Can Americans Compete?

1
Can Americans Compete?

• U.S. not building human capital as before
• Primary and secondary schools falling behind rest
  of world
• Universities still excellent, but foreign
  students increasingly taking education back home
• Science and engineering grads increasing
  elsewhere, declining here
• Many iconic U.S. firms already do most business
  and employ most workers outside U.S.
• Conversely, some quintessential American brands
  (e.g., Jeep) owned by non-U.S. cos
• Many products of U.S. cos made outside U.S. while
  many non-U.S. cos make products here
• Dell laptop may have been assembled in Malaysia
  from parts made by American cos in Thailand

2
Can Americans Compete?

• Large cos transcended nationality long ago
  globalization creates opportunities as well as
  challenges
• For American workers, globalization is dicier
  propositionvast numbers exposed to global labor
  market competition, contest many cannot win at
  this time
• Global economy increasingly based on information
• Cost of handling information in free fall
• Low-cost countries turning out large numbers of
  well-educated workers fully-qualified to work in
  information-based economy
• China reported to be producing 600,000
  engineering grads in 2005, India 350,000, U.S.
  70,000 (note considerable issues re these
  numbers)
• Outsourcing no longer threatens only mfg and
  lower-level knowledge work
• McKinsey estimates 52 of engineering jobs
  amenable to offshoring, 31 of accounting jobs
• Downward pressure on U.S. wages

3
Can Americans Compete?

• Question is whether there can be economic
  dominance wo/ technology leadership
• Until scientific revolution began in 17th
  century, virtually everyone lived on verge of
  subsistence
• Three centuries of technology breakthroughs are
  root of todays abundance in developed world
• Those w/ technological edge have highest standard
  of living
• Key to competitiveness is maintaining
  technological superiority continually creating
  high-value new jobs that workers in rest of world
  cant do yet
• 1 policy prescription education
• Thats a problem for America today
• As America changed from agricultural to
  industrial economy, high school movement swept
  U.S.
• 8th grade education no longer enough
• European model, which prepared small minority of
  young people for college, was rejected
• Morrill Act of 1862land-grant universities
• By 1940, U.S. was worlds best-educated nation

4
Can Americans Compete?

• U.S. spending on RD will have to increase
• 71 of industrial RD is on development, not
  basic research
• Federal funding of research in physical sciences
  as percentage of GDP has been declining for 30
  years
• How can American workers be worth what they cost?
• Greatest challenge will be changing a culture
  that neither values education nor sacrifices the
  present for the future as much as it used to or
  as much as our competitors do
• Challenge to business, government, and society