0:04

Hello, and welcome to Stephanomics, the podcast

0:07

that brings the global economy to you. Well.

0:14

Last week we talked about whether a country could ever

0:16

have too many educated workers.

0:19

Today we're asking how the US

0:21

should go about fixing the opposite problem,

0:24

having far too little high quality education

0:26

happening in low income communities, where

0:29

skills and education might be the only

0:31

ticket to a decent job. The

0:33

task is complicated by the fact that in the

0:35

US, the individual states provide

0:37

the lion's share of the funding for schools

0:39

and have a lot of influence. In a minute,

0:42

I'll have a chat with an expert in US

0:44

education policy from the Economic Policy

0:46

Institute in Washington, d C. About

0:49

how exactly you tackle the inequalities

0:51

that are built deep into the US education

0:53

system. But first, our US

0:56

Economy reporter Craig Torres has

0:58

gone back to school in a touched a corner

1:00

of western Maryland. This

1:12

is Gary Bay. She's the third grade teacher. Welcome

1:15

to Hi. How are

1:17

you organized chaos?

1:19

Welcome? This is inside recess. How are you we

1:21

are? We're getting the tank ready for tomorrow.

1:24

We're gonna be standing up for our trout in the Pastorge. They're

1:26

great, It's gonna raise

1:28

trouts, some rocklashers.

1:31

How's it down? Probably

1:33

the queen as trash every did see

1:36

you have never thought there'd be a line of children

1:39

that want are you? That's

1:41

school principal Dana McCauley and one

1:43

of her teachers at Crellin Elementary School

1:46

in western Maryland. The

1:48

school sits on the edge of a former Appalachian

1:50

coal mining village of the same name. Many

1:54

families struggle here. In fact,

1:56

more than half of mccaulay's students received

1:59

a free or subsidized meal. It

2:02

is classrooms like this one we're widening.

2:04

Inequality in the US increases,

2:07

or maybe finally begins to narrow.

2:10

The US labor market is demanding more

2:12

high level skills from the workforce, the

2:15

types that students begin to build in

2:17

high school. The basic foundation

2:19

is built in elementary schools like this one.

2:27

All rights researchers

2:35

continue to find that achievement gaps

2:37

between well off students and poor

2:39

students have failed to close,

2:42

despite decades of work to fix the problem.

2:46

One big reason is that education

2:48

in the US is mainly financed

2:50

with state and local budgets, and

2:53

local budgets are often tied to local

2:55

real estate taxes, so

2:57

the more financially challenged a county

2:59

is, the more constrained its funds.

3:03

The result is you often see impoverished

3:05

school systems producing impoverished

3:07

adults. The lack

3:09

of resources for education and poorer

3:12

states has felt well beyond the school

3:14

gates. Here's

3:16

Bruce Baker, professor at Rutgers

3:18

University Graduate School of Education.

3:22

It takes money to provide

3:24

quality services to two kids,

3:26

and schooling is human resource intensive.

3:29

You have to be able to hire and retain

3:32

enough good people with the right qualification

3:34

to get the job done. In an

3:37

affluent community, it's an easier job

3:39

to get done. You've got parents and families

3:41

that are putting additional resources into

3:43

their own kids outside of school, and

3:45

you get kids that are coming to see a better fed, better

3:47

prepared The

3:52

state of Maryland is considering a reform

3:55

that would attack this problem head on. William

3:58

Kerwin is a maryland Ed cat with

4:00

long experience. He led the

4:02

team that wrote the plan. He

4:05

told me the state has to act now, either

4:08

it stops widening economic disparities

4:11

or becomes two societies. Maryland

4:15

is one of the richer u S states, Yet

4:18

his report found that four out of every ten

4:20

public schools in the state get at least fifty

4:23

of their students from low income families.

4:26

Test scores are starting to lag, with a wide

4:29

performance gap between low income and

4:31

well off students. The

4:34

plan calls for an increase in state and

4:36

local spending that rises to more

4:38

than three billion a year by The

4:42

goal is to raise standards and teacher

4:44

pay and provide educators such

4:46

as Macaulay with more support. It's

4:54

not it's not that people don't care about the school system.

4:56

That's not it. It's it's a

4:58

matter of where it is on the list of prior you

5:00

know. Yeah, And honestly I think too

5:03

that. Seven West, a former teacher

5:05

who now works for the Educators Union,

5:08

we had a drink at a popular local restaurant

5:11

in the county and spoke about the types of

5:13

challenges the Kerwin Plan would address

5:15

in rural school districts like this one.

