Physics of the Future_ How Science Will Shape Human Destiny... Part 19

Surprisingly, there is a large cla.s.s of blue-collar work that will will survive the computer revolution and even flourish. The winners will be those who perform nonrepet.i.tive work that requires pattern recognition. Garbage collectors, police officers, construction workers, gardeners, and plumbers will all have jobs in the future. Garbage collectors, in order to pick up the trash at different homes and apartments, have to recognize the garbage bags, place them in the truck, and haul them out to the waste yard. But every piece of trash requires a different method of disposal. For construction workers, every task requires different tools, blueprints, and instructions. No two construction sites or two tasks are the same. Police officers have to a.n.a.lyze a variety of crimes in different situations. Moreover, they also have to understand the motives and methods of criminals, which is far beyond the ability of any computer. Similarly, every garden and sink is different, requiring different skills and tools of the plumber. survive the computer revolution and even flourish. The winners will be those who perform nonrepet.i.tive work that requires pattern recognition. Garbage collectors, police officers, construction workers, gardeners, and plumbers will all have jobs in the future. Garbage collectors, in order to pick up the trash at different homes and apartments, have to recognize the garbage bags, place them in the truck, and haul them out to the waste yard. But every piece of trash requires a different method of disposal. For construction workers, every task requires different tools, blueprints, and instructions. No two construction sites or two tasks are the same. Police officers have to a.n.a.lyze a variety of crimes in different situations. Moreover, they also have to understand the motives and methods of criminals, which is far beyond the ability of any computer. Similarly, every garden and sink is different, requiring different skills and tools of the plumber.

Among white-collar workers, the losers will be those involved in middleman work taking inventory and "bean counting." This means low-level agents, brokers, tellers, accountants, etc., will be increasingly thrown out of work as their jobs disappear. These jobs are called "the friction of capitalism." Already, one can buy a plane ticket by scanning the Web for the best prices, bypa.s.sing a travel agent.

Merrill Lynch, for example, famously stated that it would never adopt online stock trading. It would always do stock trading the old-fas.h.i.+oned way. John Steffens, Merrill's brokerage chief, said, "The do-it-yourself model of investing, centered on Internet trading, should be regarded as a serious threat to America's financial lives." So it was humiliating, therefore, when it was finally forced by market forces to adopt online trading in 1999. "Rarely in history has the leader in an industry felt compelled to do an about-face and, virtually overnight, adopt what is essentially a new business model," wrote Charles Gasparino of ZDNet news.

This also means that the corporate pyramid will be thinned out. Since the people at the very top can interact directly with the sales force and representatives in the field, there is less need for middlemen to carry out orders from the top. In fact, such job reductions occurred when the personal computer first entered the office.

So how will middlemen survive in the future? They will have to add value to their work and provide the one commodity that robots cannot deliver: common sense.

For example, in the future, you will be able to buy a house on the Internet via your watch or contact lens. But no one is going to buy a house this way, since this is one of the most important financial transactions you will perform in your life. For important purchases like a home, you want to talk to a human who can tell you where the good schools are, where the crime rate is low, how the sewer system works, etc. For this, you want to talk to a skilled agent who adds value.

Similarly, low-level stockbrokers are being thrown out of work by online trading, but stockbrokers who give reasoned, wise investment advice will always be in demand. Brokerage jobs will continue to dry up unless they offer value-added services, such as the wisdom of top market a.n.a.lysts and economists and the inside knowledge of experienced brokers. In an era when online trading mercilessly drives down the cost of stock trades, stockbrokers will survive only if they can also market their intangible qualities, such as experience, knowledge, and a.n.a.lysis.

So among white-collar workers, the winners will be those who can provide useful common sense. This means workers involved with creativity-artwork, acting, telling jokes, writing software, leaders.h.i.+p, a.n.a.lysis, science, creativity-qualities that "make us human."

