Arthur Brooks: Escaping poverty through entrepreneurship

0:00:00: Alright. Good afternoon everyone. Welcome to today's policy lecture. Policy talks lecture which is co-sponsored by the The Gerald R. Ford School of Public Policy and Poverty Solutions. My name is Luke Shaefer. I direct Poverty Solutions. It's a university-wide initiative of the University of Michigan that seeks to partner with communities and policy makers to find new ways to prevent and alleviate poverty. Tomorrow will mark our first birthday so we'll be having some cake and stuff. And we think there's no more fitting way to celebrate one year into poverty solution than with a speaker who offers an important voice in our national discussion on how to confront poverty. And we appreciate the Ford School's willingness to partner with us through their outstanding policy talks series.

0:00:50: Dr. Arthur Brooks is President and the Beth and Ravenel Curry Scholar in Free Enterprise at the American Enterprise Institute. Before joining the Institute, Dr. Brooks was a Louis A. Bantle Professor of Business and Government at Syracuse University, where he taught Economics and Social Entrepreneurship. And before that, he spent 12 years as a classical musician in the United States and Spain. So hopefully we can talk a little bit about that in the Q&A. Dr. Brooks is a contributing opinion writer for the New York Times and a bestselling author of 11 books on topics including the role of government, economic opportunity, happiness and the morality of the free enterprise.

0:01:31: His latest book, the New York Times bestseller is "The Conservative Heart: How to Build a Fairer, Happier, and More Prosperous America". He's also published dozens of academic journal articles in the textbook "Social Entrepreneurship". Dr. Brooks has a PhD and a Masters of Philosophy in policy analysis from the Pardee RAND Graduate School. He's been married to his wife Esther for 25 years and they have three children. My intel from just a minute ago is that they're teenagers, another thing to talk about I guess. They currently live in Maryland.

0:02:06: Following his remarks, Dr. Brooks will take questions first in a conversation with me and then from the audience. So beginning at 4:40, staff will start collecting question cards. For those of you watching online please post your questions via twitter using #policytalks. Ford School Professor Natasha Pilkauskas along with U of M students, Jesse Arm and Kate Blessing-Kawamura will facilitate the Q&A. One thing I admire about Arthur is his eagerness to engage others who hold a variety of views and perspectives. Such exchange is a core value of the University of Michigan. Just this week, President Schlissel echoed this sentiment saying, The university of Michigan, will quote, "Always be an unalienable forum for discovery, debate and discussion. A place where respect and disagreement are complementary, where each makes the other stronger and where we will all advocate for and learn from their confluence. Here at the Ford School and at Poverty Solutions, we seek to live in to this call in our teaching, research, and engagement". With that, please join me in welcoming Arthur Brooks to the University of Michigan.

[applause]

0:03:18: Thank you Luke. Thank you very much and thanks to all of you, it's wonderful to be here. It's an honor for me to be here at the Gerald Ford School. I'm the President of the American Enterprise Institute and Gerald Ford, the month he left office as President, joined AEI as a Senior Fellow, a position that he held until the month of his death as a matter of fact. He's somebody that's held in great reverence as a moderate voice, bringing people together in public policy, somebody who treated politics with great respect and it's a wonderful name to have on your school. Congratulations on that.

0:03:47: It's great to be here with my friend Mel Levitsky, who's been a professor here since we were colleagues together at the Maxwell School at Syracuse University. I've been looking forward to seeing Mel. We've corresponded by email over the past couple of years and now we're getting to... Tonight we'll have dinner together in person, it's wonderful. I'm going to talk to you today about entrepreneurship and poverty. These are actually for me, until relatively recently two completely disparate lines of research and thinking. I never wanted them to be, I wrote about entrepreneurship. It was my main area of scholarship when I was a professor.

0:04:22: Poverty was the thing I cared about the most. And I always wanted to find the way that those two things could come together but I was never able to do it. And I'm gonna tell you what my problem was and how I finally solved it and what I've learned. And if I do my job, I'm gonna tell you that what I learned about putting entrepreneurship together with poverty as a solution to poverty actually has given me solutions on how I personally can live a better life. And I'm gonna offer those solutions that I learned from people living in poverty to you, even though I'm assuming that no one here is actually poor.

0:04:57: So where do we start? I'm the President of this think tank in Washington DC And if there's one thing to know about what it means to be the President of a think tank, it's that you have to raise money all the time. It's a non-profit based entirely on philanthropy, we take not one dime from the government, we don't have any contracts, we sell nothing. We get all of our money from voluntary contributions and that means that for me I'm in the hunt all the time. Now the good thing about that... It's tough because I'm on the road a lot, but the good thing about that is, I meet unbelievably successful entrepreneurs and they're very interesting people.

0:05:33: Now one of the things I've taken to do is, I ask them to tell me in their own words their story of success. It's fascinating, it's anthropologically interesting. As a behavioral social scientists you always... 'Cause how they explain their own success, whether it's humble or egotistical and it's great actually. And I wanna to tell you the story that one of my donors recently told me. A very wealthy man, a billionaire told me about his secret to success, and it's gonna make a point that you'll see here in a second.

0:06:01: He said, "My secret to success is really a very simple story that started with an experience that I had when I was 12." He said he grew up in a little town in Kansas. And one day he was at the edge of town, there was an orchard relatively near his house on the edge of town. And he was looking up into this apple tree and it was full, it was August or September. And it was big, beautiful, red apples and they looked so delicious. And the farmer noticed that he was admiring the apples and came up to him, and said, "Kid, you like those apples?" And he said, "I said, 'Yeah.' He said, 'You want one?'" He said, "Yeah." He says, "I'll give it to you for a nickel." A nickel. It turns out his father had just given him his allowance. It was a nickel. And he pulled it out and he bought the apple. He said, "I was walking into town and I was shining it up on my shirt and a businessman comes walking up to me and he said, 'Hey, kid, that's a great looking apple. I'll give you a dime for it.'"

[chuckle]

0:06:55: "And I said, 'That's a 100% profit margin.' And my entrepreneurial career was born." He said, "I took my dime back out to the edge of town, I bought two apples and brought it back and I doubled my profit again." I said, "This is amazing. This is... " It was revelatory for him. So after school the next day, he went running out with his now 20 cents and got 40 cents. He said, "I started doing this everyday. By the end of two weeks I was taking my bike out and bringing a box of apples and then selling them to businessmen, doubling my money over and over again. Two years of this go by and I realize I can't take this thing to scale." He's 14 at this point which apparently is the driving age in Kansas. [chuckle] And he borrows his uncle's truck and takes it out to the edge of town and buys a truck load of apples and brings them in and it's this business. And he said, "This is my secret to success, in a nutshell. I doubled my money with apples, day after day. Week after week. Month after month. Year after year. And then my father died and left me with $100 million."

[laughter]

0:08:02: See, you weren't expecting that and I wasn't either.

[chuckle]

0:08:06: Why do I bring it up? 'Cause stories of entrepreneurship... You know in your heart, in America today, you kinda think that that's the real ending. Don't cha? There's more and more data coming out that show that fabulous riches, Horatio Alger stories are largely fiction anymore. And I don't want it to be true, I want them to be false. But you find the rags to riches stories, when you dig a little bit are actually kind of riches to riches stories. The average entrepreneur who is successful in this country, monetarily successful, financially successful starts in the upper middle class or lower upper class. That's just the truth. And if that's the truth, then we have a problem if we wanna pose entrepreneurship as the solution to poverty. We have to solve why it is that the avenues to entrepreneurial success don't appear to reach all the way down to the people at the very bottom of the economic pyramid. Why is that? And what can we do about it?

