March 27, 2008
American Enterprise Institute
(This is a rush transcript.)
– Steve Hayward
If we could please come to order, we shall begin. I want to welcome everyone to the American Enterprise Institute this afternoon, and especially those on TV joining us by the indispensable medium of C-Span. In his first speech in the well of the House after becoming speaker in 1995, Newt Gingrich invited his colleagues and fellow citizens to think anew about the challenge of transforming the welfare state into the opportunity society, about having, and I quote him now from that speech, “an honest dialogue about priorities, about resources, about what works, and what does not work.” And although Congress, following the Speaker’s lead, did fulfill next year President Clinton’s campaign promise to end welfare as we know it, the goal of rethinking social policy more broadly proved stillborn.
Last week, Barack Obama, in a speech that in many respects bears comparison to Lincoln’s overlooked Temperance Address of 1842, issued his own call for thinking anew about some of the hardest social questions of our time. Like Lincoln’s subtle teaching then, Obama’s speech invites the possibility of turning away from exploiting misery rather than relieving it. Needless to say, whether this is the beginning of a long train of thought and action on the highest level by Senator Obama is a question currently before the nation’s voters. Today, however, Speaker Gingrich takes up Senator Obama’s invitation and returns to the theme that was central to his first day wielding the gavel in the well of the House thirteen years ago, and indeed to the theme of his first day as a member of the House thirty years ago. Please join me in giving a warm AEI welcome to Newt Gingrich.
– Speaker Newt Gingrich
Thank you very much, Steve. I thank all of you for being here today. I really do believe that we have a unique opportunity to think anew about the challenge of poverty, racism, and those Americans who have been left out of the pursuit of happiness as most of us know it. And I do think that the Lincoln quote actually that I would have used is not the temperance speech but from Lincoln’s second annual message to Congress on December 1, 1862, when he said:
The dogmas of the quiet past are inadequate to the stormy present. The occasion is piled high with difficulty, and we must rise with the occasion. As our case is new, so we must think anew and act anew. We must disenthrall ourselves, and then we shall save our country.
I think that it is the opportunity which Senator Obama gave all of us in his speech in Philadelphia to reengage in a dialogue about poverty, race, and the future of those Americans who are currently unable to pursue happiness. That is something we should not casually set aside.
Senator Obama said, and I quote:
By investing in our schools and our communities . . . at this moment in this election, we can come together and say, Not this time. This time we want to talk about the crumbling schools that are stealing the future of black children and white children and Asian children and Hispanic children and Native American children. This time we want to reject the cynicism that tells us that these kids can’t learn, that those kids who don’t look like us are somebody else’s problem. The children of America are not those kids; they are our kids, and we will not let them fall behind in a twenty-first century economy. Not this time.
Let me suggest to all of you that if you set aside the normal partisanship and cynicism of politics, that that’s a very powerful paragraph and a paragraph worthy of response at the same level, that in fact we should set aside the cynicism, and I am giving this speech today to take up this opportunity, both to reject cynicism, but also to suggest that we find real solutions. But to find real solutions, I would argue, we have to have real honesty and a serious dialogue in which unpleasant facts are put on the table and bold proposals are discussed.
Senator Obama gave us a very courageous speech. We owe it to him and to the topic to take it very seriously and respond to the level of eloquence and systematic explanation that he gave us. He asked historic questions, and that is appropriate. And I want to make quite clear, and this may well be a disappointment to the more partisan and the more ideological, my speech today is not an answer to Senator Obama. It is not a refutation. Hopefully, it is the beginning of a genuine dialogue in which people of all backgrounds can come together to have a serious conversation about America’s future.
Let me start by talking about the concept of anger, because I do think there’s an authenticity and legitimacy of anger by many groups in America. Senator Obama said in his speech:
That anger may not get expressed in public, in front of white coworkers or white friends. But it does find voice in the barbershop or around the kitchen table. At times, that anger is exploited by politicians, to gin up votes along racial lines, or to make up for a politician’s own failings. . . . That anger is not always productive; indeed, all too often it distracts attention from solving real problems; it keeps us from squarely facing our own complicity in our condition.
I think that that’s right, and I think that it’s important to recognize that anger can be a source of energy to create a better future—in which case it’s a very good thing. But if anger is a self-inflicted wound that limits us, it is a very bad and a very dangerous thing. And we have to be very careful about the role that anger plays in our culture. Tragically, what has happened is that cultural and political leaders have used anger as an excuse to avoid reality, as an excuse to avoid change, as an excuse to avoid accountability, because everything that is wrong is somehow somebody else’s fault.
Now, Senator Obama is right about the destructive impact of historic injustices and the anger they cause in different groups of Americans. And as a historian, of course, I agree with [William] Faulkner, as quoted in Senator Obama’s speech: “The past isn’t dead and buried. In fact, it isn’t even past.” In my own life, I was born in Harrisburg, Pennsylvania. I grew up in an integrated U.S. Army at Fort Riley, Kansas; in Orléans, France; and in Stuttgart, Germany. I did not encounter legal segregation until I was a junior in high school at Columbus, Georgia. Segregation was a horrible institution imposed by force by the state. It ruined the lives of people, it crippled their futures, it was a terrible injustice, and it is totally authentic to be angry about it. As Senator Obama notes,
the legalized discrimination—where blacks were prevented, often through violence, from owning property, or loans were not granted to African-American business owners, or black homeowners could not access FHA mortgages, or blacks were excluded from unions, or the police force, or fire departments—meant that black families could not amass any meaningful wealth to bequeath to future generations.
Anyone who thinks that there was not this destructive impact is simply not in touch with the reality of American history for African-Americans.