People in the arts will have jobs, since the Internet has an insatiable appet.i.te for creative art. Computers are great at duplicating art and helping artists to embellish art, but they are miserable at originating new forms of it. Art that inspires, intrigues, evokes emotions, and thrills us is beyond the capability of a computer, because all these qualities involve common sense.

Novelists, scriptwriters, and playwrights will have jobs, since they have to convey realistic scenes, human conflicts, and human triumphs and defeats. For computers, modeling human nature, which involves understanding motives and intentions, is beyond their capability. Computers are not good at determining what makes us cry or laugh, since they cannot cry or laugh on their own, or understand what is funny or sad.

People involved in human relations, such as lawyers, will have jobs.

Although a robolawyer can answer rudimentary questions about the law, the law itself is constantly changing, depending on s.h.i.+fting social standards and mores. Ultimately, the interpretation of the law boils down to a value judgment, where computers are deficient. If the law were cut-and-dried with clear-cut interpretations, there would be no need for courts, judges, and juries. A robot cannot replace a jury, since juries often represent the mores of a specific group, which are constantly s.h.i.+fting with time. This was most apparent when Supreme Court justice Potter Stewart once had to define p.o.r.nography. He failed to do so, but concluded, "I know it when I see it."

Furthermore, it will probably be illegal for robots to replace the justice system, since our laws have enshrined a fundamental principle: that juries be made up of our peers. Since robots cannot be our peers, it will be illegal for them to replace the justice system.

On the surface, laws may seem exacting and well-defined, with precise and rigorous wording and arcane-sounding t.i.tles and definitions. But this is only an appearance, since the interpretations of these definitions constantly s.h.i.+fts. The U.S. Const.i.tution, for example, appears to be a well-defined doc.u.ment, yet the Supreme Court is constantly split down the middle on controversial questions. It is forever reinterpreting every word and phrase in the Const.i.tution. The changing nature of human values can be easily seen simply by looking at history. For example, the U.S. Supreme Court in 1857 ruled that slaves could never become citizens of the United States. In some sense, it took a civil war and the death of thousands to overturn that decision.

Leaders.h.i.+p will also be a prized commodity in the future. In part, leaders.h.i.+p consists of sizing up all the available information, viewpoints, and options and then choosing the most appropriate one, consistent with certain goals. Leaders.h.i.+p becomes especially complicated because it deals with inspiring and providing guidance to human workers, who have their own personal strengths and weaknesses. All these factors require a sophisticated understanding of human nature, market forces, etc., that is beyond the ability of any computer.

FUTURE OF ENTERTAINMENT.

This also means that entire industries, such as entertainment, are undergoing a profound upheaval. For example, the music industry since time immemorial was based on individual musicians who went from town to town, making personal appearances. Entertainers were constantly on the road, setting up shop one day and then moving on to the next village. It was a hard life, with little financial reward. This age-old pattern changed abruptly when Thomas Edison invented the phonograph and forever changed the way we hear music. Suddenly, one singer could produce records sold by the millions and derive revenue on a previously unimaginable scale. Within a single generation, rock singers would become the nouveau riche of society. Rock stars, who might have been lowly waiters in a previous generation, became the venerated idols of youth society.

But unfortunately, the music industry ignored the predictions of scientists who foresaw the day when music would be easily sent over the Internet, like e-mail. The music industry, instead of laying the groundwork for how to earn money selling online, instead tried to sue upstart companies that offered music at a fraction of the cost of a CD. This was like trying to sweep back the ocean. This neglect is causing the present turmoil within the music industry.

(But the good thing is that unknown singers can now rise to the top, without having to face the de facto censors.h.i.+p of the big music companies. In the past, these music moguls could almost choose who the next rock star would be. So, in the future, the top musicians will be chosen more democratically, via a free-for-all involving market forces and technology, rather than by music business executives.) Newspapers are also facing a similar dilemma. Traditionally, newspapers could rely on a steady stream of revenue from advertisers, especially in the cla.s.sified ads section. The revenue stream came not so much from the purchase of the paper itself, but from the ad revenue those pages generated. But now we can download the day's news for free and advertise nationwide on a variety of online want-ads sites. As a consequence, newspapers around the country are shrinking in size and circulation.

