Think of this as Volume 18, Number 1 of the newsletter I have written weekly since March, 1997. Enjoy.
Where does growth come from? The answer is always changing.
During the Industrial Revolution capital was mainly financial. It was invested in manufacturing capacity, and infrastructure consisted of roads, ports, and rail for moving vast quantities of raw materials and manufactured goods to markets.
Capital was money, invested in stuff.
The Internet has changed all that. Yes, the Internet has a physical infrastructure. A lot of our debates about its future, in the past, involved the expansion of this physical plant, and how people would pay for it, what they would pay for how many bits.
But fairly quietly, this debate has moved into the background. In 2014, and beyond, we need to change the way we think about all this. Because the key to growth is no longer something you buy, it's something you make.
It's you. And me. It's our kids and grandkids. Human capital now defines human wealth.
Last month I did two pieces focusing on the development of human capital. I asked, “What would you need to be taught if all the answers, to all the world's questions, were available at the touch of a few buttons?” Then I sought to answer the question.
It's the start of an important discussion, one we all need to be involved with. We can no longer afford to waste our human capital. We can no longer afford freeloaders who won't get skills. Whether it's due to lack of education, criminal tendencies, lack of opportunity or general laziness, every person who's not engaged in building their skills or using those skills is a drag on the economy, not just society but our economic competitiveness.
It takes skills to create value. Skills come from training. The skills may not go into your mind – they may go into your hands. But they have to be there, and they have to be flexible.
You should get some of the skills needed to obtain these skills, and create such skills, through education. A high school education is basic to getting into this world. So I'm proposing that no one be allowed into society without one. If you can blow through a high school curriculum by age 14, welcome to society. If it takes you to 18, that's normal. If it takes you to 22 to gain these basic skills, we should support you.
But this idea of “dropping out” of education has to end. We can't afford it. We can't let people do it any more. To those who claim “freedom” in this area, I say bullshit. Without a basic education you're fit only for jail, or welfare, or both, and these things cost money. I'm not interested in subsidizing your “freedom” in that case.
Of course, in the world of the Internet there are ways and there are ways to gain this education, to prove you know what you need to know to get along. School should no longer just be a physical place, and schooling doesn't just have to be done on a regular schedule. Schools need to become libraries, and librarians teachers, performing that one-on-one tutoring that turns curriculum into knowledge, and that lets someone prove that knowledge through completion of a test, which can also be handled online. School, in the Age of the Internet, is no longer a noun, but a verb. It needs to be available free to all, on every level possible, even the highest levels taught by places like Rice and Stanford, and with the Internet it can be.
When people learn the Internet, they also learn how to engage the market. They should learn how to get together with others of like minds to build projects that create enormous value. They should be able to use the Internet to bridge the gap between virtual space and “meat space,” by first using the “meet space” of the Internet, and then all the various meet-up spaces – from coffee shops to homes to offices rented by the hour or the day – in order to do what they want to do.
Expanding this, building this, is not all about spending money. It's as much an organizational challenge as anything else. Institutions have to be transformed in order to meet the demands of the new age, and our political debates need to change with them, asking less what government can or can't do to what we can facillitate among ourselves, publicly and privately, with those walls broken down.
Economic leadership in this new age is up for grabs, and the best news is that of all countries in the world, America is best placed to provide that leadership. That's because the most important driver of our human capital infrastructure is freedom.
Freedom is not just another word for nothing left to lose. Only free minds can innovate at the highest possible level. In order to compete with America, China has to transform itself utterly, from a top-down society built on structure to a bottom-up society based on liberty. It's something we've been working on since the Internet was first created.
All the movements of the 1960s and 1970s, whether on behalf of women, of gays, or the use of capital and technology, were necessary stages we had to go through in order to unlock our nation's full human potential. The most important issue of freedom in our time, in fact, is freedom to use the Internet – all of it, without reservation. The nations that give the most of this freedom to their own people will be those that advance most rapidly.
To some these movements have felt hellish, they still feel hellish to some, but they have been necessary. The society that removes the most blinders from its people, which reduces the numbers of “noes” it produces and maximizes the number of “yeses,” has the economy that's going to grow fastest in the future.
Proof of what we've done in that regard can be found in every immigrant community across the U.S. The speed with which Mexican-Americans and Chinese-Americans and Indian-Americans become Americans, measured in just one generation, is the economic miracle that will continue to give us our advantage. And we hold that advantage over every other country.
Take a look at our U.S.A. Soccer team this summer, at the World Cup. Germans, Icelanders, Mexicans, a second-generation Haitian at forward and a few whose families have been here for many generations. No other nation can really offer that, and we don't just have that at the highest level, but at nearly all levels.
Copy that, China.
We'll only be in trouble, as an economy and a society, when free minds no longer want to come here, when the best, free people choose to move to other countries rather than our own.
