Marcelo Somers

Here’s Louis Gerstner formerly of RJ Reynolds, American Express, and IBM:

If you look at the history of America, you know we started out making shoes, we started out making clothes, we started out with basic manufacturing industries. What has proven to be enormously successful over 100 years is we’ve moved up the chain. Those industries moved to other countries that were more than happy to take those commodity industries, and we moved up into electronics. We moved up into material sciences, we moved up into different industries, aircraft manufacturing. And so we’ve always been able to evolve but the problem in America today is the next level of industries require a level of skill, educational level that we’re not producing in this country.  We’re not producing workers who have the skills to move up the next step. So we’ve got a competition for high paying, high return jobs, and we’re not in America investing in the skills of our workers to allow us to compete in those industries today.

This echoes the argument has been made by a number of prominent economists, including Larry Katz and Claudia Goldin, that much of the recent increase in American inequality stems from a failure to match skill supply with skill demand. As economist Matthew Slaughter recently pointed out, America’s high school graduation rate is slightly below the level it hit in 1969. America could also improve the business climate and reduce inequality (and work off some of the country’s excess housing inventory) by making it easier for high-skilled workers to immigrate.

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There are always new industries. It’s likely better to keep the American economy flexible than to spend resources trying to fight other countries over businesses that may or may not turn out to be economically critical.

I couldn’t agree more with Gerstner, on so many levels. Many politicians in this country seem to be running on platforms of “protecting” jobs in the US. The reality is that over time, we have evolved. There simply isn’t a market in the US anymore for goods that can be manufactured elsewhere for much cheaper.

People like manufacturing jobs - they’re simple and “easy.” I can come in to work for General Motors at 18, be guaranteed a job for the next 30 years, because of my Union (another holdover from a century ago), and retire by 50 with a fat pension from my company for the rest of my life.

Those days are gone. We have to accept that. This isn’t about “protecting” those jobs. Honestly, we don’t want those in the US anymore. They’re great and cushy and all, but the world is evolving. Pretty soon, China and India will be passing us up in science - those are the jobs (and companies) we want here in the US.

The reality is that companies generate jobs (not the government!). It’s popular today to bash companies, but they are going to hire where the best talent is, not in the country that makes it as hard as possible to get the best talent.

If we want to continue to succeed as a nation, we have to find a way to encourage people to be trained for these newer, higher skilled jobs. It’s becoming unrealistic to have a decent career with even just an undergraduate degree.

So I’m still not 100% sure how, but I feel that the government’s role in all this is to find an effective way to incentivize people to get more education - not give it away for free (someone has to pay for it!), but give incentives to encourage people to find ways to get more education.

At the same time, our education system has to “grow up.”

I think back to my Operations Management courses during my undergrad & MBA. Believe it or not, they were all focused on how to gain productivity in a factory settings. I’m willing to bet 95% of the students in my classes will never work in a factory setting. In this example, you have to be learning about streamlining operations at a service-based company. That was touched on very little in the courses, but I am picking it up quickly at my job.

Again - we are in a time of change in our country and world. We want that change to continue here, and protecting the status quo isn’t going to do that.