But this process will continue only so far. There is so much noise on the Internet, with would-be prophets daily haranguing their audience and megalomaniacs trying to push bizarre ideas, that eventually people will cherish a new commodity: wisdom. Random facts do not correlate with wisdom, and in the future people will be tired of the rants of mad bloggers and will seek out respected sites that offer this rare commodity of wisdom.

As economist Hamish McRae has said, "In practice, the vast bulk of this 'information' is rubbish, the intellectual equivalent of junk mail." But he claims, "Good judgment will continue to be highly valued: successful financial a.n.a.lysts are, as a group, the best paid researchers in the world."

THE MATRIX.

But what about Hollywood actors? Instead of becoming box-office celebrities and the talk of society, will actors find themselves on the unemployment line? Recently, there has been remarkable progress in computer animations of the human body, so that it appears nearly real. Animated characters now have 3-D features and shadowing. So will actors and actresses become obsolete anytime soon?

Probably not. There are fundamental problems modeling the human face by computer. Humans evolved an uncanny ability to differentiate one another's faces, since our survival depended on it. In a flash, we had to tell if someone was an enemy or a friend. Within seconds, we had to rapidly determine a person's age, s.e.x, strength, and emotion. Those who could not do this simply did not survive to pa.s.s on their genes to the next generation. Hence, the human brain devotes a considerable amount of its processing power to reading people's faces. In fact, for most of our evolutionary history, before we learned how to speak, we communicated through gestures and body language, and a large part of our brain power was devoted to looking at subtle facial cues. But computers, which have a hard time recognizing simple objects around them, have even greater difficulty re-creating a realistic animated human face. Kids know immediately if the face they see on the movie screen is a real human or a computer simulation. (This goes back to the Cave Man Principle. Given a choice between seeing a live-action blockbuster action movie with our favorite actor or seeing a computer-animated cartoon action picture, we will still prefer the former.) The body, by contrast, is much easier to model by computer. When Hollywood creates those realistic monsters and fantasy figures in the movies, they use a shortcut. An actor puts on a skintight suit that has sensors on its joints. As the actor moves or dances, the sensors send signals to a computer that then creates an animated figure performing the precise movements, as in the movie Avatar. Avatar.

I once spoke at a conference sponsored by the Livermore National Laboratory, where nuclear weapons are designed, and at dinner sat next to someone who had worked on the movie The Matrix. The Matrix. He confessed that they had to use an enormous amount of computer time to create the dazzling special effects in that movie. One of the most difficult scenes, he said, required them to completely reconstruct an imaginary city as a helicopter flew overhead. With enough computer time, he said, he could create an entire fantasy city. But, he admitted, modeling a realistic human face was beyond his ability. This is because when a light beam hits the human face, it scatters in all directions, depending on its texture. Each particle of light has to be tracked by computer. Hence, each point of skin on a person's face has to be described by a complex mathematical function, which is a real headache for a computer programmer. He confessed that they had to use an enormous amount of computer time to create the dazzling special effects in that movie. One of the most difficult scenes, he said, required them to completely reconstruct an imaginary city as a helicopter flew overhead. With enough computer time, he said, he could create an entire fantasy city. But, he admitted, modeling a realistic human face was beyond his ability. This is because when a light beam hits the human face, it scatters in all directions, depending on its texture. Each particle of light has to be tracked by computer. Hence, each point of skin on a person's face has to be described by a complex mathematical function, which is a real headache for a computer programmer.

I remarked that this sounded very much like high-energy physics, my specialty. In our atom smashers, we create a powerful beam of protons that slams into a target, creating a shower of debris that scatters in all directions. We then introduce a mathematical function (called the form factor) that describes each particle.

