by Vishaal Kuruvanka
May 12th, 2022

“Technology destroys jobs and replaces them with opportunities” - Naval Ravikant

 

“Standard of living is related to the average value add of your work-force and that is related to the average educational level of your workforce. If you downgrade the average educational level of your work-force, relative to your competition, your standard of living will decline” - Craig Barrett, Intel Chairman

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At the time of this writing, the current Secretary of State, Antony Blinken, said that the most important driver of the US GDP is human capital. Ray Dalio, co-CIO of Bridgewater Associates, has built a formula for calculating future economic growth for countries which places a two thirds weight on the productivity of the workforce. Specifically he states: 

 

“A country’s production (GDP) will equal its number of workers times the output per worker (productivity). One can increase one’s productivity either by working harder or by working smarter. Productivity is driven by how cost-effectively one can produce, so, relative productivity—i.e., competitiveness—will have a big effect on relative growth. In a global economy those producers who are more competitive will both 1) sell more in their own country and other countries, and 2) move their production to countries where they can produce more cost effectively. Likewise, investors will follow these opportunities.” 

 

The quicker we can effectively train and improve our workforces’ skills, the more we can produce as a country. There are many different economic arguments that can be made for America’s stagnating growth in the last 5 decades but surely the stagnation of the education system has contributed to this.

Broadly speaking, in a capitalist society, a country aims to produce the highest quality goods and services and, through trade agreements with other countries, sell these products around the world. As seen through most of world history, capitalism has been the best force for uplifting people around the world through an incentive based model. Technology also plays an enormous role in producing and transporting these goods and services. As we will see shortly, technology dramatically changes the lifestyles and work environments for people. As technology advances, our people must too. 

 

Economic History

During the founding era of the country, farming was the main means to employment. Farmers grew what they could, depending on the region that they lived in, and then sold whatever excess produce they had to make money. Beginning as far back as 1791, when agriculture was the primary driver of the national economy, plans were made to propel America into a manufacturing powerhouse. The industrial revolution, beginning in Britain, was caused by Britain’s ability to manufacture and trade textiles with countries across the globe. The machinery to create the textiles, at the time, was a piece of highly productive technology which was kept secret and banned from trading. Innovations in the textile production process were monumental to the economic development of the UK, especially to other commodities, through the proliferation of not only the technology but the managerial methods used to create the textiles. The profits that the British were able to make through trade, were reinvested into textile making and other proponents of the industrial revolution like foundries, silk mills and other manufacturing operations. Eventually, the first acts of American espionage were committed to bring this technology to the US where it began to have an exponential effect in a mostly agrarian economy.

Manufacturing allowed for work to be subdivided into easier operations with machinery operating much more efficiently than humans in mechanical tasks. As the manufacturing industry spread across the US in a plethora of industries, jobs within this sector increasingly served as means of adequate employment for americans. For the next century and half, the US grew to heights never seen before in the economic history of the world, boosted by a growing and educated population and vast supply of virtually untouched natural resources. Historically, Hamilton’s vision of America becoming a manufacturing hub eventually won out over Jefferson’s agricultural society. The shift that happened, from working on farms to working in highly industrialized factories, required a knowledge of how to work with industrial technology. Earlier, we spoke about how the educated workforce was able to produce more goods and services because of the synergistic alliance between technology and skilled workers. 

After the Civil War, industry grew profusely due to the country’s growing population, its growth westward and a mostly unregulated business environment. This age of business was free to grow and expand in ways that had not been seen before in the history of the world. The evolution of transportation methods from horse drawn carriages to a growing railroad network and steamboats allowed for goods to be transported at a fraction of the time that it used to take. 

Because these manufacturing companies were able to produce quicker, they were able to quickly consolidate their businesses and consequently accrue power. Famously, Rockefeller’s rise as a oil tycoon who consolidated his business by quickly expanding refineries and building alliances with the transportation industry to squeeze out competitors with high transportation costs, is an important example to study to understand how the nature of capitalism has constantly changed within the US. Rockefeller and other industrialists of the age, borrowed capital to invest and expand quickly to gain advantage in markets. At one point, Rockefeller’s oil production was vastly greater than any other oil producers so he was able to set special transportation rates. Because the oil industry was the frontier at the time, the industry was subjected to much economic uncertainty, like supply shocks and booms and recessions that occurred because of a plethora of reasons. As Ron Chernow has written on capitalism in his biography on Rockefeller:

 

“If the most creative and dynamic of economic systems, capitalism can also seem wasteful and inefficient to those who endure its rocky transitions and violent dislocations. By bringing forth superior methods, capitalism renders existing skills and equipment outmoded and thus fosters unceasing turmoil and change. Such a mutable system violated Rockefeller’s need for stability, order, and predictability.”

