In Praise of the United States -- and the Question of Education
One of the persistent answers to high unemployment around the world -- especially for the developing countries -- is that entrepreneurship can actually create new jobs. But it is astonishing to hear about how many parts of the world where there is deep suspicion of entrepreneurs, and real resistance to their efforts. And it's not just bureaucracy and red tape that get in their way.
By Peter Cappelli
It's time again for the World Economic Forum's annual meeting at Davos, where one learns that the people you see on TV are shorter in real life, but the members of their staff are taller and better looking than you'd imagine.
It is not as well-known as it should be, but the premise of this organization is the basic idea -- put forward by the founder Klaus Schwab -- that people with power have obligations to all the stakeholders in society. Particularly, business has obligations not only to shareholders but to employees, the communities where they operate and the planet.
One of the big themes this year is unemployment, especially among youth. There are 200 million unemployed in the world right now, more than 11 percent in Europe, as many as 8 percent (the best real guess) in China. The number is actually going up. Seventy-five million youth are unemployed; 56 percent in Spain, for example. What should be done about this?
One of the persistent answers, especially for the developing world, is entrepreneurship that can actually create new jobs. For those of us in the United States, it is astonishing to hear how people in many parts of the world have a deep suspicion of entrepreneurs and resist their efforts. It's not just bureaucracy and red tape that get in their way; it's social and cultural stigma. Some of this is a legacy of communism and its principles, some of it is envy of people who get rich in poor countries. The United States is seen -- by far -- as the best place to start businesses and the place where foreigners need to come to do so, not just because of the resources available, but because it is viewed here as an honorable and desirable thing to do.
Here is something related that is really shocking, at least to me: The United States is seen by most everyone from elsewhere as a country that has its act together, where we are on the road to economic recovery. Not just that, but also that our political conflicts are relatively modest. I know, you're thinking: "Wow, how bad things must be elsewhere!" And rightfully so, especially in Europe.
Back to unemployment, the other answer one often hears is education; that more education will help economies grow. Certainly, in developing countries, there is no doubt that literacy has to improve for those countries to participate in the modern economy. Countries such as India and China are growing so quickly that their higher-education systems have not been able to keep up, and there are not enough graduates with technical skills to meet demand.
What about in developed countries? Would it help the United States to have even more college graduates? There is much hand-wringing in some quarters that the average education level of the U.S. population may actually decline somewhat in the next generation; in part, because of the financial demands of attending four-year colleges. We used to be the country with the second-most educated workforce (behind the Soviet Union, surprisingly), but now others, including South Korea, are passing us by.
Here is where the controversy comes in. On the one hand, we have a view associated with economists that more education is almost uniformly good for an economy. It makes individuals more productive, and it spills over to help others who are less educated become more productive as well. If you look at macro-economic data, it is certainly true that countries that are richer have more educated workforces.
On the other hand, there is the view associated with sociologists -- one looking more at the individual - that, beyond a certain point, more education is simply an expensive way to "screen" people: Employers will hire someone with a master's degree over someone with a bachelor's degree at the same wage, even if the master's degree isn't required for the job. Individuals may feel they need to get the master's degree to get the job, but it is expensive for them and isn't really necessary.
There are clearly points of agreement. It is obviously better if education could be more efficient, if students could learn more before getting to college and, indeed, in college. It is clearly a good thing if students would not drop out of high school and would learn more, even if they don't go to college. (Despite the rhetoric, the vast majority of the jobs the government projects for the future with still require only a high-school degree or less.)
The heart of the debate is whether the United States should try to get even more people to go to college - and, by that, I mean four-year colleges, not just vocational-based programs associated with two-year programs.
I would really like to hear your view on this: In your own organization, would it help effectiveness in a noticeable way if the people in your jobs had more education? In your own career, do you feel that additional education -- say, an advanced degree -- would help you do your job better? Or is it useful mainly as a credential just to get a job?
What do you think?
Peter Cappelli is the George W. Taylor Professor of Management and director of the Center for Human Resources at The Wharton School. His latest book is Why Good People Can't Get Jobs: The Skills Gap and What Companies Can Do About It.