June 27,2005

Floor Statement of U.S. Senator Max Baucus on the Importance of Education in Keeping America Competitive

(WASHINGTON, D.C.) U.S. Senator Max Baucus delivered the following speech duringtoday’s Senate debate regarding the United States’ competitiveness in a global economy. This isthe second speech in a series of floor statements by Senator Baucus on America’s globalcompetitiveness. As ranking member of the Senate Finance Committee, Baucus has been aleader on a number of issues related to keeping America at the forefront of the world’s economy.Today’s speech highlighted the importance of education in keeping America’s economycompetitive with the rest of the world.

The floor statement follows:

Floor Statement of U.S. Senator Max Baucus

Mr. President, in the book of Isaiah, the prophet wrote, “[M]y people have gone intocaptivity, because they have no knowledge.”

Francis Bacon wrote, “Knowledge itself is power.”

And when H.G. Wells summed up his history of the world, he concluded: “Humanhistory becomes more and more a race between education and catastrophe.”

Mr. President, in the next two decades, America’s history will become more and more arace for economic leadership. For more than a century, America’s economy has set the pace.We have led all competitors. Year after year, we have become used to winning the race.But now, over our shoulder, we can hear the footsteps of another runner. That competitoris China. And it is gaining fast.

If we wish not to go into economic subservience, if we wish to maintain our economicpower, if we wish to avert economic misfortune, the answer is education.America’s economic leadership has been a remarkable achievement. We Americans arejust 4.6 percent of the world’s people. More than a fifth of the world’s people live in China.There are nearly 4½ times as many Chinese as there are Americans.

Yet America produces 60 percent more goods and services than China.

That is how Americans can enjoy one of the world’s foremost standards of living. Theaverage American’s share of our economic output is $37,610 a year. The average Chinese’sshare of theirs is $1,100 a year.

But from a slow start, China has picked up the pace. Starting with Deng Xiaoping in thelate 1970s, China began to reform its economy. Deng was eminently practical, when it came toeconomic philosophy. He said: “It doesn’t matter whether the cat is black or white, as long as itcatches mice.” Today, you can find those capitalist cats everywhere in China.

Over the last two decades, China’s economy has been growing at an average of 9.5percent, nearly three times as fast as America’s. And some project that within 20 years, China’scould become the world’s largest economy, ending more than a century of American leadership.

You can see how they do it at an American or Japanese factory in Shanghai. You seerows and rows of hardworking workers, in colorful uniforms, at well-lit work stations. Thecompany pays them about $2,000 a year, plus food and housing benefits. But that is good moneyin a country with an average income of $1,100 a year. The workers there want to keep their jobs.

And 200 million other workers stand ready to take their jobs if they do not.

The challenge for America in the decades to come will be: How can America competewith that factory in Shanghai? How can we get paid $37,000 a year or more to make goods andperform services, when there are Chinese workers willing to work hard for $2,000 a year?The answer is not protectionism. We cannot build a wall around America. We cannotlift the drawbridge and flood a moat around our Country.

If American companies do not employ those willing workers at the Shanghai factory,companies from Japan and Italy and China itself will. Then Japanese and Italian and Chinesecompanies will sell products more cheaply into America. And American consumers will gladlybuy those products at lower prices. American consumers will insist on buying those products atlower prices.

If America raises tariffs on goods made in China, then American consumers will paymore for their cost of living than will people in other countries. Americans will have less moneyto spend on other things that they want, less money to spend on other things in America. TheAmerican economy will be smaller, if America raises tariffs.

If America raises tariffs, then American businesses will pay more for their industrialinputs than will businesses in other countries. American businesses will become lesscompetitive, lose sales, and lose jobs. Once again, the American economy will be smaller, ifAmerica raises tariffs.

No, the answer to how America can compete with that factory in Shanghai is notprotectionism.

The way that we can get paid $37,000 for our work — when Chinese workers are willingto work for $2,000 — is for Americans to add more value. Americans earn more because weproduce better. Americans produce smarter.

And that means that for us to remain economic leaders of the world, Americans need tostay smarter. We need to educate our children and our workers so that American workers canadd more value in an hour of work than workers in any other place in the world.Knowledge will be economic power.

Ensuring that we continue to have more knowledge than the Chinese will not be easy.China has worked on its education system. 9 out of 10 Chinese can read.

It is very Chinese to take the long view. More than 2600 years ago, the master KuanChung said, “If you plan for a year, plant a seed. If for 10 years, plant a tree. If for a hundredyears, teach the people. When you sow a seed once, you will reap a single harvest. When youteach the people, you will reap a hundred harvests.”

