The Race to the Top

Stephen DeAngelis

June 20, 2006

I remember the days when one of the starkest contrasts between capitalism and communism was that the former fostered an entrepreneurial spirit while the latter sapped the desire to work from its labor force. You know the last vestiges of communism are starting to crumble in China when the its leadership urges their people to be more innovative. Yesterday’s Washington Post ran an article about just such a turn of events [“In China, Dreams of Bright Ideas: From Top Down, A Push to Innovate,” by Edward Cody].

Instead of millions of Chinese youths assembling somebody else’s inventions, the party leadership has concluded, the time is right for China to come up with its own ideas and sell them to everyone else. The question of whether China can pull off this transformation — from workshop of the world to cradle of invention — is key to the giant country’s future. The answer will help determine whether a government anchored in 150-year-old Marxist ideology can pursue economic expansion, satisfy the needs of 1.3 billion people and take a place among global powers in an age when knowledge is the highest-earning product.

It’s ironic that at the moment the world’s most powerful capitalist nation spends most of its time complaining about the outsourcing of jobs, the world’s most powerful communist nation sees its future creating jobs (not importing them). The key to such job generation, according to the article, is education — “knowledge is the highest-earning product.” There is no secret here. We pay lip service to education, job training, etc., but we have yet to bite the bullet as a nation and get serious about improving our educational system.

In April 2005, Tom Friedman wrote about this problem [“What, Me Worry?” The New York Times, 29 April 2005]. He had just listened to a speech by Bill Gates to America’s governors. Here is some of what he wrote:

One of America’s most important entrepreneurs recently gave a remarkable speech at a summit meeting of our nation’s governors. Bill Gates minced no words. “American high schools are obsolete,” he told the governors. “By obsolete, I don’t just mean that our high schools are broken, flawed and underfunded. … By obsolete, I mean that our high schools – even when they are working exactly as designed – cannot teach our kids what they need to know today. Training the work force of tomorrow with the high schools of today is like trying to teach kids about today’s computers on a 50-year-old mainframe. … Our high schools were designed 50 years ago to meet the needs of another age. Until we design them to meet the needs of the 21st century, we will keep limiting – even ruining – the lives of millions of Americans every year.” Let me translate Mr. Gates’s words: “If we don’t fix American education, I will not be able to hire your kids.”

As backward as some Americans think China and India are, they are rapidly overtaking the U.S. in the educational field. If America is to remain resilient, it needs to stop whining and start educating its future work force – its future innovators. Friedman continued by quoting from an interview he had with Harvard President, Larry Summers:

“For the first time in our history, we are going to face competition from low-way, high-human-capital communities, embedded within India, China and Asia,” President Lawrence Summers of Harvard told me. In order to thrive, “it will not be enough for us to just leave no child behind. We also have to make sure that many more young Americans can get as far ahead as their potential will take them. How we meet this challenge is what will define our nation’s political economy for the next several decades.

Friedman concluded his column by recommending a book whose contents seem to have been read by Chinese leadership:

Meeting this challenge requires a set of big ideas. If you want to grasp some of what is required, check out a smart new book by the strategists John Hagel III and John Seely Brown entitled “The Only Sustainable Edge.” They argue that comparative advantage today is moving faster than ever from structural factors, like natural resources, to how quickly a country builds its distinctive talents for innovation and entrepreneurship – the only sustainable edge. Economics is not like war. It can always be win-win. “But some win more than others,” Mr. Hagel said, and today it will be those countries that are best and fastest at building, attracting and holding talent. There is a real sense of urgency in India and China about “catching up” in talent-building. America, by contrast, has become rather complacent. “People go to Shanghai or Bangalore and they look around and say, ‘They’re still way behind us,’ ” Mr. Hagel said. “But it’s not just about current capabilities. It’s about the relative pace and trajectories of capability-building. “You have to look at where Shanghai was just three years ago, see where it is today and then extrapolate forward. Compare the pace and trajectory of talent-building within their population and businesses and the pace and trajectory here.” India and China know they can’t just depend on low wages, so they are racing us to the top, not the bottom. Producing a comprehensive U.S. response – encompassing immigration, intellectual property law and educational policy – to focus on developing our talent in a flat world is a big idea worthy of a presidency. But it would also require Mr. Bush to do something he has never done: ask Americans to do something hard.

