The stuff that dreams are made of.

I never tire of the ceremony of a college graduation. This past week, attending my daughter's graduation from Johns Hopkins University, I watched a thousand young men and women begin the next step of their life journeys. A thousand students, from literally every corner of the globe, walked across the stage, their faces beaming, while in the audience parents, siblings, relatives and friends watched in pride.

Graduating from college is a threshold step in the American dream. Not just for students, but for their families, and for past and future generations. When we focus our attention only on the students, we tend to lose sight of the trans-generational significance of higher education.  We lose sight of the toil and sweat of grandparents, of the diligent support and financial commitment of parents, and of the generations to come whose opportunities will be transformed.

An African American friend and colleague of mine once remarked that his completing college--to say nothing of his law degree and doctorate--would have a greater impact on the wealth of subsequent generations than if had made the NBA. An NBA star can make millions, but dollars alone can easily dissipate. But by graduating from college, the family culture and expectations around education would be forever altered, and with it the life opportunities of his children and of generations to come.

And his observation is more true now than it was a decade or so ago when he made it. The growing issue of income inequality is in large measure a product of the growing premium that competitive globalized labor markets place on educational attainment. The data are well known. On average, high school graduates earn about half of what college graduates earn, and the greater the level of educational attainment, the more stark the comparison. In a similar vein, the economic collapse of 2008 had minimal impact on those with at least a bachelor's degree, while the economic opportunities for others were devastated, and they have yet to recover.

In this economic landscape, improving educational attainment outcomes has become a primary goal of public policy. In light of this goal, two key metrics have come to define--in public policy as well as in US News rankings--the quality and effectiveness of individual higher educational institutions: student persistance--the percentage of students who return to school for their second year--and graduation rates. Accordingly, colleges invest an increasing share in limited resources to providing support to struggling students--as well as seeking "better" students--to improve their outcomes along these metrics, and thereby demonstrate their increasing quality and effectiveness to potential students, alumni donors, accrediting bodies, and the political establishment.

However, as much as we prefer simple measures of complex problems, equating success with persistance and graduation rates may obscure a more nuanced story. Over the past several decades, we have doubled the college participation rate--the share of the high school graduates who go on to college--to over 70%, and along the way a higher share of college matriculents are first generation students. For these students, whose parents did not attend college, the definition of success is often more complicated.

Even as my wife and I flew to Johns Hopkins--an elite university where student persistance rates are nearly 100%, and well over 90% graduate--she told me about a student of hers--call her Marielle--who will not be coming back for her sophomore year at Mills College, the small, liberal arts college where she works. Marielle comes from a rural family, is the first in her family to go to college, and did well in her first year. But she will go home because her mother told her the she and Marielle's brother "need her to be home." Perhaps she will continue to take classes at the local community college next year.

Marielle's is not an unusual story. Unlike Johns Hopkins, almost one-third of Mills College students are the first in their family to attend college. The most recently published data suggest that 77% of students return for their second year, and 63% graduate. Marielle will go home, and she may or may not return to school.

But Marielle's departure should not be viewed--as statistically it will be--as evidence of failure by Mills College. In our higher educational marketplace, schools play different roles and take on different challenges. Johns Hopkins is a world-renowned research institution, while Mills is an excellent undergraduate college that takes pride in admitting students like Marielle, and supporting them to go as far as they can. And each school defines success differently and official statistics should reflect these differences. By finishing a year of college, Marielle has embarked on a transformative pathway that will continue in her family. She may accede to her mother's wishes, but one thing is clear: she has taken the important first step and her own children will likely go to college. They will have the opportunity to complete the journey that Marielle started. In the world of first generation college students, Marielle is a story of success.

Marielle's story made me appreciate all the more the majesty of the commencement at Johns Hopkins. This was the moment that one imagines Marielle will dream about, and those dreams will uplift generations to come. Just as my grandfather--like so many others--brought his family across the ocean for opportunities that would never be his, Marielle has become the spark that will lift up her own future family. Thus, those who may pronounce Marielle a failure when she heads home miss the point. Whether Marielle ultimately completes her degree or not, she has begun the process of changing her family's culture and expectations around education--and the economic possibilities attendant with that change--for generations to come.

