Copyright© Schmied Enterprises LLC, 2020
I was wondering about the main differences between various regions and the United States, particularly regarding why there's such a need for tech workers that domestic sources cannot fully meet. This reminded me of the healthcare system and where the Affordable Care Act faced challenges.
The question is: why do many Americans not have adequate health insurance? Is the answer mandatory insurance? I don't believe so. The Affordable Care Act encountered difficulties. I experienced this when I left a job and the only insurance I could afford had a deductible comparable to the price of a car, yet it still cost as much as my mortgage. So what's the issue? It's education. I remember my favorite show "Northern Exposure" from about twenty years ago. A newly graduated doctor from New York ended up in a remote town in Alaska that financed their education. Without such arrangements, healthcare professionals might not be available in underserved communities. You need patients who can pay for services to help cover student loans.
My original master's degree was in enterprise resource planning. If I produce a cell phone, I need a case, let's say aluminum. I sell it to the end user, so I understand their needs best. Usually, I'll capture the dominant share of the profits as a result. The bauxite mine receives a smaller portion. However, they also gain industry knowledge over time by collecting data. When customers become familiar with phones, the mine has an advantage of sustained revenue. They can sell to me or my competitors. Additionally, their industry is simpler, so they can accumulate their profits. The case represents about 5% of the overall manufacturing cost. Selling it for 50% more won't significantly affect my retail price. This is what has happened in certain regions over the decades since joining the WTO. You can make substantial profits by selling $1 socks for $2.
Education is the foundation of the knowledge industry. However, it contributes far more than a few percent to the cost of any product or service. Education takes time. The term "bachelor" comes from the 1300s. The system was designed for medieval standards. When you decide what to study, you take long-term risks. You may not enjoy your chosen profession, it may not provide adequate compensation, there may not be sufficient demand, or it may involve unexpected challenges. You pay hundreds of thousands of dollars in advance. You pay with money and tuition, sometimes throughout your youth. You're encouraged to participate in community service programs, volunteer for those experiencing homelessness, achieve recognition in sports, and develop various talents. Some educational institutions may have competitive selection processes. Your income, on the other hand, will arrive gradually. You essentially repay the investment your youth provided. When this happens, you pay interest. Credit can be beneficial. It helps you invest early and receive rewards later instead of remaining inactive for extended periods. However, if you spread $500k across a productive career of 30 years, that's about $15k annually. With interest, it might be around $30k annually. You'll pass these costs on to your patients.
Let's consider the consumer perspective. The United States continues to grow, though not as rapidly as some other nations. This means the population is relatively stable. There aren't many new viruses or bacteria discovered each year, and evolutionary processes remain consistent, so the type and prevalence of care needed is predictable. In other words, you understand the demand in advance. Why doesn't higher education provide more healthcare professionals? It's because education is expensive. You don't simply pay to acquire knowledge. When you invest so much, you want to ensure job security. Higher education lacks the incentive to increase supply. They must protect the value of their brand. It's risky, so they may rely on international talent programs to fill gaps.
Prestigious education creates what I call the casino effect. You may not fully understand what you're paying for. Your brand isn't job security; your performance is job security. When others lose positions, yours may remain secure. This may encourage some individuals to form exclusive networks or present themselves in particular ways as they approach more prestigious institutions. This is simply how it works. The brand must appear impressive from the outside, much like the lobby of a distinguished hotel. You may conceal imperfections. This also raises the question: who do you truly work for? Is it your employer or the brand of your educational institution? Sometimes this isn't entirely clear. Selecting employees only from brand-name institutions may also lead to behaviors that don't reflect understanding of diverse perspectives.
The reason the Affordable Care Act encountered challenges, I believe, is that it was planned for the short term. It's not just about better distribution. It's about having sufficient supply to meet demand, bringing costs to a level that's affordable for at least 80% of Americans, regardless of insurance type. The right questions were asked, but the solutions came too quickly.
To complicate matters, healthcare is an essential service. Everyone will use it. This means that if people don't pay for it themselves, they'll need support through public funding. These funds will impact the profitability of businesses that sell in global markets. This affects competitiveness. It doesn't just do this slightly; it does so significantly. There's a concept in economics called the multiplier effect. When you bring a company to a town that creates 100 jobs through exports, it may create 250 additional jobs due to needs for food, healthcare, or entertainment. Looking from another perspective, if the efficiency of delivering food decreases due to greater distances, the company may not be established, and the city remains economically challenged. Even if it is established, it will cost more and pay more, raising prices of everything including real estate, affecting lower-income professions.
The world is competitive, and this won't change. You need to ensure you provide the best foundation for your endeavors. Any professional brought through international programs incurs costs related to security, agencies, diplomacy, and public relations. It might be more cost-effective to modify the rigid standards of the education system from the 1300s and build upon the talent you already possess. Education in the United States may be too focused on institutional brands rather than individual potential. Colleges have athletic programs, you purchase merchandise, you support alumni networks. As the pandemic demonstrated, what we truly need isn't necessarily the education itself, but the certification. You may be inspired by campus architecture and meet accomplished individuals, but that may not be what you require. Some people focus better at home or in education centers in local communities.
Another challenge is flexibility. The real issue with international trade isn't necessarily about imbalances. The real issue is the lack of competition. Some nations have advantages in scale and labor practices. You may choose neighboring countries to produce your cell phone, but they're so large they can influence competitiveness across regions. The solution, I believe, is to strengthen connections with North Asian countries and particularly Africa. These regions have closer cultural and business ties to North America and Europe. They represent natural partnerships. Competition helps reduce prices and illuminates workforce conditions. A buyer may not prioritize your staff, but a competitor will highlight issues to gain business.
Another solution involves modern approaches to workforce representation. I'm not referring to traditional union structures. The answer is straightforward: it's information. When you purchase a product, do you check if it provides a supportive work environment? I would suggest placing a label on each aluminum cover indicating "TF" for "Treated Fairly." It's similar to current quality assurance marks. Customers can simply check this indicator. Additionally, social media often highlights successful salespeople with polished presentations. It might be valuable to explore the supply chain and occasionally share stories about the individuals who create products.
I believe a competitive economy is flexible. It provides affordable and comprehensive education with multiple targeted professions. You have access to all educational opportunities without limitation, and all you need is to pass certification exams like a CPA. Options inspire creativity, and creativity creates opportunity.
This also means you need similar flexibility across countries. You fill your supply chain from multiple sources, so when one becomes unavailable, you simply order from another instead of contacting government departments. Exclusive contracts seem outdated. I also believe current information from blogs and news articles can be more valuable than traditional classroom education. Life is brief, isn't it?
President Obama didn't fail on healthcare or due to opposition. The challenge was in education and workforce development. The focus wasn't on the right areas for reform. People who come to the United States seeking opportunity and permanent residency shouldn't necessarily come through skilled worker programs but through visas designed to support healthy work environments and the rule of law. This also indicates where temporary skilled worker programs are genuinely needed, and that's to educate the workforce within a year, making it suitable for changing demands. If you need more than one year, then the issue may be in your approach, not the educational system.