Winner Take All

A competitive society must be an educated society that understands the interrelationship between exponentially accelerating convergence, infrastructure, and investment.

The popular concept of stars, cash cows, and dogs could become a major problem for America’s education system in a world where global competition pursues the implications of Moore’s Law.

Why? Because if you lose to the competition without understanding why, wrongly assuming that you had the bad luck of picking a dog business or that your competition was willing to “give it away,” you may lose more than the knowledge base to compete.

You may lose the motivation to maintain an education system designed to provide the skills and technological advances essential to stay in the business.

Simply put, students study and teachers teach subjects related to where the jobs are.

If there is no demand for a particular expertise, there is little incentive for either students or teachers to invest their time in it. (And thinking they will invest regardless is naïve at best.)

Without an industrial base demanding ever-higher levels of technological skill to meet global competition, there is no compelling reason to graduate additional professionals.

There will be nothing for them to do. When lack of demand for talent goes on too long, and the talent well dries up for loss of career opportunity, withdrawal from the market is often rationalized as leaving the dirty work to the competition.

As the proponents of Moore’s Law have learned from experience, when you get off the train, it is very difficult to get back on.

When a nation’s politics and economics fall out of step with its education system, the cost of reengagement is extraordinarily high.

Therefore any attempt to explain the plight of education in America must look first at the country’s current political and economic attitudes. They are directly linked.

For example, America often assumes it has the luxury of ignoring a competitive environment in which other nations strive to take up the “burden” of manufacturing products or component parts, despite the fact that in time these products may have strategic significance for the United States.

Their motives and methods unexamined, these foreign competitors are simply deprecated, often by comparing their lower returns on investment to that of an American company that has given up its manufacturing.

This is a deceptive comparison, since the lack of investment that results from outsourcing can generate higher margins and lots of cash for several years.

Concerns about losing position in a particular technology, product, or market are overridden by short-term profits, and for a time the decision looks masterful.

But eventually the supplier may decide to integrate its manufacturing expertise with its knowledge of the product and become a competitor, or the outsourced activity may become more strategic than the end-use product it supports, and the supplier begins to take control.

A loss of business under these circumstances is near impossible to turn around.

Eventually, because of the exponential acceleration in convergence, infrastructure, and investment, there’s a cascading effect, and the loss of one industry begins to threaten the stability of others.

These events are noticed by the educational community, which must provide a measure of career guidance for its student population and thus looks to political, economic, and business leaders for answers.

Consider this: For the United States to maintain a competitive position in consumer electronics, displays, and semiconductors — which have become a major part of the convergent technological infrastructure of most other industries — it must attract the best and the brightest engineering talent graduating from America’s university system, a system still regarded as the world’s best.

Yet in today’s environment, unless the graduating engineer hopes to establish his or her own business, it is often more profitable, even more intellectually challenging, to pursue a career in finance and investment banking.

As manufacturing for high-tech industries has moved offshore, much of the R&D associated with these industries has gone as well, a depletion clearly visible to any engineer seeking a technical career in the United States.

In the world of high technology, exciting opportunities for engineers and scientists are declining in America.

For those graduating with technical degrees, it is becoming more attractive to engineer a deal than a new product.

Editor’s Note: This feature is adapted from “Winner Take All,” by Richard J. Elkus, Jr. Reprinted by arrangement with Perseus Books. Copyright (c) 2008 by Richard J. Elkus, Jr. All rights reserved.