Sunday, December 18, 2005

Smarter than the other guys?

Globalisation is a topic that absolutely fascinates me; in particular, the economics of the rise and rise of the Far East and Asia, and the future downfall of the West. I firmly believe that within 10 to 15 years, the global economic landscape will have shifted considerably in favour of our Eastern competitors.

Essentially, the problem is this: The West was once a manufacturing powerhouse, but manufacturing capability has shifted to the Far East (Vietnam, Cambodia, the Philippines, Korea, Thailand, China et al), where labour rates and hence production costs are much, much lower. Initially, it was just simple manufacturing tasks that were outsourced, and the West moved to more hi-tech manufacturing jobs. Over time however, the complexity of the manufacturing tasks being sent to the Far East (for reasons of cost) has increased - to the point where the majority of the world’s high-tech equipment is now built in the Far East.

So the West has had its manufacturing jobs taken from it – including most of the high-tech ones. That was inevitable. No matter, say our business and government leaders, “We’re still ahead in ‘innovation’, and we’re going to make sure it stays that way.” What they basically mean is that it doesn’t matter that we’ve lost the repetitive, low-skilled jobs because we’re going to keep and develop the jobs that need brains – design, analysis, innovation, finance. The so-called ‘knowledge economy’. The West is basing its whole economic future on the futile hope that we’ll stay smarter than the other guys.

I’m not the only one who sees a problem with this approach. In his latest book, entitled ‘The World is Flat’, Thomas L. Friedman quotes Bill Gates as saying, "When I compare our high schools to what I see when I'm travelling abroad, I am terrified for our work force of tomorrow. In math and science, our fourth graders are among the top students in the world. By eighth grade, they're in the middle of the pack. By 12th grade, U.S. students are scoring near the bottom of all industrialized nations. . . . The percentage of a population with a college degree is important, but so are sheer numbers. In 2001, India graduated almost a million more students from college than the United States did. China graduates twice as many students with bachelor's degrees as the U.S., and they have six times as many graduates majoring in engineering. In the international competition to have the biggest and best supply of knowledge workers, America is falling behind." You could easily add the UK in to that statement. Which pretty much sums up the whole problem – we’re not going to be staying smarter than the other guys for very long.

Friedman himself goes on to say something similar to what I said in a previous post (only he puts it far more eloquently), “It is now possible for more people than ever to collaborate and compete in real time with more people on more different kinds of work from more different corners of the planet and on a more equal footing than at any previous time in the history of the world… When the world is flat, you can innovate without having to emigrate”.

So much for keeping ahead through innovation.


Post a Comment

<< Home