Other groups have reasons for anger. Native Americans have a claim probably at least as great if not greater than African-Americans. Japanese-Americans went through a period of internment in World War II. Jewish Americans have a history which includes the Holocaust but extends back before the Holocaust to pogroms in Russia; anti-Semitism in Poland; expulsion from Spain; and, in the last fifty years, an unrelenting and virtually hysterical effort by their Arab neighbors to exterminate them in a way which no other group has experienced.
So there are many groups that could find causes for anger. But I would go a step further. I would argue that as citizens of a country which asserted that we are all endowed by our Creator with certain inalienable rights, every American has things to be angry about. Simply ask yourself, if it was your daughter or son, if it was your granddaughter or grandson, trapped in some of the disastrous conditions of the very poor and very dispossessed in America, how angry would you be?
Consider some examples: At the Rosebud Sioux reservation in 2007, a population of 13,000, 144 young Native Americans tried to commit suicide—arguably the highest suicide rate in the United States.
In 2006, the poverty rate in America was 12.3 percent. For non-Hispanic whites, it was 8.2 percent, but for blacks, it was 24.3 percent.
In 2007, 46.8 percent of twelfth-graders admitted to taking some sort of illicit drug in their lifetime; 35.6 percent of tenth-graders made the same admission; and in 2006, 20.9 percent of eighth-graders—let me repeat this, among eighth-grade Americans, every fifth American child admitted to taking some sort of illicit drug.
1 percent of the American population—3 million people—are in prison. That is more than the entire population of Washington, D.C., Baltimore, Atlanta, Detroit, and Denver combined.
Now, how can you hear these things in a country that says we are endowed by our Creator with certain inalienable rights and not be angry? So I think anger can be, should be a universal American feeling about those things that dissatisfy us and about a culture and a government which is failing.
Consider homicides in our cities: in Philadelphia in 2006, there were 406 murders. To give you a sense of the scale of this, there’s an article called “The War in West Philadelphia” written by Dr. John Pryor, who was an Iraq combat surgeon and an emergency room doctor in Philadelphia. This is what he said:
In the swirl of screams and moving figures, my mind drifted to my recent experience in Iraq as an Army surgeon. There we dealt regularly with “mascals,” or mass-casualty situations. In Iraq, ironically, I found myself drawing on my experience as a civilian trauma surgeon each time mascals would overrun the combat hospital. As nine or ten patients from a firefight rolled in, I sometimes caught myself saying “just like another Friday night in West Philadelphia.” The wounds and nationalities of the patients are different, but the feelings of helplessness, despair and loss are the same. In Iraq, soldiers die for freedom, for honor, for their country and for their buddies. Here in Philadelphia, they die without honor, without purpose, for no country, for no one.
Now how can you hear that about your country and a great city and young people being killed, and not have some sense of anger? You should have a sense of anger about problems not solved, conditions not improved, and people not helped. The question is—and I think this is where Senator Obama began to get a little off the mark—what do you do with the anger? We have to move from anger to courage, from blaming to solving. But if we want to save lives instead of being angry about their loss, we have to have real courage. As Lincoln said, we have to think anew.
There are principles for thinking anew. Real change requires real change. More than a slogan, it has to be a program, and the program has to be implemented. Albert Einstein said, “doing more of what you’re already doing and expecting a different result is a sign of insanity.” I would argue that most politics and most government in America in the last thirty years has fully fit the Einsteinian model. We talk about change, and then we do more of what we’re already doing.
General Eisenhower said in World War II, “when I can’t solve a problem, I always make it bigger. I can never solve a problem by trying to make it smaller, but if I can make it big enough, I can often find a solution.” And I’m going to suggest some very big solutions in the next few minutes.
Franklin Delano Roosevelt, speaking at the depths of the Depression, in his first inaugural in March 1933, said:
This is preeminently the time to speak the truth, the whole truth, frankly and boldly. Nor need we shrink from honestly facing conditions in our country today. . . . So, first of all, let me assert my firm belief that the only thing we have to fear is fear itself—nameless, unreasoning, unjustified terror which paralyzes needed efforts to convert retreat into advance. In every dark hour of our national life, a leadership of frankness and vigor has met with that understanding and support of the people themselves which is essential to victory.
John F. Kennedy in his inaugural in 1961 pointed out why we should be concerned about the loss of any young American. He said that every single life is important, because we are all endowed by God.
He went on to say, “The same revolutionary beliefs for which our forebears fought are still at issue around the globe—the belief that the rights of man come not from the generosity of the state but from the hand of God.” And that’s in part why Callista and I did the DVD Rediscovering God in America, which uses this very quote to remind us that before the counterculture, before secularism, before we had an elite dominating our system, even liberal Democrats like Franklin Delano Roosevelt and John F. Kennedy understood if you don’t believe you’re endowed by God and if you don’t act that way, you can hardly live out the American process.
Kennedy also had a sense of being fixed on solving things. He said, quote, “Our task is not to fix the blame for the past, but to fix the course for the future.” Now, I want to repeat this, because I think it’s the greatest challenge that Senator Obama and his friends have. “Our task is not to fix the blame for the past, but to fix the course for the future.”
Now, in order to fix that course for the future, I am going to pick up on a specific phrase from Ronald Reagan’s first great national speech in October of 1964, “A Time for Choosing.” He said, quote, “I am going to talk of controversial things.” Because while Senator Obama has done an important service to the country in raising the right issues, and I hope legitimizing a genuine dialogue, he now has to join a dialogue about new solutions. I am going to describe new solutions based on principles that have been politically incorrect in terms of the culture of the Left. But I want you to look at the real world. Look in your heart. Look at your own values. Isn’t it time we started a totally new conversation about meeting the challenge that every American should actually live out their Creator-endowed right to pursue happiness.
