The Race between Education and Technology

1. Education as the Cornerstone of Economic Supremacy

Economic growth in the more modern period requires educated workers, managers, entrepreneurs, and citizens.

Human capital is paramount. The 20th century underscored the critical role of education in driving economic growth and individual productivity. Nations that prioritize education equip their citizens with the skills necessary to invent, innovate, and utilize advanced technologies, leading to higher standards of living.

Education fuels innovation. An educated workforce is essential for modern economies, fostering entrepreneurship, technological advancement, and informed citizenry. The ability to read complex documents, master blueprints, and utilize computers has become a prerequisite for participation in the global economy.

Global competition demands education. In today's interconnected world, nations must invest in education to remain competitive. While an educated populace doesn't guarantee economic success, low levels of education invariably hinder a nation's ability to reach the technological frontier and fully participate in the global marketplace.

2. The American Century: A Confluence of Education and Innovation

Because the American people were the most educated in the world, they were in the best position to invent, be entrepreneurial, and produce goods and services using advanced technologies.

America's educational advantage. The United States' early commitment to mass education, particularly at the secondary level, positioned it as a global leader in technological innovation and economic growth during the 20th century. This investment in human capital allowed Americans to invent, be entrepreneurial, and produce goods and services using advanced technologies.

Education drives productivity. A greater level of education results in higher labor productivity, and a greater level of education in the entire nation tends to foster a higher rate of aggregate growth. The nation that invested the most in education, and did much of that investment during the century in which education would critically matter, was the nation that had the highest level of per capita income.

Preconditions for growth. Economic growth is not solely dependent on education. Factors such as government type and security of property rights are also crucial. However, the American experience demonstrates the strong correlation between investment in education, technological advancement, and economic prosperity.

3. The Shifting Sands of Inequality: A Century of Change

For much of the twentieth century the gains from economic growth became more equally distributed.

Two distinct eras. The 20th century witnessed two contrasting trends in economic inequality. The first three-quarters of the century saw a decline in inequality, while the last quarter experienced a sharp rise. This discontinuity highlights the complex interplay of factors influencing income distribution.

Education as an equalizer. Educational progress played a key role in mitigating inequality during the first three-quarters of the 20th century. Increased educational attainment, particularly at the secondary level, helped to narrow the earnings gap between the more and less educated.

The rise of inequality. Since the late 1970s, economic inequality has risen dramatically, reaching levels comparable to those seen before the Great Depression. This trend has been accompanied by a slowdown in average real wage growth, raising concerns about the distribution of economic benefits.

4. Technology's Double-Edged Sword: Demand vs. Supply

Rapid technological change does not always increase economic inequality, even when it is skill biased.

Skill-biased technological change. Technological advancements often increase the demand for skilled and educated workers, potentially widening the earnings gap between the more and less educated. However, this effect is not inevitable.

The supply side matters. The impact of technology on inequality depends on the supply of educated workers. If the supply of educated workers increases rapidly enough to meet the demand, inequality can decrease even with skill-biased technological change.

A race between education and technology. The relationship between technology and inequality can be understood as a "race." When education outpaces technology, inequality declines. When technology outpaces education, inequality rises.

5. The Virtues of American Education: A Historical Perspective

By the mid-nineteenth century schooling was, for most European-descent children, publicly funded, open, forgiving, gender neutral in most respects, secular, and publicly provided by a multitude of competing school districts.

Egalitarian principles. The U.S. educational system was built on a set of "virtues" that promoted egalitarianism, including public funding, public provision, secular control, gender neutrality, open access, and a forgiving system. These virtues fostered equality of opportunity and a common education for all.

Decentralized control. The decentralized nature of the U.S. educational system, with its multitude of competing school districts, allowed for greater responsiveness to local needs and preferences. This fostered innovation and experimentation in education.

A unique approach. The American approach to schooling was critically important to its technological dynamism, rapid economic growth, more equal income distribution, assimilation of great waves of immigrants, and transition to mass college education.

6. The High School Movement: Democratizing Secondary Education

The high school, not the college, was primarily responsible for some of the largest gains in educational attainment in U.S. history.

Mass secondary schooling. The high school movement of the early 20th century was a transformative period in American education. It democratized access to secondary education, making it available to a much larger segment of the population.

Grassroots initiative. The high school movement was largely a grassroots phenomenon, driven by local communities and parents who recognized the value of secondary education for their children. This bottom-up approach fostered a strong sense of ownership and commitment to education.

A turning point. The high school movement was responsible for much of the increase in the schooling of native-born Americans in the twentieth century. The high school, not the college, was primarily responsible for some of the largest gains in educational attainment in U.S. history.

7. The Slowdown in Educational Attainment: A Cause for Concern

An important part of the American dream, that children will do better than their parents, was threatened, and this danger was even greater than the educational data would suggest.

Stagnating progress. After decades of rapid educational advancement, the growth in educational attainment among young Americans slowed considerably in the late 20th century. This slowdown threatens the American dream of upward mobility and raises concerns about the nation's future competitiveness.

A tale of two parts. The 20th century can be divided into two distinct periods with regard to educational change. The first three-quarters of the century saw rapid educational advance, while the last quarter experienced stagnation.

Global implications. The slowdown in U.S. educational attainment is particularly concerning in light of the rapid educational progress being made in other nations. The United States is no longer the world leader in high school and college graduation rates.

8. The Global Race: America's Fading Lead

We may well be doing something wrong now that we once did right and there may be ways of altering our institutions to create an even more productive and equitable society.

Falling behind. The United States, once the undisputed leader in education, has seen its lead erode in recent decades. Other nations have caught up and, in some cases, surpassed the U.S. in terms of high school and college graduation rates.

International comparisons. Standardized test scores reveal that U.S. students lag behind their peers in many other developed countries, particularly in math and science. This raises concerns about the quality of American education.

A call to action. Rising inequality, lagging productivity, and a non-stellar educational report card have led many to question the qualities that once made America the envy of all and a beacon for the world’s people.

9. Reclaiming Leadership: Investing in Human Capital

We may well be doing something wrong now that we once did right and there may be ways of altering our institutions to create an even more productive and equitable society.

The need for reform. The U.S. educational system faces significant challenges, including rising inequality, lagging productivity, and a decline in international competitiveness. Addressing these challenges requires a comprehensive approach that focuses on improving both the quantity and quality of education.

Revisiting the virtues. Many of the reforms alter the qualities of American schooling that had been the virtues of the past. Vouchers, charter schools, public funding for church-based schools, and high-stakes testing with real consequences are some of the enacted reforms.

A path forward. To regain its leadership in education, the United States must invest in human capital, promote innovation in teaching and learning, and ensure that all students have access to high-quality educational opportunities.

10. The Enduring Power of Education: A Call to Action

Human capital, embodied in one’s people, is the most fundamental part of the wealth of nations.

Education as a public good. Education is not just a private benefit; it is a public good that benefits society as a whole. A well-educated citizenry is essential for economic growth, social progress, and a healthy democracy.

A shared responsibility. Investing in education is a shared responsibility of individuals, families, communities, and governments. All stakeholders must work together to ensure that every American has the opportunity to reach their full potential.

A renewed commitment. The United States must recommit itself to the principles of universal education and equality of opportunity. By investing in education, America can win the race for tomorrow and create a more prosperous and equitable society for all.

Last updated: February 26, 2025