@ Copyright 1997 by Anatole Beck. All rights reserved.

PREFACE

The past twenty-five years have seen a marked constriction in the activities of education, research, innovation and creativity 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. Not only does this tend to render us powerless in our own professions, but it also makes such things of value such as professional integrity and the advance of our sciences, arts, and scholarship into items which the customers may, at their pleasure, consider luxuries which they do not care to support. I must report, in sadness, that there are members of the knowledge business (the choir of the subtitle) who have accepted this point of view. I suspect that almost all are motivated not by conviction but out of capitulation to what they see as overpowering force.

The bulk of those who reject this viewpoint ,and (paradoxically) many of those who accept it , is that all the artists, scientists, scholars, etc. are, in large part Mozarts, Renoirs, Darwins or Einsteins and are entitled to be supported comfortably, both in their personal and professional lives. They claim that this support is the sacred duty of a civilized culture, i.e. that the people are pigs if they don't do it. This Byronic approach is pompous and vainglorious, and I reject it, as most people do today. It exalts the status of our profession even beyond its legitimately high standing to rank as essentially a holy enterprise, to be worshipped 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. But is it offensive to the public at large, and also I 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 Roshin 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.

It must be said, however, that this legacy comes with a price, a mortgage as it were, in the form of an intergenerational debt, left by our parents and to be paid out of the proceeds of the inheritance itself. This debt is enormously less costly than the value of the legacy. The true value of interest on it is roughly between one twentieth and one tenth of the annual value of the inherited knowledge, in money alone. This calculation will be supported in Chapter 6, The golden eggs, and a discussion of national net worth, a related matter, is to be found in Chapter 36.

It is unfortunate that forces dedicated to the dissolution of the Welfare State as a model for industrial society have fixed upon this debt as a mechanism for recruiting the electorate to support the elimination of many social programs, and that among these programs we find education, research, and support of innovation and creativity. This is said to be out of consideration for the future of our progeny, but in fact will act to deprive them of far more than they can be compensated for in the amelioration of the debt. The young people being denied the opportunity of a university education are not being helped, nor are those denied early childhood education. The generation which has had scientific research cut roughly in half has likewise not been benefited by the savings of cost and debt in that misguided effort. Yet, even despite this choking of intellectual opportunity, the inheritance has grown and remains our greatest treasure.

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 the dead 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 German 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 A CONNECTICUT YANKEE IN KING ARTHUR'S COURT.

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 inherited by any 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 being 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 powerful 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 early 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, 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 mere 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 for them 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 enrolments 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 undoubtedly constituted 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 , and also a few others, in The Technological Society. 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, or about $ 6 billion in today's money, 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, which was the cost of the Apollo Project, 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. In this case, not only could the early investigators not imagine any use for them, they actually believed they could prove that there could be no use for them. since they were totally imaginary. Any suggestion of funding research into them as a possible investment in future prosperity would have seemed as ridiculous then as a proposal that investing billions in the study of chess would bear substantial fruit in engineering or economic scholarship. And even that would be more believeable than the prospects for fruit from imaginary numbers four hundred years ago. It was ``known'' that these things simply did not exist except in the minds of mathematicians.

Of course, almost all numbers are imaginary, in one sense or another. They exist in a formal system in which we can handle them but they have no reality as such. No one has a real sense of what we mean by 1,497,225,741 , and there is no sense in which our perception of it differs from that of 1,497,225,743 . It is part of the decimal system, and in that system we can handle it, but it is a construct of mathematicians. Fractions are, if anything, even more synthetic and any high school student will tell you how imaginary the negative numbers are. Irrational numbers, such as the square roots of 2 or 3 are even more abstract, though we can accept them as real since they turn up in our study of geometry. But the imaginary numbers, the ones we actually give that name to, are even more abstract than that, and were thought not to refer to anything in the real world for a long time, during which their study rested only on the intellectual curiosity of mathematicians.