Let me make the key case for boldness. I think this is a great national debate we need, and it’s a debate which I would hope Senator Obama would be prepared to engage in. The greatest case for boldness and new solutions is that the current system is destroying people. This is not a choice between a productive, effective system and improvement. This is a choice between utter disaster with enormous, profound human consequence, and the need for new thinking, new ideas, and new solutions.
Our choice is: how many eighth graders will take up drugs instead of math and science? How many thirteen-year-olds in Dallas will become madames before they have an honest job? How many young African-Americans will be killed or sent to prison? So when we talk about bold ideas, it is in the context of human disasters right here in America reported in your news every day. And the next time you hear these disasters, ask yourself, “To what extent is this the cost of bad culture and bad government?”
We speak here after twenty-five years of failure to fix the problems. April 26 will be the twenty-fifth anniversary of “A Nation at Risk,” a report on education in the United States. Here’s what that report said. Quote,
If an unfriendly foreign power had attempted to impose on America the mediocre educational performance that exists today, we might well have viewed it as an act of war. As it stands, we have allowed this to happen to ourselves. We have even squandered the gains in student achievement made in the wake of the Sputnik challenge. Moreover, we have dismantled essential support systems which helped make those gains possible. We have in effect been committing an act of unthinking unilateral educational disarmament.
And I would argue with every conservative: education in the United States is a national security issue and the secretary of defense should give an education speech every year reminding us that we are not going to be the leading power in the world if we don’t have fundamental, deep rethinking of our education programs.
A few years later, I was honored to help create the Hart-Rudman Commission on National Security for the Twenty-first Century when I was speaker, and when I stepped down I served on it. The bipartisan commission reported in March 2001. It said the greatest threat to the United States was a weapon of mass destruction going off in an American city, probably from a terrorist. It did not get much attention in March, but by September 2001, people thought we were fairly prescient. But it said that the second greatest threat to the United States is, quote, “inadequacies of our systems of research and education which pose a greater threat to U.S. national security over the next quarter century than any potential conventional war that we might imagine.” Let me repeat this, because I think to have a national security group come back and tell you that you are in greater danger from the collapse of education than you are from any possible conventional war should have been a very startling thing, and should have led to very fundamental questions about how badly the system is failing and what the replacement has to look like.
Now, let me say, the rest of what I’m going to say today—if you think the current system is working, what I’m going to say is far too bold and far to willing to change what’s happening. But is anybody really prepared to defend the current system? And I think it will be very hard to go around this country and find anyone willing to stand up and suggest that the current system is working, particularly for the poorest and weakest of Americans.
The tragic truth is that the current system is not working because of two topics we don’t like to talk about: bad culture and bad government.
And bad culture and bad government intersect to reinforce each other, to create human and financial cost beyond anything we could have imagined a quarter century ago. The tragic truth is that at the end of segregation, the great moment of opportunity for Afircan-Americans, we had a failure of government and a failure of culture. The rise of big bureaucracy in the Great Society starting in 1965 combined with the rise of a counterculture which despised middle class values and which taught the poor patterns and habits of destruction—and those two patterns of bad bureaucracy reinforcing bad culture have led to a disaster. Charles Murray captured part of this in an extraordinary book in the mid-1980s called Losing Ground, which was the seminal work in being able to pass welfare reform, in which he demonstrated that the patterns we were building were actively destructive of the poor.
Marvin Olasky extended that critique in a brilliant book written in 1994 called The Tragedy of American Compassion. Olasky outlined the values and principles of the great nineteenth century social reformers who all believed that helping people out of poverty required tough love and work requirements. He cited reformer after reformer who condemned the compassionate wealthy who wanted to give people something for nothing. These people were convinced that giving away money—the reformers of the nineteenth century were convinced that giving away money subsidized bad behavior and encouraged people to remain dependent, and in many cases, to remain addicted to drugs and to alcohol. The modern redistributionist model of bureaucratic welfare was an outgrowth of a leftist social critique of society, according to Olasky. He documented the leftist desire to create a right to money without effort. He cited advocate after advocate on the twentieth century Left who insisted that a large underclass of permanently poor people was acceptable, and that it was cultural imperialism to insist that they acquire habits of discipline and self-management in order to lead full lives as independently productive citizens. The Tragedy of American Compassion made clear that the fight over welfare reform was at its heart a cultural and moral fight over the nature of being American and the requirements of a full and healthy citizenship. Understood on those terms, the existing welfare system was indefensible as bad government and bad culture. It was bad government and bad culture combined in a way that crippled the lives of people.
In 1996, we reformed the welfare system, but we did not change the cultural values which were destroying opportunities and crippling lives, nor did we uproot the destructive institutions of bad government in education, urban bureaucracy, and tax policy.
The bad cultural signals are routine, they’re pervasive in the mass media. They surround us. They’re in songs, they’re on television, they’re in radio, and they are really destructive of sound behavior and of the opportunity to get out of poverty. You don’t have a community that creates wealth that ends up prosperous and safe and gives kids a better future if everyone is taught to stand around demanding that somebody else pay for everything. And this is a core challenge. Should this be a country in which every person learns to work, every person learns to save, every person learns to have a better future, and, by the way, is therefore responsible for working, saving, and creating a better future? Or is this a country where you shouldn’t have to do all those things because it’s too hard, and someone should take care of you? In which case, the question becomes: who’s the someone, and why do you think they’ll stay here? It’s a fundamental question, and you’ll see in just a moment the scale of the disaster.
