The economist and the kids

The chattering 3-year-olds at the New Horizons early childhood center on Hennepin Avenue in Minneapolis didn't seem to mind the unassuming older fellow who dropped by to observe their Monday-morning routine, which included counting to 12 and reviewing the days of the week.

The visitor had a Mr. Rogers gentleness about him. But the teachers knew him as a high-powered advocate of federal and state funding for just this type of high-quality early childhood education.

"What disturbs me is how many 3- and 4-year-olds need this and don't get it,'' said the man, Art Rolnick, senior vice president and director of research at the Federal Reserve Bank of Minneapolis. "If they don't get this,'' Rolnick said, pointing to the munchkins learning at his feet, "they won't get that,'' pointing out the window to the Minneapolis Community and Technical College across the street.

Rigorous research, passion and humor are the strong suits for this economist. Rolnick is carving out a distinctive niche in Minnesota, and increasingly on the national level, as a nonideological economy builder. On one hand, he's a hardheaded free-market advocate, critical of state governments' efforts to compete against each other and dubious of subsidies and special tax breaks for favored businesses, especially sports teams seeking new stadiums.

But Rolnick champions plenty more government spending on interventions in early childhood and other investments in "public infrastructure'' that research shows provide a strong "return on investment." He prefers models in which parents get to decide how to spend the money, but his faith in the essential value of some public investments strays far from antigovernment dogma.

If he's progressive, it's a disciplined brand, and it may be a character clue that Rolnick is an accomplished ballroom dancer. On one level, it's a sentimental and romantic avocation, but true to form, he's competitive about it. He and his wife, Cheri, have finished as high as second in national contests.

The policy prescriptions favored by Rolnick -- and by many other farsighted advocates in Minnesota going back to the early 1980s -- translate into real money and real taxes, to the tune of perhaps $100 million more per year in the state for early childhood "scholarships'' alone. Others estimate the total need, including the expansion of Head Start and other childhood infrastructure-building costs, at closer to $400 million a year.

This cause has been gaining the intellectual and public policy high ground for years, and the logjam that has blocked serious funding might finally be breaking at the federal level.

Rolnick is among a host of proponents who have personally advised the Obama administration on pending federal legislation that would earmark $8 billion over the next eight years in an Early Learning Challenge Fund. Minnesota stands to benefit more than other states because it has so many players and groups who are ahead of the curve in thinking and planning for it.

Last year, Rolnick got personal audiences with the powerful Emanuel brothers -- Rahm, then campaign manager and now chief of staff to President Obama, and his brother Ezekiel, a top adviser in the Office of Management and Budget.

Ezekiel had met Rolnick at the Aspen Institute's annual Ideas Festival and was impressed by the economist's patented spiel on "return on investment."

"He is one of the great presenters of the world,'' Ezekiel says, "with this great Borscht Belt delivery, peppering things with sly and good humor. He gets you on all levels, the emotional and the intellectual and the analytical, and the belly laugh.''

Ezekiel also ranks Rolnick on a par with Nobel Prize-winning economist James Heckman as among "the leading people who have driven [the early childhood movement] from the economic side.''

Meanwhile, the problem driving the movement is frightening. About a third of the 75,000 babies born every year in Minnesota go home with parents who live at or near the official federal poverty level, especially among immigrants and nonwhite neighborhoods. Three years later, about half aren't where they should be on tests for cognitive development.

At the far end of the education pipeline, only about half our young adults have some sort of higher-education credential -- increasingly a prerequisite for making a decent living and contributing to a strong economy -- by age 25.

Rolnick points to studies showing a return on investment of 7 percent to 16 percent a year from top-quality early childhood learning programs for at-risk kids. Those returns accrue in the form of increased individual earnings later in life, more taxes paid, job growth at companies strengthened by a superior workforce, and reduced spending on remedial education, welfare and prisons.

He also points frequently to recent free-market failures and dismal returns on Wall Street, arguing that few private investments will pay off as well.

Born and reared in Detroit, where his father owned a grocery store, Rolnick was a self-described "math nerd'' who got his masters' degree in economics at Wayne State University. He came to the University of Minnesota in 1967 for his doctoral studies, drawn in part by the presence of legendary U economist Walter Heller.

Heller was considered a liberal, and he was an adviser to Democratic presidents and to Vice Presidents Hubert Humphrey and Walter Mondale, but Rolnick says Heller also was a good friend of free-market hero Milton Friedman at the University of Chicago. The two would go head-to-head in debate at the university.

Heller and Friedman shaped Rolnick's eclectic worldview and the role Rolnick has played as the Reserve Bank's research director.

Rolnick acknowledges he is a bit of a latecomer to the front ranks of the movement for early childhood investment, which has many mothers and fathers in Minnesota.

Todd Otis, a former DFL Party chairman and legislator and director of the advocacy group Ready4K, has been a zealot for early childhood since his days in the 1980s as a chairman of the House economic development committee. He recalls approaching Rolnick earlier this decade after hearing him criticize stadium funding, figuring he might be a prospect for a different kind of investment.

Rolnick demanded research and evidence, then developed his own. But most important, he "broadened the community of interested parties to include businesses, more legislators and others impressed by economic arguments,'' Otis said.

"I don't have a survey, pre-Art and post-Art, but it's pretty clear that he's made a difference.''

And although Rolnick is in his mid-60s and nearing mandatory retirement at the Fed, he says he's preparing to continue and even ramp up his advocacy with a stronger role as coleader of an entity he's founded, the Human Capital Research Collaborative at the University of Minnesota's Humphrey Institute.

"We are in this for the long haul," Rolnick says. "Eventually we are going to do just as well as the stadium folks in finding the money for our children's future.''

Dane Smith is president of Growth & Justice, a think tank focused on economics and state-local tax-and-budget issues.