Investing in kids early pays off

July 19, 2005|By SUSAN REIMER

AN ECONOMIST and a preschool teacher might not have much to say to each other at a cocktail party, but they seem to have found uncommon common ground in the notion of toddlers as the target of economic development.

Maryland's Ready At Five, a public-private partnership committed to ensuring that all children enter school prepared to succeed, has hitched its wagon to the idea that it makes more economic sense to invest in children before the ravages of disadvantage defeat them than it does to lure an auto plant or a software manufacturer to the state.

"We have never really framed it that way before," said Ready At Five executive director Louise Corwin.

"There were a lot of a-ha moments."

The occasion was a recent symposium that featured economist Art Rolnick, senior vice president and director of research of the Federal Reserve Bank of Minneapolis.

Rolnick made the case that traditional economic development - a new factory or a new business enterprise - is nothing but a zero-sum game. One community wins and another one loses, and state and local governments give away millions in financial incentives to a company that was probably going to move there anyway for other reasons.

"Economic development does nothing but make a lot of CEOs rich," Rolnick said in an interview.

But there is a big news conference or a big ribbon-cutting and headlines in the newspaper that announce 5,000 new jobs. That's sexy stuff for politicians and business leaders.

The idea of investing in the early education of disadvantaged kids so they are prepared to succeed in school from the first day of kindergarten - and waiting more than a decade to see results - doesn't have the same appeal.

But if these children, through early education and the mentoring of their parents, are prepared for school, it means they are less likely to be placed in already overburdened special education classes.

It also means that public schools will run better because there will be fewer students who are frustrated and angry because they are failing.

And, years later, these kids will have a shot at finishing high school and joining the work force and stay out of the criminal justice system.

"I think it is very difficult to convince a politician of this," said Rolnick. "A $110 million office tower sure looks like economic development to them.

"How can you argue with a high-rise? It is here, it is now and it is tangible."

There has always been a moral argument to invest in little children. Rolnick makes an economic argument.

He cites studies that have followed kids for 30 years and found that the financial return to a community of a modest initial investment in early childhood education can be quantified at something like 16 percent.

That, he says, makes more sense than two states spending millions in a fight over a factory that was always going to land somewhere anyway.

Rolnick's theory has the endorsement of none other than Nobel Prize-winning economist James J. Heckman of the University of Chicago, considered an expert on job training.

His conclusion is that job training doesn't work. It is too late to make up for 17 years of neglect. Adolescent dropouts are not motivated to learn or achieve after years of frustration and failure.

"It's nuts," he said in The Region, a publication of the Federal Reserve Bank of Minneapolis.

Heckman said that it makes sense to go where the returns are the highest by investing in the education of disadvantaged young children.

He said that economists have to change the way they think about the development of human capital. GEDs and job training aren't getting it done.

Skills learned early make it easier for children to learn more skills later, Heckman has shown in his research. Job training is only successful among people who have the skills to get the job in the first place.

During his appearance at the Baltimore symposium earlier this month, Rolnick outlined a plan for intervening in the life of disadvantaged children immediately after birth by offering the child a place in an educational environment at the age of 3 and mentoring the parents until then.

There would be incentives for parents to stay involved, and there would be incentives for schools and programs that work, and it would be paid for by an endowment of public and private funds that might amount to less than what communities pay for a new stadium.

"Forget the moral stuff if you want," said Rolnick. "Forget the feel-good stuff.

"This is better for the economy."

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