For all of our fretting about the cost of higher education, we should never lose sight of its transcendent power and purpose. Stories of how Governor Rick Perry wants to take apart the university system in Texas--as his advisors suggest that it could better meet the needs of industry and workers if it is restructured closer to the community college model--miss the point. Higher education in America today is not simply about meeting the labor force needs of industry today; it is about the elevation of the human spirit and the potential created for generations to come. It is not even simply about meeting the needs of students today, but it is where the work of families from one generation to the next bears fruit, and the historical trendlines of economic determinism are broken down.

Walking across the stage at Johns Hopkins along with my daughter were students from across the globe. Parents from China and India and Iran and Brazil sent their children to Baltimore, carrying their hopes and dreams--as well as those of their ancestors and of generations yet to come. They came because the American higher education system--itself born in imitation of the great universities of England and Italy and Germany--is now the envy of the world, and their children will graduate not just with skills, but empowered to remake the world and reimagine the future.

Based on data from the National Center for Economic Statistics, Marielle's story is the same story that first generation college students have faced for decades. The integration into the academic life and the social life of college is harder for them than for those whose parents went to college. But first generation college students like Marielle are the torchbearers of the American Dream. They are driven not by what a college education offers them, but what it will do for their children. Their dream is not simply of wealth or security, it is to sit in the seats as my wife and I did, and see the fulfillment of their own dreams in their children.

Globalization and its discontents.

Apple Computer issued bonds last week. Issuing $17 billion of bonds to buy back stock and pay dividends might seem odd for a company that is sitting on an estimated $145 billion of cash, but much of this money was earned overseas and Apple, like many other transnational U.S. corporations, is refusing to repatriate foreign profits because of the tax obligations that would be triggered under the US tax code. Issuing bonds to satisfy shareholder demands was an intuitively illogical, but ultimately financially rational, solution.

The situation is a classic example of moral hazard. Having offered transnational corporations a tax repatriation holiday in 2005--a "one-time" opportunity to bring foreign profits back home for a special, low 5.25% tax rate--corporate America is now holding out for a second bite at the apple, with as much as $2 trillion held hostage in offshore accounts. Cisco Systems CEO John Chambers, whose company's offshore profits approximate $40 billion, threw down the gauntlet recently, stating that Cisco would create no new jobs in the United States until they get their tax holiday.

China has been the largest beneficiary of the offshoring of jobs by U.S. corporations that have produced the trillions of dollars in question. Yet despite seeing millions of workers lives lifted out of extreme poverty, the Chinese are not happy. They believe that they--like the U.S. treasury--should be entitled to a cut of those profits. After all, if Chinese workers actually owned the means of production, much of that lucre would belong to them. Instead, China's take has been limited to the jobs that have been created, along with whatever amounts were skimmed off along the way for the personal nest eggs of Chinese officials.

The Apple bond sale came just two weeks after the spring meeting of the International Monetary Fund, a gathering that focused on the eradication of extreme poverty and where, as reported by Annie Lowery in the New York Times Magazine, World Bank President Jim Yong Kim pronounced 2030 as "the global target to end poverty." Kim's optimism comes on the heels of the success of the world community in cutting the share of the world population living in extreme poverty by fifty percent, five years ahead of the target date of 2015 establish a quarter century ago, as the rate fell to an estimated 21 percent in 2010, from 43 percent in 1990.

The linkages between the two events--profits earned by U.S. corporations overseas and the amelioration of extreme poverty as defined in official statistics--is not something that is widely embraced in the development community. Indeed, the New York Times article is quite revealing in its conclusions. "For much of the improvement, the world can thank one country: China, which alone accounts for about half of the decline in the extreme poverty rate worldwide. It has also driven significant gains across the region. In the early 1980s, East Asia had the highest extreme-poverty rate in the world, with more than three in four people living on less than $1.25 a day. By 2010, just one in eight were."

