Arnold Kling  

Atoms, Bits, and Growth

Why Do Sales Taxes Exist?... Suburban Happiness...

David Warsh writes.

Atoms make up the rival part of a particular good, that which may be possessed corporeally by just one person at a time -- a banana, say, or a Cuisinart, or a paperback edition of A Tale of Two Cities. Bits comprise the nonrival portion, that which can be written down and encoded in a computer, and therefore used simultaneously by any number of persons -- the genome of the banana, the design of the food processor, the text of Dickens' novel.

...It is the nonrivalry of knowledge that is behind globalization, not some mysterious flattening of the earth. What has fundamentally changed is the willingness of previously non-participating nations of the world to join in the chase, by educating their citizens and permitting them to acquire and create and deploy new knowledge in global markets.

In the last paragraph quoted above, I think that Warsh goes too far. He completely ignores the Internet, and he makes it sound as if governments all of a sudden decided to open their economies. I see both technology and changes in policy playing a role in fostering growth in places like Ireland and India.

Read the whole essay.

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COMMENTS (4 to date)
Zhu Benben writes:

I like Sci-fi. Now suppose there is a world, there is no computers and the Internet, i.e. a global information network. But they have transportation. Their vehicles become faster, safer, more comfortable, etc. as the time goes on. There just is no information network. Maybe it's simply because they never have their own Maxwell and Faraday. They only have their Watt and friends (or foes).

Globalization, I suppose, means bigger and bigger markets. Now, would you think in the above sci-fi world, globalization won't happen? It won't benefit people in that world?

I understand people probably define globalization in some mystic ways totally beyond any clear explaination which could be agreeable by more than three. But if it only means that the markets goes bigger and bigger all the time, then it happens all the time, actually. I don't see a definite connection between globalization and information technology at all. And I don't think globalization began in 1995.

And, technology, we always have some. Even in ancient times. That's not a brand new concept rooted in computers, or the Internet.

Dezakin writes:

Now, would you think in the above sci-fi world, globalization won't happen? It won't benefit people in that world?

Not nearly as fast. Information technology subverts the will of the customs office far more efficiently than the traditional method of greasing the wheels of trade: Bribes.

Without IT, closed economies can remain far off lands filled with dangerous foreigners for much longer.

raj yashwant writes:

The fundamental reason for the growth of knowledge around the world has to do with the fall in the prices of network-able technology which enabled the growth of internet and further enhanced the technology. The fall in the prices of technologically advanced products has resulted it it being acceassable to the BOP markets around the world resulting in them joining the party.

However, large amount of barriers still exist in making the world truly falt or technology really non-rival to all sections of entire globe. These include language barrier inablity to talk the language of world, illiteracy barrier, economical barrier in their inability to aford goods, governmental barrier - barriers imposed by government to have control over their fiefdom, institutional barriers, various forms of phobia and irrational behaviour among the participants and their reluctance to participate and benefit from it.

When technolgoy becomes really affordable it should be able to reach the six billionth person on the plant earth,which will intern trigger the power of mankind.

John S Bolton writes:

Doesn't a subversion of the economics of producing new knowledge become intensified as transfer is multiplied, speeded-up and delivered to populations which did not, and could not have paid for this?
Why, aside from the vanity of officials and professors, flattering themselves that they are the world's teachers, and the prestigious distributors of such largesse, should the net taxpayers of a jurisdiction generously support new knowledge production, when they will not receive the main portion of the benefit of it?
Barriers to outflow of new knowledge such as technology, may have had economic benefit in the past, rather like patents, by channeling the benefits more tightly towards those who pay for the new.
That the internet has not, and will not, touch off a third-world naissance of giant breakthroughs of innovation, is an embarassment to the egalitarians.

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