My reflections on human capital in the workplace flow from my work with SUNY’s impressive research universities, including Cornell (affiliated through complex historical and financial ties) and our four medical centers. I was then—and continue to be—highly impressed by the breathtaking scientific and technological discoveries emerging from these places, which underscore how critical New York’s—and the nation’s—universities are in securing America’s global leadership in science and technology. Further, I saw firsthand how these discoveries rapidly morphed into new products and industries, a key determinant of how much human capital is generated in the workplace: SUNY campuses gave America and the world magnetic resonance imaging (MRI) scanners; the bar code; the latest generation of computer chips; “virtual” colonoscopies; and three-dimensional printing, among countless other transformational breakthroughs. But all of the undeniable and quite awe-inspiring output of these places depended very heavily, if not in many cases exclusively, on financial support from the federal and state governments. I spent a fair amount of time and ingenuity in helping our campuses gain that support. My years toiling in SUNY’s research vineyards strongly shaped my ideas in chapter 6.
Although my desire to write this book owes a great deal to my experience in Albany, it is also grounded in a deeply held conviction that has influenced all my work. Among the things I have been most certain of my entire adult life is that the United States truly is an exceptional country. Earlier in my adulthood I had plenty of company in this belief, at a time when this notion of American exceptionalism was celebrated across our nation’s partisan and ideological spectrum. Today, however, the term has fallen into some disrepute, especially among America’s cosmopolitan and intellectual elites. How dare we, with all our faults and shortcomings, hold ourselves apart and think of our country as better than any other?
Well, sorry, I still firmly hold on to my belief in this country’s exceptionalism. Even so, it does require that I give some thought to what it is, exactly, that makes us exceptional. It begins, of course, with our founding documents, notably the Declaration of Independence, which is still the most idealistic civic charter ever written, an ongoing inspiration for freedom fighters everywhere. Certainly, being the world’s oldest true democracy—at least among nations of any size—is part of the story, as is the fervent attachment of Americans to untrammeled personal freedom and individual initiative. Then there is our social egalitarianism: despite the existence at all times of great disparities of income and wealth in our midst, Americans really do believe that “all men are created equal”; that no one is intrinsically any better than anyone else; that every newborn American child should have the same shot at opportunity and success.
But the inspired civic architecture and individualistic and egalitarian values of the United States have not served just as the country’s backdrop. Americans long ago realized that, for the country to remain “the promised land” (using an enduring popular metaphor), the United States needed to sustain a robust set of institutions and practices to keep its people prosperous and free; in other words, to make extraordinary—by the standards of every age—investments in the human capital of their children and fellow citizens, and to embrace human capital from abroad. That is the real basis of American exceptionalism—and the subject of this book.
I want to thank all those who made the completion of this book possible. First, I want to express my appreciation for my publisher, Encounter Books, and its staff, both for their initial confidence in my conception of the book and for their unwavering help as the book was being written and produced.
I owe an enormous debt of gratitude to the Manhattan Institute, which has provided critical support for this book, as it has for many of my previous ones. I want especially to thank its president, Larry Mone, for his ongoing faith in the project; its book director, Bernadette Serton, for her indispensable guidance throughout the long journey from the germ of an idea to finished manuscript, and my research assistant, Yevgeniy Feyman, who helped in the writing and supplied some of the book’s key data.
I also want to acknowledge the many people who provided the inspiration and evidence I needed to shape my thinking on what has made the United States a smart society, from my former colleagues in SUNY System Administration to the many experts on American human capital—both scholars and practitioners—upon whose ideas, analyses, and experiences the book’s arguments are based.
How America Became the World’s Smartest Society—And How It Can Stay That Way
HUMAN CAPITAL AND THE SMART SOCIETY
The United States has, over its two-century-plus life, become far and away the world’s most successful society, not only in overall economic well-being, but also in social harmony and individual happiness. As of the writing of this book, the country has emerged from the biggest economic downturn since the Great Depression, a situation that shook many Americans’ deeply ingrained faith in their country’s superiority and dampened their optimism concerning their own and their children’s prospects.1 With all its recent troubles, the United States nevertheless remains the richest, freest, most socially stable, and—yes—happiest nation on the face of the earth. This is not just an empty assertion; it can be documented empirically with any number of positive statistics. The United States still has the highest gross domestic product (GDP) per capita of any country over 10 million in population,2 and in the recently published and well-respected World Happiness Report, the United States scored as the tenth happiest out of 128 nations surveyed—and was the only populous country in the top ten (alongside places like Denmark, Finland, and Switzerland).3
America’s economic and social success rests in no small part on an enviable bedrock of centuries-old political, social, and economic institutions, all of which endure. Ever since the country won its independence from Great Britain in 1783, the United States has been a free-market democracy with secure personal freedoms and property rights, and that is not about to change. In addition, the country has the good fortune to possess abundant natural resources across its vast continental land mass.
Even so, the real secret to America’s phenomenal success—and the subject of this book—is its extraordinarily high level of “human capital.” What, exactly, is human capital? Put most succinctly, human capital refers to the sum of acquired personal abilities that lead any individual anywhere to be economically and socially successful. From that it follows that the greater the sum of human capital possessed by a country’s adult citizens, the more successful that country will be. Thanks to far-sighted private and public investments made in the United States throughout the nineteenth and twentieth centuries, the vast majority of Americans—across lines of class, gender, religion, national origin, even race—long ago attained levels of human capital higher than those found in any other nation. As Harvard economists Claudia Goldin and Lawrence Katz note:
Investment in physical capital became vital to a nation’s economic growth with the onset of the Industrial Revolution in the nineteenth century. But the path to ongoing economic success for nations and individuals eventually became investment in