Economists address “challenging” future

Thursday, March 3, 2011

When St. Cloud State University President Earl H. Potter III welcomed people to the 49th Annual Winter Institute in Ritsche Auditorium Thursday morning, he did so by saying universities face challenging times and must embrace change.

He was followed by a group of prominent economists who couldn’t have agreed more.

And while the predictions they forecast for the future may not have been all happy news, it was clear that changes need to be made and embraced in a number of areas, not the least of which is how we educate workers of tomorrow.

Julie Hotchkiss, a research economist and policy adviser at the Federal Reserve Bank of Atlanta, spoke about "Workers in the New Economy: What we know, what we don’t know and what we think we know."

She said it is crucial for the United States to be able to respond to a "nimble labor market," and those who are able to adjust quickly to technology changes and market demands will be best suited for success.

And while Hotchkiss said it will be "highly important  to train all high school students with good work habits and learning skills," the next economist took that a step further.

The earliest years of a child’s life are far more important than any others, said James J. Heckman, the Henry Schultz Distinguished Service professor of Economics at the University of Chicago and "one of the top three most influential economists in the world," according to Mary Edwards, St. Cloud State professor of economics and one of the organizers of the Winter Institute.

One of the main focuses of Heckman’s talk was creating a more equal and more productive America.

"America is facing massive challenges," Heckman said. "The question is, can we meet them?"

With deficits in government budgets likely to increase, tough decisions will need to be made and priorities established. Heckman made a case for those priorities to revolve around families and disadvantaged families particularly.

He said that protecting the disadvantaged would be the wisest investment in the country’s future economic growth.  Today 30 percent of all American children are being raised by a single parent, and unlike the character "Murphy Brown" that Vice President Dan Quayle objected to in the 1980s, he said, these single parents are educated, working women but more likely high-school dropouts.

"We must help troubled families to build their skills," said Heckman. And while education of those children is important, "early life skills are most important."

Heckman said American policy must be more centered on prevention and not remediation. He said investing the greatest resources in the earliest years of a child’s life would yield the highest rate of return and create a solid skill base.

"When the skill base goes down, the return on investment goes down," he said.

Heckman said that the public sector alone won’t be able to make this happen. He said philanthropists and the private sector will need to step up to make sure families, and especially those disadvantaged families, are supplemented with resources that will make a difference in the future of those children.

Also speaking at this year’s gathering was Narayana Kocherlakota, president of the Federal Reserve Bank of Minneapolis, and Terry J. Fitzgerald, a senior economist and assistant vice president at the Federal Reserve Bank of Minneapolis.

The Winter Institute, which regularly attracts hundreds of business and community leaders, is known for having world-class speakers. Ben Bernanke, chairman of the Board of Governors of the United States Federal Reserve, was a Winter Institute speaker, as were the late economist Milton Friedman and former Federal Reserve Chairman Alan Greenspan.

In its 49th year, the Winter Institute is managed by the Center for Economic Education, 329 Stewart Hall, St. Cloud State University.

- Mike Nistler

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