0:09:09: Now, I've been thinking about this problem for a long time, because as I said, I want it to be the case that you can offer entrepreneurial opportunities to everybody. I believe, I've dedicated my career to equal opportunity. That's what really moves my heart. And when I don't see equal opportunity, it's a problem. The heart of the American dream and the American experience is wrapped up in this mythology of entrepreneurship and so I have to figure out how to solve this. When you look at the data by the way, I mentioned just a minute ago, I made some assertions about the broken path, the inability to go from the bottom to the very top. But you look at it and it's very clear in the data that we see. The stories of Bill Gates and Steve Jobs. These are really stories of people that started in relative privilege and made it to the very top of the economic food chain. So what do we do?

0:10:08: I've puzzled about this for a long time. How do we solve this problem? Or maybe the entrepreneurial system really isn't the solution to poverty. That's possible, right? I don't wanna believe that because if that's that's the case, then the only way that we can solve poverty is by treating people in poverty as largely charity cases and solve it with the government. I got nothing against government solutions to poverty, but I don't want them to be the only solutions to poverty in a country that was based on the idea of individual initiative. We could do better than that. So in doing research on this, I kind of held this in my head. And, by the way, when I was teaching entrepreneurship, I had a complementary problem to this.

0:10:50: I was teaching at the Maxwell School of Citizenship and Public Affairs in Syracuse, but also in the Business School at Syracuse. And I had these MBA students in my social entrepreneurship class and they would always ask me this question, MBA students. They would say, "What's the secret to successful entrepreneurship? Do you know the secret to it? What's the kind of... " 'Cause I'm a behavioralist and so they would wanna know, what's the behavior, what are the personality characteristics? And so I actually dug into that at one point so I'd have an answer. What do all the successful entrepreneurs have in common? And one of the most interesting ways to look at this is to go to an organization that I admire a lot, called the Gallup Polling organization. We do a lot of work with them now at AEI.

0:11:29: And they have... Their best, the most important product is called the StrengthsFinder. You think of them as doing public opinion polling about how popular is the President. That's actually not how they make their money. They make most of their money from these products called the StrengthsFinder where you go into a big company and you survey everybody in the company to find out what they're really good at. You ask 200 or 300 kind of unrelated questions and then you use relatively sophisticated statistical tools to collate through that data and tell those people what they should be doing or they shouldn't be doing. Find your strengths, StrengthsFinder. Okay, it's a great tool. I recommend pay a couple of bucks and do it yourself. You'll learn something about yourself, it's really interesting.

0:12:08: Why do I bring it up, because I was looking at that StrengthsFinder data for the personality characteristics of entrepreneurs. And what I found was really discouraging, according to this only 2% of the population is naturally entrepreneurial. And only a quarter of them has the personality characteristics to be able to manage an organization of any reasonable size. Only one half of 1% of the population has the characteristics of an entrepreneur who can actually run anything. So when my students said "Do you know the secret to entrepreneurship?" My answer should be "Yes, I do and you don't have it."

[laughter]

0:12:47: That's not motivational, is it? So I dropped the whole thing. Okay, I've got these two complementary problems, poverty and entrepreneurship, I can't connect them. Entrepreneurship, it seems like something that's elusive to begin with, its not ubiquitous. That's not a very American story either, is it? And I went around and around on this for a long time. I came to AEI and I kept thinking about it, and by sheer happenstance I had an experience that finally solved my problem for me. About the connection between entrepreneurship and solutions to poverty. I was doing something else entirely, I was making a movie, or a documentary film, its coming out in the spring. Its called "The Pursuit" and it talks about happiness and about how people can build their lives, particularly people at the bottom. If it's any good you might hear about it, if it's not, you probably won't, I don't know yet quite frankly.

0:13:39: But when I was making this movie, I was looking for the most highly functional organizations in the world for pulling people up from poverty. For enabling people really to pull themselves up from poverty, 'cause that's the stories we really really like, right? Where we allow people to live their own dignity and build their own lives. So I was looking for examples and I as polling everybody I could possible find. Have you ever heard of good organization? I was in New York and I was in Mumbai and I was in Barcelona and I was just all over the place looking for these programs. The one that inspired me the most was in Houston, Texas. And it was called, "The Prison Entrepreneurship Program". You already know what it is, just based on the title of the thing. First I'm gonna tell you... Before I tell you about it, I'm gonna tell you why it exists.

0:14:28: And the reason that The Prison Entrepreneurship Program exists, is because of a problem I would like to recommend all you of you join me in worrying about and that's criminal justice reform in America. Okay now, if you go to Texas and this is typical of any place in the United States, you will find basically three pieces of interlocking data. We'll start nation wide. Today, on this very day there're 23 million people walking around in the United States who have been in prison for felony convictions. Alright, 23 million people. That's like the whole population of Taiwan walking around free. Now, it's not bad that they're free, you don't want a criminal justice system that locks people up and throws away the key. You want people to get out. You want most people to get out when they go to prison. And is that a large number or a small number? I don't know. You can decide for yourself whether or not we lock too many people up, that's not my question here. The problem is among those 23 million, statistic number two, is that they have a 70% unemployment rate, and three, they have a 50% likelihood of going back to prison within the first 24 months of getting out of prison.

0:15:35: That's a total disaster. I don't even care what your politics are, I don't care what my politics are. It's disaster for them, for their families, for their neighborhoods, for their communities and for you. Because you're living in a country that hasn't solved that problem. You have people walking around who can't work. They're literally, quite literally the most vulnerable people in our society today and are also so much of the periphery that we don't consider them to be unloved, we consider them to be unlovable. That has moral implications to it, it has practical implications and policy implications to it. It's a big issue.

0:16:15: Okay, why do I bring that up, because I want you to join me in thinking that's a big problem we have to solve. But back to Texas, the reason The Prison Entrepreneurship Program exist is because they're trying to find a way to solve this. They notice that the guys who get out of prison from the Texas state penitentiary system, don't find jobs, go back to their old neighborhoods, have nothing to do, commit crimes and go right back to prison. They said, Huh, how do you break that chain? Oh, I know. Find some way that they can make their own jobs.

0:16:45: You can't get a job, and the hypothesis was, they can't get a job because nobody wants to hire ex-cons. It's too dangerous, too scary, too uncertain, too unknown. Right? And there're lots of solutions to that that people are starting to propose. But they say Okay, if that's the working hypothesis then what we need to do is for them create their own jobs. How do we do that? Oh, let's let them conceive of a business that they would create. And that we'll do the business planning and the elevator pitches an the marketing. And they're gonna get out, set it up, build their business, thousand flowers will bloom. So they do this, they go into the prisons, they let 2,500 guys self select into their program who are one year away from release. These are major crimes too. A lot of drug stuff, a lot of violent crimes. They don't have any criteria for getting into the program except wanting to be in the program.

0:17:39: They have hundreds of businessmen, it's only men for now, who go into the prisons and they teach the guys about how to set up businesses. Now, I've been there and it's kind of unbelievable, these are guys who are talking about this concept of a business that they've have always dreamed about, and these are not large molecule biological pharmaceutical firms and software companies. They're talking about landscaping companies and barbecue joints and real stuff. Things that they know how to do and wanna do. And they're talking about it with these business people who are saying, "Here's how you do it." And they're giving their elevator pitches and it's just beautiful and it's inspirational when you see them doing it.

0:18:22: Okay so, does it work? Here's the data. Here's the relevant metric of success. I already told you, 50% of incarcerated men in the State of Texas get out and re-offend and go back to prison within their first 24 months. Graduates of The Prison Entrepreneurship Program? 7%. They have one seventh as much re-offense. That's... When you're a policy analysts like me, you never see data like that, you never see it. The problem with our business and policy is it's like I found a three percentage point difference but I promise you it's statistically significant. It's like our lives are so dull because of that in this business. When I say 50% in one group and 7% in the other, I'm going crazy about this.

