In 1983, while I was working on the Senate Democratic Policy Committee on issues of US Competitiveness, an intriguing report with an alarming title came across my desk: A Nation At Risk. Among other memorable lines, the report included a warning: "The educational foundations of our society are presently being eroded by a rising tide of mediocrity that threatens our very future as a Nation and a people.”

The report's warnings lined up closely what I had learned before working for the Senate Democrats. 

Prior to that time, I worked as a corporate strategy consultant with large multinational companies: GE, Ford, Volvo and a few others. Most of my work focused on moving manufacturing operations out of the US and into lower-cost countries. 

By the early 1980s, improvements in logistics and communications, coupled with more liberal trade policies starting in the Tokyo Round in the early 1970s, opened the door to globalization. (Actually, I date the beginning of globalization to the mid-1950s when SeaLand started the containerization of freight with the shipment from New Jersey to Houston. For an excellent history, read The Box.)

Remarkably, I encountered unionized plants with 2,000 workers and over 200 job classifications. The rigid industrial structure of our corporations––reinforced by union collective bargaining––made many of these industrial operations in the US hopelessly uncompetitive in the emerging world of global competition. 

My insights grew enormously when I had the opportunity to join a consulting team in 1982 that compared production costs between a Ford Escort and a comparable Mazda GLC. Wage differentials between Japan and the US played some role in the cost difference, but not as much as you might think. In the end, the Japanese were making automobiles with a different business model, one that focused on flexibility, speed and lean production practices. To make these models work, they requested a lot from everyone throughout the production system.

Contrast the scene I experienced when I walked through a Ford engine plant in Dearborn. I saw one assembly worker simply putting a very small rubber bushing on an engine block, about one every minute or so. When I asked the plant engineer how they could justify paying assembly-line worker to do so little, he explained the inflexibility of union contracts. Under the then prevailing agreement, job descriptions were frozen within 90 days of the new model introduction. That meant that the contract effectively cut off any learning on the production line after 90 days.

It would be a mistake to jump to the conclusion that the non-competitiveness of the US auto industry was grounded only in union contracts. To illustrate, I will share another story. Looking at the design between the US and Japanese models, we found that the Japanese product design was far simpler and involved far fewer parts. Active collaboration between the Japanese automaker and its suppliers led to countless innovations that were reflected in ingenious designs for everything from interior trim to the transaxle. Meanwhile, the US auto executives focused on squeezing suppliers for the lowest cost and playing one supplier off against another: a short term game that strangled innovation.

US industrial business models did not require much from front-line workers. All this began to change with advances in computers that reached the factory floor beginning in the mid 1980s. By the early 1990s, employers were recognizing the need for different set of skills with their workers.

While the demands of employers have been increasing relentlessly in response to advances in technology and communications, our public schools have been mired in a slow-motion effort at reform. As the National Commission on Adult Literacy pointed out in its 2005 report, "The US is the only country among 30 OECD free-market countries where the current generation is less well educated than the previous one." 

As well educated Baby Boomers are leaving the workforce, they are being replaced  by a workforce that is both smaller and less educated. 

We can see the consequences. Despite the deep recession, employers are facing difficulty finding people with adequate skills. Many of these shortages are within the band of "middle skill" jobs: they require some post-secondary training but less than 4 years of college. 

The reason for this imbalance goes back to the sorry state of our public education system, which, for at least thirty years, has been underperforming. It was less that ten years ago that policymakers in Washington began to measure in realistic terms the Nation's drop-out problem. Across the country, about 30% of ninth graders fail to graduate from high school. These young people face a lifetime economic disability.  (You can check out some statistics here.)

The National Commission on Adult Literacy calculated that out of a labor force of 150 million, 88 million adults face at least one education barrier to higher income employment: No high school diploma; speak English "less than very well"; or a high school diploma with no post secondary training. 

The Atlantic author suggests, as well, "a continued push…for clearer paths into careers for people who don't immediately go to college".

Let's examine that idea more closely. First, we should recognize that we have no effective career guidance system in our high schools. A typical high school career guidance counsellor handles between 200 and 300 kids. Most of this guidance goes to helping the tip 30% get into college. Yet, once they are there, alarming numbers are inadequately prepared for college level work. 

Providing effective career guidance creates a daunting challenge, but figuring out career pathways is even tougher. We clearly need new ways of communicating the skills needed by employers to the educators responsible for teaching. This is not only a problem of educators. Most business people, as University of Akron President Luis Proenza points out, can tell you more detailed specifications of the products they buy than the people they hire. 

We also need to focus our innovations on "youth support networks" like Communities in Schools and the Strive initiative in CIncinnati. 

This last point brings me to perhaps the best place we have for major investments to change the trajectory of poor education: Investments in early child care. Advances in brain science in the 1990's point to the critical importance of 0-3 in brain development. A handful of economists -- like Nobel laureate James Heckman -- have underscored the value of early childhood education. 

Getting to a more open, innovative, agile approach to developing brainpower will be critical to our future competitiveness. 

The longer we wait, the more we fiddle, the more dire our situation. Raghuram Rajan, former chief economist at the IMF, has made this point clearly in his book Fault Lines. 

That's why at the Purdue Center for Regional Development, we are focused on expanding civic innovation. Teaching communities how to build complex networks to support civic innovators who are transforming old, tired systems of education, workforce development and economic development. The good news: we have found some approaches that work: they are simple, scalable, low cost, measurable and sustainable.