Common Sense

1. Education inequality starts early and persists

"If a high-performing school could be opened in a low-income urban neighborhood and then successfully replicated twenty, thirty, or even forty times, it would help show that—with the right supports—poor, low-income, and minority students could achieve at the highest levels."

Systemic inequality: The U.S. education system is designed to be unequal from the start. Poor and minority students are systematically sent to the worst schools, often based on their zip code. This early disadvantage compounds over time, leading to lower college graduation rates and fewer economic opportunities.

Attempts at reform: Recent efforts to improve failing schools, such as the School Improvement Grants program and New York City's Renewal Schools initiative, have largely failed despite significant investment. Charter schools like Success Academy have shown promising results but face fierce opposition from entrenched interests.

The roundabout solution: Rather than trying to fix the entire system, a "roundabout" approach could focus on creating alternative pathways to success for disadvantaged students. This could involve:

• Expanding high-performing charter school networks
• Developing alternative certification programs
• Investing in targeted tutoring and support services

2. Alternative certification can disrupt traditional education paths

"If it's true that, with the right supports, most kids 'can,' then we should have a lot to work with. If it's true that, regardless of background, most of us 'can,' then considering alternative methods for job seekers to demonstrate accomplishment and job readiness should be on the table."

Rethinking credentials: Traditional college degrees are often used as signaling devices for employers, but they may not always reflect real-world skills or potential. Alternative certification programs could provide a more direct and efficient way to demonstrate job readiness.

Employer-driven standards: Leading companies could establish a set of test or program standards for high-paying jobs that would be considered instead of, or in addition to, traditional degrees. This could create a new ecosystem of education and training services catering to these standards.

Benefits:

• Lower costs compared to traditional higher education
• More accessible to disadvantaged students
• Allows for continuous learning and skill development throughout one's career
• Creates a more diverse talent pool for employers

3. Expanded Earned Income Tax Credit can support low-wage workers

"If we expand the earned income tax credit, we can just have the government make up the $7.75 difference. In other words, if you can get any job, the minimum you will earn is $15 an hour."

Boosting low wages: An expanded Earned Income Tax Credit (EITC) could effectively guarantee a minimum income of $15 per hour for all workers, without the potential negative employment effects of a higher minimum wage.

Cost-effective policy: While the upfront cost may seem high, the long-term benefits could outweigh the initial investment:

• Increased workforce participation
• Reduced reliance on other social programs
• Lower long-term costs associated with childhood poverty
• Increased tax revenue from higher incomes

Implementation improvements:

• Pay EITC benefits as part of regular paychecks
• Simplify rules to reduce errors and fraud
• Expand eligibility to include more workers without children

4. Skilled immigration boosts economic growth and job creation

"According to the National Academy of Sciences, Engineering, and Medicine (NASEM, if you plan to bore people at cocktail parties), on average, every highly educated immigrant (those with more than a bachelor's degree) between the ages of 25 and 64 who settles in the United States contributes the equivalent of $1 million to the rest of us, right now."

Economic benefits: Skilled immigrants contribute significantly to the U.S. economy through:

• Innovation and entrepreneurship (founding 51% of U.S. billion-dollar startups)
• Job creation (183 additional jobs for every 100 skilled foreign-born workers)
• Tax contributions and economic growth

Current system flaws: The U.S. immigration system is overly restrictive and inefficient, ranking second to last among developed countries in welcoming skilled immigrants and entrepreneurs.

Proposed reform:

• Maintain employer-based system
• Allow companies to hire foreign workers if they pay a minimum salary (e.g., $60,000) plus a 20% tax
• Provide a clear path to permanent residency after 5 years of employment
• Remove arbitrary caps on skilled worker visas

5. Bank capitalization reform can enhance financial stability

"Let's require banks to raise more equity capital, perhaps bringing total equity capital to between 20% and 30% of total assets. But, in place of bail-inable debt, let's let them raise that added equity capital through a new kind of preferred stock."

Current system weaknesses: Despite post-2008 reforms, the banking system remains vulnerable to crises, with a high likelihood of future taxpayer-funded bailouts for "too big to fail" institutions.

Proposed solution:

• Increase bank equity capital requirements to 20-30% of total assets
• Allow banks to raise additional capital through tax-advantaged preferred stock
• Make preferred stock dividends tax-deductible for banks and tax-free for investors

Benefits:

• Reduces the risk of taxpayer-funded bailouts
• Aligns incentives for bank management and shareholders
• Maintains banks' ability to lend and support economic growth
• Simplifies regulatory oversight

6. Universal retirement savings accounts can improve financial security

"If we expand the current earned income tax credit, let's triple our current plan and spend $200 billion. Let's carefully target families and individuals who need it the most."

Current system inadequacies: Nearly half of all working-age families have zero retirement savings, with the problem particularly acute for lower-income, minority, and non-college-educated families.

Australian model: Australia's "superannuation" system requires employers to contribute 9.5% of wages to employee retirement accounts, resulting in significant national savings.

Proposed U.S. reform:

• Divert Social Security taxes into personal retirement accounts
• Expand the income limit for Social Security taxes
• Use a portion of higher-income contributions to supplement lower-income accounts
• Maintain a safety net for current retirees and those with insufficient savings

Benefits:

• Universal coverage and earlier savings start
• Potential for higher returns through diversified investments
• Reduced strain on future government budgets

7. Common sense solutions often face political and systemic obstacles

"Patching such a flawed system with more chewing gum, chicken wire, and even money has been a losing battle for over half a century."

Entrenched interests: Many of the proposed reforms face opposition from powerful stakeholders who benefit from the status quo, including:

• Teachers' unions and education bureaucracies
• Large banks and financial institutions
• Political parties seeking to maintain their base

Systemic inertia: Existing systems and regulations often create self-reinforcing cycles that make change difficult, even when current approaches are clearly failing.

Overcoming obstacles:

• Focus on "roundabout" solutions that work around existing systems
• Build coalitions of diverse stakeholders who benefit from reforms
• Emphasize long-term economic and social benefits of proposed changes
• Start with smaller-scale pilot programs to demonstrate effectiveness

Last updated: April 3, 2025