2120th Stated Meeting | February 27, 2024 | Stanford Park Hotel, Menlo Park, CA
The gap between the richest and poorest communities in the United States has grown significantly over the last few decades. There are places where population growth has stalled, business development has slowed, jobs have disappeared, and insecurity has increased. On February 27, 2024, the Academy hosted a conversation with entrepreneur Reid G. Hoffman, sociologist Katherine S. Newman, and founder of End Poverty in California Michael D. Tubbs about the geography of opportunity in the United States. The program included an introduction by Academy President David W. Oxtoby and closing remarks from Goodwin Liu, Chair of the Academy’s Board of Directors. The event was inspired by the work of the Academy’s Commission on Reimagining Our Economy and its recommendations to build a people-first economy that ensures no Americans and no communities are left behind. An edited version of the conversation follows.
Michael D. Tubbs
Michael D. Tubbs serves as the Special Advisor to California Governor Gavin Newsom for Economic Mobility and is the founder of End Poverty in California. He served as Mayor of Stockton, California, from 2017 to 2021.
Good evening. I think it is both fitting and ironic that we are having this conversation in one of the wealthiest places in this country. As we begin our program, I am thinking about the bartender at our reception and about the folks who checked me in at the hotel. I hope we keep these individuals in mind as we talk about the geography of opportunity in our country. When we think about the economy, it is always divorced from people—the economy is doing this, and the economy is doing that. I appreciate that the Academy is focusing on people, because there is no economy without people, particularly the people whom we called essential workers just a couple of years ago.
Let me begin with a question about the Academy’s Commission on Reimagining Our Economy. Why did the Commission focus on the geography of opportunity? You could have looked at economic opportunity from many dimensions: race, gender, etc. Why is geography as a unit of analysis important as we think about economic opportunity in this country? I’ll start with you, Madam Provost.
Katherine S. Newman
Katherine S. Newman is Provost and Executive Vice President of Academic Affairs of the University of California. She is also the Chancellor’s Distinguished Professor of Sociology and Public Policy at the University of California, Berkeley. Elected to the American Academy in 2011, she is a member of the Academy’s Commission on Reimagining Our Economy.
Some of the national indicators that we hear about, like the unemployment rate, hide the enormous variation that exists around the country. If you live in Boston, you are living in a very different kind of economy than if you live in San Antonio. People don’t live in the national economy; they live in their local economy, where they have, or don’t have, opportunities. Very few are focusing on that geographic variation.
One of the things the Academy’s Commission wanted to do was to develop measures and listen to voices that would help us understand the enormous geographic variation that we are witnessing in terms of economic opportunity. We did not want to focus on the average American. There is almost no meaning to that term. Instead, we focused on Americans who experience vast levels of inequality or opportunity, depending on public investments in their well-being, with institutions supporting their mobility or not.
Having spent a number of years studying tax policy in the South, for example, I learned that if you grew up in Alabama or in Mississippi, 10 percent of every purchase you made went to the tax system because the South exists on regressive taxation. That’s not true everywhere in the country. It’s not true in the Northeast, for example. So, there’s the geography of labor markets, and there’s the geography of policy, with political differences and polarization having an impact. And we need to pay attention to all of that.
Reid G. Hoffman
Reid G. Hoffman is a co-founder of LinkedIn, a co-founder of Inflection AI, and a partner at Greylock Partners. Elected to the American Academy in 2018, he is a member of the Academy’s Commission on Reimagining Our Economy.
I think most people here recognize that we have had a marked decrease in how talent moves around the country, and that means that you end up getting economic rigidification in regions of the United States. Raj Chetty, an economist at Harvard University, does a lot of very good work on this. Your economic destiny in the United States is highly predicted by the zip code of where you grow up. And so the reason for focusing on geography, to get back to Michael’s question, was because we were looking for a lens that a majority of people could get behind. It is an accurate, important, and hopefully in some degree unifying way to measure the well-being of the country. And it also gives a basis on which to make prescriptions for what you might do. A geo-focus is a way of tackling the problem.
TUBBS: The Commission’s recommendations are a good representative list, with a lot of national prescriptions. Your point about geographic differences in politics happening at the county level is important because our safety net is at the county level of government. My next question is about the Commission’s recommendations. You have fifteen great recommendations. Which ones animate you the most? Which ones are you most passionate about? Which ones were you having lively debates and conversations about in the Commission’s hearings?