This failure to take into account the realities of economics and to focus on creating a culture of productivity and prosperity can have devastating results. Paul Johnson, in his great history of the twentieth century, Modern Times, said the great tragedy of postcolonial Africa is that the activists brought socialism to Africa, and it has failed totally. And this is one the great tragedies. When people talk about helping Africa they don’t want to talk about the cultural reality that really bad values combined with really bad government destroy things. Zimbabwe is not collapsing because of racism. Zimbabwe is collapsing because a kleptocraticdictator is destroying the potential for wealth and destroying the potential for investment and destroying the potential for jobs, and in the process he is ruining the lives of people. This is a core challenge about the modern world. Are these problems caused by the failure of culture and the failure of government, or are they caused by somebody else doing bad things to us? And this is a fundamental analytical question with virtually every element of poverty across the entire planet.
There are two things profoundly wrong with the Left’s approach to culture and prosperity—which is to raise taxes, increase government, and essentially allow people to avoid effort by insisting that they be taken care of. The first is: if your ethnic group is poor, the number one thing you want them to do is to go into business because that’s where they’ll create wealth. And when they create wealth they’ll hire their relatives, and they’ll hire their neighbors. And a generation of entrepreneurs can mop up poverty at a rate no bureaucracy can imagine. And yet, nowhere among current left-wing critiques of America, and nowhere among those who most publicly spend time worrying about the poor, do you hear a constant drumbeat that says: Let’s try to turn every young person into an entrepreneur. Let’s try to teach them how to create a business. Let’s try to help them grow as rapidly as possible. Let’s see if they can’t bring wealth into the community by earning it, and in the process they will mop up the poverty by the act of hiring everybody they went to school with. This has worked for every ethnic group that has risen in American history, including, by the way, genuine African-Americans who come from Africa, or Caribbean-Americans who come from the Caribbean. As long as you focus on earning a living in America, and you focus on being prudent, you rise. People have risen whether they were Jewish, Irish, Italian, Greek, Turkish, Chinese, Korean, Vietnamese, Indian, Pakistani. It’s astonishing in America how many groups rise. But they rise by learning the rules of rising. And the first rule is to make business and the development of wealth and the creation of economic opportunity more important than politics and to focus resources on encouraging people to go into business, not bureaucracy.
The second great ground rule is simple. In a healthy society, you want the smallest possible tax rate because you want the maximum resources with people who know how to create jobs. And the choice is simple: do you make the politician or the bureaucrat more powerful by giving them more money, or do you make the job creator more effective by letting them have the money. But does anyone seriously want to argue that the bureaucrat is more likely to create the next million jobs than the entrepreneur? Very few Americans believe this. And yet it’s the base of much of our current politics.
So this question about the critique is important. And I would suggest to you, by the way, that there are plenty of factual bases for this. If you go back and look, in 1960, South Korea and Ghana had the same per capita income. Today, South Korea is the eleventh wealthiest nation in the world, with a high tech base of its industrial sector in the world market. Forty years ago, the leading export of Ireland was its children because they had no jobs. Ireland adopted a low tax 12 and a half percent corporate rate, very rigorous rule of law, investment in education and infrastructure, and today Ireland has a higher per capita income than Germany, although they’re in danger of messing it up by raising taxes and creating new work rules. But today, they are 50,000 guest workers from Eastern Europe working Ireland because they have a labor shortage. Something that was literally inconceivable, yet who on the Left is prepared to study South Korea and Ireland? Who is prepared to study success?
It’s as though, if politics were sports, the primary pattern of the Left would be to study the losing team. <LAUGHTER> And ask whether they had psychological anguish at coming in last for the thirteenth straight year. <LAUGHTER> And you would only want coaches who were compassionate in defeat because you’d expect them to be defeated every game and therefore you’d want to make sure they felt with their players during the long ride home. <LAUGHTER> You’ll notice that in sports we don’t have this model. Or at least no one will go to the games that are played by the teams who have that model.
But that’s the heart of the American political structure today.
Now, because the Left cannot deal with the cost of bad culture and the cost of bad government, they are constantly trying to find a scapegoat for the failures of their own institutions and the failures of their own bureaucracies.
Consider two quotes from Senator Obama’s recent speech in Philadelphia.
Senator Obama asserted:
Segregated schools were, and are, inferior schools; we still haven’t fixed them, fifty years after Brown v. Board of Education, and the inferior education they provided, then and now, helps explain the pervasive achievement gap between today’s white and black students.
I’m going to repeat the closing part of this. “. . . helps explain the pervasive achievement gap. . .” That is simply factually false. The Detroit schools are the third or fourth most expensive schools in America. They’re a disaster. The District of Columbia schools are not bad because of racism. The District of Columbia schools are bad because it has an incompetent bureaucracy, a failed model of education, a unionized tenured system. It is utterly resistant to improvement. That has nothing to do with racism.
And if Senator Obama is serious about helping children in urban America, he will have to question whether or not in fact he’s prepared to automatically reinforce the lockstep power of the National Education Association, which is the largest single provider of delegates to the Democratic National Convention.
Now if we’re going to have an honest conversation about poverty in America, then let’s have an honest conversation about poverty in America. The number one problem with expensive large urban schools is they are failed bureaucracies protected by political unions who refuse to change.
Further, Senator Obama asserted, the history of legalized discrimination “helps explain the wealth and income gap between black and white and the concentrated pockets of poverty that persist today in so many urban and rural communities.”
