One of the challenging paradoxes during the past several decades is that American teenagers have consistently performed below average on international tests in math and sciences, and not especially well on reading tests, yet the American economy is more productive than any other.
I can think of only two classes of explanations for this phenomenon.
(1) International tests fail to measure the superior aspects of the U.S. education system.
(2) Education is not such an important factor in comparative economic performance.
I lean toward (2). It's better to have strong entrepreneurialism and mediocre education than the other way around.
If anything, I think that the caliber of our education system is over-rated. Yesterday, one of the students in my class at George Mason came for help with some sample problems. I showed how the problem boils down to solving for x in the equation
0 = 1 + x - 5
The student had no idea how to proceed. And Alex Tabarrok's wife, who teaches biochemistry (or somesuch) at Mason, is willing to bet that my students are better than hers.