 

Although Rockefeller used legally questionable measures to subdue new people from entering in the market, he stabilized the industry to economize oil production and minimize waste that occurred regularly in the early refining days. It is important to underscore the importance of this model (vertical integration) on other industries which eventually lead to the formation of trusts(corporation of corporations). Rockefeller and Standard Oil’s maneuvers set an enormous precedent that shaped the capitalistic environment for decades and changed the legal framework that businesses operate in today. This highly efficient economic model went far beyond Hamilton’s dreams and played a huge role in America’s economic and military triumphs in the twentieth century.

World war two, is also an important period to study in the economic development of America. Wars often accelerate scientific research to help the country gain an edge in the conflict. For example, US scientists pioneered the development of an atomic bomb because of the fear that the Germany would come up with one first. The research that ensued from the creation of the atomic bomb lead to life changing advances like nuclear medicine and energy. The war also led to the creation of radars, better medical technology (vaccinations, and drugs) and most importantly computers. These inventions increased the productivity of people because they were able to live longer, travel quicker and have access to more information (H). On the production front, because of mechanized production lines, workers needed higher education to operate these technologies. The high school curriculum, largely the same one we follow today, was created to meet the needs of the workforce

As the technologies that were created during WW2 have evolved (most importantly the invention of the computer and consequently the internet), the nature of work within our society has drastically changed. As we have seen throughout this study of economic history, certain industries and technologies have drastically changed the way we live. The internet is one of them. This construct allows for humans to have access to information at a very minimal cost, almost at the speed of light. The industry that subsequently grew around it has created a whole new realm, the likes of which are still not fully understood for humankind. Communication and information flow has sped up considerably, pushing the world to operate quicker and more efficiently. Consumers can order a product or service at the touch of a button on their smartphones. On the flip side, producers can choose to hire talent and buy supplies across the world as geographic and cultural barriers have come down. As New York Times Columnist, Thomas Friedman artfully put it, technology has flattened the world and allowed for increased global competition. Workers are no longer only competing with people within their own countries but with the global workforce. It is here that education plays a big role, but this will be spoken of more later. 

Constant evolution of the manufacturing realm has led to automated machines which have taken over much of the industrial manufacturing jobs that allowed for America’s meteoric rise in the early twentieth century. Much of building, while not ceasing in the physical realm, has commenced in the virtual world. From here on out, the rate of acceleration for technological innovations will only continue to grow exponentially. 

This constant change of our society, from farming to manufacturing to the current information age, will only continue as human nature is geared towards exploring and building. As the current technology sector grows, it is important to think on America’s role within it and work to create structures that will sustain its preeminent role as the leader of this space both in academia and practical applications. People play a much different role than they did before in the early twentieth century. They no longer operate machines but maintain a strong vigil over them and look to utilize these machines in more productive ways. Ultimately now Americans must understand that technology exists to simplify production problems and helps produce goods much quicker. The internet gives us unprecedented access to information on any subject our minds can fathom. With this in mind, we must empower our people to become self-sustaining actors that work on their unique interests and passions to aid in revitalizing the declining American economy. Our public education should be focused on guiding our people to become the best versions of themselves to follow whatever they believe is life, liberty and the pursuit of happiness. This is how our people will propel themselves and their country forward into this new exciting century.

 

Roles of Government and Corporations

In any society, a form of government is necessary to govern and set rules. In the last 300 years, governments began to shift, through grassroots revolutions, from monarchy towards democracy. In the simplest terms, one of the most important functions of government is to set laws which our society runs by. But in a democracy, the government simply cannot be relied upon to solve all problems, efficiently and effectively, within society. They can only shape and design a society for us to pursue the passions of our lives. 

