About this book:


This is the second draft of my book on the knowledge business.  I am publishing

it here on the world-wide web in anticipation of producing a printed version.

I invite your reading of it, but please note that it is a copyrighted item and

that I am not authorizing anyone to download it and/or print it.  It is solely

for on-screen use.


If you have any comments, I would be glad to have them.  If you permit it, I

might wish to include them, possibly with more text by me appended, in an

appendix to this book.  In any case, I would be glad to hear your reactions.


Anatole Beck.



@ Copyright 1996 by Anatole Beck.  All rights reserved.



                     THE KNOWLEDGE BUSINESS







Chapter      1.   The inheritance

             2.   The magicians

             3.   Bert's option

             4.   The chip

             5.   Imaginary numbers

             6.   The golden eggs

             7.   Externalities

             8.   The resource

             9.   The paradox

            10.   Paying for college

            11.   Paying for pre-school

            12.   Higher education

            13.   Filling from the top

            14.   Socialism

            15.   Free lunch

            16.   Sharing

            17.   Intellectual property

            18.   Information

            19.   Unemployment

            20.   Greed

            21.   Free trade

            22.   Economists

            23.   Tuberculosis

            24.   Health

            25.   Waste

            26.   The common

            27.   Amateurs and professionals

            28.   The dark side of the force

            29.   The Luddites

            30.   Progress

            31.   Risk

            32.   The means test

            33.   College

            34.   Pre-school

            35.   National net worth

            36.   Investment

            37.   The People's share

            38.   Rentiers

            39.   White heat

            40.   The courtiers

            41.   Taxes

            42.   Cratchit

            43.   Making nice

            44.   A call to duty

            45.   Knowledge is wealth

Appendix A. The Technological Society

         B. The Iron Law of Wages






      The past twenty-five years have seen a marked constriction in the

activities of education and research in the industrialized world.  This

constriction, which followed the triumph of American technology and industry

in landing a man on the Moon, has occasioned a crisis of morale in the

academic and intellectual world.  The two principal reactions have been, on

the one hand, overly humble and servile and, on the other, overly pompous and

vainglorious.  The first has accepted a philistine view that the principal

function of the universities is to serve the interests of our ``customers'',

those being our students and their parents.  Also that the function of

scientists and researchers is to serve the interests of their customers,

those being industry and commerce.  In this view, we are all reduced to the

status of retail clerks, not to say domestic servants.  The opposite view

has been to exalt the status of our profession even beyond its legitimately

high standing to rank as essentially a holy enterprise, to be worshiped and

supported as though it were the Message brought down from Sinai, regardless

of any debasing considerations of value to the human race as a whole.  Many

intellectuals are fond of this view.  Not only is it offensive to the public

at large, but I also find it overblown and indefensible.


      In this book, I set forth a view of the function of the intellectual

enterprise in the economic life of the human race.  I argue that the cost of

that effort is small compared with its benefits, and would be so even if the

enterprise were to be extended to the outermost limits of what we could invest

in.  It is a modestly proud stance to which I hope the creators and purveyors

of knowledge can rally.  I do not imagine that this argument of mine has the

rhetorical power to persuade those who are naturally hostile to its ends, as

for example the owners and managers of predatory industries.  I leave that task

to others more talented in the arts of persuasion.  For me, it would suffice to

exhibit for the practitioners of the knowledge business a clearer exposition of

what we do that is worth the investment of the general public.


      I have been surprised not to see others saying what I have written in

this book.  It is not so unusual.  However, in recent months I have begun to

hear scraps and bits here and there.  The words ``human capital'' are not new,

and are resurfacing after a long period of disuse.  The sense of the value of

knowledge, often confused with mere information, is increasingly on the lips

and in the minds of policy-makers.  But the assembly of the bits into an

interlocking structure, not unlike a Chinese puzzle, is what I find special

about this theory.


      I am indebted to by friend Roshan for the observation that my many

commentaries on schooling, research, employment, welfare and social disorder

were actually facets of a single insight, one which could only be assembled into

a whole book.  This is that book.  I hope its readers can make of it something

of value to a world my children and grandchildren can enjoy.



Chapter 1  The Inheritance


      Knowledge is wealth.  It is an old saw that it is power, and in that

sense, knowledge is also freedom, democracy, health, and sometimes life. The

gist of this book is that knowledge is also wealth, real wealth, money in the

bank.  It is, in fact, the realest wealth we have.  And as an investment, it

is the most remunerative we have.  In this, we find a kind of paradox, for the

bulk of the expenditure on knowledge, both on research and on education, yields

nothing of economic value.  But that which is valuable, even that which can be

counted in money, is so rich that it pays for all the rest many times over.


      I am distressed that so little attention has been paid to this truth in

recent years by the economists, who have tended to treat knowledge as a private

good, the possession of those who can buy it or appropriate it out of the public

domain.  In their attention to private property as the basis of such economic

theory as they can create, they have supported policies which have caused us

to short-change the process which could have given us more of this precious

commodity, and have rallied round the proponents of this privatized theory to

shower them with honors and prizes.  In so doing, they have helped to deprive

the human race of its potential wealth.  In this book, I hope to open a sort of

interchange of ideas which may be valuable to the generation of my children and

that of my grandchildren.


      Each generation receives as its inheritance a vast store of knowledge,

gathered over the eons.  It is so pervasive that we are hardly aware of its

existence, except as we are dragged, often unwillingly, through the schools

and classes in which we acquire a small part of it.  Also, to the extent that

we are particularly interested in that sort of thing, we might keep abreast of

the inventions and innovations which are pouring out almost constantly from

the machinery of knowledge-production the human race has created for itself. 

Although we are generally aware of the private inheritances of money or

property we expect from our parents or other members of the older generation,

we tend to be less aware of the inheritance of public property which passes

constantly between generations, and most of all, we are unaware of this

inheritance of accumulated knowledge and wisdom which, I maintain, is our most

valuable legacy.


      To illustrate this value, let us compare two fairly extreme situations:

those in which a nation loses most of its physical assets (such as roads,

factories, schools, hospitals etc.) but retains most of its store of knowledge,

and those in which it retains those physical assets but somehow manages to lose

or estrange its link to that knowledge.  Neither situation is quite categorical,

but the contrast is enough to indicate what is the shape of the situation.  We

first consider how the world has recovered from the ruins of the Second World

War.  In the course of a single generation (only slightly more for the Soviet

Union), we were able to restore the physical assets destroyed in that war,

notwithstanding the appalling loss of life and, with that, a loss of the skills

and learning those people had accumulated.  In the case of Japan and Western

Europe, that rebuilding was fostered by financial aid from the United States,

but in the case of Eastern Europe and the Soviet Union, that aid was absent. 

Indeed, in East Germany the recovery was effected despite the pillaging of their

factories by the USSR as ``reparations'' for the Germany destruction of the

Soviet industrial infrastructure.  What did manage to survive the war, in large

part, was the knowledge of how the world had been put together and how to put it

together again.


      By contrast to this rebuilding of the industrial countries devastated

by the war, let us consider the plight of those revolutionary societies

which have lost, through flight, expulsion, imprisonment or exclusion, the

participation of a large part of its educated population.  In many cases, these

new regimes were left with substantial physical assets: roads, buildings,

factories, wholesale and retail facilities.  Yet we have seen many of these

assets deteriorate, even to the point of worthlessness, in the hands of new

managers who did not understand them well enough or who simply lacked the

basic knowledge to maintain and improve them.  I offer this contrast as

evidence that the most valuable thing we bring with us from the past is this

knowledge. We get some sense of this also from a reading of ROBINSON CRUSOE or



      The mechanism for both distributing and advancing this legacy of

knowledge is to be found in human intelligence.  Regardless of the differences,

if any, among specific human subgroups in their capacities in this or that

direction, it is clear that such differences are tiny compared with this vast

intellectual capacity.  Yet each generation is dependent on its elders to have

its intelligence multiplied and developed beyond the petty resources of the

individual by an infusion of the accumulated knowledge of the human race.  In

this, people are grossly different from all other animals.  The more primitive

animals, even as highly developed as spiders and sea turtles, carry all their

inherited knowledge in their genes.  They are born knowing how to walk.  The

spiders know how to spin their webs without being taught and the tiny turtles

seek the sea immediately after being hatched.  These animals may well learn

more during their lifetimes, but they are taught only in the hard school of

experience.  No one teaches them anything, in the sense we ordinarily use that

word.  Even young ruminants must stand and walk within minutes of bing born, and

almost immediately must find their mothers' teats virtually without help or they

will die.  By the end of their first day of life, they must be prepared to run

with the herd.  Unlike human children, they are not taught to walk.  That

knowledge is imprinted in their genes.


      Among the higher mammals, and particularly the predators, the young are

taught some skills by their mothers.  Hunting skills are especially noticeable

in this regard.  But even there, lacking language, the instruction is by example

only.  The cub which loses its mother early will have to make up the deficiency

on its own (unlikely) or it will die.  With the coming of language, the humans

acquired a great mechanism for imparting a much greater quantity of knowledge

between the generations, and the coming of writing increased this capacity even

more.  By comparison, printing and electronic communication, for all their

brilliance, were small advances.


      For thousands of generations, the only place for storing knowledge was

in the minds of living people and as the quantity of information grew, this task

had to be apportioned, in one degree or another, to specialized wardens for

maintenance and occasional accretion.  With the coming of writing, this vaguely

priestly function became less important, though never fully obviated.  At times,

there was knowledge lying in storage somewhere as mere information (as e.g. in

the Dead Sea Scrolls) which was not known to any living human being but was

still, in some sense, part of the Inheritance.


      It will be part of the message of this book that we have not optimized

the creation and transmission of knowledge.  In this dereliction, we have

cheated our progeny far more than any question of inherited debt could do. 

I will show that the profits, even in merely monetary terms, of a greater

investment in this resource would greatly benefit the human race, and the

additional benefits not calculable in cash would be even greater.









Chapter 2.  The Magicians


      We need to inquire into the relationship between the human search for

knowledge and the people who constitute the personnel of the Knowledge Business.

Most of the events of human life are lost in the fog of pre-history, and we can

only guess at what life was like in the Stone Ages.  However, we have come upon

a number of peoples with stone age technologies during the past few centuries

and we attempt to extrapolate from what has been observed.  It does cast some

light on the anointed keepers of knowledge in our own time.


      Although we have no examples surviving into our own time, it is

credible that in extremely primitive societies, it is possible for all the

clan's knowledge to be held in common by all able-minded adults, or men, or

women, as the case might be.  As the store of knowledge begins to grow, so does

the need to apportion it to specialists who can be responsible for maintaining a

particular portion, whether it be the knowledge of healing, or of weather, or of

agriculture, etc..  These persons take on the positions of magicians or priests,

and their knowledge is typically framed as the link into the world of the gods

or the spirits.  Remarkably little seems to be structured, in the minds of

primitive peoples discovered in the 19th and 20th centuries, as practical

advice based on observation.  Much is framed as what we today call superstition.

Of this, much leads in false directions, but much also is practical. 


      In primitive societies, the pace of advance of knowledge is slow, and

the main task of the magicians is to preserve the lore which has been passed to

them and to transmit it through their apprentices to the next generation.  From

time to time, something new is added, almost imperceptibly.  Again, this tends

to have a supernatural provenance.  Some of the advice seems very good, seen

from the viewpoint of modern science, such as the vegetarian diet of many

Hindus, while some is highly questionable, such as the avoidance of pork by Jews

and Muslims.  The avoidance of alcohol by Muslims seems clearly to arise from

the Prophet's distaste for the consequences of drunkenness, but it is again

couched in the words of divine prohibition.


      An outstanding example of the conflict between theological and practical

knowledge is to be found in the Copernican model of the solar system, and its

utter rejection by the Church.  But it arose on the threshold of a period of

enlightenment based on observation and experiment.  In a sense, it ushered in a

period of conflict between those explicitly designated as priests bearing holy

writ and those claiming to bear the torch of secular Truth.  It is interesting

that these latter ones also took on the trappings of priesthood, with titles

like Doctor and robes of office.  They did not portray themselves as the

workers of a new artisanship, but as the acolytes of Enlightenment, in conflict

with the perpetuators of Ignorance and Obscurity.  In time, artists like

painters, sculptors, musicians and eventually even writers began to share this

semi-priestly mien, and to worship the work they did.  More significantly, they

also sought a similar deference from the general public.


      There is function in this magic.  As large parts of the knowledge of the

human race fell outside the ken of most people, it became necessary to give

much trust to those who were anointed into the arcana underlying our new forms

of life.  To obtain this trust, we had to rely on the reputation of integrity

which would clothe the pronouncements of physicians and physicists alike.  We

needed to believe that their devotion to the sanctity of their vocation would

preclude mere resort to mountebank practices in their own interests.  When the

details of their pronouncements were beyond our comprehension, it was

important that we could rely on their probity.  They took on an exalted and

nearly unassailable authority.  We, in turn, obtained a belief that we could

accept their bounty without having to master their expertise.


      A famous story recounts a dialogue between two professors of philosophy:

``I am constantly amazed at how much there is to know, and how little of it I

     know.  For example, I don't even know how that electric light works.''

``You don't?  I am amazed.  I do.  It is very simple.''

``Can you explain it to me in a short time?''

``Nothing simpler. The bottom button turns it on; the top button turns it off.''


While it is easy to snigger over the simplicities of the electric light, I must

say that I don't understand the workings of the computer on which I am writing

this book right now.  I know what happens when I press the  a  key, or the esc

key, but I have almost no idea what is inside the box I am looking at.  I take

it as given from the priests of computer hardware and I am thankful when it

works, which is most of the time.  But like most of us, I am not nearly as

thankful as I ought to be.


      Most of the priests of the new knowledge are jealous of the prestige

and authority which come (or at least used to) with this status.  Many, like

myself, come from working-class homes where entry into this priesthood is taken

as a high mark of personal success.  They speak of having risen out of the

working class.  A few come from upper-class homes, and are thankful of not

having sunk lower than this.  Very few join me in considering us as a brand of

worker, receiving a moderately comfortable wage for a very valuable service.

But more of this later.


      The question of priestly status comes up in connection with the issue

of what we do for our pay.  It is an issue which I undertook to study shortly

after Neil Armstrong walked on the moon and the Space Race coasted to a crawl. 

I asked what it was we did that justified the substantial expenditure of

the people of e.g. the State of Wisconsin in supporting scholarship at the

University of Wisconsin.  The answer, nearly universally, was that we were the

Keepers of the Flame, and that the support of our efforts was part of the duties

of a Civilized People.  In short, they were pigs if they didn't.  I didn't

find that an acceptable answer then, and those People find it increasingly

unacceptable now.  However, I had my own answer.  It was an extension of the

answer I gave to my friend Bert (see the next chapter), and it has grown to be

this book


Chapter 3.  Bert's option 


      In the Fall of 1957, the USSR placed the Sputnik into orbit around the

Earth, beaming its radio signal to the world.  I was then in Austria, and it

was plain to see the enormous impact it made on even the most sophisticated

and blase of the Viennese.  In response, the USA launched a period of intense

scientific and technological effort based on the need to re-establish prestige

by beating the Russians to the moon.  In the process, the nation also supported

study in foreign languages under the National Defense Education Act, and then,

miraculously, scholarship in social science, the arts, and every aspect of the

intellectual life, at least those aspects which were represented in  reputable

universities.  It was a Golden Age.  University enrollments blossomed and so

did the level of accomplishment expected of students.  Scientific research

especially was supported generously, and every project of merit was funded.  It

was also a time of intellectual ferment, a ferment which unfortunately was cut

short by the need felt by many millions of young people to divert their energies

into opposition to the war being fought in Vietnam.  However, despite the war,

the Apollo project did succeed in flying two men to the surface of the moon and

bringing them home safely, and after a few encores the enterprise was shut down

and with it, shortly, the drive for accomplishment and excellence.


      It made sense.  When one runs a race, one stops running when the race

is over, especially when the race is won.  The fantastic enterprise, which had

created the world's greatest scientific synergy ever, had no more substantial

basis than this rather artificial competition, and so it was no longer needed.

As someone who had gloried (not to say profited) in the bright sun of that

glorious day, I looked to see whether we hadn't produced more than merely

a propaganda triumph for Uncle Sam, and I decided that we had.  But I also

realized that my insight was not widely shared.


      Somewhat over a year later, my friend Bert was invited to be a candidate

for the presidency of a major university.  Bert was a high government

functionary, who had dreams of achieving a cabinet appointment.  He decided

that he was unwilling to forgo that dream to become a university president.  I

realized that the university in question was one of those which could organize

around itself an economic community which I had envisioned as a technological

society.  I prepared a position paper (Appendix A) in which I set forth a

sketch of a community whose major economic asset was a gaggle of laboratories

and consulting firms in an intellectual ambience created by a progressive and

innovative university.  The city and university in question was undoubtedly

one of the possible teams.  Bert wasn't interested.


      In the intervening quarter of a century, I have tried to interest the

bureaucrats of my own university in The Technological Society, and also a few

others.  Surprisingly, the project was taken up by a dark horse, the State of

North Carolina, not one of the places which I had touted in 1971.  The move

flowed from the imagination of Terry Sanford, their US Senator and formerly

the Governor of the State and the President of Duke University.   Working with

lesser intellectual assets than the universities I had identified, he created

the Research Triangle, which has been an economic boon to his State and an asset

to the people of the world.  Looking back, today's experts agree that it was

obviously the right move.  As obvious, I note with some bitterness, as it was

to the same experts earlier that it was wrong.


      But in 1971, I hadn't really measured the potential of The Knowledge

Business to the degree I have today.  I looked at it from the rather limited

perspective of what the university community could do to earn its keep in a

nation ready to jettison it as redundant.  I hope this book will be thought

to offer a broader and more prosperous horizon.




Chapter 4.  The Chip


      As an illustration of the immense potential economic impact of the

Knowledge Business and of its precarious existence, I offer here the history

of the computer chip, later to become the microchip.  In the 1960s, as part of

the process of landing men on the moon and retrieving them, it was necessary to

produce computers so small and so light that it would be possible to carry three

aboard the Lunar Expedition Module.  At that time, computers were enormous, by

the standards of today.  First it was necessary for them to be reduced in size

and weight by the introduction of integrated circuits, which combined the wiring

with the transistors, and printed the wiring onto a substratum with metallic

ink.  But then a revolutionary idea was to use a photographic technique to

accomplish the same thing in infra-miniature.  It was a bold innovation, and not

thought highly likely of success.


      Looking back from a third of a century later, it all seems obvious,

but at the time it seemed a chancy undertaking.  Furthermore, there was no

expectation of any commercial use of the chip, even if the project were to

succeed.  Computing was then a highly specialized function of scientific

research, carried out in large installations.  Size did not seem an issue, and

paying for smallness seemed intelligent only in such very specialized contexts

as flying to the moon.  Of course, there were visionaries even then, who spoke

of a computer revolution, but practical, intelligent people were not influenced

by such pipe dreams.  Even industrial giants like IBM, which could have

financed such an enterprise, were not interested in making the huge investment

for what appeared to be minimal gain.


      The Apollo program, on the other hand, had no such limitations.  As

an aspect of the Cold War propaganda battle, it had an essentially unlimited

budget, and the small (by the standards of those days) computers were absolutely

essential to the project's success.  Thus, it enjoyed the kind of blank check

usually reserved for the development and procurement of weaponry.  It appears

that the Apollo project paid for the integrated circuits portion of this

program.  The infra-miniaturization seems to have been funded by the Pentagon

in order to include miniature computers in various weapons systems.  It is hard

to apportion the costs between Apollo and the Pentagon, but in fact, the total

cost of this project has was probably well over a billion dollars.  I have heard

the figure of \$ 1.25 billion noised about, but I have not been able to verify

that.  Still, compared with a total budget of about \$ 30 billion in the money

of that time, or the equivalent of about \$ 6 billion today, it was huge.  And

it was far from certain of coming up with anything workable, to say nothing of

marketable.  No private concern would have touched it.  Almost no one believed

it had any commercial value.


      Even after the miniaturized computers had flown men to the moon and

back, it took a while for the private sector to amass the will and the money

to produce the first hand-held computers, really just calculators by today's

standards.  Yet in time, these machines have produced wonders, and extended

their capacities into easing millions of tasks, from the monumental job of the

CAT scan to the relatively easy job of monitoring the Anti-locking Braking

System.  The benefit to the human race has been enormous, far beyond the price:

multi-billions of dollars spent world-wide each year for the hardware and

software.  Of the return to the US Treasury, merely the taxes collected on those

profits earned in the United States have clearly paid for the whole Apollo

program vastly many times over.


      In this connection, I am always distressed by the know-nothing comments

of ignorant critics who repeat the mindless comment that we have had nothing

from Apollo but Tang and Velcro.  I don't know who made that up, or why the

lie had not been scotched, but there it is.  In fact, the moon shot was one

of many research enterprises which bear the honor that they pay back to us

each year a large multiple of their cost and that their benefits to the human

race are probably greater than the total cost of all research, successful and

unsuccessful, private and public, known and unknown, for the whole history

(and pre-history) of the human race.  Inventions like steel, printing, the

steam engine and imaginary numbers.  Imaginary numbers?  Yes, that is a story

in itself, and is the business of the next chapter.




Chapter 5.  Imaginary numbers


      One of the fallacies of modern economic thinking is that we can save on

the costs of research by investing only in those enterprises which have visible

practical benefits.  This is a little like saying that the way to make money at

the horse races is simply to bet on the winning horse.  Of course, we all know

that there are things of value which have come out of left field.  The most

outstanding example of this which I know is the matter of imaginary numbers.


      The history of numbers is fascinating, much of it running back into

pre-history.  Some of it can only be extracted by applying detective work to

the language.  It is clear that the first distinction is between one and many,

reflected in the universal distinction, in all human languages, between singular

and plural.  Next, we have the special position of 2 , indicated in English

by the fact that there are so many names for a twosome, most of which do not

reflect the number 2 in any language (as, e.g. duo, duet, bifurcation do). 

There are couple, pair, yoke, span, brace, etc..  We can think of this as being

in some sense connected with the languages discovered in the last two centuries

where the known numbers are 1, 2, and many.  Then there is a (later) special

place for 3, since first, second, and third are the only ordinals which are not

merely the name of the number followed by the suffix  th, as in fourth, fifth,

etc..  (Twenty-first is not a counter-example.)  Again, some primitive peoples

were able to count 1, 2, 3, many.  We can assume that in some of these peoples,

the magicians had some sense of larger numbers and might even have been able to

do small calculations with them, possibly without having names for them.


      In any case, it was millennia ago that people had a sense of the natural

numbers, 1,2,3,4,5, ... , the numbers that the mathematician Kronecker said were

created by God.  (All the rest, he said, were the work of Man.)  The first of

these were the fractions.  You cannot divide 2 by 3 in the system of natural

numbers, the first-grade numbers.  But by fourth grade, we create new numbers,

the fractions, to fill this gap.  For centuries, people like the Egyptians had

fractions, but their way of writing and thinking about them was so complicated

that it was hard to construct any workable theory.  The Greeks did manage to

capture that idea, and the Pythagoreans believed for a while that all the

numbers were fractions.  But all these numbers were positive.  It is amazing to

learn how far people were able to go into dealing in numbers without the concept

of zero, which came to the Mediterranean out of the East.  And then we added in

the negative numbers, and we were up to seventh-grade arithmetic.  This gave us

the system of positive and negative fractions, the rational numbers, in which it

was possible to add, subtract, multiply and divide (except by 0).  This was

a perfect system, or so it seemed to the Pythagoreans until someone proved

that there was no fraction whose square was 2, even though the ratio of the

diagonal to the side in a square had to be that ``non-existent'' number.


      But in all this calculating, there were no numbers whose squares were

negative.  The square of 0 is 0, the square of a positive number is positive,

and so is the square of a negative.  If, in the formula for solving a

quadratic equation, we were called upon to find the square root of a negative

number, we simply said that there was no answer.  Yet that did not seem an

adequate answer.  By the 18th century, mathematicians began to play around

with imaginary numbers, numbers whose squares were negative.  They were called

imaginary specifically because there were no such numbers in the real world,

or so it was thought.  They created a unit, given the name  i  for imaginary,

which was taken to be the square root of  -1 , and the other imaginary numbers

were taken to be multiples of  i .  The other numbers, the positive and negative

numbers, were called real numbers to make this point.  Numbers which were formal

sums of real and imaginary numbers were called complex.  It was understood that

there could be no referent in the real world for these imaginary numbers, and

that their only value was the intellectual pleasure they gave to mathematicians.

In today's world, such mathematical constructs would be ineligible for funding

in the programs devoted to applied mathematics.  It was more than the mere fact

that no one could imagine an application for the imaginary numbers.  It was in

fact thought that their practical worthlessness was a mathematically provable



      And so it went for a full century.  The theories were built and

published, all without any hint of the immense treasure which that golden goose

was to lay.  Until Gauss.  Karl Friedrich Gauss is usually granted the honor of

being called the greatest mathematician who ever lived.  He was also a noted

physicist and astronomer, and it was he who found in the imaginary numbers a

way of treating with impedance, a physical phenomenon like resistance, but

not quite.  Impedance is made up of three parts, resistance, inductance, and

capacitance, and Gauss discovered that he could make sense of it by considering

the last two as though they were positive and negative imaginary forms of

resistance.  Formulas which were incomprehensible before suddenly became

transparent, and algorithms could be formed which would enable engineers working

with alternating current to carry out their calculations without having to probe

deeply into the underlying reality.  This was a great advance.


      To illustrate the value of algorithms, let me raise the issue of long

division.  It turns out that very few adults can do long division, but even

among those who can only a tiny fraction understand why the process they use

gives the answer to the problem.  What they know is what Miss McLaughlin taught

them: if they do it this way, they will get the right answer.  That was all we

needed when I learned it, and today we need even less, thanks to the Chip.  But

the algorithm for dealing with impedance by use of complex numbers has enabled

generations of engineers to give us electric power systems, radio, television,

microwaves, and computers, to name only the major benefits.  As I said in the

previous chapter, this is one of the discoveries which pays out each year a vast

multiple of the investment in it, and whose total dividend over the 150 years or

so since being ushered into the realm of applicable mathematics is a large

multiple of all the costs of research undertaken by the human race (of which

almost all have been incurred in the past two centuries).


      In addition to the practical value of complex numbers as a model

for impedance, electronic resonance, etc., it also yielded analytic tools,

like the Fourier Transform, which enabled mathematicians, scientists, and

engineers to manipulate elements of real calculus in a more understandable way,

and thereby also to make an impact on the real (including the economic) world.

But the technical difficulty of explaining these tools lies well outside the

scope of this book.


      Yet this immensely valuable invention subsisted for over a century

on just the fact that mathematicians found it enchanting, marveling that the

complex numbers could, like the rational numbers or the real numbers, support a

theory of addition, subtraction, multiplication, and division (except by 0), and

that it was possible to build on it a system of calculus very like that which

had been invented for the reals.  In terms of applications, it was like bread

cast upon the waters, which has returned to the human race much more than a





Chapter 6.  The golden eggs


      One of the hard things in framing this theory is the measuring of

the value of the knowledge which is, as I wrote in Chapter 1, the principal

legacy of each generation.  To measure the value of each advance, as I have

attempted to do for the Chip and the imaginary numbers, is enormously difficult.

It is even worse in trying to evaluate the benefit to the human race of the

minutiae, like the zipper, or shoe laces, or the type face in which you are

reading this book.  And then there are the ``gimmicks'', which people think of

when they think of technology, like the VCR or fuel injection in your automobile

or frozen dinners.  These latter are fairly small stuff each by itself, but our

daily lives today involve so many of them, some as tiny as the convention that

the red light always goes at the top of the traffic signal so that even the

color-blind can read it.


      One mechanism of the expert, when faced with a question which he*

cannot answer, is to answer another, similar question, and take the answer

of the second as some sort of an indication of the first.  The whole field of

Statistics lives on such a switch, for the client comes with data and wants to

know the probability of the hypothesis.  The statistician is prepared to tell

him* the probability of the data given the hypothesis.  And I am about to pull

that switch now.  I will take the value to us of the technology of the past as

a measure of the value of today's technology to the future.  That is, the value

to the people of 1995 of the inventions of the human race up to 1994 will be

taken as the value to the people from 1996 forward of the inventions of 1995. 

Of course, such a manoeuver requires some justification, and I will offer what

I can.  Because of the acceleration in the accumulation of knowledge, the

typical year offers to the following year somewhat more than it has received

from the preceding year.  Its benefit to the year after that is likewise usually

more than it received from the year before last.  As the numbers increase, it

becomes ever more certain that its contribution to the year ten years later

will exceed what it had received from ten years earlier, more for twenty, etc. 

There might be a few exceptions.  Depending on what date we wish to set for the

invention of the Chip, we might well consider that the contribution of that year

to our present welfare exceeds what we expect to be our own benefit conferred on

a similarly distant year in the future.  But on the whole, it is a fair, though

unprovable, assumption.


      [*  One of the problems besetting English today is the absence of

            neutral singular pronouns.  This has caused activists to

            complain that an atmosphere has been created in which the

            holders of all positions in life are assumed to be male.

            The criticism is valid, but all the proffered remedies are

            horrendous.  The most common ones are the use of plural

            pronouns for singular use and compound words like he/she,

            him/her, his/her and his/hers.  Much less common is the use

            of genuine neuter pronouns: it and its.  For a period, there

            was some noise in favor of creating new words for the purpose:

            tey, tem, and teir.  Finally, there is the advice that one

            write something else in place of what one hears in the inner

            ear.  I find them all impossible, like the imagined requirement

            that a painter should omit the use of certain colors on the

            ground that their use would be offensive.  I have decided to

            be true to the rhythms of English as I learned them many

            decades ago, but to indicate to the reader, by use of an

            asterisk, that he* remember that the word can be used, and

            is being used, to connote human beings generally, and not

            males in particular.  For any offense which this concession

            fails to alleviate, I offer my apologies in advance.]


      While it is difficult to make these assessments for any one year, we can

do better by looking at a large block of time from the past, as this eliminates

the need to assign specific dates to specific advances and to measure the value

of each.  Thus, I suggest that we clump together just the advances of the past

thousand years and take that as a (surely underestimated) measure of the value

of this year's innovation to the next thousand.  We will not measure in dollars,

but in percent of gross product, thus eliminating the need to account for

inflation and thereby neutralize arguments over present as opposed to future



      This sleight-of-hand almost certainly understates by a substantial

factor the value to the future of today's work, since the pace of

innovation has been steadily increasing for at least the past two or three

centuries, and in some sense, more than half the increase in the livability of

human life has taken place in the twentieth century alone, as we shall see



      To measure the value of the knowledge we now possess, we will look at

the advance in the comfort, safety, health, longevity, etc. of today's  people

as compared with those of the earlier time.  There is only so much we know about

``Man in the state of Nature'', but it is not overly dismal to accept Hobbes'

evaluation that it was poor, nasty, brutish, and short.  However, I can give

away so much in this argument that I am prepared to measure as the dividend of

knowledge only the advance of the past thousand years, overlooking such advances

as language, fire, the wheel, agriculture, geometry, and steel.  I take as my

pay-back the fact that we know quite a bit about the period a thousand years

ago, so we can more nearly measure the advance.


      Let me make some argument as to the plausibility of this measure.  We

are constantly witnessing an acceleration in the rate at which knowledge is

being acquired.  I offer as an example my own field of mathematics.  As a rough

measure of how much mathematics there is, I take the number of pages devoted

to the reviewing of new articles in the Mathematical Reviews.  It is easier to

measure these on the library shelves than to total the pages themselves.  In

the 1940s, the first decade of this journal, the pages, exclusive of the hard

covers, totaled 14.5" .  In the 1950s, it was 36.25" , more than double.  In

the 1960's, 72", in the 1970s, 142" , and in the 1980s, 197.25" .  Thus, there

was a doubling or more in the first three decades of this half-century, and a

gradual decrease from that rate after Apollo.  Based on this observation, which

I am sure is paralleled in other fields, more or less, it is easy to conclude

that the value of this year's gain in knowledge is worth at least as much to

the people of next year as last year's has been to us.  The value of the same

product of 1995 to 1997 is at least as much as the value of 1993's to 1995.

The value of 1995 to 1998 is probably more than the value of 1992 to 1995, and

so it goes.  Undoubtedly, the value of the product of 1995 to 2005 will exceed

the value of 1985 to 1995.  And as the periods in question grow longer, the

differential will grow, so that the value of this year's product to the whole of

the 21st century will be far greater than the value of the 20th century to us.

Indeed, it may be greater than the value to us of the whole previous millennium.


      We should note a subtlety here.  There may very well be individual

years in the fairly recent past whose contribution was so outstanding that its

contribution to today's world is likely greater than today's contribution to a

similarly distant date in the future.  Following the analysis of the previous

paragraph, if we take 1970 as the date to credit for the computer microchip,

then it is likely that that year's value to 1995 is indeed greater than 1995

will prove to be to 2020.  But averaging over even periods as short as a decade,

the analysis is almost certainly true, and over the century there is no doubt.


