Sunday, June 19, 2005

And now, for something completely different...

From the Scrivener; a Democrat who actually grasps elementary economics:

[Nick] SCHULZ: In other words that education is not the way out of the poverty trap. Now how do you reach that conclusion?

[William] LEWIS: By sifting through evidence primarily from two directions. Interestingly enough, we got the first hint of this when we were studying the US relative to Japan back in the early 1990's when the Japanese were wiping out the US consumer electronics industry and threatening the steel and automobile industries. The conventional wisdom in the US was that it was true, and that was in large part true because the US labor force was so bad. There were many disparaging comments made in the US and maybe even stronger abroad, (and especially in Japan) about how the US labor force was getting what it deserved because it was lazy, uneducated and maybe even dumb. And of course, the Japanese then showed -- the really capable, competent Japanese manufacturing companies -- showed that was wrong by coming here, building their own factories, managing American labor and taking a lot of other local inputs and coming within five percent of reproducing their home country productivity.

So when we first came out with this conclusion, it just really staggered Bob Reich and others. Bob Reich was US Secretary of Labor and a great advocate at that time of the German apprenticeship system and felt like we just needed to train American labor better. And we showed that something like 40 percent of the unemployed in Germany had been through the apprenticeship system.

But more importantly, you can take the US workforce and train it on the job with sufficiently skilled managers to reach within a hair's breadth of the highest productivity in world in these industries. That pattern -- and of course that conclusion back then coupled with the fact that the US wasn't behind -- really got a huge amount of attention and
really undermined the initial economic platform on which Bill Clinton was elected.

I am a Democrat, by the way, and I voted for Clinton, but he clearly was wrong about the health of the US economy in his first campaign and in the early days of his being president

The great bulk of the evidence about education came from competent multinational corporations of any nationality. Showing they could go virtually anywhere in the world and take the local workforce and train it to come close to home country productivity.

And then, sort of the clinching evidence was we then looked at some other industries. We compared the construction industry in the US to construction in Brazil and found that in Houston, the US industry was using Mexican agriculture workers who were illiterate and didn't speak English. So they were not any different than the agricultural workers who were building similar high rises say in Sao Palo. And yet they were working at four times the productivity.


LEWIS: Just because people are not educated does not mean that they are incapable, which is a mistake educated people in the West often make -- and not just the West but probably in Japan as well. These people can be trained on the job to accomplish quite high skill levels and quite high levels of productivity. And that's basically good news because if the World Bank and everybody else had to wait until we revamp the educational institutions of all the poor countries and then put a cohort or two of workers through it, we are talking about another 50 years before anything happens. That's not acceptable and it's not necessary, thank God.

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