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or constantly adapting to higher-value-added jobs, it will grab its slice of that

growing pie. But

we will have to work at it. Because if current trends prevail, countries like India

and China and whole regions like Eastern Europe are certain to narrow the gap with

America, just as Korea and Japan and Taiwan did during the Cold War. They will keep

upping their standards.

So are we still working at it? Are we tending to the secrets of our sauce? America

still looks great on paper, especially if you look backward, or compare it only to

India and China of today and not tomorrow. But have we really been investing in our

future and preparing our children the way we need to for the race ahead? See the next

chapter. But here's a quick hint:

The answer is no.

::::: SEVEN

The Quiet Crisis

Close games for the Americans were rare in previous Olympics, but now it appears to

be something the Americans should get used to.

-From an August 17, 2004, AP article from the Athens Olympics titled "U.S. Men's

Basketball Team Narrowly Beats Greece"

You could find no better metaphor for the way the rest of the world can now compete

head-to-head more effectively than ever with America than the struggles of the U.S.

Olympic basketball team in 2004. The American team, made up of NBA stars, limped home

to a bronze medal after losing to Puerto Rico, Lithuania, and Argentina. Previously,

the United States Olympic basketball team had lost only one game in the history of

the modern Olympics. Remember when America sent only NCAA stars to the Olympic

basketball events? For a long time these teams totally dominated all comers. Then

they started getting challenged. So we sent our pros. And they started getting

challenged. Because the world keeps learning, the diffusion of knowledge happens

faster; coaches in other countries now download American coaching methods off the

Internet and watch NBA games in their own living rooms on satellite TV. Many of them

can even get ESPN and watch the highlight reels. And thanks to the triple convergence,

there is a lot of new raw talent walking onto the NBA courts from all over the

world-including many new stars from China, Latin America, and Eastern Europe. They

go back and play for their national teams in the Olympics, using the skills they honed

in America. So the automatic American superiority of twenty years ago is now gone

in Olympic basketball. The NBA standard is increasingly becoming a global

commodity-pure vanilla. If the United States wants to continue to dominate in Olympic

basketball, we must, in that great sports cliche, step it up a notch. The old standard

won't do anymore. As Joel Cawley of IBM remarked to me, "Star for star, the basketball

teams from places like Lithuania or Puerto Rico still don't rank well versus the

Americans, but when they play as a team-when they collaborate better than we do-they

are extremely competitive."

Sports writer John Feinstein could have been referring to either American engineering

skills or American basketball skills when he wrote in an August 26, 2004, AOL essay

on Olympic basketball that the performance of the U.S. basketball team is a result

of "the rise of the international player" and "the decline and fall of the U.S. game."

And the decline and fall of the U.S. game, argued Feinstein, is a result of two

long-term trends. The first is a steady decline "in basketball skills," with American

kids just wanting to shoot either three-point shots or dunk- the sort of stuff that

gets you on ESPN's SportsCenter highlight reel - instead of learning how to make

precise passes, or go into the lane and shoot a pull-up jumper, or snake through big

men to get to the basket. Those skills take a lot of hard work and coaching to learn.

Today, said Feinstein, you have an American generation that relies almost completely

on athleticism and almost not at all on basketball skills. And there is also that

ugly little problem of ambition. While the rest of the world was getting better in

basketball, "more and more NBA players were yawning at the notion of playing in the

Olympics," noted Feinstein. "We have come a long way from 1984, when Bob Knight told

Charles Barkley to show up to the second Olympic training camp at 265 pounds or else.

Barkley showed up weighing 280. Knight cut him that day. In today's world, the Olympic

coach wouldn't even have checked Barkley's weight in the first place. He would have

sent a limousine to the airport to get him and stopped at Dunkin' Donuts on the way

to the hotel if the player requested it... The world changes. In the case of American

basketball, it hasn't changed for the better."

There is something about post-World War II America that reminds

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me of the classic wealthy family that by the third generation starts to squander its

wealth. The members of the first generation are nose-to-the-grindstone innovators;

the second generation holds it all together; then their kids come along and get fat,

dumb, and lazy and slowly squander it all. I know that is both overly harsh and a

gross generalization, but there is, nevertheless, some truth in it. American society

started to coast in the 1990s, when our third postwar generation came of age. The

dot-com boom left too many people with the impression that they could get rich without

investing in hard work. All it took was an MBA and a quick IPO, or one NBA contract,

and you were set for life. But while we were admiring the flat world we had created,

a lot of people in India, China, and Eastern Europe were busy figuring out how to

take advantage of it. Lucky for us, we were the only economy standing after World

War II, and we had no serious competition for forty years. That gave us a huge head

of steam but also a huge sense of entitlement and complacency-not to mention a certain

tendency in recent years to extol consumption over hard work, investment, and

long-term thinking. When we got hit with 9/11, it was a once-in-a-generation

opportunity to summon the nation to sacrifice, to address some of its pressing fiscal,

energy, science, and education shortfalls-all the things that we had let slide. But

our president did not summon us to sacrifice. He summoned us to go shopping.

In the previous chapters, I showed why both classic economic theory and the inherent

strengths of the American economy have convinced me that American individuals have

nothing to worry about from a flat world-provided we roll up our sleeves, be ready

to compete, get every individual to think about how he or she upgrades his or her

educational skills, and keep investing in the secrets of the American sauce. Those

chapters were all about what we must do and can do.

This chapter is about how we Americans, individually and collectively, have not been

doing all these things that we should be doing and what will happen down the road

if we don't change course.