5:18

Themediate house on income is pretty low. There's

5:21

a significant problem here with readiness.

5:28

This area is also dealing with pretty

5:30

profound effects of the ovoid crisis

5:34

UM and more and more pre

5:37

K programs are are We're seeing

5:40

students come in with very

5:43

very acute needs. What Kerwin understands

5:45

and tries to address is that children

5:48

from troubled family situations

5:50

or from poverty are at risk

5:52

of being vulnerable adults if both their

5:54

educational and social needs aren't

5:56

dealt with. Now coming

5:59

to this school as a minder that income

6:01

inequality in the US is increasingly

6:03

geographic. Suburbs

6:05

and cities are getting richer while

6:08

rural areas are getting poor. Garrett

6:11

County, where Krellin is located, a

6:13

scene declining enrollment in its school

6:15

system. Residents told

6:17

me this is partly due to families finding

6:20

better opportunities elsewhere. The

6:23

future of the workforce in Garrett County

6:25

is in the classrooms today. I

6:27

asked Evan West if better education

6:30

would improve economic development and

6:32

employment here. It's

6:34

probably the biggest part of the answer.

6:38

It's the most important piece of a larger

6:40

puzzle. Okay, And

6:50

the Kerwin proposal will be a big fight

6:52

in the Maryland legislature in the

6:55

session which started in January. Nobody

6:58

is sure how it is going to turn out. Even

7:02

county officials here are grappling

7:04

with the idea of how they're going to pay for their

7:06

share of the reform, even

7:08

though they would also get more state money.

7:10

With the plan. I

7:13

spoke to Paul Edwards. His

7:15

family has been in this county for four generations.

7:19

He is a county commissioner and head

7:21

of secondary education in Garrett County.

7:24

He has also been a teacher and a coach. He

7:27

understands the challenges the school system

7:29

is facing now, from the need for

7:31

higher pay to recruit teachers to

7:34

opioid affected kids. Still,

7:37

America's county based education

7:39

financing system presents challenges.

7:42

Carlin is going to be very difficult fund

7:44

for us. You know, we're

7:46

looking at, you know, thirteen

7:49

million additional dollars we've got to find locally

7:51

to pay for Carwin. That's not jump change

7:54

for us because

8:02

our snowy creek. Yeah,

8:04

and remember where do we come down here

8:06

to find crayfish?

8:10

Back at Crawlin Elementary, I take

8:12

a walk with Dana mcaulay around

8:15

the farm that's behind our school. There

8:18

are chickens, a greenhouse, orchard,

8:22

and even a pregnant you during my visit.

8:26

As her kids leave her, she wants

8:28

them to have options to satisfy

8:30

the curiosity that she's built here

8:32

in the classroom. I want them

8:34

to have choices. So when

8:36

I look at um academics.

8:40

Um, I want them to have choices in

8:42

the classes that they take. If they if

8:44

they choose not to take it, it's not going to be

8:46

because they can't because

8:49

they don't have the ability. Do you know what I mean? Like, I want

8:51

them to have choices, and I want them to be confident, and

8:53

I want them to feel just

8:55

securing themselves. This

9:00

is where we found our bears. Huh, I

9:02

found bears here. That bears were back here.

9:04

Yes, were

9:07

they living, They

9:10

were just bound. They were passing through Bloomberg

9:13

News. I'm Craig Trust. So

9:23

that's the view from Western Maryland.

9:26

On the phone. Now, I have Elaine Weiss,

9:29

an education policy specialist

9:31

from the Washington think tank, the Economic Policy

9:33

Institute. Elaine, you've

9:35

led a campaign in the past to call attention

9:38

to many of the obstacles in the way of high

9:40

quality education in low income

9:42

communities that we we heard about in

9:44

that piece from from Craig Torres. Um.

9:47

I mean we heard there that the state is

9:49

trying to direct more money into

9:51

those low income schools

9:53

to try and increase outcomes.