NEWMAN: For me, given my interest in labor markets and in social policy, the recommendations about cliff effects were the most important to me.
TUBBS: Can you define that for us?
NEWMAN: We have a vast social policy apparatus, and it provides benefits, especially to those who have either experienced unemployment or have fallen below a particular income parameter. Food stamps are an example. Medicaid is another critical example. But all of those benefit programs have cutoffs, and those cutoffs tend to be fairly rigid, meaning just one dollar above the cutoff amount and you lose everything that the benefit provides. The nature of poverty is one in which people can outrun some of the liabilities of poverty, but not all of them. If, for example, your family depends on a Section 8 housing voucher and you can manage to support your family on your income as long as you have that voucher, then one dollar over what that voucher allows and the voucher is gone. For most people when their earnings improve, they may not improve enough for them to be able to do without that housing voucher.
TUBBS: In many places, there is this pervasive narrative that folks are poor because they are not working hard, and that if they just worked harder, they would be better off. Provost Newman, you have studied and written several books about people working harder and how in some cases that leaves them further behind.
NEWMAN: Folks working harder for less money than they should be earning can be poor, even if they work full-time and year-round. The books that I am best known for from a while back were all about the working poor. I have been trying to shift our understanding of poverty away from what was then the welfare system to the low-wage labor market, which is a huge source of working poverty. But coming back to cliff effects, if we could reconceptualize what we think of as an inadequate safety net and think of it instead as social policy, as a springboard to mobility, we would have a country in which escaping poverty is likely to be more durable than being totally dependent on the strength of the labor market. We don’t allow people to accumulate assets because we are constantly worried about the free rider problem. Wealthy people in particular are worried about the free rider problem. I don’t worry about it.
TUBBS: What is the free rider problem?
NEWMAN: You actually explained it just in a different way. It is the idea that people will somehow stop working or slow their work efforts if we provide them with public benefits. But you learned in Stockton as mayor, and you are our hero on this, that if you provide a floor under people, it doesn’t diminish their work effort at all. It just gives them more opportunity to invest in their children, to afford after-school care or whatever it is they think is important for their kids. There is a body of economic theory out there that argues that if you provide people with that level of security, they will just cut back on their work effort. And that’s just empirically not the case, as your work showed. What we need to do, in my opinion, is to relax those cliff effects, make them more gradual, provide people more time to amass assets, and not slam them for gaining those assets because those assets are what will keep them durably out of poverty if you let them.
TUBBS: Reid, before I go to you, I want to bridge what Provost Newman said to what you will talk about. I understand the cliff in terms of basic income. When people say if you give folks money, they are not going to work, I say, look at Reid Hoffman This man is a billionaire and he works hard. He is always working. And that is my transition to your answer.
HOFFMAN: Thanks, Michael. You and I have known each other for years! The things that motivate me relate to economic opportunity. How do we create healthy industries and economies for people in places that don’t necessarily have them? How do we make that happen? How do you take areas that are left behind and give them new opportunity and hope? Those are obvious answers from the co-founder of LinkedIn. I also learned from the other members on the Commission about how to rebuild a sense of trust and a shared trust in our society. The discourse was vigorous, but not so much as “I am right and you are totally wrong.” It was more like our mandate is to figure out a set of things that could work. As long as you share the goal that everyone should have the American dream, then economic opportunity is not just for the top one-third, but for the whole country. So how do we help deliver that? What are the various things we can do? It wasn’t one specific recommendation but the range of recommendations that was interesting to me.
TUBBS: What role can AI play in ameliorating some of these concerns or in creating a baseline of prosperity? How could AI be used to do that?
