From the Minneapolis Fed to early childhood education: Lessons from Art Rolnick’s career

NINA MOINI: Well, you've probably heard the term "human capital." It's an economic catchphrase for the collective knowledge, skills, experience, and other attributes people accumulate throughout their lives. Human capital development is the key to a nation's prosperity.

You'll immediately grasp the meaning of the term if you spend time talking about ideas, policy, and life with Art Rolnick. He's a scholar of pre-Civil War banking; a well-known opponent of public funding for stadiums, and the costly tax competition between states and localities to attract business; former longtime head of research at the Federal Reserve Bank of Minneapolis; and most notably, an enthusiastic advocate for early childhood human capital initiatives. Oh, and did we mention, he and his wife were once competitive ballroom dancers, too? [LAUGHS]

Well, at age 79, we reached out to Rolnick for our series, "Connect the Dots," where we ask community elders to share part of their life story and lessons they've learned along the way about what really matters in life. So MPR's senior economics contributor Chris Farrell recently met with Rolnick, and he joins us now. Hi, Chris.

CHRIS FARRELL: Good to be here.

NINA MOINI: Wow, that was a lengthy--

[LAUGHTER]

--resume. Tell us a little more about Art, if you would.

CHRIS FARRELL: So when I started covering finance economics as a journalist many, many years ago, I would interview on various topics. And I remember one time, I had this idea for a column about bank regulation, and I interviewed him about the pre-Civil War era of regulatory-free banking. And I'm not sure if it turned into a column.

NINA MOINI: Yeah. [LAUGHS]

CHRIS FARRELL: And anyway, we've crossed paths over the years since then, and he's always willing to engage in a discussion about ideas. And during our latest conversation for this interview, several themes emerged from his remarks. And here's Rolnick at different times in the interview.

ART ROLNICK: All serendipity.

CHRIS FARRELL: Serendipity?

ART ROLNICK: Yeah, we were in a bowling league. [CHUCKLES] This wasn't planned, OK? This was opportunity knocking. And I realized that's a door I should open.

NINA MOINI: That's a skill, right, to take advantage of unexpected opportunities.

CHRIS FARRELL: That's right. I mean, that's clearly one of his life lessons. And by the way, this is a total aside, but I just found this interesting. I was doing some research, and I learned the origins of the word "serendipity."

NINA MOINI: Hmm.

CHRIS FARRELL: And it was created or coined by Horace Walpole mid-1770s. So he made this chance discovery. And he created a word to describe his experience by recalling the Persian fairy tale, The Three Princes of Serendip. They traveled the world, making discoveries by accidents and sagacity of things they were not in quest of.

NINA MOINI: [LAUGHS] I love that. So more on Rolnick here.

CHRIS FARRELL: OK, born and raised in Detroit, he went to Wayne State University, studying mathematics. Worked his way through college at the campus computer center. And one of the computer clients was a professor of economics and said, hey, Art, you might like economics. And he did. Later on-- graduate school at Wayne State-- another professor suggested he study economics at the University of Minnesota.

NINA MOINI: Hmm.

CHRIS FARRELL: And then he was in a bowling league in the Twin Cities, and a fellow bowler worked at the Minneapolis Fed. And he encouraged Rolnick to consider working there while he was finishing his PhD.

NINA MOINI: Sure, a lot of serendipity and a lot of interest there at work, and I'm noticing a willingness to take chances.

CHRIS FARRELL: That's right. And then two other themes to highlight in addition to serendipity and that willingness to take a chance, one is his powerful beliefs in the benefits of education and curiosity.

NINA MOINI: Hmm.

CHRIS FARRELL: When we're young adults, when we start out our careers, we don't often know what kind of work do we want to do. And so exploring different topics, learning about different fields, that's useful information for the journey. And Rolnick was still feeling this way when he was encouraged to join the Fed.

ART ROLNICK: I had to look up and understand what is the Federal Reserve. I really didn't even have a course on the Federal Reserve at the time. So I just knew, because of my parents and because of the community I was in, that I was going to go to college. I knew that.

Now, was I going to be a doctor or a lawyer? I had no idea. I just didn't go to college to take-- and that's why I tell people, when you go to undergraduate, take lots of different courses because you never know what's going to be your thing or the thing that grabs you. And it just so happened economics worked for me.

NINA MOINI: That's good advice to make sure you expose yourself to lots of different ideas.

CHRIS FARRELL: It is. I mean, and sometimes it just doesn't get emphasized enough. I mean, education, learning, curiosity-- they're also fundamental to figuring out your purpose or your purposes, which, by the way, isn't easy.