      Life for the vast bulk of humanity at the end of the first millennium

was little better than Hobbes' evaluation cited above.  At a reasonable

estimate, we can assume that the surplus of production over the barest survival

needs of the serfs who created it was perhaps a tithe to the Church and

approximately the same amount taken by the nobles and Crown.  That would be

about 20\% over bare survival.  The level of survival was one of malnutrition,

subsisting on gruel and vegetables for the most part, with only occasional

access to meat or fish, principally on feast days.  Their homes were cold, with

most of the heat being the residue of cooking, their clothes in most cases

insufficient for their needs.  Fewer than half of their children lived to

maturity, and life was miserable beyond any comparison with that of any but the

very poorest in any modern industrialized society.


      In today's terms, one would have to say that survival for a family in a

single room of a housing project, living on surplus vegetables from the local

supermarket, without TV or any other organized entertainment, without shoes and

with hardly any clothing, ignorant, cold, and diseased would cost a few hundred

dollars a month.  The stipend of a family entirely dependent on Aid to Families

with Dependent Children is luxurious by comparison.  Since the per-capita

product of (e.g.) the United States is in the tens of thousands of dollars

annually, we can conservatively estimate this level of survival at 5\% of our

current product.  Adding an additional 1\% to match our estimate that there was

a small surplus even a thousand years ago (estimated at 10\% of that 5\% as a

tithe to the Church and a similar amount taken by the nobles and the Crown),

leaves us with the estimate that 94\% of our present world is the product of the

changes we have wrought over the past millennium.  We could quibble over whether

the figure should be 92\% instead, or perhaps 97\% , but an estimate of 90\%

would clearly be too low.


      As I said in Chapter 1, only a small fraction of the difference is

accounted for by the physical assets we have produced.  The vast bulk is in the

knowledge which has created this affluence, and can recreate it if necessary, as

long as the knowledge itself is intact.  Now if we account for the acceleration

in innovation, the exact extent of which we can imagine only to a very gross

degree, we see easily that the value to ourselves and our heirs of this year's

advance of knowledge exceeds our Gross Domestic Product by a substantial factor.

Indeed, we can ramify this accounting if we are willing to make some additional

assumptions, all of which are at least reasonably likely:  since the bulk of

human knowledge has been accumulated in this century, it is quite possible that

the value of this century's innovation to this year's production exceeds half

of that product, in which case the value of this year's knowledge to the next

century may well exceed the whole of this year's product.  It is conjectural,

but not outside the realm of the possible, if only we had a way to measure it.


      In addition, we need not wait a century for the fruits of this advance.

Again taking the assumptions above, we can validly estimate that for each of

the next ten or twenty years, 0.5% of that year's product will be the result of

this year's increase of knowledge. Thus the benefit in the next decade of this

year's work will be in excess of 5\% of this year's GDP, measured in today's

money, or about $ 350 billion.  The payout in twenty years would be over

$ 700 billion.  Thus, the investment in knowledge this year would pay heavy

dividends even in the lives of those now living, and far more than that for

those who are now younger than forty.  This calculation seems paradoxical, for

it posits a rate of increase in GDP which is greater than that which is now

attributed to this statistic.  That is because of the way GDP is measured. 

The value of increased consumer satisfaction in a product is not part of the

statistic.  Thus, the decrease in the cost of television sets shows up as a

decrease in the GDP, even as the quality of the product increases.  A car, as

expensive as it is, is a less costly item than a horse and carriage, so it

counts less, in real money, in today's GDP than the horse did then.  But when

we ask whether our level of consumption is greater than that of one hundred

years ago, it is clearly so by over 100%, or over .5% of today's GDP for

each of those years, on average.


      This is an accounting made solely in those products which register on

the economic balance sheet.  No price has been set on the fact that in this

millennium the life expectancy has doubled, that we do not any longer suffer

the agony of burying more than half of our children, that we have the comfort of

literacy, and that we are today citizens and not, in  fact, serfs.  These are

the things which economists label as ``externalities''.  We shall discuss them

in the next chapter.




Chapter 7  Externalities


      Some things are beyond price.  What will one pay to save his* life, or

to be restored to health when threatened with crippling illness?  What is the

value of our children's lives, and thus how do we measure vaccination, or

penicillin?  What is it worth to be free, and not a slave? What is the value of



[* See Chapter 6.]


      In our time, economists are eagerly reaching to achieve an understanding

of the world comparable to that which the physicists boast.  These latter have

the comfort of working with variables which are capable of measurement and

inclusion in equations and formulae.  Also, they have had the benefit of being

able to carry out experiments on inanimate matter.  When Galileo wanted to study

falling bodies, he could drop cannonballs from the Tower of Pisa.  His bodies

did not have to be live human beings.  The economists are constrained in their

experiments and are correspondingly always on more fragile ground.  They have

prices, profits, bank holdings, populations, and other things to measure. 

Even when the accuracy of the measurements is uncertain, these still offer the

illusion of such certainty as one finds in the ``hard sciences''.  But there

things which are beyond calculation, such as the civility of our streets and the

security with which we lie abed at night.  In the absence of prices for these

things, it is necessary for those who yearn for the security of what we might

call Newtonian economics to exclude them from the equations entirely.  If we

can not buy life, or health, or safety, then they are not part of the economic

universe.  And if they are not in our universe, we can ignore them.


      To begin with basics, the greatest gift of knowledge is the various

mechanisms we now have to protect the lives of our children.  It was at one time

the case that fewer than half the children lived to maturity.  Even fifty years

ago, it was commonplace for them to die of pneumonia, diphtheria, whooping

cough and poliomyelitis, even after the conquest, more or less, of smallpox. 

(I lost a dear friend to pneumonia in fifth grade.)  Earlier, the rate of loss

was greater.  I cannot imagine an agony greater than having to bury a child. 

There is no advance of economic efficiency which can compare to the almost

total elimination of infant mortality in the industrialized world.  And next,

following closely, is the fact that so many of us live to see our children grow

up, and even our grandchildren.  The extension of life is a blessing, one which

we have managed to turn into a curse in some cases by our mismanagement of the

details of our working lives, our retirement plans, and our medical facilities.

But most of those who complain that longevity is a mixed blessing are actually

thinking about others' longevity, whatever the shape of their rhetoric. 

Typically, they reserve the right to buy the prolongation of their own lives,

and in large part this argument comes from, or is bought on behalf of, those who

can pay for this privilege.  How much economic benefit can we compare with these

two blessings?  How much would we be willing to spend to keep them, if price

were the issue?  There is no way to answer this question, so they go into the

equations as invaluable, which turns out in practice to mean worthless.


      Next in line after life comes liberty.  This is usually taken to mean

political enfranchisement and lack of imprisonment, but we should also include

freedom from debilitating illness or crippling deformity.  We don't usually

think of these as being the gift of advancing knowledge, but of course it is.

Included in this rubric are literacy and widespread education, both of which

are the product of enlightenment, not to mention The Enlightenment, which is

quite visibly an outgrowth of the spread of knowledge, prosperity, and the

general advance of education.  Here we run into the evaluation that liberty is

of lower order than survival, but it follows it closely, and people are often

ready to risk their lives in order to attain it.  It is also an externality,

and finds no reckoning in the Gross Domestic Product, though we often consider

that we are buying it (at quite a high price) in our military budget.


      One place where these externalities come together with cash

considerations is in the epidemic of tuberculosis which medical scientists tell

us is impending.  Here, the deficit in the understanding of the physiologies

of both the pathogen and ourselves, combined with the lack of technology for

creating new antibiotics to order for outflanking the bacterium's capacity

for mutation, on top of the pernicious effects of poverty and homelessness in

defeating our present therapies and thus breeding the immune strains of the

germs, all these will result, they tell us, in a new epidemic of the disease

which has been slaughtering us in huge numbers at least since the stone ages.

Not only will it bring suffering and death, but it will cost hundreds of

billions of dollars, perhaps trillions.  I will take this up in more detail

in Chapter 23, below.  How do we compare the costs to the rich, who will pay

and suffer and die, to those of the poor, who will pay less and die more?  No

calculus will enable us to do it, but the theoretical economists will make their

reckonings without attention to these costs.


      And we must not omit to mention the value of the knowledge of how

to live together in a democratic or at least autonomous society, a knowledge

which many peoples assumed they had already acquired by living in the

twentieth century, but which proved tragically scanty when the pressures of

self-government came up against the realities of military ambition and/or

intergroup rivalry.


      In addition to these most pressing issues, there are the matters of

adding beauty to our lives, and pleasure, joy, enlightenment and peace, together

with the avoidance of ugliness, displeasure, ignorance, and strife.  There is

the knowledge of the need to stop polluting the air and water and earth, and

some of the ways we might actually achieve the stoppage.  And there are no doubt

many other externalities I have overlooked in this short summary.


      At a minimum, we could grab at some figure for the whole of human

advance in this millennium and say, for example, that the total value of the

externalities is ten or twenty times the value of the economic advances.  I

am not dogmatic about the number.  The Scrooges can choose two times, or even

one-half (Who are these people?), but let it be set forth at the outset of every

calculation so that we can measure the sanity of the calculator before we are

willing to accept the worth of the results.  And let us understand also that the

pretense to precision is ridiculous.  As John Dewey once wrote of the IQ tests,

it is like weighing a pig by balancing a log across another log, and then

balancing the pig against some stones, and then guessing the weight of the



      But I will out-Scrooge even Scrooge, for the riches which we draw from

knowledge are so great that I can afford to forgo consideration of any of these

``externalities''.  So that Scrooge cannot carp at my choice of multiplier, I

will join the theoretical economists and in the remainder of the book I will

reckon life as worthless, together with the lives of our children, relief from

pain (except to the extent of the price of analgesics), safety from attack,

purity of air, beauty, enlightenment, freedom from fear, and from bondage.  All

these we will reckon as unworthy of notice, except for a bit of ``journalism''

from time to time.  But I will ask the reader to carry in the back of his* mind

the memory that in fact these things, which we reap from knowledge are

immeasurably more valuable than all the rest.


[* See Chapter 6.]


      My dear friend Charlotte has complained (sic) that this way of

calculating takes account only of the values created by scientific knowledge,

ignoring the arts and humanities.  That is only partially true.  Of course,

the examples we have of financially rewarding knowledge are mainly scientific

in nature, though art is also a form of knowledge and has a market in each

generation.  It is true that this market is smaller than the other, and the

market for criticism is smaller yet.  Most of the value of this product is

in the externalities, which I have just above undertaken not to attempt to

measure or to consider in the profits of the Knowledge Business.  However, my

observation is that most scientists are more than willing to share the profits

of their discoveries with the arts and humanities. (It was so during the 1960s.)

If there are those who are unwilling, it is not the scientists, but those who

imagine that the profits of this enterprise belong to the entrepreneurs, and

it is these who are unwilling to share with the arts and humanities.  Are they

right about who has the legitimate claim?  I will discuss that in Chapter 17 on

Intellectual Property.


      But there is another aspect to the support of the arts and humanities.

In a way that no one understands very well, they are essential to the fruits of

the scientific enterprise also.  I have used the metaphor of the apple tree.  It

is only the shallow who imagine that the fruits grow only on the branches. In

fact, the fruit grows on the whole tree, including the roots and trunk, though

that is not where they are physically located.  In perhaps the same way, the

arts and humanities feed the sciences.  Certainly we see the importance of

literacy in this regard, but in a deeper sense we also see the nurturing of

individualism and creativity, of courage and dedication, of determination and

personal autonomy.  I am beginning to get on thin ice now.  If it should prove

important to the course of technology that books like this one be written, then

that is also a fruit of training in literature and rhetoric, and also in the

social sciences and philosophy.  I have rarely found miserliness in this respect

in the scientific community.  That meanness comes more from the advocates of the

economics of scarcity.







Chapter 8  The resource


      Knowledge is built out of intelligence.  Part, but only part, of the

process of building it is to be found in the process of education.  Every

population is endowed with more or less the same amount of this resource, but

there is a gross disparity in what particular peoples make of it.  No people

makes full use.  The access to education everywhere in the world depends on

other factors than merely the ability of the prospective student to acquire,

assimilate and use what he* will be taught.  Everywhere the access to education

is limited, either by the cost of schooling or administrative limitations.  It

will be the burden of this section to argue that all such limitations now in

effect are counter-productive and that almost no such restrictions are warranted

by economic considerations.  Indeed, in many countries at the present time,

the economy would be strongly improved by devoting more money to this aspect of

the knowledge business.


[* See Chapter 6.]


      One of the interesting features of education is its experience in North

America.  The Massachusetts Bay Colony established schools immediately on

landing.  In the first winter, they lost half the colonists to disease, hunger,

and hypothermia.  But the education of the children was a high priority in the

puritan creed, and schools were established immediately.  After a bare twelve

years in the new wilderness, they established the university which would later

be named for John Harvard.  In all the colonial period, the rate of literacy,

and of elementary education generally, was far ahead of that of Europe.  I think

that this must be what accounted for by ``yankee ingenuity''.  Where Europe and

other parts of the world had as high a percentage of intelligent people, a

vast proportion of them never had the education to turn that intelligence into

usable knowledge.  Many American inventors sprang from humble backgrounds, from

a fraction of the population whose talents would have been wasted elsewhere.


      One measure of this disparity of education is to be found in the extent

of literacy.  While it is hard to pin down exactly, an indicator of this is the

proportion of the population who could sign their names on documents and voting

rolls.  An authoritative study of literacy places this at 90 \% in the United

States at the time of the revolution, a fraction which the European countries

would not achieve until a century later.


      This phenomenon continued through the nineteenth century.  While only

a small proportion of Americans finished high school or went to college, that

fraction was higher than elsewhere, and more determined than elsewhere by

academic talent rather than social class or wealth.  During that century, we saw

the establishment of state universities, and it is significant to compare the

United States of 1862, at the time of the Morrill Land Grant Act to the England

of Dickens in matters of general education, not to mention the Italy of

Garibaldi or the Russia of Gogol.  That is not to deny that there was a ``gilded

youth'' here whose experience of preparatory school and college was more

entertainment than education, but only asserts that participation was rather

more democratic than elsewhere.  The bigger step up came after the Second World

War, with the program known as the GI Bill of Rights.


      In 1945, the United States government, in token of the sacrifices

of the nation's youth in the War, established a series of entitlements for

the returning veterans which included jobs, houses and, most significantly,

education.  As a boy who had to compete with these young men for scarce space

in the nation's colleges, I was keenly aware of how their presence changed the

sort of accomplishment necessary to secure that kind of education then.  A

large number of them wanted to go to Harvard University and the Massachusetts

Institute of Technology, and that raised the standards of these two colleges

enormously.  Harvard particularly had been quite a stamping ground for the

spoiled sons of the rich before the War, but took a fiercely intellectual turn

with the arrival of the GIs.  Yale College & Princeton were also to make this

transition in the following decades.  At the time, the universities of Europe

were still rather more selective, and would be for some time.  They were more

successful in providing excellent education and obtaining excellent results from

a very elite clientele.  In that sense, their universities were more successful

that the American ones, but the Americans were processing a higher proportion of

the population.  Thus, the Europeans were producing more education per student,

while the Americans were creating more knowledge per thousand of population.


      The 1960s produced a vast expansion of university attendance on both

of these continents, apparently spurred by the Soviet launch of the Sputnik

and other spectacular feats of cosmonautics.  Money was found to finance the

education even of the economically deprived, if they had academic talent.  This

was felt most strongly in science and engineering, but all branches of learning

profited from the advance.  This may have been in part a form of baksheesh

paid to the universities for their cooperation in the space flight effort,

but it certainly paid at least lip service to the universality of the needs

of education.  In addition to rocketry, much effort was poured into language

studies, health, and computers.  But also music, literature, history etc. were

the beneficiaries of an academic golden age.


      No sooner had Neil Armstrong set his foot upon the moon than the whole

fabric of this intellectual miracle began to come undone.  Up to that point, it

had withstood even the disruptions and conflict occasioned in the universities

by the protests over the war in Vietnam, but at that point, the colleges were

under attack from both left and right, the one assault being ideological

and the other financial.  What went unnoticed was the vast wealth which was

beginning to pour in from the other products of the knowledge business.


      During the whole post-War period, Japan was rebuilding, with a very

substantial emphasis on their schools.  After about 25 years, the students of

those schools began making an impact on the industrial world.  They were

producing goods of remarkable quality based on the knowledge of the younger

generation.  Combined with an aggressive mercantilism, this manufacture of

desirable material fueled a spectacular recovery, which has been the marvel of

the economic world.  Many commentators have noted the role which the Japanese

education system played in bringing these riches to Japan.


      It is interesting that the motivation of Japan's leaders in pushing the

education of their children seems not to have come so much from the expectation

of the prosperity it would bring as from the desire of the people to do the

best for their children in the wake of the devastations of the War.  Surely the

Puritans of Massachusetts were not motivated in their educational undertakings

by an expectation that their descendants some ten to fifteen generations later

would be made prosperous by the technological industries which would gather

around Boston in order to be close to the scientific wellsprings in Harvard

and MIT.  Politicians almost never invest in education as a development

strategy.  The payout time is too long, but the costs are in the present. The

ones who pay for the educating must bear the political costs of raising the

taxes, while others will reap the rewards of the investment.  It is only a

society which sees the development of the children themselves as the major

benefit which is willing to bear the cost.  They love their children, and a

just Providence rewards them with prosperity, often in their own lifetimes.  It

is a phenomenon of almost biblical justice, as though illustrating the parable

of the loaves and the fishes.


      Of course, all of this hangs on the question of who will pay the costs

of the enterprise.  When we require it of the parents, there are many who cannot

afford the tariff.  When we demand that society generally pay the expenses of at

least the most able, the taxpayers often balk at the burden.  They observe that

not all those they would endow will return value to the community.  In this they

are about half right, as we shall see in the next chapter.



Chapter 9.  The paradox.


      There are two ways to see the knowledge business.  On the one hand, it

is a vast enterprise which pays back for each year's investment a large multiple

of that investment.  On the other hand, most of the money spent on education and

almost all of that spent on research never produces anything of economic moment.

Both of these observations are correct.  Depending on which one dominates our

thinking, we will press for ever-greater expansion of the enterprise, or seek

to limit it in the quest for greater efficiency.


      One aspect of the search for greater efficiency has been the

progressively more stringent limits placed on the social funding of basic

research and even of development work.  This has decreased in real money per

annum, and even more by comparison with the expanding resources of educated

intelligence still flowing from our graduate schools.  As the cash shrank,

so the competition for it sharpened and it became available only to those

perceived as the most talented and the most likely to produce valuable results. There is almost no limit to such reckoning.  Even among the Nobel laureates,

our most honored researchers, there are some who are greater than others.  Few

if any can genuinely be ranked as the peers of Einstein.


      It is obvious that the way to maximize the efficiency of our knowledge

business is to invest only in the super-geniuses.  Indeed, it would be even more

efficient, in some sense, if we were to have only those supergeniuses who would

invest in their own education and their own research.  That would save us money,

as was the case in the eighteenth and nineteenth centuries (and before), but it

would result in only a meager output.  (See Chapter 27 below, Amateurs and

professionals.)   If we were willing to stretch to fund the ``mere geniuses'',

our efficiency would decrease, but our output would increase.  More of our

endowment would be spent in financing effort which went nowhere, in terms of

measurable economic benefit.  If we extended to the merely gifted, we would be

worse off and better, with more waste and more profit.  Indeed, we would have to

dig pretty deeply into the lower levels of talent before we stopped raising the

profits, seen as a whole, but as we dug deeper, the amount of waste would climb

and climb.


      In a sense, there are these two ways of evaluating the effectiveness of

this knowledge enterprise.  The efficiency is defined as the value of the output

divided by the cost of the input.  The profit is the output minus the input.

The paradox is that these two measures do not run in parallel but in opposition.

We might believe that greater efficiency would lead to greater profit, but in

fact we can achieve greater efficiency only by sacrificing the profits we could

obtain by cutting out the least promising.  As a metaphor, this crop is so

valuable that we can even make a profit on even the least fertile land.  Of

course, if we knew in advance which individuals would produce no yield, we could

increase our profits by cutting those, but we do not.  (This is a bit like the

observation that it is easy to win money at the race track by just betting on

the winners.)  And the ones we would lose by making even a reasonably good guess

would cost us more than we would save.  The evidence for this is to be seen in

the overall profitability of the American investment (usually family investment)

in education even for unpromising students at our universities.


      Before asking how selective we need to be in order to be efficient, let

us consider what is the maximum degree of leniency we would undertake if we were

to seek the maximum legitimate investment in education and research.  We could

reach all the way back to high school, where economic factors are actually part

of the decisions of young people concerning whether they will go to school or

work, or both.  If we had the wildly generous policy of considering school

attendance as a job, and paid just a shade more than the student could obtain in

the job market, we would retain in school almost all of those who do not find

it actually painful.  That is an interesting criterion, and one which we should

keep in mind.  The ability to tolerate school would suddenly be seen as a

valuable talent, even among groups who today do not see education as a potential

ladder to success. The payout in increased earnings in the future for students 

who would otherwise drop out, not to mention the potential for the increase

of knowledge from among them, is thin but by no means invisible.  In addition,

their continued attendance in school is valuable also in that they otherwise

tend to be a substantial economic burden in the activities with which they tend

to occupy the time.  If we reckon the cost as minimum wage ( \$ 4.25 today ) for

30 hours per week for 40 weeks in the year, that comes to \$ 5,100 per student

per year, which is less than we are now spending for the upkeep of the high

schools in many states.  Thus, even this wild plan involves less than a doubling

of the cost of maintaining the high schools, and would apply only to juniors

and seniors under the laws of most states.  Since not everyone would take this

option, we are talking about an increase of less than 50 \% in the cost of the

high schools.  Possibly it would even pay out in economic terms if it saved us

the very high costs now associated with high-school drop-outs.


      When we speak of college students, we must realize that the United

States is outstanding among the industrialized countries in the miserliness with

which we treat our post-secondary students.  If we look at the United Kingdom,

a poor country by comparison, we see that they have 30 % of their college-age

students in post-secondary education.  All of these received free tuition

until recently and most, probably more than 5/6 (i.e. 25 % of the total)

received maintenance grants of about $ 4,000.  (This policy is under escalating

attack by the Tory government.)  Granted that the purchasing power of those

grants looks more like $ 2,500 at UK prices, it is still far more than any of

the United States is providing.  If my state (Wisconsin) were to provide free

tuition for all residents at the state university and $ 4,000 per year in

maintenance for those with family incomes under $ 30,000 , I would think the

Messiah had arrived.  Yet there are many talented young people who could come

to college on those terms whose talents are today underutilized in jobs which

do not require them.  As we will see in Chapter 13, Filling from the top, there

are substantial benefits to be derived from leaving those jobs for high school

graduates with no interest in college.  A program like this would create more

demand for college admissions, which should be dealt with by a renewed expansion

of the higher education sector, but more of that below.


      Among college graduates, there is now only a very meager demand for

graduate education.  In part, that is fueled by the knowledge that there is not

much opportunity for attractive employment which would justify the investment

of time and money which such education entails.  But it is also true that most

college graduates have obtained their goal, a diploma which certifies their

entry into middle-class status, and are not at all eager for any more schooling.

We see this in the fact that although employment as a teaching assistant in a

doctoral university is a better job than average for college graduates, those

who can pass the entrance requirements of most graduate programs often find that

``the real world'' holds more attractions than continued schooling.  And not

all fields offer the number of teaching opportunities which are available in

my subject, mathematics.  If we were able to offer university employment at

the level of tuition plus $ 12,000 per year for all the graduate students in

exchange for 20 hours of work per week for 39 weeks per year, we would have a

noticeable, but not an overwhelming, demand for such positions. 


      Finally, there are the young Doctors (of Philosophy, Medicine, Music,

Engineering, Juridical Science, Sacred Theology, Education etc.), the scholars

who may have invested so much of their lives in a career which today leads only

to unemployment.  For those who have completed the academic rat race, there are

at least some, probably many, who would continue as scholars if a scholars mite were available.  I would define that as an income of about $ 15,000 - $ 25,000

per year and either a position in a research project or at least the unfettered

and cost-free access to university libraries which used to be called ``doctoral

courtesy'' and were part of the ``immunities and privileges'' pertaining to the

PhD.  And then there are the many projects of high desirability which are today

being refused by the funding agencies because of the unavailability of money for

the pursuit of knowledge and art, particularly in basic science, whose economic

benefits, while surely huge, lie well in the future.


      In all these suggested openings of opportunities for continuing

education and research, there are a few at the bottom of the talent pool who are

willing to undertake more study if money is available, but whose prospects for

delivering an economically valuable product are slim.  We will discuss later the

benefits to be had merely from keeping them in school, but now I want only to

note that even a few of these might yet pan out.  Edison was thought ill of as

a student, and while very few of those with the same reputation have the same

genius, the number is not zero.  Still, if we were to trim just a few at the

bottom, we would still be doing so much better than we are now that I for one

would be willing to try it for a few decades before looking for the next book to

take up the cause again.


      As an initial program, let us consider that all students in the last two

years of high school should be eligible for minimum wage payments, so long as

they attend their classes, submit their homework, and pass the courses.  No

doubt there would be a few additional passing grades distributed for work

that we now consider failing, but that is a minor consequence.  For entrance

to college, and the support that would bring with it, Scrooge could set a

requirement of being in the upper half of the graduating class OR the upper half

of one of the national examinations OR making a convincing case to a panel of

educators convened to judge the unusual situations which we would expect to

arise.  There would probably not be many of these, since most people who did not

fit such loose requirements are not interested in more schooling, and most of

those who do are not as unusual as they might like to think.  There is a certain

public unwillingness to support in college everyone who just wants to go, and

this might handle that.  A similar consideration applies to the maintenance of a

reputable record at a certified school as a condition of continuing to receive

the grant.


      A similar regime might be applied to graduate students.  During the

1960s, when we were pressing to beat the Russians to the moon, we expanded our

graduate capacity enormously and were willing to gamble on a level of talent and

preparation well below what was considered acceptable before or since.  And we

were rewarded by reputable doctorates from many of those who would have been

rejected by the higher standards.  Again, the same period saw the Federal

Government supporting nearly all reputable scientists in fields touching at all

on space flight or weaponry.  Today the criteria are stricter and the rewards

are less.  And the same is true of biological research, and of the physics

and chemistry which support it, though there it is our lives, rather than our

national prestige, which is at stake.  In all of these areas, a loosening of the

requirements for subsidized continuation of the pursuit of knowledge, down to

the level of the 1960s or less, would probably yield a greater profit, while

showing a lower level of efficiency.


      And then there is also the effect on the employment situation, dealt

with separately below, which in itself could be reckoned as having a benefit

almost equal to the whole cost of such an open-handed approach to education and



      When I have discussed this with my colleagues, before they had any

opportunity to consider the actual costs, they imagined that a policy this

open-handed might well consume the whole of the Gross Domestic Product (GDP).

The reality makes a joke of that fear.  In fact, my rough estimate of this

whole project is about \$ 200 billion a year.  That is not exactly chicken-feed,

but it is about 3\% of a GDP of about seven trillion dollars.  By comparison,

the defense budget during the fifty years of the Cold War averaged 8.5 % of

GDP.  And that was when the GDP per capita was a lot less, even in real money.

This consideration makes a mockery of the straining over the bill for the

Superconducting Supercollider, which was under one billion dollars a year for

eleven years.  I will mention that later, in Chapter 24 on Health.


      If we understand that this money, if spent this way, is a benefit to our

children and their children, then there should be no difficulty in coming up

with the funds.  Given that about 95 \% of our GDP is the product of the

Knowledge Business, the program I have outlined here is just a minor payback.




Chapter 10.  Paying for college.


      Of all the recommendations in this book, the most controversial will

probably be the issue of paying the costs of having more of our academically

talented people go to college.  This is because college is usually seen as both

a consumer good in the present and as an individual's investment in his* future

earnings.  It is rarely seen as a social investment in the future prosperity

of the whole people.  One reason is that a college degree (or at least some

attendance at a college) is the basic form of accreditation into the respectable

middle or upper classes.  This feature is especially American, since we do not

have a tradition of inherited nobility to work from.  We are a people whose

antecedents are typically obscure.  Some can trace their roots for generations,

but many, like me, can hardly speak with much substance about our grandparents.

I do not know my father's mother's maiden name or first name.  I know nothing at

all about my great-grandparents.  We carry our own accreditations.


[* See Chapter 6.]


      One example of this is that almost all the officers in our armed

services are college graduates.  The phrase ``an officer and a gentleman''

reflects the class bias that an officer should be a gentleman, meaning class

rather than behavior. It was probably a part of the mystique of giving orders,

and could well arise from the fact that in Europe, officers tended to be the

younger sons of noble and gentle families.  Those did not require degrees to

establish their right to command, but in America that status was connected with

college.  In the Second World War, the requirement of graduation was relaxed for

pilots, and even these were usually required to have two years of college.  Most

of those commissioned through the Officer Candidate Schools were graduates.


      I remember first noting this when a problem arose concerning one of my

cousins.  He had failed out of one of the great universities, largely because he

had not taken his studies very seriously.  He had been born a millionaire on his

mother's side and his chosen career was as a restaurateur.  Since his interest

in things intellectual was minimal, I did not immediately understand why he

needed a degree at all, but some reflection revealed that in his social circles

being a college man was a sine qua non.  A more modest college was found where

he could continue and complete his undergraduate years, and he was duly anointed

a member of the upper class.


      As a professor, I have been aware of a large number of students at each

of the universities where I have taught who were merely in pursuit of a diploma,

without much desire to learn anything in particular.  Many are people whose

economic prospects are, like my cousin's, not dependent in any way on academic

knowledge narrowly construed, and many others would be equally well served by

any diploma in any subject from any accredited university.  In a parallel to

the armed services situation noted above, the college degree of any sort was a

necessary and sufficient qualification for the job of welfare investigator for

many years.  (I do not know whether this is still necessary; it is clearly

no longer sufficient.)  As in the services, the issue was social class.  The

investigator was required to have a certain social distance from the troops.

The pursuit of a degree as a patent of gentility has little in common with the

search for knowledge and even less with its advancement.  What knowledge is

acquired is usually crammed into short-term memory and vanishes on the journey

home at semester's end.  (It is for this reason that the faculties of many

universities reject the possibility of lecturing until just before Christmas

and then giving examinations in January without further instruction.)


      By contrast with those in pursuit of diplomas, with or without the

implied knowledge, I look with distress on the fact that many young people with

genuine academic ability are excluded from college by the inability to pay. 

This reality is often denied by those who imagine that it is perfectly feasible

to make one's way through a university education by a combination of loans and

part-time employment.  We all know people who have done it, but then we all

know people who have done things that the less gifted would find impossible,

like outstanding athletic or artistic performances.  What most professors who

have had the experience will tell you is that students who are employed more

than ten hours a week will have the quality of their studies affected.  And the

prospect of being graduated from college with tens of thousands of dollars owing

is far more daunting to those of working-class background than to the children

of more financially sophisticated houses.  In these homes, it is understood

that a debt at a low and/or deferred interest is a canny investment in future

prosperity, a sign of good fiscal management.  For the working class, debt

is a mark of economic failure, and is (properly) feared.  We will examine the

elements of risk and investment in Chapter 31, below.  For myself, I chose to

attend Brooklyn College, a branch of the College of the City of New York (as it

was then known) and forfeit a scholarship to Cornell because my attendance at

the more famous university would have required at least twenty hours a week of



      In many working-class neighborhoods, one can hear stories of those who

worked many hours and borrowed much money to obtain a college degree, in many

cases with a record whose luster was undermined by the poorer grades earned

because of time spent in employment.  For those for whom the degree was not

a passport to notably greater earnings, the experience has meant long-term

(perhaps life-long) indebtedness.  It is not surprising that this has resulted

in a certain reticence in working-class children, even those with academic

talent, in pursuing this path to a college education.  In my days as a member of

the Scholarship Committee of the Madison Federation of Labor, I was surprised to

find that with a major university in town, offering subsidized education and a

singularly low tuition charge, over 80\% of students from relatively well-paid

union families were electing to go to the local vocational college in preference

to that university.  They all said they couldn't afford it.


      The answer to this loss of intellectual talent to meet the needs of

society is that the society itself must be prepared to invest in the talent. 

The repayment should be made from those who manage to turn the investment into

economic gain, with no burden on those who fail to reap this benefit.  As I

will maintain in a later chapter, all those who have large incomes are the

outstanding beneficiaries of the inheritance of knowledge and its promotion in

our own times, and should properly be taxed substantially to support its

furtherance.  Society can afford to spread its risks over many students, with

the assurance that it will reap benefits from enough of them to repay the

investment handsomely.  Indigent students, even bright ones, are far less able

to bear that risk.  Their investment is their years of study.  For those for

whom that study is a pleasure, this is a good deal even if it does not lead to

riches.  Those who do not enjoy schooling would be well advised not to take up

even a full scholarship, and we are unlikely to be the losers for their absence.


      The analysis of risk is significant, since the same degree of

uncertainty bears differently on different players.  If (to make up a figure)  

a college education represents an investment of \$ 40,000 with a 10 \% chance of

a 20-fold return, that would look to a mathematically sophisticated working-

class youngster like a 9 to 1 chance of losing badly against the possibility of

becoming comfortable in middle age.  Taking a guess at what the utility of money

would be, it might well not look attractive to him.  To a millionaire, the same

odds are quite attractive.  Going further, if society generally takes the risk,

it is a good investment.  And then society also reaps a substantial fringe

benefit in the form of an alleviation of certain social problems connected with

unemployment, as I mention below, but that is in addition to the value of the

investment in knowledge itself.  Of course, it should involve some way of

repaying the social cost out of the benefit, but that is a detail on which this

particular analysis should not depend.  I will discuss it in a later chapter. 


