Uncompetitive education systems are damaging America

Intellectual power is shifting to Asia

In the United States, approximately 2 million people graduate from university annually including post-graduate degrees.

Of those, less than 6% studied engineering.

By comparison, China has over 8 million university graduates each year.

Of those, some 600,000 graduates are engineers (although the data are rough and to some extent suspect). Suffice to say, China graduates a lot more engineers than United States. One manifestation of this trend is the high level of capital formation in China, estimated at about 45% of GDP.

By comparison, fixed capital formation in the United States is estimated by the World Bank at about 22% of GDP. Since the economies of China and United States are approximately the same size, it is clear that in absolute dollars capital formation in China is about double that of America. Since labor is less costly in China, the physical output of new fixed capital would be an even higher ratio to that of the U.S.

China has industrialized by selling cheaper labor to industrial nations. In parallel, the Chinese have invested in infrastructure - rails, bridges, real estate, roads, factories, and technology. Today, the largest producer of semiconductors is Taiwan Semiconductor. China asserts that Taiwan is part of “One China”, a geopolitical issue that may be determined by warfare. China has invested heavily in its military sporting a major Navy and well-equipped Air Force. A war with China would be a dangerous episode in world history and it is unclear whether NATO countries would prevail.

China has invested in heavy industry as Western democracies have shrunk investment in areas like steel fabrication, aluminum smelting, and the automobile industry. The world’s largest steel companies in 2021 were all Asian.

Today the Chinese car industry is larger than United States and industry leaders like Tesla, Ford and GM have built factories in China while the so-called Big Three (Ford, GM and now Stellantis) have closed factories in America. In 2021, China produced more than twice as many vehicles than United States and combined with Japan, India, South Korea and Thailand Asian car makers produced more than half the world’s new cars.

American leaders are dismissive of China claiming it is a low-cost source of labor and little else and think they are exploiting the Chinese by off-shoring jobs to earn higher profits. In reality, China is exploiting the Western democracies by using the profits from exports to those countries to build productive infrastructure, educate their people, and establish world-class manufacturing capability, often by just copying Western technology or outright stealing it. The result is an overconfident American industry, a weak American leader, a crumbling Europe and burgeoning economies in Asian countries.

The success of the American experiment and Europe since the beginning of the industrial age can be traced to advances in education. Now our universities are full of leftists who prefer to teach “woke” ideology and graduate thousands of students with little skill in key STEM disciplines but well-versed in DEI, ESG and the correct pronouns. It is a trend that bites back.

In the next few decades, I believe China will emerge not only as the world’s economic leader but also as the de facto world power and the U.S. and NATO will follow a path of decline much as the British Empire did following the Suez crisis in 1956. Smug, overconfident and lost in the past, British leaders let the country slip into a decadence from which it has never recovered with a socialist labor party now as powerful as any party that embraces free markets. Canada has suffered a similar decline in support for the free market system and now has less than 10% of its workforce employed in manufacturing. The U.S. may suffer the same fate unless they elect a leader who embraces capitalism, eschews progressive policies and re-establishes the country’s industry and military as the world’s best. I don’t see that happening under Joe Biden or his ilk.