0:19:07: This is unbelievably successful. And I talked to some of them and they're in the movie by the way. And they're like, "How my life changed, it's so awesome. My brother and I were with this landscaping company... " And I thought, "Wow, they all do this. They can all do this." And then I asked this question because I was only talking to guys who had set up their businesses, and I just said to the guy who started... The founder of the program, "What percentage of these guys actually start their businesses?" It's a standard question you'd ask when you're doing an evaluation of a program. And he said, "16%." Huh? This is not making sense to me; One seventh as much re-offense but 84% don't even start their businesses. It doesn't make sense. It doesn't work in my head. So I started digging in more. I just started evaluating it to a deeper level. So I started talking to these guys to find out what's really going on.

0:20:06: And this is where the light really turned on for me. I thought I was going to find the secret of start-up businesses, and what I found was the secret to start-up lives. See, when I talked to these guys, they didn't even want to talk about their businesses and the money that they were making. They wanted to talk about all the things that were going right in their lives because they had learned about entrepreneurship. They talked about how they had re-engaged in the lives of the mother of their children or the kids themselves or how they saw their own life as an exciting adventure. They talked like entrepreneurs with the enterprise of their lives. Here's the secret to entrepreneurial living.

0:20:53: Your life is an enterprise. I didn't get that from Steve Jobs. I spent lots of time in northern California with very wealthy people who started up these incredible businesses. And when you talk to them, they talk about their businesses, but that's not the secret to your happiness, that's actually not the secret to your personal success. The secret to that, the real American dream, in your life is seeing your life as an enterprise and living it as such. I learned that from poor people, not from rich people. Now, it kind of changed my thinking.

0:21:29: I have to say about my own life. I got so excited about this over the past year that I'm working on a book right now called 'The Start-up Life: How I learned About Entrepreneurship from Ex-Cons and Homeless People", not from Steve Jobs and Bill Gates. I'm not going to put that last part in the title because people are so sensitive these days, right? And I'm so captivated by this, my imagination is so turned on by this that I want to tell you two of the lessons that I've learned from these guys. And not just in Houston, in New York City and places all over the country where I'm finding more and more and more people that are living these start-up lives, that are at the margins of society that we can learn from if we want to be truly happy. I'm going to tell you that what, for my money right now, are the two most interesting and counter-intuitive lessons of the start-up life. And here's my money-back guarantee, I realize you didn't pay for this lecture but the money-back guarantee is that if you do what these guys taught me, starting tonight, you're gonna be happier, is the guarantee.

0:22:30: Lesson Number One of the Start-Up life: Take more risk. It sounds crazy actually when you get to know guys who've been in prison, they are astonishingly forthcoming about their mistakes. They'll tell you everything and it's amazing the stuff that they'll tell you. This guy is like, "Yeah." I said, "What did you do? Why did you go to prison?" He says, "Well, I robbed a liquor store that was downstairs from my house." That's really a bad idea. That's a terrible risk to take. Don't take that... Obviously. Or, "I bought drugs from an undercover police officer, the same guy three times," right? And it's like this is really dumb risk. And it seems like the advice would be, "Don't take so much risk." To criminals or people who have been criminals.

0:23:17: That's wrong and I'm going to to tell you why that's the wrong advise. That's just scratching the surface of the start-up life. And to explain this, I'm going to take you to a study that I've been looking at that's captured my imagination. It's by an economist in the University of Chicago that you've all heard of before, his name is Steven Levitt. Now you know his name because he is a huge best-seller called 'Freakonomics.' I'm not going to talk to you about the book 'Freakonomics,' I'm going to talk to you about his newer research which he's been doing recently and a paper that he published last year in 2016 in the National Bureau of Economic Research. It's a working paper now. And the reason that Steven Levitt is really famous and good is not because he has better technical skills than other economists. We can all do math. The reason he's really good is 'cause he asks the most interesting questions.

0:24:05: For those of you who're students and want to be scholars, those who are graduate students, the secret to success is the most interesting questions not the best answers, okay? So Steve Levitt, always asks these really interesting questions and last year he publishes this paper where he asks, "How do people answer the hardest questions in their own lives?" How do people make tough decisions? Now, if I look around here, I am willing to bet that about a quarter of you are in agony over a decision you're trying to make.

0:24:36: It's all gonna be different. It's like some health related thing or some love related thing or some work related thing. Do I do this or that? And basically it always has the same form; Do I say yes to the scary thing or no? Right? Do I take the jump or do I stay with what I'm doing right now? Do I ask her to marry me or not? Do I take that job and leave, drop out of college or not? If you don't have that kind of conundrum in your life, you have in the recent past or you will in the near future 'cause everybody deals with these things and they're super hard, the easy decisions. Should I go see that guy Brooks give this little lecture? It's a low cost decision. You're not agonizing over that, right? It's like "Ugh." Right now you're thinking, "Yeah, I should've gone get coffee."

0:25:23: Anyway, but there are other things that are just weighing on you right now. What do you usually do? Most people usually don't make the decision and let it pass by which is an automatic no. That's what happens in the big majority of cases. So Steve Levitt wants to know what's the right thing to do usually. Here's how he answers it, this is why it's such an interesting question and an innovative answer. He puts out a call all around United States and here's what it says, "Are you in agony over a decision in your life, your personal life, you're having a hard time making? You just can't make the decision. Let me make the decision for you with the flip of a coin," and 6000 people signed up.

[laughter]

0:26:05: This is such a great country. I mean you could do anything, right? And we're just crazy, we'll do stuff like this. It's like "I can't decide" so I can't decide whether to ask my girlfriend to marry me so I'm gonna have a University of Chicago economist flip a coin to make that decision for me. It's nuts, right? But 6000 people. They signed up, most of them stay in the experiment and it's a valid experiment if you look at the experimental protocols, good stuff. And he doesn't flip a coin, a computer does heads and tales. Heads is, "Yes, do it", tales is, "No, don't do it." It's all different sorts of things that all have the same form. Should I do the scary thing or should I not do the scary thing? Okay, Now here's where it gets interesting, he follows up six months and a year later to see how happy the people are.

0:26:50: He measures their self-reported happiness beforehand. I've done a lot surveys on self-reported happiness and it sounds really goofy and soft it turns out it's pretty good stuff because people tend to self-report their happiness with a high degree of fidelity and when you have large samples you can count on it. In this particular scale one is misery and and 10 is total bliss. A year after this experiment he follows up with the people who had the decision made for them by the flip of a coin to see whether the yeses are happier or unhappier than the nos. And what does he find? Yes on averages is one entire digit happier than no. What does this mean? It means that the conservatism that we bring to our personal decision making is usually suboptimal, that's actually what that means.

0:27:36: Now that's not for all of you, this is across all the population. Maybe some of you are nuts and you say yes too much but for most people across the population probably including most of you sitting right here, you need to say yes more when you're afraid that's what that study says that's the actionable consequence of the study. So it's interesting because I took that thing when I was talking to the guys at The Prison Entrepreneurship Program and tested it out. And it turns out it exactly matches what their experience is. What were the yeses that they were afraid to say. It was about engaging in the lives of the women who had their children that's what they were afraid to say yes to. They were afraid to get married.

0:28:20: Everybody is afraid to get married including guys in The Prison Entrepreneurship Program of course 'cause it's scary, it's your heart and it's a big commitment too. People are afraid to engage in the life of their kids. You know what they're really afraid of often? Was to take a boring job and commit to showing up for it everyday. It's hard to make that commitment for a lot of people. It's easier to do drugs and to do crime for a lot of people than to make those commitments that are actually scary to every single person and they felt that when they were willing to take those big risks with their hearts, with their love, that's what changed their lives and it made them feel entrepreneurial.

