Thursday, November 4, 2010

One Million Engineers A Year - And Counting

I recently returned from a trip to India, my second one this year. As I was getting on the return flight to Mumbai, I could see hundreds of armed guards being deployed throughout Mumbai - in anticipation of President Obama's first official visit. Even though his trip was a few days away, it was evident that the Indian government was not going to take any chances. Security would be air tight in a city that, like New York, experienced the "26/11" terrorist attack. Obama will then proceed to New Delhi, the capital city, to meet with the government officials, and address the Indian Parliament, among other things.

Buried in all the hubbub was what was NOT included in his agenda. Despite several recommendations in both countries, Obama will not be visiting Bangalore, a city that he has often tried to put down in his speeches. Bangalore, after all, is the high tech capital of India, home of several internationally renown IT companies like Wipro and Infosys. In his speeches, Obama often points to Bangalore as the place where the American corporations ship jobs to, supposedly creating unemployment here in the US. But let us step back a bit from the rhetoric and look at the facts, which in my opinion point to a totally different source for the current woes in this country.

First, let us review some axioms that I will use for this blog. Simply put, every economy needs people with different skills. Some, like scientists, engineers, technicians, researchers, create new intellectual property (such as patents) which can be turned into new and unique products (such as iPods, iPhones etc.), which can be sold for a profit in the marketplace. Some others, such as doctors, nurses, accountants, etc. help keep people and corporations healthy and humming. But by themselves, they can only reach a peak of 100%, and no more. Then there are others that, suffice to say, redistribute the wealth that is created by other professions. Currently, hedge fund managers come to mind as the favorite villains, but the entire government machinery, which taxes some to send benefit checks to others, while taking a cut to maintain its bureaucracy, falls in this category. The entire legal system also falls in this category, although austensibly it exists to maintain "fairness" in society. But it needs to be perfectly clear that the wealth creating part of every economy MUST create and sustain enough wealth so the other parts can function as designed. When the wealth creation engine starts dying, the others start dying as well.

When we look at the current state of our economy, it is amply evident that we have too many people in the latter two categories, and too few in the first. It is a forgone conclusion that our manufacturing base has been systematically dismantled and shipped to other countries, mostly China. But even more dismaying is the fact that our engineering schools have been graduating an ever smaller crop of future wealth builders. The number of bachelors' degrees in this country has slowly eroded from about 85,000 per year at the end of the '70s to about 70,000 in 2010. By itself, this does not mean much unless you compare it to emerging countries. China is said to have a capacity of around 600,000 to 700,000 engineering graduates per year, which explains why everything worth manufacturing is done in China. The come-from-behind story is India, where five short years ago, the capacity was around 500,000. By 2010, it has shot up to a million. Five southern states of Maharashtra, Andhra Pradesh, Karnataka (where Bangalore is situated), Tamil Nadu, and Kerala account for nearly 70% of this capacity, mostly initiated by the state governments by allowing private foundations to start schools. Just to understand how mind boggling this number is, it will take only two years for India to produce as many engineers as the US did in the last 30 years! And what will these engineers be doing in India? Anything that IBM, Cisco, Microsoft, Intel, Boeing, GE, and hundreds of other Fortune 500 companies want them to do. And let us not forget local companies like Tata Group, Reliance Group, Infosys, Wipro, HCL, and hundreds of government owned enterprises (including the space agency which recently sent a probe to the moon), and small enterprises. Even if the Obama administration ends tax breaks for companies that hire people in other countries, the genie is out of the bottle. Companies in the US simply have more choice and lower costs when it comes to hiring in India. If the US companies do not have a presence where the talent is, they lose to other European, Asian and Indian companies which hire profusely in India. A side benefit for the Indian economy is the 10 million or so high school seniors who study several years of physics, chemistry, math and computer science, aspiring to be engineers, doctors or scientists, but end up in other jobs such as technicians, accountants, and bureaucrats, with a much higher cognitive base compared to their foreign couterparts. This reality is unlikely to change any time soon.

So, what can the US do to counter this tsunami of engineering talent? First of all, turning off the tap of foreign talent alone will not jump start the economy here. We need to gear the education system to produce more wealth builders, a task that is easier said than done. Capacity to educate engineers is hard to come by, with fewer qualified professors and expensive facilities. Also, with around 90% of our children being educated in public schools, fewer and fewer students come to college with the knowledge and skills, let alone enthusiasm, to study engineering. With public schools coming up with a million reasons why they cannot change, the only way out appears to be to create a parallel system of schools that is more nimble and responsive to the economic realities. To their credit, both president Obama and his education secretary Arne Duncan have been promoting charter schools, which when done right, can accomplish what is needed. But even if someone were to wave a magic wand today, and made every school in this country a charter school, I think it will take at least a decade or longer to see measurable change in wealth creation. Add to this the gentrification of population, we have a long and bumpy ride ahead.