We need to plant those seeds of education and tend those young saplings, in our publicschools. In 1835, the Supreme Court Justice Joseph Story wrote: “Every successive generationbecomes a living memorial of our public schools, and a living example of their excellence.”Ensuring that our schools are a living example of excellence will take more than justmoney. But ensuring that our schools are a living example of excellence will take money, aswell.

We need to ensure that children can come to school ready to learn. We need to ensurethat children have modern and well-equipped schools. We need to ensure that children havesmall classes. And most importantly, we need to ensure that children have good teachers.In the next decade, America will need to hire 2 million new teachers. 1 in 5 new teachersleave teaching within 3 years. In urban schools, half of teachers leave the profession within 5years.

Nearly 2 out of 5 low-income children are taught by teachers without a college degree intheir primary instructional field. Low-income students are taught by more teacher’s aides thancredentialed classroom teachers. 4 out of 5 aides do not have a 4-year college degree.Columnist Tom Friedman wrote recently:

“We are heading into an age in which jobs are likely to be invented and madeobsolete faster and faster. The chances of today’s college kids working in the same jobsfor the same companies for their whole careers are about zero. In such an age, thegreatest survival skill you can have is the ability to learn how to learn. The best way tolearn how to learn is to love to learn, and the best way to love to learn is to have greatteachers who inspire. And the best way to ensure that we have teachers who inspire theirstudents is if we recognize and reward those who clearly have done so.”

We need to give good teachers the recognition that they deserve. Friedman told howevery year, Williams College honors four high school teachers who made a difference. Everyyear, members of its senior class nominate their best high school teachers. A committee atWilliams then goes through the nominations, does its own research, and chooses the four mostinspiring teachers.

Williams gives each of the teachers $2,000, plus a $1,000 donation to the teacher’s highschool. And Williams flies the winners and their families to the college to honor them atgraduation.

Williams’s president, Morton Schapiro, told Friedman: “We take these teachers, who arenot well compensated and often underappreciated, and give them a great weekend.”Said Shapiro: “Every time we do this, one of the teachers says to me, ‘This is one of thegreat weekends of my life.’”

It’s a great idea.

Each of us can do our part. I have started a program that will recognize Montana teachersacknowledged for excellence. This is something that all Senators can do in their home states. Alittle recognition can go a long way.

But if knowledge is power, then we must also devote the resources necessary to maintainthat power.

Columnist Matt Miller argues: “The answer is to think bigger.” He suggests that wemake the best teachers millionaires by the time that they retire.

Miller proposes a “grand bargain” where we raise salaries for teachers in poor schools by50 percent. And in return, teachers would agree to change their pay scale so that we could raisethe top performers and those in math and science another 50 percent.

Miller, who used to work at the Office of Management and Budget, calculates that hisplan would cost about $30 billion a year. That would provide a 7 percent increase in the nation’sK-through-12 spending.

I ask my Colleagues: Why don’t we invest $30 billion for top teachers, and pay for it byclosing abusive tax shelters?

And we need to help students to learn math and science. Companies are moving jobsoffshore to China, India, and Eastern Europe not only because workers there work for less, butalso because they are well educated in math and science.

Sadly, American high school students now perform below most of the world oninternational math and science tests. Most have little interest in pursuing scientific fields. Only5½ percent of the high school seniors who took the college entrance exam in 2002 planned topursue an engineering degree. We have to do more to encourage students to love to learn mathand science.

And we need to help students to learn geography and languages. Visit a primary schoolin a middle-d Chinese city. Bright, enthusiastic children will greet you in English. Chineseschools are preparing students to compete in a multinational, multilingual world economy. Thecoming generation of Chinese businesspeople will do business around the world. Americansneed to broaden our linguistic and geographic abilities, or Chinese businesspeople will cut thedeals before us. As our former Colleague Bill Bradley said in 1988, “If we are going to lead theworld, we have to know where it is.”

And after school, almost 6 million latch-key children go without access to after-schoollearning opportunities. More than 7 in 10 mothers of children under 18 are in the workforce.America can no longer afford a school day based on 1950s family structures. Quality afterschoolprograms can both keep children safe and improve academic achievement. We need toensure that children have quality after-school programs.

Similarly, we continue to have a school year that reflects the harvest schedule of anagrarian economy that America long ago left behind. Long summer vacations mean readinglevels drop and other learning is lost.

Schools like Des Moines’s Downtown School point to another way. They have a 6-weeksummer break. And that means less time to forget. Besides 6 weeks in the summer, studentsalso have week-long breaks in October, February, and May.