HOFFMAN: Obviously, the general discourse around AI is that it is damaging our democracy; it is coming for our jobs, and maybe even for our lives. So why then are people using AI? The specific answer is that AI is actually a steam engine of the mind, and as such it is going to have a revolutionary impact on industries, maybe even greater than the impact of the steam engine. It is an amplifier of every single task you do with language. We are all linguistic creatures. If I am a steel manufacturer, for example, my responsibilities include sales and marketing and analysis, and these are all language tasks. AI can be very helpful. You may say that the early adopters will probably be the more educated people from certain zip codes, and that the worry is that AI will make them better off while everyone else will be left behind. But where AI is a challenge, it can also be a solution. For instance, public access to ChatGPT is available through the internet, as long as you have broadband access, which by the way is one of our recommendations. My friend’s fifteen-year-old daughter is really interested in organic chemistry. She takes organic chemistry papers, puts them into ChatGPT, and says, “explain this to a person who is fifteen years old.” You have an infinitely patient tutor.
TUBBS: That is a brilliant idea. I’m going to try that.
HOFFMAN: I might say explain this to a twelve-year-old, but the point is we have to be intentional as technologists and as inventors, and therefore we have to be intentional in society. I think slowing down big tech is the wrong focus. The focus should rather be how do we harness this to be beneficial to the broader community, the broader industries, and the broader society? In essence, how do we make sure that the tutor is accessible and available to everyone? How do we make sure that the medical assistant is accessible, especially to people who don’t have access to doctors? Obviously, we want everyone in the country to have access to a doctor. But that is not the case by a long mile. And so these are the kinds of ways in which AI can be helpful. I do think some of it will happen naturally; for example, the translation services that AI provides. Before I go on, let me ask a question: Are we on the record here?
NEWMAN: Well, this is a big audience.
HOFFMAN: What I have to say is not super-secret. I am going to be publishing some AI-generated videos of me speaking in other languages. It is one of the things that it is possible to do with AI. I have seen myself speak Chinese, Korean, Japanese, et cetera. I speak none of these languages. So AI can be used as a tool for building bridges. It is the flip side of the deep fake concern.
TUBBS: I think what I heard you say, and I want to underline this idea, is that maybe AI is not the problem; maybe it is the foundation upon which AI is built. If you have a technology that accelerates learning, and there is a group of people who are not connected, then that chasm will get bigger. We will be in a better position to harness AI for good if we live in a country with a baseline level of security, opportunity, and mobility.
HOFFMAN: Ten thousand percent.
TUBBS: Provost Newman, in the Commission’s report, there is a recognition that race plays a role in some people’s economic security and opportunity. I also think we should consider gender, gender pay gaps, and unpaid labor. The report also talks about how work is important, that you have to contribute, that everyone has to work. Let me ask you two questions. One, when we talk about work, is that a broad definition of work that includes unpaid labor, caregiving, and all the things that ChatGPT won’t be able to do? Two, if racism and white supremacy are some of the root causes of the outcomes we see, how might we address these problems?
NEWMAN: Let me start with an ad because tomorrow in my day job, we are having a ten-campus gathering. It is an academic congress on AI, and a member of the Academy’s Commission, Daron Acemoglu, is our keynote speaker. We will be focusing specifically on our responsibility as educators to think about how we give our students tools to make use of the genie that we can’t put back in this bottle, as well as recognizing all of the inequality effects that you mentioned. We will be talking about this in health care, in education, and in the many different dimensions of our lives that are going to be affected by AI. One of the reasons I wanted Daron to join our academic congress is that he is a masterful communicator about the question of technology’s impacts. Many different technologies have advertised themselves as revolutionary. Very often the uptake is less than what people thought. The productivity consequences are weaker until we get to the next financial crisis. And then people turn around and ask, what can this technology actually do for me? They start intensifying investment in it. I think we can learn from history and understand how technological change has actually affected people.
As a sociologist, I can say that people don’t live in aggregates. We live in geographies; we live in occupations. So, when we say aggregate employment will grow, that may well be the case. But those most impacted are not necessarily the people who will benefit from this employment growth unless we intervene and provide them with the opportunity to engage in the learning. That is partly the university’s responsibility.
As to race, we did talk about race, and again, this is my personal preoccupation with social policy. One of the recommendations that we made is that we need to extend to Black World War II veterans and their descendants the housing and education benefits that they were denied under the GI Bill. This investment, which was denied to African Americans, created huge wealth inequalities that are persistent across the generations, and we have a responsibility to address the consequences of that very affirmative social act. It was a social act to decide that Black GIs were not entitled to the same benefits as white veterans. And similarly with social security, which we denied to agricultural workers and to domestic workers and which created generations of inequality. So instead of talking about race as an identity construct or the many other ways in which one could productively talk about it, we spoke instead about specific and deliberate policy interventions that created and powered inequalities that have consequences to this very day. I think we felt that it would be possible for the country to figure out in a fairly definitive way who was denied those benefits. One of the complexities of reparations in general is figuring out hundreds of years later who exactly are the people who ought to be in line for those opportunities. But we can figure it out for World War II. So our focus was partly geographic and partly political because we knew that racial inequalities are expressed in political participation.
