China’s army of scientists, not cheap labor, our real worry

   A recent cover of The Economist magazine featured a doctored street sign: “Great Wall St.” The caption read: “How China runs the world economy.”
   The gist of the article is America’s demand for low- cost products is fueling China’s industrial expansion. In turn, the Chinese are investing billions in U.S. Treasury bonds. The tag line is Beijing, not Washington (or Wall Street as the cover illustration implies) makes decisions that affect workers, companies, financial markets, and economies around the world.
   In our nation’s capital, the emergence of China as an economic giant is leading to a new round of protective legislation and a focus on outsourcing of industrial production. Increasingly, lawmakers worry not only about China, but about India and other countries with lower labor (and regulatory) costs.
   There is no doubt that software piracy, product knockoffs, low labor costs, friendlier regulations, and the way China values its currency hurt our ability to compete. They lowered costs, and today costs matter more than ever.
   But there are other reasons we are in this predicament. Here are two:
   First, Americans are on a spending binge. As The Economist points out: “America’s trade deficit is due mainly to excessive spending and inadequate savings, not unfair Chinese competition. Americans like to slap the ‘made in China’ label on their huge trade deficit. Yet not only is China’s forecast current-account surplus around $100 billion, this is only a fraction of America’s likely deficit of $800 billion.”
   While financial advisers tell people they need six months cash in reserve in case of a layoff or other emergency, too many in the United States are debt ridden, with little or no savings. Credit cards are charged to the limit and people juggle steep vehicle and house payments each month.
   Imposing buying discipline and putting some money away is a “must do” not a “when I get around to it.”
   Second, Americans need to get serious about education at all levels. Instead of arguing whether test scores or grades should be the indicators of achievement, students must be able to apply their knowledge. We also must encourage them to take the tough courses in science, math and engineering. If we don’t, America will lose its high-tech advantage.
   Consider these eye-opening facts: China and India are graduating nearly three times as many students as the U.S. But the most telling fact is that they’re graduating almost 10 times as many engineers. Even South Korea, with one-sixth of our population, graduates as many engineers as we do today.
According to the National Center on Education and the Economy, 42 percent of China’s undergraduate students are in science and engineering, compared with 5 percent in our country.
   While our elected officials worry about manufacturing jobs moving offshore, they should instead be worrying about the army of foreign scientists and engineers who will supplant our role as the world’s high-tech leader.
   Forward looking companies like Schweitzer Engineering Laboratories in Pullman have recognized that our country lags behind the world in engineering, math and science, and have started programs for high school students. In the Vancouver area, Hewlett-Packard, Wafertech, and nLight are doing the same.
   While many enlightened employers are making a dent in some communities, the fact is, unless the upcoming generation gets serious about school, starts majoring in engineering, science, and math, and curbs its thirst for spending, our country will no longer be a global leader.

Don Brunell is president of the Association of Washington Business.

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