The Knowledge Economy:
A Sketch of a Framework
This is a transformative moment
- More than just rapid technological change
in a single "leading sector"
- A moment when changing technology reshapes
the whole economy
- Who was the first network billionaire?
- What are the bounds of the high-tech economy?
- There are no businesses and organizations
that we can be confident will not be transformed...
- Lessons from past transformative moments
- Examples: enclosures, Gilded Age, late-Victorian
Britain
- It's possible to fumble the transformation
- New technologies blossom only with new economic
institutions and restructured "soft infrastructure"
- New institutions and infrastructure require
consensus political support
- The "inclusionary economy" becomes
a necessity
What are the characteristics of this transformative
moment?
- What this transformative moment isn't
- A change in the kinds of activities that
create wealth
- Technology-driven: transistors -- ICs --
microprocessors -- networks
- Revolution in information and control
- Not making more goods and services, but making
the right goods and services
- Is this a bigger transformative moment than
we have seen in the past?
- We don't know: measurement problems
- Measurement problems the flip side of extremely
widespread benefits
- But in the past we didn't have Moore's Law
and Metcalf's Law
- Speed of change
- Possbility that first uses are not the highest-value
uses
- Building out over existing physical infrastructure
The international stakes
- Initially American initiatives
- But it won't stay American for long
- Differences in governance and network structures
will drive innovation from abroad
- Japan in the 1980s taught us that we weren't
an island where electronics was concerned
- Benefits of interoperability will allow first-mover
governments to shape global patterns
- Communication means that organizations may
become "footloose"
- U.S. executives not eight times as effective
as Argentinian ones
- Headquarters location isn't everything
- Hence the penalties to getting national policies
wrong become much greater
- But negative-sum games over industrial location
not worth playing
- The U.S. government has limited state capacity
- And internationally-oriented policies have
enormous domestic distributional consequences
How to sustain and accelerate this transformation
I
- Thinking about infrastructure
- Physical infrastructure
- Human infrastructure
- Soft infrastructure
- Physical infrastructure
- Building out over Bell System infrastructure
- Elimination of budget deficit makes capital
scarcity less of a problem
- Network integrity issues
- Human infrastructure
- Fundamental research and development
- Today we are living off of past investments
- Today no Bell Labs or (old-style) IBM
- Lesson from Xerox PARC
- Fundamental R&D is unhelathy for your
bottom line
- Education and skills
- Improving public schools
- Technicians and researchers
- U.S. is making enormous investments in the
training of the foreign-born
How to sustain and accelerate this transformation
II
- Soft infrastructure
- Examples from the past
- Enclosures, FDA, Sherman Act, German technical
education
- Change in source of value means change in
the kinds of things that are deemed worthy of property-law protection
- Enclosure on the electronic frontier
- Balance rights of innovators against rights
of users
- Without powerful protection of their rights,
no innovations
- With too-powerful protection of their rights,
use of innovations is greatly and unduly restricted
- Recall that the users of one layer of technology
are the innovators of the next
- RAM -- microprocessors -- motherboards --
boxes -- operating systems -- networks -- applications
- Rivalry, excludibility, transparency
- The progressive-era solution--oligopolies
to provide some competition and reap most economies
of scale--may not be viable
- Carpal tunnel syndrome of the invisible hand?
- Government needs to fulfill these infrastructure
gaps
- At the moment the most pressing needs are
in human and soft infrastructure
- Government has this role not because it is
especially competent at doing them, but because it is the only
thing that can
- Industry self-regulation as a guide to government
action
- Government can't simply hide--much as some
might wish it
- But we do not know enough to propose policy
solutions
- All we have done is to identify needs
New Economy Master Page
|
Professor
of Economics J. Bradford DeLong, 601 Evans Hall, #3880