      The general unwillingness to pay for college for everyone contrasts

with the willingness to pay, and pay handsomely, for the education of military

officers.  According to the Washington Post of 27 January 1995, the cost of each

degree from the three service academies runs between $ 204,000 (Navy) and

$ 265,000 (Army), averaging $ 237,000.  Of course, military officers, most of

whom will see little combat or none during their careers, are seen as valuable,

though they produce no wealth.  By contrast, the education of a scholar, which

typically costs much less than half of that, is part of the greatest wealth-

producing mechanism our society has.  A program on the order of the GI Bill,

which sent nearly a whole generation of Americans to college in the 1940s, would

be about $ 80,000 to $ 100,000 for each participant.


      The policy I suggest will be attacked as elitist by those who are eager

that enough college places be available for children of the upper classes, even

those without much intellectual drive, who are seeking the social accreditation

I mentioned above.  They are, ipso facto, proponents of elitism based on the

ability to pay, instead of ability to learn.  Both are elitism, but one lies

closer to the function of the educational enterprise and the needs of society

generally.  And also, we can expect that the powerful will arrange an expansion

of educational institutions to accommodate their own children, if that proves to

be necessary.




Chapter 11.  Paying for pre-school.


      Surprisingly, one of the most important aspects of the knowledge

business is the question of pre-school, including even infant day-care.  The

effectiveness of the Head Start program is documented, though it is true that it

needs to be reinforced by adequate schooling to retain its benefit.  Many poor

children pass their first five or six years in a very deprived environment, in

which they are often denied even the stimulation of being talked to by their

parents (or parent, if there is only one).  It is widely believed that this

early deprivation of intellectual stimulation produces a deficit in their

ability to learn which is life-long.  In addition, the absence of adequate

day-care is a factor in whether their parents are able to work.


      In a society which manifestly has more labor available than it is able

to use profitably, it is grossly wasteful to allow such deprivation to produce

that kind of deficit mentioned.  We can clearly produce trained teachers who can

adequately meet the needs of children of any age.  Indeed, in addition to the

early education which would be available in this way, there are other aspects of

the lives of poor children which could be alleviated by having publicly-funded

day-care and pre-school available for all.


      One problem afflicting the poor is the question of adequate nutrition.

This meshes with the problem of income support (known as welfare payments),

which are thought by many in the general public to be abused.  There is now

much resistance to continuing these payments.  A program of pre-school and

day-care which supplied up to three meals a day to the children could prevent

malnutrition without relying on the adequacy of the parents' shopping, cooking,

and feeding.  This is not to say that such inadequacy is widespread, but that

many would prefer to provide the food rather than the money.  In this connection

I also favor not only subsidized school lunches, but also school breakfasts.


      While school lunches could attract people of every economic class, the

breakfasts, and even more the dinners, would likely be foregone by those with

more resources.  Family meals are an important amenity, which would be foregone

only by those who were short of either the time or the money, and we should be

prepared to sustain either or both of these needs.  Instead of the means test

we now employ as to who can receive these free, we could employ what I call the

Principle of the Library Card, in which people can have membership in the Public

Library (and can use the public schools and the public highways) free of charge

regardless of their wealth, paying for it through taxes which might depend on

their ability to pay (as in progressive income taxes or graduated vehicle

registration fees) in another way. 


      The early availability of intellectual stimulation, independent of

the parents' financial capacity or intelligence, is a way of magnifying and

promoting whatever endowment of intelligence our children receive.  In a society

which has implicitly decreed that both men and women should be employed at paid

labor, the provision of this sort of child care, publicly funded and accredited,

is an important link in the process of maximizing the profits of the Knowledge




Chapter 12.  Higher education.


      Compared with the costs of pre-schools for all, stipends for high school

juniors and seniors, and college grants, each of which would run in the tens of

billions of dollars per year, the costs of supporting graduate and post-doctoral

education are minimal.  The vast majority of college graduates are glad to be

finished with formal education.  Probably the majority were sated by the time

they were part-way through Junior year, but persisted up to their degrees. 

But we see that even among those who have wealthy and indulgent parents, or

trust funds that would maintain them for further education, only a relative

few are tempted by the prospect.  Of those who are, many already find a source

of institutional support, in the form of a fellowship, scholarship, teaching or

research assistantship, or some form of university employment to maintain them

in graduate study.  In line with the benefits already mentioned, and to obtain

the benefits which will be discussed in the following sections on employment

theory, I think that it would be beneficial to the public generally if the kind

of support which is nearly universal for science students were available in all

areas of study.  That is, employment nearly comparable with what other college

graduates are getting, with the benefits being modest pay, health insurance,

tuition, a 20-hour work week and a 39-week year.  It should be set where it

makes an attractive package for someone who takes in addition the pleasure of

continuing education, but is otherwise burdensome if the 40 - 60 hours a week

of study are counted as onerous.  Keeping such people out of the job market

for a few years while possibly equipping them for a very high-level job later

is highly beneficial as long as employment is scarce for those with minimal

education and skills.  I will discuss this in the next chapter.


      For those who complete their graduate educations, culminating in a

terminal degree, I suggest that further independent study be available on more

or less the same terms: a stipend somewhat below the standard of pay for PhDs,

with the opportunity to pursue an approved program of study.  It might even

include payment to universities or research institutes to reimburse them for

the costs involved in accommodating the additional scholars.  As in the case of

graduate education, there should be a level of proficiency required for entry

into the program, but it should be on the relatively permissive standards in

use in the 1960s, rather than the stringent ones of the 1990s.  In the case of 

subjects like the sciences which require extensive laboratories or equipment,

that should also be subject to peer review, but not nearly so tight-fisted as

we see today.


      The cost of all the educational programs of these last three chapters

would run into the tens of billions of dollars, not exactly small change.  It is

not being offered as an easy expenditure, although it is small compared with the

current military budget, which meets no visible security threat.  If that budget

can be justified as a prop to the general economy, when it has no prospect of

economic benefit in the future, then this should be that much more attractive.

It might well be argued, and would surely be, that a greater knowledge of French

Renaissance music or Anglo-Saxon epics or neoPlatonic philosophy is certain not

to advance our economic needs.  I will remind you of the imaginary numbers, and

note that nothing is certain in this regard.  But even if subjects such as those

mentioned bring no riches in cash, they are fruitful in externalities and are

in any case preferable to the ``military Kenynsianism'' mentioned in this



      But I see that the time has come to bring in the matter of employment

policy, which adds to all that I have written before, so that even where the

investment in education and research has no visible payout in the form of

inventions or commercially salable books, it still confers important economic

benefits.  That will be the business of the next few chapters.



Chapter 14.  Socialism.


      The proposals I am making will no doubt be criticized as socialistic. 

To some degree, that is accurate, but excessive.  The archangel of private

capitalism, Adam Smith, has noted that there are certain areas of community

expenditure which cannot be served by private fee-for-service economics.  He

cites such things as roads and bridges, which confer benefits on many who do

not use them directly.  To this we can add things like armies and prisons and

courts.  A big fight in Wisconsin this year is over whether a stadium for a

professional baseball team also falls into this category.


      Adam Smith did not consider whether the expansion of knowledge

falls into this same category.  Possibly the fact that knowledge was not as

significant a feature of his time (despite its being known as the Age of Reason)

accounts for that.  Also, it was a time in which a higher proportion of new

knowledge was seen as private property.  (See Chapter 17 on Intellectual

property and Chapter 37, The People's share.)  However, we see that in our time,

there is a vast public interest in knowledge, and it passes without cost to many

users.  As an example, I note the information that aspirin, or red wine, or

frequent exercise will help in the avoidance of coronary artery disease.  Many

people will benefit from acquiring this information free of charge, and on one

will pay anything for it to those who discovered it.  Even the payment to the

pharmaceutical companies or the vintners grossly understates the value to the

recipients.  A similar comment applies to the knowledge that eliminating lead

from gasoline reduces the loss to exposed children and adults.


      More commercially, the knowledge of how to build computer chips

could not be fully restricted by the companies which did that, so that their

competitors were able to produce alternatives by a similar procedure.  The

same comment applies even more strongly to the software we see produced

today.  In the field of the externalities, where no money changes hands, a new

understanding of Shakespeare or Sanskrit benefits many who do not pay for it, in

some cases people who do not even come to know of it.


      In addition, any benefit to the problem of unemployment is clearly

felt by the general public, and especially those whose job situations would be

improved by the consequences of the policy of skimming the cream.  In all, the

payout to the public generally would justify a public support of the program,

and indeed that is the only feasible way of paying for it.  Those costs would be

substantial, but comparable in scale to what we now pay for knowledge.  The

National Science Foundation estimated in 1992 that the payment that year for

research and development in the United States was about $ 150 billion.  Of that,

half was being borne by private industry, and about another quarter was being

funded by the Federal government for work being done by private industry. 

The remainder was done by universities, non-profit agencies, and government

agencies of one sort or another.  I will argue below that the work in

private corporations which is product-oriented and held for private gain is

intrinsically less efficient in producing knowledge valuable to the public as a

whole than that which is produced at public expense and distributed free to all

who can make profitable use of it.  An example is found in certain corporate

laboratories when a scientist might stumble on an idea which is not closely

connected with the company's product.  If it needs investment, the money might

well not be forthcoming.  If the researcher does not wish to change employers,

the idea might go unexplored.  Even if it is developed, it might change

hands in a way which exposes the weakness of this kind of fragmented effort. 

The flat screen which is in use in e.g. laptop computers was developed in the

laboratories of the General Electric Corporation.  That company did not elect to

develop that product, and the management sold it off to the Sharp Corporation of

Japan for two million dollars.  That tactic produced a welcome uptick in the

profit statement for the quarter in question, but was a long-term loss for both

GE and the United States.  Of course, Sharp obtained a bargain.  It is an ill

wind that blows no good.


      This is clearly an area where the benefits are at least nation-wide,

and perhaps more reasonably global, but it is hardly likely to be funded by a

world-wide effort.  However, large players in the world economy, like the United

States, Europe, and probably Japan would find it profitable to pay the costs,

even though some of the benefits would flow out to other players, including

some who do not participate fully in paying for it.  In a time when there is

much touting of the Global Economy, this leakage is probably beneficial to all.

The attacks which will continue to be made against governmental planning and

funding based on the collapse of the Soviet Union are highly inappropriate. 

As I mentioned at the outset of this chapter, public support of the Knowledge

Business would meet the criteria set out by Adam Smith.


      And perhaps this is a place to take up the cudgels for national, if not

world-wide planning of economies.  The persistence of age-old Russian corruption

into and through the era of Communist rule is hardly an indictment of the

planning of our economies.  We can read of that corruption in Tolstoy, Chekhov,

Gogol, and Gorki.  The same comment applies to China and Cuba.  By contrast

with the poor performance of the Soviet Union, we have the example of full

free-market capitalism, which ruled the world almost unimpeded for all of

the 19th century and a third of the 20th.  It was marked by accelerating and

progressively more severe cycles of boom and bust, culminating in the most

disastrous economic collapse of all time, worse even than the worst excesses

of Soviet Communism.  That visibly intelligent people could champion it in

the face of this monumental failure must raise the question of what motivation

could so override their pretensions to rival experimental science.  That such

championship was a ticket to personal prosperity and honor is visible; whether

that is the key to the mystery must be a secret locked in their own consciences.

But surely, if we will not base our policies on the greater good of the greater

number, our posterity will pay a heavy price for it.







Chapter 15.  Free lunch.


      It is a bromide of our time that there is no free lunch.  Yet we are

all, as I said at the outset, the heirs to a great treasure, and our legators

are, for the most part, people we never heard of and who did not name us in

their testaments.  It was said of President George Bush that he was born on

third base and thought he had hit a triple.  If I may alter the metaphor to

football, we have all been born within 1 yard of the goal line, and those who

manage to score (the ``self-made men*'') imagine that they have run 100 yards. 

Even so outstanding a genius as Isaac Newton said of himself that if he managed

to see further than those who came before, it was because he stood on the

shoulders of giants.


[* See Chapter 6.]


      Without taking anything away from the accomplishments of Henry Ford, he

could not have done any of it without his legacy from Newton and Watt, not even

to mention Benz.  He did not even invent the assembly line.  The knowledge that

our generations inherit is an indispensable part of the advances they make. Even

the knowledge of their own contemporaries is mostly given without cost to the

world, being published in scholarly journals and exploited liberally by those

with just a bit of imagination and some economic resources.  To demand that they

repay some of that profit into the education of their own generation or the next

one is hardly an imposition.


      There is almost no one among the rich in the present generation whose

prosperity is not rooted in great degree in the work and genius of others,

including members of that very generation, or the spending habits of others who

are themselves the beneficiaries of the work of others.  And almost none of the

work of previous generations carries a royalty in our own time.  It is all free

lunch.  This causes some difficulty, as states and nations seek to ride free

on the investments of others.  I see it at the University of Wisconsin, which

imagines that we have been investing at our own cost for the benefit of the

whole nation, not to mention the whole world.  And there are those who complain

that the Japanese have grown rich from expropriating, without payment, the

results of American and European science.  For myself, I find the complaints

petty.  There is more than enough for everyone, if we would but pursue the goal

at the maximum that our inherited genius makes possible. 


      If we are so miserly that we refuse to bankroll the whole of our

children's generation, then at least we could create the means for them to care

for their own needs.  Let us consider another thought experiment.  Suppose we

were to propose funding the program of education and research I have outlined

by floating a special bond which would not be repaid until the investment had

started to pay dividends, and then only from the pockets of those who had been

enriched.  As one measure, we could define that as those whose incomes exceed

twice the median income in any given year.  Suppose further that we could poll

all the 17-year-olds in any given year on whether they would be willing to pay

an additional income tax of (say) 20 \% on the excess of their incomes above

that figure to pay off the debt.  I think it obvious that the vast majority of

that cohort would willingly embrace such a proposal.  They would think that an

opportunity to expand their horizons and their prospects on the basis that only

those who win would pay would be a free lottery ticket which would require the

winner to share the prize.  Almost all would want it, but we do not make that

available to them.  Instead, we have politicians of almost all colorations

who tell us that their refusal to enter into more debt is a favor to their

children's generation, even when their parsimony results in closing the doors

of education to that very cohort.  There is a vicious logic in this, since the

powerful are more interested in preserving the relative status of their children

than in the general welfare of that whole generation.  It might result in their

children being less well off, in both economic and external considerations, but

it would give them the dubious pleasure of being less deprived than others.


      But isn't this whole project immensely costly?  Costly, yes; immensely,

no. It would be comparable with our present expenditure in research and

development, which is about $ 150 billion annually, and less than we continue

to spend on our defense budget.  Possibly more than the R&D costs, but not

as much as double.  A rough and unreliable calculation yields about \$ 40

billion annually for each of pre-school and high school, and about double

that for college.  I can hardly estimate what the graduate and post-graduate

projects would cost, but it must be about the same, to within a small multiple.

But then, of course, there would be savings.  After all, we are paying privately

now for some of the costs of pre-school and college, and the expanded post-

graduate program would release a flood of new knowledge into the public domain,

some of which knowledge is now being purchased in industrial laboratories. 

Further, the transfer of some of the research from corporate into institutional

laboratories would free it of some of the inefficiencies caused by restricted

product horizons, as mentioned above.  Finally, there are the benefits of

easing unemployment and maintaining the pool of adaptable minds to tap for new

technologies as they arise.


      The mechanisms we now have for rewarding invention and creativity are

grossly inefficient.  We need to create new ones which will encourage their

dedication to the public domain, where all can benefit from this free lunch.




Chapter 16  Sharing.


      In the years since the disaster which fell upon the intellectual

world as a result of the successful flight of Apollo XI, we have seen a great

deficit in the number of job opportunities in the knowledge business.  This

is especially true in the arts and humanities, but it applies to most of the

sciences and social sciences as well.  The exceptions were, for a while, the

arts of making money, in particular economics and business training of various

sorts.  This shortage of jobs, described as a glut of labor, has resulted in

the knowledge business suffering as a desirable career choice, and there are

fewer takers at every level of the education process, particularly graduate

school.  And there are fewer research opportunities as well.  The young doctors

today face a world in which job opportunities come without any prospect of

permanence, even for excellent performance.  The pay is poor and the usual

fringe benefits, such as retirement and health coverage, are absent.  The hours

are long and the employer is often indifferent to scholarly accomplishment.  Not

only have the young doctors suffered, but the entire academic, indeed the entire

knowledge profession, has been beset with poorer rewards and greater intrusion

of the ignorant meddling of legislators, trustees, and managers.


      The academic and research communities have regarded this misfortune

as though it were an act of God or a natural and unavoidable occurrence.  In a

sense, within the boundaries of what we were willing to do on our own behalf,

it was.  For to make any significant change in the history of the past quarter

century would have required that the profession, and especially the academic

portion of it, would be tightly organized and willing to press stringent

demands, possibly backed by the threat of industrial action.  That the

majority have plainly been unwilling to do.  But many ask, with justice, what

we could have done in any case, even if so organized, in the face of that

shortage of positions.  One serious problem in this business is that it is

highly inelastic as to labor.  That is, decreases in the cost of intellectual

talent do not result in any noticeable increase in demand for people's

services.  If the salaries of academics, for example, were to be halved

overnight, there would probably be very few additional professors hired.  Thus,

it takes only a relatively small deficit of positions to create a buyers'

market, and this has been exploited ruthlessly by administrators and trustees,

without any compensating increase in the number of academics hired.  If it had

been possible for the academic profession, or the research profession, to assure

jobs for the young doctors, even wholly or partly at their own expense, their

economic status might well be better today.


      In an organized industry, the academics might have insisted that place

be created for the young people by increasing the phenomenon of sabbatical

leaves, even paying more of the cost ourselves, perhaps making the sabbaticals

compulsory, and even possibly making them more frequent than every seventh year.

It is true that there are many academic families, particularly among the young

ones, where the loss of income would be very troublesome, but it is exactly

those young families who have been hurt most by the fall in salaries and

benefits which the job shortage has occasioned.  And if there would be a loss

in salary, at least there would be some gain, both to the scholars and the

human race generally, from the increase in knowledge.  It is not beyond belief

that they might today be getting more money, averaged over the years of their

employment, with more time for the study which, I would assume, is their major

motivation for undertaking the relatively modest living which the academy



      What is true of the knowledge business holds even more for the rest

of the economy.  For the past fifty years, advances in technology have been

raising the productivity of labor.  In the early part of this half-century,

the strength of the unions assured that Labor was able to secure a share of

the benefit of this productivity, probably about one third.  However, as this

advance continued, it began to create something of a labor surplus, which led to

a phenomenon which was given the ominous name of ``technological unemployment''.

As the goods shortage produced by the Second World War abated, and as the

purchasing power of the working classes failed to keep up with the capacity of

the technologized industries to produce the demanded goods with ever-decreasing

inputs of labor, we began to be beset by increasing unemployment.  The unions

failed, for the most part, to recognize the impact of this threat.  Like the

academic profession, organized labor was, for the most part, unwilling to make

any sacrifice to deal with the rising unemployment.  Specifically, there was no

substantial move to shorten the work week or increase vacation time in order

to keep employment full.  Those who were employed, who were and are the vast

majority, simply looked the other way, and their union leaders did likewise.

There were some tentative moves in the opposite direction, such as the Humphrey-

Hawkins Bill, which would have made the U. S. Government an employer of last

resort, or the All-unions Committee to Shorten the Work Week, organized by the

United Auto Workers.  But these were weak moves which never gained wide or deep

support, and as the productivity of labor increased, the army of the unemployed

grew and their desperation provided strikebreakers when these were called for.

The unemployed felt little solidarity with the workers who had largely ignored

their plight.  Thus, the power of the unions waned.  By 1970, labor ceased to

participate in the benefits of technological advance, and from that time, each

new advance became the occasion for weakening the unions and failing to keep

pace with the advance of inflation.  By the 1990s, companies were actually

extracting give-backs of even nominal wages as well as benefits.  By being

unwilling to share, labor had lost more than the sharing would have cost. 

At an estimate, full employment would have resulted in wages being 50\% higher

than they are today, so that instead of working 30 hours for 45 hours pay by

1970 standards, those who are employed are working 40 or 45 hours for 30 to 35

hours' pay.  In addition, we have a huge number of unemployed, many more who

have fallen from well-paying jobs to near-proletarian labor, and fear of job

loss among those who are still working.


      The promise of technological advance has always been that it would free

the human race from the burden of toil, but this promise has never been realized

except through struggle on the part of the working people.  The first strike

in the American Colonies was in 1776 in Philadelphia (!) when the carpenters

demanded a 72-hour week.  Over the years, successive struggles lowered the work

week to 60, then to 48, and finally to 40 hours.  But since 1938, there has been

no decrease, even in the face of astounding advances in labor productivity.

Instead, the employers have successfully fought to create a measure of

unemployment aimed at reducing their employees to helpless servitude.  Indeed,

the Chairman of the Federal Reserve Bank has expressed his concern when even the

official unemployment figure (a grossly understated one) threatens (sic, sic,

sic) to fall below 5.5% .  Neither the workers nor their leaders saw this

disaster coming to the point that they were willing to share the work in order

to forestall it.


        In this way, the refusal to share has resulted in a degradation of the

rewards of labor, both in the intellectual world and in the world of manufacture

of goods and services.  It is almost biblical in its import.  By not casting

our bread upon the waters, we have been denied the benefits our generosity would

have generated.  In addition to the misery that has been inflicted upon so many,

there is also (and this is the message of this book) the loss of the knowledge

we could have reaped for the past twenty-five years if we had continued with the

program of knowledge-seeking we had pursued in the 1960s.


      In the long run, the benefits of the Knowledge Business must be seen as

the property of the whole human race.  However, so long as humanity chooses to

organize itself into nation-states with boundaries and mercantilist economies,

it is at least essential that the advanced countries enforce some part of the

dividend to all the people.  The sharing of the available work for ordinarily

skilled people, and a reasonable wage for such work, is an essential component

of the promise of participation in the rising tide which is supposed to raise

all boats.  Today in the United States, about 75% of the population no longer

has a hope of employment at more than about six dollars per hour, and many

are unable to get employment even at that low wage.  The bulk of high school

graduates who have not gone to college, many of those with weak degrees, and

some of those with honors degrees and graduate degrees are jobless or working

at menial wages.  Of those with these educational qualifications, most have

no hope of a good life as we have known it unless they are outstandingly gifted

in intelligence, athletic ability, skill or strength, or are engaged in one of

the richer and more dangerous forms of criminal activity.  This is a very sick

state of affairs.  If we were to agree that some portion of the Gross Domestic

Product is the general public's legitimate dividend on the Inheritance I speak

of, and that this dividend is to be shared by all who are willing to work, with

a share of the riches in exchange for their share of the work, then I think we

could come out of the malaise which grips our Nation.  Otherwise, not.  Sharing

is the true key to prosperity and safety in the world of tomorrow.




Chapter 17  Intellectual Property.


      In some sense, it has long been known that knowledge is wealth.  Those

who knew how to make, for example, magnificent violins kept the secret to

themselves, and the art died with them.  Today, platoons and battalions of

physicists and acousticians have tried to plumb the secrets of Stradivarius

and Amati, with only middling success.  Other secrets died with the holders or

with whole peoples.  As this book is being written, knowledge of the healing

powers of various plants of the Amazon rain forest is vanishing as the

magicians of those peoples fail to find acolytes to whom they can pass it on.  

In an attempt to save knowledge from that fate, we have seen the adoption of

patent laws which offer inventors a limited monopoly on the fruits of their

ingenuity in exchange for recording their advances and thereby eventually adding

them to the public domain.  In a somewhat similar way, the invention of printing

led to a similar protection for the reproducible arts, in the form of copyright

laws.  But the advance of technology has now rendered those mechanisms obsolete,

and they have become impediments to the dissemination of knowledge.


      As I mentioned earlier, most new knowledge is conferred gratis upon the

human race, in the form of publication from which the author takes only the

reward of fame and admiration.  It is true that for many of these inventors, it

is possible to capitalize on this prestige in the form of academic advancement

or corporate promotion, but the payment does not come from those who benefit

directly from the advance in knowledge.  In the field of computer software,

there is a growing tendency of inventors to place the work where others can use

it, asking only that the user donate voluntarily either a modest fee or whatever

he* thinks it is worth to him*.  In part, this is an expression of open-handed

philanthropy, but it is also a recognition of the fact that it has become

increasingly futile to try to hold on to anything as mercurial as an idea.  The

battles being fought over the use of xerographic copies of copyrighted material

also show that while the doctrine of ownership of intellectual property has been

a spur to its creation, it has now become an impediment to its dissemination.


[* See Chapter 6.]


      So how do we have it both ways?  After all, it is the business of

intelligence not to be constrained by the disheartening wisdom that we cannot. 

Before the electric light, we had to have it dark or smoky, but could not have

light without smoke.  Before the fluorescent tube, we had to give up most of our

energy to heat if we wanted light, and then later came ionized gas lighting. 

Each advance, in some sense, allows us to have it both ways.  I propose that

there are ways of rewarding inventors and writers for putting their genius into

the public domain.  Without detracting from the present option of taking a

patent or a copyright, we should create such an option for those who are willing

to go that route.  Many possibilities offer themselves.  One is that of the

Prize.  There was, for example, the Kremer Prize for man*-powered flight. 

Originally five thousand pounds, it was increased to fifty thousand before it

was claimed by the designers and builders of the Gossamer Condor.  I don't know

how much it cost to build that machine and fly it, mostly on donated labor, but

it must certainly have been much more than the amount of the prize.  Similarly

for the Gossamer Albatross, which was the first man*-powered machine to fly

across the English Channel and the Voyager, which was flown non-stop around the

world without refueling.  The subtle knowledge of low-speed flight which the

human race gained from those enterprises was far in excess of not only the prize

but also the cost.  It is truly remarkable how much effort can be expended to

win a Pulitzer or Nobel Prize, or a knighthood, or election to the National

Academy of Sciences.  I suggest that a large number of substantial prizes for

the most valuable inventions of each year, with funds donated by the major

industrial countries, would produce a richer harvest than the patent system. 

The cost would almost certainly be less than the benefit obtained.


[* See Chapter 6.]


      An alternative possibility would be to charter an Institute of

Inventors, like the National Academy of Sciences, which would be a self-

certifying organization but which, like the Academies of Communist Eastern

Europe, would carry a stipend for its electees.  Perhaps even a hierarchy of

ranks in this institute depending on the perceived value or importance of the

honored inventions.  The process of selecting those to be rewarded would not be

perfect, and that could be argued in opposition to either of these suggestions,

but indeed the present system is probably even less reliable.  A wise inventor

today might not invest the time, effort, and cost for obtaining a patent unless

he* had some confidence of being able to sell the license to someone who could

use it profitably.  And in addition to the uncertainty of selling the idea,

there is also the substantial possibility that it would be pirated, as was the

case with the intermittent windshield wiper, whose inventor spent a large part

of his life in litigation with automobile companies to secure some payment for

their arrogant appropriation of his creation.  Both suggestions are at least

as fragile in their seeking for justice as is today the award of employment,

tenure, and promotion in the Academy, which relies upon such a system, but that

profession remains an island of tranquility and certainty compared with the

jungle of commercial life.


      The rewards of invention today rarely go to the inventor, and even when

they do, it is only partial, sometimes very partial.  An outstanding example is

to be found in the Edison General Electric Corporation.  The riches occasioned

by the electric light and electric generation went only in small part to the

inventor.  The vast bulk of it went to J. P. Morgan and the group of investors

he recruited.  In time, they even took Edison's name off the business.  In the

thinking of the theoreticians of capitalism, Morgan was the real genius, because

he recognized that this was an invention worth acquiring. (Stealing?)  But we

can ask in what was this talent of his?  Edison was already a famous genius, but

in fact there were few on Wall Street willing to put their money behind his work

without the imprimatur of a recognized opportunist like Morgan.  Such people are

supposedly the strength and glory of the capitalist system, but in fact the

vast majority of them are weaklings and cowards waiting for an investment with

no risk.  When they do move to capitalize on the knowledge created by others,

they demand and get the vast preponderance of the rewards.  It is said that this

is the best way, but in fact whenever the Nation really wants something done, we

know that the best way is to do it ourselves, like flying to the Moon.


      I will also raise here the question of the knowledge owned by us all,

the inheritance I spoke of in Chapter 1.  The patent system allows the inventor,

and by extension the parasites who fatten on his* genius, to grab for himself*

the benefits of previous knowledge which belongs, as I aver, to all of us.  In

the process, depending on how he* does it, he* many even fence off previous work

in a way which keeps others from using it.  Thus, for example, the recent patent

granted by the U. S. Patent Office on any future modification of the cotton

plant.  The patentee did not invent genetic manipulation, nor did he create

cotton, but he has, in effect, fenced in a substantial portion of the common,

if I may use that metaphor.  A large part of what he has taken was the property

of us all.  We are entitled, in some sense, to a huge share of anything that

will come from that patent, but the state of the law today does not grant it to

us.  Other cases are less egregious, but it is obvious that a large share of

every patent is a private use of this common inheritance.  I applaud its use,

but I do insist that we should all share in the profit.  Maybe then we would be

more willing to pay its costs.


      The system of patents works well for the large industrial laboratories,

which are funded by corporations for the specific purpose of advancing the

shape, form, or quality of their product.  Even there, as I noted earlier, much

new material goes without follow-up because it is not sufficiently product-

specific.  Much of the result of new patents is also wasted in that the company

which makes the discovery does not use it, but holds the patent to prevent any

one else from intruding into their protected market.  The individual inventor

is effectively shut out from the opportunity of seeing his* work realized, in

most cases.  I have even had instances in which I was unable to give away the

product of my thinking free of charge, because of the legal pitfalls facing any

company which was so incautious as to listen to an individual inventor.  The

whole phenomenon actually has a name, NIH, for Not Invented Here.


[* See Chapter 6.]


      The same considerations as for patents applies, but with somewhat less

impact, to copyrights.  There are many people who have written books or other

works of various kinds which they wish to donate to the human race.  They would

like to be rewarded for it, in many cases, but would publish in any case if they

had the opportunity.  Nonetheless, they would like to retain some control over

the way in which their creations are used.  The copyright laws enable them to

do so.  But the same laws make it difficult for others to share and spread this

beneficial product.  Some people will put books onto the internet or distribute

them as data files, on discs or tapes or even CDs.  But then they run the risk

of seeing them duplicated without proper permission.  Someone might usurp their

product, since it is so easy to do.  It is even easier than using a copying

machine, and that has been the subject of much litigation.


      It would be valuable if we were to find a way to make knowledge more

available without infringing this right of intellectual property.  Perhaps by

a variant of the Prize Principle mentioned above.  Suppose there were a large

number of large prizes offered each year for the best works donated to the

public domain.  The creators would not have to find publishers willing to

finance the cost of embodying it in matter, as by printing it, or performing

it and recording it, etc..  They might well just put it into circulation using

the mechanisms of mass communication in the hope of attracting an audience and

possibly winning a prize.  It would be an alternative way of spreading knowledge

which might advance the common weal.  We should be glad to pay for it.


      Our present concept of intellectual property is one which rewards the

owner of knowledge for restricting access to it.  That should not be our

purpose.  We should find a way of rewarding the dissemination of knowledge

which fosters its spread to the greatest degree possible.




Chapter 18  Information


      This is being touted as the Age of Information.  In a sense it is, since

the advance of information technology in the past thirty years has transformed

the world of business, including the Knowledge Business.  Information is not

knowledge, though it is often treated as though it were.  But it is a great

resource in the search for knowledge.  As a trivial example, it is now possible

to put all the valuable manuscripts in the British Museum or the Library of

Congress onto graphic data files so that it would be unnecessary, except in

the most special cases, for anyone to handle them and so that they would be

available for use by scholars all over the world, at essentially no cost,

and possibly simultaneously.  More significantly, one of the major impediments

to the exchange of information, the necessity to embody it in matter, would be

eliminated.  As just one more example, I intend to put the first draft of this

book onto the internet so that anyone who is interested can download it while I

work on polishing it.  This might well result in a slightly smaller sale of a

printed version, if there is to be one.  However, since my principal motivation

in writing this book is the dissemination of a point of view rather than making

money, that is acceptable to me.  (I am also aware that some circulation in

draft form might actually have the effect of increasing the demand for the

finished product.)  The necessity of moving information in the form of matter

has always been considered an unavoidable difficult.  A. J.  Liebling has

written that ``Freedom of the Press is important to those who own one." 

The ownership of a press, or of a broadcast station, has given some people

(e.g. William Randolph Hearst) disproportionate power in the political arena. 

Others have been able to spread their ideas only to the extent that they

were able to secure passage from one of these media.