Jan Drees, the principal of the Downtown School, says: “The research is becoming moreand more clear that students retain more learning and need less review with shorter summerbreaks.”

The Downtown school is popular, too. More than 800 children are on a waiting list to getinto the school.

Iowa law requires schools to provide a minimum of 180 instructional days a year. Butthe Downtown School teaches students for 192 days a year. They are getting more learning in,every year. For Americans to stay smarter, students should spend more of the school year inschool.

China’s increasing competitive strength is also fueled by its growing population ofcollege graduates. Last year, nearly 3 million Chinese entered the workforce from 3- and 4-yearcolleges and graduate programs. This is one-third more than the year before, and double the yearbefore that.

America’s college system is the finest in the world. And the work of the 21st Centuryincreasing demands good college education. But rising college costs increasingly bar Americansfrom getting the college education for which they are qualified.

We must make college affordable for all. We need to ensure that young Americans arenot discouraged from obtaining post-secondary education because of costs. Tuition costs haverisen considerably in recent years. And federal assistance programs have not kept pace.Pell Grants help to make college education affordable for 5 million students, a third ofAmerican undergraduates. But students receive grants averaging just $2,500 a year, while theaverage annual cost of tuition at a public college in-state averages more than $9,000 a year, andprivate college averages more than $23,000 a year. The most that a student can get in PellGrants is $4,050 a year. Expanding Pell Grants would increase the ability of low-income youngAmericans to prepare for the 21st Century.

As well, we should improve, consolidate, and expand the government’s education taxincentives to make them more effective. We could expand and extend the deduction for tuitionexpenses. We could expand the Hope and Lifetime Learning credits. We could craft targetedincentives for students pursuing science and engineering careers. We could do more to make itpossible for non-traditional students to obtain an education. There are many good options.As with elementary school students, we need to help encourage college students to learnthe subjects needed in the 21st Century.

In 1975, America ranked third in the world in the share of 24-year olds who held ascience or engineering degree. By 2000, we had slipped to 15th. By 2004, we were 17th. Andin the future, the Department of Labor projects that new jobs requiring science, engineering, andtechnical training will increase four times faster than the average national job growth rate.Last year, China produced 220,000 new engineers, while America educated just 60,000.And America trains only half as many engineers as Japan and Europe.

In a recent report, McKinsey Global Institute found that there are already twice as manyyoung university-trained professionals in low-wage countries as in high-wage countries. Chinahas twice as many young engineers as America.

Engineers play a critical role in the development of new jobs and new industries. Weshould increase scholarships and loan forgiveness for engineering students to entice more peopleto love to learn engineering.

At that Shanghai factory, American and Japanese research and development stand behindmany of the products being built. But ask the American or Japanese company their plans, andthey will tell you that they plan to move R&D work closer to the plant, there in China. AndShanghai’s government hopes to lure more R&D to town. Chinese business understands thatinnovation is the source of American value-added. And they want part of that action, too.

Clive Cookson reported in the Financial Times about a bioscience park outside Beijing.A firm there called CapitalBio is emerging as a world leader in the new technology of biochips.Biochips are cutting-edge devices that combine biotechnology and electronics for biologicaltesting and medical diagnostics. The 4-year-old company is already selling instruments toAmerican drug companies.

Last month, CapitalBio entered into a partnership with Affymetrix in California, theworld’s largest biochip producer. CapitalBio’s chief executive said: “Affymetrix had neverimagined that there was such a big research effort in biochips in China, working to such a highstandard.”

Dozens of similar examples exist. Already, several Asian countries boast of such scienceand technology centers. They are following in Japan’s wake as world-class centers for researchand development.

Asia’s R&D investment and scientific output have both surged rapidly. Between 1998and 2003, China’s research and development spending roughly tripled.

You can judge a scientific paper’s effect by how often other researchers cite it. Thenumber of frequently-cited Chinese research papers has risen from just 21 in 1994 to 223 in2003. And China’s contribution to the world’s scientific journals has increased from less thanhalf a percent in 1981 to more than 5 percent in 2003.

And Chinese researchers will do research for less cost. Newly-graduated researchers inChina generally earn about a quarter of what Americans do. For more senior staff, salaries areusually at least half American salaries. And in exceptional cases, they can sometimes exceedours.

Chinese scientists who have returned after studying and working in the west are playingan important role. In Beijing, CapitalBio’s CEO said that he [quote] “made a special effort at thebeginning to attract [Chinese expatriates] from abroad, with salary and stock options. Weoffered at least to match the salaries that senior scientists were receiving; the highest we offeredwas $120,000 a year,” he said.