Let me mention another product of our Commission—the CORE Score, which Jacob Hacker developed. The idea behind the CORE Score, which is an index of American well-being and I hope some of the social scientists in this audience will use it because it is a very rich tool, was to drive all the way down to the county level and look at political participation, the ease with which people can actually get to the polls and vote, the efficacy of political representation, how accurately do political representatives vote the attitudes and beliefs of their constituents, as well as economic security and economic mobility. There is no way to think about those questions of political representation without thinking about race. There is a very clear racial element to voter suppression. Those are things in which there is a documented history. The opportunity to rectify those things is certainly something we are advocating for.
TUBBS: I appreciate your answer. Part of what prompted my question was some of the research that I did in preparation for our conversation. I played around with the CORE Score. And what I found was that the scores for Black and Hispanic counties in this country are the lowest. For example, if you look at Black and Latino scores in San Mateo County, they are terrible and worse than Nashville. If you look at some of the low opportunity areas, you find the same thing. I thank the Commission for its leadership on the CORE Score, and for giving us the ability to drill down to data at the county level.
My last question before we go to the audience Q&A. There are a lot of good reports out there, and they are great intellectual exercises, including the Commission’s report. But how do we take what is in the report and commit ourselves to making the changes that are necessary?
HOFFMAN: Our country is facing huge problems, and their solutions seem to be beyond even very powerful individuals. The reason for the CORE Score, for our focus on geography, for our focus on people instead of GDP scores was to provide a conceptual architecture to the people who want to act on these problems. They may be government people, businesspeople, philanthropists. Part of the reason why the Commission is having events like this one is to try to get the conceptual infrastructure out there. And it’s an effort. I don’t know how many people in the tech world are here tonight, but it is similar to being given some open-source code and told go use it. Now, obviously if we put the Commission’s report on the shelf, we won’t succeed. So it is not enough to write the report. We need to talk to the folks who are active participants in trying to make the next version of our society, and to give them the conceptual tools by which they might make a real difference.
NEWMAN: Let me add some optimistic notes here. We cut child poverty by one-third in about three months when the federal government stepped in and created a massive childcare tax credit. So we know how to do this. It is not a mystery. We invested heavily in keeping people on company payrolls rather than have them cut loose during the COVID-19 recession. And that helped to lay the groundwork for the most extraordinary labor market we have ever had. We are now two years into below 4 percent unemployment. I wrote a book this year about tight labor markets, and what tight labor markets do for poor people. But the point is we had many social policy instruments. We invoked them all.
In New York City, where I spent many years educating four-year-olds, creating pre-kindergarten relieved families of a huge burden of childcare and started their children on their way through the education system. We know how to do this. It is not a mystery. The challenge is generating the political will that we need. We hope reports like the Commission’s will make a difference.
Mayor Tubbs, you created the most remarkable experiment in guaranteed income. Researchers who have studied what you have done have shown the extraordinary benefits of your program to the people of Stockton, and to the other mayors who are working toward the same. We know how to do this and we know what those benefits are. We know if we invest in children and provide them with a rich education, it will pay off for the rest of their lives. And it will pay off for the rest of us too. When we have tight labor markets, and when people who have been in prison for years get jobs, they know that they have something that is extremely valuable to them and they hold onto it for dear life. When you talk to employers as I have about what that means for them, they suddenly start to recognize there is a source of labor here I never even thought about. It is not just that Joe over here turns out to be a really good egg. It is that there are thousands of Joes and I’m going to offer them jobs and give them training. They don’t have the skills when they walk in the door, so the great American job machine turns into a human capital investment. The optimist in me says we know how to do this. We just need the political will not only to pursue it, but not to let go of it. We just let go of that Child Tax Credit and plunged millions of families back into poverty. It does not have to be that way. I hope that reports like ours, as modest as the contribution may be, will help generate some of that political will to take those policy steps and stick with them once we can empirically show they work.