Welcome to the 21st century!

Monday, October 18, 2010

How To Kill The Golden Goose

While watching the recent economic blight that has struck America, I am often reminded of the Aesop's fable about the goose that laid golden eggs. There was a farmer who had a goose that laid a golden egg each day, the story goes, which the farmer sold to support his modest living. Until one day, the farmer got greedy and killed the golden goose thinking he will find a stash of eggs inside, only to end up with no golden eggs, and no goose that would have laid them either.

While there may be a lot of morals and interpretations of the tale, the one that appeals to me in the current context is that we have a lot of people around who would like to make a quick killing (no pun intended) rather than find a sustainable way to build wealth. And I don't mean "sustainable" from an ecological perspective, but an economic one. To get into a sustainable, long term growth mode needs long term thinking. And I see the long term thinking being continuously sacrificed for quick, short term gains. That is where, I think, countries like China outdo us consistently. Let me elaborate.

A reporter once asked former Chinese premier Chou En-Lai (Zhou Enlai) what he thought was the effect of the French Revolution, of 1789, on the rest of the world. He is said to have replied (sic) "It is too soon to say", meaning it was too early to tell. It was nearly two centuries after the incident that he made the comment! In my view, what he was exhibiting was a perspective that only someone whose feet are firmly entrenched in thousands of years of Chinese history could show. Also implicit in his response, in my opinion, was that the leadership of China took a much longer term view of the future when it came to decision making. They would, for example, forgo today's return if it meant much better returns ten years, or even fifty years. They focused on educating their young in the most rigorous math and science classes, even though their families could barely afford a decent living. They created a pseudo capitalistic system where individuals can create small businesses focused on export. They backed bright ideas with capital to take to market, even if it did not produce quick gains. Using these and many other longer term strategies, China went from being the begging bowl of the world, to the industrial giant that now has the world's largest automobile market, makes almost ten times the steel compared to the US, exports everything from toothbrushes to air conditioners to practically every country in the world, and has the world's largest standing army. The US owes a Trillion dollars (that is 1 followed by 12 zeroes) to the Chinese government, and there is very little we make that the Chinese want to buy. It is said that 600 of 800 suppliers for Wal Mart, an "American" retailer, are from China.

Going back, it has been nearly half a century since Premier Enlai said those famous words, and he is long gone. But thinking like his, I contend, has shaped China into a giant that every nation has to take seriously, including the United States. The funny thing is, it is not just China that has used this trick. Many nations that rose out of the ashes of WWII used the same recipe to race past us economically, in less than two generations. Germany and Japan were the earliest, followed by the Asian Tigers Korea, Taiwan, Hong Kong, and Singapore. If this strategy has worked for them, it should work here as well, right? Perhaps - if we thought like they did. The big question is, how to get such thinking ingrained into the psyche of the American people so that we too can dig out of this hole?

One possible way is to look to our so called leaders, and see how they think. Maybe there is some hope that a group of them will suddenly snap to a new grid called "long term thinking", and start role modeling it. Then the followers will follow, and the rest will be written in the annals of history. Right? Right. So which one of multiple breeds of leaders are thinking this way? Let us do a quick status check:

Political Leaders: The behavior of political leaders, I am led to understand, is shaped by the election cycles. Deny as they may, getting elected has become so dependent on money that the moment someone gets elected, they get busy raising funds for the next election. Out with the long term focus, and in with reelection tactics. When the focus goes to fund raising, unfortunately, special interests with deep pockets move in to garner influence - often to make quick gains. After all, there is no guarantee the politician will get reelected anyway. Legislation often ends up in short term window dressing, and a lot of pork to keep the deep pockets happy. So, there does not appear to be any cheese at the end of this tunnel.

Business Leaders: Ostensibly, businesses are supposed to be in there to create value by inventing new things and making lives more convenient. They are also supposed to compete in an open market and make manufacturing efficient. But once a business grows large enough to edge out competitors, it behaves more like a monopoly. The leaders, at least in my observation, tend to look towards the next quarterly profits. Often, a long term investment gets shoved under the rug while making the next quater's results look better. Efficiency comes via finding cheaper places to make things (China!) while cutting labor in the US. It has taken retired executives like Bill Gates and Craig Barrett to see the light, but they are quite in the minority, and don't wield the same influence as they did when they were at the helm of their respective companies. Most of the time, I see there is no cheese to be found here either.

