The Information Economy

by Dave Paulsen

dave@reststop.net

Copyright© 1991, all rights reserved

Introduction

Four of the major influences on we as humans and our civilization in the late twentieth century are the concepts of information, economy, education, and mass media. The linkages between these systems form another system that defines the environment of human social life and psychological development, or who we are and what we want. At one point in history information was scarce, the economy was run by local fiat, education was for the nobility and clergy, and the mass media was non-existent. This was only about 500 years ago, when Gutenberg's invention of the movable type printing press allowed greater access to information, written in the common vernacular, and an economically feasible means of advertisement. This time span in the course of human evolution accounts for only about 5% of our psychological and social development.(1) The changes that have been made in the last 500 years have had less time to be assimilated, for people to discover the full uses and proper applications of technological change, and how these changes can be used to a greater advantage by a greater percentage of the human race. It should come as no great surprise to anyone that we seem to only get it right about 5% of the time, and we should admit outright that mistakes have and will be made. Sometimes other ideas should be entertained

The 10,000 years that humans had slowly been changing and adapting in the agricultural based society suddenly changed to the industrial society in the 1700s. The industrial revolution was put into high gear by the 1780 invention of a practical steam engine by James Watt (Burke, 1985. p. 190) which fueled the nascent economy and decreased the percentage of the population involved in agriculture. That period lasted for less than 150 years before the start, round the turn of the twentieth century, of the information age, which really got underway in the late 1950s with the start of global communications.


The information economy

This information economy, kindled by Gutenberg, was further flamed when Samuel F. B. Morse's telegraph was put into operation in 1844, and again when Guglielmo Marconi sent a radio signal across the Atlantic Ocean in 1901. With the laying of the Transatlantic phone cable in 1956, and the launching of the Early Bird communication satellite in 1965, we had realized instant global communications. By the time white collar workers outnumbered blue collar workers in the late 1950s (Naisbitt, 1984), the information economy was firmly entrenched.

The industrial economy of the early 20th century saw the beginning of mass production techniques that made it possible for higher manufacturing productivity levels. In the period 1923-9 factory productivity increased 55%, machinery output increased 50%, this production growth was higher than the population growth (Burck & Silberman, 1955), and the mass market was born. As the population increased, there was less demand for labor in the manufacturing sector. The service sector picked up the slack from the population increase to keep overall unemployment levels at the same percentage of the labor force (p. 165). At the same time, the mass media and advertising sectors were increasing, first with radio and then television in the early 1950s.

The mass market created by a production growth that was greater than population growth was fed by advertising. And this advertising was aimed at an increasingly affluent society that was earning its income from the information sector of the economy. These jobs have increased from about 17% in 1950 to 65% in 1984 (Naisbitt, 1984, p. 4), and include managers, professionals, technicians, educators, computer programmers, administrative support, clerks, lawyers, bankers, insurers, and bureaucrats. Our labor force in 1983 had 12% employed in manufacturing operations, and less than 3% in agriculture (p. 5).

The American economy itself in 1988 was made up of 17.8 million firms, 71.3% were in the transportation, communications, wholesale and retail trade, financial, and service industries, and contributed 57.2% of the 7.8 trillion dollars in receipts reported to the IRS. The manufacturing sector contained 3.4% of the firms, and contributed 33.6% of the receipts (Ragan & Thomas, 1990, p. 115). In light of the above facts and statistics, it seems to make little sense to want to re-industrialize or continue our reliance on the manufacturing sector of the American economy to keep us competitive and a leading force in the world's economy. The leading economic resource in America today is the production and distribution of information and services. American companies held 20% of world wide market share in the export of services in 1980, and 90% of the 19 million new jobs created in the 1970s were in the information, knowledge, and service sectors (Naisbitt, 1984).


Information as a commodity item

Marshall McLuhan foresaw the information society's ability to create what he called the Global Village using television as the medium. The trends that have been developing in recent years I believe put us in what could more descriptively be called the Global Cottage, with computer technology and satellite communications providing the basic linkages. Today any individual can access information held anywhere else in the world, right from their living room, or engage in conversations with others no matter where they are, on or off the planet.

As information becomes more valuable a market value needs to be put on it, as people become more aware of the power information and knowledge can wield. John Naisbitt (1984) says "Marx's labor theory of value . . . must be replaced with a new knowledge theory of value." Business, both large and small, and individuals will more and more become information brokers. Information and knowledge in different areas of expertise will be needed to be sorted and retrieved, and even the companies and individuals that cover a certain area will need to be accessing information from other areas and disciplines. As people become more aware of the multitude of sources that make up information, the need for an effective selection process becomes apparent.


