Friday, May 9, 2014

From Our Rearview Mirror – The New Tailgaters



Some say that Russian hackers come from generations of surviving in a country where those who know how to game the system eat well and generate the social benefits of a social structure where insider advantages are the only real way to become successful. When they emigrate to other countries, knowing that Russian is not a language that tracks easily into learning English, they speak fluent “math.” The Russians that remain behind but have these same skills do equally well not only in their native land, but wherever they provide their well-educated computer and code-writing skills to global buyers.
As U.S. aggregate math test scores from our nation’s primary and secondary schools drop, year-by-year, as access to college education is increasingly unaffordable to our high school grads (falling from 70% to a bit over 65% over the last five years) and graduations from four-year schools below 50% in a normal college process (a bit more graduate over a longer term) and as the world continues to prioritize education to become competitive, the United States faces increasingly competent international workforce skills that threaten what dwindling competitive advantage we have. Patents from China are beginning to soar. It’s a story that repeats itself all too often.
International universities are luring their ethnic stars – who have built solid reputations in the United States – back to the home country with offers of high pay and incredibly sophisticated laboratories and research grants. Some countries are willing to pick up the tab for their best students to study at the best American universities… and these same institutions of higher learning are happy to accept these full-tuition scholars who do not need to tax their financial aid coffers. Other prestigious America universities are actually opening branches in Asian and Middle Eastern venues to expand their reach (and the potential of growing powerful alumni organizations).
The result is a shrinking American middle class, and as I have blogged before, a contraction in that segment of our social structure that has been mostly responsible for innovation and growth. It is just too easy for those willing to invest in education to shift economic power to themselves. We’re concerned with deficits and austerity – not truly understanding the difference between spending and investing – as statistics tell us that our overall educational policies are pushing our future prospects downward.
The May 8th FastCompany.com points out a few of the fastest growing tech innovation countries that Americans should be concerned about. There are Silicon Valley equivalents popping up in some unexpected places:
“Zhongguancun [China] is sometimes called the ‘Silicon Valley of the East,’ and for a good reason. When Steve Blank, lecturer at the Haas School of Business at the University of California Berkeley, visited this Beijing northwestern district in 2013, he described it as what ‘Rome looked like in the time of the empire or New York in the 1920’s ... now it’s Beijing announcing that China has arrived.’ The country is only second to the U.S. when it comes the venture capital spending, mostly investing in the technology, media, and telecommunications sectors.
“With its massive 1.3 billion strong population, entrepreneurs in China will be the ones who can identify unmet needs and use their resources to provide services and tools to meet those needs. Entrepreneurs outside of China can only dream of being able to fill gaps in this massive marketplace…
“Israel’s entrepreneurship spirit comes from the fact that the country itself is a startup. With little natural resources and constant political turmoil, Israelis are fighting for better lives by creating energy alternatives. As a result, we’ve seen some amazing companies come out of Israel.
“The country boasts more startups per capita than any other country and currently has 70 companies listed on the Nasdaq, making it third only to the U.S. and China on the stock exchange. Not bad for a population of 8.2 million… In 2008, per-capita venture capital investments in the country were 2.5 times more than the U.S. and 80 times that of China, according to authors Dan Senor and Saul Singer in their book Start-Up Nation…
“South Korea has one of the fastest broadband speeds among all. As most of the world continues to struggle with 4G connection, South Korea is investing in 5G, meaning its residents will be able to download HD movies without any problems by 2020. The country’s Ministry of Education, Science and Technology (MEST) announced it is investing $1.5 billion in this project alone.
“The South Korean government promotes its startup economy by pouring $2.7 billion in funding startups and offering tax breaks for big companies that invest in startups... A recently published Bloomberg Global Innovation Index ranked South Korea first among all by examining factors such as research and development capability, productivity, tech density, and patent activity…
“Estonia [is] the small country in the Baltic Republic so innovative, it’s nicknamed ‘E-stonia.’ In 2000, its government deemed Internet access a basic human right and free Wi-Fi became the norm throughout the land… With the collapse of the Soviet Union, Estonia gained it’s independence in 1991 and needed to build a new administration quickly and cost-effectively. Estonia is said to have the world’s most digitized government… Today, Estonians are the brains behind Skype and Kazaa, an early file-sharing program, and has one the fastest broadband Internet speeds in the world.”
If the United States does not perform a ground-up restructuring of its entire educational system, cannot find a way to prioritize education at least at the same level as we protect our over-spending-driven military, we can expect to become an innovation also-ran, with a concomitant downward pressure on the quality of our job picture for the future. Education needs to be free as much as we can, mortgage-sized student loans need to be replaced with grants and the quality of our students needs to zoom back to first place, where we were for decades.
 I’m Peter Dekom, and we are voluntarily handing over our competitive advantage to others through a combination of arrogance and fiscal stupidity.

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