For a newspaper editorial page, the public schools are an issue all the time. Always the schools are to be supported, one reason being that local business needs an educated workforce in order to be competitive. I believed that until I ran across an unusual study by the McKinsey Global Institute. My column on it ran in the Seattle Times on July 14, 2004.
Consider this statement, from an initiative that will be on our November ballot:
To compete successfully in the 21st century economy, Washington’s citizens must be equipped with the best education and skills in the nation.
Could anyone doubt that a highly educated people will have economic success? William W. Lewis doubts it. “The importance of the education of the workforce has been taken way too far,” he writes in his new book, The Power of Productivity (University of Chicago Press, $28).
Lewis is not a proponent of ignorance. He has a Ph.D. from Oxford in theoretical physics. His son is a cardiologist and his daughter is a lawyer. He does not deny the well-known correlation between individual education and income, in which schooling opens the door to elite jobs. What he denies is the importance of ever-more doses of schooling to the job performance of the average American.
Lewis, now retired, was a partner for 20 years at McKinsey & Co., worldwide management consultants, and founder of the McKinsey Global Institute. His book interprets a McKinsey study that took a dozen years. The study asked why rich countries were rich and poor countries poor — a question that had been asked many times. The unusual thing was the study’s method, which concentrated on individual businesses. The McKinsey team would compare an Indian bank to a Brazilian bank, or a Russian homebuilder to a Japanese homebuilder.
Right away, one thing was obvious. The key to relative wages is output per worker. This is true not just for manufacturing workers. Japan’s workers, for example, beat America’s in steel and auto manufacturing, but America’s beat Japan’s in retailing, wholesaling, food processing and services. Japan has Toyota and Nippon Steel; America has Wal-Mart, Costco, Office Max and Tyson Foods. We are more productive than Japan in most of the things an economy does, and therefore we have a higher living standard.
Each “world-class” industry has its particular advantages. American retailing has big-box stores, which spread faster here because zoning allowed them here and Americans pushed them. American homebuilding has the subdivision, which allows houses to be built on a production line, and the mortgage, which is taken for granted here but doesn’t exist in India or Russia.
Americans have many economic advantages, but we do not have a country in which students spend more time in school and pay more attention to the teacher. The American level of book learning is none too good. All during the time of the study, Lewis writes, “U.S. managers complained regularly about the inability to hire workers who could read, write and do arithmetic.” And yet, he writes, “In sector after sector, the U.S. workforce achieved higher labor productivity than anyplace else on earth.”
Why? Americans mostly learn their skills on the job. But anyone may do that. One of Lewis’s studies was of apartment builders of Houston, who employ barely educated workers from rural Mexico. Their productivity, he writes, is “world-class.”
Why in America?
Our edge, Lewis says, is competition. We open our doors to both the carrot and the stick. Here innovators can offer new things. They can also push rivals to the wall. People like to talk about the carrot — economists call it “incentive” and egalitarians call it “greed” — but in Lewis’s view the stick does most of the work. That is because a carrot alone may be ignored, and often is. Not so the stick. Those who ignore the stick end up like Ernst Home Centers: out of business.
What of education? I called Lewis and asked him. He allowed that education is important to train people for certain high-knowledge jobs like the one he had.
But he said, “The promoters of education, many of them educators, have overstated their case.” Economic development is the modern mantra, and they have tried to tie education to it. “It is an easier argument,” he said.
The better reason for mass education is to pass on a culture. But we ill-educated Americans have a tin ear for academic-sounding arguments like that, and the promoters of education want to make a sale.
© 2004 The Seattle Times
I got several pieces of fan mail for that column, but the one I enjoyed the most was from Mike Riley, superintendent of the Bellevue School District. The true educators really hate making the economic argument. They make it only because they think it works.