Half jokingly, I asked if there was a relations.h.i.+p between the human face and high-energy particle physics? Yes, he replied. Computer animators use the same formalism used in high-energy physics to create the faces you see on the movie screen! I never realized that the arcane formulae that we theoretical physicists use may one day crack the problem of modeling the human face. So the fact that we can recognize the human face is similar to the way we physicists a.n.a.lyze subatomic particles!

IMPACT ON CAPITALISM.

These new technologies that we have been discussing in this book are so powerful that, by the end of the century, they are bound to have an impact on capitalism itself. The laws of supply and demand are the same, but the rise of science and technology has modified Adam Smith's capitalism in many ways, from the way that goods are distributed to the nature of wealth itself. Some of the more immediate ways in which capitalism has been affected are as follows: *Perfect capitalism The capitalism of Adam Smith is based on the laws of supply and demand: prices are set when the supply for any good matches the demand. If an object is scarce and in demand, then its price rises. But the consumer and producer have only partial, imperfect understanding of supply and demand, and hence prices can vary widely from place to place. So the capitalism of Adam Smith was imperfect. But this will gradually change in the future.

"Perfect capitalism" is when the producer and the consumer have infinite knowledge of the market, so that prices are perfectly determined. For example, in the future, consumers will scan the Internet via their contact lenses and have infinite knowledge of all comparative prices and performances. Already, one can scan the Internet to find the best airline fares. This will eventually apply to all products sold in the world. Whether through eyegla.s.ses, wall screens, or cell phones, consumers will know everything about a product. Going through a grocery store, for example, you will scan the various products on display and, via the Internet in your contact lens, immediately evaluate if the product is a bargain or not. The advantage s.h.i.+fts to the consumers, because they will instantly know everything about a product-its history, its performance record, its price relative to others, and its strengths and liabilities.

The producer also has tricks up his sleeve, such as using data mining to understand the wants and needs of the consumer, and scanning the Internet for commodity prices. This removes much of the guesswork in setting prices. But in the main, it is the consumer who has the advantage, who instantly has comparative knowledge of any product, and who demands the cheapest price. The producer must then react to the constantly changing demands of the consumer.

*Ma.s.s production to ma.s.s customization In the present system, goods are created by ma.s.s production. Henry Ford once famously said that the consumer could have the Model T in any color, as long as it's black. Ma.s.s production drastically lowered prices, replacing the inefficient, older system of guilds and handcrafted goods. The computer revolution will change all this.

Today, if a customer sees a dress of the perfect style and color but the wrong size, then there is no sale. But in the future, our precise 3-D measurements will be stored in our credit card or wallet. If a dress or other garment is the wrong size, you will e-mail your measurements to the factory and have it immediately produce one in the right size. In the future, everything will fit.

Ma.s.s customization today is impractical, since it is too costly to create a new product just for one consumer. But when everyone is hooked to the Internet, including the factory, custom-made objects can be manufactured at the same price as ma.s.s-produced items.

*Ma.s.s technology as a utility When technologies become widely dispersed, such as electricity and running water, they eventually become utilities. With capitalism driving down prices and increasing compet.i.tion, these technologies will be sold like utilities, that is, we don't care where they come from and we pay for them only when we want them. The same applies for computation. "Cloud computing," which relies heavily on the Internet for most computing functions, will gradually gain in popularity. Cloud computing reduces computation to a utility, something that we pay for only when we need it, and something that we don't think about when we don't need it.

This is different from the situation today, when most of us do our typing, word processing, or drawing on a desktop or laptop computer and then connect to the Internet when we want to search for information. In the future, we could gradually phase out the computer altogether and access all our information directly on the Internet, which then charges us for the time spent. So computation becomes a utility that is metered, like water and electricity. We will live in a world where our appliances, furniture, clothes, etc., are intelligent, and we will talk to them when we need specific services. Internet screens are hidden everywhere, and keyboards materialize whenever we need them. Function has replaced form, so, ironically, the computer revolution will eventually make the computer disappear into the clouds.