0:29:02: Now, maybe you're thinking then it's a sleight of hand intellectually for me to compare entrepreneurship with family life for example. Well, I think it's okay and I got a study that shows this too. There's a study that just came out in the spring from a university in Finland where these behavioral psychologists were doing what a lot of behavioral psychologists like to do now these days. Psychology, Social Psychology is getting a lot into brain science and so one of the very common things to do is MRI studies, FMRI studies where you look at brain activity patterns and then you see what part of the brain is being illuminated when people are making different decisions basically so it's kind of a structural psychology that's going on here. So these guys have these... At a university in Finland, took two groups of men and the first group were entrepreneurs who had started up businesses, and the second group were fathers they were all comparably matched groups of men in their 30s.

0:30:02: The first group when they were in the FMRI machine, were given photos to look at of their businesses. Physical photographs of their startups. The second group, the dads were given photographs of their kids to look at, and the pictures of their brains were the same. Indistinguishable. Now the researchers couldn't decide whether or not they were finding evidence that people, that startup entrepreneurs saw their businesses as their kids, or whether or not dads see their kids as little startups.

[laughter]

0:30:37: Either way, you find a common neurological experience of the entrepreneurial ecosystem that people find in their midst and participate in, and family life and affairs of love. Okay. What does this tell us back to these guys in Prison Entrepreneurship Program? They got better, their lives were improved when they applied the principles of entrepreneurship to their personal lives, and that meant taking the big risks. You can use that too. All of us can use that too. Because we're all not taking enough, I bet almost all of us are not taking enough risk. Here's what I'm gonna ask you to do to learn from these Prison Entrepreneurship Program guys. Think about that thing that your agonizing over. That hard personal decision. It doesn't have to be in love, it can be in work, it can be in school, whatever it happens to be. Say, yes, it's probably the right choice.

0:31:33: Principle number two, of the start-up life: Use your weaknesses to propel your success not just your strengths. I talked to you about the Gallup StrengthsFinder survey, which I love because I learned some things about myself when I took it, and everybody wants to dig into their self, it's interesting. And furthermore, you always got this advice that you should figure out what you're good at and do that because you'll be happier and more successful, and that's good advice. Your mother taught you that, and your high school guidance counselor told you to do that and it's solid stuff. The Prison Entrepreneurship Program guys teach you that you should also look at the stuff that you're really bad at and especially that you're really embarrassed about, and you should exploit that. Because that's your connection with respect to success in connecting to other people, which is really part of the happiest life.

0:32:29: Okay. Now when I talk to really successful entrepreneurs, commercial entrepreneurs, one of the things that I've noticed and you've probably noticed too, is they never tell you stories of good things happening on their way to success. They always tell you about really bad things. It's like,"Oh, Yeah, we went bankrupt three times, and I had to raid my kids college fund." They always tell you about these rough times. Rough times are more interesting in the story of somebody's rocky path to success. They always tell you about weaknesses and disasters that happened.

0:33:00: One of my donors is a guy, [0:33:02] ____ my organization, is a guy named Bernie Marcus who started Home Depot. This unbelievably successful enterprise. There's a Home Depot at every place. I say, "Tell me about the founding of Home Depot." He immediately starts talking to me about these early bankruptcies and they opened their first store in Atlanta and nobody will go in. And he has this kids out on Peachtree Street waving $10 bills to anybody who'll just even go in the store to look around. It sounds awful. He says, "Yeah, it was terrible, hahahahaha."

[laughter]

0:33:34: That's a weird paradox. He doesn't saying, "Oh, it was smooth sailing, I was born really smart and my dad had a lot of money, and everything went really great and then I got really rich." That's not even an interesting story. You don't wanna talk about strengths. The same thing turns out to be true for the guys who were working on the enterprise of their own lives. When I dig in with the Prison Entrepreneurship Program guys, and I see what really is charging you up that you're working on right now. You know what it always is: "Yeah, I'm talking, I'm going to these high schools and I'm talking to these guys and I'm saying, 'You want to know what happens when you take drugs? Let me tell you what happens when you take drugs.'" And they tell them their own story. Why? They're not bragging about it, they want somebody to not make the mistakes that they made. They're using their weaknesses as a source of strength in connecting to other people, and that is profoundly satisfying to them. Now when I tell you the stories of these guys, I've told you a few of the transgressions, it's hard to relate to.

0:34:36: I bet none of you has ever come close to robbing a liquor store. I bet. I don't know, but I haven't. But you will hear stories that you can relate to. It's a very interesting thing when you're talking to people who have been in prison, because you become very conscious very quickly that this could be you under different circumstances. What if you were known for the very worse thing that you did in your life. I bet if you gave it a little bit of thought you could think about the very worst thing that you did in your life. Imagine that every transaction that you came into, every job application, every relationship that you started, that was the one thing that everybody knew about you. Imagine how your life would be different and you can suddenly start to experience a little bit of empathy with the guys in The Prison Entrepreneurship Program.

0:35:25: And furthermore, sometimes the very worst thing that they did is perilously close to the very worst thing that you did. Okay. You didn't buy drugs from an under cover cop. Maybe you've been intoxicated. I made a friend over the course of this research, who was not from terrible poverty, he was actually from relative privilege. He came from a well known family, with a well known family business and he was kind of a wastrel, a little bit of a lay about, kind of a partier. You can imagine the type. And he smoked dope all the way through high school, and he went to college 'cause that's what he had to do, and it's a pretty ordinary story up to this point, you've heard it over and over again. And he said that he basically was drunk all the way through college, again, pretty ordinary at most universities. He said in his senior year, he was coming back from a party, driving back from a party, it was 3:00 in the morning, he was stone cold drunk, and he ran over a pedestrian and killed him.

0:36:29: Now, put yourself in that position. Honestly, who'd you prefer to be? Him or the pedestrian? You don't know, do you? It would ruin your life, it would be the end of your life, you would never live it down. He was arrested, and he went to prison for a few months, as you'd expect for a crime under those circumstances. You have to pay but, you're not gonna be in prison for life for that, and he had time to think about how he was gonna deal with this, how he was going to come out of prison. Was he gonna just basically try to sweep it under the rug, and have his dad get him a job, and pretend it never happened? Maybe that's what some of you'd do; he made a decision when he's in prison, to dedicate his life to that weakness, he became a drug and alcohol counselor, and now dedicates himself professionally to warning people who haven't gone that far, where this path can lead. I can relate to that guy, can you?

0:37:29: When I mentioned that he said to me "Yeah, you probably have something that you're really embarrassed about, and that by embracing it you have or can change the course of your life for the better" I said, "No way, no way" But I thought "Is there something? Is there something for you? Is there something for me?" There is something for me, and I'm gonna tell you about it; because thinking about that, and embracing that actually has changed my life. Now, you heard a little bit in this really gracious biography about my past as a college professor, and before that I was a classical musician. I was a french horn player. I played for a bunch of years in the Barcelona Symphony in Spain. And that's a kind of unusual bio, it's an interesting bio but, it's the sanitized version of the bio. See, here's the real story: When I was 19 I dropped out of college, I don't have the experience of those of you who are undergraduates had; I started college but, I was a terrible student, I wasn't ready for college, so I dropped out, kicked out, splitting hairs.