The media's role

The need to sort the information out of the data, and organize it in a meaningful way that can be presented to the public, has been the job of the media, including newspapers, magazines, radio, and television. The power of the media in presenting the news and information is reflected in the figures showing that 66% of Americans say they get all the information they need from television. Television itself has grown from six stations serving 8,000 homes in 1946 to 1,050 stations serving 93 million homes, or 98.5% of American homes (Scherler, 1991).

The information flow through the media affects gold prices in Zurich, wheat prices in America, the stock market in Hong Kong, and lingerie in Paris as market conditions and advertised prices are broadcast throughout the world by news services like the Associated Press, Reuters, and Dow Jones (Fink, 1990). The economic power of the media is shown by the excess of 58 billion dollars in sales by the largest 100 media companies, and the 118 billion dollars spent on all media advertising (pp. 60-1).


Replacing America's economic strength

The traditional economic outlook on America's financial strength divided our output into either the industrial or the service sector. The service sector, however, needs to be broken down into its constituent parts, including the traditional service sector jobs, and the information and knowledge workers. Only in this way can we see exactly where the majority of the economic strength lies. In this way we can better see where to put our educational and retraining resources.

Education is more important now than ever before because the information sector of the economy is brain intensive. Unfortunately, the literacy rate in America is dropping. Dropout rates are increasing while SAT scores are decreasing. By the early 1980s, 300 companies were providing remedial English and math courses to entry level employees (Naisbitt, 1984). Says Naisbitt (p. 26),

Just when offices are demanding more highly skilled
workers--to operate a word processing machine, for
example--what they are getting is graduates who would
have a hard time qualifying for the jobs that are
already technologically obsolete. One large information company, IBM, was spending about 500 million dollars annually on employee training and education (p. 32).

It is popularly reported that over 75% of the jobs in America today have something to do with computers and information processing. Knowledge of computers is not only a vocation in itself, but a salable advantage in job skills for an ever increasing number of other occupations.


Conclusion

Information and knowledge as an industry will not replace the manufacturing industry totally, anymore than industry replaced agriculture, although it is possible that the number of laborers in manufacturing may drop to the levels of agricultural workers. Even though the information sector of the economy may not appear as tangible as the output from the manufacturing sector, information will continue to be a salable item because it costs something to produce and people are willing to pay for it.

What we need to do is gear up the educational process to better prepare people for life and work in the information age. We need just as many of our best and brightest going into education as into the industrial and information sectors of the economy. The personal as well as societal worth of becoming educated, and the skills necessary to pass that education on to future generations, needs to be stressed much more in American society. This is one of the areas that mass media, especially television and advertising, could prove to be extremely beneficial in.

With the reach and impact of media today, part of their charter to serve the public interest should be to show both the value of education and that knowledge acquisition is not a painful experience. Retraining into a high tech job can have rewarding side effects, many of them far reaching. Media could be presenting educational and training materials in order to make information easily accessable, because the artifacts of societies modern technology require not only the knowledge to design them, but also the skills to maintain them.

An example of the high tech maintenance requirements of our present society, and our failure to meet these requirements, is illustrated by the number of workers needed but not available in the waste disposal industry. A billion gallons of partially treated sewage was dumped into San Francisco Bay in 1979, devastating marine life. This was from a brand new plant, which had nineteen vacancies on its operating staff, including the biologist whose job it would have been to monitor and clean the bacteria screens which clogged and caused the plant malfunction (Naisbitt, 1984, p. 49). This same lack of staffing, and underqualification of other employees, is also apparent in the nuclear and transportation industries. Instead of hiding our heads in the sand and bemoaning the march of progress, we need to meet the challenges head on and prepare ourselves and our future generations for our high tech information based future.


Notes

(1). Dated from mans first tribal villages about 10,000 years ago (Gribbin, 1981. p. 273) and the start of agriculture, which provided the first man made permanent environment which led to the start of civilization and the social mores we live with today.

References

Burck, G. & Silberman, C. E. (1955). What caused the great
depression? From Unemployment. pp. 163-72.

Burke, J. (1985). The day the universe changed. Boston:
Little, Brown, & Co.

Fink, C. C. (1990). Inside the media. New York: Longman.

Gribbon, J. (1981). Genesis: The origins of man and the
universe. New York: Delacorte Press.

Naisbitt, J. (1984). Megatrends. New York: Warner Books.

Ragan, J. F. Jr. & Thomas, L. B. Jr. (1990). Principles of
economics. New York: Harcourt Brace Jovanovich.

Scherler, K. (1991). Mass Media class lecture notes. Spokane
Falls Community College.

Next dave T.O.C. CRS Home CRS T.O.C. Content Forums File Areas Coming Events What's New?

Questions or comments about these Web pages? Send e-mail to
dave@reststop.net

Copyright © 1994-1997 by CyberNaut Rest Stop™