*Targeting your customer Companies historically placed ads in newspapers, on radio, on TV, etc., often without the slightest idea of the impact the ads had. They could calculate the effectiveness of their ad campaign only by looking at upticks in sales. But in the future, companies will know almost immediately how many people have downloaded or viewed their products. If you are interviewed on an Internet radio site, for example, it is possible to determine precisely how many people have listened. This will allow companies to target their audience to tailor-made specifications.

(This, however, raises another question: the sensitive question of privacy, which will be one of the great controversies of the future. In the past, there were worries that the computer might make Big Brother possible. In George Orwell's novel 1984, 1984, a totalitarian regime takes over the earth, unleas.h.i.+ng a h.e.l.lish future in which spies are everywhere, all freedoms are squashed, and life is an unending series of humiliations. At one point, the Internet might have evolved into such an all-pervasive spying machine. However, in 1989, after the breakup of the Soviet bloc, the National Science Foundation in effect opened it up, converting it from a primarily military device to one that networked universities and even commercial ent.i.ties, eventually leading to the Internet explosion of the 1990s. Today, Big Brother is not possible. The real problem is "little brother," that is, nosy busybodies, petty criminals, tabloid newspapers, and even corporations that use data mining to find out our personal preferences. As we will discuss in the next chapter, this is a problem that will not go away but will evolve with time. More than likely, there will be an eternal cat-and-mouse game between software developers creating programs to protect our privacy and others creating programs to break it.) a totalitarian regime takes over the earth, unleas.h.i.+ng a h.e.l.lish future in which spies are everywhere, all freedoms are squashed, and life is an unending series of humiliations. At one point, the Internet might have evolved into such an all-pervasive spying machine. However, in 1989, after the breakup of the Soviet bloc, the National Science Foundation in effect opened it up, converting it from a primarily military device to one that networked universities and even commercial ent.i.ties, eventually leading to the Internet explosion of the 1990s. Today, Big Brother is not possible. The real problem is "little brother," that is, nosy busybodies, petty criminals, tabloid newspapers, and even corporations that use data mining to find out our personal preferences. As we will discuss in the next chapter, this is a problem that will not go away but will evolve with time. More than likely, there will be an eternal cat-and-mouse game between software developers creating programs to protect our privacy and others creating programs to break it.)

FROM COMMODITY CAPITALISM TO INTELLECTUAL CAPITALISM.

So far, we have asked only how technology is altering the way capitalism operates. But with all the turmoil created by the advances in high technology, what impact is this having on the nature of capitalism itself? All the turmoil that this revolution is creating can be summarized in one concept: the transition from commodity capitalism to intellectual capitalism.

Wealth in Adam Smith's day was measured in commodities. Commodity prices fluctuate, but on average commodity prices have been dropping steadily for the past 150 years. Today, you had breakfast that the king of England could not have had 100 years ago. Exotic delicacies from around the world are now routinely sold in supermarkets. The falling of commodity prices is due to a variety of factors, such as better ma.s.s production, containerization, s.h.i.+pping, communication, and compet.i.tion.

(For example, today's high school students have a hard time understanding why Columbus risked life and limb to find a shorter trade route to the spices of the East. Why couldn't he simply go to the supermarket, they ask, and get some oregano? But in the days of Columbus, spices and herbs were extremely expensive. They were prized because they could mask the taste of rotting food, since there were no refrigerators in those days. At times, even kings and emperors had to eat rotten food at dinner. There were no refrigerated cars, containers, or s.h.i.+ps to carry spices across the oceans.) That is why these commodities were so valuable that Columbus gambled his life to get them, although today they are sold for pennies.

What is replacing commodity capitalism is intellectual capitalism. Intellectual capital involves precisely what robots and AI cannot yet provide, pattern recognition and common sense.

As MIT economist Lester Thurow has said, "Today, knowledge and skills now stand alone as the only source of comparative advantage.... Silicon Valley and Route 128 are where they are simply because that is where the brainpower is. They have nothing else going for them."

