Talkin bout a revolution Ñ and Oregons economy
MIT's Lester Thurow touches on recession, biotech, school cuts
Economist Lester Thurow says times are bad. Meaning for him, oddly, times are good.
Thurow, a Massachusetts Institute of Technology professor who has advised presidents on business matters, is completing a book on economic globalization.
'In good times, economy books don't sell,' explained Thurow, who's speaking in Portland on Sunday. 'People say, 'I'm getting rich, I don't know why, and I don't care.' Economy books sell better in hard times, and between now and September (the book's release date), the hard times are unlikely to get much better.'
Thurow's lecture, 'Ensuring a Solid Foundation for Education, the Stakes for America and Our Future,' will address educational roles in today's economy.
The Tribune spoke to the best-selling author by telephone earlier this week:
• Trib: What Oregon-related topics will you discuss?
Thurow: There are revolutions going on that have impacts on education, which is important because of all the problems you're having there.
The first revolution is that everywhere in the world, we're shifting from socialism to capitalism. It's even true in the most capitalist of countries, like the United States. É It's easier to fire people today than it was 20 years ago.
The problem with capitalism is, it comes with built-in stability and recessions. (We're in) the 10th recession since World War II.
The thing that's interesting about this recession is that if you look at it through the lens of the fallen gross domestic product, this is close to the mildest recession since World War II.
On the other hand, if you look at it in terms of loss of jobs, it's the biggest recession since the Great Depression. We've lost 4 percent of the jobs in America; we're approaching job losses around 6 million. So it's either a mild recession or something very severe.
• Trib: What's another revolution?
Thurow: We're in the third industrial revolution: Steam is first, electrification is the second, but the thing that'll be the equivalent of steam and electrification is biotechnology. For the first time in history, humans can change their own genetic makeup. That may come to be seen as the most important invention in human history. The only thing that could come close is reading or writing.
• Trib: We keep hearing biotech will play a key role in Oregon, yet it hasn't really happened here yet.
Thurow: Well, the industrial revolution didn't happen overnight. It took 100 years.
• Trib: So it'll take awhile.
Thurow: Yeah, but some of it's here already, and some of it's coming. Think about it: We can change who we are. That is an incredible fundamental revolution.
So if we put those things together, we'll see a widening income gap based on education. É That's basically because in the knowledge revolution, knowledge is more important and experience is less important.
• Trib: How else are our education problems affecting the state?
Thurow: You'll find talented engineers and managers don't want to move to Oregon. The problem will get much worse in the future because any talented person will want to get a good education for their kids.
A person isn't going to go to a place where they say, 'We're cutting the school year. Our class sizes are getting bigger.'
• Trib: What's your take on Oregon's economy?
Thurow: There's an interesting division in Oregon between rural and urban (communities). Which is unusual because few rural kids become rural adults. If (the adults) in rural areas say, 'We're going to cut schools because they're not important to me,' that's peculiar because their kids are unlikely to remain rural.
The other thing is if you look at school bond issues and votes, it's now the elderly versus the young, and the young don't get to vote. People used to think the elderly wouldn't vote against these measures because it was a vote against their grandchildren who went to those schools. But now, grandparents don't live near their grandchildren.
• Trib: You've said the Iraq war didn't affect the global economy. Does that mean things are, overall, OK in America?
Thurow: No. The American (gross domestic product) grew by 2.4 percent in 2002, which is above the average for the 1980s, when it grew by 2 percent a year.
The problem was that in 2002, productivity grew by 4.7 percent, which means we lost 2.3 percent of all the jobs in America during a recovery year.
• Trib: So, we're, as you said five months ago, still 'skating on thin ice'?
Thurow: It's looking like 2003 will look like 2002. We'll have a growth rate around 2 percent, maybe a little north of 2 percent, with a rate of productivity that's higher, and we'll lose more jobs.
One of the problems the Bush administration has is if the economy isn't kicking by early spring of 2004, there's nothing they can do to make it tick by November 2004. Because even if the economy picks up later in the year, no one will notice it.
• Trib: Any easy, nonacademic ways you use to judge the economy?
Thurow: In Boston, for many years I commuted from the suburbs. I could always tell if a recession was under way by traffic on the morning commute. If there was less traffic, we were in a recession.