TUBBS: Let’s now turn to some questions from our audience. But before that, let me express my thanks. Tonight is the culmination of two years of conversations and hard work by the Academy’s Commission on Reimagining Our Economy. One of the things I learned as a student at Stanford is that you can find talent and intellect anywhere, but what is not distributed equally or equitably are the resources and opportunities. I think this report will actually get us to the point in which every kid in this country is given a fair shot and a chance to be a CEO or provost or mayor.
AUDIENCE MEMBER: I heard two things tonight. One is we need to change policies. And if we change policies, it will change how people react and that in turn may change how companies react. It can create a virtuous cycle. And two, we need to create the political or the public will to actually change policies. I noticed that Anna Deavere Smith and Tom Hanks are on your Commission. So let me ask, what is the role of the arts and artists to change hearts and minds? And if we know what needs to be done, how do we get the public will to do these things?
NEWMAN: There are people in this room who are more knowledgeable than I am about how to cope with political polarization and the moment we find ourselves in, especially with an election coming up. But I would say on behalf of the Commission that it was not accidental that we produced a photojournal with photographs of Americans across the country, or if you tune into the interviews that were done that you can hear the voices of the people we spoke with. I think we recognize that a report by itself will matter to an audience like this one. But for other people, the photographs bring home that there is a real person sitting at that lunch counter and that there are real lives on Indian reservations. As somebody who has done years of fieldwork, that is the reason for doing fieldwork. It is not just to illustrate something; it is to pull the reader in and make the reader feel the pain and the opportunity, the optimism and the possibilities. How do we get them to think about it? Well, audiences like this are influential. We hope that you will talk to people about what you have learned tonight.
HOFFMAN: We are obviously at a moment of intense political division in our country. And one of the things we are trying to do in the report is to offer recommendations that could be part of the conceptual frameworks that sidestep much of that polarization. Getting that political will involves trying to rebuild some trust so we can work on these problems together.
Last night I was on a different stage with the UK home secretary, who asked me how should they talk to their constituencies about these technological benefits? And I said the way that it normally happens is you enable the companies to take risks. You stay in dialog with them, you try to nudge them some, and then you see the products and services that come out of it. What is disheartening is trying to figure out how to foster this trust and get the dialog going. It is one of the reasons why the Academy is very important and a good voice here.
TUBBS: From my work in local government, I am convinced that policy only moves at the speed of narrative. Until we tell a different story of origin in terms of how the problem came to be, it will be hard to get a political actor to make a different solution. If the dominant narrative, and perhaps not the narrative held by folks in this room, is this idea that effort alone equals outcome; that if you pull yourself up by your bootstraps, you will be okay; and that some people are endowed by God with intelligence and others are endowed by God with laziness, then we will keep getting these solutions that are more focused on individuals and structure. I do think storytelling, arts, and culture can help transcend some of the polarization we are seeing. Provost Newman mentioned some of the guaranteed income work that we did. Two year ago, we produced an hour-long documentary following people in four different cities who were receiving guaranteed income, and that documentary premiered at the Tribeca Film Festival. Since then, it has become easier to have conversations because it is not you arguing with a political figure whom you may or may not like. It is you arguing with your neighbors or with the bus driver in St. Paul or with the worker in Massachusetts who looks like you and talks like you. I think any political power building agenda has to have a storytelling culture component. That is the only thing that seems to transcend the noise.
AUDIENCE MEMBER: I have two questions. First, I thought the expanded Child Tax Credit passed the House, and the Senate just hasn’t taken it up yet. And the second question goes to the points we have all been making about how to get this really good message out and actually get the political buy-in. On the foreign policy side that I come from, there is an organization that brings people together across the political spectrum, from the business community, and from the religious community, and they go state to state and city to city to talk about the importance of giving aid internationally. Something similar could be successful here. How are you thinking about the rollout and is there a plan to take the show on the road beyond Menlo Park?