9:56

But you know, tell us, what what do we know about

9:58

what works in this area? Yeah? I mean, is

10:00

money really the answer, or there deeper

10:03

changes you have to make. So the

10:05

short answer is that we absolutely

10:07

do know how to improve educational

10:09

outcomes in poorly resourced districts,

10:12

and it starts with the reality that all

10:15

kids need the same things in order

10:17

to succeed in school and be prepared

10:20

for life, whether higher education or

10:22

the start of a career. And we know

10:24

this because Maslow told

10:26

us very clearly that

10:29

everybody needs to start with the basics

10:31

safety, security, food, and shelter. Kids

10:34

in particular really need the feeling

10:36

of being loved and being connected to

10:38

other people, in particular key

10:40

adults in their lives. And once they

10:43

have those things, they can take advantage

10:45

of the kinds of things, stimulation,

10:47

and opportunities to explore and learn

10:50

that schools offer. The problem,

10:52

as Crens report illustrated very

10:54

starkly, is that a growing share

10:56

of students in our country's public schools

10:59

don't have access to even those basics,

11:01

and they are therefore not able

11:03

to benefit from what our teachers

11:05

and our schools have to offer. And

11:08

due to how we fund and structure our

11:10

public schools, the opportunities

11:12

in those schools are also vastly disparate,

11:15

which means that they are compounding the

11:17

inequalities that the children in those schools

11:19

experience in their daily lives. In

11:22

the book that I published this past year, we

11:24

explored a dozen very different

11:27

communities across the country where

11:29

schools and communities have built partnerships

11:32

to ensure that all children have

11:34

those basics and that schools

11:36

serving disadvantage students have the

11:38

tools and resources to provide

11:40

those kind of stimulating, enriching opportunities.

11:44

And I shall tell you, those districts are bucking

11:46

the trend. A lot of people listening

11:48

will feel like it will be amazed that

11:51

that this is still such a big problem,

11:53

that this debate is still ongoing

11:55

when you consider that when you can,

11:58

and not least because actually politicians

12:00

on both sides, even in this sort of

12:02

partisan times, febrile partisan

12:05

times, you've had Republicans

12:09

and Democrats very firmly

12:11

in favor of changing the education

12:13

system, putting more money into it. I mean, of course, President

12:16

Bush, you know there's no child left behind policy.

12:18

I mean, you can debate the details

12:20

of it, but there has been quite a sort of bipartisan

12:22

consensus in favor of improving education.

12:25

And what's been what's

12:28

what's been standing in the way of the kind

12:30

of change that you're talking about. I mean, does it still

12:32

come down to differences about how to do it

12:35

or has there just been a lack of desire to put money

12:37

into it? It's both, you know. So

12:39

you talk about these decades we've spent people

12:42

being education governors and education

12:44

presidents. Throughout those decades, we

12:46

have systematically put less and less money

12:49

into our schools. So there's the first irony

12:51

in all of this. So that has not happened.

12:54

And the second piece is that we have completely

12:57

ignored and even dismissed the reality

12:59

that poverty and inequity are at the heart

13:01

of the problem, and we have been ironically

13:05

and wrongly fixated on these

13:08

narrow little things we could do, how

13:10

we run schools, who's the head of a school, what kind

13:12

of standards we have in a school, while

13:15

totally ignoring the reality that a

13:17

growing number of our kids come

13:19

to school so ill prepared

13:21

to learn and so unequipped

13:23

to deal with the daily stresses that they

13:25

live in that they can't possibly learn effectively.

13:29

What I am hopeful about is that that has

13:31

really turned around in the last five years

13:34

um and there is growing recognition and

13:36

even a call to pay a lot

13:38

of attention to the role up poverty and inequality

13:40

are playing to try to enact policies

13:43

that counter those forces and

13:45

put in place the kind of

13:48

collaborative, whole child focused

13:50

approaches to education. UM.

13:52

And I would say that the kind of education

13:55

martial plans that two

13:57

of our candidates, Bernie Sanders and Elizabeth

14:00

and put forth would go a

14:02

huge way toward putting us where

14:04

we need to be and represent I

14:06

think a huge growing public recognition

14:09

that we have been going down totally the

14:11

wrong path, um, and that what we're calling

14:13

education reform in the past decades is

14:15

really in the wrong direction. Well, it's interesting.

14:18

I was going to, of course ask you finally about

14:20

how whether you thought there was a prospect for

14:23

for real change in this from

14:26

an election result in November and the

14:28

presidential election, And you've mentioned that

14:31

Bernie Sounders and as Witheth Warren both have very

14:34

dramatic education proposals. I guess the

14:36

risk is that it does become

14:38

highly politicized and whatever they do

14:42

will get reversed by the next

14:44

president. I mean another point I guess also people

14:46

sometimes make about the Democrat side is that,

14:48

especially when it comes to an election, they're a bit

14:50

too unwilling to take on teachers

14:53

and in trying to sort of improve the

14:56

way that teachers can contribute to outcomes.

14:58

But is that is that a is that a false debate? That

15:00

is a very false debate. And it's interesting

15:03

that so called taking on

15:05

teachers should be the problem in education.