      In a few cases, information could pass without being embodied in matter,

such as spoken communications or performances, but the former were only a small

proportion of all transmissions in the past few centuries and the latter also

required access to a suitable stage.  Today, people can gain access to a large

audience for little more than the price of a personal computer, a modem, and a

telephone connection.  The boast of nuclear power, that it would generate

electricity too cheap to be worth metering, was a sham, but it is true of

the passage of information over the internet.  Nonetheless, we must never

underestimate the rapacity with which private interests will appropriate the

public patrimony.  We saw it with the lands of the Western United States,

taken freely by the railroads, the public airwaves colonized by private

ownership of the right to broadcast, and now the internet is being parceled

out to private interests who will charge for the right to speak and listen

on the public common. 


      In order to facilitate the spread and generation of knowledge, we

require the free (in both senses) use of this amazing new medium.  In a real

sense, it is more important than even the public highways.  Information is not

knowledge, but it is one of the things out of which knowledge is made, perhaps

even the most important of these.  As a printed book was a more potent medium

for the transmission of ideas than one which had to be copied by hand, so a

book on a data file is almost infinitely more accessible than one which is

on paper.  Of course, it is uncomfortable to read a book on a cathode ray tube,

like the one I am looking at right now, but it would be easy and cheap to

produce a ``reader'' which would look like the screen of a laptop computer

and serve only the function of displaying such data-file books.  I have urged

such a ``reader'' in every forum where I thought it might be taken up.  With

the present mood of the Patent Office, that might even be a patentable idea.


      In addition to books, there are other places where we might wish to

distribute information without having to invest in the cost of embodying it

in matter.  Someone might wish to ``showcase'' musical talent, or exhibit a

novel interpretation of a classical work.  Today that involves the cost of

manufacturing a recording and distributing it.  The innate transportability

of the idea is held hostage to the cost of the matter.  A person with a video

camera might well make a film, or record a performance of a play or a dance,

but what is the route he* must take to reach a public with it?  He* must

secure financing for at least copying the film onto other cassettes and then

distributing them, at substantial cost, to stores which would have the task of

selling them.  The ideas might be free, but the cassettes are not.  Nor are the

shipping costs.  A final example is to be found in computer software.  Here, the

bonds of materiality are slipped, and those who wish to disseminate their work

to the world are able to offer it, free of charge, without having to invest in

its materialization.  Indeed, as I mentioned in the last chapter, the problem in

that case is that the information flows all too easily for those who are trying

to draw a fee for its use. 


[* See Chapter 6.]


      In the world of the ``information superhighway'', it should be possible

to sell and buy information without investing in matter to do it.  We should be

able to go down to the ``bit shop'' to buy a book, or a performance, or a program

to be written onto a medium we already own or one which, perhaps, we buy at the

shop for the purpose of taking away the information we have just bought.  And if

I have an account at that shop, I should be able to buy it by telephone without

making the trip.  Information would then be so fluid that the copy rights would

be at risk, as they already are.  And to compensate for that, we should be

willing to reward those who allow their work to be distributed freely.


      The enclosing of portions of the common patrimony is not an activity

which should be countenanced.  It is true that in this case, the impoverishment

of all can result in the enrichment of a few.  But the losses are greater than

the gains. In addition to that which is paid for, where the losses equal the

gains except for negligible costs, there is also what is not taken, not bought,

not used, and not employed in the advancement of humankind.  In that, we are all

the losers.


      The railroads eventually sold off the lands they got in exchange for

laying the tracks.  They are no longer running the trains, but they have kept

the bribe, and sold it.  The broadcasters no longer acknowledge any obligation

to serve the public good, but they still own the licenses, and sell them at a

huge profit.  The descendents of the British lords who fenced in the commons and

drove off the common people are still living on the dividends of this ill-gotten

gain.  Now the telecommunications corporations are grabbing up the fruits of the

labors paid in part from public taxes and based on the use of the common rights-

of-way on the information superhighway.  Like the knowledge upon which this is

based, it is our property.  We should plan to take it back as soon as possible,

and the question of payment should be considered an open one.




Chapter 19.  Unemployment.


      The promise of the advance of knowledge, and of the technology which

it has generated, has been a world freed from the curse of Adam, the burden of

toil.  Instead, we have seen an acceleration of unemployment everywhere .  It

is hard to reckon the exact amount, since the sources of data are scanty and

governments everywhere seek to minimize the figures by finding excuses to

exclude large numbers from the count.  As a few trivial examples, most women

who are available for work but are spending their unemployment at home are

not counted, but are called full-time housewives.  Most unemployed men over a

certain age are considered retired, particularly if they have given up seeking

work, and universally if they are living on a pension, however unwillingly.  No

students are counted, no matter their motivation for being in school, etc..  In

most countries, those who have never been employed cannot be counted as



      Of all those in the world who are available for work, at least 30\%

are unemployed, and the figure may well be over 50\%.  Most of these are in

impoverished countries of the third world, but increasingly many are in Europe,

North America, and the Antipodes.  Recently, the problem has begun to afflict

Japan and South Korea.


      The consequences of this unemployment come under two rubrics: economic

and social.  In the developed countries, the economic effect is destructive to

Labor, but eagerly embraced by Capital.  The social effects are destructive to

both.  Many among the rich think that they can grab the cash benefits and buy

their way out of the disintegration of the social world.  They are mistaken.

Laboring people have yet to catch on, in any major way, to the fact of how both

their social and economic well-being is being eroded by this disaster.


      It is important to understand what is meant by the phrase ``labor-saving

machinery''.  The labor of the replaced worker can only be considered saved if

some worthwhile use is made of it.  If it shows up merely as the idleness of

unemployment, then it is not saved but wasted.  Indeed, it is worse than wasted.

It becomes an actual pollutant of our social life.  One way to put the labor

saved to use is to distribute it as leisure.  That may or may not be the best

way.  Another is to find a use for it, either in private or public enterprise.

And a third is to invest it, and about the best investment around is to be found

in the Knowledge Business.


      During the past two centuries, up to about twenty years ago, new

technologies were often put onto the bargaining table, and a share in the

benefit was claimed by Labor as the price of continuing economic activity.  Part

of the sharing has been the gradual shortening of the hours in what we define as

full-time employment.  Also, the total compensation for even the shortened work

week had increased over the decades, up to that time.  An essential component of

this advance in worker compensation has been labor unions, and the major tool of

the unions in securing it has been the alternative of striking.  As the rate

of unemployment has risen, particularly long-term unemployment, it has been

progressively easier for employers to secure strikebreakers when they needed

them.  This ease has been accelerated both by government policies to enable the

employment of permanent replacements for the striking workers and also by the

perception of the desperate unemployed that organized Labor had largely ignored

their plight since 1945.  The weakening of unions by this strategy has led

to a decrease in their memberships, as a fraction of the labor force.  At the

same time, the shift of labor from the assembly line to clerical and other

white-collar work has presented the unions with new challenges of organization,

challenges for which their talents were increasingly unavailing.  Finally,

the consequences of red-baiting of unions in the 1930s, resolved by their

abandonment of social-democratic ideology in the following decades, resulted in

the rejection of union membership by millions of workers who were bemused by

the illusion that they were professionals who would be tainted and abased by any

association with the culture of the factory.


      As a result of all of the above, it has been possible for Capital to

split the ranks of those who depend on wages for a living and increasingly

to dictate more unsatisfactory working conditions.  In particular, any need

for additional labor tends to be met by overtime hours rather than by hiring

new workers.  The costs are greater, but the long-term benefits of having

frightened and docile workers and desperate potential strikebreakers has acted

to advance the interests of shareholders and especially managers.


      In the three decades following the Second World War, an average worker

in North America could expect a job which would require few skills, would

provide the costs of maintaining a family in very modest comfort with a car,

a modest home, some vacation, health insurance, retirement benefits, and the

possibility of sending some of the children to university.  In the past twenty

years, that reality has faded into a dream from out of the past.  The wages of

unskilled and semi-skilled workers have fallen in real terms, while the costs of

all those things have risen, even when adjusted for inflation.  Even discounting

those who drop out of high school, an average high school graduate has almost

no hope of achieving that sort of life today.  And the rot has begun to afflict

even college graduates with the more modest degrees and those, regardless

of the quality of their degrees, who have no outstanding skills or special

connections.  Even some PhDs are going jobless, and the numbers of these are



      Much has recently been written about the need for retraining and the

expectation that each person in the future will have four or five careers at

different lines of work.  Lifetime employment, it is said, is at an end.  But

this view must be meshed with the reality that most people become unemployable

if they are looking for work in their late 40s or beyond.  Thus this new dictum

is actually an early warning that most people can expect to become permanently

unemployed half-way through what we today consider a normal working life.  And

it is expected that the working people of the nation, and of the world, will

docilely tolerate this outrage.


      At the same time, the consequences of hopelessness are becoming harder

for the rich to bear.  More people are unwilling to endure the risk involved in

entering the cities at night for concerts, plays, or lectures.  More rely on

their televisions and cables to bring them entertainment and culture while they

rest, presumably secure, beyond gates and barbed wire, or merely the shelter

provided by distance.  Yet even these are increasingly beset by the costs of

imprisoning those whose antisocial behavior cannot be tolerated, even at a

distance.  These costs are substantial, despite the fact that the perpetrators

are not yet a major portion of even those described as ``the underclass''.


      Yet there can be little doubt that hopelessness is a generator of

fearlessness in those who do not anticipate that they will be able to obtain a

decent mode of living.  This proposition can be illuminated by the observation

of those who were convinced that O. J. Simpson had indeed murdered his ex-wife.

They said, ``What a stupid thing to do.  He had everything to live for.''  The

comment carries the implication that those who apparently have nothing to live

for can well be expected to do whatever comes into their heads at the moment.

Where there is no hope, fear is much abated.


      Even a job on the assembly line is something worth protecting by a

diligent attention to at least most laws.  And those who grow up in a climate

where no one goes to college, no one gets a decent job, and no one has any

rights before a police force who are themselves baffled by how to deal with the

tide of lawlessness they are expected to check, are likely to throw it all up

and take a flier on e.g. a high-paying if dangerous career as a drug runner or

an apprentice to a gang.  It doesn't take many choosing this option to make the

cities quite unmanageable.  And the abandonment of the cities to the underclass

is not an answer either.  Criminals are almost as mobile as millionaires these

days.  We have not yet come to the condition of Colombia, where the kidnapping

of the rich is a major industry, but only a fool would bet his* life that it

will never come to that in North America.


[* See Chapter 6.]


      I hold it essential that the vast bulk of inhabitants of the world

should be employable, and should be employed.  If we cannot control those beyond

the borders of our own countries, at least there we need to meet this goal.  The

alternative is truly horrendous, as we already see if we are willing to extend

the limits of our humanity beyond the bounds of our own families.  It is not

sufficient to say that there are plenty of jobs for college graduates because

firstly it is not true and secondly even if it were, most families have no

hope of sending their children to the universities.  But, as I indicated above,

the practice of filling jobs from the top means that large numbers are now

permanently unemployed, and the situation will only worsen until we take active

steps to correct it.


      There have been several attempts to find ways of using the reserve of

unskilled labor, but none have ever succeeded to any degree.  Organized Labor

attempted to promote the Humphrey-Hawkins Bill, which would have made the U. S.

Government the employer of last resort when officially recognized unemployment

went above 4\% .  However, there was only dim willingness to pay the costs of

that initiative, and the same has overtaken every attempt to employ the least

attractive employees in civic enterprises at minimal rates of pay.  Many have

argued that we should be able to increase the output of product by more use of

labor, but this form of supply-side economics has been as unavailing as all the



      In the area of armament industry, the nation is willing to practice

demand-enhancing employment, even to the point of continuing to produce weapons

which are specifically tailored to deal with a unique antagonist, the defunct

Soviet Union.  If we were willing to devote similar resources to the advance of

education and research, we might well relieve the burden of unemployment and,

as a bonus, possibly reap enormous benefits in the form not only of economic

benefit, but also of health, freedom, and  culture.


      Given the inability of our economic system to use what is perceived as a

surplus of labor to enhance the output of our factories and the unwillingness of

the body politic to pay adequately for the many civic tasks (like the cleaning

of our streets and parks) that are going undone, there remain two major ways of

opening the ranks of well-paid employment to the bulk of the population.  One

is by reducing the work week to whatever it would take to share out the jobs,

with some assurance of adequate income.  This would necessitate a somewhat

mercantilist government policy, in which the near-slave labor of the

impoverished third world is not permitted to erode labor standards in the

developed countries.  (See the next chapter on Greed, below.)  The other, and

not conflicting, strategy is to ``skim the cream'' of those who are willing

to undertake more education and research by financing those activities to the

fullest (and taking a portion of the gains to help support those who do not or

cannot participate in The Knowledge Business), thus opening up a corresponding

number of jobs for some of those going jobless.  Of course, even extending

further education to all who are willing to undertake it on conditions of

subsistence will certainly not mop up all of the unemployment.  Some of the

other strategies will have to be employed.  But there is no better investment of

the liberated time than to expend it, and the necessary resources to support it,

in furthering the inheritance of knowledge for the human race.


      If we do not find a way to defeat the ogre unemployment, the gains of

the rich will prove temporary and illusory as the demand for goods wanes in the

developed world and more and more must be spent on the (ultimately vain) attempt

to control an increasingly angry and desperate underclass.  The fruits of greed

will be a much worse world for everyone.







Chapter 20.  Greed


      "People have always eaten people.

       What else is there to eat?

       If the Juju had meant us not to eat people,

       He wouldn't have made us of meat."


So wrote Michael Flanders in his song, The Reluctant Cannibal (At the Drop of a

Hat, by Flanders and Swann, Angel record no. 65042) .  Throughout history, and

no doubt before that, those who have advanced their own welfare by profiting

from the victimization of others have often sought to excuse the viciousness of

their behavior by citing a supposed ``natural law'', not unlike the cannibal

of Flanders' song.  It is hard to realize that this was offered in defense of

slavery in America, of the extermination and expropriation of the indigens of

North America (Manifest Destiny), of the Spanish-American War, etc..  More to

the point of this book, it has been cited in the field of labor relations. 

It was said that the Iron Law of Wages is an inescapable consequence of The

Way Things Are, and in the nineteenth and early twentieth centuries, it was

frequently cited in support of the proposition that labor unions were immoral,

and clearly contrary to God's Will, as manifested in this ``natural law''. 

[For a discussion of The Iron Law of Wages, see Appendix B.] I understand that

there are still some who believe this, though they have been much quieter in

the past half-century.  Adam Smith was a great believer in the immutability of

the principle which condemned the vast bulk of the population of his day to

miserably long hours of toil for the merest of pittances.  He acknowledged it as

heart-rending, but proclaimed it as unavoidable, and to the best interests of

all, in some larger sense.


      The history of the past fifty years has clearly shown that in this Henry

Ford was smarter than Adam Smith.  He posited that his best interest would be

served by an America in which ordinary working people would be able to buy his

cars, and also believed that the same was true of every manufacturer.  He was

willing to pay his workers double the prevailing rate, and urged a similar

strategy on other capitalists, but to little avail.  It was not until the unions

brought about the condition he had advocated that the truth of what he had

maintained was proved.  It is an irony that Ford opposed that union movement

with all the force, amounting even to murder, that he could muster.


      Today, as employers use the force of the army of desperately unemployed

people to smash the unions and to lower wages and benefits, they again sing the

siren song of natural law.  They claim that they are forced by competition to

pay the lowest wages possible, to deny health insurance, and even to oppose any

increase in the minimum wage.  Of course, if they were genuinely concerned for

their workers, they would support compulsory health insurance and an increase in

the minimum wage, for these would enable them to offer these benefits without

suffering adverse competition.  But we all understand that the underlying

argument is not genuine, so discrediting it is meaningless.


      The greatest example of this doctrine of natural law today is to be

found in what is given the sanitized name of The Global Economy.  This is also

treated as an act of God, visited on us by the Laws of Nature.  Actually, it is

about as natural as slavery, cannibalism, theft, rape, and every other activity

by which powerful people take what they want from those who cannot help

themselves.  The fact that those who can will frequently do it is the evidence

offered that it is natural, and thus should bear no opprobrium.  Actually, this

``Global Economy'' is an artifact of predatory employers who have taken it as a

mechanism for utilizing labor in those parts of the world where unemployment is

so severe that they can obtain workers for wages barely sufficient for survival.

This labor is not slavery in the technical sense of actual chattel ownership,

but it comes near enough to bear the onus.  And just like Flanders' cannibal,

the practitioners expect not only to escape criticism, but even to be admired.

They present their predation as bringing employment to the poorest parts of

the world.  And just by accident, they find it, in the words of James Russell

Lowell, ``prosperous to be just''. 


      I have coined the word exoslavery to describe this form of vicious

exploitation.  Although chattel slavery has been outlawed in most of the world

for over a century and wage slavery is tempered in the United States by the

Fair Labor Standards Act (and by similar legislation in most advanced countries)

it is possible to escape the strictures of this advanced humanitarianism by

carrying one's operations to places where wages are minimal, hours very

oppressive, work conditions abysmal and unions suppressed.  That is, one can

export the conditions of slavery or near-slavery to a foreign location where it

is not illegal, while putting the blame on God or Nature.


      Indeed, if these malefactors of great wealth had chosen to open

factories in these downtrodden lands which would pay the same wages and have the

same protections as labor in their own countries, we might well admire their

altruism, but that is not the name of the game.  The Global Economy is not a

sharing of wealth, but simply a way to avoid the laws against economic rape

which have been established these past fifty years in the industrialized world.

[It is interesting to note that in many of these same underdeveloped countries,

the laws protecting children from rape are absent, so that many of these same

businessmen are buying other illicit pleasures there as well.]


      This aspect of greed is part of a rhetorical constellation which

today afflicts departments of Economics, masquerading under the name of

``rationality''.  It is said to be irrational not to move one's factory to the

source of the cheapest labor, and the resort to this alleged rationality is

proclaimed to be, in some sense, a sacred duty.  Thus, no matter how unpleasant

the consequences, it is what one is compelled to do, and no blame can apply.


      This perversion of the good name of reason is reflected in an amazing

bit of trash which circulated among departments of Economics a few years ago.

When I first heard of it, it was through my brother (at Northwester University),

my son (at Cornell) and my colleagues at the London School of Economics.  It

is so bizarre that I was certain that it was a hoax, and that no one actually

believed it, but in each case I was assured that the proponents were in deadly

earnest, and resented the implication that their attested belief was in fact

a complicated joke.  The matter concerned the tipping of waiters by diners

such as travelers who expected never to eat in that place again.  It averred

that since the purpose of the tip is to secure good service, tipping in the

present is a way of obtaining that in the future.  If there is to be no future

intercourse between that diner and that waiter, then the tipping is irrational

and should not be undertaken.  The fact that there is an understanding that the

waiter is being paid for services already rendered is waved away by the fact

that there is no explicit contract and that the diner is legally (and thus

arguably morally) permitted to escape payment.  However, all concede that they

do not put the waiter on notice of their understanding, leaving him* to the

belief that he* will be tipped in proportion to the perceived value of the

service rendered.


[* See Chapter 6.]


      The interesting thing about this phenomenon is that the argument can be

seen as a reduction ad absurdum of the argument of self-serving rationality. 

As such, one would expect it to be swept under the rug by the argument's

proponents.  Instead, presumably on the theory that offense is the best defense,

they press it stridently.  Since it cannot be imagined that these people are

really eager to pocket the small sums of money they would save, and since I have

my doubts in any case that they actually submit themselves to the stress of

carrying out their program, I take the exercise to be more hortatory than

practical.  But I am assured that they do maintain the position with fervor,

so that it clearly means something to them.  Rationality, indeed!



Chapter 21.  Free trade.


      Among the idols being worshiped in the pantheon of greed, the doctrines

of ``free trade'' and ``free labor'' stand out.  It is a bad joke that the model

of free labor is slavery, punning on the two uses of the word ``free''.  But it

is in this very fact, mentioned earlier, that the Global Economy is a mechanism

for recreating a world bound by Ricardo's Iron Law of Wages, that a valid

analysis of the new meanings of ``free trade'' are to be found.


      For those whose admiration of Adam Smith projects into our own time and

serves as a basis for their advocating what he wrote, there are important data

to consider.  In Smith's time, every country was bound by this cruel law.  In

fact, slavery was then openly practiced in the whole of the British Empire, and

was not condemned in his Wealth of Nations.  Indeed, a century later, Stephen

Douglass, in debate with Lincoln, pointed out that in many cases the conditions

of hired labor, which could be worked to death without economic loss to the

employer, could be worse than that of chattel slaves.  In purely economic terms,

it might be hard to draw the line of favor between the lives then of Welsh coal

miners and those of the slaves of Mississippi.  After the Civil War, many of the

freedmen* found themselves faced with the possibility of death from starvation,

a fate they rarely encountered during their years of servitude.  [This does

not in any way detract from the fact that the near-universal opinion of these

people was that they would not trade the one condition for the other.]  Smith

lived in a world in which death from starvation was a commonplace in every

developing capitalist country, and many others as well.  It was a context in

which his opinions made much more sense than they do today. 


[* See Chapter 6.]


      In addition, Wealth of Nations precedes both the American and French

revolutions.  The measure of what recourses were available to the downtrodden

did not seem to him to include overthrowing their tormenters and cutting their

heads off.  More to the point, there was no reason for Smith to imagine that a

program of prosperity for working people could enrich the rich.  Smith would

certainly have believed the exact opposite.  And today's desperately poor have

at their disposal mechanisms of predation of their own, mechanisms which can

impoverish the lives of the proprietor classes.  All of this argues against a

world in which it is profitable for the rich to impose desperate poverty on the

people among whom they live.


      I have no problem with applying Smith's analysis to the trade among more

or less equal contenders in the world marketplace.  It is easy to believe that

the exchange of goods between, say, the United States and France can be to the

advantage of both, in exactly the way that Smith expostulates.  Even Britain,

with its somewhat lower standard of living, is an acceptable trading partner. 

But I do not accept the slogan of Free Trade as a means of putting the

genuinely liberated working classes of the developed world into direct

competition with the quasi-slaves of Thailand, Malaysia, or India.  We can buy

the shirts they make, but what will they buy which is produced in the United

States?  Even management services are beginning to be bought from Asia,

imported by satellite communications from offices in Bombay.  These people do

not buy many Chevrolets manufactured in Detroit, and even their purchases of

jetliners from Boeing are increasingly contingent on a substantial degree of

participation in the production process.


      I advocate that the price of entry into a Global Economy by the poorest

nations of the world should be the adoption of standards of wages, benefits, and

conditions of employment comparable with those of North America, Europe, the

Antipodes, and Japan.  That would bring them into the market with the ability

to buy goods of our manufacture.  The present arrangement makes them merely a

source of cheap, nearly free, labor.






Chapter 22.  Economists


      At this point, I run into a serious methodological problem.  It concerns

the economists.  They are as a group very intelligent, and most are people of

integrity and compassion.  Yet their pronouncements in the areas which I have

been discussing have mostly been in directions quite opposite to what I have

written here.  I feel I must answer their criticisms in advance or face the fate

of being ruled out of the discourse.  Of course, the simple position is that

they are right and I am wrong, and I have no doubt that I will be subject to

much criticism of that coloration.  And I have given much attention to that

possibility.  I am, after all, an amateur on their turf, and my sources of

information do not rise above college courses from nearly fifty years ago and

what I remember from mostly periodical literature in the intervening time. 

However, I have always had a great semi-professional interest in Economics

and Scoiology, which I catered to during the years when I was Professor of

Mathematics at the London School of Economics.  Nonetheless, it is their turf. 

So I give them the deference their expertise commands, but I cannot convince

myself that their analysis is more reliable than my own.  I continue to believe

that what I say is right by such a margin as would allow substantial errors in

the data without being invalidated.  So I will put aside that explanation and

wait for the professionals to make that case against me.


      However, it seems to me that in answer to the nearly universal rejection

of my thesis by economists of nearly every political persuasion, including those

with whom I imagine I share many fundamental beliefs, I need to say why I do not

give their expertise the deference they say is due.  It is not really what this

book is about, but I am eager that readers should not dismiss my arguments

simply because the professionals disagree.


      Economists have risen and fallen in the estimation of the ``practical

people'' of business over the decades according as whether their analyses

indicated policies which those people wished to see pursued.  About a century

ago, when many economists were also sociologists (e.g. Karl Marx and Thorstein

Veblen), they put much emphasis on the ills which capitalism had inflicted on

society.  They were dismissed as cranks, but when the system of unrestricted

capitalism collapsed in 1929, their theories gained more support and became, to

one degree or another, underpinnings to the various forms of national planning

which swept the industrial world in the middle third of this century, notably

Socialism, Fascism, and Keynesianism.  The teachings of Adam Smith were laid

aside as discredited by the disaster which had crippled the world for a decade.

However, the ``practical people'' never lost their affection for a world in

which they were freer to prey upon the weak.


      The mid-century brought a period in which Science began to be revered

as a possible savior of the world from the curses of poverty and disease, and

many subjects sought the status then being accorded to Physics, which claimed

to hold the keys to unlimited quantities of power, both military and electric.

Examples are Political Science, Military Science, and Domestic Science.

Psychology disdained the status of a healing art, and demanded recognition as a

science, History sprouted Cliometrics, etc..  And the economists also sought to

break the historic link with Sociology, denouncing its researches as ``mere

journalism'' and claiming status as the peer of Physics and Chemistry.


      One of the chief figures in this transformation was John von Neumann,

one of the most brilliant mathematicians of the mid-century.  In his book


U Press, 1944), he attempted to bring the study of economic phenomena under the

kind of analysis which Isaac Newton had brought to Physics.  The work, and the

theories which have sprung from it, have been magnificent in the quality of

their analyses and admirable as examples of deductive thinking, but they omitted

the fundamental basis which underlay the work of Newton and his followers: they

were unable to submit their theories to the discipline of experiment.


      It is in the nature of Economics that all its theories are subject to

the human factor, and that every experiment, if it does not go as expected, can

be alibied by the fact that either the theory was not implemented to the full or

that an incalculable datum (drought, war, election) intervened to render the

outcome meaningless.  Thus, the acolytes of Adam Smith allege that the cycles of

boom and bust in the 19th century, leading to the Great Depression, were not a

disproof of his theory, because his theory had never been fully tried.  The same

comment applies to socialists who reject the argument that the failure of the

Soviet Union was a refutation of Marx's theories, or even of Lenin's.  The

Keynsians argue that the New Deal was undercut by the Nine Old Men who nullified

the National Recovery Act, and even the fascists can claim that their nostrum

would have succeeded but for the military idiocy of Hitler and Mussolini.  And

today the advocates of ``shock therapy'' in Eastern Europe do not admit that it

failed because they allege it was never really tried.


      Nations, peoples, tribes cannot be experimented with as Galileo dropped

cannonballs from Pisa's tower.  Thus theory always depends on its own intrinsic

plausibility, and little more.  In this, it is more like Aristotelian physics

than Newtonian.  The results are always implicit in the assumptions, and we have

only the most meager of observations to underpin our axioms.  In particular, the

assumption of universal greedy behavior is included as an axiom of both Smith

and von Neumann not because it is an observed feature of human conduct (It

is not.), but because no other assumption will lend itself to quantitative

analysis.  Even in the more subtle Utility Theory of von Neumann, there is no

way to account reliably for altruism, pity, joy or the anticipation of reward

in Heaven.  (Cf. Pascal's Wager.)  By this standard, our theory of Economics

should also postulate universal cannibalism, rape, robbery, and every other

form of predation.


      Still, the longing of economists to be ranked among the scientists

was great enough that modern theories based on the classicists are embraced

even by those who find their consequences hateful.  (They call themselves neo-

classicists; I call them neo-Victorians. I forbear to call them Dickensians.)

When, in the last forty years, they came up with a theory which, like Smith's,

put the imprimatur of inevitability on the policies most favorable to

the ambitions of the rich, the disdain of businesspeople melted and the

``scientific'' outlook became the qualifying study which fitted students to

enter graduate business schools and also to be equipped there to enter the

management suites of the corporations run by those same businessfolk.


      The consequences for the practitioners of Economics of this viewpoint

has been magnificent.  First and foremost was the flow of support for their

research efforts and their schools and departments.  Then there was the

demand for their services, as had been the case for physicists, chemists, and

mathematicians in the 1960s, leading to a plenitude of positions and higher

salaries.  Finally, there was even the purchase by the Central Bank of Sweden of

a ``Nobel Memorial Prize'', designed to be mistaken for a Nobel Prize (as it has

been) and to admit the likes of Milton Friedman into the apparent company of

Einstein and Pauling.  It is a heady concoction, and one which dictates to its

recipients a community norm which requires them to support its validity.  (See

Chapter 40, The courtiers.)


      I would not wish to be misunderstood as denigrating the value of this

study of deductive Economics.  It is one of the most interesting and most

demanding of the mathematical sciences, and I have been an enthusiastic

participant for many years in some aspects of Game Theory and the Theory of

Social Choice.  But it is only a pale reflection of economic reality, even

paler than what we find in theoretical Physics and Chemistry.  It should be

studied and from time to time casts a weak light on what we see in the world

(as e.g. the light which Game Theory sheds on The Iron Law of Wages in

Appendix B), but we should not become so bemused that we forget that the

theorems are, as in Mathematics, merely a distillation of what we ourselves

put into the axioms.


      I think the economists know this, for one of them has made an

extraordinary career out of studying how actual people play actual games.  He

has been generously supported, though the direct consequences of his findings

are meager, in the light of the broader scope of Economics.  However, it seems

to me that the economists have been so pleased to be able to add any form of

experiment to their discipline that they have been open-handed, even in a time

of constrained resources for research.


      An example of the failure of deductive economic theory is perhaps the

best-known example of quantitative economics, the setting of prices.  This

supposedly occurs at the intersection of the supply an demand curves, and this

``theorem'' is the nearest we come to something like the Law of Universal

Gravitation.  It would be magnificent if knowledge of these two curves would

lead us to learn what the price should be, but that does not happen.  Instead of

having the known shed light on the unknown, what we know are the actual prices;

the curves are conjectured based on these, and the conjectures, where they are

made, are often wrong.  So the theory is based again, in true Aristotelian

style, on it own plausibility. And plausibility, as von Neumann well knew, is

often a hiding place for error.


      The weakness in mathematical economics lies not in the analysis of the

models, which is excellent, but in the nature of the models themselves.  They

are full of ``simplifying assumptions'', without which analysis would be

swamped by cataracts of details.  A parody of this is the supposed economist who

starts his analysis with the simplification that all people are spherical.  The

consequences of such an assumption (as in calculations concerning dispersal of

bodily heat) might be interesting, but must eventually be connected with the

test of reality.  Since we have good reason to believe that economic reality is

chaotic, in the technical sense, that is, that large changes in outcome can be

generated by small differences in initial conditions, we must be skeptical of

placing too much reliance on the results of the calculations.


      A parable which is appealed to by both sides of this argument is that of

the drunk searching for his lost key under the street light.  When asked, he

says that he actually lost the key in the next block, but that the light there

is too poor to find anything.  Looking under the lamp might turn up something

of value, but it is highly unlikely to open his door.  We should always look

where there is some light, and value whatever we find, but it is a chutzpah to

allege that it is what we were seeking unless we have good evidence for that,

especially where the lives and welfare of people are involved.


      One of the seamier aspects of this particular hubris of the mathematical

economists is their evident contempt for the practitioners of the other social

sciences.  Sociology, Politics, Anthropology and History are dismissed as ``mere

journalism'', and those economists, like Galbraith, who mix their quantitative

analyses with concern over social problems are scorned as ``unscientific''.

Thus, the same people who chafe under the unwillingness of physicists and

chemists to recognize them as equals are also the practitioners of their own

brand of snobbism. 


      If I illustrate how a support of the economic theories of, e.g., Milton

Friedman and Jeffrey Sachs enhance the finances of those who do it, I am sure

they will allege that I am overstepping the bounds of credibility.  Yet how

should we measure the protestations of those whose message in the classroom is

that only self-interest is a reliable guide to people's behavior and that the

claims of those who would rely on altruism as a motivation in economic life are

childishly naive?  Public spirit, they tell us, can never stand up to the profit

motive in determining what people will do.  Perhaps the same is true of what

people say?  Even economists?


      As a result of the demand for business-school graduates by employers,

and of classically-trained economics majors by the business schools, there has

been the kind of demand by universities for economists which parallels the

need for mathematicians and physicists during the years when the national task

was to get Neil Armstrong to the Moon and back.  It is not desired that those

economists teach that the ``automatic'' operation of the economy by the unseen

hand of the market produced escalating disasters during the century (roughly

from 1830 -1930) when it was free to work its supposed magic.  The business

cycle is still taught as a mystery, and today's students are not introduced to

the analysis of Marx.  This is because the official position in our colleges,

as in our newspapers, is that the validity of Marx's analysis of capitalism is

somehow rendered false by the corruption which has always existed in Russia and

was not ended by the Bolshevik regime.  [We can read all about it in Tolstoy,

Gogol, Chekhov, and Gorki.]  Our economists lay claim to the status of

scientists, but are apparently immune to the evidence of experiment.  The legacy

of unplanned capitalism produced the Great Depression, which was the greatest

worldwide economic disaster since the Year Without A Summer.  This last was a

natural disaster, not amenable to human correction.  But economic planning, when

not distorted by greed, has for the most part succeeded in averting another

Great Depression.  Now, however, large numbers of economists, marching in the

army of Milton Friedman and his acolytes, tell us that Adam Smith was right,

and that the key to prosperity lies in restoring the economic conditions of

Victorian England.  Dickens tells us otherwise.


