The second half of the twentieth century was a time of great prosperity and growth in the United States. Our nation’s natural bounties—physical, cultural, moral, and intellectual—were enough to mask any fundamental errors committed by our leaders. Between enormous advances in technology and wide-open world markets, we could quickly turn around any ill effects caused by bad policies.
A consensus vision of the future formed based on this temporary good fortune. The vision featured the United States maintaining its position atop the world economy permanently by focusing on the highest levels of employment: research, design, and development, as well as finance. Lower-skilled functions such as manufacturing and resource-extraction could be left to less-developed nations—what we need to do was pump up our scientific and technical labor force through education and immigration.
Under the vision’s spell, our leaders have poured money into education, and continue to do so. Considered especially important is increasing the numbers of college graduates in the STEM (Science, Technology, Engineering, and Mathematics) disciplines.
But our era of economic invulnerability is over, and that vision of permanent technical superiority is proving to be false. The prolonged recession is revealing big cracks in the foundations of the big government, Western welfare state model that subsidizes education at unsustainably high levels. Developing nations, such as China and India, are not content to perform just low-skill functions, but are producing their own highly educated researchers who can replace U.S. engineers and scientists.
Yet, even as the vision’s fundamental flaws and lack of sustainability grow more painfully obvious, much of our leadership cannot let go of its basic tenets. It continues to prime the STEM pump as a cure for high unemployment, when there are already gluts in many STEM fields.
Our leaders ignore the fact that such traditional industrial activities as manufacturing and resource extraction are the very activities that produce huge numbers of good jobs, and instead burden them with onerous regulations and tax structures. Accordingly, China surpassed the United States as the world’s leading manufacturing nation in 2010; U.S. employment in manufacturing has been shrinking rapidly for over a decade:
A key element missing from the vision is the understanding that far more engineers can be employed to perform routine operations such as supervising production in traditional industries than our country will ever be able to employ doing meaningful research. Despite decreasing employment in the manufacturing sector, and despite our emphasis on producing researchers, only 4.8 percent of all engineering positions today are in research and development, according to Leonard Lynn of Case Western Reserve, Daniel Kuehn of American University, and Hal Salzman of Rutgers and the director of the J.J. Heldrich Center for Workforce Development.
The pharmaceutical industry, which at one time hired large numbers of chemistry and biology majors, has been struggling due to burdensome government testing regulations and difficulty enforcing patents overseas and is dismantling much of its research capabilities. A Forbes article, citing consulting firm Challenger, Gray & Christmas, revealed that between 2000 and March of 2011, the pharmaceutical industry cut 297,650 jobs.
The energy sector—which hires lots of engineers and scientists—has had its hands tied as well by environmental opposition.
This drop in wealth-producing employment may portend a drop in future innovation: the vast majority of innovation comes from industries that are already working in the specific area of the innovation. They’re the ones who are closest to the existing technology, the needs of customers, and have the most at stake. As innovation guru Peter Drucker suggested, the “mundane and unglamorous” tends to provide the most fertile ground for innovation.
It may be that America loses its global technical edge, not because we lack sufficient scientists and engineers to man our industries, but because other countries that are now eager to undertake “mundane and unglamorous” pursuits for material gain will increasingly innovate as a routine function of their operations.
For now, we must focus on putting our resources toward their most efficient use, not trying to make the real economy match failing theories. In two previous articles, I presented statistical arguments that clearly show the presence of labor supply gluts that exist or have existed recently in some of the most important STEM disciplines, such as chemistry, engineering, and computer science. Continuing to overproduce graduates in these subjects will only make employment in these fields more difficult, lower wages, and is a terrible use of human resources.
Of course, just because STEM careers are not as promising as advertised and more investment in innovation is not the way to the Promised Land does not mean we should ignore science and technology. There are still many reasons why we should continue to educate people in STEM fields, including:
- Bright, inquisitive minds will naturally be drawn to the study of the physical world and to practical applications of science.
- Scientific exploration and innovation will continue to be extremely important. (We just shouldn’t expect to solve non-technical problems with technology.)
- There will always be some jobs opening up that require knowledge in these disciplines. In many of them, particularly computer science, employers may prefer recent graduates trained in the most up-to-date technology rather than more experienced workers whose skills are growing obsolete.
- These subjects also provide the rigor and habits of mind all too often absent from other college majors. Many of the skills are transferrable to other careers; if you learn how to differential equations to earn a physics degree, you can certainly apply them to economics. Training in the scientific method will enable graduates to apply their powers of experimentation and analysis to many different endeavors.
But while having young people study science and technology is important, such activities’ ability to change the economy should not be exaggerated. The solutions of the establishment vision simply won’t work anymore.
So how do we get out of this conundrum?
It won’t be by doing what we have already done for decades. Pushing more students into fields where there are shrinking opportunities is not the solution; an end to government meddling is. Only by the government getting out of the way can we allow the market to make the proper adjustments and restore our productive capacity.
We must also stop treating rising wages as a disease that needs immediate treatment via immigration, and recognize them as a sign of a healthy industry as well as a signal to people to enter that field.
Conversely, academia must stop pretending that labor supply and demand don’t exist and stop encouraging students to study for careers that are on the decline. University officials must allow departments to shrink and quit trying to solve their enrollment and graduate assistant labor problems with foreign students.
It must be understood that economy-changing innovation is unpredictable, and according to Drucker, innovation from scientific research is the most risky of all. Investing in innovation is not the same as investing in a factory—you can predict when the factory will produce goods, but you can’t predict when researchers will discover a fundamental breakthrough.
More fundamentally, it means a change in visions. Pipe dreams of a future technological paradise, populated strictly by visionaries, innovators, and other assorted creative types, may be fine for entertainment purposes, but they are not a firm foundation for our economy. Such futuristic fantasies are already leading us to a downward spiral by avoiding the present reality. What is needed now is a new pragmatic vision of using our currently available technology and human capital to restore our actual prosperity. In doing so—by concentrating on what we can do now—we will not only put people back to work, but we will again create a demand for potential innovators who, given the opportunity, will create a brighter future.