The US should, like Singapore, upgrade workers through training – not wage doomed trade wars
- Winston Mok says trade wars make better politics, but heightened investment in education and vocational training is the key to a US workforce that does not lose jobs. Blaming China is only a distraction
Technological innovations and globalisation have been the twin engines behind economic growth and, at the same time, social dislocation. Compared to four decades ago, the world’s largest companies by market capitalisation, while still US-dominated, have witnessed a sea change. Those “older” corporate giants which can effectively exploit globalisation and innovation are more likely to remain on top.
As well, it’s worth noting that globalisation creates as much as destroys jobs – such as in the car plants of Toyota and Mercedes-Benz in the US.
The stark reality is, in a globalised world, some US workers are not productive enough to justify their once-high wages. The US once had the most educated workforce in the world. A higher proportion of young people now graduate from universities in Japan and Korea. Through a combination of factors such as skills, work practices, process management, automation and supplier integration, some US autoworkers were not as productive as their German or Japanese peers.
Making America great again must start with its workers. In developed economies, solid post-secondary education and training is essential to decent earning prospects. Nevertheless, despite the growing popularity of higher education, the college premium for lifetime earnings in the US remains high. At the high end, the US has the best universities – attended by fewer than 1 per cent of American students. But university education is extremely expensive, often resulting in the crushing burdens of student loans.
Furthermore, America’s tertiary education has high enrolment but staggering drop-out rates. Improving graduation rates with government support would be a good start.
Indeed, vocational training is indispensable to strong manufacturing industries. The US’ community colleges provide a natural platform where upgraded or expanded vocational training may be provided. Vocational-oriented programmes at universities and colleges may be expanded with government support.
While public high schools in affluent Palo Alto or Lexington can provide superb education, the same is not true for most inner-city schools. No investment would yield a higher return to the US economy in the long term than fixing its so-called K-12 education system.
To make America great, it should look to tiny Singapore for inspiration rather than China for excuses. Globalisation inevitably dichotomises the workforce – particularly for post-industrial developed economies. The government should support disadvantaged workers with skill training and welfare programmes.
Finding external scapegoats may be politically expedient. Fixing its long-term human capital development challenges, with the US’ short-term political cycles, will be difficult. But there is no other way to keep America great.
Winston Mok, formerly a private equity investor, is a private investor