Why is this historic transition rocking the foundation of capitalism? Quite simply, the human brain cannot be ma.s.s-produced. While hardware can be ma.s.s-produced and sold by the ton, the human brain cannot, meaning that common sense will be the currency of the future. Unlike with commodities, to create intellectual capital you have to nurture, cultivate, and educate a human being, which takes decades of individual effort.

As Thurow says, "With everything else dropping out of the compet.i.tive equation, knowledge has become the only source of long-run sustainable compet.i.tive advantage."

For example, software will become increasingly more important than hardware. Computer chips will be sold by the truckload as the price of chips continues to plunge, but software has to be created the old-fas.h.i.+oned way, by a human working with pencil and paper, sitting quietly in a chair. For example, the files stored in your laptop, which might contain valuable plans, ma.n.u.scripts, and data, may be worth hundreds of thousands of dollars, but the laptop itself is worth only a few hundred. Of course, software can be easily copied and ma.s.s-produced, but the creation of new software cannot. That requires human thought.

According to UK economist Hamish McRae, "in 1991 Britain became the first country to earn more from invisible exports (services) than from visible ones."

While the share of the U.S. economy coming from manufacturing has declined dramatically over the decades, the sector that involves intellectual capitalism (Hollywood movies, the music industry, video games, computers, telecommunications, etc.) has soared. This s.h.i.+ft from commodity capitalism to intellectual capitalism is a gradual one, starting in the last century, but it is accelerating every decade. MIT economist Thurow writes, "After correcting for general inflation, natural resource prices have fallen almost 60 percent from the mid-1970s to mid-1990s."

Some nations understand this. Consider the lesson of j.a.pan in the postwar era. j.a.pan has no great natural resources, yet its economy is among the largest in the world. The wealth of j.a.pan today is a testament to the industriousness and unity of its people, rather than the wealth under its feet.

Unfortunately, many nations do not grasp this fundamental fact and do not prepare their citizens for the future, relying instead mainly on commodities. This means that nations that are rich in natural resources and do not understand this principle may sink into poverty in the future.

DIGITAL DIVIDE?.

Some voices decry the information revolution, stating that we will have a widening chasm between the "digital rich" and the "digital poor," that is, those with access to computer power and those without. This revolution, they claim, will widen the fault lines of society, opening up new disparities of wealth and inequalities that could tear at the fabric of society.

But this is a narrow picture of the true problem. With computer power doubling every eighteen months, even poor children are getting access to computers. Peer pressure and cheap prices have encouraged computer and Internet use among poor children. In one experiment, funds were given to purchase a laptop for every cla.s.sroom. Despite good intentions, the program was widely viewed as a failure. First, the laptop usually sat unused in a corner, because the teacher often did not know how to use it. Second, most of the students were already online with their friends and simply bypa.s.sed the cla.s.sroom laptop.

The problem is not access. The real problem is jobs. The job market is undergoing a historic change, and the nations that will thrive in the future are those that take advantage of this.

For developing nations, one strategy is to use commodities to build a sound foundation, and then use that foundation as a stepping-stone to make the transition to intellectual capitalism. China, for example, has been successfully adopting this two-step process: the Chinese are building thousands of factories that produce goods for the world market, but they are using the profits to create a service sector built on intellectual capitalism. In the United States, 50 percent of the Ph.D. students in physics are foreign born (largely because the United States does not produce enough qualified students of its own). Of these foreign-born Ph.D. students, most are from China and India. Some of these students have returned to their native countries to create entirely new industries.

ENTRY-LEVEL JOBS.

One casualty of this transition will be entry-level jobs. Every century has introduced new technologies that have created wrenching dislocations in the economy and people's lives. For example, in 1850, 65 percent of the American labor force worked on farms. (Today, only 2.4 percent does.) The same will be true in this century.