      Let me say that it is true that the 19th Century was a period of great

economic growth, but I attribute that to the growth of knowledge, and not to the

magic of the market.  Indeed, the market was an impediment to growth, and only

on the most outrageous terms was invention to find investment there.  Even when

Edison had already established a reputation as a genius, he could only get

financial support for electric lighting by turning over to J. P. Morgan and his

junior partners the vast majority of ownership and control in the Edison General

Electric Corporation, and after it was successful, the jackals managed to do him

out of his share in it.  But the advance of knowledge was so great that not even

the excesses of capitalist greed were able to hinder its bounty, up until the

Great Crash.  And it must be said that the New Regime of the capitalists in the

19th Century was more efficient than the Old Regime of the 18th.  But the

half century of prosperity since 1945 has been heavily dependent on central

planning.  Even the Friedmanites say that some nationwide planning is necessary,

but they allege that all we need can be had in manipulation of the interest

rates.  Again, experiment has proven them wrong, but the belief sustains itself

on the basis of mere argument.  The official line in the economics departments

is that it was the Free Market which produced the wonders, and it was government

which was the impediment.  For this, they have no evidence, except insofar as

government has been permeable to the corrupt demands for unwarranted favor from

powerful agents of well-heeled interests.


      In contradistinction to the experience of panics and collapses of the

unregulated market, we have the 250-year-old theory of market economics, a

theory which is plainly inapplicable to a world in which gigantic corporations

do indeed plan the economy, and plan it to their own best interests.  There

is nothing in Adam Smith which supports the belief that this, too, will be for

the best of everybody.  But it is taught that way because it suits the needs

of those who use our complaisance to maximize their profits.  And a diligent

attention to the equations by those who proclaim (and hope) that they describe

the Economy will yield a comfortable living to most, and the honor of an

imitation Nobel Prize to the leaders of the pack.


      As illustration of the deleterious effect of the ``free'' market on the

advance of knowledge and invention, I offer two instances I know of.  The first

is Brunel and the Great Western Railway in Britain.  He correctly observed that

the gauge of British trains (about 4' 8", inherited from the Roman chariots) was

inferior in terms of passenger comfort and safety at high speed to a much wider

one.  The Great Western gauge was just over 7' .  The trains ran better and

safer, but the political and economic power of the established railroad

companies defeated him.  He was forced to accept their obsolete standard, and

the investment in superior technology was not made.  Today, Britain still runs

on the gauge which was obsolete over a century ago, and it continues to hamper

the development of adequate rail service there.  In America after 1945, the

Tucker Motor Car was a substantial technological advance over what was being

offered by the established companies.  As with the railroads in the previous

example, those companies were able to use their economic and political power to

drive their superior competitor out of business.


      As an outstanding example of the complicity of the economists in the

misinformation of the voting public, let me remind the reader of a laughable

incident which goes by the name of the Laffer Curve.  During the presidential

campaign of 1980, Arthur Laffer, an economist, observed to Ronald Reagan that

the amount of income tax the government could expect is a function of the rate

of taxation.  He observed that if the rate were 0\% or 100\%, the revenue was

0 , and between these two, there was a curve (he drew one on a napkin) showing

the amount of tax that would be paid.  The curve he drew showed a maximum

below the 50\% rate, and thus he persuaded the anarithmetic Mr. Reagan, who

was more than willing to believe it, that cutting the rate of income tax,

particularly for the rich, would increase the amount of tax collected.  The

whole incident was farcically ridiculous, for anyone with any competence in

economics or even just Calculus, but it was introduced seriously into the

campaign by the seemingly feckless Mr. Reagan.  He even maintained that he would

be able to finance his projected increase in the cost of the armed services out

of the additional revenues the tax cut would produce.  I remember asking some

of my economist friends why it was that this scam, which was uniformly derided

by all mathematicians of my acquaintance, was not publicly denounced by every

economist jealous of his* subject's integrity.  I was then answered that

economics is not an exact science, and that no one could reputably declare that

Laffer was disreputable.  It is not what they say of themselves when they are

today declaring ex cathedra that free trade is the only alternative to poverty

for the advanced nations of the world.


[* See Chapter 6.]


      I call upon my colleagues to think again.  We can plan our economies

better than the invisible hand can do it.  We are not bound by the laws of

nature to a system which wastes so much of our industrial capacity and most of

our labor, which decrees that a minority will work too much and most will not

work at all.  We can devise solutions, and even devise so that most of the

solutions will work.  We need to yoke our intelligences to that task, but we

will not do so while we are ourselves constrained by an ideology which is

tailored to the greed of the rich.


      In the propaganda of this day, we hear that co-operation and public

purpose can only be had at the price of Gulags and Russian-style corruption.

Merely to state it baldly is to expose its falsity.  We can build a

better world, if we set our minds to it.  But the madness of free private

enterprise must be evident as the United States struggles to climb out of a

mini-Depression while the rich grow richer and the working classes slip toward

proletarian misery.  That is the price of our accommodation with those who use

our support of this doctrine to secure public compliance with their projects.





Chapter 23.  Tuberculosis.


      I said in Chapter 1 that I would limit myself to economic matters, and

eschew arguments to externalities.  Yet there are some external considerations

which also reach to economic considerations.  Certainly at least some of the

issues of health are in this category.  One of these is the impending epidemic

of tuberculosis.  This disease, which has haunted the human race from almost as

early as we have bones to examine, is now looming again on the horizon.  Its

reappearance is due to causes which are only partially understood, but we can

make out the shape of a large part.  Some twenty years ago, TB was more or less

considered a conquered disease.  There were antibiotics which would attack the

mycobacterium tuberculosis, the pathogen which produces the illness.  Then, as

time passed, some strains of the mycobacterium began to appear with a degree of

resistance to the drugs then in use.  A therapy was devised which would make use

of a cocktail of what we had, and that worked for a while.  Then came Reagan.


      The parsimonies of the 1980s resulted in a huge increase of the homeless

people who live in our streets, our bus stations, in culverts, under bridges,

in doorways, wherever shelter could be found.  These were the jobless, the drug

addicts, the runaways, but they were augmented by the chronically mentally

ill, who were being turned out of mental hospitals to spare the taxes of the

rich.  It is a constant of history that these undernourished and hypothermic

populations are the ones most vulnerable to TB.  When they showed up at public

hospitals, they were given the most advanced drugs available, and many of them

became walking breeding grounds for resistant strains of the disease.  They

took the drugs, not for the whole six months which was needed, but only until

they felt well enough not to bother any more.  And in many cases, the disease

was still in force, though quiescent, and the partially resistant bugs could

reproduce and mutate further, developing in the direction of drug resistance.


      It is now expected that the process is continuing, that there is no

way within our current legal and governmental structure to hinder it, and that

every destitute patient we treat becomes a potential hothouse for the breeding

of drug-resistant strains of the disease.  I know of no one who thinks it

avoidable.  The rich and the middle classes look the other way, imagining that

this is a problem for Them, for the underclass.  And indeed, that is where it

lodges for the most part, for the nonce.  But the history of the 18th and 19th

centuries tells us that the White Death manages to cross class lines, especially

in an age of public transport, elevators, and crowded streets.  Somehow, like

the Red Death in Poe's story of that name, it creeps into even well-defended

fortresses.  And in addition to the suffering, the cost in dollars will be



      One thing that might have helped to prevent the coming catastrophe would

be if we had understood that the proletarianization of the working classes would

bring back plagues of this kind.  That knowledge was there to be had, if anyone

were interested in knowing it.  It is easy to blame the lack of knowledge on the

incapacities of Ronald Reagan's mind, but he had counselors who were as bright

as anyone had to be to perceive this, and they, like he, were blinded with their

greed.  But in addition to the fragility of the homeless and the mentally ill,

there is also the lack of weaponry on the part of medical science at the time

when subtle intervention was needed.


      Since the discovery of penicillin at midCentury, we have been hunting

in all sorts of places for evidence of new antibiotics.  And we have found many,

but we are not yet in a position to actually manufacture them out of whole

cloth.  As a metaphor, we are in the position of early stone age people who

knew to search for stones of certain shapes and sizes, but had not yet learned

to chip flint to specified useful shapes.  We are still looking to find our

antibiotics.  We do not understand the microbiology of the pathogens, the

physiology of ourselves, or the chemistry of protein synthesis to the point

where we can keep a jump ahead of the germs by creating drugs faster than they

can adapt to them. 


      For the most part (though this is also changing), our political leaders

have been willing to finance research which was directed at particular diseases,

so long as the diseases were at least fairly widespread, the researchers major

figures, and the prospects of early success so apparent that even persons of

average intelligence might understand the benefits to be expected.  But when the

connection between the research and the desired end was problematic, or even not

to be anticipated by the researchers themselves, the fear of disease and death

fell away as a motivation for the appropriation of money for study.  This is

very short-sighted, as we will see in the next chapter.  It is hard to make even

the most esoteric argument that the study of Piers Plowman can have any effect

on the search for a strategy to defeat tuberculosis, but in fact it is only a

few orders of magnitude less likely than some of the bits of knowledge which

have come to have meaning in the struggle against disease and death.


      I think it likely that the increase in the cost of the TB epidemic due

to the parsimony of public funding of research in the past twenty-five years

will exceed many time the cost of the research not done, even the cost of all

the research foregone in this quarter-century.  And that does not even count the

loss in blood and tears.



Chapter 24.  Health.


      The past twenty-five years have seen enormous strides in the field

of health, most especially in its technology.  By this I mean not only such

machinery as CAT scans, heart-lung machines, and pacemakers, but also advanced

procedures like transplants, angioplasties, and lithotripsy, and thousands

of new drugs.  And every time I hear tell of a new wonder, I seethe over my

perception that there could have been more, if only the knowledge machine had

not been throttled back after Apollo XI.  Of course, it is not possible to know

what specifically would have been learned.  To know that is to know what is

true already.  To say that we are seeking a cure for cancer is merely a cliche,

while the conjecture that a specific gene will produce a protein that will shut

down a breast cancer relies on knowledge which is already almost the whole way

to the establishment of the fact.


      In fairness, I must agree that in the case where the road to the full

discovery can be foreseen, the United States and the whole world have in general

been fairly open-handed in appropriating money to attempt to finish the job.  It

is in the cases where knowledge is sought which cannot be foreseen as helpful

that the crunch comes.  There, the pursuit of knowledge for its own sake must be

relied upon to produce results, most of which do not result in economic or even

health gains.  I have a few anecdotes in that direction to make this point.  And

the value of those few cases is so strong that ... .  But I repeat myself.  Let

me tell you the stories.


      In the 1940s, a farmer came to the laboratory of Prof. Karl Paul Link of

the University of Wisconsin.  His cows had been dying of a mysterious malaise,

which no one could diagnose.  It was already conjectured that this syndrome

(which other farmers had also noted) was somehow connected with the use of sweet

clover as part of the silage.  But no one knew how.  Prof. Link took up the

challenge, and discovered that the cows in question had a deficiency in their

blood which impeded the functioning of the clotting mechanism.  Further research

showed that the deleterious effects of the tainted silage could be offset by

feeding the cows a diet rich in Vitamin K.  Case closed.  A boon to the dairy

agriculture sector so vital to the economy of the State of Wisconsin.  But Prof.

Link was a product of the knowledge culture, and he wanted to pursue the matter

and find out what it was in the silage which produced the bleeding.  He isolated

a compound called dicoumerol, and showed that animals which ate it had thin

blood which resisted clotting.  He produced a variant of this material, which

was more reliable and dependable in its effect, and called it Warfarin in honor

of WARF, the Wisconsin Alumni Research Foundation, which sponsored research at

that university, and conjectured that it would be possible, and profitable, to

use it to give sweet clover disease to animal pests.  Under various trade names,

it contributed to the easing of famine in much of the world by reducing the

amount of food lost to vermin, in particular rats and mice.


      However, the story does not end there.  Eventually, medical researchers

decided that perhaps carefully controlled doses of Warfarin could be used

to thin the blood of cardiac patients, especially in the critical six months

following a heart attack or cardiac surgery.  Further testing made this credible

and many people, including two presidents and myself, were eventually to be

given this treatment.  No one can say which of these, or exactly how many, were

saved from death by this therapy.  What is important is that the basic step was

not taken in a hospital laboratory by cardiac researchers, but by a biochemist

following a line of research which would never have been funded by the National

Institutes of Health.


      If the link between biochemistry and medicine is fairly clear, we can

look at the CAT scan and the MRI.  The development of computer technology was

undertaken in connection with rocket flight, both of weapons and the Race to the

Moon.  It was not imagined that a significant outcome of the research would be

the possibility of producing enhanced x-ray pictures by use of what forty years

ago would have been considered unachievable computing feats.  The CAT scan

was a byproduct of the computer which would, in this application alone, have

justified the billions of dollars which that technology cost.  But there is no

way that any medical foundation would have considered the expenditure of even

mere millions in computer research as justified.  It was not thought of as

medical research.


      An even more striking example is to be found in the MRI.  At the end

of the 1930s, Prof. I. I. Rabi of Columbia University came upon a phenomenon

called nuclear magnetic resonance.  Subjecting materials to a strong oscillating

magnetic field would cause them to resonate, and different materials resonated

in different ways.  No one imagined that this could be connected in any way with

medicine or health.  But it was interesting stuff, and its study was pursued,

when time and funding could be found for it.  Those were the days when Physics

was done ``with sealing-wax and string'', as a kind of intellectual enterprise

by the universities.  Nearly half a century later, after the CAT scans had been

made to work by nearly infinite computer effort, a similar technology was able

to separate the tiny resonances of different materials in the same body to

identify what was going on inside an object such as a patient's body.  It was

a blessing which saved untold expenditure in exploratory operations, not to

mention the suffering it averted.  More significantly, it was able to discover

things which no x-ray or operation would have reached, such as the edema in the

marrow of my femur which was causing me pain in my knee.  Such edemas had never

been known of prior to the MRI.  (Unfortunately, it was a newly-discovered

malady for which no treatment had yet been devised and I had to get well on my

own.)  Now I have recently learned that other research in Physics has had a

startling impact on medical technology.  One isotope of Helium has only one

neutron in the nucleus instead of the usual two.  In ordinary helium, the

spins of the neutrons and those of the protons balance, and the material is

magnetically neutral.  But the isotope 3He is capable of being detected, since

nuclear magnetic resonance is based on detecting the effect of reversals of

spin.  To be detected, a body of 3He must have a predominance of one spin

over the other, and this is achieved by a process called ``polarization''.  A

polarized body of 3He can be ``seen'' by the MRI.  This means that a lung which

has a quantity of polarized 3He can be accurately mapped in a way that no x-ray

and no unassisted MRI can accomplish it.  The lung tissue itself is just too

light and sparse to show up with either of those technologies.


      The ability to ``see'' a lung inside an intact body has great possible

implications for the impending TB epidemic.  Its value will be enormous.  Yet no

one in the 1930s, or even the 1960s, would have had the chutzpah to seek funding

for magnetic resonance research from medical sources on that basis.  Even in

the 1980s, research on polarized 3He was not supported on that basis.  But

in those years, the U. S. government was planning to build a superconducting

supercollider (SSC) to investigate properties of matter beyond the reach of the

machinery then available.  Eventually the project was abandoned because its

cost (almost one billion dollars a year for over eleven years) was considered

exorbitant.  Yet it is clear that if it were to contribute in any significant

way to the effort to defeat TB, it would have been a wild bargain.  Was there

any prospect of its doing that?  Not that anyone could foresee, but I have just

showed some wonderful results in the field of health that arose from knowledge

that no one would have thought to be health-related.  And the similarity of

polarized 3He to the kind of research which would have flowed from the SSC is

not a very long stretch for the imagination.


      One can understand how the brand of selfishness which our economists

teach us is the engine of progress might lead our legislators and executives to

eschew the kind of educational effort which would raise more of the underclasses

into highly productive lives.  It is a cloddish and short-sighted policy, but

one which accords easily with ordinary human grossness.  The privileged know

that if they cut the expenditures on public education, their own children will

still go to good private schools and universities, possibly even thereby gaining

an advantage over intelligent poor children who might otherwise outshine them.

And an absence of a national health service will not prevent them from getting

the best medical care to be had in the world, for which they can pay either

directly or through expensive insurances.  But they cannot buy knowledge when

they need it.  It must be bought well in advance.  And that is why they have

always been ready to pay, and pay well, for what they can recognize as medical

research.  But apparently our legislators and presidents, even the smart ones,

are not so smart that they can take the long view on what even medical science

will require from Physics, Chemistry, and Biology, to mention nothing of

Mathematics, Psychology, Sociology, or even Economics.  And to suggest that

there is wisdom to be found in Literature, Music, or Sculpture which will be

significant in relieving the curse of death, disease, and pain is to be classed

as a complete fool.


      So we are stuck, in the field of health, with what a Senator or a

President can foresee, and since even the Physicists and Chemists cannot say

with any degree of certainty what their work will bring forth, we must suffer

the loss of this vital knowledge.  As a very wild guess, I have assumed that the

slow-down of basic research during the past twenty-five years has cost us half

of what we could have produced at full throttle, such as we knew it in the

1960s.  And thus, when I see new things coming forth, my gorge rises and I ask

after the rest of it, the lost knowledge which could already have been saving



      A final note is called for here.  In early 1996, the conservative House

of Representatives actually voted a severe cut in the budget for the National

Institutes of Health as part of their passion for a balanced budget.  They were

so committed to their ideology that they were even, implicitly, willing to lay

down their lives, and the lives of their loved ones for it.  But self-interest

prevailed, within their limited horizons, and direct medical research was

restored.  The deep scholarship and invention which might underpin and

accelerate it, however, was in fact cut.



Chapter 25.  Waste.


      As intelligence, and especially educated intelligence, is our greatest

resource, so its expenditure in directions which are of provably zero or minor

benefit to the human race generally is to be deplored and, where possible,

discouraged. There are several such places.  One of them is in the markets for

commercial assets, particularly stocks, futures, and other place-holders for

economic assets.


      The stock market is an important feature of the system of capital we

rely upon for funding our industries and other enterprises.  It is important

that the holders of these instruments be able to buy and sell them as their

values, realized or anticipated, change.  However, there is no particular value

to the public generally, or even to the market for capital, that it should

be profitable for people to make money on minor fluctuations in the value of

particular shares.  The market for homes, e.g., is in large part dependent on a

certain underlying liquidity, but the fact that it usually takes weeks or months

to sell a house, and that a few percent of the price must be devoted to the

costs of doing it does not materially detract from the value of the home, even

when seen as an investment.  Indeed, if it were so fluid that the market for

homes were to be as volatile as the market for securities, there might well be

fewer people willing to risk the losses in order to obtain housing.


      At the present time, we see a large number of bright young people

who are making a good living in the trading of securities, and an even larger

number who are training for that career.  In a world in which the more

traditional forms of scholarship are offering only very unreliable careers,

the demand for training in these specialties is overwhelming the universities.

At the same time, the amount of mathematical talent which is being devoted

to the science of portfolio management is prodigious.  Much of this work is

addressed to the question of realizing quick gains from small fluctuations

in the prices of specific stocks, rather than canny estimates of the long-run

prospects of particular issues.  Indeed, if there is one word which increasingly

describes the sickness of western capitalism, it is ``short-run''.


      A tax of a few percent on all transactions in securities, including

all contracts for future purchase and sale which rely on the courts for their

enforcement, would greatly slow down the velocity of trading, and especially

that trading which is predicated upon small fluctuations in prices.  Recent

trading in the stock markets of the world is far more volatile than any basic

appraisal of long-term outlook would warrant.  Large moves in prices based on

estimates of changes in the prime interest rates of a fraction of 1 \% are an

extreme case.  The same comments apply somewhat less to the market in bonds,

but more to the market in commodities futures.


      A more sober market, less attractive for gambling, would be more useful

in promoting the productive functions which are always adduced for maintaining

a free market in securities.  Of course, the volume of trading would diminish

greatly, stocks would cease to be a place for holding money in the short run,

and the need for talented and well-educated people in what amounts to a huge

gaming house would be lessened.  It might be argued that the loss of this

non-productive labor would exacerbate the slackness of the employment situation,

but it should not be beyond the ingenuity of such a creative people as ourselves

to find a way for these talented workers to be paid for doing something of

genuine value.


      In the same way, there are problems being solved in our courts which

should and could be settled in other, more productive, ways. An example is the

burden of litigation which has overtaken the system of worker's compensation, a

system which was explicitly designed to overtake the lawsuits which bloomed once

the courts decided that employers were indeed liable for accidents on the job

which were due to the negligence of (among other things) the slackness of fellow

workers.  Now, in recent times, the question of what injuries are work-related

is eating up the benefit gained.  I have suggested to union people and to labor

lawyers that a system which would extend accident coverage to workers when they

were not on the job would save those costs to be distributed between labor

and capital.  The benefit would have a value to the workers which would be

beyond the saving to the employer, and the difference would be available for

distribution between them.  In many industries, the additional premium would be

zero, according to my sources.  But the biggest saving would be in the use of

intelligent, educated people who are working at doing a job whose value is less

than zero.  A similar comment applies to medical malpractice.  If all persons

who were made sicker or more disabled by medical treatment could be compensated

without fault and within limited constraints (e.g. medical expenses and loss of

earnings up to a stipulated limit), it would cost somewhat more in total outlay,

but it would also pay something to the vast majority of those injured, who

never claim for damages.  A specified legal definition of the value of a life,

an eye, a limb, etc., as we do in death and dismemberment insurance, would

obviate the need for high-priced lawyers to emote in front of juries.  Those

whose lives or body parts were more valuable than that would need to bear the

cost of obtaining their own insurance, as is often the case (e.g. the hands of

successful musicians).


      But these examples are as nothing compared to the cases in which people

do work which is genuinely antisocial, as in the advertising of tobacco products

or the obfuscating of the cost of consumer credit, or the managing of assets

to produce not a productive profit but a tax advantage.  Cases abound in which

the purchase of certain assets produces more tax relief in the first year

alone than the cost of the asset.  This is misdescribed as accounting, but

a huge proportion of our CPAs are engaged in this kind of tax fiddling.  The

restructuring of our tax laws to salvage the intelligence of our people could

add to the profits to the human race of more innovation and creativity.


      However, if the effect of changing these practices were merely to add

the intelligent to the rolls of the unemployed, that would hardly be a benefit.

As labor is only saved if useful employment can be found, so is it true for

the minds liberated by simplifying our world.  How shall we weigh the value of

a person investigating even an obscure and esoteric iota of knowledge compared

with his* expending that time and effort on reacting to the effect on the stock

market of a .25% decrease in the prime interest rate?  For me, the answer is



[* See Chapter 6.]


      In his 1963 book, THE PAPER ECONOMY, David T. Bazelon argued that we

are deceived in equating the economy of goods and services with the economy

of paper.  By goods and services he includes automobiles, restaurant dinners,

haircuts, medical attention, etc..  By paper, he includes currency, checks,

deeds, stocks, bonds, leases, bank accounts, etc..  The existence of the paper

economy is justified as a necessary control mechanism for the economy of goods

and services.  However, he argues that the needs of paper have become over-

reaching, and are distorting the best use of the resources which should be put

to the more central concern.  In sum, he concludes that the paper economy is

parasitic and insufficiently productive for the resources of time and money

which it now consumes.  To this comment, I add that the overuse of the limited

endowment of intelligence and education by this economy is even more wasteful.

Given the amount of money which is involved, and the riches to be drawn from

basically unproductive profit-seeking from episodic volatility, only a

taxing of the enterprise can restrain it within reasonable bounds.  A similar

argument applies to the other wasteful abuses of this resource.



Chapter 26. The common.


      The concept of public domain, like that of common property, is one which

needs investigation here.  Who owns the common?  In one formulation, it consists

of things which are free for the taking, by whoever has the means of taking.  In

another, it belongs to all, and all are entitled to a share of the bounty which

may flow from its use.  Thus, it is not generally held that one is entitled to

fence in public land and build a house upon it, except in special circumstances,

like those created by the Homestead Act.  On the other hand, it appears that

one may freely publish editions of e.g. Tom Sawyer without paying royalties to

anyone.  There have been frequent examples of people who have grown remarkably

rich by finding a use, legal, semi-legal, or illegal, of what is in effect the

people's property.  An early case involves the enclosure of the village commons

and the impoverishment of the peasantry.  In more modern times, the railroads

were ceded huge tracts of land in the American West, ostensibly because it

was the only way to get them to lay track there.  In more recent times, the

federal government took possession of the airwaves on behalf of the People, and

proceeded to give the radio and television licenses away to people who became

very wealthy by using the People's property, without paying for it.


      However, these examples pale by comparison with the appropriation of

our common knowledge by people who have made small advances in it, patented the

result, and charged us for the use of products whose major component was the

knowledge which rightfully belongs to all of us.  Quite an extreme case is to

be found in the work of George Washington Carver.   Whom are we to consider

the more legitimate heirs and beneficiaries of Carver's accomplishments, the

American underclass or the Archer-Daniels-Midland Corporation?  I think there

is no doubt about which of these would be named if Carver were alive to say. 

But he is not, and his work lies in the public domain.  Similar comments apply

to the works of most of those who have pushed forward the boundaries of human

knowledge.  (See the next two chapters.)


      It is, however, very difficult to assign the proportion of each person's

income which arises from use of the public domain.  However, if we consider that

the public domain is the public's property, then a stiff income tax of, say,

50 % or 60 % is likely a gross underestimate in most cases.  Even for those

who do not use the knowledge directly, they are likely feeding off the

prosperity occasioned in others by _their_ use of it.  (I am thinking of such

persons as entertainers, realtors, and tennis instructors.)  For the few people

who are genuinely unconnected with the common knowledge in any way, even not

relying on their own literacy or health, I could only say that every scheme for

taxation carries an irreducible residue of injustice, but that this one would

likely be minimal.  In addition, there is the matter of risk, which we deal with

in Chapter 31.  This puts the issue of payment of income tax not on the question

of who can afford it, but who owes it as a matter of paying for the materials

out of which their financial success has been created.  In this, it is an heir

to the legacy of Henry George's single tax on the value that nearby inhabitants

create in land, and which the landowner owes to the polity.  The tax becomes

a restoration of (in this case, part of) the value the successful person derives

from that which the whole of humanity properly owns.


      Of course, those who succeed would prefer to keep the knowledge they use

without paying for it.  It has been the custom in the past, and is a corollary

of the general principle that might makes right.  But this formulation is a

protest against that principle, and a reclaiming by the whole of the People of

the knowledge which they not only own by legacy from the past, but which they

are actually paying for in the present and would pay more willingly in the

future if they were assured that they would share more substantially in the






Chapter 27.  Amateurs and professionals.


      Prior to the 19th century, the vast bulk of advance of knowledge was

attributable to amateurs, people who made their livings at other things and

dabbled in science or art or scholarship as a sideline, an avocation.  In

many cases, they were independently wealthy or had the sponsorship of wealthy

patrons.  Sometimes the sponsorship was in the form of prizes offered by

governments for inventions of special value, such as those offered by the

British navy for a shipboard chronometer, or by Napoleon's army for the

preservation of provisions, which led to canning.  But most such advances

were undertaken for the pure satisfaction of personal interest.  The results

were not, in general, patented but flowed immediately into the public domain.

We owe a great debt to those amateurs.  Their bounty has been included in many

of the inventions and advances we see today, though the level of participation

of amateurs is now much reduced.


      Beginning roughly in the 19th century, we began to see two major kinds

of professionals.  The first was the independent inventor or artist, who made

a living from the sale of his* product in one way or another, as by patenting

and producing a machine or by publishing a symphony or selling a painting. 

The second was the hireling.  This was a person hired to produce material of

value to someone else.  A minor example of this was the professional academic,

someone who actually made a living as a teacher but was also an innovator and

creator.  This professional was also something of an amateur, as the rewards

for publication were rather insignificant until the 20th century.


[* See Chapter 6.]


      In this century, there began to be major underwriting of scientific,

cultural, medical, and artistic efforts by various agencies, but it was not

until the Second World War that we see really massive investments in knowledge,

mostly investments in military technology culminating in the atomic bomb and

the vengeance rockets.  Since that war, there has been a sustained effort in

arms research of various kinds, but also a great deal more effort on the

civilian side, even including the Moon Project, which was only semi-civilian.


      We now raise the question of what was the public attitude toward the

accumulation of knowledge during these two periods in our recent history. The

first made people feel that knowledge was something that just happened, that it

``falleth as the gentle rain from heaven''.  The second was even more pernicious

as it made people feel that knowledge was private property, and would accrue

to the common only when most of its value had been used up.  Both views were

unreasonable, but understandable in the light of the times.  The view that the

work was on behalf of humankind in general would have been thought vainglorious

for the amateurs and hypocritical for the professionals.  Yet the amateurs can

be thought of as working on behalf of the human race generally, as can the

institutions, charities, universities, and foundations which have funded so

much of the advance by professionals in recent years.


      The most reasonable view of the Knowledge Business today is that it is

properly a public enterprise, to be pursued by professionals on behalf of the

People and at public expense, at reasonable compensation and at the greatest

pace which the endowment of intelligence will make possible.  The fruits of

this endeavor should then return in major part to the People who have made it

possible.  This must include those who did not actually participate in the new

discoveries, but who, through their taxes and other support, contribute to the

outcome.  And what of the fruits of the work of yesterday?


      As I mentioned in the previous chapter, I am laying claim, on behalf of

the People, to the rights of all the work which is attributable to the amateurs.

There is no indication, in most cases, that they intended the benefits to accrue

to any but the public generally, and not in particular to whosoever should

grab up pieces of the common patrimony.  Even in those cases where particular

beneficiaries were intended, the rights have, in most cases, now passed to the

human race in general.  As I noted, the reasonable way of collecting on this

ownership is by a substantial tax on all large incomes, which in almost every

case would be less than the public investment in the mechanism which produced

the wealth.


      The case of the professionals is rather more complicated.  Many of these

did indeed patent their inventions, and many of the patents are still in force.

Still, essentially all of these patents represent only small advances on the

vast body of knowledge which make them possible, which knowledge in itself

is public in nature.  Most of our scientists and engineers have, in addition,

been educated partly or wholly at the expense of others than their families or

direct patrons.  Scholarships at elite schools were not established for their

individual benefits, and education at the public schools was also for the

benefit of the whole of the human race, or at least of the nation or state which

paid for it.


      But there is a subtlety in the case of the professionals.  For many

of them, and in particular for many of the best, a large part of the reward

for the work they have done has been the joy and the opportunity of doing it. 

And this now leads into another subtlety.  The door to participation in this

business has not always been open to all, and is still not.  In addition to the

restraint of affordability, there have been other restrictions of class, race,

gender, etc., and also of politics.  During the period when I was in college,

the United States was under the influence of rabid antiCommunists like Senator

Joseph McCarthy of Wisconsin.  In the face of the hysteria and the perceived

threat of Soviet Communism, many career opportunities were closed to anyone of

suspicious political coloration.  I remember that in the late 1940s, I asked

one of my college classmates whether he would sign a petition.  It had nothing

to do with global geopolitics, but was probably something like a request for

a federal anti-lynching law.  He replied that as a prospective Physics graduate

student, he would not sign any petition for anything, as he hoped soon to

qualify for a graduate fellowship funded by the Atomic Energy Commission, and

those required security clearance.  It was the general wisdom at that time

that signing any petition for anything was presumptively subversive behavior,

and especially for anything favored by left-wing opinion.  (Such matters were

routinely excoriated as ``Communist-inspired'' by those who opposed them.) 

I did not press him on the issue.  I understood that anything which acted to

stand between a budding scientist and his science would have entailed a great



      At that time, access to many of the career paths in Science, or even

in education generally, were closed to those who were (or were imagined to be)

of left-wing political persuasion.  Inclusion in the profession and access to

its machinery were reserved for those who were PR (Politically Right).  So a

great price was extracted from those who laid down their ethical principles

to reserve the option of becoming scholars in certain fields or at certain



      At the same time, a mystical mood was growing among academics, partly

as an antidote to the imposition of Political Rightness.  The Subject became

an idol.  The service of Mathematics, or Music, or Economics was seen as an

absolute.  I remember particularly a very prominent mathematician who was deeply

committed to the cause of saving Soviet Jewish scientists from the oppression of

antiSemitic feeling which was running rife in the USSR in the late 1970s. 

After my visit to Moscow and Leningrad on behalf of the committee in which he

was active, I advocated that a journal which had a policy of excluding Jewish

authors be denied the support which it obtained from being translated and

disseminated by the American Mathematical Society.  That was too much for him,

and the conflict between his concern for the Soviet Jews and his veneration of

Mathematics was resolved in favor of the latter.  He opposed (successfully) the

proposal I had made.  The Society continued to publish the antiSemitic journal,

and even paid them handsomely for the privilege.


      To continue the status of professional for the practitioners of the arts

of knowledge-accumulation while freeing the product for use by the whole of the

human race, we must be prepared to support the professionals who have become the

more or less sole suppliers of this esoteric product.  In exchange, the People

should take, as our legitimate dividend, a large portion of the wealth which the

product generates.  I will take that up later, in Chapter 31 on Risk.






