Reimagining the Economy, an initiative based at the Kennedy School’s Malcolm Wiener Center for Social Policy, launched in October with an event that combined examples of the project’s central pillars: asking deep questions about how an economy can serve everyone and expanding the conversation to include practitioners and other academic disciplines beyond economics.
“What we want is … an economy that is at once productive and inclusive,” said Dani Rodrik, the Ford Foundation Professor of International Political Economy. Rodrik is co-director of the project with Gordon Hanson, the Peter Wertheim Professor of Urban Policy, and both have been longtime analysts of the shortcomings of markets and globalization in America and across the world.
Speaking at the launch, HKS Dean Doug Elmendorf underscored the project’s vital central focus. “Too many people in this country and others are not sharing in the overall gains in well-being. They are on the outside of successful parts of our economy. Looking in, they see other people's economic conditions improving, but not their own,” Elmendorf said in his opening remarks. “And this divide between those who are on the inside and those who are on the outside, watching, cuts across our economy and society in lots of different ways.”
The project is supported by a $7.5 million grant from the William and Flora Hewlett Foundation. It will also be supported by the Kennedy School’s Taubman Center for State and Local Government and Center for International Development. It is one of four related academic research initiatives being funded by Hewlett; the other three are at Howard University, MIT, and Johns Hopkins University. A fifth grant from the Omidyar Network for a similar project at the Santa Fe Institute brings the total committed by the two foundations to more than $40 million.
The Reimagining the Economy project intends to build on and integrate three different areas, Rodrik said: studying the work already done by practitioners and policymakers; collecting qualitative and quantitative data about local economic development practices in the United States and around the world in order to build a systematic basis of knowledge; and looking to other disciplines—political theory, sociology, and history, for example—for guidance.
The launch event was an opportunity to draw on that multidisciplinary environment that Harvard can create, both through its own experts and through its convening power.
Rodrik was joined on a panel by Danielle Allen, the James Bryant Conant University Professor and director of the Edmond and Lily Safra Center for Ethics, and Edward Glaeser, the Fred and Eleanor Glimp Professor of Economics and the chairman of the Department of Economics at Harvard University. Their discussion dove deeply into the questions of what has gone wrong in the economy and, even more fundamentally, what and who an economy should serve.
Glaeser presented a range of “symptoms” of America’s economic dysfunction, including the decline in intergenerational mobility, the exorbitant cost of housing in many of the most economically vibrant parts of the country, and the high levels of joblessness among prime-age men in the more economically depressed regions. For Glaeser, the underlying problem is rooted in “institutional baggage that needs to change before any public policy can be implemented”: an economic system that maintains barriers that favors insiders through things such as onerous professional licensing rules and severe restrictions on new housing.
Allen raised a fundamental question about the framing of economic development challenges. The goal of an economy is to promote human flourishing and, according to Allen, the best way to do that is by not only focusing on people’s private lives, but their public lives as well. With that in mind, she explained, the economy needs to be set up to empower participants in their communities and workplaces and allow them to be involved in decision-making and integrated into production processes. In this context, Allen highlighted that economics’ primary concern with efficiency and redistribution often results in a short-sighted focus on taxes as the primary policy instrument for improving welfare.
On a second panel that examined inequality from the perspective of policy practice and politics, Hanson was joined by U.S. Representative Ro Khanna and Heather Boushey, a member of the White House’s Council of Economic Advisers.
Khanna, a California Democrat, said policymakers need to return to the fundamental question of what purpose the economy serves. The government has not done an adequate job of helping American communities adjust to de-industrialization, he said, which has had devastating impacts on American citizens and has manifested in high rates of divorce, substance abuse, and suicide.
Boushey noted that the United States had fallen behind because policymakers have not taken its development problems as seriously as those in other countries have, and that the productivity gains made since the 1970s have failed to go to workers. That, she said, has driven the Biden administration’s economic vision: building an economy that empowers workers; enhancing productive capacity so that goods can be made and built in America; making products and services such as health care or childcare affordable for everyday Americans; ensuring American industry is less concentrated and more competitive on the global stage by building strong supply chains; and prioritizing work and not wealth.
While the project has just started, it has already begun collecting and sharing practitioner knowledge through a series of podcasts. Hanson said collaboration with policymakers would be vital to the project’s success, and he assured the audience that the project would be producing much more work in the near future. “There's going to be a lot coming down the line,” he said.
Photographs by Martha Stewart; Banner image from left: Dani Rodrik, Danielle Allen, and Edward Glaeser