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To remain vibrant, competitive economic centers, both the U.S. and the city of Chicago need to improve education, better facilitate research in science and technology, and invest more in infrastructure, said Austan Goolsbee, Robert P. Gwinn Professor of Economics. “There is a great possibility of consensus among a lot of reasonable people about what kinds of things can be done,” Goolsbee told the World Presidents Organization in a talk sponsored by the Michael P. Polsky Center for Entrepreneurship at the Charles M. Harper Center on June 19.
The nation’s education system must be improved, from the very top level levels of graduate school to pre-kindergarten, he said. In 1970, 1980, and 1990, the U.S. had the highest percentage of 25-year-olds with college degrees, Goolsbee said. Today, the United States maintains the same percentage, but the country’s rank has dropped to 31, putting it between Costa Rica and Bulgaria because the rest of the world has recognized the value of college education, he said.
“I’m not saying anything negative about Bulgaria or Costa Rica,” said Goolsbee, an economic adviser to Democratic presidential hopeful and former University law instructor Barack Obama. “What I’m saying is, if you have the skills somewhere between Bulgaria and Costa Rica, 20 years from now you’re going to have income levels somewhere between Bulgaria and Costa Rica. This is simply not on the radar screen of a typical American.”
Foreign students spent $16 billion on American education last year, more than the United States exported in steel or computers, he said. “Raising your skill level has a profound impact on the course of your career,” Goolsbee said. “The evidence is overwhelming that a place with educated people is growing, that they’re getting better jobs and higher pay. And in places where people are not educated, they are falling behind.”
Cutting spending on research in health sciences will not save money in the long run, he said. “Think of a hospital as the new model for economic development,” Goolsbee said. “You’ve got high-skilled doctors, you’ve got skilled nurses, you’ve got people working in the cafeteria – you’ve got a whole range of skills. On top of that, new industries of the future have yet to be written. The top 25 percent of highest-paying occupations did not exist 20 years ago.”
The U.S. Chamber of Commerce named infrastructure its number-one issue in 2008, he said. “We’re talking about things like the average railway speed through the city of Chicago, which is 14 mph,” Goolsbee said. “We have not been able to keep up with the cost of infrastructure. These are the kinds of investments we need to make for businesses to succeed.”
When it comes to business education, the GSB allows students to experience decision making and dialogue each day in a way that will be useful to them in business, said dean Edward Snyder, who also spoke. “We believe in discipline-based knowledge and facts, and we try to be very clear about the idea that hierarchy is not good,” Snyder said. “That takes discipline and rigor. Despite a person’s previous success, you have to attack his or her idea to determine what discipline-based knowledge and facts were used to arrive at the answer.”
The WPO is a global organization of more than 4,800 individuals who are or have been CEOs of major business enterprises. The organization partnered with the Polsky Center at the GSB for its 2007–08 Education Program in order to let members learn more about today’s business education. In addition to Goolsbee’s talk, participants attended classroom sessions with James Schrager, clinical professor of entrepreneurship and strategic management; Harry Davis, Roger L. and Rachel M. Goetz Distinguished Service Professor of Creative Management; and Steven Kaplan, Neubauer Family Professor of Entrepreneurship and Finance.
—Phil Rockrohr