The advent of private organizations(or business), was primarily a function of trying to solve problems more efficiently. For example, if one wants fish to eat, he must endeavor to find it. If no other producers exist, then a person will go to a lake, sea, or oceanfront and fish to get fish. If this individual is good at fishing and ends up catching more fish then he can eat, what should he do with it? He has spent his invaluable time and energy to catch these fish. To store this value, he sells the fish and receives money so that he can use this money on a later date (perhaps when he is not so lucky to find fish in the sea). As this fisherman continues to fish, he begins to realize that if he hires more people and teaches them how to fish, he could very possibly get more fish and sell it to more individuals in his city. So he begins to hire individuals and teaches them how to fish (the formation of a business). If this organization can ultimately catch enough fish to cover the cost of paying its employees and maintaining its equipment, then it will survive. If not then it will shut down and someone else with either better managerial qualities (or even better luck!) will fill this need in society. 

This simplified example is given to show that businesses are formed to solve problems or fill needs in society. Through solving these problems, these private individuals are given value for solving these problems (usually in the form of money). Private actors have realized through time that one individual can only do so much but through designing organizations to solve specific problems, they can do much more. This is what businesses today are claiming to do. These private actors are much better at solving specific problems because they are much smaller and therefore more flexible than large governments. They also usually have a governance structure that will remove ineffective leaders much more quickly than a government can to ensure the survival of the company. 

In a capitalist society, these businesses look to solve specific problems and compete with other businesses trying to solve the same problem. The best businesses aggregate skilled labor and therefore create more efficient and productive organizations. 

But in our current age, large technology conglomerates have become exceedingly large, controlling large swaths of capital and labor. To some extent this works well as Amazon provides an efficient e-commerce experience and Google’s search engine searches thousands of pages in an instant and gives us the best searches. But at some point, are they stifling the productivity of the country at large by aggregating large amounts of smart people? At any rate, the internet has changed the way we live and an argument can be made that capitalism works best when there are 50 different organizations competing against each other, as opposed to just one. While I currently have no regulatory answers to this question, I believe that education, here too, plays a significant role in shaping the economic machine of our country. If students are pushed to create and pursue their specific interests, early on, instead of learning mechanized tasks, would they not fare better in the economic realm? I am not saying a knowledge of basic skills(math, science and literature) are not necessary, but would our economy not do better if we had more self-starting entrepreneurs and scientific researchers? This intertwined nature of education producing more productive workers and therefore more economic prosperity must be at the forefront of public discussion to spark organic economic growth. 

 

Entrepreneurship with Education

As we have discussed, private actors are an invaluable part of our society. In the education realm, entrepreneurial vehicles can be utilized to solve the problem of educating our children. These instruments can help come up with effective methods or tools that make the overall educational experience better. The reason there are few private actors in the realm of education is because the local, state and federal government, effectively, have a monopoly on educating the K-12 students. This function should most definitely be a part of government responsibilities because the government is entrusted with the security of the nation. Individuals that are better educated tend to better defend their society through many different means such as creating technology, shaping policy and efficiently organizing people to solve problems. Because the government has this monopoly on the education system, there is very little monetary incentive for private actors to work on coming up with more efficient ways of educating people. The monetary incentive is held low as school districts are usually the ones that would purchase these types of products but these districts themselves are running a tight watch, looking for more funds to administer their schools. 

To remove this barrier, the government should use a portion of it’s spending expenditures to fund research (as a grant, loan, subsidies, etc.) or companies that can create better technologies that can accelerate learning outcomes for students in the classroom. It would be advantageous to the education system if more actors within the private sphere are experimenting with building technology systems that can aid teachers with the disbursement of material and creating problem sets that adapt to focus on student weaknesses (using machine learning). 

There are many use cases of Artificial Intelligence (AI) in different sectors to provide personalized experiences. We experience this everyday when we scroll through Youtube, Facebook or Amazon. These computers adroitly try to predict what we would like to see based on what we have seen in the past. If this technology is being used in many different industries, can it be used to create an application that could provide more of a personalized learning experience which tailors questions based upon what the students’ strengths and weaknesses are? The answer is yes. One of the pedagogical practices which was hammered into our heads, during training, was to make sure that we were approaching material from different viewpoints. For example one student may be a visual learner so he learns better by having a visual to look at, or another student learns through audio and learns best through speaking with other peers. These different learning types all usually exist within the same classroom and teachers try to encompass all these types in their lessons. But as we have seen with technology, a computer can do certain things better than a person can. In this instance, having an AI that can understand how a student learns, by giving a preliminary exam to the student, can then devise lessons and problem sets that suit their learning style. 