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, 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.) Then came the others. 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 with them 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 16th 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 proposition.

And so it went for three full centuries. 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 beyond the scope of this book.

Yet this immensely valuable invention subsisted for over three centuries on just the fact that mathematicians found it enchanting, marvelling 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 thousandfold.

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 if one assumes the hypothesis. And I am about to make 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 1998 of the inventions of the human race up to 1997 will be taken as the value to the people from 1999 forward of the inventions of 1998. Of course, such a manoeuver requires some justification, and I will offer what I can.

[ * 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. Some have advocated exclusive use of the pronouns one and one's. 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.]

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.

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 value.

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 later.

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 the life of ``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, totalled 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 of increase 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 1996 to 1997 is at least as much as the value of 1995's to 1996. The value of 1996 to 1998 wil probably be more than the value of 1994 to 1996, and so it goes. Undoubtedly, the value of the product of 1996 to 2006 will exceed the value of 1986 to 1996. 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 1996 is indeed greater than 1996 will prove to be to 2022. 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.

Just one indication of the advance of knowledge and technology in the course of the second millennium can be found in the advance of agriculture. In France, one thousand years ago, according to the historian Georges Duby, a serf would sow 3 bushels of wheat seed to reap a crop of about 5 bushels, or a usable crop (over the seed for the next year) of just over 60 % of the seed. Today in the same country, the wheat crop is between 7,500 % and 10,000 % of the seed sown, or a multiplication of the rate of yield by 120 - 160 times.

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 at least 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 reasonable, 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, .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 literacy?

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 are 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 most of 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 they are. 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 stones.

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

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 even smaller. 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 the 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 factors other 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.

One of the interesting features of education is its experience in North America. The settlers of 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 ``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.

[To confirm the disparity between American and European literacy rates, see Literacy in the United States by Carl F. Kaestle et al. , Yale (New Haven) 1991, PP. 12 - 25, and in particular PP. 13, 18, and 20.]

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 Landgrant 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 and 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 efficient than 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 fuelled 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 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 ( $ 5. 15 today ) for 30 hours per week for 40 weeks in the year, that comes to $ 6, 180 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 has now been largely discarded by the New Labour government.) Granted that the purchasing power of those grants looks more like $ 2,500 at British 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 fuelled 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 are 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 research. A model is to be found again in the GI Bill of Rights, which not only educated 7.8 million veterans in the period 1945-56, but also kept them out of the job market at a time when the reconversion to a civilian economy was fragile and unemployment was high.

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 $ 528 billion a year. That is not exactly chicken-feed, but it is about 6.6% of a GDP of about eight trillion dollars. By comparison, the cost of health care today is about 15% and the defense budget during the thirty-eight years of the Cold War (1952 - 1990) averaged 8.5% of GDP, with an average of 9.8% for the first half of this period, according to the Historical Tables of the Budget of the United States Government published by the Office of Management and Budget in 1997 (PP. 96 - 98). Interestingly, the figures of the Bureau of the Census, published in 1996 in the Statistical Abstract of the United States covers only the years from 1965 forward, and is consistently 0.1% - 0.2% higher for those years (P. 351). And all 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.

[The rough calculation is as follows: There are about 12,000,000 children between the ages of 2 and 5 (Chronicle of Higher Education, Almanac issue 1997, Vol. XLIV no. 1, p. 5). I calculate the cost for these at $1,000 per month for a total of $ 144 billion per year. The same source shows about 2.5 million high school graduates (p. 19) after a drop-out rate of 9%. (p. 5) This gives the number of high school juniors and seniors (including those now dropping out) at under 6 million. At $ 6,180 per year, that is about $ 37 billion. Again, the same source gives 12 million undergraduates and 1.872 million in graduate and professional schools. (p. 19) At $ 25,000 per year, that is $ 347 billion. The cost of post-doctoral research is trivial compared with these.]

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.