All the bullshit accountability that the Bush administration, and to a certain degree the Clinton administration, has forced on the public school system has done is force schools to teach kids how to beat standardized tests. I know it's a common complaint for young teachers that they feel like they've become a slave to this nonsense.
On my current contract gig, I work with an Indian guy that also spent a lot of time in Singapore. Culturally, he found it odd that I have no formal education in computer science, but accepts that I've made up for that in terms of real experience. Still, he makes a strong case for off-shoring not in terms of cost, but in terms of available brains.
One thing he said that struck me as not-so-obvious is that India and Singapore spent so much time under British rule that one of the biggest influences that came out of that was one of European education. He feels that India's constantly expanding middle class exists because there's so much emphasis on learning technology trades, in the way that the U.S. once emphasized industrial trades. The problem is that we never switched our focus. There just aren't as many well paying blue collar jobs around anymore.
Personally, I see the failure of our educational system every day on the message boards I run. I don't want to call the kids stupid, because I don't think that's it. They're just so incapable of forming complete, written thoughts (with actual grammar and spelling) that what they say is not readable. Heck, my wife sees this failure all of the time as a graduate assistant grading undergrad papers.
What's the solution? I don't actually know. I'm not suggesting that we should be a nation of rocket scientists, but if we don't get our shit together, we will fall desperately behind the rest of the world. Trade issues can't be solved by legislation... we're living in a global marketplace now.