The Indian Economy Blog

December 19, 2005

Don’t Try Kicking Sand In America’s Face…

Over the last few years, there’ve been an increasing slew of proclamations about America’s “decline” as an economic power — for instance, check this Fortune cover story by Geoff Colvin.

A key figure cited by the “declinistas” as evidence of America’s decline is the huge imbalance of engineering graduates between the US and those two Asian “juggernauts”, China and India — one much-cited stat pegs China at 600, 000 graduates per year and India at 350, 000 versus a paltry 70,000 for America.

Not so fast, says Vivek Wadhwa in his Business Week column. Wadhwa and a team of researchers from Duke found

…that the U.S. was graduating 222,335 engineers, vs. 215,000 from India. The closest comparable number reported by China is 644,106, but it includes additional majors. Looking strictly at four-year degrees and without considering accreditation or quality, the U.S. graduated 137,437 engineers, vs. 112,000 from India. China reported 351,537 under a broader category. All of these numbers include information technology and related majors.

The point? The declinistas never tire of saying that

America is in trouble and that the root cause lies with our education system. There’s no doubt that K-12 science and math could be improved, and few will dispute that America needs to invest more in education and research.

However, (America’s) higher education system isn’t in trouble — in fact, it’s still the world’s best. We spend the most on research, produce the most patents, have the most innovative curriculum, and educate many of the world’s leaders.

Sidebar 1: As I’ve said earlier, I’ve always regarded the sturm und drang over outsourcing as much ado about nothing. I’m not trying to diminish India’s (or China’s) recent accomplishments. It’s just that India certainly ain’t no economic (or knowledge) superpower — not by a long shot. So, let’s go easy on the self-congratulatory chest-thumping. And likewise, for a $12 trillion economy to import $10 billion in white-collar services from India isn’t a sign of weakness.

Sidebar 2: A lot of the declinistas sound oh-so-1980s. Back then, the rise of Japan was supposedly exposing the weaknesses in America’s educational and business set-up, when it was more a reflection of Japan’s rise (as in the case of China and India today) rather than America’s decline. Wonder if some of the declinistas’ angst and anxiety arises from solipsism — a genuine American weakness, in my opinion.

Update: The actual study from Duke University

9 Comments »

  1. We spend the most on research, produce the most patents, have the most innovative curriculum, and educate many of the world’s leaders.

    Why, oh why do people (implicitly) equate the number of patents with innovativeness?! The number of patents are just that – numbers. Being in the IPR field, I should know. I’ve seen thousands of patents that make you really wonder – “What was the frikkin’ USPTO thinking!”

    Patents != Innovation

    Comment by Nandz — December 19, 2005 @ 11:33 pm

  2. Concerning Sidebar 2, a couple of points:

    First, in terms of economic power and influence one nation’s rise is necessarily another’s decline. While it is certainly possible in an absolute sense for living standards to rise (or fall) for all parties, economic and political power is a zero sum game.

    Second, it must not be overlooked that Japan’s rise did not occur in isolation, it was built on strength in industries (autos, electronics, steel) that the US had previously been dominant and all but took for granted. For many involved in or dependent upon these industries, Japan’s rise is very palpably linked to America’s decline.

    Third, I would make the exact opposite point concerning American solipsism: Back in the 80′s, many found it worthwhile to examine the structures and institutions of others (Japan, Germany) especially since they had seemed to gain advantage through them.

    Comment by walker — December 19, 2005 @ 11:40 pm

  3. Walker says

    First, in terms of economic power and influence one nation’s rise is necessarily another’s decline. While it is certainly possible in an absolute sense for living standards to rise (or fall) for all parties, economic and political power is a zero sum game.

    Walker, as per your argument, the best case scenario for the US is one in which every other country in the world experiences negative GDP growth, till every single one of the 5.7 billion non-Americans on this planet is living below the poverty line… that would see America’s economy zooming ahead, wouldn’t it? [grin]

    Comment by Prashant Kothari — December 21, 2005 @ 5:19 pm

  4. There is a mini-industry in America that specializes in the theme of America’s alleged decline. I have been reading wonderful analysis of the inevitable decline of America from the 1970s. They have all proved to be wrong but empirical evidence has no impact on a good story. The alleged “causes” of decline change with the seasons but the story is always the same.