ART ROLNICK: Most of us don't know what our passion is. We don't really want-- I didn't know I wanted to be an economist when I grew up. I wanted to be a baseball player. [LAUGHS]

And that's the advantage of education. You get a better understanding of who you are. You study poetry, study history, study science, study as much as you can. Or maybe it's vo-tech. Maybe you're just great at physical things, and you want to be a plumber. But figure that out. And it's about trying different things.

NINA MOINI: Yeah, experimenting, being curious, taking risks. A career is really a journey, isn't it? Sometimes many, Chris.

CHRIS FARRELL: That's right. And then one of the questions, the natural follow-up to all this, is, OK, so what gives them meaning? His family, of course. But I don't think the rest of the answer will surprise you by now.

ART ROLNICK: Learning? I love reading history. I love learning about people and how they manage difficult problems over history. Keeping my intellectual skills up gives me meaning.

And I talked to friends that are retiring. I said, you don't really retire. You got to move on to something. And most of the friends I have, fortunately, are-- we go together. We go to lectures on various fields on-- modern physics I find really fascinating, hard to understand.

NINA MOINI: [LAUGHS] Yeah, I don't think I'll be exploring that soon, but he's giving a lot of ideas. You know, learning-- I love what he said, Chris, about you don't really retire, but you just move on to something else. And so what's another theme that stuck out to you there?

CHRIS FARRELL: The desire to make a difference, you know? To leave a positive legacy, to work at something that offers purpose.

NINA MOINI: So Rolnick, I understand, is well-known, again, as a strong advocate of early childhood education initiatives, like you mentioned. So is this an effort that he believes can or has made a difference?

CHRIS FARRELL: It's clearly a passion. It's a calling. All you have to do is ask him a question about it, and he's off to the races.

NINA MOINI: Sure. So how did he get involved with early childhood education? So he was the director of research at the Minneapolis Fed. Seems kind of far from researching US monetary policy and interest rate changes and pre-Civil War banking.

CHRIS FARRELL: That's right. So he was at a luncheon in downtown Minneapolis, and the speaker was making the moral case for investing in early childhood ed. And Rolnick said, look, the moral arguments, they don't get you far. There's a lot of good moral reasons for investing more in higher education, climate change, lowering crime, and so on.

NINA MOINI: Sure.

CHRIS FARRELL: He wanted to-- someone should be looking into the economic case for early childhood education.

ART ROLNICK: What you want to have is not inequality of outcomes. You want to have equality of opportunity. And that gets me into the importance of education-- critical. And if I would say there's one major economic problem we have in this country, is, in many states, we have a huge achievement gap.

Kids born into poverty, generally, on average, start school way behind. And they don't succeed in school. They potentially can be an important increase in our workforce. And when they don't succeed in school, it's very expensive to deal with the problems that exist after that.

NINA MOINI: So, Chris, he did research on what happens if we invest in early childhood education, and what did he find?

CHRIS FARRELL: Well, the number is the return on investment was an inflation-adjusted 18%. Now, to put that in perspective-- OK, 18%-- from the Second World War till now, the inflation-adjusted return in the stocks, 6%.

NINA MOINI: Hmm.

CHRIS FARRELL: So this is incredible. Now, remarkably-- and I still don't exactly know how this happened-- the Fed gave him the leeway to address what really is one of the most important public policy issues confronting the country, which is this education achievement gap.

ART ROLNICK: So our program-- what we call the Minnesota Model-- was scholarships plus a mentor starting prenatal, prenatal. We talk about early childhood, prenatal to five. And if we get high-quality prenatal to five working with the parent, getting that parent engaged, we know-- well, we know the opposite.

We know if a kid starts school well behind, odds are they don't finish. We know when they start school ready, engaged, healthy, and ready to learn with an engaged parent-- very high probability that they finish high school, and again, all these wonderful benefits to the child, to the family, and to the community.

NINA MOINI: Boy, he really is passionate about this topic, Chris.

CHRIS FARRELL: Yes, he is. And of course, in this series, I always ask, what is your purpose? What is your reason for getting out of bed in the morning and moving around? And it doesn't really matter what your purpose is, I mean, right? But I do find Rolnick's engagement in this early childhood education movement inspiring.

ART ROLNICK: I just wanted to do-- I wanted to be in the public policy space and feel like I made a difference in my career. And that gives me a lot of purpose, knowing-- and when I visit some of these programs and I watch these kids, I mean, it's just amazing. It's just amazing. What it does for the families, what it does for the parents, it's so moving.

And you realize, yeah, we're not just doing the research. We're actually doing something that's making a difference. And we also realize we're not just changing the lives of the children. We're changing the lives of those parents. We're changing the lives of the siblings. And, just, that gives me a lot of purpose.

NINA MOINI: An inspiring individual, to say the least. Thank you so much for sharing that with us, Chris.

CHRIS FARRELL: Thanks a lot.

NINA MOINI: Chris Farrell is our senior economics contributor.