Sunday, February 1, 2009

Sustaining America's Edge in a Competitive World


In spite of America's leadership position in global competitiveness, the new US administration under President Barack Obama is asking the US Congress to more than double the federal education budget this year, as part of its stimulus package. Some of the new spending will ensure that any reductions in education budgets by local and state bodies are more than offset by additional federal dollars.

International math and science test results have consistently shown for over a decade that Asian students from China, Japan, Singapore and Korea perform better than American students. In spite of such results, the US continues to excel in scientific and technological innovation as measured by the number of Nobel prizes and number of international patent filings. Most of the recent breakthrough innovations have come from the United States. Six of the top ten highest ranked universities are in the United States. America's workers continue to be amongst the most productive in the world. There is only one Silicon Valley in the world and it is in the United States. This valley represents more of a state of mind rather than a physical place. Why is it? Do Americans focus more on scientific reasoning than facts and content? Is there greater focus on rote learning in Asia? Do Americans foster more creativity and greater exploration? Does freedom of expression in America encourage more questioning and better reasoning? There have not been any comprehensive studies to answer these questions satisfactorily. But one thing is clear: In the "New Economy", the most important single asset for any nation is the intellectual capital it develops by educating its people well. Investment in education could not be better described than by the words used by the Chinese genius Kuan Chung centuries ago: "If you plan for a year, plant a seed; if for 10 years, plant a tree; if for a 100 years, teach the people. When you sow a seed once, you reap a single harvest; when you teach the people, you will reap a 100 harvests."

The Department of Education’s discretionary budget for the 2008 fiscal year was about $60 billion. The stimulus bill would raise that to about $135 billion this year, and to about $146 billion in 2010. Other federal agencies would administer about $20 billion in additional education-related spending. The new spending represents a dramatic boost in a country which already spends more than most of the industrialized nations on education.

In recent years the federal government has contributed 9 percent of the nation’s total spending on public schools, with states and local districts financing the rest. Washington has contributed 19 percent of spending on higher education. The stimulus package would raise those federal proportions significantly. Total public and private spending on US education is close to a trillion dollars a year, about 6.8% of the 14.5 trillion dollar GDP.

In higher education, the bill would increase spending on Pell Grants, the most important federal student aid program, to $27 billion from about $19 billion this year, according to the New York Times.

“It’s a very good idea to increase Pell Grants in the stimulus,” said Terry Hartle, a senior vice president for public affairs at the American Council on Education, which represents colleges and universities. But Mr. Hartle said that even he was having difficulty tracking all the new spending. “A lot of things will go through, and only later will we know exactly what happened,” he said.

The large increases in education spending may or may not be sufficient to guarantee a continuing edge for America in the brave new world of competition. But it is very likely to help, particularly if the spending boost is accompanied by a sound education policy that encourages new technology innovation, philosophy of peaceful coexistence with other nations, achieving breakthroughs to respond to the modern challenges of climate change, renewable energy, sustainable development and a new industrial and information revolution that makes life better for all citizens of the world.

2 comments:

Anonymous said...

"The large increases in education spending may or may not be sufficient to guarantee a continuing edge for America..But it is very likely to help, particularly if the spending boost is accompanied by a sound education policy" - I agree with you on this 100%. Great article. Keep it up!

Riaz Haq said...

Here's a Time Magazine piece titled "China Makes Everything. Why Can't It Create Anything?":

... China's 1.3 billion upwardly mobile people are voracious consumers of everything from cars to smartphones to Kentucky Fried Chicken. Through its relentless exports, China has amassed a mountain of cash reserves and made itself Washington's biggest foreign creditor.
However, the China that vacuumed up factories to become the Workshop of the World is fading into history. The country is a victim of its own success. Decades of nonstop growth have forever altered China's place in the global economy and changed how it must compete with rich nations like the U.S. and emerging economies like India. The tools that China has used to spark its economic miracle — government support, cheap labor, state-directed finance — cannot ensure its future. The country can no longer rely on just making lots of stuff; China has to invent things, design them, brand them and market them. Instead of following the leaders of global industry, China has to produce leaders of its own.
Such a transition is not easy. Few emerging nations in modern times have made the leap from assembler to inventor, copycat to innovator. For China, this would mean an overhaul of its economy. Many of the products China manufactures today aren't really very Chinese at all. Apple iPads might be exported from assembly lines based in China, but the Chinese themselves do little more than piece them together. The core technologies come from elsewhere, and even the factories are run by foreign firms (like Taiwan's Foxconn). For Chinese companies to compete with the world's best, they have to create products of their own that have a similar impact as the iPad. That requires a set of skills and know-how they don't yet possess and a level of managerial expertise they haven't yet developed. Economist William Janeway, author of the book Doing Capitalism in the Innovation Economy, says what has gotten China thus far won't be enough for the next step: "It is hard to start the process of pushing the frontier with [such] practices and policies."
Chinese policymakers fully realize that. The new leadership team in Beijing, ushered into office a year ago, has pledged to press ahead with free-market reforms — liberalizing finance, supporting private enterprise and cracking open protected sectors. "China's modernization will not be accomplished without reform, nor will it be achieved without opening up," Premier Li Keqiang recently conceded. So far, though, progress has been slow. Few meaningful initiatives have been introduced, and even headline-grabbing measures — like the September launch of a special zone in Shanghai to experiment with freer capital flows — have proved mere baby steps. Li and his mandarins must take on vested interests and rein in an overbearing bureaucracy, which will require formidable political will. China's leadership "is not ready yet to deliver a comprehensive reform package with executable specifics and clear timetables," Bank of America Merrill Lynch economists warned in October.
Whether China succeeds or fails will determine where everything from sneakers to cars to smartphones are manufactured, the brands that appear on them and who sells them. Failure could stall China's economic miracle and dampen global growth with it. Here are five challenges China must address:

1. Labor is no longer cheap
2. Companies lag behind in technology
3. Innovation doesn't come easy
4. There are too few global brands
5. Good managers are hard to find


http://content.time.com/time/magazine/article/0,9171,2156209,00.html