Looking back, it seems the stuff of which Bruce Willis movies are made. A devastating storm devolves an American city into chaos. People are dying, the government is helpless, and the situation grows more deadly by the minute.
Then, when things are at their worst, a "John Wayne dude" rides to the rescue. With a cigar between his teeth, he gets people plucked out of the flood and finds food for the starving, medicine for the sick, and shelter for the homeless. He tells the trigger-happy to put down their guns and averts bloodshed. He barks at the media to stop spreading rumors. He tells politicians to get out of his way. He asserts order, saves lives, and prevents a calamity from becoming an utter catastrophe.
We're not developing this unique capital. We're letting potential workers, customers, and leaders go to waste.
That John Wayne dude, as New Orleans Mayor Ray Nagin called him, was Lt. General Russel Honoré, who retired in 2008 after serving as the Commanding General, First Army; Commanding General, Standing Joint Force Headquarters, Homeland Security, U.S. Northern Command; Commanding General, 2nd Infantry Division, Korea; Deputy Commanding General/Assistant Commandant, United States Army Infantry Center and School, Fort Benning, Georgia; and, of course, the Commander of Joint Task Force -- Katrina. He is also the author of Survival: How a Culture of Preparedness Can Save You and Your Family From Disasters. So no one would blame him if, in his retirement, he chose to sit back, light up a Cohiba, and bat away importunate screenwriters.
Instead, Gen. Honoré still seeks to ride to the rescue. His new mission is to help people avoid the needless waste of disaster -- not only the kind generated by storms and fires but also the kind that results from letting poor neighborhoods rot. In his view, Americans' rapt attention to Wall Street and Main Street, especially during the economic downtown, ignores the people on "Railroad Street," as Honoré calls impoverished neighborhoods.
Neglecting the poor, General Honoré says, is bad for people and bad for business, because every kid who grows up believing that his greatest opportunities lie in crime -- or that her mind is sufficiently educated by ninth grade -- is human and financial capital down the drain. As Gen. Honoré discusses below, morality isn't the most compelling reason for business to intervene in poor communities; enlightened self-interest is. The bottom line is that the folks on Railroad Street are potential customers, employees, and business leaders, and organizations overlook them to their detriment.
GMJ: This will sound cold, but what's the business case for helping the poor?
Gen. Russel Honoré: Business has a moral obligation to do what government can't do: invest in human capital on Railroad Street. The people on Railroad Street fix your tires; they fix the beds in the hotel. Not all of us are going to be scientists -- somebody still has to polish silverware.
People want a job. If they can't find a job, they'll end up in some [bad] state, or they do nothing and disengage from the economy. But how do we provide them with opportunities? I know some people will just turn their shoulder; I've heard the town hall shouting matches where people say, "You're in America. You're on your own." But when we've got generation after generation of economic disengagement on Railroad Street, and I think a lot of people are conscious of this, we have to wonder about how we are investing our [resources].
GMJ: But what's the economic argument here?
Honoré: We're not developing this unique capital. We're letting potential workers, customers, and leaders go to waste. We need to invest in and improve education and opportunities for our own people. The alternative is letting immigration address all of our needs, which means that we will be importing a third of our skilled workforce. The work that Wall Street and Main Street have not gotten someone to do cheaper overseas will have to be done with imported workers. If our own people don't have the skills, many will be permanently disengaged from the economy. That's a waste.
A lot of businesses have realized this. A Better Chance [ABC], a national program, takes academically talented kids out of the ghetto and sends them to some of our nations' finest college preparatory schools. This program has been investing in human capital on Railroad Street since 1963.
I visited one of their community school program houses in New Canaan, Connecticut recently; they've got eight promising scholars living there with house parents and tutors, and they attend New Canaan High School during the academic year. The students are encouraged to become part of the New Canaan community and to volunteer their time to local charitable organizations. These ABC Scholars get "a better chance" to make a meaningful contribution to their home and their host communities and our global society.
GMJ: But the reality is that college graduation rates aren't encouraging -- only about 6 in 10 white students complete a bachelor's degree within six years, and the numbers drop further for minority students [47% of Hispanic students, 40% of African American students, and 39% of Native American students complete a bachelor's degree within six years]. How do we get kids on Railroad Street ready for college? And how do we keep them there once they enroll?
Right now, too much of our system is based on sink or swim. Kids on Railroad Street need to have hope, and they've got to be nurtured.
Honoré: Right now, too much of our system is based on sink or swim. Kids on Railroad Street need to have hope, and they've got to be nurtured. When they go home, it's likely going to be a single parent home or one with multiple generations living in the same place, and there's no place to study there. I think schools should be a sixteen- or seventeen-hour operation. And school probably needs to be year round. There's nothing going on in the summertime that's any good for Railroad Street. There's nothing good happening in the ghetto during the summer, so keep the kids in school.
Once they get to college, they need some guidance. They need to be in specialized study groups. If we can bring Chinese students over here and let them spend the first year learning English, we can bring kids off of Railroad Street and let them spend the first year learning how to be students. And we need to help them eliminate or minimize distractions. The first thing I would do is get rid of automobiles for freshmen in every college in America, because you've got to get them past that first year, and a car is nothing but a distraction. So are jobs, to tell you the truth. I worked myself through college, but you look at my grades, they were nothing to be proud of.
