Argentina, whose currency collapsed last week, is another case in point. Blessed with great natural wealth, the Argentines have resented the oligopolies who control their resources, and try to vote themselves rich with depressing regularity. One government after another offers handouts to the querulous voters, who have learned that this practice breeds inflation and currency devaluation. The Argentine game is to be first in line at the public trough, and first in line at the foreign exchange counter to get out of local currency before it collapses yet again.
The industrial countries have the same kind of problem just below the surface. In America, fewer than half of adults available to work with a high school education or less actually are working.
That is, only 58% of the noninstitutional adult civilian population with only a high school degree is counted in the labor force. For adults with less than a high school diploma, the labor participation rate falls to just 44%. Deduct the unemployed, and the result is that less than half of Americans without college are at work. That's why 60 million Americans are on food stamps, and why a third of all American households have at least one member receiving means-tested government subsidies.
Meanwhile employers report shortages of skilled labor in numerous fields. It is hard to find skilled machine operators, who require the equivalent of a couple of years of college math to master the computer controls on industrial equipment, for example.
Spain's unemployment rate remains at 26%. Spanish workers are now willing to take jobs at 700 euros (US$957) a month making clothing to compete with Chinese imports. That's roughly what better-qualified Chinese workers earn with overtime. The low end of the European labor market, that is, already has converged with the high end of the Chinese labor market.
The problem isn't inequality of income, but inequality of knowledge. One pilot flying a modern military aircraft could destroy the whole of an ancient civilization. One farmer from Nebraska can replace a hundred in Egypt. A thousand years ago, everyone knew how a watermill worked; 200 years ago, most people knew how a steam engine works; how many people today know how a computer works?
East Asia is faring better than the rest of the world in this great transformation because its culture imposes a merciless meritocracy. The West should be able to do better than this. If we can't, we can see our future in Argentina.
The industrial countries have the same kind of problem just below the surface. In America, fewer than half of adults available to work with a high school education or less actually are working.
That is, only 58% of the noninstitutional adult civilian population with only a high school degree is counted in the labor force. For adults with less than a high school diploma, the labor participation rate falls to just 44%. Deduct the unemployed, and the result is that less than half of Americans without college are at work. That's why 60 million Americans are on food stamps, and why a third of all American households have at least one member receiving means-tested government subsidies.
Meanwhile employers report shortages of skilled labor in numerous fields. It is hard to find skilled machine operators, who require the equivalent of a couple of years of college math to master the computer controls on industrial equipment, for example.
Spain's unemployment rate remains at 26%. Spanish workers are now willing to take jobs at 700 euros (US$957) a month making clothing to compete with Chinese imports. That's roughly what better-qualified Chinese workers earn with overtime. The low end of the European labor market, that is, already has converged with the high end of the Chinese labor market.
The problem isn't inequality of income, but inequality of knowledge. One pilot flying a modern military aircraft could destroy the whole of an ancient civilization. One farmer from Nebraska can replace a hundred in Egypt. A thousand years ago, everyone knew how a watermill worked; 200 years ago, most people knew how a steam engine works; how many people today know how a computer works?
East Asia is faring better than the rest of the world in this great transformation because its culture imposes a merciless meritocracy. The West should be able to do better than this. If we can't, we can see our future in Argentina.