 Let’s jump back to Cody’s article in yesterday’s New York Times:

Even while they enforce political conformity, President Hu Jintao and Premier Wen Jiabao rarely let a speech go by these days without urging their countrymen to think up new products. Most recently, Hu told scientists and engineers they must make China “a nation of innovation.” “Innovation is an overall strategy for maintaining China’s economic security,” said Hu Shuhua, who heads the Product Innovation Management Center at Wuhan University of Technology. “Now should be the time for us to innovate,” he added, pointing out that China has been importing other countries’ know-how for the last 20 years. “Now we have the economic and technical base to do it.”

Cody reports that Chinese leaders lament the fact that they have to travel on Boeing aircraft, log on to their computers using Microsoft software, and drive in cars built in partnership with foreign car manufacturers. That has a familiar ring to it doesn’t it? China will get over its inferiority complex and soon realize that this global interconnectivity is good, not bad. They will welcome what IBM’s Samuel Palmisano calls “globally integrated enterprises.” Chinese leaders are hoping they can foster innovation in areas they desire, while preventing it in areas they perceive as threatening.

Even as President Hu was urging party members to “actively promote cultural innovation” in April, censors were ordering more than 20 paintings with political content pulled from an exhibition in Beijing’s Dashanzi art colony. Similarly, in May, Premier Wen urged scientists to “raise the level of self-generated innovative ability” just as his government ordered a blackout on the film “Summer Palace,” a Chinese production containing references to the 1989 student protest in Tiananmen Square that gained acclaim at this year’s Cannes Film Festival.

They will learn — and eventually accept as fact — that once people taste a bit of freedom, obtain a little success, and connect with others, there is no going back. It’s a Pandora’s Box. Nicholas D. Kristof’s column in today’s New York Times underscores what I’m writing about. Kristof started two Chinese blogs to see how outrageous he could get before the censors shut him down. He learned he could be pretty outrageous.

China is not the police state that its leaders sometimes would like it to be; the Communist Party’s monopoly on information is crumbling, and its monopoly on power will follow. The Internet is chipping away relentlessly at the Party, for even 30,000 censors can’t keep up with 120 million Chinese Netizens. With the Internet, China is developing for the first time in 4,000 years of history a powerful independent institution that offers checks and balances on the emperors. It’s not that President Hu Jintao grants these freedoms, for he has arrested dozens of cyberdissidents as well as journalists. But the Internet is just too big and complex for State Security to control, and so the Web is beginning to assume the watchdog role filled by the news media in freer countries. … China’s leaders decided years ago to accept technologies even if they are capable of subversive uses: photocopiers and fax machines at first, and now laptops and text messaging. The upshot is that China is much freer than its rulers would like. To me, this trend looks unstoppable. I don’t see how the Communist Party dictatorship can long survive the Internet, at a time when a single blog can start a prairie fire.

These are all good signs for the advance of globalization and international peace, but they are also strong warning signs for the U.S. if it wants to stay in the race at the top. A freer, more competitive China will force the U.S. to reexamine how it educates and employs its work force. America will ignore these signs at its peril. The U.S. has rested on its laurels far too long and must once again get serious about education. The “greatest generation” returned from the Second World War eager to get educated and get to work — and what miracles it wrought! It’s time to work more miracles, by educating the next great generation and providing them with the necessary skills to excel in what promises to be a very interesting moment in history. We will be in a win-win situation only if we position ourselves for success. That’s being resilient.