This example is wholly possible with the computational power available today. Using artificial intelligence, we can allow students to really work on areas and subjects that they are weak in and strengthen those areas. This is an area that the country needs to broadly invest in. The government can step in and incentivize companies to create programs that utilize the aforementioned programs above. Because there is not really a free market in the education space, the government must push innovation and experimentation within education to make sure that our education system continues to be effective. This research and solutions can then be put to use within classrooms to aid the teacher.  The only thing that has been keeping America at the forefront of all occupations and that is to always figure out how we could do something better. Now, we must look to utilize the technology that we have to widen learning outcomes for all students.

 

Global Thought Experiment

Engaging in another thought experiment, more of a playout of current circumstances, occurring 25 years in the future will give the reader a sobering view of the future. If we take a look at our geopolitical allies and rivals, it is foreseeable that both India and China will play increasing roles on the global stage. As their technical talent continues to balloon, and their wave of copying US products reaches a plateau, these countries will look to build in new spaces that come through their imaginations. As both of these countries have much larger populations than the US, and if their technical workforce continues to grow at the same rate, we will not have as many technical minds working on building the frontier as they will. As they begin to build the new, capital will flow into those countries and then inevitably, intellect follows. Although this example may be exaggerated and simplified due to not considering each of their unique legal and government structures, it is still important to ponder on how this current trend may play out. As more companies continue to contract work outside of the US, they are building the workforces of those nations and much less of our own. These trained workers then push for their offspring to get educated and this wave of upliftment triggers technological and productivity boosts which cannot be accurately predicted (because humans cannot comprehend exponential growth in terms of technology very well). There is nothing inherently wrong in this, as the free market determines efficiency and prices but we should still examine the US to make sure that our workers are highly trained and to keep conditions conducive to building and experimenting with technology. 

As seen in history, we can clearly see that advances in technology have made life more prosperous than ever before. Consequently the holders of these technologies have produced more profits for themselves and their investors. As technology continues to evolve, the operators of those types of technologies will become smaller as a percentage of the population that knows the knowledge to operate these new technologies becomes less. Corporations in today’s free market are in a battle for hiring top talent that knows how to operate these technologies to grow their businesses. Immigration plays a pivotal role in this overarching system. Currently we can make the argument that the free market brings the best to the US for a variety of reasons, the chief being that it offers the most opportunities to grow. It is also currently where the world’s most valuable companies are based. To maintain this, we need to make sure that our workforce is highly educated and trained to work on the complex problems that will arise in the coming decades.

 

COVID 19

During the COVID 19 pandemic in 2021, companies had a hard time hiring workers for their job openings (21 million employees quit in the second half of 2021). Because of a combination of economic measures taken by the government such as stimulus and unemployment benefits, workers were reluctant to return to minimum wage jobs. The advent of virtual work has also added a unique shift in the job market as we begin to move past the pandemic (1/67 jobs were virtual before the pandemic to currently 1/7). Many workers that quit in 2021, have stated that virtual work allows them to be more flexible with their time. Large technology conglomerates said that workers could work virtually forever, if they wished. The ability to work anywhere from any location already has had profound complications for the US economy. It allows for capital to be spread over locations instead of congregating within one area or city. Interestingly, because of the emergence of virtual reality and artificial reality hardware, there could be a future where students could complete school (or really any form of education or training) through putting on a headset. Ultimately, there may be a mix of virtual and in person work in the future but this option is not available to many blue collar and frontline workers. Because there are few avenues for these workers to reskill themselves, the mobility for people to move themselves into sectors where there is demand is difficult. Education is the ultimate means to improvement and an avenue for advancement but that road is seemingly cut off for people as they leave high school. Possible solutions to this problem will be laid out in the continuing education essay.

 

Education and Democracy

 

“Your people, sir –your people is a great beast!” - Tommaso Campanella (1568-1639)

 

The quote above is famously attributed to Hamilton but is actually said by a Dominican Friar who spoke of people’s ignorance to their own power. Education has a widely democratizing effect on countries as the flame of knowledge burns brightly to melt away ignorance and awakens the populace’s dormant powers. An exploration of the connection between education and democracy is an important undertaking because there are clear examples that as individuals become more educated, they understand the immense powers that lay within themselves and demand the means to build a more free life.

First let us define what a democracy is and then what is needed to sustain it. In a democracy, the government is run by the people and can be carried out in various different forms. Here in the US, we have designed a representative democracy where people are elected to represent the interests of their constituents to the elected body. There are routine free elections which allow for the electorate to hear from different candidates and then eventually pick the ones that they feel would best represent their interests in the elected body. While our form of government was agreed upon in 1787, it has continued to evolve and become more open as a result of grassroot efforts by the people. 