China? The rise of the Asian Tigers--Singapore, Taiwan, Korea, and Hong Kong (then still a British colony) from destitute poverty to affluence came long before China decamped from its faith in the Little Red Book and began its journey down the capitalist road. It is striking that the same newspaper that won Pulitzer Prizes for its reporting on the offshoring of American jobs to and related corruption in China could showcase a piece on the global decline in extreme poverty without even a nod to the American middle class that made it all possible, and paid the dearest price.

Neither the Time's article--nor for that matter the communique published in the wake of the IMF meeting--ever once mention the word "trade", yet it has been one of the driving forces in global economic development over the past several decades. The alleviation of poverty in China and India--the countries that data suggest have seen the greatest alleviation of extreme poverty--is in particular a direct result of the U.S. embrace of free trade. The rise of the Asian Tigers was based on the export-driven development model that raised Japan up out of the ashes of World War II, and that was subsequently replicated across much of the rest of Asia. The Times article cites the population migration in Cambodia as an example of where extreme poverty has been reduced. "Cities bolster access to health services and public resources; infant-mortality rates, for instance, are 40 percent lower in urban Cambodia than in rural Cambodia. And workers themselves become more productive, often by making the switch from labor-intensive work like farming to capital-intensive work like manufacturing." Yet there is no suggestion of the global economic changes that enabled that transformation.

A national export-driven economic development strategy requires two essential elements. First, one or more trade partners willing to accept trade imbalances--to import more from than they export to the country in question. And second, a stable, if not pegged, currency relationship, which is necessary to ensure that the intentional trade imbalances do not result in the appreciation of the export country's currency, thereby increasing the cost of their exports and undermining the export strategy. But for the willingness of trade partners to support large trade imbalances with Chinese--and tolerate the attendant destruction of domestic employment--China's dramatic economic growth would not have been possible. Indeed the relationship described by the New York Times article is inverted: The world need not thank China. Rather, China should thank the world.

U.S. leadership in the promotion and support of global trade has been essential to the alleviation of extreme poverty. While Europeans have for years evinced a deep disdain for American capitalism and imagine their system to be more compassionate, the European polity has steadfastly resisted the national sacrifice that stronger measures in support of open trade with developing nations would require. The French continue to resist opening their agricultural markets to Portugal and Greece, much less to African nations, while Germany has shown no appetite to undermine its own manufacturing export machine that other nations might benefit. Only in America would politicians forsake their middle class constituents and vote for free trade agreements to the benefit of their industry contributors--and the developing economies of the world.

In 1992, Ross Perot famously described the giant sucking sound of American middle class jobs that would be lost in the wake of free trade. And he was correct: In the two decades that ensued, millions of American jobs were lost as entire industries shifted production offshore. But over the same period, as celebrated at the IMF summit, hundreds of millions of people across the globe have seen their lives lifted up  out of extreme poverty.

Companies such as Apple and Cisco Systems, and nations such as China, that have benefited from free trade are part of a closed system that has been built in large measure on the strength and confidence of the U.S. consumer. Yet those beneficiaries have been largely indifferent to the plight of the American middle class--whose economic well-being and confidence in the future has been undermined by the expansion of free trade--focusing instead on their own self-interest and entitlement to the benefits of trade. The leaders of Apple and Cisco gripe about tax rates, while the leaders of China disdain American concerns for their predatory trade practices.

If the world is to sustain the momentum of economic development that is essential to Jim Yong Kim's optimism, the companies and countries that have benefitted from expanding free trade have a collective stake in figuring out a path forward that stanches the downward spiral of the American middle class. Failing that, the political coalition that has promoted free trade to date will ultimately unravel, as an increasing number of Americans adopt the stance of the leaders of Apple and Cisco and China, and decide that it is time to ignore the interests of the rest of the world and just pay attention to their own self-interest.