For many
years it has been the conventional wisdom that the U.S. economy is the world's
most dynamic with the world's most flexible work force, most entrepreneurial
ethic, most new start-ups, and most innovative management and with the most
benefits from globalization. Declinism was not only out of vogue. It had an air
of illegitimacy about it. Now, suddenly, declinism is in fashion and it is the
conventional wisdom that America is headed in the wrong direction on the wrong
track.
A new
conventional wisdom is evolving to explain the causes of the decline and how to
address them. Among the key elements of this new orthodoxy are the notions that
the U.S. is lagging badly in innovation and education. This diagnosis, of
course, leads directly to prescriptions for greater spending on and government
support of R&D and much greater emphasis on getting students not only into
and out of college but into advanced and professional degrees.
Of course, it
is true that U.S. spending on R&D as a percent of GDP has fallen and
stagnated in comparison with the glory days of yesteryear and the recent
reports on SAT scores certainly seem to confirm that there are problems with
U.S. education. And yet, as I consider Germany, I wonder.
Germany has
higher wages, higher taxes, higher welfare costs, a lower percentage of college
and professional graduates, and lower spending as a percent of GDP on R&D
than the United States. Yet, in contrast to America's chronically large trade
deficit and high unemployment rate, Germany has a huge trade surplus and a low
unemployment rate. What's going on?
One thing is
a misperception about high tech, R&D, and innovation. Consider a recent
conversation I had with a CEO of an American office furniture manufacturer.
Just making small talk at a conference, I asked him how business was. " Pretty
good," he said. "What's selling?" I asked. "We have a line of Cherry office
furniture that's just flying out of the showroom," he replied. "Where do you
make it," I asked. "Well," he said, "we cut the cherry trees in West Virginia.
They have the best cherry trees in West Virginia. Then we ship the logs to
Germany where they peel the veneer. Then we ship the veneer to China where it
is glued to the frame and then they ship the finished furniture to us in
Wisconsin where we market and sell it." Astonished, I asked in a tone of
disbelief, "You ship the logs to Germany? Is there no one who can peel veneer
in America?" "Yes," he admitted, but went on to emphasize that "the Germans do
it far better than the Americans."
Veneer
peeling never shows up on the lists of high-tech industries and is never
discussed when there is talk of the need for more Silicon Valley style
start-ups and innovation. Nor do veneer peelers need advanced college degrees.
Yet veneer peeling in Germany is so high-tech and so innovative that furniture
makers are shipping logs and veneer around the world to get something done in
Germany that one would expect to be easily done in the United States.
Innovation and high tech doesn't have to be Google or Silicon Valley. It may
not necessarily take a lot of basic Research spending (although certainly some
D spending) or advanced formal education.
What Germany
has is a lot of family owned, medium sized businesses and a government and
society that are committed to the long term and to keeping German-based
production competitive in as many sectors as possible. It also has a system of
training and maintaining skills that doesn't turn out PhDs, but does turn
out supremely qualified workers. And, of course, to gain full advantage from
those skills, it strives through cooperation between industry, government, and
labor to keep producers competitive from a German production base.
Of course, I
do not mean to oppose further support of education and R&D in the United
States. The more the better. But perhaps we should also try to learn from the
Germans.
Read More
(12)
HIDE COMMENTS LOGIN OR REGISTER REPORT ABUSE