We can see examples of this throughout our own history. As the rudimentary education system increasingly educated more Americans, people began to support measures that expanded democracy within their country. Prior to 1913, senators were chosen by state legislators to represent the state’s interests in the federal body. Although other political motivations existed for changing the way senators were elected, the peoples’ spearheading support helped overturn the existing system. Similarly the nineteenth amendment to the constitution, giving women the right to vote, was also part of the democratizing change that began to happen in the early twenty century. Looking further, the mobilizing efforts in the 1960s for the civil rights movement shows the American electorate, most of which had graduated high school, began to petition for social and economic change for all people, regardless of their skin color. It is hard to underestimate the effects that education had on the country during these periods and it is in these examples that we can see the power of education, secretly at work, changing the structures within society. 

An important assumption that is made within the economic and political confines of our society is that individuals are rational actors who know what their best interests are. While a case could be made around the reality of this assumption, it is important to reflect on what is best for democracy. In recent decades, because of the computer and internet, there has been an exponential increase of information on the internet. Because the internet expands the medium of communication for masses of people, each individual can put out their own thoughts with no limits on how much is being said or even what they are saying.  As seen in the 2016 election, mass misinformation spread among different social media platforms was one of the chief problems that may have ultimately tilted the election. Because these social media platforms have only begun to actively sift through “fake news” stories, the responsibility to discern what is true and false, falls to the individual. Although this may seem obvious, a robust education is essential to carry out this task and marks of our failing education system can be seen here too.

 

One of the chief problems often stated by the opponents of capitalism is that, if left unchecked, monopolies will rise and dominate people. To stop this government is often relied upon to impose strict measures that make sure that the free market system is operating at full functionality. The trust busting business which was undertaken by President Theodore Roosevelt serves as a good example for when government could be relied upon to set good standards. 

 

After decades of this raging economic development, the government followed suit and set measures in places to regulate free trade measures and make sure that all Americans were benefiting from this growth, not just the wealthy few. Theodore Roosevelt’s trust busting business, invoking the Antitrust Sherman act, sent a message to the business community that for the free market to work to its efficiency, there must be competition between businesses to keep prices low and increase product quality. The breaking of the trusts was also significant because it allowed for workers to receive better benefits and allowed them to work in better conditions. 

 

“The great corporations are creatures of the state and the state not only has the right to control them but is duty bound to control them wherever need of control is shown. - Theodore Roosevelt

 

 For this function to properly occur, the people must be educated to identify and elect high quality leaders. A strong appeal of two candidates for president in the 2020 elections of President Trump and Andrew Yang was that they touched on the mass transformation happening within the job market system. A two pronged decimation of the American economy over the last three decades, beginning with manufacturing jobs being shipped to countries with lower wage rates to the proliferation of artificial intelligence in most industries, struck a beat within Americans across the country. They saw their livelihoods either being shipped overseas or being taken over by robots. As America’s manufacturing jobs are being lost away, our answer to this crisis should not only be imposing tariffs to incentivize buying home grown products but to invest in training our workforce to work in the new frontier. It is here that democracy plays a big role in solving the current problem we face. If the people understand the innumerable benefits of a high quality education, as they no doubt do, then they can mobilize and demand change from their elected representatives. Climate change, genomics, clean energy, space and many other sectors are beckoning to be solved and there is much need for skilled workers to work in all of these sectors. 

Innovation is the chief driver of growth and although there is no clear- cut formula to increase innovation, economists have shown that increased education can have a positive correlation between innovation and education. It is simple, the more educated we are, the more we create. The higher economic growth is what should be most enticing to individuals that are in-charge of dispersing government assets as this is an investment that will pay off handsomely in the decades to come. While the US government’s spending on education has continued to increase over the last couple of decades, we can see that capital is not the root of the issue, but rather the existing decentralized system that exists. In all of the many ways that the American government works to invigorate economic activity, a steady long term investment in the public education of the general population’s children will pay off the highest rewards. Solutions currently being put forward, generally try to solve the problems of poverty, homelessness, and unemployment by alleviating issues that arise at the surface, instead of pulling on the root. Education is what can help lower the gap, for future generations, that currently exists between the rich and poor. For our democracy and economy to continue to grow, we need our electorate, all of them, to become highly educated actors within our society. Education in this sense is extremely important to the function of our country. Now, it will be wise to study two other successful countries that have different systems of bringing out the best in their students.