[laughter]

0:38:35: And I decided to do what I always wanted to do, which is to go on the road to be a musician, because music was my life man, it was pure joy. And so I kind of made a living, sort of paid the rent, played chamber music around the United States for a bunch of years, I wound up playing with a jazz guitar player named Charlie Bird for a couple of years on the road, and then I wound up, through a series of odd circumstances in the Barcelona Symphony in Spain. But, you know what always bugged me? I got nothing against not going to college, it's fine for me if not all my kids go to college as a matter of fact but, it always bugged me that I failed. It bothered me. It just... Prideful, and I'm not proud of that but I always thought "I'm gonna try again" but I had a problem, I was not living any place and, I had no money.

0:39:26: So, I did a little bit of research, and I found out that you can go to college with no money, it's called correspondence school. So I looked for a bunch of different correspondence schools, and I found one, I was living in Barcelona at the time but, I found this place in Trenton, New Jersey; it was called Thomas Edison State College, that's where I went to college, I went to correspondence school. This is very unusual for an academic, to be sure, and I graduated from college one month before my 30th birthday. Graduation day for me was walking out in my slippers out to my mailbox, and getting my diploma, and walking back in the house, in my apartment.

0:40:08: And when I did that, I couldn't decide exactly what to do with this degree, it was an economics degree. By the way, I killed it in correspondence school, it was like I got straight A's in correspondence school, I was a great student, and I was super serious, I loved every minute of it, and as I studied economics, which is the most interesting thing in the world if you wanna understand phenomena, and behavioral stuff, it's so good and so right but, I didn't know what to do with it. So, I wrote to one of my mail order professors, and it's like "I don't know what to do now, what should I do now?" And he was a ordinary professor at some minor campus in the Colorado University system in some place, a retired guy actually, and he wrote back to me and said, "In all my years teaching correspondence students economics, you did the best. If you ask for my advice, I think you should go get a PhD in economics." I'm like, "What? Me?" I'm just a french horn player."

0:41:04: And so, I wrote back and I said "Where should I do it?" and he said "You should apply to Harvard University, I am sure you'll get in." I'm like "Harvard? It's like the Shangri-La of academia." I literally knew nobody, I'm from Seattle, it's far away and it was famous but, he got my confidence up, it was the first time I'd really had confidence in something like this. And it's like "Maybe I'm actually kinda smart, and maybe I can do it" And so, you know what I did? I applied to Harvard, with all my heart, and all my affection, and all my attention and energy, and I sent off my application and I got rejected in two days. It was like "No!". And it turns out, in retrospective it's kind of funny because I had for some reason thought that Harvard University is interested in a 30-year-old, french horn playing, correspondence degree earning, college dropout. It's like that's not their key demographic.

[laughter]

0:42:06: I didn't know what to do at that point, because I didn't have any information. I didn't know why it had failed and this guy said yes and then they said no. I was married at the time and still am, same woman. I said to my wife, "I'm gonna call them up and see how close I came." And she says "You're an idiot, 'cause nobody does that." I call up the College of Arts And Sciences at Harvard University and I said... A very nice lady answered the phone and I said "My name is Arthur Brooks and I applied to the PhD Program in economics and I just got a rejection letter." She said "I'm sorry." I said, "No, no, no, it's fine. I just want to know, how close did I come?" She says "Okay" and I hear her leave the phone on the desk and she's opening and closing filing cabinets and taking out papers and she comes back after a minute and she says, "Not close."

[laughter]

0:42:54: Now I'm panicked, or like I'm bargaining, I say, "Was I in the top half?" and she says "No!" And it was horrible. It was horrible.

[laughter]

0:43:06: So I went down a level in the rankings and I got rejected. I went down a level in the rankings and I got rejected. I did it a couple more times and got rejected. Finally I found a PhD program that wasn't paying close attention and I got in. And I got to graduate school and I never told anybody about my undergraduate experience. It's so stupid in retrospect, but everybody went to these fancy schools, like the University of Michigan, these good places, these famous places. They would say "Where did you go to your undergraduate?" and I would say "I went to Ha Ha Ha University." I would just kind of change the subject. Then I got out and I graduated and then became a faculty member. I went to Georgia State University in Atlanta and in three years I went to Syracuse, which in public affairs is the number one school in the country. I was really proud of that. You know what I didn't do? Tell anybody about my undergraduate experience.

0:43:57: My CV was up on the web but it's Thomas Edison State College. That sounds totally super legit. Nobody ever would think, I mean I'm a full professor at Syracuse University. But I never told anybody about it. Honestly, it's so stupid, but I was honestly embarrassed about this thing. All my friends went to Harvard. Then something happened. In 2008, I became President of the American Enterprise Institute. After a long search and it was a failed search on the part of the organization and weird circumstances turned it toward me and I took this job and I went to AEI and everybody who worked there went to Harvard. I mean, this place is super elite. It's the Ivy league of Washington think tanks. You know what I didn't do? I didn't tell anybody about my college experience, because I was embarrassed and I was afraid it would be like a Washington Post story, that the American Enterprise Institute had hired a hack, a patsy, a loser, right? It would be embarrassing to my colleagues and it would be embarrassing to me. So I swept it under the rug.

0:45:00: A year goes by, 2009. I hire this guy to do research on higher ed. His name is Andrew Kelly. He's a pretty famous guy. He's got this academic pedigree you'd die for. Undergraduate, Dartmouth. His PhD, he got it at Berkeley. Super great pedigree, the best. Something about AEI you should know. We're like a university, we have pure academic freedom. When I hire you, I'm hiring you to do work in a certain area and I want you to do work in that area and I'm gonna make sure you share our values, to be sure. But you get to do work on anything you want and you get to say anything you want. All you have to do is work a lot.

0:45:38: So I bring in Andrew Kelly and I know he's gonna do exposes on higher ed. Higher ed, we love it or we wouldn't be here, but it's all screwed up. It's too expensive and there's too much debt and people don't finish. There's not enough ideological diversity and it's just not the right kind of market that serves people well enough, we all know this. This is not mixed company, we can say this. So I bring in Andrew Kelly and I sit him in my office and I say "Andrew, what's your first big expose?" Andrew says "My first big piece of research is gonna be about fly-by night correspondence schools."

[laughter]

0:46:17: Now the jig is up, kind of. I feel like the sheriff is on my tail with bloodhounds or something. I'm panicked, but I don't say anything, I'm being cool, "Maybe nothing happens." A month goes by. I get an e-mail from Andrew Kelly, middle of the night, he works at night. "Hey Arthur, you're not gonna believe this, but I'm on the Wikipedia site for a place called Thomas Edison State College and this is the crazy thing. They're claiming you're an alum."

[laughter]

0:46:50: So dude, you better get that cleared up.

[laughter]

0:46:55: So what do you do now? It's gonna come out, it's gonna come out. So I think, "I've gotta own this." So I wrote an article about it in the New York Times, called "My Cheap Valuable College Degree," where I described how I got my whole college education, including the books, for 10 grand in today's dollars. Including, by the way, a sticker for my car which I didn't put on my car 'cause I was embarrassed. I sent it off and they published it in the New York Times. I was wondering what was going to happen, was it going to be "I knew it, that free market think tank was being run by a hack, I knew it." But that didn't happen. It was the number one piece on the New York Times website for two solid weeks and I started hearing from people I had never heard from in my whole life. People who said, "I got my education in an alternative way too and I never told anybody. Thank you for writing that article." This one lady, she wrote to me, she said "My son, he's 31. 10 years ago, he dropped out of college and he's really struggling. He read your article and he just called Thomas Edison State College and I think he's gonna sign up. Thank for giving my son a second chance."

0:48:06: I said," My God". Here is the irony. At first I thought that's awesome, but then I thought this is not awesome. You know why? Because I've dedicated my career to equal opportunity. I have radical views on the equality of human dignity. I'm a warrior for that. I left academia and a tenure professorship at the best school in my field, to go without tenure to do management in a think tank. Because that think tank was dedicated to equal opportunity, and to fight for everybody. And that's great, but there's one thing in my background that truly ties me to the people who need opportunity the most. For the people at the periphery of society, as Pope Francis calls them. For the people at the margins. And that's my weird college education. And that's the one thing that I've been running away from and denying for 20 straight years.

