Magazine article The Public Interest

A Human Capital Policy for the Cities

Magazine article The Public Interest

A Human Capital Policy for the Cities

Article excerpt

A NEW NATIONAL administration has taken office, one of whose defining characteristics is its commitment to human capital investment, which it sees as crucial for the restoration of vigor to the American economy, the increase of good jobs for American workers, the effective competitiveness of the American economy in a world in which international competition and the openness of all markets to penetration from abroad is a new and somewhat frightening reality. In the view of the administration, and many others, investment in young people in school, in those who leave school prematurely, in those who even with high-school diplomas flounder from one inadequate job to another, in mature workers who lose jobs in an increasingly turbulent and volatile economy, has become a key task for American society. Human capital investment--better education at all levels, better training for new jobs in businesses taking advantage of new technology and new ideas of leaner organization--is seen by the leaders of the new administration as critical.

Thus a more activist phase in American national government, inspired by a new vision, opens, succeeding a series of Republican administrations with quite a different vision. For twelve years, national administration has been committed to the free market, and its expectations were that the signals the market provided would suffice to guide people and firms, seeking their own interests, to the training necessary for a changing economy. Under such an outlook, the cities, which had seen in the 1960s and 1970s a huge increase in federal funds for education and training, summer jobs and public service jobs, and other needs that they defined as crucial as their populations became poorer and the proportion of minorities and new immigrants in them rose, felt ignored. The best the cities could hope for was that the rising economic tide would lift all boats, including the cities among them. But the condition of cities overall has not improved in the last dozen years--or in the two decades that preceded them, for that matter. They have become poorer, compared with their suburbs and compared with the nation as a whole. They have become increasingly the place where minorities and new immigrants live, with their additional burdens on social services. They have lost great numbers of manufacturing jobs, to suburbs, to the South, to Mexico or Puerto Rico, to foreign competitors. The "urban crisis," which has been with us for thirty years or more, is still with us. By almost all measures, cities, that is large central cities, poorly off in the 1960s when the poverty program and other initiatives designed to assist them were launched, are worse off today.

A new administration often comes with a defining book, or text. When it comes to the key role of human capital investment, the defining book for this administration is Robert Reich's The Work of Nations (Knopf, 1991), and the defining text is the report, America's Choice: High Skills or Low Wages (1990). Robert Reich has become secretary of labor, and Ira Magaziner, who was chairman of the Commission on the Skills of the American Workforce that produced the report America's Choice, and has like Reich been a close advisor to the president, also has an important place in the new administration. We can find further elaboration of the defining vision in the report of the William T. Grant Foundation Commission on Work, Family and Citizenship, The Forgotten Half (1988), addressing itself to that half of America's youth who don't go to college, a commission on which Hillary Rodham Clinton sat, and in books such as Thinking for a Living, by Ray Marshall and Marc Tucker (Basic Books, 1992), Made in America: Regaining the Competitive Edge, by Michael Dertouzos, Richard K. Lester and Robert Solow (MIT Press, 1989)--Solow was the witness who opened the president-elect's post-election economic summit, in Turbulence in the American Workplace, by Peter Doeringer and others for the Committee on New American Realities of the National Planning Association (Oxford, 1991), and in other books and reports. …

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