Friday, January 12, 2007

Is China going to dominate the 21st century?

From "Learning to Keep Learning" By THOMAS L. FRIEDMAN, The New York Times, December 13, 2006:


Sorry, but I am not ready to cede the 21st century to China yet.

No question, China has been able to command an impressive effort to end illiteracy, greatly increasing its number of high school grads and new universities. But I still believe it is very hard to produce a culture of innovation in a country that censors Google — which for me is a proxy for curtailing people’s ability to imagine and try anything they want. You can command K-12 education. But you can’t command innovation. Rigor and competence, without freedom, will take China only so far. China will have to find a way to loosen up, without losing control, if it wants to be a truly innovative nation.


Why should any employer anywhere in the world pay Americans to do highly skilled work — if other people, just as well educated, are available in less developed countries for half our wages?

If we can’t answer this question, in an age when more and more routine work can be digitized, automated or offshored, including white-collar work, “it is hard to see how, over time, we are going to be able to maintain our standard of living,” says Marc Tucker, who heads the National Center on Education and the Economy.


Tomorrow, Mr. Tucker’s organization is coming out with a report titled “Tough Choices or Tough Times,” which proposes a radical overhaul of the U.S. education system, with one goal in mind: producing more workers — from the U.P.S. driver to the software engineer — who can think creatively.



Don said...

"Why should any employer anywhere in the world pay Americans to do highly skilled work — if other people, just as well educated, are available in less developed countries for half our wages?"

That is a good question, but it is prompted largely by the supposed competition for knowledge work posed by outsourcing in India and China and other places.

In my field I have seen demand (and wages) fall by 30% since 2000 - which is supposedly to be caused by outsourcing to India.

I've seen interesting data indicating that outsourcing has not been the fundamental cause, at least in software engineering. Rather it seems to be a demand-driven phenomena. There seem to be fewer of what I call 'demanding' projects going on and more relatively routine work out there. This has a negative impact both at the higher end of the labor market and the lower end, but for different reasons. The higher end (where I inhabit) has simeply been hurt by lower demand. Many of the leading corporations in the telecoms and engineering sectors were savaged or made bankrupt by the 2001 recession and they have not come back. Consequently the highly-skilled engineers they once employed have had to find other work - at much lower pay.

The effect on the lower areas of the software engineering field has also been profound, partly caused by 'slumming' by more skilled workers taking jobs which they once would have scorned, and partly by the results of outsourcing taking some of the work.

Yet I doubt that outsourcing will long have a major effect on western labor market - in the 10 to 20 year perspective I mean. As China takes it's industry upmarket it is going to need all the skilled people it can produce to accomplish that feat. In fact it will probably import those skills from abroad. As India develops it's manufacturing sector it will have to do the same. Skilled people occupied by local companies making products perforce will not be available for outsourcing. Wages will rise in those places - sounding the death knell for outsourcing as we know it.

Outsourcing really only makes sense when there is an enormous differential between wage rates - and that gap is narrowing and will continue to narrow. No longer will Indian software engineers cost 10% of rates in the EU and the US. Already the difference is much narrower than that, at 50% or more.

Marian said...


thank you for your - as per usual - insightful - comment. And a happy new year, btw!

I'm with you as the narrowing gap is concerned, but a "10 to 20 year perspective"? Come on, you has the time for a perspective lasting more than, say, two weeks? ;-) Tom Friedman certainly not.

Marian said...

you has the time = who has the ... sorry