0:49:00: Now when that happened, and when I embraced that, and I didn't do it on purpose, and I'm not proud of this, I did it because I was forced into it. When I embraced that, it changed my life, and it changed my approach to my job, and you know what? It changed my institution. AEI today is known for fighting for the poor, because I as Chief Executive say, "This is my priority and I hire people for I want it to be your priority." That wouldn't have happened, I don't think, if it hadn't been for accidentally embracing that weakness. Imagine my friends, if I had done it on purpose. Like my friends in The Prison Entrepreneurship Program.

0:49:37: One more point I wanna make before I turn it over to you. I gave you two suggestions on how you can live your lives differently, but here is a broader point. In American today we have trouble with despair. We have too much class-based separation, I believe. And one of the ways that we exacerbate that lack of connections in our society, is by having the wrong heroes. When you're hero is somebody who went from the upper middle class to the very upper echelons of the economy, that's necessarily cutting the American dream narrative out of the parts of our society that needed the most. We need better heroes. We need heroes that actually remind us of who we are.

0:50:30: Now I'm gonna make a radical suggestion to you. Who did the PEP guys remind you of? It should be you, and your family. See I look around this room and some of you are immigrants, and if you are not immigrants you're just a few generations away from being immigrants. A few generations away from people who are not from this country. We all have different stories.

0:50:56: Some of your great grand parents were scratching out potatoes in Ireland, and some of your grandparents were running from a [0:51:02] ____ in central Europe, and some of your ancestors came here involuntary. But let me tell what we all have in common. We descend from ambitious riff raff and that fact gives us pride, and that fact gives us satisfaction. Your ancestors were like the prison entrepreneurship guys who treated their lives like an enterprise, and that is why you get to sit on these seats today. This is the American story. And when we turn back to these stories of the people that give us pride, because they've gave us these good lives, we should be able to see the reflection of the people in The Prison Entrepreneurship Program in the margin society who are treating their lives like startups. And we should have the ingenuity, as people interested in public policy, of creating policies and cultural institutions that try to bring the start-up life to more people. That's the connection between entrepreneurship and the elevation of poverty. Where do you find the start-up lives? It turns out it's easier than you think.

0:52:04: One last story, and then I'm done. I didn't tell you the end of Thomas Edison story. When I started getting calls and emails from strangers, one of the strangers that called me was the President of Thomas Edison State College. I'd never talked to him before. I didn't know him. I really admire him, because he's an educational entrepreneur who's trying to give opportunity to people like me, and people who needed it more than me. And he said, "Wow. You're running a big think tank in Washington." I said, "Yeah." He said, "Would you come and speak at graduation?" And I thought to myself, the first thing I thought was, "What's graduation for a correspondence school? Is it like eight guys in the conference room? I don't know." But I said, "Yes." And I went to Trenton, and it was in the Trenton ice rink.

0:52:45: And I went in there with my son Carlos, who at the time was 13-years-old. And I wanted him to see it, because I don't know what his life is gonna bring. There was 5000 people in this ice rink, and hundreds of them are graduating that day. And I looked at them, and it was one third active military. And it was poor people. And almost everybody was the first generation in the history of their family to go to college, and they were filled with pride. And there's this one lady. This one lady I remember, I will never forget. I had given this graduation speech on happiness, and how to live a good life and yada yada yada, right? But what was really interesting what what they said, because each person got to say their name, and one biographical fact. What name? And then they had to go on, 'cause hundreds of people had to cross the stage. There was this one lady, she was 45, and she has lines one her face. She's lived. Right?

0:53:37: She gets to the microphone and she says her name, and she says, "And for this moment I just want to thank my five children and the living God." And I said, "That is a start-up life." That's an ordinary, yet extraordinary American hero. And these people are all around us. If you join me in believing that your work must go for the benefit of people with less power than you. You must start by admiring people who have less power than you. And that is not only the secret to their start-up lives, but your start-up life as well. Thank you.

[applause]

0:54:26: You wanna sit or do you wanna stand?

0:54:27: Oh, sure. I'll sit down.

0:54:29: Okay, great. So, Arthur, you had this great... I was trying to write it down, I think you said, "Radical approach, a radical view on human dignity." so, can you tell us a little bit more about that? I've been thinking about dignity, our mutual colleague Cathy has... I know sometimes public policies can act as strip people's dignity away, but it seems like trying to figure out how do you measure it? How do you... How do we know when we have policies that positively and maybe enhance human dignity?

0:55:04: Human dignity is defined in a lot of different ways. It's not a social science construct to be sure, it has a lot of subjectivity to it, but the one thing that we do know is that people say that their lives have dignity, the people who say that they feel a lot of dignity in their lives, they all have one thing in common which is that they feel needed. And this gets back to the poverty conversation, and this gets back to the radicalism of my own views.

0:55:29: The poverty conversation that we have too much in America today is all about how to help poor people, it's not about how to need poor people. In point of fact, if you take an entire class of people and treat them like charity cases and come up with better and better and better and better ways to help them, but you say, "You know what? We don't need you." they will feel an attenuation of their dignity. And an attenuation of dignity has an opposite side, it actually leads ineluctably, I believe, to despair.

0:55:58: And if you wanna see what's going on in this country, if you wanna see the fruits of class polarization, if you wanna see the haves and have nots in the deepest moral sense, you'll look at the indicators of despair in this country which indicates a lack of dignity which proceeds from not being needed, and you can see it every place. I talked about this film I'm making, we made, with The Prison Entrepreneurship Program, but I also was for making this film was in a place called Inez, Kentucky, where we kicked off a war on poverty in April of 1964.

0:56:29: Actually, the big speech on that was May 22nd, 1964 when Lyndon Johnson talked about the great society and war on poverty on this campus, was a speech that was given when I was one day old. I remember it well.

[laughter]

0:56:43: And in Inez, Kentucky, where he went for a photo op to show third world poverty in the context of American life, he found people who hadn't worked in generations, people who were malnourished, people who were really, really despairing. If you go back there today, you know what you'll find? 29% of the adults are in the workforce. You'll find the 40% of adults are on welfare. Every single family has somebody addicted to drugs, every family has people who are unemployed and have no skills, feel they have no hope and have no place to go.

0:57:15: That's despair and it has to do with dignity which comes from not being needed and that's the approach that we have to take to poverty today. What am I going... If I believe in equal dignity... And by the way, I don't think that most people do believe in equal dignity. If you think that it's okay just to help poor people, but to not make them needed even though you're sure that your own kids should be needed, you don't believe in equal dignity. You effectively don't believe in equal dignity.

0:57:39: And that I think is a radical thing to say. So, what do we need to do? We need to change our whole approach to poverty alleviation in this country to say, "What am I going to do to bring work to people's lives? To bring family life into people's environments, so that people are actually needed in the lives of other people?" If we can't answer that question, we're not actually ever going to morally answer the question of what we're doing about poverty in America, and we can't be a great country.

0:58:05: We're gonna turn it over to our students.

0:58:16: Hello.

0:58:16: Hi.

0:58:17: Can everyone hear me?

0:58:18: Yep.

0:58:19: My name is Kate Blessing-Kawamura and I'm a second year, a master's student here at the Ford School of Public Policy.

0:58:28: I'm Jesse Arm. I am an undergraduate here at the University of Michigan. I'm studying international Political Economy and Entrepreneurship. And I am the chairman of the American Enterprise Institute's Executive Council here at Michigan.

