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The Learning Revolution (1993)

The Learning Revolution (1993)

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Published by Lewis J. Perelman
Originally published as Chapter 9 in David Boaz and Edward H. Crane, eds., Market Liberalism: A Paradigm for the 21st Century, Washington, DC: Cato Institute, 1993.
Originally published as Chapter 9 in David Boaz and Edward H. Crane, eds., Market Liberalism: A Paradigm for the 21st Century, Washington, DC: Cato Institute, 1993.

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Published by: Lewis J. Perelman on Jan 29, 2012
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01/29/2012

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L.J. Perelman, © 1993page1Learning Revolution
CATO INSTITUTE
Market Liberalism
*
Chapter 9– The Learning Revolution
Lewis J. Perelman
The collapse of the Soviet empire is just one of the most dramatic symptomsof the dawn of the new knowledge age economy. Among the many profoundimpacts of this technological revolution, one of the most critical is the globalobsolescence of traditional education and training institutions. This radicaltransformation in turn demands a complete replacement of outworn publicpolicies which aim to subsidize and“save” these institutions. The new policyparadigm must focus on (1) abolishing the wasteful paper chase for academiccredentials and (2) commercializing (not just privatizing) the economy ofacademia, the biggest and probably last great socialistempire on earth.
The New Economy
In the new economy being formed by explosive advances in informationtechnologies, knowledge has become the crucial factor of production.Contrary to much of the conventional (and backward-looking) wisdom drivingmost recently proposed economic strategies, software has displacedmanufacturing as the key to national economic strength, and learning hasbecome the crucial form of work required for family self-reliance andprosperity.With learning now the indispensable focus of work, entertainment, andhome life, the attempt to keep learning confined in the box of the government-controlled empire of school and college classrooms threatens to be asdestructive and costly as the political efforts at the beginning of the 20
th
century to protect the vast horse industry against the threat of the automobile.National economic leadership, security, and prosperity at the beginning ofthis century depended on the swift, wholesale
replacement
of the transportationindustry based on the horse by an all-new system based on the automobile(and shortly later, the airplane). In the same way, economic progress in theimminent 21
st
century depends on the rapid, total elimination of schools andcolleges—a $445-billion-a-year industry in the U.S.alone—by a newcommercial industry based on the technology I call“hyperlearning” (HL).Henry Ford’s Model T was not an invention so much as the integration of aset of technical advances in power plants, rubber tires, batteries, and othercomponents as well as fuel refining, production engineering, employmentpolicies, and marketing strategies—a total system that changed not justtransportation but the entire fabric of Western society. Similarly, HL
*
David Boaz and Edward H. Crane, eds.,
 Market Liberalism: A Paradigm for the 21st Century
,Washington, DC: Cato Institute, 1993
 
L.J. Perelman, © 1993page2Learning Revolution
represents the imminent integration of skyrocketing advances in the so-called“artificial intelligence” of computers and robotics, broadband“multimedia”communications,“hyper” software needed to cope with the resultinginformation explosion, and even“brain technology” that is expanding ourunderstanding of how human and artificial brains work.“Hypermated” learning loops increasingly form the core of just about everykind of economically productive activity. The London Stock Exchange hasreplaced legions of shouting floor traders with an automated telecomputingnetwork, following the lead of America’s NASDAQ. The most prosperousfarmers today spend more time working with computers than combines.Political rhetoric notwithstanding, factory“jobs” are not coming back: Theyare bound to become as productive,and hence as scarce and knowledge-demanding, as farm jobs. General Electric’s state-of-art light bulb factory inVirginia employs a third as many workers as the one it replaced—and noneever touches a light bulb. Each of the similarly few workers employed inCorning Glass’s most modern plants is trained to be able to run everyoperation in the factory, not to do a“job.” The work mainly is troubleshootingand managing the software of the automated systems that do the actualmanufacturing.This HL revolution cannot be attained successfully by any“reform” or“restructuring” of schools and colleges, any more than the horse could be re-trained or even genetically re-bred to become a car.“Break-the-mold” schoolscan’t and won’t.
Education: A Barrier to Progress
A critical feature of the new world order marked by the collapse of socialismis that education, once widely viewed as an engine of prosperity, has becomethe major
barrier 
to global economic progress.The
overeducation
of the workforce is one of themajor causes of the economicslump that has plagued the U.S. and other modern national economies forsome three years. Roughly three-quarters of the thousands of employees beingeliminated by major employers such as IBM, General Motors, and TRW aremanagerial, professional, and technical workers with extensive college andpost-graduate education. In this recession, corporate middle managers were2½ times more likely to become unemployed than the average worker. In pastrecessions, laid-off factory workers were re-hired once sales recovered—butthe recent rapid growth of white collar unemployment represents thepermanent elimination of jobs. In the recession of the early 80s, white collaremployment kept on growing, and 90% of white collar employees who losttheir jobs were re-hired within a few months. In the latest recession, whitecollar employment has declined and fewer than 25% of the displaced whitecollar workers have been able to find new jobs.Recent political campaign proposals called for more“investment” in the U.S.workforce in the form of expanded spending on traditional education andtraining programs. This rhetoric masked the reality that the U.S. currently hasthe
most schooled workforce
in its history—from 1970 to 1989, workers with fouryears of high school increased from 31% to nearly 39% of the workforce and
 
