Rising Above the Gathering Storm Energizing and Employing America for a Brighter Economic Future (2007) / Chapter Skim
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1 A Disturbing Mosaic
1 A Disturbing Mosaic
Pages 23-40
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From page 23... ...
Friedman argues that, despite the dangers, a flat world is on balance a good thing -- economically and geopolitically. Lower costs benefit consumers and shareholders in developed countries, and the rising middle class in 1Major portions of this chapter were adapted from an article of the same name by Wm.
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From page 24... ...
That same rising middle class will have a stake in the "frictionless" flow of international commerce -- and hence in stability, peace, and the rule of law. Such a desirable state, writes Friedman, will not be achieved without problems, and whether global flatness is good for a particular country depends on whether that country is prepared to compete on the global playing field, which is as rough and tumble as it is level.
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From page 25... ...
In 2001, the Hart–Rudman Commission on national security, which foresaw large-scale terrorism in America and proposed the establishment of a cabinet-level Homeland Security organization before the terrorist attacks of 9/11, put the matter this way:4 The inadequacies of our system of research and education pose a greater threat to U.S. national security over the next quarter century than any potential con ventional war that we might imagine.
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From page 26... ...
Many people who once had jobs in the textile, furniture, apparel, automotive, and other manufacturing industries might be forgiven for saying that world is decidedly slanted. They watched their jobs run downhill to countries where the workforce earns far lower wages.
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From page 27... ...
Furthermore, protectionist measures have historically proved counterproductive. For several years, US companies that outsource information-technology jobs have all but ordered their contractors to send some portion of the work overseas to gain hiring flexibility, cut employment costs -- by 40% in some cases18 -- and cut overhead costs for 12B.
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From page 28... ...
Because offshoring of service-sector jobs is a recent phenomenon, few analysts offer predictions about its long-term effects on the US economy. The classical view of free trade, as articulated nearly two centuries ago by British economist David Ricardo, states that if a nation specializes in making a product in which it has a comparative cost advantage and if it trades with another nation for a product in which that nation has a similar cost advantage, both countries will be better off than if they had each made both products themselves.25 But does that theory hold in a world where not only goods but many services are tradable as well?
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From page 29... ...
In those economies, wages for skilled workers are low because these workers were previously cut off from the deep and rapidly growing pool of technological knowledge that existed outside their borders. As they have opened up their economies so that this knowledge can now flow in, wages for highly skilled workers have grown rapidly.
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From page 30... ...
Yet there is widespread concern about our K–12 science and mathematics education system, the foundation of that human capital in today's global economy. A recent Gallup poll30 asked respondents, "Overall, how satisfied are you with the quality of education students receive in kindergarten through grade twelve in the United States today -- would you say you are completely satisfied, somewhat satisfied, somewhat dissatisfied or completely dissatisfied?
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From page 31... ...
That was a primary reason for the creation in the 1860s of the land-grant college system; it is why early in the 20th century universal primary and secondary schooling was supported; it is why a system of superior state universities was created and generously supported and scholarships were given to needy students; and it is why the Serviceman's Readjustment Act of 1944 -- the GI Bill -- was established and why the National Defense Education Act was passed in 1958 shortly after the launch of Sputnik. Now, however, funding for state universities is dwindling, tuition is rising, and students are borrowing more than they receive in grants.
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From page 32... ...
Nonetheless, the increasing pressure on corporations for short-term results has made investments in research highly problematic. Funding for Research in the Physical Sciences and Engineering Although support for research in the life sciences increased sharply in the 1990s and produced remarkable results, funding for research in most physical sciences, mathematics, and engineering has declined or remained relatively flat -- in real purchasing power -- for several decades.
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From page 33... ...
A recent National Academies study37 revealed that the average age at which a principal investigator receives his or her first grant is 42 years -- partly because of requirements for evidence of an extensive "track record" to reduce risk to the grant-makers.38 But reducing the risk for individual research projects increases the likelihood that breakthrough, "disruptive" technologies will not be found -- the kinds of discoveries that often yield huge returns. History also suggests that young researchers make disproportionately important discoveries.
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From page 34... ...
Some promising students wait a year or more for visas; some senior scholars are subjected to long and sometimes demeaning review processes. Those cases, not the shorter average processing time, are emphasized in the international press.
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From page 35... ...
The academic research community is deeply concerned that a literal interpretation of these suggestions could prevent foreign graduate students from participating in US-based research and would require an impossibly complex system of enforcement. Given that 55% of the doctoral students in engineering in the United States are foreign-born and that many of these students currently remain in the United States after receiving their degrees, the effect could be to drastically reduce our talent pool.
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From page 36... ...
In recent months, polls have indicated persistent concern not only about the war in Iraq and issues of terrorism but also, and nearly equally, about jobs and the economy. One CBS-New York Times poll showed security leading economic issues by only 1%;41 another42 showed that our economy and job security 41CBS News-New York Times poll, June 10-15, 2005; of 1,111 adults polled nationwide, 19% found the war in Iraq the most important problem, 18% cited the economy and jobs.
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From page 37... ...
Well-paying jobs, accessible healthcare, and high-quality education require the discovery, application, and dissemination of information and techniques. Our economy depends on the knowledge that fuels the growth of business and plants the seeds of new industries, which in turn provides rewarding employment for commensurately educated workers.
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From page 38... ...
In the 1980s, Ireland's unemployment rate was 18%, and during that decade 1% of the population -- mostly young people -- left the country, largely to find jobs.48 In response, a coalition of government, academic institutions, labor unions, farmers, and others forged an ambitious and sometimes painful plan of tax and spending cuts and aggressively courted foreign investors and skilled scientists and engineers. Today, Ireland is, on a per capita basis, one of Europe's wealthiest countries.49 In 1990, Ireland's per capita GDP of $12,891 (in current US dollars)
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From page 39... ...
World War II saw us rise to the military challenge, quickly developing nuclear weapons and other military capabilities. After the launch of Sputnik53 in 1957, we accepted the challenge of the space race, landed 12 Americans on the moon, and fortified our science and technology capacity.
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From page 40... ...
It might even be appropriate to protect some selected jobs for a very short time. But in the end, the country will be strengthened only by learning to compete in this new, flat world.
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