January 20, 2022

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3 ways to increase economic growth, make American society more equitable

Growth in per capita income typically is a result of increases in productivity, which are often attributable to improvements in our workforce and technology. With that in mind, here are three proposals to make American society more productive and more equitable:   

1. Ensure that high-performing students from low-income homes get the education they need.  We’ve heard about free college for everyone, forgiveness of student loan debt, free college education at state universities and other ideas. These big programs may (or may not) be good ideas, but let’s focus on a narrower issue. Nearly three-quarters (74%) of top-performing American students from affluent families graduate from college. But only 41% of academically equivalent students from low-income families graduate from a university.   

A high-performing, upper middle-income student has a 70% higher chance of graduating college than the academically equivalent student from a low-income family. And top-performing students from low-income families who do go to college are more likely to attend academically inappropriate schools (at the extreme, attending community college when they should be at a four-year research institution).   

On average, a young adult with a college degree earns $20,000 a year more than a young adult with only a high school degree. For high-performing students, the productivity gain should be even higher. 

Jamie Dimon, CEO and chairman of JPMorgan Chase, rightly pointed out that we might be wasting the talent of potential Einsteins by not getting smart people into programs where they can flourish.   

This focus will yield quick benefits. It also will make American society fairer, while increasing our economic growth.  

This type of program could be implemented in several ways. One step might be to require (as a condition for maintaining tax-exempt status) that highly selective colleges’ undergraduate admissions reflect the socioeconomic diversity of our nation’s academically high-performing students.   

We should embrace this commitment to equality of opportunity, not just because it’s the right thing to do, but because it’s also the economically smart thing to do.   

Continuing to lead the world in science and technology is vital to American economic growth and security.
Continuing to lead the world in science and technology is vital to American economic growth and security.

2. Import the world’s best scientists. The United States has about 4% of the world’s population, so we likely have about 4% of the world’s top talent. Notably, however, about 40% of America’s Nobel Prize winners in the sciences are immigrants.   

We need to continue to be a magnet for the world’s best talent. We can discuss the size of our immigration programs for refugees and economic migrants, but the overwhelming evidence is that high-skill immigrants are good for economic growth.       

One idea is to create a federally funded program to attract 1,000 of the world’s best scientists to settle permanently in the United States (with an expedited path to citizenship for them and their families, multiple year federal funding at their sponsoring research university and some resettlement funds). Limiting participation in this program to state universities would ensure these world-class scientists are distributed across America.   

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China understands the value of intellectual talent. It has operated a similar program, called the Thousand Talents, for several years.  

3. Invest in research and development. As professors Jonathan Gruber and Simon Johnson have pointed out, we should invest much more in basic research, which provides an estimated return to society of more than 50% a year. 

Basic research tends to be underfunded by the private sector because it takes too long, is often difficult to patent (making it harder for the private sector to profit from) and is far too risky (basic research often doesn’t pan out).   

Government funding is patient money. The classic example is the internet, which started as a federally funded military research project (called ARPANET) in the 1960s but wasn’t commercialized until the 1990s. No private company would have financed the 30 years of research and development that finally became the internet revolution.

In America, government funding of research has declined from a peak of almost 2% of gross domestic product in 1963 to only about 0.7% of GDP today.  

Meanwhile, China’s investment in R&D has risen at a rapid pace, and many commentators expect China to overtake America in R&D in the near future. It’s time to dramatically reverse that trend by committing to spend an additional 0.5% of GDP a year on federal R&D, targeted at state research universities. 

Continuing to lead the world in science and technology is vital to American economic growth and security. Implementing these three proposals should be bipartisan priorities for 2020 and beyond.  

Steven Strauss, the John L. Weinberg/Goldman Sachs & Co. Visiting Professor at Princeton University’s Woodrow Wilson School of Public and International Affairs, is a member of USA TODAY’s Board of Contributors. Follow him on Twitter @Steven_Strauss.

You can read diverse opinions from our Board of Contributors and other writers on the Opinion front page, on Twitter @usatodayopinion and in our daily Opinion newsletter. To respond to a column, submit a comment to [email protected]

This article originally appeared on USA TODAY: How to improve economy: Attract top scientists, invest in research

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