NEWMAN: The expanded Child Tax Credit is not dead, but it has been dramatically reduced. Still, it is better than nothing, but it could be what it used to be. And I think this is the road show, but probably the best thing that we could do is get this report to Taylor Swift! I want to second the mayor’s point that telling this history and these impacts through real lives is the most impactful way to get people to pay attention. And my hat is off to the Commission for pulling people from different political corners together. There were many things that we talked about that some of us would have liked to see included in the report but we couldn’t convince our more conservative colleagues. But there were many elements that transcended those political boundaries, and we had to discuss them and debate them in order to include them in the report. For example, reducing barriers to employment, reducing licensing requirements that have been a mechanism for excluding disadvantaged people, and equalizing investments in education because when they are state by state and county by county, they lead to vast inequalities. These are not easy things to do, but I think there are ways to persuade people in different political corners that there is some value to this.
When I finished my book on tight labor markets, I wrote a piece about how tight labor markets and policies that continue to keep labor markets tight reduce the need for public benefits. If you are earning enough, you don’t need some of those public benefits. And that is an idea that appeals to conservatives because they tend not to be happy about those benefits anyway. But it actually turns out that people can build their own safety net if they are consistently employed at higher wages, which is what happens in tight labor markets. I think when we consciously try to persuade people who are not initially in our political corner, there is some hope that other people will be listening besides the usual suspects. And maybe we can get to Taylor Swift too.
TUBBS: Let me give a shout-out to the wonderful staff who worked with the Commission to produce this report. We appreciate your work and insight.
AUDIENCE MEMBER: I love the premise that there is a report that says the economy is nothing unless you consider its workers. And then the secondary premise that if we want to equalize opportunities across our workers, we need to equalize neighborhood amenities. Are the recommendations in this report able to actually equalize the amenities that neighborhoods offer? There is a recommendation about inclusionary zoning policies that would increase the housing supply. But is it enough? At the end of the day, if all the recommendations were implemented, would we end up with neighborhoods with equal amenities? Or were there recommendations that hit the cutting-room floor that could do that?
NEWMAN: Some of the things that hit the cutting-room floor that I think personally would make a difference had to do with enabling unionization more aggressively because even now we can see that the wave of strikes that have happened in the United States are starting to push up the bottom of the income distribution, just like tight labor markets do. And there are some recommendations in this report that I think are enormously important and probably will never happen, like funding schools out of local taxation, which would make a huge difference because schools are such an important aspect of human capital formation. Some other things that we left on the cutting-room floor are more aggressive attention to the minimum wage and to tax policy in general. I always worry about regressive taxation and its consequences. Too much of the country is fueled on regressive taxation, and that has a huge impact throughout the South in particular. Here in California since Proposition 13, we have heavier sales tax, which has a tremendously dampening effect on income equality. So, the list is long. But I think this is a good beginning when you consider that there are members of the Commission who are very strong conservatives and they were willing to endorse what you see in the report. Part of the purpose of the Commission was to try to reach across that divide. And I haven’t been in too many settings where that was the goal.
HOFFMAN: I think it is a mistake to think that any individual effort at any time will solve everything. I think it is much better to think of yourself as a renovator, as someone who makes something happen, and then you move on to other renovations. Some of the recommendations will not be adopted, but the renovations’ approach is a better way to think of it.
TUBBS: I would add that baby bonds would be an interesting recommendation to have in terms of any wealth gaps for the next generation. I think a right to housing is important. We know that evictions drive real poverty, and people struggle to recover. And of course, universal basic income, like guaranteed income. The research tells us that it is not the panacea for everything, but it is the panacea for one issue with poverty, which is the lack of cash. There is recent polling that says that 60 percent of Americans, including 42 percent of Republicans, support some sort of guaranteed income. So, I think there is some room there to grow. And with that, let me thank Reid Hoffman and Katherine Newman for their insightful comments and terrific work on this Commission. And let me express my gratitude to the Academy. As we think about next steps, and as Provost Newman mentioned, we know what to do. So what are we each going to do today so that fifty years from now, we have all the great things called for in this report: like redesigning safety nets, adopting inclusionary zoning policies, extending benefits to the folks who have been denied help, expanding broadband connectivity, creating a training and financing program to assist working-class Americans, etc. We know we can’t do everything today, but that is not an excuse for doing nothing.
© 2024 by Michael D. Tubbs, Katherine S. Newman, and Reid G. Hoffman, respectively
Learn more about the Commission on Reimagining Our Economy and its work here.