Gilder explains the true meaning of the microcosm with his uniquely poetic prose:
As Peter Drucker said. “What one man can do, another can do again.” Distilling discoveries of science, a set of technologies, and a Philosophy of enterprise, the microcosm is far too big for any one country. Even its products are mostly made of ideas—waves that suffuse the mindscape of the world. (p.127)
The vital importance of ideas in all aspects of the microcosm, including hardware, is a central theme of the book:
Computer hardware thus is another form of information technology like books, films, and disks. The value resides in the ideas rather than in their material embodiment. The chip design is itself a software program. Even the design of the computer’s plastic chassis and keyboard may well have begun as a software program. Like a book, a spreadsheet financial package, even a film on a videocassette, a microchip design is conceived and developed on a computer screen and takes form in a storage device that costs between 80 cents and $2 to manufacture. The current dominance of such products in the world economy signifies the end of the industrial era and the onset of the age of the microcosm. (p. 159)
Consider debate over handset exclusivity: Those who insist that AT&T be forced to relinquish its exclusive rights to the iPhone ignore the fact that the iPhone is not so much a device as a brilliant idea—actually, a cluster of innovations made possible because AT&T was willing to partner with Apple on the risky venture of developing the expensive device and bringing it to market. Speaking of ideas made reality, I can’t wait to get my hands on a Microsoft Surface!
http://www.youtube.com/v/rP5y7yp06n0
The Wall Street Journal reports today that student loan borrowing for college “in the 2008-09 academic year grew about 25% over the previous year, to $75.1 billion,” with the average student borrowing $13,172 to pay for college. So it should come as an enormous relief that one Internet start-up, StraighterLine, has essentially made the university fully virtual, offering classes for just $99/month. While this may seem like a boon for students, especially the millions of Americans for whom even community college tuition seems an insurmountable obstacle to climbing up the economic ladder, such “e-Learning” offerings are already, predictably, coming under attack by entrenched interests in “Big Ed” (the professoriat!) as the “media-software–publishing–E-learning-complex.”
In Washington Monthly, Kevin Carey explains why “The next generation of online education could be great for students—and catastrophic for universities.” In a nutshell, the story is the same basic theme of Chris Anderson’s book Free!: digital distribution of information will ultimately drive costs down to zero. Carey shows how universities are essentially facing the same sorts of pressure from disruptive innovation as newspapers—except with more capital costs:
Colleges are caught in the same kind of debt-fueled price spiral that just blew up the real estate market. They’re also in the information business in a time when technology is driving down the cost of selling information to record, destabilizing lows.
In combination, these two trends threaten to shake the foundation of the modern university, in much the same way that other seemingly impregnable institutions have been torn apart. In some ways, the upheaval will be a welcome one. Students will benefit enormously from radically lower prices—particularly people like Solvig who lack disposable income and need higher learning to compete in an ever-more treacherous economy. But these huge changes will also seriously threaten the ability of universities to provide all the things beyond teaching on which society depends: science, culture, the transmission of our civilization from one generation to the next.
Whether this transformation is a good or a bad thing is something of a moot point—it’s coming, and sooner than you think.
Continue reading →
A few gems from George Gilder’s 1990 masterpiece Microcosm: the Quantum Revolution in Economics & Technology as I work my way through the book:
Predatory Pricing. Gilder details how early microchip manufacturers created wholly new markets put Say’s law into action: supply creating its own demand. Not only did these companies introduce new technologies, but they created demand by slashing the prices of those technologies by multiple orders of magnitude (10-10,000x) even before they figured out how to lower production costs enough to make even a small profit. While such practices would later give rise to charges of “predatory pricing” and “dumping,” Gilder explains:
Selling below cost is the crux of all enterprise. It regularly transforms expensive and cumbersome luxuries into elegant mass products. It has been the genius of American industry since the era when Rockefeller and Carnegie radically reduced the prices of oil and steel. (122)
The Learning Curve: Gilder explains the dynamic by which prices drop so consistently in innovative new industries:
Early in the life of a product, uncertainty afflicts every part of the process. An unstable process means energy use per unit will be at its height. Both fuels and materials are wasted. High informational entropy in the process also produces high physical entropy.
The benefits of the learning curve largely reflect the replacement of uncertainty with knowledge. The result can be a production process using less materials, less fuel, less reworks, narrower tolerances, and less supervision, overcoming entropy of all forms with information. This curve, in all its implications, is the
fundamental law of economic growth and progress. (125)
The Curve of the Mind: Gilder explains the broader implications of the Learning Curve to the competitiveness of the market economy, and how easily yesterday’s giants can become tomorrow’s easy prey: Continue reading →
The Technology Liberation Front is the tech policy blog dedicated to keeping politicians' hands off the 'net and everything else related to technology.