I recently finished rereading The Race Between Education and Technology, by Claudia Goldin and Lawrence Katz, two Harvard economists. In it, Goldin and Katz describe how American investments in the skills and knowledge of our people contributed, stage-by-stage, to the ability of this country to dominate the global economy. The story begins in the nineteenth century with our early investment in universal primary education and continues with the high school movement at the turn of the century. Just as our investment in elementary schools enabled us to lead the world in the level of formal education obtained by our workforce in the mid-nineteenth century, the high school movement enabled us to lead the world in the proportion of our workforce with the equivalent of a high school diploma. And, another half century later, we did it again, this time for college-age students, after the Second World War.
Goldin and Katz point out that, by leading the world in increasing the supply of educated workers at each of these stages, we should have been producing an oversupply of educated workers, quickly reducing the economic returns to investment in more skills and knowledge. But that did not happen because technology was advancing so swiftly that that the demand for more highly educated workers was increasing just as fast or even faster than the supply. It was this symbiotic relationship between advancing technology and increased supply of every-better educated workers that enabled the U.S. to build the world's most successful economy.