Chapter 28.  The dark side of the force


      The accumulation of knowledge is not without its dangers and its faults,

leading (among other things) to the Luddite rebellions we take up in the next

chapter.  For the benefit of those who deny the significance of these dangers, I

will take a chapter to mention some of the major ones which come to mind.  It is

especially significant that the power conferred by knowledge makes the misuse of

office by the government even more significant, but the problem does not even

end with government.  There are other powerful malefactors.


      A very important category of scientific abuse revolves around the issue

of nuclear weapons and the ancillary question of nuclear energy.  In recent

years, we have seen some second-guessing about the decision to build an atomic

bomb during the Second World War.  It is an interesting question, but not the

one I want to take up here.  But the bomb did open a wound in the fragile

fabric of civilization, and that wound may never heal.  Certainly it shows no

sign of healing yet.  After the defeat of Japan, the temptation to the United

States to continue as Boss Nation by virtue of having the super-weapon proved

insuperable.  Even so famous a thinker as Bertrand Russell, later to gain repute

as a partisan of peace, advocated using the threat of preventative nuclear war

as a way of forcing upon the Soviet Union a mode and degree of disarmament

satisfactory to the Western powers.  ``Absolute power corrupts absolutely.''

(Acton)  When the Russians failed to fall in line with the Baruch Plan of the

Truman administration, further research was pursued by the United States to

create the hydrogen bomb.  This required a vastly expanded program of testing of

nuclear weapons, mostly in Nevada, with special care taken that the fallout of

fission products drift to the Northeast, away from Los Angeles.  A decision was

taken in Washington to sacrifice the ``downwinders'' (as they would later be

called), the people living in Nevada and Utah upon whom the deadly rain would

fall.  In reply to the protesters who claimed that this was happening, the

government not only lodged denials backed by the full credibility of the United

States, but also recruited scientists to swear to the lies.  And to sustain the

untruths in the minds of the people, they required the scientists to lay on the

line the full credibility inherent in the priestly character in which Science

had been wrapped since the late 19th century.  The denials issued by such major

figures as Edward Teller, John von Neumann, and E. O. Lawrence were only just

not made wearing the white laboratory coat which had become almost a priestly

robe in the minds of a credulous populace.


      At the same time that the innocent and unsuspecting downwinders were

being subjected to nuclear fallout, patients in various hospitals were being

secretly subjected without their consent to large doses of radiation from

radioactive materials being injected into their bodies or from x-ray machines.

Again, the scientists involved were government employees prostituting

their professional responsibility in order to serve the power needs of the

politicians.  Even today when the truth is finally coming to light half a

century later, some of these doctors are continuing to deny the truth of the

crimes they committed on the orders of the American government.  The same

applies to all sorts of outrages committed in the service of nuclear armaments.


      One of the programs undertaken to endear the horrid atom to the skittish

public was the promise of nuclear energy.  It would be, we were told, ``too

cheap to be worth metering''.  Those who said that it would turn out to be the

most expensive energy the world has ever seen, if all the costs were taken

into account, have proven right, and the potential costs of accidents and

decommissioning of the plants are a large multiple of the value of the energy

produced.  Nonetheless, it was a seductive prospect.  Physics came to be viewed

as a technology which would generate infinite wealth, and the physicists became

a very well-rewarded group of scientists.  Even today, they continue to claim,

as a kind of recitation of allegiance to their Subject, that a perfectly safe

and economical nuclear power plant can be built and run, basically the same

story they have been telling us for the past fifty years.  This is not the place

to plumb in detail the merits of the claim.  I rest the rebuttal here simply on

the well-known fact that if such a plant were required to buy insurance against

all possible catastrophes from a financially responsible private source, not a

single one would ever again be built.


      The important issue here is not the settling of this debate, but the

way in which the social pressures of the particular science obtain a degree of

conformity to a public stance which benefits the practitioners regardless of

the interests of the human race which they claim to serve.  It is, of course,

completely in accord with the ways in which people are supposed to act under

capitalism.  One acts to advance one's own interests, and all is said to be for

the best in this most possible of all possible worlds.  But when these people,

in their own best interest, call down the credit which the People have learned

to place in Science for the advancement of their own work, they commit a foul

and place in jeopardy the credit of the human race's most precious resource,

the store of knowledge on which we all depend.


      In the late 1960s, the resistance to the war in Vietnam caused many of

the students on American campuses to carry their protests to any manifestations

of US authority which were at hand, particularly any which were in any way

connected with the Pentagon.  Among the most visible of these were the various

research projects scattered at universities everywhere by the Department of

Defense.  The scientists reacted badly to this attack on their means of funding

that which had become for many the most meaningful aspect of their lives, and

they sought and received the aid of the bulk of the scientific community. 

It became a cliche of the anti-war movement that Science was a corrupt

enterprise and that no person of conscience would sully himself* by inclusion

in it or co-operation with its aims.  If its sanctity had been overblown and

vainglorious up to that time, its fall from grace in that period was equally



[* See Chapter 6.]


      One of the most prominent expressions of Pentagon science on a

university campus was the U. S. Army Mathematics Research Center on the campus

of the University of Wisconsin.  It was well known before the war in Vietnam

became a major issue that there was secret work being done there for the Army.

The building had been operated under conditions of severe security, and the

exterior proudly displayed the Army's seal.  It was to become a symbol of the

war, located right in the middle of the University.  It became even more of a

target than the Reserve Officers' Training Corps (ROTC).  The mathematicians,

experiencing an era of prosperity previously unknown in all human history,

rallied round the Center for the most part.  And yet, there was a substantial

and growing group who were against the War, and wanted the world to know that

war was not a project of our profession, prosperity notwithstanding.  I for

one was eager to conduct a poll of the American Mathematical Society for the

purpose of demonstrating to an impressionable cohort of university students

that Mathematics was not a world-destroying enterprise in the pay of the

war-mongers.  I carried my fight to the membership meeting in January 1971,

but lost there by a narrow margin.


      Another outstanding example of the misuse of the prestige of Science

was an agricultural chemist at the University of Wisconsin who continued through

the 1960s and 1970s to maintain that DDT was harmless to birds and mammals.  He

often gave talks on campus to whoever would listen, which one afternoon was the

Wednesday noon lecture series of the Mathematics Department.  In that talk, he

went so far as to stir into a glass of water a large dollop of what he said was

DDT and proceed to drink it.  I have no idea of whether any of his own work was

funded by the chemical industry, but he was probably reflecting the viewpoint

of his colleagues in the College of Agriculture.  I do not know what ultimately

became of him, but the intervening years have certainly left his position



      If government and universities were often corrupt, it seems that

industry was corrupt almost full-time.  One of the career strategies for bio-

chemists was employment by the cigarette companies or the Tobacco Institute.

They were hired as a public-relations stratagem to help dispel the public

perception that smoking was leading large numbers of people to early and painful

deaths.  Some of these chemists were told outright that their work was to obtain

data indicating the harmlessness of cigarettes or discrediting the work of those

who were proving the opposite.  Others were hired under the ruse that they were

to produce a safer cigarette, and left when they understood that that was not

their true function.  In the meantime, all these scientists served as cover for

a campaign of lies, designed to use the prestige of Science to help keep people

enslaved to their deadly addiction.  Their work did not escape the attention of

those who have come to the conclusion that knowledge is dangerous and that we

should seek the shelter of ignorance to protect ourselves and our loved ones,

not to mention the persistence of life on Earth.


      And finally, I must repeat my example of the economists, who have made

a consensus around the view of economic reality most agreeable to the wealthy

industrial and financial interests who hold the key to both a growth in prestige

and a comfortable living.  The attempt to raise the level of credibility of

their work affords them a chance to bask in the glow of glory reflected from

intellectual giants like Newton and Einstein and also gives to the promoters of

the Global Economy (with its attendant corollary of exoslavery, as noted in

Chapter 20 on Greed) the aura of inescapable fact, a perception which

helps to avoid any restrictions which responsible national authorities might

impose.  This point of view is so generally held by the dominant forces of that

profession that it is taught as fact in the basic courses, rather like the Law

of Universal Gravitation, and those economists who dispute this orthodoxy are

for the most part treated as idiots, if not traitors.  The story about the

rising tide raising all boats is repeated as though it were known to be true,

which it clearly is not.  (And, as we will see below in Chapter 33 on College,

is not promoted in the circumstances where it is true.)


      It is bad enough that in all these cases, scientists and economists are

selling the public on falsehoods which they have enough background to be able to

see as false if they were not blinded by the official wisdom of the discipline

to which they owe their allegiance.  It is much worse that they bring the honor

and the reputed integrity of those disciplines in the service of these untruths,

so that the public which sees through the deception also learns to distrust the

practitioners of the Knowledge Business, lumping them with other self-seeking

(not to say corrupt) chasers after private gain at public cost.  These

researchers sully the name of Progress (see Chapter 30) and open the door to

often well-meaning but misled Luddites, of which more in the next chapter.



Chapter 29.  The Luddites


      For many reasons, some of which can be found in the previous chapter and

the succeeding one, there are many people who are so oppressed by the negative

features of the knowledge business that they are seduced by the vision of a

simpler and purer time and life.  Some are stigmatized as Luddites, including

both those who have committed or advocated acts of violence and those who have

expressed any degree of sympathy with them.  Yet the assault on the Luddites

is excessive, as is the ideology of the Luddites themselves.  The matter needs

a more subtle analysis.


      The Luddites take their name from Ned Lud, a worker in the late 18th

century who broke up some of the stocking frames which were destroying the

possibility of employment for himself and others.  In the early 19th century,

under the impetus of increasing mechanization of the textile industry, other

workers took to attacking factories and wrecking the new machines.  In our

histories, we read about them solely as ``enemies of progress'', with almost

no attention being paid to the devastating circumstances driving them to

their desperate responses.  In this, we see a triumph of the ideology of the

investing classes to the almost total negation of the needs of working people.


      The description of the plight of these workers in the literature of the

time pays essentially no attention to them as human beings.  There is almost

no concern expressed for the fact that they were being essentially condemned

to death.  Later analyses would focus on the need for progress, as though the

replacement of human labor by machines was an automatic good.  There is talk

of the long-term benefit to the People generally, and of course the rhetorical

cliche about the rising tide raising all boats.  But in fact, those workers'

boats were being sunk and we might well have seen an entirely different

analysis if the victims of the ``progress'' had been people whom the prevailing

ethos had defined as worthy of protection.  I have mentioned above the way

in which the ruling classes rallied to protect the owners of poorly-designed

railroads against the costs of adapting to Brunel's superior technology, an

unadaptive stratagem which hobbles British and American railroads even unto

the present day.


      In fact, the 18th and 19th centuries were a time of labor surplus,

in which the workers being dispossessed of their employment could only find

substitute employment by displacing other workers, so that the total of the

effect of their loss of work was to add that number to the unemployed, and to

further empower the employers who were profiting from Ricardo's Iron Law of

Wages.  (See Appendix B.)  And we see a repetition of that situation today, when

the reduction of the labor force does not release labor for other employment but

merely adds to the army of the unemployed and the supply of cheap, desperate

workers competing for manifestly unsatisfactory jobs creeping ever closer to

the level of bare subsistence.


      Viewed from a macroeconomic perspective, we can compare the situation

in which a machine replaces the work of, say, ten people.  If the machine works

and the people are unemployed, they become a problem in society.  In many cases,

their families suffer, their marriages might deteriorate, their children might

become troubled, and they themselves might sink into hopelessness, homelessness,

alcoholism or other drug addiction, mental illness, vandalism, crime, or

suicide.  In addition (and this is new), they might turn to the antisocial

organizations, like the ``militias'' which have sprung up in this time of

trouble, which blame their problems on other members of the working classes and

on a supposedly tyrannical government, and which represent a threat to the very

basis of our civil society.  By comparison, if it is the machine that is idled,

that is something that machines do very well.  Indeed, the machine would most

likely be idled by not being built, but even if built it might be like the

automatic cotton-pickers in the 1930s, which were suppressed for socially

necessary reasons.  The one fly in this ointment is the additional profit lost

by the employer who could reduce his* labor costs by the replacement of human

effort by the machine.  We hear very little comment to the effect that his*

insistence on his* profit is destructive of progress, or of the rising tide

that raises all the boats.


[* See Chapter 6.]


      In the macroeconomic sense, we can only call machinery labor-saving if

it frees time and effort for some useful application, such as the production of

something else or the expansion of leisure.  In saying this, we must be clear

that unemployment is not leisure, but in general merely idleness.  Thus, the

machines against which the original Luddites rebelled were in essence labor-

wasting technology.  But the bias in favor of having work done by machine is

very deeply ingrained in our technology-loving culture, and I myself have said

that it is beneath the dignity of a human being to do work that a machine could

accomplish.  But there are limits, and the degradation of long-term unemployment

(not to speak of permanent) is even greater.  An example can be found in a

conversation I had some years ago with a close friend, a professor of Chemical

Engineering.  We were discussing the problem of recycling garbage, and I spoke

of the fact that people of very few skills, and even of substantially sub-normal

intelligence, could easily muster the resources to distinguish among wood,

paper, glass, and metal, or among the various colors of glass, or the different

metals.  He noted that there were machines being designed that could do that job

almost as well as a mentally-impaired human being.  I countered that the person

I had described would likely then go unemployed, and that the use of that

person in a valuable job would not only add dignity and fulfillment to his*

life but would actually be highly economic in that the we would have to support

him* in any case and that this way at least his* labor would not be totally



      The efforts of the Luddites were in any case misdirected, in that they

addressed the machines rather than Society's way of dealing with them, almost

as though we were to attempt to deal with the problem of lynching by outlawing

rope.  Of course, at the time working-class consciousness was in its infancy and

no one was speaking of the rights of the common people, with the exception of

such visionaries as Thomas Paine.  In the meantime, we have seen the appearance

of Karl Marx and the aberrant misapplication of his theories in Soviet Russia,

together with a reaction which condemns all working-class consciousness as

an attempt to impose an oppressive police state on what would otherwise be a

libertarian paradise.  And still we must find a way to accommodate the basically

valid protestations of the Luddites (and their philosophical heirs in the

present day) within a pattern of genuine progress which is not based on the

dehumanization of some people to advance the profits of others.


      In this age, we have seen a man, designated as the Unabomber, who has

attacked the mechanicians rather than the machines, the technologists rather

than the technology.  The failure in that is not only that it is an inhuman

way of dealing with the problem (which it is), but that it is unavailing and

unproductive.  That is, it is a failed mechanism of protest.  It does not even

garner sympathetic attention to the problem(s) it seeks to correct.  Instead of

seeking ways to direct the stream of knowledge in ways which will benefit all,

and thus genuinely raise all the boats, Luddites of this persuasion seek to stop

the juggernaut, and crash against the rocks of public indifference when they

are denounced as the enemies of progress.  We need instead to look for a form

of progress which is genuinely progressive, and not predatory.  That is the

business of the next chapter.


      But I must not forget to raise another issue which is very important in

the creed of many neoLuddites, and which emerged in some commentaries on the

very Unabomber mentioned above.  It concerns the despoliation of the planet by a

human race whose fertility and resistance to disease have been enhanced by the

workings of medical science, a planet whose resources have been raped by the

depredations of industry.  Whatever be the other considerations, it is clear

that by the time our race had invented agriculture (and even earlier, according

to some commentators), its population was destined to expand to the limit the

Earth could bear, and even beyond.  During all that time, and even now in less

educated places, this process continues.  The goatherds who travel along the

Southern edges of the Sahara Desert, extending its reach by some forty yards

with each visit, are not the products of the machine age.  The despoliation of

the slopes of the Himalayas in Nepal or of the plains of Ethiopia is not the

work of multinational corporations, but of simple people who cannot afford even

the cost of considering the next year's crop while struggling to survive until

then.  However, it is true that the rate of destruction due to such practices

as strip-mining and waste-dumping is even more spectacular than that.  The

difference is that it is only in the past century that the preservation of the

Earth became a major concern of a noticeable portion of the human race, and that

the mechanisms of Science are beginning to be bent to the task of its salvation.

That knowledge and that science are inextricably linked in their history to the

industrial revolution which created the means for their flourishing up to this

point.  Without it, the Earth would have been doomed to a more certain, if a

slower, destruction.  It is a hard calculus, but one which points up again the

urgency of proceeding at the maximal rate possible with the accumulation of





Chapter 30. Progress


      The issue of progress in the last chapter raises a question which is

dealt with rather poorly in our economic life.  It is interesting that it has

a sort of answer in the economic theory of games, and that that answer is

undermined by the realities of economic life.  It frequently happens that

a certain change in economic circumstances will produce a benefit for one party,

A, while imposing a cost on another party, B.  If the gain to A exceeds the loss

to B, we have a situation of potential progress.  If the loss to B exceeds the

gain to A, we have the possibility of predation. 


      Let us dispose first of the case of predation.  I choose this name to

describe the phenomenon because it is analogous to the case of the lion and the

antelope, and also rhetorically pungent.  When the lioness kills the antelope,

the pride gains a meal; the antelope loses its life.  When a burglar steals my

television set, the gain to him* is less than the loss to me.  It is even worse

when someone takes my wallet, which contains, in addition to some money, a great

many things which are valuable to me and worthless (or nearly so) to him*.  And

if he* stabs me in the process of stealing my wallet, it is even worse.  In all

of these cases, there is a net loss of utility to the biological or economic

world, though the predator makes out nicely.  No theory of raising all the

boats can justify it.


[* See Chapter 6.]


      In the case where the gains to A exceed the cost to B, our theories

distinguish between those situations in which B has the power to veto the change

and those where he* does not.  When he* does, the theory of bargaining games

reaches as far as to say that B can command all of his* losses and also a part

of the excess of the gains over those losses.  This amounts to a game which I

call Tweedledum and Tweedledee, in which the Red Queen offers a sum of money to

Tweedledum and Tweedledee on condition that they agree how to divide it.  (For

more on this game, see Appendix B on The Iron Law of Wages.)  The Red Queen here

is the economic situation, and the sum of money is the difference of the gain

minus the loss.  No one has managed to say anything worth saying about how

the players should divide the premium.  And examination of the realities of

situations where this model apply indicate that the division is very rarely

equal, for one reason or another.


[* See Chapter 6.]


      A major effort on the part of A in situations like this one is often

directed to depriving B of the veto.  This is sometimes done by turning public

opinion against him*, claiming that B is an impediment to progress.  This

tactic is especially successful when A is actually the public, as we shall see

below.  And it is really easy to accomplish when A is the government, and  B

is the public individually rather than collectively.  That is, if the government

takes a dime from each of 280,000,000 Americans to build a \$ 28,000,000 public

project, there will hardly be a squeal.  On the other hand, Wisconsin Public

Radio regularly makes two week-long begging marathons each year to secure an

amount of support which adds up to five cents per inhabitant each time.  If

the State were to appropriate that amount twice a year, the citizens would



[* See Chapter 6.]


      The protection of the workers thrown onto the scrap heap by the

mechanizations of the industrial revolution could have been alleviated by the

government of the day.  I assume they never actually took the possibility

seriously, if they considered it at all.  It was convenient to the capitalists

and to their supporters in Parliament that the cost of progress be borne by the

displaced workers without any compensation.  During the past half-century, we

have seen situations where the owners of newspapers were so eager to install

new machinery that they negotiated contracts with various printing unions which

would guarantee to keep their pressroom crews employed without pay loss until

they died or retired, then closing their employment lines permanently.  The

arrangements ultimately fell apart because of the overreaching of the unions

combined with the greed of the owners.  The workers demanded that new workers

be hired and the bosses saw a chance to dump the agreement and transfer all

the cost to the eliminated employees.  It had always been the position of the

modernizing employers that such a transfer was the only road to progress. 

A moment's reflection will reveal that there are many such paths, and that

each could apportion the costs in different ways.  Clearly, a commitment at

midCentury to lifetime employment by Japanese corporations did not impede their

spectacular modernization, including the introduction of lots of robots.


      In today's world, we often see government taking property by the right

of eminent domain.  The owners of the property are entitled only to their

provable losses, and are often lucky to get even those.  Thus, if the State

takes your house, it might pay you what you would have gotten by selling it.

Since you were not selling it, it clearly was worth more to you, in some

realistic sense, than the price you could have gotten.  This is the sort of

calculus which is the stock in trade of elementary Economics courses, but we do

not hear it when the victims of the depredation are individual citizens.  This,

too, is a dereliction of duty on the part of our economists.  In addition, we

see that in the case of e.g. the rail link in England to the Channel Tunnel,

the threat of compulsory purchase of houses and farmland along the right-of-way

drives down the prices well before the State decides to take the land and pay

for it, further reducing the price the dispossessed owners will receive for

having their lives torn up.  And as always, their cries of pain and their demand

for adequate compensation are squelched by the accusation that they are standing

in the way of Progress.


      The proof that Progress is indeed at stake is often buttressed by a

claim that the good to be realized by the Nation or the State is very large,

but no one comes forward to pay the uprooted generously out of the supposed

benefits.  They are denied a veto, or even the sop of a generous settlement. 

Similarly with those done out of their jobs or other items of value by the

``march of Progress''.  We could well test the inflated claims made for the

public good in all these projects by establishing a principle of law that says

that the share of those who are dispossessed in the great benefit supposedly to

be reaped is a certain multiple of their provable costs.  That sort of open-

handed generosity is what we saw in the grant of huge tracts of land to the

railroad companies in exchange for laying track into the Western United States.

I would think the factor for such compensation should be between double and

triple the provable value of the losses.  In most cases, this would exceed the

actual losses, and would represent a participation by the displaced in the

wealth that their discomfiture would help to make possible.  If the (usually

rosy) estimates of the gains to be made do not extend to triple the costs of

those who must bear the burden, then it is unlikely that the supposed Progress

is much of an advance.


      In particular, I am concerned about those whose lives are being torn up

by being forced into permanent unemployment or professional debasement by the

changes in technology which are advertised as Progress.  I am thinking e.g. of

the skilled machinists who are being made redundant by the excellent work done

by robots now controlled by the data-processing contained in a computer chip

costing only a few dollars.  They have every right to be bitter.  They have, as

we constantly hear, played the game by the rules.  They gained a valuable skill,

committed their working lives to the exploitation of that skill, and are now

fobbed off by the fable of the buggy-whip.  By implication, their skills are as

worthless as buggy-whips in an age of automobiles.  It is an insult.  They are

not artifacts but people, and their taxes have contributed mightily to the

knowledge which their detractors are using to cast them into economic oblivion.

Commentators even pontificate over the fact that lifetime employment is at an

end, and that skills like those of the machinists are to be considered of only

passing value.  By comparison (and we shall examine this below), those who are

living on inherited wealth and have no skills of any economic value, who have

sheltered their incomes from taxes and lead the life of gilded idleness, are

able to profit from the knowledge created by the taxes of the working people

and dedicated by those who have discovered it to the public good.


      We shall examine later my contention that those who work should also be

able to live on their inheritance, if they need to, and that this inheritance is

their legitimate right, that those who use it to create profits must pay a large

share of the profits to the owners of the knowledge they use, and that these

taxes are not stolen from them by the government, but their payment to the

People for the assets they use.  Progress, if it is genuinely that, must pay

generously for the assets it consumes, especially if what it consumes is the

ability of decent and honest people to earn a modestly comfortable living.






Chapter 31. Risk


      One of the major elements dealt with in capitalist economics is risk.

When Edison had invented electric lighting and a system of electrical generation

and distribution to make it feasible, he was dependent on financiers to put up

the money to realize it, and to take the risk involved over whether the system

would work.  Much is made of the contribution of those financiers, in particular

J. P. Morgan, the outstanding venture capitalist of the day.  Because there

were very few people in a position to take such a gamble, Morgan is celebrated

in current economic theory as the genius of electric lighting, at least to the

extent that it is considered appropriate that he individually and his partners

collectively should have reaped the greatest share of the rewards of that

invention.  Of course, it did not take a great deal of courage, if one had that

kind of money.  Edison was already an established genius, and the potential of

the electric light was obvious.  The only question was who was in a position to

take the risk, even as good a risk as that was.


      I have mentioned earlier, in Chapter 10, that for a reasonably good

student from a working-class home the risk of being graduated from college with

a debt of \$ 20,000 and having to find the money, with interest, out of the

proceeds of that education are very daunting.  Many do not choose to go that

route, even among pretty good students.  For such people, such a debt can look

like a ticket to a life of misery and poverty.  Recent laws prevent them from

even finding such relief as the laws on bankruptcy offer to every entrepreneur

who fails in business.  Many who do take the gamble become essentially life-long

economic fugitives.


      Actually, the risk is rather a good one, if one can afford it.  The

earnings of those with college degrees is quite a bit more than for those

without them, so that for those who can afford the risk, it pays well.  To make

the point with an exaggerated example, consider the model of a gamble which

requires an investment of one million dollars with a 1 \% chance of a return

of one billion and a 99\& chance of total loss.  For a billionaire, this is

a magnificent opportunity.  For someone with an inheritance of exactly one

million, it is a 99 \% risk of losing a fine legacy in the quest for unneeded

luxury.  For a person with \$ 100,000 who is offered a chance to risk it all and

go \$ 900,000 into debt without the possibility of bankruptcy protection, it

would be gross folly to take such a risk.


      The world, and even the United States, is full of people who have the

intelligence to make a good stab at a lucrative career if they can go to college

but lack the means.  Those who do not have the problem of means can easily claim

that there is plenty of opportunity for those who are looking for it.  Those who

have actually done it in the past are even more unsympathetic.  It is one of the

least attractive features of the ``self-made man*''.  At any rate, whether the

fears are justified or not, there are plenty of bright young people who are

locked out of participation by their perception that the potential rewards do

not warrant the substantial risk.  In brushing away that reality, we do not

save money, but lose it.  We lose the benefits those people's talents might have



[* See Chapter 6.]


      But there is another model, one in which the risk is borne by the public

in exchange for a large portion of the winnings.  If the model of risk is that

one need not wager a million dollars to win a billion, but merely ten dollars,

there are many who would do so, even if the winnings were taxed away at 99 \%.

Not to oversimplify, the Knowledge Business requires talent and education to

bring forth its benefits.  Those who have the talent will often be willing to

invest their time if the other costs can be borne by someone else.  It is not

even a question of money all the time.  Sometimes just a reasonable degree of

support can make possible the intellectual development which has some chance,

usually a long chance, of being of value to others as well.  Enough of these

cases exist to warrant public support of all the most talented thinkers.  The

British used to do it, until Thatcherism eroded the willingness to continue, and

even today their support of their impecunious university students is a reproach

to the stinginess of far more prosperous nations.  The vast bulk of the benefit,

when there is some, is rained indiscriminately upon the general public in the

form of public domain, and even that which results in substantial profits has

a substantial proportion of general enrichment.  To recover the costs of this

enterprise from those who use the knowledge as a resource, as most successful

people do, in one degree or another, would be only just.  I do not suggest

anything as stringent as 99 \%, but something like 75 \% of the incomes above

\$ 100,000 does not strike me as excessive.


      Let me refine an earlier thought experiment:  suppose it were possible

to propose a deal to this year's graduating class from high school.  All who

could secure admission to an accredited college would be financed out of money

borrowed for the purpose.  They would receive money for room, board, tuition,

fees, and books just as we paid those for the veterans of the Second World War.

In exchange, that cohort would agree that the costs of paying interest on that

debt and retiring it would be repaid by a surtax on the incomes of those members of the class whose incomes exceeded, say, twice or thrice the median income in

each year after graduation from college.  Only the portion of income over the

threshold figure would be taxed.  I.e., only taxing what could legitimately be

called the fruit of the investment.  No means test.  (See the next chapter.)

Even the wealthy would receive the same benefit, but the cost to them might be

more, since their income would also probably reflect an increase due to parental

influence in the job market.  We could never properly administer such an

arrangement, of course, and how would we obtain the consent of the cohort, but

I imagine that the vote in favor would be overwhelming.  The rich might well

complain.  (See Chapter 33, College.)  But it would certainly make a valuable

and productive education available to the cohort as a whole, just as the GI

Bill of Rights did in the late 1940s and early 1950s.


      Given that we could not propose such a deal, and on the assumption that

it would be accepted if it could be offered, it follows that it makes economic

sense to indenture the nation's future to provide such education to those who

can make the best use of it, and pay it off from the proceeds of the investment.

It is a good risk, but one which many feel (accurately or not) that they could

not prudently take individually.  It is certainly prudent when seen as a risk to

be taken collectively by the whole cohort.  Only the winners would pay.  What

certainly makes no sense is to deprive so many today of the possibility of

making a fine and rewarding contribution in the future on the indefensible

ground of saving them from the debt.





Chapter 32.  The means test


      In the last chapter, I alluded to the question of means testing for the

benefits of public expenditure.  This has become more prevalent in recent years

and I see it as a way of undermining the benefits involved.  The idea is to

reduce status of the benefit from that of a public expenditure to that of a form

of charity.  The most recent such program has been to effectively means-test

Social Security payments.  The argument is that those who have substantial

other incomes do not ``need'' the federal pension plan.  That is step one in a

program to restrict payment to those who do need it, then to those who are very

needy, and then to let it wither in the way that has been applied in recent

years to the minimum wage.  We are also seeing that happen increasingly to

public education, and especially to higher education.


      The contrary position is that which I used to call the principle of the

library card.  Access to the public library is accorded to all residents as a

way of bringing the benefits of civilization to our communities, not as a way of

extending charity to those too poor to buy books.  The same has been true of

public schools, which are open without charge to all, regardless of ability to

pay.  And, to add another element, the public highways.  On the means test

model, we could charge for all these things, with a paternalistic waiver of the

fee for those who could successfully beg for it.  In the case of the roads,

which serve the needs of commerce, we do not do it, and those roads and bridges

which do charge a toll have no provision for permitting the poor to use them

without charge.  The public schools are also open to all, but they have been

progressively impoverished both in the United States and in Great Britain, with

more and more of the upper middle classes paying for private education where

that is available.  This process feeds on itself, and as people find they must

buy the service privately, they become ever more unwilling to also pay the cost,

through taxes, of providing the service to others.  In a vicious cycle, the

proportion in private education climbs and the public schools are starved for

adequate funds.


      At the present time, the public schools in Wisconsin are under threat

by a program in the City of Milwaukee, where the State is dealing with the

inadequacy of the public schools by offering a subsidy to parents who send

their children to private schools, including religious schools.  The costs of

this subsidy are assessed against the school aids to the public schools, thus

impoverishing them even more.  Access to the subsidy is means-tested.  What is

left is an increasingly privatized system of education, in which the public

schools are increasingly left to those who are unacceptable to any private

school.  The public schools become, in effect, outpatient reform schools.


      A similar fate is even reaching to the public libraries.  The

outstanding example is California, where a citizen initiative succeeded in

placing an infamous proposition on the ballot which passed a constitutional

amendment lowering taxes to the point that many communities have closed all or

most of their public libraries and heavily restricted the hours of the others.

So even the library card has in our time become a luxury.  Perhaps it will soon

become a fee-paying service, with presumably free cards for those who are found

poor enough under some sort of means test.


      The proper place to test means is at the tax office, not at the public

library or the public school, the public road, or the public college.











Chapter 33.  College


      WIZARD (to SCARECROW)  Why, anybody can have a brain.  That's a

            very mediocre commodity.  Every pusillanimous creature

            that crawls on the earth or slinks through slimy seas

            has a brain!  Back where I come from, we have universities,

            seats of great learning - where men go to become great

            thinkers, and when they come out, they think deep thoughts -

            and with no more brains than you have - but!  they have

            one thing you haven't got!  A diploma.

            (He picks up several diplomas, selects a parchment scroll

            with seal and ribbon, and presents it to the SCARECROW.)

            Therefore - by virtue of the authority vested in me by the

            Universitatus Committeeatum e pluribus unum, I hereby

            confer upon you the honorary degree of Th. D.  Heh, heh!


      SCARECROW (terribly impressed)  Th. D.?


      WIZARD      Yeah, that ... that's Doctor of Thinkology.


      SCARECROW (putting finger to his head)  The sum of the square roots

            of any two sides of an isosceles triangle is equal to the

            square root of the remaining side.  Oh, joy, rapture! 

            I've got a brain!  How can I ever thank you enough?


To those of us who teach in universities, this scene from THE WIZARD OF OZ has a

certain bitter familiarity.  We don't see it a lot, except for honorary degrees,

but it is not without its referents.  I remember many years ago dealing with the

question of required Calculus when it was a feature of our BA and BS degrees.

The teaching of that subject was a real trial, and it was hard finding a way to

pass enough students to keep from feeling like a martinet, especially when we

did not particularly agree that this subject was the right one for many of those

upon whom we were constrained to inflict it.  One day, in conversation with my

colleagues, I proposed for discussion a hypothetical offer of a professor to

give an average grade (then a C) to any student who would agree on day 1 not to

come to any classes, not to go to any office hours, and not to take any of the

examinations.  The unanimous opinion at the table was that almost no one would

be left to teach (and some omitted the ``almost''). 


      Our colleges serve the dual roles of imparting knowledge to those who

need or want it, and of conferring privilege on those who receive degrees.  The

balance is different in different institutions, but none is 100 \% one way or

the other.  And there are certainly some fully accredited colleges where a

student of average intelligence who attends class regularly, makes a modest

effort and crams for the examinations can expect to get a degree at the end of

four years, depending only on payment of the tuition.  At the time of this

writing, there is a large portion of the Regents of the University of Wisconsin

System who are in favor of offering a written contract of almost exactly those

terms to any student who will tailor his* studies to making it happen.


