The knowledge glut

As important as the rise of participative media is – for those keeping track, the #1 video on YouTube today is Pepsi Girl Superburp – the broadband internet is also having other effects. It is, for instance, reshaping the worldwide labor market. In an article in the Financial Times today, Michael Schrage takes a contrarian look at the West’s “shortage” of qualified science and engineering graduates, arguing that attempts to close the technical skills gap are wrongheaded and doomed.

“India and China,” he notes, “already produce nearly 1 million engineering graduates a year compared with roughly 170,000 such graduates from the US and Europe.” Confronted with this “demographic deluge of human capital investment,” European and American policymakers and educators are urging big investments to train “more and better homegrown students” in technical disciplines in order to ensure future competitiveness. That view has become the common wisdom, but Schrage blasts it:

What nonsense. What aspect of “supply and demand” do these elites refuse to understand? Western students clever enough to succeed in science and engineering are clever enough to know they will compete against growing global armies of educated rivals trained to work hard for less … Innovative companies will [use the internet to] chase ‘cheap smarts’ as relentlessly as today’s cost-conscious multinationals pursue cheaper manufacturing and call-centre capacity.”

I think Schrage’s right. And his point is a critical one. As I wrote last year, reporting on comments Gerry Cohen made about American students’ declining interest in technology careers, “The supply of homegrown tech talent will shrink because the availability of and compensation for tech work will decline as companies … shift jobs to countries with cheaper labor. It’s simple economics. When wages go down for a category of jobs, demand for those jobs falls as well … If we think stronger education will cure the shortage of domestic tech workers, we’re wrong. It’s job quality, not education quality, that in the end determines the careers people pursue.” However noble the intentions, pushing students into a glutted labor market will only backfire.

Schrage coldly sums up the new market dynamics generated by globalization and high-bandwidth data networks: “Knowledge is not power; it is on sale … For the US and Europe, increasing the numbers of science and engineering graduates seems a policy prescription for economic despair.”

So how do we ensure that good, well-paying jobs will be around in the future? Schrage says that our educational institutions need to focus on “creative differentiation.” If that sounds vague, it’s because it is. Where Schrage’s diagnosis of the problem is incisive, his prescription for solving it is sketchy. He talks about using business ingenuity and the prestige of our top universities to harness the power of the cheap technical talent residing elsewhere in the world. But while that may help the bottom lines of multinational corporations, it leaves unanswered the bigger question: Where are the good jobs required to support a healthy middle class going to come from? I admit that I don’t have an answer for that question, either. But I’m pretty sure of one thing: We can’t all make a living writing blogs and shooting silly videos.

6 Comments

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6 Responses to The knowledge glut

  1. I often agree with you, Nick, but I could not disagree more on this one.

    The most seriously flawed assumption here is that demand for knowledge can be satisfied.

    Are there only so many inventions to be made before everything that can be invented has been? Will there be an end to our ability to create new tools to improve productivity? Are there limits on what people can learn? Is there only so much knowledge to be gained?

    Knowledge is not a good with a finite demand. You do not eat knowledge and then find yourself satiated. You do not drink knowledge and find your thirst quenched.

    We have a boundless appetite for knowledge and the wealth created from our inventions.

  2. I argue that though we can’t all make a living shooting videos, we can take a step back and look at the phenomenon that is American Culture and the new tools that allow it to spread like wildfire to include now IRISH and ENGLISH youths chasing daily fame.

    We need to embrace the new tools of American Culture distribution that could be our last great export. There is great marging in this export.

    I post in more detail on mt blog.

    Great post – thanks for making me think about it.

  3. ordaj

    Corporations are a problem. Never has there been a better vehicle for sucking wealth to the few. There will be a recalibration in the future.

  4. James Gross

    Really like this post for a couple of reasons. Let me see how far off track I can get.

    First, I would disagree with you and the FT writer, knowledge will never become an available commidity. I refuse to believe that we should all go find the rich dad poor dad type job, or all work to be Glenn Beck, because we have lost the war on knowledge to the world market. Creative differentiation is an interesting and real idea, but the day as a nation we rely solely on others to cognitively think through and solve our problems, well…….

    Secondly, to Ordaj’s point, youtube is sad. It is sad because it is a disruptive technology being reduced to the level of mindless fodder of the likes of MySpace. The age of the participatory media should have struck a chord with all the bullsh** that goes on with our gvt. and corporations. Instead, as can be seen by the ‘views’ on youtube, it is just another medium of noise as kids are watching user generated pepsi commercials and spoofs on the BackStreet Boys.

    In the age of choice and the era of predictable disillusionment we are just a fat society built on entertainment and refusing to use tools in a way were we could actually aquire and spread real knowledge.

    Now we are a rogue state, dependent on oil and chain restaurants, fighting a war that we can’t possibly win, and we no longer sing hallelujahs at church but at the closing bell of the market.

    Who cares, American Idol is still on at 8, right?

  5. I’m always amazed by these arguments that we don’t need to worry about offshoring of technical knowledge and skills because, in essence, “they” can learn all the boring maths and engineering, and “we” will still sit at the top of the heap doing the fun, creative stuff.

    What that betrays is a profound ignorance about creativity.

    Creativity in engineering, the kind that invents microprocessors or spreadsheet software, comes out of being steeped in the technicalities of an area. It comes from the guy who’s been building widgets in the old style for 5 years and who realizes that it could be done more efficiently if we use this kind of screw as a connector, or if we re-organize the production line that way, or if we standardize on this single protocol for communication between the various modules in our architecture.

    Engineering creativity doesn’t come from market researchers saying “we detect a need for a blah; put the engineers on designing one”. The best that gets you is lowest common denominator incremental, “sustaining” innovations. (That goes for even such “innovative” products as the iPod.)

    If the US applies its creativity to spoofing commercials, it’s because commercials are all it knows. The next leaps forward in technology will come from, and be owned by, those chinese engineers. And “creatives” in the US will be reduced to what they’re steeped in : knowledge of how to sell products made of such technologies to the American market.

  6. Kirk Simpson

    Schrage and his supporters are correct about chasing “cheap smarts” overseas, but this doesnt translate into less jobs or job quality here at home. Of all the underlying principles one must come to accept about work life in America, it’s this: the failure of human beings to (mentally or physically) keep up with the pace of and types of technology required to make today’s world operate is an ever-expanding job niche. Right now, I’m listening to a conversation (debate) at a client site related to several different Administrative Assistants arguing over a) how and where to deploy an org chart Excel spreadsheet and b) how to use it cooperatively across widely spread geographic locations. My job as a consultant is not to solve this problem, but for close to lawyer’s wages I’m here helping them understand the spreadsheet AS database, importing and sharing spreadsheet data, etc. The moral of this very short story is that “support – support” roles like the one I temporarily filled today will expand, not contract, and the humans fulfilling this type of “support – support” thinking MUST be on site. Because of additional factors like human comfort and cultural aversion, I feel any well-educated graduate in the U.S. has an excellent chance to make his or her way through what is likely to be a very diverse, fulfilling career on “the mainland.”