In the 1800s, new waves of immigrants flooded into the United States, whose economy was growing rapidly enough to a.s.similate them. In New York, for example, immigrants could find work in the garment industry or light manufacturing. Regardless of education level, any worker willing to do an honest day's work could find something to do in an expanding economy. It was like a conveyer belt that took immigrants from the ghettoes and slums of Europe and thrust them into the thriving middle cla.s.s of America.

Economist James Grant has said, "The prolonged migration of hands and minds from the field to the factory, office and cla.s.sroom is all productivity growth.... Technological progress is the bulwark of the modern economy. Then again, it has been true for most of the past 200 years."

Today, many of these entry-level jobs are gone. Moreover, the nature of the economy has changed. Many entry-level jobs have been sent overseas by corporations looking for cheaper labor. The old manufacturing job at the factory disappeared long ago.

But there is much irony in this. For years, many people demanded a level playing field, without favoritism or discrimination. But if jobs can be exported at the press of a b.u.t.ton, the level playing field now extends to China and India. So entry-level jobs that used to act as conveyor belts to the middle cla.s.s can now be exported elsewhere. This is fine for workers overseas, since they can benefit from the level playing field, but can cause inner cities to hollow out in the United States.

The consumer also benefits from this. Products and services become cheaper and production and distribution more efficient if there is global compet.i.tion. Simply trying to prop up obsolete businesses and overpaid jobs creates complacency, waste, and inefficiency. Subsidizing failing industries only prolongs the inevitable, delays the pain of collapse, and actually makes thing worse.

There is another irony. Many high-paying, skilled service-sector jobs go unfilled for lack of qualified candidates. Often, the educational system does not produce enough skilled workers, so companies have to cope with a less-educated workforce. Corporations go begging for skilled workers whom the educational system often does not produce. Even in a depressed economy, there are jobs that go unfilled by skilled workers.

But one thing is clear. In a postindustrial economy, many of the old blue-collar factory jobs are gone for good. Over the years, economists have toyed with the idea of "reindustrializing America," until they realize that you cannot turn back the hands of time. The United States and Europe went through the transition from a largely industrial to a service economy decades ago, and this historic s.h.i.+ft cannot be reversed. The heyday of industrialization has pa.s.sed, forever.

Instead, efforts have to be made to reorient and reinvest in those sectors that maximize intellectual capitalism. This will be one of the most difficult tasks for governments in the twenty-first century, with no quick-and-easy solutions. On one hand, it means a major overhaul of the education system, so that workers can retrain and also so that high school students do not graduate into the unemployment lines. Intellectual capitalism does not mean jobs only for software programmers and scientists but in a broad spectrum of activities that involve creativity, artistic ability, innovation, leaders.h.i.+p, and a.n.a.lysis-i.e., common sense. The workforce has to be educated to meet the challenges of the twenty-first century, not to duck them. In particular, science curricula have to be overhauled and teachers have to be retrained to become relevant for the technological society of the future. (It's sad that in America there is the old expression, "Those who can, do. Those who can't, teach.") As MIT economist Lester Thurow has said, "Success or failure depends upon whether a country is making a successful transition to the man-made brainpower industries of the future-not on the size of any particular sector."

This means creating a new wave of innovative entrepreneurs who will create new industries and new wealth from these technological innovations. The energy and vitality of these people must be unleashed. They must be allowed to inject new leaders.h.i.+p into the marketplace.

WINNERS AND LOSERS: NATIONS.

Unfortunately, many countries are not taking this path, instead relying exclusively on commodity capitalism. But since commodity prices, on average, have been dropping for the past 150 years, their economies will eventually shrink with time, as the world bypa.s.ses them.

This process is not inevitable. Look at the examples of Germany and j.a.pan in 1945, when their entire populations were near starvation, their cities were in ruins, and their governments had collapsed. In one generation, they were able to march to the front of the world economy. Look at China today, with its 8 to 10 percent galloping growth rate, reversing 500 years of economic decline. Once widely derided as the "sick man of Asia," in another generation it will join the ranks of the developed nations.

