By THOMAS L. FRIEDMAN
Published: October 20, 2009
Last summer I attended a talk by Michelle Rhee, the dynamic chancellor of
public schools in Washington. Just before the session began, a man came up,
introduced himself as Todd Martin and whispered to me that what Rhee was about
to speak about — our struggling public schools — was actually a critical, but
unspoken, reason for the Great Recession.
Skip to next paragraph There’s something to that. While the subprime mortgage
mess involved a huge ethical breakdown on Wall Street, it coincided with an
education breakdown on Main Street — precisely when technology and open borders
were enabling so many more people to compete with Americans for middle-class
jobs.
In our subprime era, we thought we could have the American dream — a house and
yard — with nothing down. This version of the American dream was delivered not
by improving education, productivity and savings, but by Wall Street alchemy
and borrowed money from Asia.
A year ago, it all exploded. Now that we are picking up the pieces, we need to
understand that it is not only our financial system that needs a reboot and an
upgrade, but also our public school system. Otherwise, the jobless recovery
won’t be just a passing phase, but our future.
“Our education failure is the largest contributing factor to the decline of the
American worker’s global competitiveness, particularly at the middle and bottom
ranges,” argued Martin, a former global executive with PepsiCo and Kraft Europe
and now an international investor. “This loss of competitiveness has weakened
the American worker’s production of wealth, precisely when technology brought
global competition much closer to home. So over a decade, American workers have
maintained their standard of living by borrowing and overconsuming vis-à-vis
their real income. When the Great Recession wiped out all the credit and asset
bubbles that made that overconsumption possible, it left too many American
workers not only deeper in debt than ever, but out of a job and lacking the
skills to compete globally.”
This problem will be reversed only when the decline in worker competitiveness
reverses — when we create enough new jobs and educated workers that are worth,
say, $40-an-hour compared with the global alternatives. If we don’t, there’s no
telling how “jobless” this recovery will be.
A Washington lawyer friend recently told me about layoffs at his firm. I asked
him who was getting axed. He said it was interesting: lawyers who were used to
just showing up and having work handed to them were the first to go because
with the bursting of the credit bubble, that flow of work just isn’t there. But
those who have the ability to imagine new services, new opportunities and new
ways to recruit work were being retained. They are the new untouchables.
That is the key to understanding our full education challenge today. Those who
are waiting for this recession to end so someone can again hand them work could
have a long wait. Those with the imagination to make themselves untouchables —
to invent smarter ways to do old jobs, energy-saving ways to provide new
services, new ways to attract old customers or new ways to combine existing
technologies — will thrive. Therefore, we not only need a higher percentage of
our kids graduating from high school and college — more education — but we need
more of them with the right education.
As the Harvard University labor expert Lawrence Katz explains it: “If you think
about the labor market today, the top half of the college market, those with
the high-end analytical and problem-solving skills who can compete on the world
market or game the financial system or deal with new government regulations,
have done great. But the bottom half of the top, those engineers and
programmers working on more routine tasks and not actively engaged in
developing new ideas or recombining existing technologies or thinking about
what new customers want, have done poorly. They’ve been much more exposed to
global competitors that make them easily substitutable.”
Those at the high end of the bottom half — high school grads in construction or
manufacturing — have been clobbered by global competition and immigration,
added Katz. “But those who have some interpersonal skills — the salesperson who
can deal with customers face to face or the home contractor who can help you
redesign your kitchen without going to an architect — have done well.”
Just being an average accountant, lawyer, contractor or assembly-line worker is
not the ticket it used to be. As Daniel Pink, the author of “A Whole New Mind,”
puts it: In a world in which more and more average work can be done by a
computer, robot or talented foreigner faster, cheaper “and just as well,”
vanilla doesn’t cut it anymore. It’s all about what chocolate sauce, whipped
cream and cherry you can put on top. So our schools have a doubly hard task now
— not just improving reading, writing and arithmetic but entrepreneurship,
innovation and creativity.
Bottom line: We’re not going back to the good old days without fixing our
schools as well as our banks.
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