0:58:42: And our first question is, "Do these principles account for systemic racism and how will these principles work for underserved individuals of color?"

0:58:54: I believe that these principles work for everybody because we're all the same. And what we need is people. This is the key thing, I mean... Racism and classism are linked together because we're talking about people at the margins of society and we have all kinds of attitudes that don't try to treat people at the margins with equal dignity. The good news is what's good for one person is good for somebody else. What's good for rich people is good for poor people. What's good for black people is good for white people, but we have to be dedicated to the idea that everybody does need the same thing, and that is dignity and that is to be needed, so my view is that we have problems with racism just as we have problems with classism as we have problems with discrimination, and we have to address it in the same way with the belief in the equality of human dignity and acting as such.

0:59:39: So, I assign capitalism and freedom in my book and Milton Friedman has a...

0:59:43: It's a Milton Friedman's classic as you, of course, all know.

0:59:46: Has a great chapter on occupational licensures, and how interest groups use occupational licensures to restrict access to good jobs and disproportionately affects people of color and underrepresented groups by cutting off opportunity and then it raises the costs of goods like going to the dentist or going to a lawyer, which is a double whammy. So, is this one of those areas where we wanna look for ways to increase opportunities and reduce the restriction away from those, concrete ways? The thing that as a policy wonk, I wanna do is take your points and nail them down into concrete policy.

1:00:25: The most important thing to understand in public policy is before you try to take some proactive solution to a problem, the first thing to think about is what can I take away that's creating the problem? It's a very important principle in life actually. You can say, "Well, let's see, I feel lousy, what pill can I take?" It's more important... That might be the right thing to do, it's more important to think what can I stop doing that I'm doing that's making me feel lousy? It makes sense. So in public policy we forget that a lot, so we try to rush, especially when we're policy wonks, we're in a rush towards building with policy design new institutions that will solve problems. But in the case of a lot of things that we're talking about in poverty is taking away barriers to earn success. And one of the key things that we're doing in this country right now is occupational licensing. It sounds really, really nutty and crunchy, but it's simple.

1:01:18: For a lot of really ordinary entrepreneurial things, you need a license to do it. And it kinda makes sense on its face. If you're doing something that has any possibility of hurting other people, you have to be trained appropriately and then we have to have proof that you're trained appropriately, but in most of the cases when you look, it's nothing more than a barrier to entry to people who are already in an industry, and I'll give you an example. In Washington DC, if you wanna be a realtor and this is a very frequent second career for upper middle class women when their kids grow up and move away, that's kind of the demographic you typically see in the realty profession in Washington DC. It takes about three months of training and costs you a few thousand bucks to get your license. Is that a lot or little I don't know, maybe it's appropriate.

1:02:03: Now let's say you you wanna do hair braiding with no chemicals, this is a very typical first job for single African-American women in Washington DC who have kids in the home. It's a very typical thing to do. They have skills, there's the harsh chemicals, it doesn't hurt anybody, it takes a year of training and $16,000 to get your license. My friends that's discrimination against the poor and that's happening every day of the week. Why? Because the African hair braiding specialist they don't have a lobby, they can't fight against it, they don't have the power to do it. So what do they need? They need you to fight against it, they need you to stand up for them and that's not just standing up for Capitalism although it also is that, it's standing up for people who need the Capitalism the most; Towards the margins of society. I don't need... The realtors don't need me. The hair braiders need me. And so you know what, they're gonna get... I'm gonna strap on my sword and shield and I'm gonna fight for them.

1:03:01: How if at all does your Catholic faith and Catholic social teaching inform your approach to poverty and entrepreneurship?

1:03:09: So, apparently there's information on the World Wide Web that I'm a Catholic. And it is true. It is true. I'm a Christian, a lot of you are traditionally religious, some of you are non-traditionally religious, but let me tell you how faith actually informs my values, just a little bit. And I offer it to you for your interest, not to proselytize. When I was in the music business, when I was still playing the French horn in Barcelona, my favorite composer, I mean, you all know who this composer even if you don't like classical music, it was Johann Sebastian Bach. Everybody knows Bach. Bach was this for me the greatest composer who ever lived. And he was unbelievably productive. He lived to 65 and he published more than a thousand pieces for all different sorts of instrumentation, for chorus, and for keyboard, and for orchestra, and for chamber music, and it was all beautiful and it was all good and he was so prolific. And by the way he also had 20 kids, which is prolific. And near the end of his life, he was not famous as a composer, the only became famous 100 years after he died, because another composer named Felix Mendelson found his scores, dusted them off, played them for his friends and said, "This is awesome."

1:04:24: So, he was just kind of a well known teacher at his time, but he was asked by this minor biographer, a local guy in Leipzig "Hey, Bach, why do you write music? Why do you write music?" And here was his answer, textually, not in German, I'll give it to you in English. "The aim and final end of all music is nothing less than the glorification of God and the refreshment of the soul." And I read that as a French horn player and I said, "Man, that is exactly right." I wanna be able to say that in my work, but I can't as a French horn player. I literally left music because of Bach. Isn't it ironic that the greatest composer in the world pushed me out of the Barcelona Orchestra and made me into an economist.

1:05:09: Because only when I studied the path forward from poverty to prosperity, from despair to dignity, could I actually put Bach's axiom into practice in my own life. Let's say you're not a traditionally religious person, but Bach is saying that the purpose of your work is to serve others. That's what Bach is saying. How do I serve others in a world where billions of people can't make a living, were billions of people are at the margins who don't have what we have in this room? The answer is, you have to have a system that works while you sleep, and there's only one system in the history of the world that has pulled people out of poverty, by the billions. It requires globalization and free trade and property rights and the rule of law and the entrepreneurship that I've talked about here and it's not perfect. You also need other stuff, you need regulation, you need government, and you need charity, and you need human values but that system is revelatory for me, it changed my life.

1:06:05: Bach showed me that my approach to public policy and the love that I have in my heart for other people and the way I can instantiate it in my day to day work, it doesn't just come from my faith, it comes from music, and it comes from the intersection I believe of truth and beauty. That's kind of a long answer, that's probably more than you were expecting.

[chuckle]

1:06:30: This question comes from Twitter. This person...

1:06:33: From Twitter himself.

[laughter]

1:06:36: That's right. It's just from Trump.

[laughter]

1:06:41: That's fake news by the way.

[laughter]

1:06:45: I've wondered about other states borrowing The Prison Entrepreneurship Program idea, are there plans to scale it up to other states?

1:06:57: Yeah, The Prison Entrepreneurship Program is proliferating all over the country and it's not just being copied, there are lots of people who've had the same idea. One of the great things is it's super simple and you can probably find it here in Michigan. It'll take a minor Google search for you to figure it out. You can probably get involved in it and I would strongly recommend that you do it because it'll change your life, as much as anything else. So, yes this is happening all over the place, and this is the kind of spirit of experimental entrepreneurship that we need to really change society. So I recommend that you find out about it, get involved in it and maybe even start it yourself.

1:07:34: So Arthur as, again, my policy wonk hat, tell me why I shouldn't think selection is what was driving the positive result? You could imagine that the people who signed up for a program like this might just be that much more likely to succeed that you could see a split 7%, 50%?

1:07:53: For sure. And so for those of who are not following, the wonkees here, the selection issue is maybe the 2500 people in the Prison Entrepreneurship population were probably gonna be okay anyway, and they just saw an opportunity and so they took it. I have no doubt that that's playing into it. Because there's no way, this is not a treatment and control design. It would be a good idea by the way, if we did a treatment and control design in the context of a Prison Entrepreneurship Program, where we had people sign up and people not sign up, or people would sign up and get entrepreneurship training, and the other guys would play board games or something like that. It would have certainly some ethical implications, human subject implications to it but that would be a good way to evaluate this type of program. I have no doubt that that's the case, but when you talk to the guys in the program, some of them were repeat offenders. Some of these people had come out, done drugs, gone back, come out, knocked over liquor stores, gone back.

