The New Economy

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Commission on Excellence in Education noted that only 20% of all 17-year-olds can write a persuasive essay, and only one-third can solve a math problem requiring several steps. A recent study by the U.S Chamber of Commerce found that 35% of corporations surveyed had to provide remedial basic-skills training to new employees. AT&T alone spends $6 million annually to teach workers reading and math skills.

The direction of education is as much a concern as its poor quality. High school curriculums have tilted toward home economics, music and driver education at the expense of the math and science needed for jobs in the new high-tech industries. About half of all students take no math after the tenth grade, and 80% drop science. Says New York City Investment Banker Felix Rohatyn: "The more we look at tomorrow's technologies, the more we see a need for higher skills. So far, our educational system really has not been geared to producing those skills." Several companies have decided to help out the schools. Technicians from Texas Instruments, for example, are preparing to teach math to fourth-and fifth-graders.

The challenges and upheavals facing the U.S. economy are hardly unique. All industrial nations are struggling with the onrush of technology and the painful transition from the past to the future. Western Europe is having a particularly difficult time moving toward the New Economy. In most European countries, many heavy industries like steel and coal mining are nationalized. Political pressure has made it difficult for governments to shrink these industries and move workers into new fields. In addition, European workers are much less willing than Americans to pick up and move to a new location. European governments have also made it very expensive to close down a factory by passing laws requiring large payoffs to workers left unemployed. Companies are therefore often wary about starting risky, new ventures. As a result, European economies have been developing few new jobs, and unemployment in Western Europe has gone from about 3% to 11% since 1970. In roughly the past decade the number of jobs in the European Community has risen only .5%, in contrast to 15% in the U.S. Says Pehr Gyllenhammar, president of Volvo, the Swedish car manufacturer: "Europe has grave problems—no growth, more people without jobs, little investment and sluggish productivity. Europe is not creating new resources, but is declining under the pressure of increased competition. When things are dying, we do not let them die any more. Companies do not go bankrupt the way they used to do. We try to restructure, preventing the creation of dynamic new industries."

Several governments in Europe are trying to introduce some dynamism into their economies. Prime Minister Margaret Thatcher has chopped the job rolls of Britain's nationalized steel industry by 52%. At the same time, her government has guaranteed loans totaling $465 million to 10,000 small businesses. Even the Socialist government of Francois Mitterrand has launched a new austerity program that calls for a 10% cut in the work force of France's steel industry. With a historic French search for a centralized government solution, Mitterrand is trying to move his country into high technology with a $1.8 billion government fund for loans to help companies develop new products, including microcomputers and