Well, you can make an argument for that, and I think there are communities in which first slavery, then segregation, then consistent discrimination played a role. But it’s not true for the majority of poor communities. The majority of poor communities are poor because of a combination of bad culture and bad government. And in fact the people in those communities who leave become fairly wealthy as soon as they go to a place that has money. Because they learn very rapidly to show up at work on time, to actually keep part of their paycheck every week, to do all the things successful people do.
And this is not an easy problem. It was not an easy problem in Welsh villages. It is not an easy problem in rural France. It is not an easy problem anywhere on the planet. When you have cultures that are preindustrial, and you have people who don’t have the habit of work, they don’t have the habit of saving, they don’t have any willingness to pursue opportunity, it is very hard to change them.
But that’s not a problem of legalized discrimination. The poorest of the Native American reservations are not a function of legalized discrimination. They’re a function of a legal system which is anti-private property, anti-individual achievement, anti any opportunity coming in, and they created disaster, a human disaster, which no one is allowed to talk about, because it would be so politically incorrect.
So let’s take Senator Obama seriously about discussing this. His analysis is simply factually false. The collapse of Detroit, from 1950 to 2008, which I think should be the centerpiece of the fall campaign, because it is the case study in bad culture and bad government. Detroit in 1950 had 1,800,000 people. Last year, it dropped below 900,000. Less than half the housing stock is needed. It is the first American city in history to drop below a million.
The numbers are actually worse than that in the last three years: Detroit had three times the out-migration rate of any other city in the United States. Twenty-seven thousand additional people fled Detroit. It dropped from being the number one per capita income city in the United States to ranking numbersixty-second.
Now, you could say, well, it’s all the auto industry’s fault. That’s simply not true. First of all, there are large parts of America that have very successful auto industries. They tend to be in right-to-work states with low tax rates and without the United Auto Workers. But they’re quite successful. We’ve had a very large increase in factories that produce cars.
Second, even in Michigan, despite a very destructive governor and a very destructive state legislature, Grand Rapids is in the middle of a building boom. Now why is Grand Rapids, on the western side of Michigan, growing dramatically while Detroit, on the eastern side of Michigan, is continuing to collapse?
The results are even worse. The best estimate of the Gates Foundation was that a freshman entering the Detroit school system had one chance in four of graduating on time. Three out of four children in Detroit are being cheated by one of the most expensive school bureaucracies in America.
But that’s because we measure the wrong metric. The primary metric of the Detroit school bureaucracy has nothing to do with the children. It has to do with whether or not the paychecks are issued every month. And it has been a stunningly effective bureaucracy at issuing paychecks. It just doesn’t do anything for the paychecks. And yet no one wants to talk about this.
So start with the idea that if we’re going to have an honest conversation, we ought to start with Detroit because if we can’t have an honest conversation about how big a disaster Detroit is, we sure can’t have an honest conversation about poverty in America, and we sure can’t have a conversation about what needs to change.
It’s that simple and that direct. And I think virtually no one on the Left is prepared today to talk candidly about Detroit because it is their institutions and their culture which has caused the collapse of one of America’s great cities.
And you may think I’m exaggerating. Consider the following. An entrepreneur offered $200 million to develop charter schools in Detroit and was rejected on the grounds that he was obviously a white racist attempting to overturn the black power structure. “I am disappointed and saddened by the anger and hostility that has greeted our proposal,” explained [Bob] Thompson to the Associated Press.
Because of these contentious conditions, we are not going to move forward with our planned charter high schools. Our proposal to build a number of new, very small charter high schools in Detroit was intended to increase options for Detroit parents and children. The proposal was meant to be for kids, and not against anyone in any institution.
Now what does that tell you about pathology, when you can have a system failing, and remember, if you’re an African-American male, and you drop out of high school, you face a 73 percent unemployment rate in your 20s and a 60 percent chance of going to jail.
And you have to ask yourself, by what moral authority did the Detroit school bureaucracy block $200 million from saving young men from going to jail, from giving them an opportunity to go to college, from offering them hope? And why did no one speak out against it?
Now, there are policies that can work dramatically. I agree with Senator Obama. He said:
A lack of economic opportunity among black men and the shame and frustration that came from not being able to provide for one’s family contributed to the erosion of black families, a problem that welfare policies for many years may have worsened.
You would be shocked to discover that he just paraphrased Charles Murray’s Losing Ground.
But he’s right. The welfare policies we had were a disaster. I’m very proud to have been part of the group that passed welfare reform. We stood on Ronald Reagan’s shoulders. He first proposed it in 1966 when he ran for governor. He first described it as government policy in his inaugural in 1967. He signed the first work-fare experiment with the Nixon administration in 1970. When we passed welfare reform, here are some of the consequences.
During the late 1990s, employment of never-married mothers increased by nearly 50 percent, of single mothers who are high-school dropouts by 66 percent, and of young single mothers ages eighteen to twenty-four by nearly a hundred percent.
The child poverty rate fell from 20.8 percent in 1995 to 17.8 percent in 2004, lifting 1.6 million children out of poverty.
The poverty rate among black children fell from 41.5 percent in 1995 to 32.9 percent in 2004—a stark contrast from the period 1971 to 1995, when this poverty level had not changed much.
The poverty rate also fell from 53.1 percent to 39.8 percent for children from single-mother families.
I’m just giving you a framework of how big the difference was. Welfare caseloads began to decline in earnest after 1996 and have fallen by 56 percent since then.
Now, I think it is clear that the right policies make a huge difference. So, I want to talk about the right policies, and I want to give you an outline of the scale of change we need. But I do want to reemphasize the importance of culture.
Oprah Winfrey has done many powerful and important things. And she is a remarkable figure who brings many Americans together. And her program emphasizes self-help and the opportunity you have to have a better future.