Then, when they graduate, they need to be prepared for the workforce. You've got to get them socialized to the workforce. They need mentors; they need personal feedback -- you know, "Playing that loud music in the cubicle is a nonstarter here, son." You've got to reach out to them, so it's not just sink or swim.
This is how we invest in Railroad Street to get people more qualified to compete in the 21st-century jobs that are coming, so we don't end up just importing people. It's a damn shame when we give up. But like Bill Gates found -- and he and his wife have done a lot to contribute to education -- throwing money at the problem doesn't improve it. You've got to shift the culture of the learning environment.
GMJ: How do you begin to shift the culture on Railroad Street?
Honoré: The key is security, which means we need more police so people can walk around and live a secure life. Law and order is the first step on the [Gallup Path to Macroeconomics]. More than anything else, people want to be in a safe place.
The next most important thing is that they want to be able to take care of their families. One reason people get into selling drugs is they can't find anything else to do. They have no skills, they have no education, and some dude walks up and says, "Hey, take this bag here to the building down there and go put it on the top shelf, and I'll give you a hundred dollars."
GMJ: What you're talking about is socially re-engineering Railroad Street.
Honoré: It's more like developing capital. The idea is to start the conversation and then get the success stories. You know, I spoke to African-American McDonald's franchise owners -- they have an association among themselves. The CEO of McDonald's [and] two vice presidents of Coca-Cola were there. They had about five hundred people. We got to the question and answer time and they asked, "What do we do about Railroad Street? That's where our stores are."
I told them to develop the McDonald's Leadership Institute. And I said, "There are leaders among those kids. How do you develop them? And then how do you get them to become owners/operators? You have five hundred people here this year. Next year, you should have five hundred and fifty, meaning one out of ten of you has developed a new owner/operator. You own stores in and around inner cities across America. Your objective next year is to have each one of you take on and create a new owner/operator of a McDonald's. Don't build another store, build another store owner."
Personal income is pretty high for store owners. So every one of those kids they employ and lift up, every kid who's got the talent and got the drive and determination of leadership, brings Main Street that much closer to Railroad Street. It creates a legacy in the community of helping develop leaders. And I told them, "But you're going to have to tap down some of your own greed to do that." Now, you could hear the air suck out the room when I said that. But by the end, they gave me a standing ovation.
That is the type of investment people will have to make. Invest in the future, but at the same time, take advantage of the local human capital in the community -- it helps the economy. And as we reinvent ourselves to compete in future centuries, one of the biggest drivers is industry. We have to create our own workers.
Railroad Street could go either way. It could either be a great market or a great drain on our resources.
GMJ: You must have had experience with this when you were in the military.
Honoré: Yes. There are a lot of places where there's no middle class. I saw that in 1972 on my first assignment to South Korea. They have a big middle class now because they allowed democracy and commerce in and they supported the education system. But in the early 1970s, a majority of the small villages north of Seoul had open sewer systems, dirt roads, no formidable buildings. The country wasn't developed; it was still on a wartime footing with quasimilitary dictators running it.
But South Korea transitioned to a democracy. And when they did, they also invested in education, and they became a powerhouse in industry. Now there are interstate highways, high-rise buildings, modern transportation systems, and it's one of the most digitally connected countries in the world. And they build cars now -- they build cars in the United States and sell them back to us. That's what capitalism can do. That's what democracies do, and that's what happens when you allow the middle class to expand by spreading some capitalism around.
Then there's Cuba. Pretty interesting story there. They adopted communism and socialism as a way to run their country, and it's a failure in timely economics. The people have nothing, and the majority of them depend on government subsidy. The socialist economy doesn't work because there's no room for entrepreneurship.
Cuban farms used to be very, very productive, but now the farms are failing. You hear them talk a lot about trying to increase their production. They'll tell you they don't have enough fertilizer and water and equipment and they are not allowed to get them from the United States, where they could get them at a great price. And that inhibits their production. But reading between the lines on the street there, people working on the farms have no incentive to be very productive.
It's a sad situation, because the Cubans will blame all of it on the U.S. embargo, but the ability for people to build and earn capital is pretty much stifled in Cuba. Cuba was in better shape in 1972 than South Korea was. But South Korea expanded entrepreneurial opportunities.
GMJ: Thus Cuba and South Korea are both cautionary tales and business profiles.
Honoré: Yes. Railroad Street could go either way. It could either be a great market or a great drain on our resources. That's why the business class here, in the United States, has to be involved in the quality of life for the people and in expanding jobs.
The function of businesses is to solve problems and make profit doing it. If you want something to eat, if you need transportation, if you need medical care, if you need your house painted -- those are all people problems. Business is meant to take care of those problems. But when people can't pay, then there's no incentive for business to solve them. That's what happened in Cuba.
Business is a big part of eliminating poverty on Railroad Street, along with creating a viable education system and a secure environment to live in. That's why business should care about Railroad Street -- should invest in the capital it finds there. It's the right thing to do, of course. But business alone has the capacity to improve Railroad Street; it has what government doesn't. And business can get more out of Railroad Street than it puts in.
-- Interviewed by Jennifer Robison