Democracy And Free Markets: Is That All?

Data, Information and Accompanying Technology

(Participant) Douglass: In #46 you are presenting only half of the equation. That is -- only known information is worthless, because it could be distributed very quickly. The other half is what is extremely valuable is unknown information. This is a debate that I have been having with my colleagues so that we can move our curriculum to an inquiry-based model, instead of what we normally do which is professing known information to students. What I have advocated in recent years is to teach research as the only TECHNOLOGY we need to teach in our Department of Educational Technology. For advanced economies we have to MASS PRODUCE new knowledge. This is a contradiction of sorts only in terms and not in concept until I can express it better with a new term. Mass produced new knowledge is not uniformed as goods were in the industrial era. It will be situational, used rapidly, and perishable, as for example food is. We have to reach new frontiers in knowledge generation in advanced economies.

(Douglass Carmichael) Fred, it may be half the information in terms of categories in unknown, but much less in unknown in actual practice. My ability to understand a competitor in most cases is pretty good. It doesn't take much to understand their technology, management structure, financial structure, and software infrastructure such as accounting and personnel.

Given that reality it seems to me the narrowing of profit to zero analysis holds *as a trend *. I'd add that some have argued that in computer manufacturing generally, given the massive investments, the net return may be below zero! dotcoms fit that, and generally we are developing new technologies with zero net return. The restaurant business may be another where so many failed startups add up to a net minus.

On the other hand, I once consulted to a failing computer company and one senior manager said, as we were reviewing corporate history, "we have only paid a dividend twice in seventeen years, but we have sure paid off a lot of mortgages and sent a lot of kids through college."

I think the globalization heightens the contradictions. Take for example the rush of American companies to develop manufacturing in China, were agreements with the Chinese basically meant tech transfer in five to ten years. That meant one generation of manages looked good, leaving it to the next generation to compete back into Chinese markets. I think last year China became the lead country in computer manufacturing and I think the percentage of that which is China owned is increasing.

Since the market is not a closed system, losing control of one part may be balanced by the introduction of new tech and products one does control, maintaining a healthy balance over time. In this case I think we are losing out. But I am open to numbers.

I recall a few years ago the NYT article on ‘success of globalization", and they took the example of Boeing. But the factory picture was in china, and not only is Asia the site of manufacturing, but also of market and, pay attention – source of investment capital. Thus the whole trend is towards everything being overseas except for some part of US-based ownership—and that is decreasing.

I have forgotten his name: the secretary of commerce who died in the plane crash in Italy under Clinton. Everyone on that plane was looking for sites overseas – not markets, but manufacturing.

Fred, one further thought: mass production of information. I do not accept the basic model that we are producing so much more than before. Basic questions about information theory may be important here. Any interest in that? For example, if we have one copy of Shakespeare, is there more information if we have two?

Note again: the thesis—the monopolization of markets and power, and profit margins declining except for monopolies. True? (by which I mean pragmatic trends, not absolutes) If so, what do we do?

I also agree with this statement to a degree. Generally speaking the trend for everything (second law of thermodynamics) is toward entropy, unless you put more information into it. In the industrial era this entropy in social systems (in the broad sense of the word) was slow. We did not notice it as much. The information age, paradoxically, has accelerated the entropy of social systems that rely on their extant achievement and don’t wish to grow.

Right now, the computer that I use in teaching my class every night is about $500. The projector displaying its screen image is more than $2000. It is small, slick, portable and recently designed. The design of a PC, however, is just about 30 years old. It is faster now than 30 years ago, and holds more stuff. But its basic design and its problems are the same. No new research has been put into it to give it more functionality. The projector, on the other hand, has become portable enough to fit into a suitcase. It has a new design and has held its value.

The case of the dotcoms is the same. I manage one: http://distance-ducator.com. I started it in 1995, and had no competition. Now, there are many sites that people think are my competitors (I sincerely believe I don’t have any competitors; but that’s another story). So, I have accelerated our research and development program to provide new information on my website that is unique and useful to people.

We haven't said much about the marginal value of information, or "information float", i.e., the value of knowing something before it is known by others. Didn't a Rothschild make a mint that way in the time of Napoleon? Anyway, the idea isn't new, but it strikes me that this "value" is going to be with us for a long time.

Fred, it seems like we pretty much agree. I may tend to look at trends for large ensembles, you focus more on the experience of local cases, but I don't see any real disagreement. the question then is, if monopolization is the trend, what are the consequences, and what do we do about them?

I also agree we are in an entropic age, which means surrounded by decay, unbound energy, "information" that while it appears to be information is mostly redundancy. I think we need an information topic.

Perhaps no other institution has decayed more than education in the past 20 years. We have dysfunctional schools and semi-functional universities. There is a great reluctance among the universities to adjust to the realties of the 21st Century. As such, Jacksonian democracy, which is based on rewarding the independence of the "common man", is sacrificed by an elite that is totally disconnected with those whom they are supposed to serve. The faculty eat cake at the university (the university is a candy store for the faculty who have access to Internet2, and high speed computers, reality rooms, and great libraries, although they don’t get paid very much) and expect our students to eat cake too.

One piece of suggestive evidence of how seriously the administration takes their view of the world is their willingness to spend down national wealth to achieve it. If we look at it as an investment strategy for a failing enterprise, does it make sense? The assumption in that question is that the administration is functioning as a board for the US as a corporation. It may be possible that it is the weak link because building a culture is also a political leader's main task, and Bush has so little interest in relationship building, truth telling, or having a sense of the whole and its moral climate. Yet, he might argue that it is the culture which is at stake and the Democrats—Roosevelt through Clinton—were impervious to the drift towards large government and statism, and the value of Bush is to spend the government into bankruptcy in order to get rid of social security, Medicare, the Departments like Commerce and Education.

What is the real story?

It seems to me that the question of democracy has no "national" definition left anymore. As markets, and capital are globalizing, so is the question of democracy and representation. The process is not complete yet, but it started in the late 1970’s. If I may relate part of my political experience…during the Nixon administration the Shah was responsible for the defense of the Persian Gulf. When Carter took over, the Shah was relieved of his duty. What went through my mind then --perhaps not in these very terms-- was that sooner or later we will have globalized terrorism. No longer, terrorism would be limited to killing Western personnel or Western educated Iranian employees in the streets of Tehran. In the disappointment of the moment I was saying to myself ‘let the Americans take over and see what it takes to run a television network in an environment infested with Islamic Marxists.’ Mind you, at the early stages of the Iranian revolution it was clear that the U. S. was supporting Khomeini. Andrew young called him the Gandhi of Iran.

We have seen the extension of terrorism and its paradoxical requirement for democracy in Afghanistan and Iraq in recent times. In short, we need to consider this global dimension in this discussion and see to what extent we have to have democracy in other countries to have democracy in the U. S. or in Sweden for that matter.

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