The truth is, we are in a crisis now, but it is a crisis that is unfolding very slowly

and very quietly. It is "a quiet crisis," explained Shirley

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Ann Jackson, the 2004 president of the American Association for the Advancement of

Science and president of Rensselaer Polytechnic Institute since 1999. (Rensselaer

is America's oldest technological college, founded in 1824.) And this quiet crisis

involves the steady erosion of America's scientific and engineering base, which has

always been the source of American innovation and our rising standard of living.

"The sky is not falling, nothing horrible is going to happen today," said Jackson,

a physicist by training who chooses her words carefully. "The U.S. is still the leading

engine for innovation in the world. It has the best graduate programs, the best

scientific infrastructure, and the capital markets to exploit it. But there is a quiet

crisis in U.S. science and technology that we have to wake up to. The U.S. today is

in a truly global environment, and those competitor countries are not only wide awake,

they are running a marathon while we are running sprints. If left unchecked, this

could challenge our preeminence and capacity to innovate."

And it is our ability to constantly innovate new products, services, and companies

that has been the source of America's horn of plenty and steadily widening middle

class for the last two centuries. It was American innovators who started Google, Intel,

HP, Dell, Microsoft, and Cisco, and it matters where innovation happens. The fact

that all these companies are headquartered in America means that most of the

high-paying jobs are here, even if these companies outsource or offshore some

functions. The executives, the department heads, the sales force, and the senior

researchers are all located in the cities where the innovation happened. And their

jobs create more jobs. The shrinking of the pool of young people with the knowledge

skills to innovate won't shrink our standard of living overnight. It will be felt

only in fifteen or twenty years, when we discover we have a critical shortage of

scientists and engineers capable of doing innovation or even just high-value-added

technology work. Then this won't be a quiet crisis anymore, said Jackson, "it will

be the real McCoy."

Shirley Ann Jackson knows of what she speaks, because her career exemplifies as well

as anyone's both why America thrived so much in the past fifty years and why it won't

automatically do the same in the next

fifty. An African-American woman, Jackson was born in Washington, D.C., in 1946. She

started kindergarten in a segregated public school but was one of the first public

school students to benefit from desegregation, as a result of the Supreme Court ruling

in Brown v. Board of Education. Just when she was getting a chance to go to a better

school, theRussians launched Sputnik in1957, and theU.S. government became obsessed

with educating young people to become scientists and engineers, a trend that was

intensified by John F. Kennedy's commitment to a manned space program. When Kennedy

spoke about putting a man on the moon, Shirley Ann Jackson was one of the millions

of American young people who were listening. His words, she recalled, "inspired,

assisted, and launched many of my generation into science, engineering and

mathematics," and the breakthroughs and inventions they spawned went well beyond the

space program. "The space race was really a science race," she said.

Thanks in part to desegregation, both Jackson's inspiration and intellect were

recognized early, and she ultimately became the first African-American woman to earn

a Ph.D. in physics from MIT (her degree was in theoretical elementary particle

physics). From there, she spent many years working for AT&T Bell Laboratories, and

in 1995 was appointed by President Clinton to chair the U.S. Nuclear Regulatory

Commission.

As the years went by, though, Jackson began to notice that fewer and fewer young

Americans were captivated by national challenges like the race to the moon, or felt

the allure of math, science, and engineering. In universities, she noted, graduate

enrollment in science and engineering programs, having grown for decades, peaked in

1993, and despite some recent progress, it remains today below the level of a decade

ago. So the science and engineering generations that followed Jackson's got smaller

and smaller relative to our needs. By the time Jackson took the job as Rensselaer

Polytechnic's president to put her heart and soul into reinvig-orating American

science and engineering, she realized, she said, that a "perfect storm" was

brewing-one that posed a real long-term danger to America's economic health-and she

started speaking out about it whenever she could.

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"The phrase 'the perfect storm' is associated with meteorological events in October

1991," said Jackson in a speech in May 2004, when "a powerful weather system gathered

force, ravaging the Atlantic Ocean over the course of several days, [and] caused the

deaths of several Massachusetts-based fishermen and billions of dollars of damage.

The event became a book, and, later, a movie. Meteorologists observing the event

emphasized . . . the unlikely confluence of conditions... in which multiple factors

converged to bring about an event of devastating magnitude. [A] similar worst-case

scenario could arrest the progress of our national scientific and technological

capacity. The forces at work are multiple and complex. They are demographic, political,

economic, cultural, even social." Individually, each of these forces would be

problematic, added Jackson. In combination, they could be devastating. "For the first

time in more than a century, the United States could well find itself falling behind

other countries in the capacity for scientific discovery, innovation and economic

development."

The way to avoid being caught in such a storm is to identify the confluence of factors

and to change course-even though right now the sky is blue, the winds are gentle,

and the water seems calm. But that is not what has been going on in America in recent

years. We are blithely sailing along, heading straight for the storm, with both

politicians and parents insisting that no dramatic changes or sacrifices are required

now. After all, look how calm and sunny it is outside, they tell us. In the fiscal

year 2005 budget passed by the Republican-led Congress in November 2004, the budget

for the National Science Foundation, which is the federal body most responsible for

promoting research and funding more and better science education, was actually cut

by 1.9 percent, or $105 million. History will show that when America should have been

doubling the NSF funding, its Congress passed a pork-laden budget that actually cut

assistance for science and engineering.

Don't be fooled by the calm. That's always the time to change course-not when you're