-targets" in the war on drugs. One discovery completely surprised the authors. They did not realize how widespread the abuse of prescription drugs is. Students recklessly mixed different pills or took them with alcohol and, even after experiencing serious health episodes, did not seem to realize the danger they had put themselves in. One student reports his bad experiences with pharmaceuticals:
with uh Lamictal [a commonly prescribed drug for the treatment of bipolar disorder], if I drink on that I found out that I end up having seizures so I don't drink anymore on that. I've only done it twice and it's been a terrible, terrible situation. . . . Adderall, I've taken way too many of those before. That was bad news. I couldn't go to sleep for five days, that's not good for you. (p. 94)
Prescription drug abuse is rising rapidly and it is already killing more people than crack cocaine did at crack's peak in the early 1990s. But students fail to realize that they are playing with a loaded gun.

Among 18-to-25 year olds, white youth are two-and-a-half times as likely as black youth to abuse prescription drugs. The abuse of drugs like OxyContin kill more people than crack cocaine and yet, as measured by the intensity of our policing and prosecution, our criminal justice system views crack cocaine as the greater harm to society. Mohamed and Fritsvold conclude,
when it comes to drug trafficking, there is substantial bias in the justice system based on, among other things, whether the offender is dealing in pharmaceuticals or street drugs. . . . [T]his disparity is not based on any objective assessment of social harm or threats to public well being. Rather, it is more likely that the types of people who are apt to be abusing and trafficking in pharmaceuticals do not fit the stereotypical drug dealer profile that has come from the war on drugs and are, therefore, regarded quite differently by lawmakers and the criminal justice system. (p. 93)
Dorm Room Dealers shows from a new angle that our illicit drug policy needs comprehensive reform to make it more just and more effective at protecting the public.

Copyright © Algernon Austin 2010