Education--key to future growth?

The recent 'Great Recession' has made many consider a fundamental question: What will drive America's future growth? Manufacturing, long the capstone of American ingenuity and innovation, has been outsourced to low wage countries. It does not stop there--with increasingly better educated foreign workers and an internet connection--many other things are being outsourced as well: call centers, accounting, and even basic legal 'grunt' work. The rest of the world is no longer satisfied with making America's shoes but want to rise up the value added chain by providing services. The crown jewels of India's IT industry--Infosys and Satyam--for example no longer just do back office data sorting but are slowly innovating their own technologies for the world's consumption. Jaguar, a car renowned for its performance and beauty, is owned by India's TATA motors that recently also introduced the world's cheapest car, Nano. China is stepping up research into producing planes and it is widely expected that it will launch a no-frills car in the US a few years down the lane--following Toyota's model of success.

We are experiencing precisely what globalization and capitalism espoused: a rising tide lifts all boats. But the problem is that while the emerging markets experience meteoric growth, the developed countries languish with anemic growth. Who knew that the tide can lift some boats more than others or maybe sink some boats in the process as well? Schumpter who coined the popular term 'creative destruction' may argue that we are going through it now--old, inefficient industries give way to new ones. After all, the golden rule of the liberalization of markets and capitalism is that pain in the short run through job losses (ex. outsourcing) will lead to long run gains.

But I think that there is an important issue that must also be addressed: if other countries are educating their workforce more and more to compete for higher wage jobs--where does that leave the US? China--despite severe disparities--is spending more and focusing on educating its students. In India, blink a few times, and another private engineering college is being built. Don't get me wrong--America still boasts the finest universities and most productive workers--but it is the ever worrisome 'percent change': while more engineers, scientists, and doctors are being churned out in India--the numbers have stagnated in America. Similarly, while their productivity and ability to perform increasingly complex work rises ours continue to stagnate. Sadly, some business leaders say that the areas of highest demand are very high skilled, high wage labor and there is a shortage of it in the fifty states

Similarly, America, while still dwarfing most countries in raw expenditures on education in the primary and secondary levels, has students who simply don't do nearly as well in the albeit controversial OECD Pisa Exams in Math and Reading. Many will argue that the countries that beat us have more homogenous populations, less poverty, and are smaller. These are fair arguments but what troubles me more is that if we want to continue innovating and improving our country we need smarter and smarter kids. We cannot just find excuses but must tackle the problems of poverty, diversity (language issues), and size head on. BUT when a recession hits our education system feels the shocks immediately: school budgets are being slashed, public universities are severely underfunded. In effect, we have collectively decided not to invest in our future when more than ever we need to.

Imagine my shock when I read articles that state that in the coming years the jobs that are primed for the most growth and thus demand are ones that DO NOT REQUIRE a college degree: Customer Service representative, health aide, and store clerk. While all these jobs are certainly important, it is astonishing that some economists are going further and challenging the third-rail of American education system by nitpicking the opportunity costs of college education as well. While children in the third world crave a higher education, Americans are reconsidering it? How is this possible?

With an increasingly knowledge oriented economy it is more necessary now than ever to pursue bold policy to retool our education system to maximize its efficiency. The conversation should really turn to how we should empower Americans to increasingly compete and earn high wages. After all, when all the accountants, paralegals, and computer engineers are outsourced--what will America's middle class do?