So far, Asia has been able to make a global mark only in a few new areas of the lifesciences where western expertise is not entrenched. Stem cell technology is an example. SouthKorea, China, Singapore, and India are racing ahead on stem cell research. Those countriesaccept human embryo research in a way that the American government has not.

But America still has an advantage in innovation. And America also benefits from a risktakingentrepreneurial culture. You can see it in the venture capital that funds companies spunout of American research laboratories or universities. America’ capital markets remain the envyof the world.

We can help to maintain that edge in innovation by supporting research. Americanuniversities and research institutes do much of the most innovative research in the world.But over the last 20 years, federal research funding in the physical sciences andengineering has declined by nearly a third as a share of the economy.

We should reverse this trend and increase federal spending on basic research. Themoney we spend will come back to us many times over in the creation of new jobs in newindustries making products yet to be invented.

We should support the National Science Foundation. The NSF funds research andeducation in science and engineering through a variety of successful programs. It accounts for afifth of all federal support to academic institutions for basic research, a crucial engine ofinnovation.

NSF funds have helped discover new technologies that have led to multi-billion dollarindustries and millions of new jobs. NSF-funded work in the basic sciences and engineeringmade possible fiber optics, radar, wireless communication, nanotechnology, plant genomics,magnetic resonance imaging, ultrasound, and the Internet.

Each year, the NSF helps fund over 200,000 students, teachers, and researchers. Many ofthem take their NSF-supported work into industry. They found start-up companies selling newproducts and new technologies.

In addition, we should make it easier — consistent with the requirements of nationalsecurity — for foreign students to study in America. America has traditionally poached many ofthe best and brightest students from around the globe. Well over a third of American science andengineering doctorate holders were born abroad.

Since 9/11, however, many students are having a difficult time getting visas to study inAmerica. In 2004, foreign applications to American graduate schools declined by 28 percent.Enrollments of foreign students at all levels of college declined for the first time in 30 years.Foreign students are increasingly studying in Europe and elsewhere. That is a terribleloss. It will affect our economic health in the long-term. We need to do a better job balancingsecurity and economic health.

America must not compromise on its security needs in hosting foreign businesspeople orforeign students. But there must be ways to streamline visa procedures and otherwise lighten theburden. We need to make it easier for foreigners to study and conduct business in America.We should support community colleges, and strengthen the link between them and theworkforce. That will allow schools to develop training programs relevant to jobs in the realworld. That is a primary goal of the Enzi-Baucus Higher Education Access, Affordability andOpportunity Act.

And when American jobs are lost to trade, we need to retrain people and help them to getback into the workforce. The philosopher and educator John Dewey said, “Education is notpreparation for life; education is life itself.” We can no longer afford to think of education assomething just for the young.

We need to help displaced workers to receive the retraining that they need to succeed in achanging economy. Jobs will change. We should help workers to get the educational tools tochange with those jobs.

That is why I joined with Senators Wyden and Coleman to introduce legislation toexpand Trade Adjustment Assistance to service workers who lose their jobs because of trade.TAA is a vital means of helping displaced workers get the education to change careers and stayproductive.

When Plato envisioned the ideal society in his work The Laws, he wrote of theimportance of education, through the course of life. He wrote: “[N]owhere should education bedishonored, as it is first among the noblest things for the best men. If it ever goes astray, and if itis possible to set it right, everyone ought always to do so as much as he can, throughout thewhole of life.”

And so, through advancing education, America can compete with that factory inShanghai. Through advancing education, America can respond to competition, without erectingharmful barriers to trade. And through advancing education, America can respond to a growingChina, without forcing confrontation with China.

University of California economist Brad DeLong wrote of the choice that we face in howwe address the challenge of China. He wrote: “A world 60 years from now in which Chineseschoolchildren are taught that the U.S. did what it could to speed their economic growth is amuch safer world for my great-grandchildren than a world in which Chinese schoolchildren aretaught that the U.S. did all it could to keep China poor.”

Through advancing education, America can seek that safer world.

But perhaps most importantly, America should seek to advance education not just topreserve our economy, but also to preserve our freedom.

As Senator Daniel Webster said in a speech in 1837, “On the diffusion of educationamong the people rest the preservation and perpetuation of our free institutions.”As Thomas Jefferson wrote in 1816, “If a nation expects to be ignorant and free, in a stateof civilization, it expects what never was and never will be.”

And as the Phrygian philosopher Epictetus said, “Only the educated are free.”

And so, Mr. President, let us advance education to preserve our economic power.

Let us advance education to win the race for economic leadership.

And most importantly, let us advance education to help preserve our Americandemocracy.