NYT
May 2, 2008

Op-Ed Columnist
The Cognitive Age
By DAVID BROOKS

If you go into a good library, you will find thousands of books on
globalization. Some will laud it. Some will warn about its dangers.
But they’ll agree that globalization is the chief process driving our
age. Our lives are being transformed by the increasing movement of
goods, people and capital across borders.

The globalization paradigm has led, in the political arena, to a
certain historical narrative: There were once nation-states like the
U.S. and the European powers, whose economies could be secured within
borders. But now capital flows freely. Technology has leveled the
playing field. Competition is global and fierce.

New dynamos like India and China threaten American dominance thanks to
their cheap labor and manipulated currencies. Now, everything is made
abroad. American manufacturing is in decline. The rest of the economy
is threatened.

Hillary Clinton summarized the narrative this week: “They came for the
steel companies and nobody said anything. They came for the auto
companies and nobody said anything. They came for the office
companies, people who did white-collar service jobs, and no one said
anything. And they came for the professional jobs that could be
outsourced, and nobody said anything.”

The globalization paradigm has turned out to be very convenient for
politicians. It allows them to blame foreigners for economic woes. It
allows them to pretend that by rewriting trade deals, they can assuage
economic anxiety. It allows them to treat economic and social change
as a great mercantilist competition, with various teams competing for
global supremacy, and with politicians starring as the commanding
generals.

But there’s a problem with the way the globalization paradigm has
evolved. It doesn’t really explain most of what is happening in the
world.

Globalization is real and important. It’s just not the central force
driving economic change. Some Americans have seen their jobs shipped
overseas, but global competition has accounted for a small share of
job creation and destruction over the past few decades. Capital does
indeed flow around the world. But as Pankaj Ghemawat of the Harvard
Business School has observed, 90 percent of fixed investment around
the world is domestic. Companies open plants overseas, but that’s
mainly so their production facilities can be close to local markets.

Nor is the globalization paradigm even accurate when applied to
manufacturing. Instead of fleeing to Asia, U.S. manufacturing output
is up over recent decades. As Thomas Duesterberg of Manufacturers
Alliance/MAPI, a research firm, has pointed out, the U.S.’s share of
global manufacturing output has actually increased slightly since
1980.

The chief force reshaping manufacturing is technological change
(hastened by competition with other companies in Canada, Germany or
down the street). Thanks to innovation, manufacturing productivity has
doubled over two decades. Employers now require fewer but more highly
skilled workers. Technological change affects China just as it does
the America. William Overholt of the RAND Corporation has noted that
between 1994 and 2004 the Chinese shed 25 million manufacturing jobs,
10 times more than the U.S.

The central process driving this is not globalization. It’s the skills
revolution. We’re moving into a more demanding cognitive age. In order
to thrive, people are compelled to become better at absorbing,
processing and combining information. This is happening in localized
and globalized sectors, and it would be happening even if you tore up
every free trade deal ever inked.

The globalization paradigm emphasizes the fact that information can
now travel 15,000 miles in an instant. But the most important part of
information’s journey is the last few inches — the space between a
person’s eyes or ears and the various regions of the brain. Does the
individual have the capacity to understand the information? Does he or
she have the training to exploit it? Are there cultural assumptions
that distort the way it is perceived?

The globalization paradigm leads people to see economic development as
a form of foreign policy, as a grand competition between nations and
civilizations. These abstractions, called “the Chinese” or “the
Indians,” are doing this or that. But the cognitive age paradigm
emphasizes psychology, culture and pedagogy — the specific processes
that foster learning. It emphasizes that different societies are being
stressed in similar ways by increased demands on human capital. If you
understand that you are living at the beginning of a cognitive age,
you’re focusing on the real source of prosperity and understand that
your anxiety is not being caused by a foreigner.

It’s not that globalization and the skills revolution are
contradictory processes. But which paradigm you embrace determines
which facts and remedies you emphasize. Politicians, especially
Democratic ones, have fallen in love with the globalization paradigm.
It’s time to move beyond it.