[* See Chapter 6.]


      College is the most expensive part of the program of education I laid

out earlier in this book.  My model is the GI Bill of Rights of the 1940s and

1950s.  We should give room, board, tuition, fees, and books to students in

accredited colleges, and probably some of the better trade schools as well, just

as we did then.  This would be a financial boon to many middle-class families,

who now struggle to put their children through college, and a blessing to the

most capable working-class youngsters who have no hope of college at the present

time.  The cost could be paid in part by current taxes and partly from a debt

which the beneficiaries would undertake to pay out of the presumed benefits of

those who managed to turn the privilege into an economic gold-mine.


      The losers would be those who are now in a position to buy privilege for

their children and who have the means to do the buying easily.  Their children

would benefit only to the extent that this program would mean an acceleration of

the accretion of knowledge, which would enrich the whole generation.  But this

is an instance in which the rich do not believe the story of the tide and the

boats.  They want privilege for their own children, not merely those children's

fair share of a bigger pie.


      Indeed, for those who can remember the midCentury, the influx of

veterans into the most prestigious universities made it harder for the children

of the prosperous to obtain admission.  The contrast was spectacular with the

preWar colleges, where it was said that if the check was good and the body was

warm you had a freshman.  The effect was most marked at Harvard and MIT, but

even many state universities were forced to limit admission mainly to residents

and largely on a merit basis.  But the quality of education was spectacular, and

I was fortunate enough to share my first two years of college with the last of

the veterans, after which education became noticeably less exciting.


      The interesting dichotomy here is between thinking of education (or more

accurately the reputation of being educated) as a private good, which those of

means buy for their children and actual education as a social investment in the

prosperity of the next generation and the deeper welfare of the human race.  It

is distressing that the professoriate, decked out in the trappings and honors of

this secular priesthood, have become accomplices in the demand that we certify

as intellectually superior almost anyone whose family can pay the tuition and

who will meet the rather minimal conditions mentioned above.  As though to mock

the word, this is called democracy in education.  The idea that college should

be first and foremost for those who are genuinely interested in it, or at least

those with some noticeable talent, is called elitism.  The idea that only the

prosperous should be able to get it (except for a few super-geniuses) is not

called by that name.


      Yet even now, employers are beginning to catch on that the students who

have gotten through college and even graduate schools of business by cramming

for examinations likely retain little more of their studies past the next summer

vacation than the Scarecrow's garbled version of the Pythagorean Theorem.  In

a lovely reversal, they have found that the way to hire thinkers is to employ

those who study subjects thought to have no economic benefit: Astronomy, Art

History, Anglo-saxon literature, etc..  But of course, as soon as it is known

that the smart money has learned this, the opportunists will flock to those

courses and they will become polluted with straw-headed exam-crammers.


      The emphasis on private goods in this last decade of this millennium, as

exemplified by the privatization of nearly all public assets in Tory Britain,

has been embraced by the economists of the Chicago school and their acolytes.

In that paradigm, it is thought proper that the advantages of the college

diploma should go to those who can pay for it.  And they have helped to put

the blessings of the supposedly sacred vocation we serve upon this crass

prostitution of our priestly function.  Meanwhile, the cause we should be

serving, the accumulation of knowledge for the benefit of humanity, goes begging

for resources to support it.








Chapter 34. Pre-school


      The second most expensive program I have proposed is that of universal

pre-school with full meal availability.  This is partly, but only partly, in the

direction of promotion of the knowledge agenda.  It also functions as a major

modification of the economic safety net, which has proven unsatisfactory in the

view of most Americans and is in the process of being dismantled.


      Over the course of the past sixty years or so, the United States

government has largely replaced the system of orphanages which often served the

needs of children whose parents could not adequately support them by a program

of Aid to Families with Dependent Children (AFDC).  This supported the mothers

of children who could not obtain support from the fathers.  It was cheaper than

the orphanages and was thought to provide the loving care which was not usually

a feature of orphanage life.  Originally conceived as a program for widows,

it became over the years more one for unwed mothers and abandoned wives.  In t

he course of time, it began to be seen as a modus vivendi for poor unmarried

women and was perceived (possibly erroneously) as a pattern which passed from

generation to generation.  By the 1990s, a widespread consensus was found for

the desire to discontinue this form of social support and to force the parents

involved into work to support their children.  A small additional effort was

mounted to secure child support payments where an absent parent could be

identified who could pay it, but this was not very availing.  For the most part,

this new burden is falling on single or abandoned mothers.


      A major difficulty in this program is that mothers who are working

(or single fathers in the same position) must have day care for the children

in order to be free for employment.  This raises the question of providing

adequate child care for these parents, and, by extension, for other working

parents as well.  Parents in well-paid positions have been able to secure very

good pre-school care for the children, but those with minimal jobs have been

unable to find this premium care, for the most part.  The new programs of

removing the safety net provided by AFDC will create a huge demand for better

child care facilities for working parents.


      One of the problems with the removal of the safety net is the danger

that a large part of the impact may fall upon the children.  Not only do they

suffer from lack of competent care, but there is a deficit of intellectual

stimulation, and even the nutrition required for a growing body and brain are

often lacking.  A disproportionate fraction of this group become failures in

school, vandals or criminals, and also prisoners.  The cost to the public

generally of this form of deprivation is enormous, though not all the victims

follow this tragic course.  This is a matter of concern even for most of

those who feel that the burden on the mothers is a consequence of their own

improvidence.  However, if meals were available at child care centers, that

would be a way of circumventing malnutrition even in those situations where

the parent was unable to make ends meet.  This expedient has an interesting

connection with the question of the means test.  We could expect that parents

of all economic classes would take advantage of the school lunch, but the more

prosperous would most likely want to have breakfast and dinner with their

children.  In the cases where this is not so, it is just as well that we have

some assurance that the children are properly nourished.


      As to education, we know that some children experience a paucity of

intellectual stimulation in the home, and for such the pre-school experience

under the care of professional personnel would usually bring out intelligent

development where it was in peril of being lost through lack of the proper

stimulation at the appropriate developmental stage.  This is especially

significant in the verbal area.  But in a larger context, we know the immense

difference that the Head Start program has made for poor children.  The

investment of Society in the resource of intelligence should start with

the fostering of all the talent there is, from as early as possible. 

The pre-school is where it should start.



Chapter 35.  National net worth


      The national debate in the United States in recent years has been over

the national debt.  Both major parties spend enormous amounts of ink and air

time in decrying the debt and offering their recipes for ways to lessen it. 

Both are positing reductions in federal expenditure.  Both claim to be doing

this in order to spare our children the burden of increased debt.  Both are

talking nonsense.


      Among the things which are being done to lower the deficit and thus to

arrest the increase in the debt are the retreat of the federal government from

particular programs of investment in the future, most particularly in the fields

of health, education and welfare.  It has been my purpose thus far in this

book to demonstrate that most of the cuts in education, at least, cost the next

generation far more than the additional debt, even with usurious interest, could

possibly do.  But there is a far deeper and more pervasive flaw in the thinking,

a flaw which indicates that we are doing our bookkeeping in a half-witted and

unproductive way.


      We need to recognize that each generation, with few exceptions, has

had a richer inheritance than the previous ones.  This is especially true of

the inheritance of knowledge, but for the most part it is also true of the

physical and industrial assets they obtain.  There are exceptions to this last

generalization.  Those generations which inherit the ruins of war, or the

residue of a period of despoliation of the environment, have a legitimate gripe

in this regard.  But for the most part, the advances in knowledge cancel out

even these losses.  The young people growing up today can expect a richer

legacy than any previous cohort.  To complain on their behalf of the debt which

will come with that legacy would be comparable to an heir who received from

his* parents a home worth a million dollars, but burdened by a mortgage of

\$ 200,000.  It would be a churlish and ungrateful child who would complain of

being saddled with his* parents' debt.  In this sense, our children can expect

to inherit a world in reasonably good working order, equipped with the machinery

and facilities to provide them with a pretty comfortable living, if they can

just manage to get all the pieces together and provide equitably for each other,

an accomplishment which seems to have eluded us, at least for the present.  To

measure this inheritance without too great attention to the debt, I propose as

a thought experiment the concept of national net worth.


[* See Chapter 6.]


      In the case of individuals, we note that it is not generally the case

that those with the greatest debts are the poorest.  Indeed, it is more often

the reverse: the greater the debt, the greater the wealth.  Mostly that is

because the rich use debt as a way to advance their fortunes, rather than as

an expedient to procrastinate payment of their obligations.  Even those who

are on the point of declaring bankruptcy for hundreds of millions of dollars

will be seen to recover from that to a position of prosperity more often than

the poor wretches who are burdened by a few thousand dollars of consumer debt

with no visible mechanism of acquitting the obligation.  Thus, when President

Clinton proposed a program of national investment in 1993, an irresponsible

attack was made on him.  He was accused of favoring the increase of the

national debt and thus moving to burden further the next generations.  And in

the service of this bogus accounting, legislators who undoubtedly have the

intelligence to know the folly of their positions voted down the program.


      Let us imagine that we were to concoct the concept of a national net

worth, (NNW) rather like the personal net worth which we see often in our

financial planning.  The public assets consist of such public property as

schools, parks, roads, bridges, town halls, fire engines, water works,

universities, and also courts, prisons, police equipment etc..  We must add to

those the value of the educations which we have implanted in the minds of our

citizens and the value of the knowledge we have put into the public domain. 

These last two items we could value at the cost of their acquisition, though

that would be a gross undervaluation, for reasons which we have already

explored.  For the rest, we should reckon the cost of their replacements,

diminished by a factor related to the expected life expectancy of the still-

usable assets.  This would be only an approximation, but it could be done in

concordance with accepted principles of accounting.  Unlike the situation in

private circumstances, the value of assets might well not agree with the price

that could be gotten by selling them.  For how much could one expect to sell a

prison, say, or a landfill or a sewage-treatment plant?  Or even a road, for

that matter, or an air traffic control facility?  Those things which we must

have, as a community, in order to continue functioning must be reckoned at

replacement value, with due account for the gap in time until that replacement

must be effected.


      Measured by this idea of the national net worth, the selling off of

public assets at bargain prices, as was done by Tory governments in Britain

under Margaret Thatcher and John Major, would be seen as reducing the NNW,

rather than the way it is now regarded: reducing the debt and the taxes.  On

the other hand, the ``bail-out'' of Chrysler in the United States could be

seen as a canny investment, as was the building of the Interstate Highway



      In this spirit, we should find that careful investments on the public

behalf would be increasing the inheritance, the net worth, of our public

assets.  Of course, the value of the national net worth would be known only

approximately.  But that is true, to a greater or lesser degree, of all our

economic statistics.  The important item would be the knowledge of whether it

was roughly growing or shrinking.  If it was growing, even over an increase in

the debt, we would not need to tolerate stupid talk about burdening our children

with our debts, while if it were shrinking, even with the debt shrinking, then

we would know that we were not living up to our responsibilities.







Chapter 36. Investment


      The entire question of public investment raises another issue which is

peculiarly apposite.  We find ourselves in a period when the public is making

many investments which are, however, for private gain.  The matter which comes

most frequently to the forefront of the news concerns public investment in

stadia for the use of privately-owned professional sports companies, such as

baseball or football teams.  However, the phenomenon is not limited to that

circumstance.  In Michigan, the major automobile companies have been building

new factories only when the State and cities contribute by condemning and

purchasing land, providing special municipal services, and cancelling large

portions of the taxes which will come due.  These donations to the corporations

are in effect investments from which the public can expect no dividends,

other than the jobs which will not be removed to other locations in non-union

states or abroad.  In a similar vein, several airlines have required their

employees to invest in the company.  Some of the investments have been in the

form of stock which would not have sold on the securities market, but which

might bear dividends in the future.  Another form of investment has been the

``give-backs'' of pay and benefits to reduce the costs of operation.  These

will not yield any direct share of the profits.  Even in those cases where the

employees have bought the whole of the company from the previous stockholders,

it has been at an unrealistically high price.  Thus, the People are being made

investors in business in a parody of socialism.  They pay the price and bear the

risk, but do not share in either the control or the profits (if any) which are

the usual prerogatives of the investor.


      The arrangements outlined above are some of the very few which are less

attractive to the public than what is called ``lemon socialism'', in which

failing enterprises, such as the passenger railroads of the United States and

Great Britain are sold off to public ownership for a fictitiously high estimate

of their value, and then run at a deficit because the public needs the service.

In the extraordinary case (as with Jaguar automobiles) where the business is

resurrected and becomes profitable, the benefit accrues to the public.  Jaguar

was sold to Ford, and the money returned to the public purse.  When there is no

profit, this is as bad as the other, but at least there is the possibility,

however tiny, of public benefit from the investment.  When the State builds a

stadium or a factory or a special sewer line, it bears the risk of losing its

investment if the enterprise fails, but reaps no reward if the investment bears



      An entirely different calculus applies to the investment in knowledge.

There, the public stands to gain substantially if it is understood that the

student or the researcher is acting for the People and will be required to

share the proceeds, if there are any.  This perception is defeated if we

consider the State's participation in the Knowledge Business as an expenditure

rather than an investment.  In that case, the rhetoric is over the cost seen

as merely spent, and the benefit to the recipient of the scholarship, the

tuition support, or the research fellowship.  It looks like an expensive gift

to a private party.  I am struck by the similarity to a comment of the late

Renaissance economist Thomas Mun, quoted by Adam Smith:


      If we only behold the actions of the husbandsman in the seed-time, when       he casteth away much good corn into the ground, we shall account him

      rather a madman than a husbandman.  But when we consider his labours in       the harvest, which is the end of his endeavors, we shall find worth and     plentiful increase of his actions.


      Thomas Mun, England's Treasure by Forraign Trade, or the Ballance

      of our Forraign Trade is the Rule of our Treasure, 1664 (posth).


Seeing education as a consumer expenditure is like seeing the husbandman as the

waster of grain.  Seeing it as an investment is like knowing that there is a

harvest in the offing.


      But we must ask the question of how we collect on the profits of the

investment.  At the present time, we collect little, because the owner of the

education quite properly believes that his* investment of time and money, in

particular if the latter has resulted in substantial debt, makes the increase

of earning capacity his* own personal property, to which no one else has a

claim.  This is outstandingly true of the physicians in the United States today,

whose claim to the profits of their educations rests in large part on their

personal sacrifices in securing it.  The fact that the public, in one way or

another, has paid the greater share does not come into their reckoning.  Only

those who have been wholly financed as e.g. by the armed services or the

Public Health Service might have such a humble outlook, and even those are often

not inclined to give the public any more of the profit than what their contracts

specify.  In some cases, they even try to evade that.


[* See Chapter 6.]


      To maximize the profit of the investment, the public should solicit the

participation of the ablest.  It is not always so clear who these are.  In East

Harlem, for example, the rate of high school graduation was less than half.

But that was greatly altered for the graduating class of one junior high school.

An alumnus who had succeeded in business offered to send to college any child

of that class who succeeded in being graduated from high school and obtaining

admission to a university.  The success rate of that class jumped to 85 \% .

I think it fair to say that those who would not have achieved the high school

and college diplomas would overwhelmingly have been trapped in working-class

life or worse.  For those who achieved a level above working-class, I think it

would be fair to have made a part of the agreement that they would share the

excess, returning a portion to the next generation from (perhaps) the same

junior high school or the same district.  More generally, it would be fair for

the recipients of public financing of their educations to share the rewards

with the investors if they achieve comfortable lives.  Then the public becomes

like the sower of grain, who is not throwing it away but planting for a harvest.

And it would be wise of the public to invest as widely as possible on that

basis, given the great potential of profit which the Knowledge Business affords.








Chapter 37.  The People's share


      I come now to a rather delicate question. What is the legitimate share

of the People in the profits reaped from the knowledge which is our common

property, and how much belongs to those who find ways to use it?  It is clear

to me that the ideology of the states which called themselves socialist gave

too little to the innovators, while the present practice in the countries

which are designated as capitalist gives too little to the public.  What is a

reasonable partition of the fruits of this inheritance?


      Keeping in mind the legitimate grievance of the Luddites, we should

start with the elimination of what is called technological unemployment.  The

ideology which regards a skilled machinist as someone who has not taken the

trouble to acquire a salable skill is not only unrealistic but also cruel.  And

the demand that he* should meet the problem by retraining in another skilled

profession which also faces the same risk is unrealistic on several grounds.

The first is that skills of that order are hard and long in their acquisition,

particularly for those who have lost the resilience of youth.  The second

is that even if such a skill were acquired, the older worker would face

substantial age discrimination (notwithstanding the law) in competing with

younger workers for employment.  The third is that the available positions

are principally in disciplines which require higher education, which is even

more unreachable for an unemployed worker with a family, a mortgage, and a

multi-thousand dollar balance due on his* credit card.


[* See Chapter 6.]


      It is time finally for the promise inherent in the concept of Progress

to be realized, for the time saved from toil which cannot be put to productive

use to be distributed to the working people as leisure.  I accept that there

needs to be a small amount of unemployment corresponding to the situation of

those who are looking for their first jobs, or looking to change jobs, or

temporarily dislocated for any of various other reasons, such as having an

employer go out of business, but these ``structural'' unemployed should come to

at most a fraction of 1 \% of the labor force.  Those who are able and willing

to work are entitled to claim as their share of the common legacy a decent job

at a living wage.  In addition, those who have been deprived of an especially

skilled job at a higher wage are entitled to compensation, even generous

compensation, for that loss, in the spirit of the discussion in Chapter 30

on Progress.  Changes which do not create profits sufficient to pay such

indemnification are not progress, but merely the mechanisms of advancing one

person's wealth at the expense of others'.  The details of who will pay the

indemnity are not specified yet.  It may be that the innovator can convince the

public generally, through the State, to bear that cost, or part of it, for him*.

That might be the case where the element of progress was clear for the benefit

of all.  Yet the loser must be compensated out of the benefits to others, or

we will have the kind of injustice of which the Luddites properly complain.


[* See Chapter 6.]


      A second claim which I find reasonable is that the common portion of

the resource of knowledge should support a level of compensation for ordinary

unskilled or semi-skilled work which we recognize as a comfortable working-class

standard of living.  That includes, in my way of seeing it, the ability to

afford a home adequate for the raising of a family, and the ordinary comforts of

working-class life as we came to know them in the 1960s and 1970s.  If we cannot

or will not provide such a life as the reward of such work as we have available

for people with ordinary preparation for employment, then we must be ready to

accept serious social disruption as the cost of this economic injustice.


      One of the mechanisms which is available for dealing with this situation

is to be seen in the Fair Labor Standards Act, which dictates maximum hours and

minimum wages.  It may be that this expedient requires some fine-tuning.  I can

think of particular changes that I would wish to see incorporated, but that is

detail.  It is clear to me that in a world of giant corporations and in the

light of the Iron Law of Wages for an unregulated economy, the supposed wonders

of ``the invisible hand'' of the market leave entirely too much to be desired.

One of the ways of keeping the balance of wages and hours from running in the

direction of too much pay for too little work can be found in the policy of

``skimming the cream'' which I described in Chapter 13 on Filling from the top.

But to the extent that we cannot bring the wages and hours into balance, with

useful work being done by the labor saved by progress, we can take our reward in

the form of leisure. 


      In addition to the little comforts which were the lot of ordinary

working people in the 1960s and 1970s, there are other benefits which should, at

a minimum, flow from the People's ownership of the common knowledge.  With the

wealth which we draw from it, there is no reason why we need to tolerate hunger

or malnutrition, at least for children, at least in the industrially developed

part of the world.  In Chapter 34 on Pre-school, I indicated how this can be

accomplished for those children.  Actually, I think a similar program should be

adopted for all school-aged children, at least in the United States.  As the

world's population approaches six billion, there begins to be some doubt about

how far beyond this minimum we can extend such a guarantee.  And the same

fountain of wealth can easily afford the program of universally available

education which I have outlined in Chapter 9.  Finally, there is still so much

wealth in the difference between the productivity of the 1960s and that of the

1990s that some rise in the level of luxury (in which there has actually been a

decline) for working people can be afforded without critically injuring the

motivation for seeking and funding advances in technology in the future.


      Another area which commands attention as part of the People's share is

the issue of health care.  This one is touchy, because the costs have become so

very high in recent years.  People demand adequate care, and also demand that

the costs be reduced.  There are at least two ways od dealing with this apparent

contradiction.  One is to take it as a natural law (See Chapter 20 on Greed.)

that we cannot satisfy the needs of all.  In this model, those who can afford

the ``luxury'' level of care, either through personal wealth or the ability to

afford a more comprehensive insurance will have it; the others will have to deal

with the harsh realities which are said to be the natural lot of the poor.  The

second method is to establish a level of care which everyone is entitled to and

pay the costs of providing it to everybody.  This comes with a subtlety, and I

want to discuss that next.


      The very advance of medical science and technology have put diagnosis

and treatment of disease on a new level.  Conditions which everyone, from the

poorest to the richest, had simply to endure have come to be treatable.  In some

cases, the treatments are costly, such as cardiac bypass.  This one has been

attacked as not cost-effective.  Some people have suggested that it is too

expensive to be included in any general health-insurance plan.  It is perhaps

ungenerous of me to suspect that the vast majority of those who hold this

opinion would in fact opt to have the operation if they needed it to save their

own lives and if their bank accounts or their insurances would bear the cost. 

The opinion is that it is too costly to ``waste on Them''.  When the State of

Oregon proposed a medical plan which would expand the availability of highly

efficient interventions, like universal immunization and prenatal care, at the

expense of not offering very inefficient care to anyone, the outcry against

this form of ``rationing'' doomed it.  I am not advocating the rationing.  I am

arguing for placing the lives and health of all the people on an equal footing,

so long as the dividends of the public knowledge will pay for it.  The rich, in

this century, have reaped a huge benefit in this area from the advance of the

People's knowledge, and it is time, as soon as the economy can bear it, for the

People to share in that.  There is likely no way to prohibit the rich from using

that knowledge until all can do so, but it might be worth considering a kind of

``luxury tax'' on all procedures not available to everyone, a tax which would

enhance access of everyone to more care than would otherwise be available.


      The 1960s and 1970s give us a model.  The level of taxation was higher

then, but there was still plenty of technological advance.  In the last fifteen

years, almost all of the rewards of advance, including the increase in the

productivity of labor, has gone to the very rich, with more than half of the

population actually seeing a decline in their living standards and their hopes

of a decent future.  If the ordinary people had been held harmless from the

advances, there would still have been enough benefit available from e.g. half

of the remaining technological advance to more than fund the benefits I have

outlined here as the People's share.


      Finally, and here we get into heavier socialistic thinking, as this

program becomes accepted (if it does), we should see more of the product of the

publicly-financed knowledge reserved to the public use.  The benefit to those

who will become the bearers of this bonanza should be an increased opportunity

to do more, what many wags have described as ``the leisure of the theory

class''.  Instead of fat paychecks, we should see lesser teaching loads, more

sabbaticals, more scholarly conferences, etc., with the cash benefits going

to the public which will have provided the paid educations and supported the

laboratories and libraries which make it all possible.  To compensate for the

loss of the possibility of great personal wealth, we need to offer these brain

workers the kind of economic security that all would reap from a much more

productive economy: school for the children, medical care for the sick, and

security in age or disability.  That would be the promise to all, and would

moderate the need for hefty salaries.


      The further regulation of wages and hours would have the effect of

putting some of the jobs we now see out of consideration.  There is always some

such effect of higher minimum wages, though it is overstated by those whose

motivation is not really the protection of the unskilled or the efficiency of

labor but the maximization of profit.  Some advocates for conservative economics

claim to be concerned that higher wages to the poor will cost them their

employment, and say they are distressed on that account.  It is significant that

these uniformly maintain that the social benefit they posit (fuller employment)

should be financed out of the pockets of the lowest-paid.  If we were to propose

that the lower wages should continue, but should be topped up to the level of

working-class comfort I have detailed above by ``negative income taxes'' of the

kind proposed by President Nixon, the crocodile tears being shed by most of

these unlikely philanthropes would dry up promptly, since that would necessitate

payment of heavier taxes by the rich and powerful.  So we see that the concern

is not for the employment of the unskilled or the use of labor in low-value

work, but the question of whose ox is gored.


      Finally, let me say that all the benefits of the common store of

knowledge should be shared by all equally.  The rich should benefit in the

availability of free education on the same terms as the poor, and also in the

programs to prevent hunger.  Anatole France's great comment should apply here in

reverse.  He observed that the Law in its majestic impartiality forbade both

rich and poor from begging in the streets, stealing bread, and sleeping under

the bridges at night.  I propose that both rich and poor have free meals

available for their children at school, and that those children all be granted

free access, paid by progressive taxation, to all the education they have the

stomach for.













Chapter 38.  Rentiers


      The suggestion of a substantial negative income tax raises the whole

question of the welfare system.  If we create such a payment instead of having a

minimum wage adequate to support working-class comfort for working Americans, we

might find a substantial number of people who would eschew minimum-wage work and

live ``on the dole''.  This situation offends the puritan strain in our culture,

but only if the practitioners are poor, for then it is perceived that they are

living at the expense of others, and the others have a right to complain.  On

the other hand, if the non-workers are living at the expense of others by means

of shares owned in companies, then it is considered as a perquisite of wealth.

If the rentiers are legatees, it may be that they never contributed any effort

of their own to creating that wealth.  Nonetheless, it is considered a valid use

of personal wealth to create a system which one's heirs can use to live without

working.  There are some who show a disapproval, usually mild, of such an idle

life-style, but these are generally thought of as puritan cranks.  The right of

rich people to avoid work which does not bring in enough money to tempt them is

usually touted as one of the benefits of the free market in labor.


      It is perhaps odd that the perceptions in the previous paragraph would

probably not be changed much if we were to consider the negative income tax as

being derived from the People's ownership of the legacy of knowledge.  The

resentment of wealthy taxpayers, even if defined as paying for use of that

knowledge, is not so easily deflected as the old socialist resentment against

``exploitation'' by the likes of Henry Ford, to say nothing of his grandchildren

and great-grandchildren.  But if we put aside the puritan opprobrium against

sloth, we could consider the merits and demerits of having people who abstain

from the economic rat-race to live on their unearned incomes.


      For decades, the answer to the problem of unemployment, at least in

part, was a system misnamed as ``welfare''.  In the popular imagination, those

who wouldn't or couldn't make a go of the world of employment had the option of

``going on welfare''.  It was a poor life, but an idle one.  That was what they

imagined.  Actually, there were only a few welfare programs, mostly for women

with children but without husbands and for seriously disabled people.  I once

carried out a bit of research to find out what was available in Madison

Wisconsin for a healthy young man without work who was in need of shelter and

food.  It was almost nothing, and that was twenty years ago, more or less in the

heyday of the welfare era.  One supper and one night's flop - maybe.  Even for

that the facilities were limited and when they were full the door was shut.


      However, it is interesting to investigate what would be the

philosophical fallout if the actual policy had been more like the European

model, where one had the option of the dole indefinitely if one could not or

did not find work.  In a period of substantial unemployment, there is a bit of

tension over who you would rather see take a job:  a person who you knew wanted

one or someone who you suspected did not.  I would prefer to save the job for

the one who wanted it, but I suspect that my position is minority.  From the

point of view of the utilitarians, we maximize happiness my way, but that

is only if we count only the happiness of the two candidates.  If we reckon

also the bile of the puritan interlopers, then more happiness is obtained by

compelling the supposed slacker to work than in giving away something (a desired

job) to the other.


      For the past fifty years, Labor has been content with the welfare

solution.  Unfortunately, the only way a healthy unemployed young man could

live off welfare was as an adjunct to an unmarried mother.  And it is hardly

surprising that there were some who arranged to do just that.  In fact, some

were so enterprising that they managed to adjoin themselves to several such. 

It was not an essential feature of this game that they be the fathers of the

children in question, but it did make it easier to accomplish.


      My own opinion is that in a situation of unemployment those who are

willing to stay out of the job market for a pittance are actually providing a

valuable social service.  It reduces the strain on others.  But for those like

the Chairman of the Federal Reserve System who worries when unemployment falls

much below 6 \%, anyone who is not underbidding his* neighbor for a job is an

additional problem.


[* See Chapter 6.]


      As I see the optimization problem, the basic work reward (BWR) should

be made up of three parts, and the combination of those parts should yield a

comfortable working-class life.  There is the standard work week  W , the

minimum wage  M , and the knowledge dividend  D .  The standard work week should

be controlled, as by a control on the maximum week one could work without

penalty, so that every one can have access to that much work, and that would

supply all the work that any employer will require, given the minimum wage.  The

knowledge dividend should be set to provide the difference, if any, between the

product of the minimum wage M and the standard work week W (which together make

up the standard minimum pay, or SMP) and the BWR :


                        D = BWR - SMP = BWR - M*W . 


Any who elect to live on the knowledge dividend rather than take work at the

minimum wage or more would be in the same position as the Ford heirs, but rather

poorer.  Any decrease in M would likely increase W , but by how much is not

clear.  However, the amount of the knowledge dividend would depend on the

product of these, and would be paid out of taxes on profitable employment and



      The knowledge dividend would be paid to all adults, rich and poor,

employed or not.  Anatole France again.  I would hope an enlightened populace

would give to the idle poor, if any, the same tolerance it now affords to the

idle rich.  The fact that these might include some artists, novelists, lay

preachers, etc. who were supporting themselves meanly in order to follow a

different drummer should be considered one of the benefits of this suggestion.







Chapter 39.  White heat


      In 1964, Harold Wilson promised that Britain would ``forge Socialism

in the white heat of the technological revolution''.  In this, he was both

wrong and right.  The wrongness is obvious.  The British essentially gambled

their whole technological strategy on the Concord, and when that failed as an

economic undertaking, the policy mistakenly ridiculed as ``picking winners''

went down with it.  And with it, eventually, went the mild pink socialism of

the Labour Party.  Yet in a deeper sense, Wilson was right.  Marx knew that

the indispensable base for a socialist economy was a successful and mature (he

would have said ``overripe'') Capitalism.  He envisioned England or Germany.

His vision did not extend to the United States or Canada, not to mention the

Antipodes.  Wilson knew that a transition to any kind of socialism in Britain

would require a new source of wealth so great that it would be possible to

create the socialist state without greatly inconveniencing those who were

already rich.  Socialism without expropriation.  And the clear source of such

wealth was to be found in what he called the Technological Revolution, and what

I have expanded to encompass nontechnological learning: The Knowledge Business.


      But something happened on our way to Utopia.  The rich decided that

they wanted it all and with the help of the Tories they have grabbed it up. 

The wealth created in the intervening years could indeed have accomplished

that dream, and without the pain that we have seen in the impoverished peasant

societies which have attempted to build socialism without such a base, but the

details evaded them.  Perhaps a more thoroughgoing analysis of the situation

would have recruited a more dedicated electorate.  It didn't happen.


      It could yet happen.  If the next generation is willing to wait

that long, the dream could yet be financed out of the profits of their own

technological advances, if they can get the permission of their parents and

grandparents to go into debt to achieve them.  And it could be hurried along if

those older ones would be willing to claim back a part of the wealth which was

created in large part by the Socialist educational policies of the 1960s and

1970s.  At the same time that the British and the French were chasing down a

blind alley with the SST, the Americans, without knowing it, were laying the

groundwork for an industry worth many trillions of dollars.  It is only dumb

luck that the winners of that gamble turned out to be the Americans and the

Japanese.  The British and the French certainly had excellent scientists and

engineers, but their businessmen* were abysmal.  I have observed that the

entry criteria for European management were far from meritocratic, and favored

the well-connected rather than the ingenious.  It is true even today, and was

much more so then.  A nation which is still paying huge stipends to nobles who

are implicitly still collecting on military services rendered to William the

Conqueror, and can hardly believe that they have a Prime Minister of distinctly

proletarian roots, still relies overwhelmingly on the holders of inherited

wealth to steer the course of the economy.  Them and their courtiers, of which

more in the next chapter.


[* See Chapter 6.]


      It can yet happen.  The Forge of Socialism is still available, but the

Labour Party has tired of seeking the Grail, and the same is true in Europe

generally.  Can someone rekindle that furnace?  Maybe.




@ Copyright 1996 by Anatole Beck.  All rights reserved.


Chapter 40.  The courtiers


      As it was in the Ancien Regime, and as it has been ever since, those who

have wealth and power gather around them courtiers who flatter and feed them and

are in turn patronized with a share of the goodies.  Some of these courtiers

are mere parasites, living off the vanity of their patrons.  But some of them

are genuine resources of power, occasionally achieving quite a bit of power

themselves.  The most powerful leave their names in history, like Richelieu,

Metternich, and Bismarck.  Others, less distinguished, still manage to make quite a good living for themselves.


      In our time, we have seen examples of these in the areas of The

Knowledge Business.  I have mentioned some of them in Chapter 28 on the dark

side of the force.  What is most impressive about those who are perceived as

having sold out to the Establishment is that they are a minority, and that the

majority of the Magicians are diligently devoted to the public interest.  I

must say at this point that those I will identify as the courtiers also believe

themselves so dedicated, but of course their perceptions are rendered suspect

not only by the rewards those opinions reap for them but, more importantly, by

our own evaluations of the consequences of their actions.


