Why The Kids Are All Right

All columnists are allowed to have pet peeves, so here's one of mine. I can't abide the assumption that just because a country sits on top of natural resources, it is potentially rich. It is now conventional wisdom that the Arab economies are "failures" because they have wasted their oil wealth. After the recent death of Jonas Savimbi, the Angolan guerrilla leader, we were told that his nation should be one of the richest in Africa--all those diamonds and precious metals under the jungle, you see.

Gimme a break. Resources are a curse as much as a blessing, for two reasons. Over time technological change reduces the relative price of commodities, and the presence of abundant resources skews incentives. Extracting wealth from the ground can look so easy that other sectors of the economy are starved of investment. Apart from Australia and Norway, it is hard to think of resource-rich nations that have used their natural endowments to build balanced economies. By contrast, some of the world's richest nations--Denmark, Japan, Switzerland--got that way without any significant stock of natural resources.

But they all had something else: human capital. Over the past 20 years, economists have come to believe that a central determinant of a nation's economic growth is the skill base and entrepreneurial moxie of those who live there. Human capital is a function of education, which is why successful Asian tigers (like Singapore) and fast-growing developing countries (like Mozambique) put so much stress on the quality of their schools. German schools and universities used to be the envy of the world, especially in math and science. But the country has been shocked by a couple of recent reports from the Organization for Economic Cooperation and Development. The average performance of German high school students in math and science is now below that seen in most OECD countries, with a worryingly large gap between the strongest and weakest German students. Moreover, only about 1 in 6 of those who graduate from a German secondary school ever completes a university degree, compared with 1 in 3 Britons and Americans. Germany's free public universities are a joke, full of perpetual students who have little contact with professors. As my colleague Charles Wallace, TIME's Berlin bureau chief, has reported, serious German students are flocking to private, fee-charging institutions, many of which use English as their medium of instruction.

How does the U.S. rank in the international human-capital standings? That's a tricky question. Over time the American economy has shown more dynamism and sustained growth than just about any other. But if you look only at the performance of the average American high school student on international tests, you would think we were a nation of dim-witted dullards. What explains the paradox?

To some extent, the answer must be the quality of American universities, which are highly efficient, intensely competitive and wonderfully endowed and which increasingly recruit the best students in the world. But university professors aren't magicians; however skilled they may be, if their inputs from high schools are garbage, their outputs of graduates will not be much better.