Universities and the Knowledge-Based Economy

This morning I want to talk about higher education and, in particular, the University of California.And my remarks are going to be focused on economic growth; that is, I am going to examine the role of the University of California in the economic growth of the state of California.In particular, UC's role in increased productivity of California workers, a higher living standard for Californians, and in general, faster economic growth.Why do I want to focus on economic growth?There are a lot of economists here today.I may be treading on their territory and I hope they will be forgiving if I am not as precise as I should be.It's quite interesting if you look at the average annual economic growth in the United States in the years from 1973 to 1993.It ran at 2 percent in this twenty-year period, while in the previous part of the century--the previous seventy years--it was running at 3.4 percent.A big difference.Many of the problems that we've had in the last twenty years are related to that slower rate of growth.Someone's estimated that over that twenty-year period, if our productivity had remained at 3.4 percent, every American family would have earned an additional fifty thousand dollars in income.There would be no federal deficit.Rather, there would be a surplus--a large surplus that could more than fund health-care payments for the thirty-seven million Americans that are not covered at this moment.