Union Leaders: Unions started out with a noble mission of protecting the exploited workers and giving them a steady wage and protection from "the greedy capitalist". In the last half century, however, the collective bargaining agreements have had the contrary effect, of "killing the goose". One example - GM and Chrysler had to declare bankruptcy because they could not afford the $70 an hour total compensation, and pensions, guaranteed by the union contracts. All this while, the transplants like Toyota, Honda, Hyundai etc. employed non union labor at $40 per hour and sold quality cars at competitive prices. In another example, recent movies like "Waiting for Superman" (see my previous blog) have hammered on the teacher's unions for being inflexible when it comes to allowing meaningful reform that actually benefits students. But the actions, as depicted by votes in union elections, have not budged from time worn, ineffective practices. Even though there are a small number of excellent teachers, it seems nearly impossible in the current system to have every teacher be excellent (deny as they may). Hmm, the cheese is getting pretty elusive.

Community Leaders: I have been involved in volunteering in schools and the community for several years now, and most of the time, the so called community leaders are forced into the role of the safety net. When everything else fails, community volunteers tutor minority kids, keep them busy and out of danger after school, mentor at-risk students, and so on. This is one group that probably sees what needs to be done, but is stretched too thin cleaning out today's mess to do anything for tomorrow. After all, there is already a flood of unemployed and underemployed people with families to feed TODAY. Who has time for TOMORROW? Sorry, no cheese here.

So who is left now? That's right, you and I. We have numbers on our side, but no organization. Because the organizations that we created to look out for us have morphed into what I consider unrecognizable entities. It is up to the average person to get into the long term thinking mode. To value education in schools (duh!) and de-emphasize sports. To get real academic competition into our schools, not the fuzzy "cooperation" that has failed to produce results. To goad our politicians to create venture funds to bring good ideas to market instead of sprinkling printed money indiscriminately. To build more science and technology schools, and pay a differential to teachers with scarce skills. To ask our political candidates what their long term goals are for their constituency, instead of spending millions on TV ads telling us how rotten their opponent is. Perhaps then it will start something that will produce results, maybe a little slower than in the past.

Hey, it only takes a couple of generations!

Friday, October 1, 2010

Superman meets Rip Van Winkle

After several months of taking time off blogging, I am starting again. I see that this election season has served up some "once in a lifetime" issues worth blogging about. Especially in focus is my pet subject, the K-12 education system.

In the recent weeks, there has been a lot of buzz about the movie Waiting For Superman. It has had rousing premieres in New York and Los Angeles on September 24, and will see wider release in the coming weeks (October 1st in Seattle and October 8th in Portland). Directed by Davis Guggenheim of "An Inconvenient Truth" fame, and promoted by high powered leaders like Bill Gates and President Obama himself, this movie promises to raise the awareness of another inconvenient truth - that our public education system has failed, and presents some ideas that have actually worked. This problem has arguably existed for at least the last 30 years, or at least since the "Nation At Risk" report came out in 1983. And I think the public has been asleep for that period of time, blissfully ignoring the problem and wishing it would go away. Well, Einstein was right in saying that doing the same thing over and over and expecting different results is the definition of insanity. I choose a much milder state of mind, i.e,. sleep, to compare the public's reaction during this time. Many people have tried heroically to change things, but it is reasonable to believe that since nothing has changed with their effort, a lot more is needed to bring about structural change.

Let us pretend that all the voting public in this country fell asleep (at least as far as public education is concerned) in 1990, and woke up in 2010 and looked at the education statistics. In those 20 years, they would have missed several national studies done on the lack of focus in Science and Math, the "Math Wars", and the recent developments such as the Race To The Top. They would miss the fact that billions were poured to reduce class sizes and teacher development, with no measurable impact on student achievement. They would miss the excitement of watching our top students slide down lower and lower in academic competitions compared to their global peers. "But wait a minute!" you say. "They were not asleep during this time!!" Did it make a difference? I think not. Perhaps because they were caught up in the excitement of the gulf war, the internet revolution, the stock market boom, the 9-11 attacks, gulf war #2, the real estate boom, and so on. Whatever the reason, the most important structural problem plaguing our economy went unnoticed like termites in the basement.

Enter a rotten economy stuck in the greatest downturn since the great depression. "A Nation at Risk" has now become a nation almost completely consumed by risk. Unemployment is stuck near double digits, those who are employed are overworked and stressed out fearing they may be next, and homelessness and poverty are at depression levels. During no other time since the depression have so many people have so much fire in their bellies and so much time on their hands. Add "Waiting For Superman", and now you have added fuel to the fire.