15:08

Imagine if we needed to, which we

15:10

do in this country, improve

15:12

our medical system, and we said, what we really

15:14

need to do is take on doctors, they're

15:16

the problem. I think we could all agree

15:19

that that is not only ridiculous

15:21

but pretty counterproductive. But that's

15:23

exactly the way we've been dealing with education,

15:26

as if teachers were the problem instead

15:28

of the solution. Teachers have been

15:30

telling us for ten twenty thirty years

15:33

that they are seeing kids walk in the door every

15:35

day, you know, not eating um,

15:38

not sleeping, you know, stressed

15:40

out from violence that's going on in dysfunction

15:42

in their communities, and that we all need to

15:45

pay attention to this and help equip

15:47

schools, but also stop these

15:49

realities from being from dominating

15:51

children's lives if we really want them to

15:54

succeed. And obviously that's true, So

15:57

I would say the biggest problem is

15:59

not taking on teach chairs, but listening

16:01

to teachers. Um and I

16:03

think anyone who thinks that fighting teachers

16:05

to improve schools, let's

16:08

take a step back and think how ridiculous that

16:10

really is. We

16:12

did hear in that piece that they

16:15

are trying these poorer communities. At least

16:17

this one program is trying to look at

16:19

everything that's affecting a child's outcome,

16:21

not just what happens

16:24

in school. So maybe things will

16:26

change. Elaine Wise from

16:28

the Economy Economic Policy Institute, thanks very

16:31

much for joining us. Thank you so much. It was a pleasure

16:33

to be here. Thank you so much for covering this. Elaine

16:43

made me smile there talking about how crazy

16:46

it would be to take on doctors because

16:48

in Britain, politicians and everyone else has

16:50

been been taking on doctors

16:52

for years now, ever since they opposed

16:55

the creation of the National Health Service.

16:57

Anyway, moving on, we

16:59

are going to talk about trade. But

17:02

before you grown, given how much

17:04

we've talked about trade in the past, I should say

17:06

it might be the last time in a while, because

17:08

it's this week that the US and

17:11

China have been signing the deal that

17:13

makes US China trade wars

17:15

a thing of the past, or at least

17:18

maybe puts off more trade

17:20

wars until after the presidential

17:22

election in November. We

17:24

must talk to Sean Donn and our senior trade

17:27

reporter to ask him whether that's really

17:29

the case. Sean, I should say this

17:32

signing ceremony was not timed

17:34

with Stephanomics in mind. So I'm

17:36

talking to you just as we're expecting

17:38

that ceremony to take

17:41

place. But we have a reasonable idea

17:43

of what's in the deal. Do you think it will

17:45

take trade wars out of the headlines

17:48

for at least the next twelve months

17:51

or are there still too many question marks? I

17:53

smiled quietly when you said

17:56

that in the in the intro there. I

17:58

I don't think this is the end of of

18:00

of the trade wars. And I think the reason for that

18:02

is, UH. It just leaves so

18:04

many unanswered questions and so many

18:06

big issues untackled, UH,

18:09

including possibly the biggest

18:11

one in not just

18:13

US economic relations with China, but China's

18:16

relations with the world. And that's the issue of

18:18

industrial subsidies and all

18:20

of those cheap loans, cheap electricity,

18:22

and all the other mechanisms

18:24

the Chinese have really used to underpin

18:29

that model of state capitalism

18:31

that has helped Chinese companies take

18:33

on the world in recent decades. This

18:36

is phase one that is gonna come, we

18:38

are told by the administration, in phase two.

18:41

No one expects a resolution to

18:43

Phase two until after the U S presidential

18:45

election, and there is always

18:47

the possibility in the meantime that

18:49

the Chinese could uh fail

18:52

to live up to their commitments. The Trump administration

18:54

could get grumpy about that, and we could see

18:57

more tariffs. And then finally,

18:59

there's just one big reality that is

19:01

going to be with us throughout,

19:04

and that is that there are still tariffs

19:06

on two thirds of imports

19:09

from China in place. Those

19:11

aren't going away, The economic impact of those

19:13

isn't going away, the business reality of those

19:16

isn't going away. So the trade wars are

19:18

here. Maybe the better way to think about it

19:21

is we're getting a truce um,

19:23

but this is a trade

19:25

wars are kind of the new normal. So

19:28

just to digg into that a bit, because obviously

19:31

this is the most relevance

19:33

this is going to have, at least in the US, is going to be

19:35

how it plays into the presidential election.