1:08:45: And they just didn't know what to do. They were so desperate for a different way, that when they had this they found a different way. And I have no way of evaluating the veracity of these claims, but my heart tells me that a lot of it is true. So, some of it no doubt is selection but I'm as convinced as I can be without the preponderance of experimental evidence, that this is a good way to go.

1:09:08: Do you think reform conservatism which promotes a kind of anti-poverty ideas that you talked about here today is viable in today's current Republican party?

1:09:18: Yeah, so reform conservatism as people often refer to it is one that's really focused using conservative ideas in a way you'd think of as sort of liberal heart, conservative head. That's how people sometimes talk about it. I think that's really important that we have hearts for other people, and whether or not you're a liberal or a conservative is almost besides the point. We need a competition of ideas, where our different ideas can come together around the moral consensus of helping people at the margins. One of the reasons I believe that we have such terrible political polarization, is not because we need more moderates. I'm not very moderate and many of you aren't either. You don't need to be moderate. What we need is to agree on the moral project of pushing opportunity out to the people who need it the most. That's the moral project I believe of the American experiment.

1:10:05: And if we agree on that, then our differences are rotating around that moral core in this competition of ideas, and man, that's when it gets really fun and interesting in this country. That's when people can disagree civilly, and that's when they can compromise in public policy, and we can bring all the ideas to the game, and where the best of the left and the best of the right can actually get together to actually serve poor people. As opposed to when the moral core collapses, not to commit Political Science on you people, when the moral core collapses, these competing ideologies are no longer rotating around it like an atom, they hit each other head on, then we get an ideological holy war. And that's what we currently are today. I think that reform everything is the way to go and the essence of reform is remembering that we're not doing things for our own good, we're doing things to serve the people who need us the most.

1:10:57: We've had a couple of questions about what can we learn from the PEP? How do you take the lessons from the Houston Prison Entrepreneurship Program and scale them into actionable policies?

1:11:10: The ideas that The Prison Entrepreneurship Program, it's interesting when you go there, when you're a policy person you're always thinking about what are the public sector solutions? I think that's not the right place to start. Because it's not necessarily the case that we need to scale everything into a government policy. I think that lots of times what we need is a moral revolution that changes our culture. That sometimes is the way to do it. In 1835, when Alexis de Tocqueville was tooling around the United States, which by that he meant the East Coast, and when he was looking at all these communities that were vital and they didn't have any bureaucrats involved, and they didn't have any men of gentry telling people what to do. He found people that were actually just helping each other for the sake of helping each other as a part of American culture. That's the essence of what the Prison Entrepreneurship Program is all about.

1:12:02: They don't take government money. I don't say that they shouldn't take government money, but I'm saying that the essence of this is not somebody in the state capital going, "You know what we need, we need people with warmer hearts towards ex-cons." We had people who said, "I'm gonna live out my personal beliefs by doing this" and actually I think that's what we need more of at least to start, and maybe even to finish.

1:12:31: So this is gonna be our last question for today. It seems as though college is a great pathway... Two more questions.

[overlapping conversation]

1:12:38: Okay, two more questions.

1:12:39: This is the penultimate question apparently.

1:12:40: Penultimate question of today. It seems as though college is a great pathway out of poverty, but colleges are constantly under scrutiny with public ones receiving less and less support. What's gone wrong?

1:12:54: That's a hugely intricate and very nuanced deep complicated question, so I can only chew off one tiny corner of it unless we're gonna be here until 9:00. A big problem is the premise that college is the pathway out of poverty, that's an incorrect premise. The truth of the matter is that we have been sold a bill of goods, that we should have college for all, that's the wrong way of thinking about it. I realize that I told you a story of my harrowing journey to get a college education. But that's not the right pathway for everybody, and let me give you just a couple of quick stats that should trouble you, I think.

1:13:31: This year 90% of high school seniors say they're gonna go to college. 65% apply and matriculate, 38% will finish. That's a 52 percentage point gap between aspiration and achievement. A lot of those 38% are gonna have some college and some debt, and no qualifications, and no help. And guess what else, there's all kinds of pathways to success that shouldn't require college. It's just unbelievable that the great battle that my wife and I have been in is to try to get the high school or my kids, my boys have gone, to try to counsel some kids that trade school might be a good thing to do.

1:14:14: There are six and a half million unfilled jobs in this country, and nearly one in five working age able bodied men is out of the workforce. You've got 18% of guys who should be working, they're able bodied, and they're working age and they're not working, and there's six and a half million jobs, and by the way this doesn't even talk about women where this is increasingly a problem as well. That mismatch has a lot to do with the fact that people come out of high school, say college for all, start college or don't go in the first place, and don't get the skills that our economy needs and they need to have dignified high paying jobs that you can't outsource to other countries.

1:14:48: That my friends is crazy, and it's crazy bad public policy that starts with the incorrect premise that we gotta force everybody through the pipe of college. So let's rethink that and we just might come up with some new public policies that will serve Americans, all kinds of Americans a little better than they're currently being served, and treat them with the dignity that they need and deserve as well. What's the last question? Not that I have strong views on this or anything.

1:15:17: Actually, it's a two part question.

1:15:18: Alright a two part question, looks good.

1:15:22: First of all, can you talk more about single mothers and how entrepreneurship can be an avenue out of poverty for them? And then second, are the guys who are entrepreneurs in the program we've been talking about escaping poverty?

1:15:37: Yeah. The second part is really easy, the answer is absolutely yes. If you want poverty for... For former convicts, for people who have been homeless, the answer to poverty is full-time work. One of the thing that we often hear, I realize that wages aren't high enough but one of the things I care an awful lot about is how to make wages higher and earned income tax credit and some of these technical solutions that I think are quite important. But the number one reason that people are poor is a lack of full-time employment. One of the things that we see that for even people who are working, who are the working poor, the number one variable is insufficient hours of work actually. So that's the... They need full-time work.

1:16:18: And people who are coming out of The Prison Entrepreneurship Program they're working like crazy, they're working tons of hours and you find... They're not rich, some of them are doing really, really well. I saw a guy with a print shop and he's cleaning up but not all of them, most of them are not rich but that's not the point. I bet nobody in here really cares about getting rich.

1:16:36: We care about a life full of dignity where we're earning our success, and feeding ourselves and supporting ourselves and our families, that's the essence of dignity. And it's like almost uniformly that's what you find. Single mothers, it's a very interesting thing. It could go either way. When you're a single woman and you have children, working has added pressures to it, it's a really hard thing. It produces what social psychologists call undue cognitive load. But there are good studies that I find compelling that show that what's good for single men is also good for single women who even have children in the home.

1:17:11: There are some pretty interesting studies using the general social survey, who show that women who went from welfare to part-time or full-time work even when they were caring for kids, had dramatically higher levels of happiness in the years after they started employment. Is entrepreneurship one of the ways to do it? For sure, particularly when we get past these problems that we see with occupational licensing, when women actually see the ways that they can make their own living and there are more opportunities for them to do so, that just creates more opportunities. More pathways for them to earn their success.

1:17:41: So I find compelling the idea that people can handle it. Now, does that mean that we need public policies to make it easier for them to handle it with childcare or parental leave? Yeah maybe. Maybe that's what we wanna do. But work is good, work brings purpose, work brings meaning, work, and ordinary work is a sanctified and a beautiful thing and everybody deserves to have it. Thank you.

[applause]

1:18:12: Thanks to Arthur. Please join us for a reception outside.