Will the movie finally get the general public angry enough to take control of their children's education? After all, it is our tax money entrusted to the public employees (teachers, administrators, and others) to make sure they stay competitive in this dog eat dog global competition. If the system has failed us, isn't it our civic duty to find out why and demand that it be fixed? I sincerely hope, for the final time, that this is what ends up happening, and not another 20 years of sleep!

Tuesday, February 16, 2010

Who is Racing To The Top? Apparently not the US

After a long hiatus in blogging, I finally found something to blog about.

I have been following the drama surrounding the first round of awards for the Federal government Department of Education "Race-To-The-Top" funding. Apparently, there is a $4.3 billion slush fund that Arne Duncan has been given by President Obama to dole out to states that sign up to reform education, with measures like implementing world class standards, taking limits off the number of charter schools, merit pay for teachers, shutting down poor performing schools, etc. Those states that have laws that are already close to meeting these requirements (Massachusetts and Indiana come to mind), will probably be shoo-ins for the first round of awards. Then there are nine states, including the state of Washington, that have chosen not to apply for the first round of financing. Why? My guess is because the states are so far behind in implementing any of the reforms, that they don't feel they have a shot at all. Then there are the "far right" states, like Alaska and Texas, that have predictably thumbed their noses at any hint of a Federally imposed measure. At this rate, it will proabably take years to see a set of common, world class standards, and a system that graduates world class students. This, some people argue, is the hallmark of American Democracy, where local control of schools is paramount, and any Federally imposed program needs to be looked at with skepticism, with lots of debate before each state or district takes action.

To this, I say, "Well, maybe if we lived in a cocoon, isolated from the rest of the world." But the 21st century came with it "3 Billion New Capitalists" according to Clyde Prestowitz's popular book by the same title. About a third of them are from China, and we are all being reminded daily, when we buy stuff at Wal Mart or hear about the trillions they own in our Treasury bills. Their education system, which cranks out more than half million engineers a year, has been labeled autocratic, dictatorial, and draconian in its ways, even though one can seldom argue with the results in the marketplace. OK, it may not be fair to compare China to the US, but how about the largest democracy in the world, which has more students in its K-12 system than China?

I am talking about India, of course. For a brief background, China has about 195 million students in its K-12 system, India has over 210 million. For comparison, the US has about 54 million. Almost all students in China attend public schools, about 88% do so in the US, and perhaps less than 50% in India (stats are unreliable, but most experts say this is a good guess). Urban Indian students from the booming middle class attend private schools (ironically, the moniker "Pubilc School" is commonly used in the titles of private schools). The private schools are reasonably affordable to the newly affluent middle class, they provide a lot more choice in the rigor and breadth of education given to students, and they are stubbornly insistant on high standards. This is a natural evolution of having competition in the education sector, because schools openly advertise their pass rates in state sponsored exit exams and acceptance rates in prestigeous technical and medical colleges. But recently, the choice became a problem because states had varied standards, especially in math and science. When it came to passing entrance exams for prestigeous national universities, the state of residence became a prominent factor. This problem was highlighted in 2009. Within months, all state boards of education came to a consensus that the curriculum should be standardized for math and science in all the states, and in within a span of two years, the new standards and curriculum will be implemented in all the states. In all likelihood, these standards will be as stringent as , if nor more than, the most stringent of state standards. Not a watered down "lowest common denominator" that most committees have been churning out in the US during the last couple of decades.

Here is the link to a newspaper article:

Some relevant quotes:

"Today is a historic day for all students. There will be a core curriculum in the science stream (both science and mathematics) for all school boards across India. This will be implemented in 2011," "It's a milestone that all school boards are one on this and want a core curriculum.. We hope it augurs well." - Kapil Sibal, Mister of Human Resource Development, Govt. of India

"In science, all students are competing at the national level. So the science course should be similar across the country. We are fine with this move and hope that students will benefit the most," - C.L. Gupta, chairman of the School Board of Education, Himachal Pradesh state.

"With this move, all students will have similar opportunity in facing competitive examinations in streams like medicine and engineering." Principal, Ahlcon International School, New Delhi

Evidently, different democracies look at the same issue differently, when it comes to the time it takes to come to a consensus. The more time the governments spend on making key reform decisions, the more handicapped our graduates become when they apply for college of get into the workforce. Maybe the government bureaucrats and elected officials in India have a better grasp of where their education priorities lie, and how to really "race to the top".