      At an accelerating pace over the past fifteen or twenty years, the

public has been persuaded to slacken in its support of the knowledge business.

At the same time, many of the same parties and interests which have promoted the

retreat have also moved to seduce selected intellectuals into their own service.

As examples, corporations have supported particular research projects, usually

those which promote either the technical needs of their operations or their

public relations needs, as in the case of tobacco companies.  I do not suggest

that the courtiers necessarily alter their conclusions to suit their patrons.

More likely, the patronage goes to those whose conclusions seem to be moving in

the direction the patrons would like to see.  In an old piece of counsel, the

mother advises her daughter not to think about marrying for money: ``Go where

money is, and marry for love.''  So, we have seen many scientists who have

gone into corporate research, or in the universities they have taken corporate

or government support for specific research projects reflecting their own

interests.  Those whose interests were less attractive to funding agencies found

themselves stigmatized as less productive, less successful, less deserving of

their universities' own honors and rewards.  They even found that they were

judged less deserving of tenure and might even on that basis have been flushed

out onto the general economy where their only employment might have been the

very projects which they eschewed as academics.


      Such was certainly the case for many at the time I was a graduate

student and a young academic.  In the Mathematics Department at Yale, life was

rather more comfortable for those who were included in a major project funded

by the Navy than for students in other fields.  The Navy project was for the

writing of a book which has become a veritable encyclopedia of a major portion

of the mathematics of the midCentury.  There was nothing wrong with it, nor was

it particularly militarily oriented, but those whose interests lay elsewhere

definitely had a harder time making ends meet long enough to write a thesis.

In more recent times, as funding for universities become thinner, more and more

of them were tempted to fund their research through extramural support, though

I do not know of any other case like that in which MIT accepted a wholly-owned

subsidiary of a corporation as a university department.


      An extreme case of this patronage involves the whole of the field of

mathematical economics, which has come under the aegis of the financial and

industrial community.  The particular brand of the subject is one which has

anointed as unquestionable the version of neoclassical economics which most

canonizes greed as a progressive and constructive force in human life.  (See

Chapter 20.)  Models are built which supposedly represent the reality of the

economic world, and conclusions are drawn from them.  As I mentioned earlier,

there is no way to test the validity of the models or the worth of the

conclusions.  Whenever predictions are made and confirmed by experience, that

is taken as proof, but when the contrary happens, there is always an alibi to

be found in the vagaries of human behavior or in the accidental factors (such

as drought, revolution, crime, or sun spots) which impinge on economic reality.


      One of the things that sovereigns have always been able to do is to

confer validity on their favorites by granting them medals, honors, etc..  To

choose an example nearly universally discredited today, Josef Stalin was able

to elevate his favorite scientists into the Academy of Sciences, and their

status as academicians was then a bolster to their prestige and contributed to

the public relations exercise which would support their theories.  The great

example, hooted at by scientists in the West, was an agronomist named Trofim

Lysenko, whose theories of inheritance lay closer than Mendelism to the beliefs

of Stalin in the field of genetics.


      Not drawing a comparison, but looking at an occurrence in the West, we

see that economists have always hungered for acceptance as scientists.  When

``scientific socialism'' was a synonym for Marxism, their pretensions were

ridiculed by practical businessmen*.  But when the monetarists of the Chicago

School supported their favorite policies, these practical folk began to see how

deep the formulas of the economists could be.  In the 1960s, the Central Bank of

Sweden, an institution of great wealth and power, created a prize for economics

similar to the Nobel Prize for Chemistry, Physics, and Medicine.  The purpose

was to win for the subject the credibility which those sciences had earned

over the course of centuries.  Other sciences with a greater claim, such as

Astronomy, Botany, Geology and Mathematics did not attract their philanthropy,

since these did not particularly serve any interest close to their hearts or

pocketbooks.  Also Sociology and Anthropology were not honored, the possible

reason being that the Bank did not see them as sufficiently scientific.


[* See Chapter 6.]


      The Nobel Memorial Prize (not actually a Nobel prize, since he did not

think Economics worthy of his attention) was designed to be mistaken for a

Nobel prize, and for the most part has been, as a reference to e.g. the

Encyclopedia Britannica will reveal.  The honor, conferred mostly on the

practitioners of that brand of Economics which best supports the banks' view

of economic reality, is one of the mechanisms for winning public acceptance of

the policies which the banks favor.  And a concurrence in this practice brings

the patina of scientific credibility to those whose view of the world is most

agreeable to the practitioners of predatory investment.  ``People have always

eaten people.''


      In today's intellectual world, the power of moneyed interests (radio,

press, TV, corporations, think-tanks, universities) to define canon makes them

extremely powerful in the world of ideas.  Even Arthur Laffer, the author of the

laughable Laffer Curve, makes a handsome living telling the wealthy what they

want to hear: that the predatory economics which brings them so much profit is

the natural order of things.  Other scientists also pay court to those who can

establish them at the bank and in the public eye.  It is a seductive symbiosis.

It has always been so.


      One of the characteristics of courtiers is the importance of finding

favor in the eyes of the sovereign.  This results in a kind of competition which

is more common among school-children than among mature professionals.  It is

more important to be better recognized compared to one's peers than to actually

do the work or accomplish the mission.  I sometimes tell a little parable about

the professor who is visited at midnight by the Evil One.  He is offered a

choice of a raise of 25 \% in his salary, in which case everyone else at the

university will get 50 \%, or he can have 10 \% and everyone else gets 5 \%. 

What is interesting is that telling this story gets nervous titters from the

audience.  They don't usually say what they would do, but it is clear that the

desire to be recognized (pride) takes precedence over both greed and altruism. 

There is also a lack of community feeling.  Success is defined as getting the

best grades in the class, or in the school, or even being the teacher's pet. 

The teacher, in this case the Dean or President, or the head of an important

foundation, has the power to award medals and perquisites, not to mention a

genuine or imitation Nobel Prize.  The deep internal rewards of knowing that

one is advancing the welfare of the human race takes a lower priority in the

thinking of one who is living the life of a courtier.


      In that broader sense, perhaps most of the practitioners of the

Knowledge Business live the lives of courtiers.  We are still, to that degree,

living the lives of adolescents.  It is surprising when a giant stands up,

like Richard Feynman, to eschew inclusion in the National Academy of Science

because it is an organization whose principal function is to determine who

will be in and who out.  We should all aspire to such integrity.  Maybe it

helps to be as generally recognized as Feynman.   




Chapter 41.  Taxes


      Throughout the developed world today, but especially in the United

States and the United Kingdom, we are seeing a revolt by the rich against the

taxes which support those who are less than successful in making their way in

a world beyond their ability to cope.  The taxes are seen as taking money from

those who have earned it (even when it is called unearned income) to pay to

those who are perceived as feckless, stupid, lazy, or criminal.  The mechanism

for this anger is to accuse the government or a policy of ``tax and spend'',

though the money spent on such things as armaments and subsidies to powerful

interests does not seem to get a lot of attention.  The taxes are themselves

seen as illegitimate.  They are money taken in the interest of being generous

with those without any valid claim on the generosity.  But the agent of this

illegitimacy is the government.  One of the purposes of this book is to focus

on the role of taxes as investment and, better yet, as repayment for the use of

public assets in the creation of wealth.  It is perhaps futile to hope that the

greedy will be persuaded that they have any responsibility to invest for their

children's generation or to repay for their own capitalization, but perhaps it

will be possible to fortify those who are so inclined with arguments to be made

against those arguing that greed is in the best interest of all.


      I once heard a wonderful quote which I, in sloth, did not have inscribed

in some permanent material to keep in a place where I would not lose it.  I have

tried to reproduce it, but my poetic gifts are not up to the original.  If any

reader can direct me to it, I shall be grateful.  Approximately, it said


      The finest and most elegant examples of the art of rhetoric are

      to be found in those arguments purchased by the rich and powerful

      to convince the rest of us that it is in the best interests of all

      that they should continue to enjoy their wealth and privilege.


With less elegance, the poor and downtrodden have always grasped to find a valid

claim why they should also enjoy some of the good things of life.  The arguments

to altruism and human fellow-feeling have always been met by supposed scientists

arguing the ``hard truths'' of the ``dismal science'' of Economics.  On the

other side, we have seen claims advanced by such as Karl Marx that it is labor

which creates all value, that employment is synonymous with exploitation, etc..

Whatever the validity of these claims, they are made to justice rather than to

expediency, with predictable lack of success.


      Contemporarily with Marx, we have the phenomenon of Henry George,

the author of the Single Tax.  Like millions of other high school students,

I learned that George proposed a tax on land to finance all the functions of

government, but it was not until I studied legal history that I came to know

what the basis of his claim was.  He wrote that land had almost no intrinsic

value, in economic terms.  Land was given value by the presence not only of

its owner, but also that of the owner's neighbors, and the more neighbors, the

greater the value, in general.  Thus, since it is the People who create this

value, it is properly their property, and they may validly tax back that value

in the form of rent.  In this context, the claim for taxes becomes neither

theft nor charity, but a mere restitution of property to its rightful owners. 

The theory was very popular a century ago, but it was never adopted.  The

owners of property managed to persuade those who could vote then that this was

a dangerous leveling doctrine.


      In a sense, my suggestion follows in the tradition of Henry George's

Single Tax, and may well suffer a similar fate, or even a more ignominious one.

But it does have a feature that George's argument did not.  It relies not only

on the claim of justice, but also that of efficiency.  The maximization of

knowledge promises a maximization of wealth for all.  Thus, it is the reverse

of the arguments of the rich and powerful, in that I argue that it is in the

best interest of all that the human race draw the most we can from the Earth,

our Mother, consistent with the need to preserve ourselves by preserving Her.

And the key to this is the maximization of knowledge.


      I have mentioned the national net worth.  It is clear that it is the

obligation of each generation to replenish, repair and replace the physical

assets which we inherit to be the legacy of our children , and also to replace

the erosion of the assets of knowledge through age and death.  In this way, we

tax ourselves to renew the national net worth as time takes its toll of it.  And

in addition, if we love our children we will endeavor to pass on our world to

them better and richer than we received it from our parents, as the ephebes of

ancient Athens swore to do.  If we love our children, we will pour them full of

all the knowledge they can use, and in the process make ourselves rich in the

near future, as I noted earlier.  But even if we are loath to sacrifice for

them, we have at least the obligation to allow them to provide for themselves,

by borrowing for their education and development the money which they will

be able to repay out of the fruits of that investment.  If we will not tax

ourselves for their benefit, at least we should make it possible for them to

tax themselves in this way.


      Instead, we are both unwilling to bear the taxes ourselves, and the debt

which could pay for our children's education we refuse, giving the ludicrous

excuse that we are doing it to avoid burdening them with our debts.  I hear this

from people who I know are too intelligent to believe this if they were to give

the matter more than the shallowest of thought.  I know of no prosperous family

which would deny their children an education in order to save the money for

their inheritance, and yet that is the essence of this argument.  But I speak

too soon, for I recently saw an editorial in the Wall Street Journal to the

effect that at current prices for college education, the investment of an

equivalent amount in blue-chip stocks would yield a greater return than the

average value of the increase in earnings of college graduates.  So low are we

sunk into the slough of Mammon that a serious news medium carries the message

that a lifetime of collecting unearned income from the labor of others is to be

preferred to the equipping of our children to improve the world.


      And what rate of taxes should our children claim from their generation

if indeed they did borrow to send to college all who had the appetite to go? 

I would not specify, except that it should be enough to pay off that debt, and

possibly also a bit of the debt the same generation inherited.  It should not

tax an income as low as the BWR.  It would be impossibly difficult to assess

for each income the value of the knowledge which produced it.  But there would,

of course, be those who would maintain that the common knowledge was no part of

their equipment for obtaining prosperity.  I cannot imagine what constellation

of circumstances would sustain such an argument, but there are a few cases

which spring to mind and can be dismissed.  The entertainer or athlete who

operates on a natural talent which is totally or nearly totally untutored,

but even he* capitalizes on the general prosperity, which does flow from the

world's knowledge.  The rentier who lives on the inheritance from a parent or

grandparent is ipso facto a parasite on that knowledge.  He* who finds gold not

only is likely influenced in where to look by the common lore but relies on the

wealth of others to turn the find into goods and services for his* own use. 

In general, it might be efficient simply to dismiss such claims on the general

grounds, common in tax law, that it need be no more than just in the large.  And

yet, it might not hurt to allow such claims to be made, and to be sustained if

just, providing the adjudication were stern and the presumption adverse.  If one

can prove such a case against the presumption, it might be allowed.  But I would

opt against allowing an opportunity to create yet another metier (the advocacy

of such claims) which would waste the valuable resource of intelligence in the

service of proving such a useless cause.


[* See Chapter 6.]


      In the interests of simplicity, a steeply progressive income tax with a

large portion exempt from taxes should serve to repay the debt of the generation

which indentures itself to provide free public education to everyone with the

talent and the inclination to make use of it.




Chapter 42. Cratchit


      One of the difficult facets of my diatribe against exoslavery

(See Chapters 20 and 21 on Greed and Free trade.) is that in many of the

countries where wage slavery or even actual chattel slavery is in effect, the

alternative to the slavery is starvation.  My friend Max suggests that I am

advocating condemning those hopeless millions to death in order to support the

comparatively affluent workers of America.  It raises a question which deserves

analysis in depth.  Dickens raises the issue implicitly in A Christmas Carol

when he has Bob Cratchit toast Scrooge at his Christmas dinner as ``the author

of this feast.''  Most of us have never thought much about it, beyond seeing

Cratchit as a good man, possibly foolishly good, for his gratitude to his

miserly employer.  But it is worth thinking about it as Dickens saw it.  I am

convinced that he sees Cratchit's attitude as the proper one, for his position

with Scrooge, as bad as it was, was the only alternative to destitution in the

context of predatory Victorian capitalism.  The alternative on Scrooge's part

would be seen as open-handed generosity, which our mathematical economists of

the 20th century call irrational.  People who call on others to stiff those

waiters who will have no opportunity to retaliate would not countenance

Scrooge's paying Cratchit more than the Iron Law of Wages dictates.


      To bring this issue into clearer focus, I want to study two incidents

in recent years which have impinged on the liberal consciousness.  The first is

the disaster at Bopahl, in India.  There, a Union Carbide plant had a safety

failure which resulted in the liberating of a large quantity of isocyanic gas,

highly poisonous and with catastrophic effect on the population.  Although I

have no hard evidence to support my suspicion, I believe that one of the major

factors which led Union Carbide to locate the plant in India was exactly the

absence of the close regulation under which their plant in West Virginia

(a nearly exact replica of the Bopahl plant) had to operate.  Like the low

wages and the suppression of union activity, the absence of regulation is

touted, often sub rosa, as a reason to relocate economic activity from the

advanced countries to those which are in an earlier stage of development.  In

fact, the potential closing of the Bopahl plant was seen by the local labor

force as a greater threat than the isocyanic peril.  A similar thing happened in

West Virginia, when the federal regulators discovered that the plant there was

at risk of a similar accident.  The threat to close the plant until the danger

was obviated resulted in a major protest demonstration by the local population.

Their fervent support of the corporation which was endangering their lives was

an almost perfect replica of Cratchit's expression of gratitude to Ebenezer



      The liberal view on Bopahl was that Union Carbide should have built the

plant there to American standards and maintained it with the scrupulous care

which was required in the United States.  (This was before the discovery of

the peril in West Virginia.)  I agree, but then I think they should have paid

American wages and had an American level of union activity.  The hole in that

view is that Union Carbide would likely not have built the plant on that basis.

They have never been thought to be in the business of broadcasting charity,

except when it brought them profit.  Forcing dangerous surroundings on poor

people as the only alternative to starvation is a nasty business.  We are seeing

it more and more as toxic or nuclear waste facilities are being foisted on poor

populations both at home and abroad in exchange for pittances they are in no

economic position to refuse.


      To see the other side of the Bopahl situation, we should examine the

circumstances surrounding the closing of the coal mines in Britain.  There, the

mines were being operated by the government, under the British Coal Board, at a

loss.  That loss was small, amounting to a few pounds per worker per week.  In

a politically clever move, Prime Minister Thatcher precipitated a strike as a

way of showing political muscle and securing the support of the urban middle

classes against what was seen as the unbridled power of the coal union leaders.

When the strike had been defeated, Thatcher sold off the mines as a huge loss,

and many of them were closed, forfeiting essentially forever substantial

reserves of coal which are becoming unreachable as the earth reclaims miles of

tunnels.  The miners have become a much greater burden on the public purse as

the economies of their areas have collapsed and hundreds of thousands have gone

on the dole.  It has been seen, and is still seen, as a disaster for Northern

England and South Wales.


      Seen from the liberal position on Bopahl, however, Thatcher's move can

be seen as a gift to the North and to Wales, a gift which no Tory government

would have made if so petitioned by the mining communities.  For generations,

the miners have had a peculiar schizophrenic relationship with their vocation,

being proud of the manly courage with which they have faced the terrors of the

underground fires and explosions, the agony with which they have dug the coal

at the most inopportune faces, the dangers of collapse from inadequate shoring

up of the tunnel ceilings, and the fine coal dust which has rotted their lungs

and carried so many to an untimely death.  At the same time, and in spite of the

joys of comradeship with those who faced all this with them, every generation

of mine workers and mine leaders has sworn to end this terrible life and to

bring their children and grandchildren out of the pits.  If they had asked the

Nation to support them by closing the pits and granting them the dole on a

nationwide basis, they would likely have been met with the sort of resentment

being expressed today against welfare-dependent people in the United States. 

They would have been accused of sloth, and of living off their more diligent

compatriots.  The closing of the mines by the Tories, over the miners' loud

protests, puts the onus on the Nation and hardly anyone has been so coarse as

to accuse the miners of laziness.  Willy-nilly, their children have had to find

other sources of income, and the burden has been picked up, to one degree or

other, throughout the United Kingdom.


      The exporting of low-wage and/or high-risk jobs to the desperately poor

people of the developing world is not an act of charity.  It is a way to reduce

the workers of the industrialized world to the same level of penury.  It is a

mechanism for breaking the unions, of setting workers at each others' throats in

search for the remaining jobs.  In fact, we see the results in the United States

and in Europe in our own time.  Although the productivity of labor has risen

sharply as a result of the use of the People's knowledge, and the per capita

income, in real money, of Americans has risen in the past fifteen to twenty

years, the incomes of the poorest 60 \% has fallen, and an additional 20 \% have

seen no increase.  Even the market of the United States for other foreign goods

than the exported industries make has fallen off as American workers have less

disposable income.  The Cratchits of the Third World must know that it is not in

their genuine interest to have governments which will sell them as slaves to the

greedy rich of America. 


      If we are to help the starving masses of the rest of the world, we must

restrict our imports only to those countries which do not countenance slavery

or near-slavery.  There would be less in that for the corrupt classes which

conspire with the purchasers of that labor to deliver it on the basis we see

today.  In the short run, it would advantage our Cratchits over theirs.  But it

can never be to the advantage of the workers to cut each others' throats over

the race to the bottom, restoring the Victorian horrors which Dickens portrayed

so vividly a century ago.








Chapter 43.  Making nice


      The smartest man I know has always kidded me about my desire to ``make

nice''.  He accuses me of wanting to be a Jewish Mother to the world.  Said

Jewish Mother wants to tell her children, ``Play nice; don't fight.''  But the

animal psychologists tell us that aggression is intrinsic to the reptilian

center of our human brains.  What are we to believe?


      The utopians have always operated on the supposition that there is

enough for all.  They have said this even in those times when, seen from today's

perspective, there clearly wasn't.  And there is the question of whether the

Earth can support all the humans which we will impose upon it if all the peoples

of the world continue to breed at the rate which we have seen in the 20th

century.  All these are significant questions, but they are not the questions

which separate this thesis from those I wish to challenge.  For the shortages

which current economics seeks to understand are not those which arise from the

genuine limitations of the environment, but are shortages created in the minds

of the players in the economic game.  They are not shortages of food, or of

basic housing resources, of schools or even of roads or automobiles, but perhaps

of titles, landed estates, Picasso paintings, boxes at the Royal Opera House,

yachts, etc..  Since so many of the economists are paying court, in one way or

another, to those for whom these are the real issues of economic life, it is not

surprising that these things, sometimes referred to as ``positional goods'', are

seen as so important.


      However, in democratic states the power of the vote resides in people

whose basic needs are to have the things I referred to in Chapter 37 on The

People's share:  adequate food and clothing, a home with a bedroom for each

child, all the education that anyone might want, all the health care that

anyone might need.  And several weeks' vacation each year with the funds to do

something interesting with it.  It is this which our ``scientists of scarcity''

claim cannot be achieved universally.  Or at least not without depriving us of

the impetus to do more and do better.


      The interesting thing about this claim is that it is demonstrably false,

and that this patent truth counts as nothing in the reckoning of the fashionable

economists.  In fact, during the 1960s and 1970s, this situation was nearly

achieved in the industrialized world.  And this in circumstances when labor

was far less productive and nearly every consumer item required more materials

and more labor than at present.  It is true that the population, even of the

industrialized world, was smaller than now, but even that is an illusion. 

Those nations would in fact be smaller in population than they were then, but

for the effect of a quite substantial immigration.  Much of this immigration

was deliberately fostered, either by the governments directly or by elements in

the economy which saw it in their own interest.  Thus, there was the ``guest

worker'' program in Germany and the deliberate courting of illegal immigration

by the farm estates in California and the restaurants of New York.  In the

less developed parts of the world, people were beset with philosophies which

spurred them to greater fecundity than their lands could sustain, and some of

these saw emigration as the natural vent to their overpopulation.


      However, I will restrict my attention in this chapter to the

industrialized world, and almost exclusively to the United States, though I

think that most of what I say applies to the whole of the G7, the richest

seven countries in the world.  There, as I said, for all of the 1960s and

1970s the standard of living for the vast bulk of the population met the

criteria I had set forth, but not for all.  The way of dealing with those others

was to fob them off with the dole, euphemized as ``welfare''.  However, in the

past twenty years, as labor became more efficient and as the GDP per capita

grew in real terms, the ranks of the unemployed, the welfare-dependent, and

the underclass generally grew as well.  The power of the unions shrank and

the rich took unto themselves more than the whole of the new wealth.  The

per capita income of the bottom 60 \% actually shrank.  Though there was some

redistribution involved within that group, that hardly affected the whole,

especially with the next 20 \% gaining nothing.  The nation felt it could afford

to support the unemployed on the dole, and to overlook the deterioration of the

living standards of the underclass.  And in all of this, the sense was that we

were being kind and tolerant, even of those who were portrayed in the press as

being cynically and opportunistically welfare-dependent.  We saw ourselves as

``making nice''.


      However, by the late 1980s and into the 1990s, we have opted for nasty.

Although every major study has shown that punishment does not deter violent

crime, we have pushed for increasing amounts of it.  And in spite of the

evidence to the contrary, we are now acting to get people employed by punishing

them if they are not.  There is a national mood now for the death penalty,

and although it is known that this will not stop murder, the push is for

vengeance rather than deterrence.  Similarly for the long sentences, up to life

imprisonment, for possession of small amounts of drugs, even marijuana.  It

is not the prospect of deterring crime which speaks to the people, but the wish

to ``get even'' with those who will not do as they should.  In the area of

welfare, ordinarily decent people are ready to starve the children of unmarried

or abandoned mothers if these are unwilling or unable to conform to what is

expected of them.  As the rich press down on the people, the people turn against

anyone who is an available target, not to say a scapegoat.


      The image of the rising tide which raises all the boats is invoked to

get people to be tolerant of the excesses of those above them in wealth and

status, but it carries no weight when applied to the enriching of the poor. 

Even the raising of the minimum wage is bitterly opposed by the minions of the

rich, as is the prospect of universal health care and free public education

from the cradle to the grave.  Yet all these things are within our grasp at

this time, and without removing the incentive to succeed.  We had it in the

1960s and 1970s.


      The past twenty years have been a period of class war, by the rich

against the working classes and by the working classes against the idle poor.

These forms of class warfare go unremarked and uncriticized.  It is only when

the poor or the workers lay claim to class interest that the kept press and

the courtiers among the intelligencia find voice against the horrors of class

warfare, by which they usually describe such innocuous tactics as appeals to

use the ballot box to redress their grievances.  But there is even worse in

the offing, perhaps, if the powerful continue to press their advantage.  For

despite the considerable disinclination to actual revolution, and despite the

fact that no revolutionary class has seen an advance in its own lifetime or

even that of its children, the upheavals, when they come, are always unexpected

and are always, in a deep sense, the responsibility of the former rulers, who

waited too long to correct that which they had every reason for seeing, if only

they had been willing to see.  The degree to which Patrick Buchanan could rally

the resentment of the working classes in the Republican primary elections in

1996 should warn us that the results of playing nasty could get out of hand in

a hurry, either in the hands of a Fascist or a Communist, and then it would be

too late to try to cure things with a Kerensky Government.  Revolutions were

narrowly averted in England in 1832 and in the United States in 1932, but I

doubt that we have until 2032 this time.


      So it is time to make nice.  It is time to distribute at least half of

the economic gains of the past twenty years to the people at the bottom of the

economic pyramid, and to restructure the economics of knowledge in the interests

of the legitimate owners of most of it, the common people.





Chapter 44. A call to duty


      My friend Al criticizes this book for preaching to the choir.  So now I

turn to the choir and preach directly.  These words are for those who have been

convinced by what I have written thus far.  Many of you are people who wanted to

believe from the start, and of course we should all be wary of believing what we

want to.  It is entirely too easy.   But now comes the hard part, because there

is a cause to be advanced, a campaign to be undertaken, and it will not be easy

or particularly cheap, either in time, effort, or even money.  It will cost.


      I address myself first to the economists.  It is here that I expect my

greatest resistance from within the intellectual community.  I have intruded

into the established paradigm of the day, and invited you to overturn it. 

I know that you are comfortable with that paradigm and with the prosperity

which has flowed from your embrace of it.  I have spoken of the rewards of

courtiership, and I know that these are subtly seductive.  There is gold in

them thar hills, whether the gold of comfortable salaries or the gold medals

of the Nobel Memorial Prize.  But there is something more important at stake,

and I call you to its service.  We have a special destiny in the nurturing and

flowering of the human race.  I have not called us magicians for nothing.  And

while a magician can be a mountebank, he* can also be a healer and a seer and

a saver of lives.  And that is exactly what I now call upon all of us, and

especially the economists, to help with.


[* See Chapter 6.]


      While the cult of greed, known more gently as the school of rationality,

which has flowed from von Neumann and Friedman, has dominated the most rewarded

heights of the economic community for the past half century, there is also

a gentler and more humane tradition reaching back to Veblen and beyond, and

represented in our time by such as Galbraith.  It is a tradition which is short

on statistics and formulae but longer on intuition and insight.  For those who

aspire to be thought the peers of Einstein and Pauling, these are ``mere''

journalists, and ``journalism'' is the epithet of most extreme contempt in

those circles.  But in fact, THE THEORY OF THE LEISURE CLASS was one of the

most important and influential books of the 20th century, though much less

read of late, and THE AFFLUENT SOCIETY bears rereading today as the school of

rationality carries us further from those virtues which these two books, and

their authors, proclaimed as paramount in the building of a new and better life

for the people of the world.


      It is tempting to seek a Newtonian economics, but we need to reduce

all economic life to measurable quantities to accomplish it and that is not

realistic.  The models present wonderful and interesting problems of mathematics

but their depiction of the economic world is questionable.  The approximations

are gross and there is more than a little suspicion that the underlying reality

is chaotic in the technical sense, so that even tiny distortions in the

hypotheses can have tremendous effect upon the consequences.  The various fields

of institutional economics, which have been getting short shrift recently, can

offer us some human and humane tempering of the brutal and selfish message

of the rationalist school.  When we assume that all of utility can be

arithmetized and then that everyone will seek the maximization of that utility

on pain of being excoriated as irrational, we build into our definitions the

conclusion that we are somehow morally obliged to be greedy.  It is not then

surprising that the greedy applaud those efforts, support them generously, and

run to hire those who have been baptized into that faith.


      I know that it is hard to incur the animus of the commercial, industrial

and financial community which has lived in symbiosis with the pronouncements of

the Chicago School for so many years and brought their adherents such honor and

prosperity, and I wonder how much altruism I might expect from those who think

it irrational to tip a waiter they will not see again, but I offer you this

crown of thorns modestly and with respect, in the hope that you will take it up

and wear it.


      I address myself next to the rest of the academic community, for it is

we who must carry the message, with or without the support of our cousins, the

economists.  We might well be thought guilty of special pleading, as those who

would benefit most from the orientation I am proposing are precisely those who

live by the product of the mind.  But it is not all benefit.  In Chapter 16,

I speak directly of the obligation to share what bounty is available so as to

maximize the production of knowledge, and not to set too stringent limits on

who will be available to partake.  It might result for many in the sort of

genteel poverty which used to characterize the lives of those pre-World War II

professors who were so unfortunate as to have to live on their salaries.  There

are limits, of course, to the sort of penury we should have to endure in this

cause, but I have nominated the floor below which no one should fall, and that

is sufficient if we understand that the benefit of sharing is that we shall

all have the time and resources to pursue our studies and the more of us there

are in the pool, the less will our assigned duties impinge in our scholarly

efforts.  If, in the process, we individually and/or collectively raise the

standard of living of the human race, we too shall profit thereby.  Again the

tide and the boats.


      I next address myself to the intellectual community beyond the walls of

the Academy and the further reaches of the research and development community.

You are our first audience, and our major contact with the wider world.  That

you read this book indicates that we have a special relationship with you which

we often find difficult in extending further.  We will need your help in

promoting an acceptance of this new formulation.  And here I reach the end of

the choir and ask you all to join me in singing to those in the nave, and even

to those who are not now of the congregation.  For the Knowledge which is the

Business of this book is not the property of the academics or the intellectuals,

and is only briefly the possession even of those who invent, discover, or create

it.  It belongs to the common people, the whole human race, to generations yet

unborn who will reap its bounty millennia into the future.


      I pray that my trumpet should not make an uncertain sound, for the

battle to enrich our progeny with all the knowledge that our endowment of

intelligence will sustain is indeed the holiest and most valuable vocation I can

imagine, and I only hope I will be worthy and able to proclaim its gospel to a

world which hardly seems inclined to accept it.







Chapter 45. Knowledge is wealth


      Knowledge is the treasure of the human race.  Accumulated over the

megalennia, at first slowly and with great difficulty, and accelerating with

time so that the majority has been discovered in the 20th century and the majority of the remainder in the 19th, it is our hope and our shield in a world where the fecundity of our species literally threatens to extinguish most vertebrate life in our consumption of the world's land and resources.  It is a process which would have happened even if our knowledge had not taken us beyond the level of the agricultural revolution, though it would have happened more slowly.  But the only hope of arresting the process lies in more knowledge and its wider distribution.  It is the scientists and philosophers who have uncovered this peril and it is they who must find the road out of the morass.  Those who seek refuge in ignorance and retrogression can only impede the process until possibly it is too late.


      Literacy is knowledge, and so is literature, and art, and music.

Knowledge gives us the hope of living with less disease, of living longer, of

seeing our children grow to maturity, of having grandparents to sweeten their

childhoods.  Knowledge has created the possibility of a life freer of toil, in

which we can fill the leisure hours with these treasures.  If we have misused

the blessing in the pursuit of our greed, it is knowledge which can point the

way to undo the abuse.  If we have raped the Earth in our immoderate demand for

materialistic pleasures, it is an error we can amend by finding ways to use less

while enriching our lives even more with deeper satisfactions.  A violin can

provide a lifetime of pleasure to one who will learn to play it, and for less

cost, in money and in resources, than a skiing trip.  A bicycle has more to

offer of lasting value than a speedboat.  A copy of THE WIZARD OF OZ has more

magic in it than a trip to Disneyland.


      Let me here take note that the deep and simple pleasures I refer to are

known to be favored more by people who have more education.  Thus, knowledge is

also a key to its own door.  The illiterate is locked out of the world of books,

a world which may become, in the age of information, more widely available than

ever before.  Those with only an elementary education will be less likely to

be able to experience the joys and plumb the depths of a Shakespeare play.  For

them, the need for a motorcycle or a trip to the excitements of Las Vegas may

well be more important.


      Educated people, and especially worldly ones, are less susceptible to

the fevers of nationalism and are less tempted by the excitement of war.  I wish

I could say they are immune, but that is patently false.  Maybe with yet more

learning, ... .  They are also somewhat less given to the nastiness which has

overtaken our decade; they are less devoted to capital punishment and are more

inclined to see the amelioration of social problems as the most successful way

of preventing crime.  They are, on the whole, more compassionate with those they

do not know.  They are more likely to want to ``make nice''.


      Knowledge leads us to value freedom, and is essential in the operation

of Democracy.  It dulls the instincts against equality and fraternity.  It is

indispensable in an informed and empowered electorate.  History and the other

social sciences are essential in the thinking of those who have in their hands

the power of decision, whether the atomic trigger or the ballot.


      Knowledge is power.  It is freedom and democracy and literacy. 

Knowledge is health and sometimes life.  Knowledge is wealth.