    Indians have not been able to brag about an economic success story for several thousand years until IT came about. India can rightly brag about its new prowess in many sectors but most Indians have a sense of proportion about it, knowing the shortcomings as well as the strengths of India. A few want to indulge their egos, or show their shallowness, by combining exaggerated stories about Indian promise with the “America is in decline” crowd and tell stories like this one, about how India’s engineering graduates will soon overpower America’s strength in technology.

    The US is not declining and India is ascending, but it has a long way to go. That is all.

    Blue Sky.

    Comment by Blue Sky — December 23, 2005 @ 10:15 pm

  5. its a shame in misunderstadning the US position – there is atructural change in the way world trade operates. think back of advantage of nation theory – well if India/China/etc provide a better base for manufacturing/servicing non core activities albeit at very low costs whats the harm. A DVD player sold at USD50 is far better than one if produced within US borders at USD500. the private/pubic sector can do a lot with the remaining USD460 for increased consumption, savings, investment, whatever and keep all better off. Lets take the case of the producing nation which enables DVD sales in US teritorry at USD50 – not many citizens can even afford the DVD at those supposed dirt cheap prices according to Americans – thats the reality. So what is the US upto. Well developed economies (incl America)own/control most of the technologies supplied, royalty rights, investments, and migrating to pure R&D economy that is less cyclical as a business.

    Comment by P Bajaj — March 17, 2006 @ 1:36 pm

  6. Two Stanford Professors have written a very nice book about how companies and countries find it easy to emulate what other companies and countries “do” rather than emulate how they “think”. The example they give is how United Shuttle (United Airlines spinoff) tried to have all of their employees wear Hawaiian Shirts and all planes will be Boeing 737′s in a bid to emulate what SouthWest airlines “did” rather than how they “thought”. They also use the same example to compare the success of Toyota to the failures of Ford, GM and Chrysler in that they adopted the superficial aspects while ignoring the core!
    The funny question they ask is “If Herb Kelleher drinks Wild Turkey Whisky every day, will other CEOs be as successful if they drink the same also?” :-)

    So the point is that the demise of U.S as an economic power has been predicted every 15 years like clockwork – first it was the Japanese Electronics, then it was the Japanese Cars (the truth is that Toyota has 20 U.S plants employing Americans replacing ineffcient badly run US company plants) and each time the opposite happened. So what’s the difference?

    The real “thinking” behind the success of the U.S economy is the opportunity it provides for the world’s brightest people to use their full potential without hindrance or prejudice. Heck, they even brought Nazi scientists over, pardoning all of their Nazi pasts to man the space program. This is the reason Europe is still struggling to match the U.S in achievements.

    The real secret is the “meritocracy” and the opportunity the U.S provides for the best minds all around the world from every country. With about 500 universities, if you want to do Civil Engg, you can do Civil Engg somewhere and if you are good you can transfer to the best colleges in that field even before you finish your degree.

    As long as no other country matches this “thinking”, any amount of aping the U.S in superficial things will only help keep the U.S in the lead. Things that are outsourced are routine work that can be outsourced but remember that it is still Microsoft that rakes in the big bucks and that is because they do the coding once for a product and sell it hundreds of millions of times over!

    Something to think about!

    Comment by Nari Kannan — March 29, 2006 @ 9:25 pm

  7. As walker noted, Japan has in fact taken over autos and consumer electronics, though its political system limited its econ expansion.

    But it’s a bad analogy. India and China are much larger and more real threats to American econ dominance than Japan. And you can’t look at those countries in stasis– their cultures will get more meritocratic/American over time.

    Comment by Manish — June 7, 2006 @ 7:21 pm

  8. Nandz is quite correct. Patents grant a monopoly with the intent of allowing monopoly pricing as a second-best alternative to the invention not existing, or not being published (held as a trade secret). If somebody was going to invent the thing and publish it ANYWAY (which is the case with Open Source software), then patents are a theft from the public domain.

    Comment by Russell Nelson — October 22, 2007 @ 6:31 am

  9. [...] Here’s an earlier IEB post on Wadhwa’s research — Don’t Try Kicking Sand In America’s Face. [...]

    Pingback by The Indian Economy Blog » Weekend Reading: 8 Feb, 2009 — February 11, 2009 @ 9:35 am

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