But here’s what she said when she was asked by Newsweek why she went to South Africa to create a school for girls. She said she doesn’t think that American students, who, unlike Africans, go to school free of charge, appreciate what they have.
I became so frustrated with visiting inner-city schools that I just stopped going. The sense that you need to learn just isn’t there. If you ask the kids what they want or need, they will say an iPod or some sneakers. In South Africa, they don’t ask for money or toys, they ask for uniforms so they can go to school.
This is a cultural problem, and I want to start with that. Because unless we understand that if you want to replace a world of poverty with a world of prosperity, it begins with fundamental cultural change. And if you want to reinforce that cultural change, you want to design government policies that reward the right behaviors and make it expensive to have the wrong behaviors.
This is not complicated, but I want to repeat it. The first step is to decide the culture that you want, and if you want a culture of prosperity, you have to establish the values of that culture. You then have to redesign government so it is rewarding those who follow the culture of prosperity and making it expensive for those who in fact are determined to reject being part of the world of prosperity. Because you want to send signals that say this is the right way to go, this is the wrong way to go. This is the heart of how healthy societies operate. It’s what Bill Cosby in many ways has been trying to say both in his speeches and in his recent book.
Now, we should realize that we’re dealing with a forty-three-year-old experience. The Great Society began in 1965. The Kerner Commission reported in 1968, and virtually every one of its recommendations was wrong. The fact is that we don’t need a big government, big bureaucracy model. We need a model which maximizes personal effort and maximizes people being engaged.
I want to very briefly describe a series of changes. But before you decide these changes are too bold, I want you to remember, you live in a country today where every fourth teenage girl has a sexually transmitted disease, and that number is over 50 percent in the black community; where Detroit has decayed from 1,800,000 to under 900,000 and from first in per capita income tosixty-second; where from July 2006 to July 2007, Detroit had 27,000 people moving out of the city.
In that setting, I also want you to remember, among Native Americans, that American Indian and Alaskan native youth, fifteen to twenty-four years old, are committing suicide at a rate more than three times the national average.
Think about the grimness of these facts.
We need bold, courageous solutions that dare to be politically incorrect.
Senator Obama quoted Faulkner, but he would have done well to have quoted more from Faulkner, especially Faulkner’s 1950 Nobel Prize acceptance speech. Faulkner at that point describes the importance of faith and the importance of optimism. He says:
The poet’s, the writer’s duty, is to write about these things. It is his privilege to help man endure, by lifting his heart, by reminding him of the courage and honor and hope and pride and compassion and pity and sacrifice which have been the glory of his past. The poet’s voice need not merely be the record of man, it can be one of the props, the pillars to helping him endure and prevail.
So how do we endure and prevail?
There are seven areas. Stopping crime and ensuring public safety; replacing the destructive culture of adolescence with the return to young adulthood; creating a new dynamic of jobs, health, and wealth creation for all Americans; using modern technology and modern science to turn disabilities into capabilities; replacing cities of poverty with cities of prosperity; ensuring true happiness and a true citizenship with a real right to pursue happiness for all Native Americans; and creating atwenty-first-century system of law enforcement and appropriate punishment with a decisively new model of prisons.
Let me just describe these very briefly.
First, I think it is very important to recognize as one of the most frustrating things about modern public life: we have an absolute, verifiable model of minimizing crime. It’s not a mystery. It’s not a secret. It is what [Rudy] Giuliani and [William] Bratton did in New York starting in 1993. New York City today is 75 percent safer; it has 75 percent less crime than in 1993. Now, we know that it is a system because Chief Bratton took that model, went to Los Angeles, and Los Angeles is today the second safest city in the United States. Los Angeles’s murder rate last year declined to a point where it was in fact the same as in 1970. If you look at the difference [in the] murder rate [per] 1,000 people, between Philadelphia and New York, it is breathtaking. And yet where are the leaders who are saying, “what should we learn from this? How do we transfer this to our city? What do we do to save lives?”
It is all available. You can read Guiliani’s Leadership. You can read Bratton’s Turnaround. You can read Michael Lewis’s Moneyball. You can talk with Dennis Smith at New YorkUniversity. This is a definable, practical system of running government. First Giuliani and then Bloomberg extended it beyond crime, making New York arguably one of the best managed cities in America today. And yet there is remarkably little migration because the rest of the country and the politicians would say, ”But that would be change. That would make someone mad. That would upset the bureaucrats.”
And it does upset the bureaucrats. When Giuliani and Bratton imposed—and they imposed—the computer system model of metrics on the New York Police Department, in the first year, three out of every four precinct captains resigned or retired. That’s how big the change was. Because it was real change.
So first of all, I would argue that the amount of unnecessary crime that we tolerate in America is breathtaking. And if every American city was as safe as New York, the number of people who would be alive next year, who will be killed this year, will be stunning.
And it’s important for two reasons. First of all, public safety is the heart of which everything else grows. If you are not going to be safe, then you are not going to invest, you are not going to create jobs, you are not going to increase property values, and so safety really matters, and it is at the heart of a healthy society.
And there is a second reason. This is a systematic, manageable approach, which is the model that says: The right policies, the right culture, the right leadership, the world changes. The wrong policies, the wrong signals, the wrong leadership, the world changes in the wrong direction.
And you have to have an honest, national conversation. You want more poverty? You want to make the whole country resemble Detroit? We can.
Or do we want to make the whole country prosperous, safe, and provide an opportunity to everyone to have the highest quality of life—fundamentally different issues.
Second, this may be the boldest thing I am going to say today, but it grows out of several experiences. At the Center of Health Transformation, we have been working on teenage diabetes and obesity. And as we tried to understand how to get young people to change their behavior, it became clear how much of the current wave of diabetes and obesity is essentially a cultural behavior.
