The Human Capital and Economic Opportunity Global Working Group (HCEO), referenced in my prior post, is run by James Heckman, Stephen Durlauf, and Robert Dugger. It operates out of the Center for the Economics of Human Development (CEHD) at the University of Chicago, and its fiscal sponsor is the Institute for New Economic Thinking (INET), an entity that emerged in the aftermath of the global financial crisis of 2008. INET funds research, grooms young economists, and convenes gatherings promoting the work of its 1,100+ experts. George Soros pledged $50 million from Open Society to create INET as a vehicle to explore “new thinking and new rules for the world economy.” Heckman, Dugger, and Durlauf are all involved in the operations of INET.
Interactive link to map below here.
The 2.5-minute video below features Soros speaking about why he created INET and what he hopes to accomplish.
(Soros) “The prevailing paradigm of the efficient markets hypothesis, rational choice theory, has actually run into bankruptcy-very similar to the bankruptcy of the global financial system after Lehman Brothers. The first phase of INET was to show the bankruptcy of the existing, and that-I hate to use this term-is “mission accomplished.” …That phase is now pretty well done as far as INET is concerned. We are now at a phase where we have to produce a new theory.
So, it’s now a constructive phase, and that has to be primarily directed at academia, at the economics departments of the universities. But it has to also address the burning policy issues, and we now have Senior Fellow, Lord Adair Turner (chair of the UK Financial Services Authority 2008-2013) joining us who will be in charge of developing that aspect of INET. In the long term I hope that this very rapid development can be maintained.
What is new economic thinking? A fundamental rethinking of assumptions and axioms on which economic theory has been based, because economics has been trying to come up with universally valid laws similar to Newtonian laws in physics. That, I think, is an impossibility, so you need a new approach with different methods and also different criteria of what’s acceptable.” George Soros, link to video
In 2013, Soros’s Open Society commissioned a working paper entitled, Impact Investing in Education: An Overview of the Current Landscape, from D. Capital Partners. The paper surfaced the following opportunities for private capital deployment, primarily aimed at the Global South: 1) provide education services in areas where the government is absent 2) spur “innovation” where governments are under-resourced and 3) develop alternative, “premium” choices where free public education is already established.
The featured image for this post identifies key players targeting “base of pyramid” populations for “investments” in infrastructure, people (student loans), and technology. D. Capital Partners described the latter as “a particularly promising arena for impact investors to seed innovations that have crosscutting commercial potential, especially if they can be deployed in large-volume markets.” The controversial tech-oriented education network, Bridge International Academies, funded by the Chan Zuckerberg Initiative, the Gates Foundation and Omidyar Network, became the largest education network in Kenya in 2013, the year the report was released.
Interactive link to map below here.
INET’s other major funder is William Janeway, Managing Director of Technology, Media, and Communications for Warburg Pincus. Warburg Pincus is a private equity firm led by Timothy Geithner who served as CEO of the New York Federal Reserve then as Secretary of the Treasury under Obama where he oversaw the Troubled Asset Relief Program (TARP). This January Warburg Pincus closed an investment deal, in partnership with Genesis Capital, for $120 million in D-round financing for Zhangmen, China’s most popular online education tutoring app. In 2015 the company invested $60 million in the predictive analytics software firm Civitas Learning for the development of an applied data science platform that would provide “personalized” insights into higher education instructional delivery. Janeway’s wife Weslie, the President of the Pyewacket Foundation, has an interest in and funds genetics research.
While pitching in a relatively small contribution of $10,000 in 2015, it is notable that Drummond Pike, former head of the Tides Foundation, is also part of this project. The Tides Foundation distributes hundreds of millions of dollars each year to social causes; see their 2016 990 tax form here. The Maker Education Initiative (Maker Ed), an outgrowth of Dale Dougherty’s Maker Faire movement, is one of the Tide Center’s sponsored programs.
My fellow Philadelphians should note Richard Vague contributed $25,000 to INET. Vague, a managing partner for Gabriel Investments (1735 Market St), exited his business ventures in the energy and credit-card sectors and now serves on the boards of Penn Medicine and several regional museums and cultural institutions. Local business, HappyCog (1430 Walnut St), was hired to do the website rebranding for INET in 2015. There are ties right here in my hometown to INET’s global operations.
In 2015, INET distributed over 100 grants totaling $1.8 million. Most were in the $40,000 to $60,000 range and funded economic research proposals addressing such issues as: Managing a Changing Global Financial System, Measuring Structure and Risk in the Financial System, Behavior and the Economy, Environmental Economics, and Political Economy of Income and Wealth Distribution and Inequality Dynamics. The University of Chicago received $500,000 for “inequality,” presumably funneled over to HCEO. INET’s grants are primarily to academic and research institutions in North America and Europe, though a few awards in 2015 were directed to individuals and to universities in South America. Below is one page of fifteen that comprise the INET grant list for 2015. See the full list here.
The largest grant in 2015, $994,000, was to the University of Oxford where the Institute for New Economic Thinking at the Oxford Martin School is based. See image below for their nine programmatic research areas.
In June of 2011 Heckman and Dugger participated in an inaugural conference call for the INET-funded HCEO working group focused on “Markets.” Introductory remarks were given by Dr. Lance Lochner, economist from the University of Western Ontario who specializes in the development of human capital over a person’s lifecycle. Next Heckman described the vision of INET and the role of HCEO, noting the importance of interdisciplinary research and the need to address “issue pockets that the markets have not addressed.” The remainder of the call was given over to Dugger who presented their plans to reform early childhood development interventions using “innovative” financial mechanisms like social impact bonds. This was the year BEFORE the Riker’s Island SIB, the country’s first, was launched in 2012. The Salt Lake City pre-k SIB came online the following year. The screen shots below are notes from the call HCEO posted online. You can read the full three-page document here.
In the video above, Soros, identified a need for a new criteria of “what is acceptable.” Which leads me to wonder how will INET and HCEO’s 1,100+ economists set those criteria? Is an indigenous child getting a chromebook pre-k education, who has no running water in her home “acceptable?” Is a “school in a box” instructional model delivered by scripted educators in sub-standard learning conditions in Africa “acceptable?” Is it “acceptable” for Chicago’s black and brown children to be compelled to learn and deliver standardized test scores in classrooms where cleaning services are MIA while investors like Goldman Sachs reap maximum payouts on their pay for success investments? Will we allow economists like Heckman and pitchmen like Dugger to offer up equations and justifications so billionaires like JB Pritzker can assign “value” to an infant, anticipate the child’s future needs, “fix” them in advance with cheap, scaleable technological “solutions” so their public benefits can be raided for private profit?
It’s time to speak up for those who need us. Unplug these children and give them the human contact and care they deserve.
Previous posts about the ReadyNation Global Business Summit on Early Childhood:
Pre-K Profit: ReadyNation Hosts Global Business Leaders in New York City This November: Link
Making Childhood Pay: Arthur Rolnick, Steven Rothschild and ReadyNation: Link
Galton and Global Education Futures Forum: Scientific Racism Looking Backwards and Forwards: Link
Heckman and Pritzker Pitch Apps as Poverty “Solutions” Yielding A 13% Rate of Return: Link
The Chicago School of Economics and George Soros: New Theories for An Impoverished World: Link