19:38

We've talked before about whether the President

19:41

would feel comfortable saying that he'd

19:43

he'd done the great deal and then

19:45

leave himself open to being criticized by

19:47

Democrats about the holes in that deal or

19:50

China's failure to comply with

19:52

what was in it? And what are the what

19:55

are the things that if you were in the Democrats

19:57

side and you were looking for tangible

19:59

things you can point to to say they're not complying

20:02

with this deal or or you

20:04

know, immediate short term weaknesses in

20:06

it. Um what's

20:08

the kind of thing that you're likely to hear. Well,

20:11

we're already starting to hear some of that from the Democrats.

20:14

Chuck Schumer, the top Democrat in the Senate,

20:16

sent a letter to President Trump on Tuesday

20:19

and and he said, all

20:21

of the things that aren't in this deal, and he pointed

20:23

to industrial subsidies, but also two

20:25

issues like Chinese cyber theft, the

20:27

hacking of US companies and US government

20:30

agencies by Chinese hackers.

20:32

Uh, that is not addressed in this deal. You

20:35

pointed to all of those things and said, you

20:37

know, President Trump, you're giving in

20:39

too easy. You're showing the Chinese

20:42

that American negotiators can

20:44

be steam rolled. And that sets a dangerous

20:46

precedent for the future. I think we're gonna

20:48

hear a lot more of that from the Democrats,

20:50

uh, in the future. And then we're still hearing

20:53

criticism from the Democrats on the tariffs.

20:55

You know, the candidates for

20:58

president have into

21:00

to the tariffs

21:03

and the economic damage to

21:05

farmers and the manufacturers

21:07

that's come from them, and and and said,

21:10

you know, we need to find a better way, although

21:12

they haven't necessarily offered a better way. It's

21:14

interesting because you say, uh,

21:17

we've talked in the past about why

21:20

the tariffs, that the additional tariffs

21:22

that had originally been threatened for

21:25

the end of last year weren't imposed.

21:27

And I think our economists pointed out that one big

21:29

reason was it was going to they were going to affect a lot

21:31

more US voters and industries

21:34

than the previous tariffs. But just to be clear,

21:36

if you're a worker

21:38

or a company that has seen

21:41

a negative impact like the ones you visited

21:43

last last summer, the manufacturing companies

21:45

from the trade wars, is

21:47

there anything in this deal that is going to

21:49

make your life better? No,

21:53

mhm. I mean that

21:55

that is because these tariffs remain in

21:57

place, and and that is one of the areas

22:00

for you know where Donald Trump

22:03

is still open to criticism. That said,

22:05

Donald Trump is remarkably

22:08

immune, at least in

22:10

his behavior, to to criticism.

22:12

He has already dubbed this a big, beautiful

22:15

monster of a deal. And

22:17

like US m c A, which

22:19

was the rebranded NAFTA, he

22:22

is hailing this as one of his big

22:24

economic accomplishments. Uh, and

22:27

he just dismisses any criticism of it. Although

22:29

he does. You do get the sense when you read the tweets people

22:31

can get under his skin, uh and

22:34

maybe force him to do or say

22:36

things that he would not otherwise have done.

22:39

But I suspect we

22:41

might hear more about trade in the next few months,

22:43

if only because a new front might

22:45

be opening with Europe. We've got just in

22:48

time for the signing of this deal. We have

22:50

the European Chief Trade negotiator

22:53

visiting his counterparts

22:55

in Washington this week, and maybe that will

22:57

produce some fireworks. We'll see. But

22:59

I'm not going to inflict that on

23:01

the listener again, and I'm going to let you, Shawn go

23:03

off to that ceremony. Thank you very much, Thanks

23:06

for thanks

23:12

for listening to Stephanomics. We'll be back next week

23:14

with a special episode from the World Economic

23:16

Forum in Davos, Switzerland. In

23:19

the meantime, you can find us on the Bloomberg Terminal,

23:21

website, app, or wherever you get

23:23

your podcasts, and we would love it if you

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took the time to rate and review our show.

23:28

For more news and analysis from Bloomberg Economics

23:30

during the week, follow at Economics

23:32

on Twitter, or you can also find me on

23:35

at my Stephanomics. The story

23:37

in this episode was reported and written by Craig

23:39

Torres. It was produced by Magnus

23:41

Hendrickson and edited by Anita Sharp

23:44

and Scott Lambman, who is also the executive

23:46

producer of Stephanomics Special

23:48

Thanks to Elaine Weisse and Sean Donnan.

23:51

Francesco Levy is the head of Bloomberg

23:53

Podcast

24:01

in the