I then went back to WestGeorgiaUniversity where I used to teach, and I taught a freshman class, and I asked the students—and there were sixty of them—how many of them knew someone in high school that had cheated? Every hand went up. This has been my experience for the last twenty-five years, except in one class, where a girl said that she had went to a Catholic girls school, run by nuns, and there were only nine people in class. And she was not aware of any of them cheating because they were terrified.
But with that exception, and every time I have asked, and try it out yourself. Don’t ask if they cheat. Ask if they know someone who cheats. I then asked them an equally revealing question. I said, ”How many of you, would be prepared,” and you think about your high school years, “if we had given you a reward, how many of you could have gotten through in three years instead of four?” All of the hands went up. Every hand.
So I said, “How many of you could have gotten through in two years?” Half the hands went up. I finally said, “How many of you could have gotten through in one year?” And a student at the back of the room yelled, ”How big is the reward?”
Now, here is my proposition. Now, when you look at the evidence of sexually transmitted disease. You look at the evidence of use of drugs. You look at the amount of illegal economic activity. You look at the drop-out rates. You look at the disaster of the current schools in big cities. I want to propose to you that adolescence is a failed, nineteenth-century idea. It was an experiment to keep middle-class kids out of factories and out of coal mines. And it has long run its effect as a disaster.
It is a disaster for the following reason. Prior to the middle of the nineteenth century, people were either children, or they were young adults. The average age of going to Princeton in the Revolutionary War was fourteen. Benjamin Franklin left home, in Boston, at thirteen and was an apprentice to his uncle in Philadelphia. And did real work. And you were treated with dignity. You were expected to actually be a young adult. And you were expected to learn from adults.
Now we have invented this middle zone, where kids are bored, trapped in mindless bureaucracies, critiqued routinely, and end up hanging out, watching junk television, doing drugs, and having sex. Now this is not the best years of their lives.
In fact, I have recently made it a habit, when I meet with successful people, to ask the following question. And you can try this out. I [ask people] who are first generation, economically successful, I say to them, “When did you first go to work? How much did you earn? And what did you learn?”
I had dinner last week with a first-generational billionaire in biotech, who had his first job at nine. Selling greeting cards door to door. He was cute; people bought the cards. He thought it was a great deal.
I talked recently with a billionaire real estate agent in Atlanta. His first job was at twelve selling newspapers. By thirteen, he had four other kids working for him. And he learned how to be in business.
So here is one of my proposals. I would like to propose that we adopt as an experiment, and I am recognizing that this is an experiment, that if you work, part-time or full-time, at fourteen through sixteen years of age, that there be no taxes of any kind. You get 100 percent of what you earn as take-home pay.
And the reason is simple. I want to send a signal down in Dallas, Texas, that if you need money, get an honest job, don’t become a madame. I want to send a signal in Philadelphia, don’t become a drug dealer. I want to send a signal that we don’t want you on the street corner, talking with your friends and doing nothing for five years after you drop out of a failed school bureaucracy. We want you actively engaged.
Second, I would propose that we fundamentally redesign learning in America on an achievement base, in which, if you can get out earlier and better, we reward you. What if every year you could get out earlier than twelve years became an automatic scholarship that would reduce the costs—this, by the way, would be vastly more money than Senator Obama’s $4,000—if you agree to national service. Let me just say that we would take the entire cost of your senior year and give it to you as a scholarship if you can graduate in three years. We will take the entire cost of your junior and senior year if you can graduate in two years. And by the way, if you can do calculus at the age of eleven or twelve, we will have the National Science Foundation call you, because frankly, we are not keeping up with the Chinese right now, and we need the help.
And so instead of saying, “be bored” because the state curriculum says that this morning is “boredom morning,” <LAUGHTER> we would say, “learn as fast as you can, 365 days a year” and reward learning. It would be a fundamentally different model.
I work with Jim Lehrer, who is a great sports psychologist, who has a model in which he talks about engagement. And I said to him one day, ”How do you describe modern schools?” And he said they are “systems of disengagement. They teach young people to be disengaged, dull and to not pursue happiness.”
Now think about that level of critique. I happen to think, by the way, that it is exactly right. This requires a fundamentally different approach to how we think about learning in America.
Third, the way you create a new dynamic of jobs with health, wealth creation for all Americans is not complicated. It’s just unacceptable for the Left. The fact is that everywhere on the planet where people have low tax, limited regulation, limited litigation models, jobs spring up.
And that’s very important. The Left somehow has this notion that we can browbeat and punish businesses so that they won’t send jobs overseas.
There is an article in this morning’s paper, about the head of AT&T pointing out that they have had for three years the goal of creating 5,000 jobs in the U.S. And they so far have been able to find 1,700 people to fill them because the schools are so bad, the drop out rates are so bad, that they literally can’t fill the jobs.
Now they are not going to go broke. In the absence of Detroit getting its act together, they are not going to open the next factory in Detroit. In the absence of our school systems being fundamentally improved, they are not going to be here.
And when you can pay 12.5 percent in Ireland or 35 percent federal income tax plus whatever your state tax is, people are not going to put their assets in the United States. I believe that we can compete with China and India, but I believe to compete with China and India you have to have a fundamental overhaul of the tax system. You probably have to abolish the capital gains tax. You certainly ought to compete with Ireland with a 12.5 percent corporate tax rate. You should probably have 100 percent expensing so that people replace their factory equipment every year.
But if we want to have a serious conversation about what would it take to compete with China and India, that would be a good national dialogue. It just wouldn’t fit any of the current, political rhetoric.