L.J. Perelman, © 1993page3Learning Revolution
the proportion of the U.S. workforce with at least four years of college nearlydoubled from less than 11% to over 21%. Fewer than 23%, and probably nomore than 15%, of U.S. jobs will call for college degrees in the 90s: With over aquarter of the workforce planning to earn college diplomas, it is likely that 10%of U.S. college grads will be unemployed by the end of the decade, andbetween a fifth and a half of the graduates will be underemployed in jobs thatdo not really require their degrees.This ongoing
deflation
of academic credentials will only be accelerated by theend of the Cold War. In the wake of the“brain glut” unleashed by the collapseof the Soviet Union, U.S. companies such as AT&T, Corning, and SunMicrosystems have been hiring top Russian scientists and engineers, amongthe best educated and most skilled workers in the world, for salaries on theorder of $60
a month
. And some 2 million of America’s own most technicallyschooled and skilled workers are destined to become unemployed over thenext two years as a result of defense spending cuts and force reductions.A prime flaw in the whole education system is that it was designed in themidst of the Industrial Revolution of the 19
th
century to prepare people forindustrial era jobs. But the kinds of skills required to work productively in theknowledge age are almost the
opposite
of the skills demanded for academicsuccess. And the message buried in the above statistics is that“jobs” for boththe overschooled and the unschooled are fast disappearing.
Entrepreneurial
skills are those most needed to thrive in the new economy, where the majorityof the“workforce” will be comprised of contractors, consultants, free agents,and traditional business creators and owners. Yet the competencies needed forsuccessful entrepreneurship are almost totally ignored by the existingeducation/training system.Even as the services of the scholastic sector become increasingly irrelevant tothe economic aspirations of the great majority of Americans, the cost of theobsolete academic bureaucracy continues to soar. Add the $50-billion-plusemployers spend to educate employees to the $450-billion annual school andcollege budget, and throw in at least another $100 billion a year of U.S.spending on“hidden” forms of education (such as conferences andconventions), and the education sector is virtually tied with health care as thebiggest industry in the U.S. economy.The upward spiral of costs has been almost as explosive in education as inhealth care. Real spending per student in U.S. K-12 schools (discountinginflation) has grown some five times since the 1950s. In the 1980s, real U.S.spending on K-12 schools grew by nearly a third; spending on colleges greweven more, by about a half.
Productivity
is the key issue that has been neglected by education andtraining policies; it needs to be the focal point of the new policy paradigm.Productivity growth—increasing the amount of wealth produced from eachhour of labor—is the essential measure of a nation’s standard of living andrelative“competitiveness.” The weakness of productivity growth has been thecentral symptom of America’s economic malaise for some two decades.Poor and declining productivity is the main reason the education sector hasbeen become a barrier and threat to economic progress in the modern world.

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