Global Economic Governance Center Launches with Alan Krueger Keynote on Jobs, Higher Ed

“The U.S. has about the best educated 60 year-olds in the world, but we are in the middle of the pack…among 30 year-olds.” said Alan Krueger, chairman of the White House Council of Economic Advisers, at the April 26 conference on the global economy and the European crisis, which launched the School of International and Public Affairs Center on Global Economic Governance in Low Library. “We view the center as a unique opportunity,” said Jan Svejnar, the center’s founder and director, “to bring in leading academics, policy makers, and business leaders from all over the world and participate in the creation and dissemination of, hopefully, pioneering ideas dealing with the issues of global economic governance.” In keeping with the center’s mission of producing, “a new wave of policy-oriented research,” Krueger, who studied economics under Svejnar as an undergraduate at Cornell University, delivered a keynote address on strategies for reversing America’s middle class jobs deficit. He outlined the administration’s plans to play both defense and offense to strengthen the middle class and combat wage inequality. “Defense means that we, as a nation want to hold on to and promote as many existing good jobs as possible,” Krueger said. “Offense means that we want to create an environment for new companies and new industries to develop, and to provide educational and training opportunities for workers to meet the demands of a modern economy.” One way to combat growing wage inequality would be for the U.S. to produce more highly educated workers who tend to be paid more. “Higher education can’t just be a luxury for a few, it is the clearest path to better jobs and a stronger middle class,” Kruger said. The problem, he stated, is that since 1975 the percentage of Americans graduating from college has “virtually stagnated.” With federal student loan rates set to double July 1 and drive the cost of education upwards, the Obama administration has expanded tax credits for education and is lobbying Congress to keep loans at the current level. This game plan is necessary, Krueger says, because of three major factors that led to the shrinking of the American middle class: the U.S. economy was not producing enough jobs before the 2008 recession, with the recession came the loss of 700,000 jobs a month, and wage inequality has been increasing since the 1970s, affecting not only less educated workers but also those with “post-secondary educations.” Krueger, who is currently on leave from Princeton University where he is a professor of economics and public affairs, said that the past decade was already set to be “the worst decade of job growth in over 50 years.” The previous five decades each saw non-farm job growth of over 20 percent, according to Bureau of Labor Statistics data he presented. From 2000 to 2007 that number dropped to 5.7 percent. The administration also plans to use tax credits to encourage American companies to promote research and development. “We’ve seen this model work before. AT&T used its monopoly power to fund Bell Labs,” Krueger said. “Bell Labs became the country, and the world’s, idea factory.” President Obama has proposed the creation of a national network of 15 centers to bring together manufacturers, universities and federal and state governments to stimulate R&D. Krueger used the manufacturing industry as a key example of the administration’s defensive efforts to retain and expand middle-class jobs, saying the president’s proposal to lower corporate tax rates would help local manufacturers compete with companies abroad. He also praised the American Recovery and Reinvestment Act of 2009, pointing to the turnaround in Chrysler and General Motors as examples of the administration’s success in helping to save jobs. “This counts as playing defense,” Krueger said. “And it was defense that would make even the New York Giants proud.” —by Omar Kasrawi