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If Knowledge Is Power, Is It Also Wealth?

If Knowledge Is Power, Is It Also Wealth? 

Ironically perhaps, the ideas that are scarce are those that disrupt “business as usual” by automating what has not yet been automated.

Let’s consider a syllogism: Knowledge is power, power equals wealth, so knowledge equals wealth.

Is this true? Author George Gilder thinks so. His book Knowledge and Power: The Information Theory of Capitalism and How it is Revolutionizing our World, proposes that (in Bill Bonner’s apt phrase) “the economy is fundamentally a learning system, not a way for distributing wealth.”

In Gilder’s view, new information (i.e. knowledge) enables us to do things better, i.e. increase productivity. New knowledge is what creates value.

New knowledge is always surprising, and it naturally disrupts “business as usual.” So those earning money from business as usual must suppress the disruption arising from new knowledge to maintain their incomes/profits.

Bonner summarizes the conflict between vested interests (cronies and zombies) and those with new knowledge in this lively fashion: “In an economy, the person who is the source of most important new information is the entrepreneur. He is the fellow who takes risks and builds a new business.

The cronies want to stop him, before he undermines the value of their old assets and old business models with new information. The zombies want to drag him down, leeching on him so greedily that he runs out of energy.”

Gilder views vested interests limiting new knowledge as the real threat to the economy. This is the danger of “regulatory capture,” when vested interests bribe the state (government) to erect barriers to competition to maintain monopolies and rentier privileges.

But what’s missing from this view of the economy as a learning system is that value flows to what’s scarce, and information is abundant.

In other words, only very specific kinds of knowledge are scarce–the kind that create new goods, services and business models.

…click on the above link to read the rest of the article…

The ‘Anti-Knowledge’ of the Elites

The ‘Anti-Knowledge’ of the Elites

Exclusive: It’s fairly easy to spot the “anti-knowledge” spouted by the Tea Party and the Religious Right’s favorite candidates, but a more subtle form of reality-deprived “group think” pervades America’s elites though it is rarely noted in the polite circles of the mainstream media, writes Mike Lofgren.


In a previous piece, I described how the Republican Party and its ideological allies in the fundamentalist churches have confected a comprehensive media-entertainment complex to attract low-information Americans and turn them into partisans.

The propaganda they are fed has become so disconnected from facts, evidence and logic that it is all too easy to laugh at people operating on demonstrably — and even ridiculously — false premises, such as the notion that Barack Obama, born in Hawaii, is not a natural-born American, or that the Sandy Hook school massacre was an elaborate fake designed to take away the firearms of patriotic Americans.

Coffins of dead U.S. soldiers arriving at Dover Air Force Base in Delaware in 2006. (U.S. government photo)

It would be comforting to believe that somewhere in the commanding heights of our permanent government, there are important players who are serious grownups who know what they are doing. That, at least, is the impression they seek to convey with their sober demeanors, credentials from think tanks or prestigious universities, and the measured, almost soporific testimony they deliver to congressional committees.

Think of Robert Gates, Ashton Carter, Timothy Geithner or Eric Holder. On the surface, they seem the very antithesis of the Tea Party fanatic, gibbering about ISIS training camps in America. The preferred pose of these establishment personages is that of the politically neutral technocrat offering well-considered advice based on their profound expertise.

…click on the above link to read the rest of the article…

Institutional Aggression, Superfluous Planners and Predictions

Institutional Aggression, Superfluous Planners and Predictions

Pretense of Knowledge

Wall Street breathlessly awaits the newest payrolls report, which is widely held to contain the information needed for the FOMC to decide whether or not it should raise the overnight interbank lending rate from zilch to zilch plus a few basis points later this month.

aggressionphoto via plantsbrookschool.co.uk

The payrolls report is going to be revised umpteen times after its initial release, is in many ways driven by statistical artifacts (such as the “birth-death” model) and concerns a lagging economic indicator – in other words, its “signal to noise” ratio makes it utterly useless, even if one erroneously ascribes a lot of meaning to economic statistics describing the past.

Monthly non-farm payrollsChange in monthly non-farm payrolls in 1000ds, via Saint Louis Federal Reserve Research, click to enlarge.

And yet, this utterly devoid of informational content data point is what the central planning bureaucrats are held to need to decide on their next steps in terms of interest rate manipulation! We are continually surprised by the fact that people can discuss this obvious nonsense with a straight face.

In this context we have recently come across an interesting article at Forbes, by sound money and free market advocate Ralph Benko. It is entitled “If The Fed Is Always Wrong How Can Its Policies Ever Be Right?” and is well worth the read. As Mr. Benko points out, the Fed’s economic forecasts leave a lot to be desired, primarily because they tend to be dead wrong with unwavering regularity.

He proceeds to ask how a bureaucracy that couldn’t forecast its way out of a paper bag can possibly know what policies it should implement. It seems totally absurd to expect it to be able to ever get it right, except perhaps by sheer accident.

2014-Interactions-Main_0

…click on the above link to read the rest of the article…

 

 

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