The current political rhetoric will move us closest to Detroit as a model for the country. It will raise taxes, drive out businesses, dry out jobs, slow up entrepreneurship, and convince brilliant foreigners not to come to the U.S. because this won’t be the best place to create jobs and wealth.
And if you want to create a country that is as dynamic as ours when we are at our best, Silicon Valley is your future rather than Detroit.
Then you want to maximize entrepreneurship. Maximize education. Have as many H1 and H2B visas as you need in order to bring smart people here. And you want to maximize the creation of really high-value jobs for everybody.
But the Palo Alto model is not the Detroit model. And we need to decide, which future do we like better? Because you can’t have both of them.
Fourth, we have enormous opportunities to fundamentally rethink disability in America. There are millions of Americans, from “workmen’s comp” to birth defects to people who have car wrecks, that could lead dramatically better and fuller lives with a capital investment, information technology, modern capability approach. I really think that we need to fundamentally reapproach how we think about disabilities, and I don’t think that you can talk about every American pursuing happiness if we don’t do something to fundamentally rethink how we approach disabilities in America.
Fifth, I favor going back to something Congressman Jack Kempt pioneered in the late 1970s for big cities. I think that we should save Detroit, not just talk about it. And to save Detroit, you need a contract that would dramatically shrink the government. Dramatically lower taxes. They become pro-new businesses moving in, rather than anti. They enforce the rule of law by using a Giuliani-style police system. They fundamentally replace the current failed education system so that it is good to move there so that your kids can actually get a good education.
And in that kind of a setting, with that kind of a contract for local reform, I think we should have very dramatic opportunity zones, and I would be prepared to say that we ought to make it possible for all investment in Detroit—if they were prepared to adopt that level of local change—that for the next ten years, you would have a tax-free zone to invest in, that would create an Ireland kind of effect and would increase the wealth of Detroit radically. It would increase the housing value for the current homeowners and return Detroit to being one of the great cities of this country.
But it has to be a dual change. It has to be a change in the local and state governments, as well as a change in the federal government. Because if all you do is create a tax zone without these fundamental local changes, it will not work.
Sixth, and a topic that I will speak on later on this year, that requires full treatment in its own right. I just want to say that you cannot talk about ending poverty in America, and you cannot talk about helping the least-advantaged Americans and not fundamentally question the current social contract with Native Americans. We have allowed a politically controlled model of cultural isolationism—and citizens that have no private property—in which people have no rights to acquire personal wealth, no ability to rise, and it has produced a disaster.
And no one wants to talk about it because the minute you do, you are called a racist. And you are accused of intervening. And therefore, the children die.
And when you look at the difference between fetal alcohol syndrome, between Native American reservations and the rest of the country, you are 100 times more likely to have a baby damaged by fetal alcohol syndrome if you are a Native American than if you are an Asian American. 100 times. 10,000 percent. And that’s just a tragedy.
And yet, that’s not a medical problem. That’s a cultural problem. It’s a function of a society with no hope, no future, no opportunity, no wealth creation. And therefore alcoholism is a reasonable behavior. Because there is no future.
This entire topic, of the rights of Native Americans, deserves a much deeper and much more profound approach and entire wave of dialogue about it.
Finally, a similar topic that requires a dramatic approach another day. We have to fundamentally rethink prisons in America. It is totally unacceptable to put 3 million people in prison. And it is totally unacceptable to have the current prisons. You should not be in physical danger when you are a ward of the state.
We give up the prisons to the prisoners. We adopt models of enforcement that make no sense at all. We have people, theoretically, totally within our control. They aren’t learning. They aren’t being productive. They aren’t acquiring the right habits. They are dealing in drugs. There is violence. There is something fundamentally wrong with this.
And if we truly want to help people, we have to have a model that says we want you to go to college and not to go to prison. But we also have to have a model that says that if you did break the law, we want to maximize your chance to learn so that you never break the law again.
And we have clear evidence that that can be done. If you look at the work that has been done, particularly the work on faith-based prisons, like Chuck Colson and others, it is astonishing, the difference in the rate of people who are saved, who end up never going back to jail again. But it is politically incorrect.
And yet even the American Psychological Association now says that belief in a spiritual being seems to have a direct effect on your ability to have a better life and your ability to withdraw from drugs. Now, if you can get that quote out of the American Psychological Association, almost anything is possible in the next decade.
I have given you a large and sweeping overview. I hope this is the beginning of a genuine dialogue. I think it would be tremendous if Senator Obama would be willing to actually talk about solutions. And if he would actually be willing to take on challenges like Detroit. And I think that we should engage him in a positive way. Not to score points. Not to try to prove he’s wrong. But to say, “let’s agree in principle that every American is endowed by their Creator with the right to pursue happiness.” It is the interest of every American to reach out and make sure that right is truly made real. And therefore, what do the policies have to be?”
I have begun the process today by outlining some of those. The next few weeks, I will be outlining a series of a few more of them. But I would hope that Senator Obama would agree to a dialogue on the positive solutions, not merely the analysis. And that he would be willing to think about them in positive ways. How would you truly help Native American reservations? How would you truly rethink the process by which Detroit has become a disaster? And how would you learn the lessons of economic growth around the planet? And apply them to try to create, once again in America, the fastest growing, most dynamic, and most entrepreneurial society in the world?
I think this is a topic well worth spending the rest of the year on. I hope it is one that can lead the presidential campaign to be one of genuine ideas, genuine solutions, and a belief that together, we can create real change. And that real change can lead to a dramatically better American future.
Thank you very much for allowing me to share these ideas.
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