What distinguishes these three societies is that each was cohesive as a nation, had hardworking citizens, and made products that the world rushed to buy. These nations placed emphasis on education, on unifying their country and people, and on economic development.

As UK economist and journalist McRae writes, "The old motors of growth-land, capital, natural resources-no longer matter. Land matters little because the rise in agricultural yields has made it possible to produce far more food in the industrial world than it needs. Capital no longer matters because it is, at a price, almost infinitely available from the international markets for revenue-generating projects.... These quant.i.tative a.s.sets, which have traditionally made countries rich, are being replaced by a series of qualitative features, which boil down to the quality, organization, motivation, and self-discipline of the people who live there. This is borne out by looking at the way the level of human skills is becoming more important in manufacturing, in private sector services, and in the public sector."

However, not every nation is following this path. Some nations are run by incompetent leaders, are culturally and ethnically fragmented to the point of dysfunction, and do not produce goods that the rest of the world wants. Instead of investing in education, they invest in huge armies and weapons to terrorize their people and maintain their privileges. Instead of investing in an infrastructure to speed up the industrialization of their country, they engage in corruption and keeping themselves in power, creating a kleptocracy, not a meritocracy.

Sadly, these corrupt governments have squandered much of the aid provided by the West, as small as it is. Futurists Alvin and Heidi Toffler note that between 1950 and 2000, more than $1 trillion in aid was given to poor nations by rich ones. But, they note, "we are told by the World Bank that nearly 2.8 billion people-almost half the population of the planet-still live on the equivalent of two dollars a day or less. Of these, some 1.1 billion survive in extreme or absolute poverty on less than one dollar."

The developed nations, of course, can do much more to alleviate the plight of developing nations rather than paying lip service to the problem. But after all is said and done, ultimately the main responsibility for development must come from wise leaders.h.i.+p among the developing nations themselves. It goes back to that old saying, "Give me a fish, and I will eat for a day. Teach me how to fish, and I will eat forever." This means that instead of simply giving aid to developing nations, the stress should be on education and helping them develop new industries so they can become self-sufficient.

TAKING ADVANTAGE OF SCIENCE.

Developing nations may be able to take advantage of the information revolution. They can, in principle, leapfrog past the developed nations in many areas. In the developed world, telephone companies had to tediously wire up every home or farm at great cost. But a developing nation does not have to wire up its country, since cell phone technology can excel in rural areas without any roads or infrastructure.

Also, developing nations have the advantage that they do not have to rebuild an aging infrastructure. For example, the subway systems of New York and London are more than a century old and badly in need of repairs. Today, renovating these creaky systems would cost more than building the original system itself. A developing nation may decide to create a subway system that is sparkling new with all the latest technology, taking advantage of vast improvements in metals, construction techniques, and technology. A brand-new subway system may cost much less than the systems of a century ago.

China, for example, was able to benefit from all the mistakes made in the West when building a city from the ground up. As a result, Beijing and Shanghai are being built at a fraction of the original cost of building a major city in the West. Today, Beijing is building one of the largest, most modern subway systems in the world, benefiting from all the computer technology created in the West, in order to serve an exploding urban population.

The Internet is another way for developing nations to take a shortcut to the future, bypa.s.sing all the mistakes made in the West, especially in the sciences. Previously, scientists in the developing world had to rely on a primitive postal system to deliver scientific journals, which usually arrived months to a year after publication, if they arrived at all. These journals were expensive and highly specialized, so that only the largest libraries could afford them. Collaborating with a scientist from the West was almost impossible. You had to be independently wealthy, or extremely ambitious, to obtain a position at a Western university to work under a famous scientist. Now it is possible for the most obscure scientist to obtain scientific papers less than a second after they are posted on the Internet, from almost anywhere in the world, for free. And, via the Internet, it is possible to collaborate with scientists in the West whom you have never met.

THE FUTURE IS UP FOR GRABS.