>X-Sender: [EMAIL PROTECTED] > >From: Tim Rourke <[EMAIL PROTECTED]> > >http://pl.net/~keithr/rf99PublicPrivateKnowledge.html >A knowledge economy for the many or for the few? > >Keith Rankin, 23 August 1999 > > > >The government's reelection strategy - codenamed Bright Future - is to >convert New Zealand into a "knowledge economy". Ireland and Finland are >seen as pioneering models of small country knowledge economies. > >The concept of a knowledge economy is ambiguous, and I think that >National Party strategists are fully aware of this. It is difficult for >potential critics to oppose any plan to create a knowledge economy. Few >of us would own up to preferring an 'economy of ignorance'. > >Orthodox (ie neoclassical) economics assumes that, under textbook >conditions of perfect competition, both consumers and producers have >"perfect knowledge". But that only means that consumers know all of the >spending choices available to them, know what competing firms are >charging for identical products, and know about the qualitative >differences between substitute products. For firms, perfect knowledge >means knowing resource prices, knowing the alternative techniques for >making their product, and knowing what other products they could make >with the resources they command. > >Thus, to a neoclassical economist, knowledge is only of use to the >extent that it serves the interests of producers or the utility of >consumers. Investing in more knowledge than is needed for that purpose >is seen as wasteful. > >Nevertheless, although it is understood in strictly utilitarian terms, >knowledge in economics is a public resource. Knowledge belongs in the >public domain. Attempts to inhibit the dispersion of knowledge - eg >through patents - are regarded as forms of market failure. > >Political proposals to create a "knowledge economy" today, however, are >as much attempts to privatise knowledge than they are attempts to expand >it. This process has two dimensions. > >The first dimension is the creation of a 'knowledge elite' within New >Zealand. It is an exclusive process of rationing knowledge to those most >equipped to profit from it. Knowledge is a source of economic rent to >the knowledge-rich. This process is not a matter of creating scientists >instead of entrepreneurs, as Roger Kerr (Herald, 20 August) worries. Max >Bradford wants to create applied scientists who sell for high prices the >products of patented knowledge. > >Creating a knowledge elite is a process of intervention; of picking >winners, which means picking losers. Mr Bradford would like four of our >seven universities and all of our institutes of technology to do less >research, not more. Those outside of the elite three, as "teaching >universities", would be spoonfed only the knowledge that is deemed good >for them. > >The second dimension of the policy to exploit privatised knowledge >relates to New Zealand's competitive advantage in the global economy. >The plan is for New Zealand Incorporated to gain market share in the >world economy by being more knowledge-rich than New Zealand's rivals >are. > >This view - of the opportunistic nation state - fails to appreciate the >nature of the globalisation process. Globalisation is a process that >diminishes national borders and national economic plans. In practice, >New Zealand's knowledge elite will have far more in common with the >knowledge elites of other nations than with the knowledge-poor majority >in our own land. > >Ireland's present success is due in large part to opportunistic >behaviour on the part of Irish policymakers. Ireland has chosen to make >itself more attractive than its potential rivals to transnational >corporations. It is paying them huge subsidies - in the form of tax >concessions - to set up in Ireland instead of somewhere else. Ireland's >success has depended on it pursuing tax policies that differ from other >nations. > >If the majority of nations choose to emulate Ireland's strategy, then >Ireland's miracle economy will disappear. It will not reappear >elsewhere. Rather, the shareholders of the companies that get worldwide >taxbreaks will be the winners, and everyone else will pay through the >loss of their tax-enabled social wage. > >The solution that is best for the world as a whole, and therefore best >for each nation in the world, is to treat knowledge as a free public >resource. Knowledge creation would be understood as a component of >social investment, funded by taxes. The public knowledge economy should >yield an increment to the social wage that represents a return to each >of us from our past social investment. Our social wage includes our >health system and our social security system. > >In an internationally cooperative public knowledge economy, nations do >not seek to undercut each other by offering corporations tax subsidies >and non-unionised labour forces. Rather, moderately high income taxes >are seen as the price that all producers pay for public knowledge. > >The concepts of the "knowledge economy" and the "economy of ideas" are >derived from "new growth theory", also known as "endogenous growth >theory" and "neoschumpetarian growth theory". The person who has done >most to develop its theoretical underpinnings this decade is American >economist Paul Romer. In doing so, Romer has built on the early >twentieth century writings of the Austrian-American economist Joseph >Schumpeter. > >Schumpeter's hero was the entrepreneur in a century when >entrepreneurship has been an unfashionable concept in economic theory. >While Schumpeter's entrepreneurs thrive on uncertainty, people like >Roger Kerr, who pay lip service to entrepreneurship, push for policies >that give businesses certainty. There is no certainty in an "economy of >ideas". > >In Schumpeter's 1947 paper "The Creative Response in Economic History", >entrepreneurs included any persons who had the ability "to get things >done": "civil servants, farmers, workmen, artisans, members of the >learned professions". > >The writings of both Schumpeter and, latterly, Romer, are dominated by >visions of publicness, of inclusiveness. It is therefore unfortunate >that their fine writings should be interpreted by our government as the >basis of a recipe for a divided national community and as a means by >which we as a nation can gain a competitive advantage over >knowledge-poor rival nations. > >New Zealand touts free trade as a cooperative international solution to >the world's economic problems. A policy that seeks to profit from the >knowledge poverty of other nations while also creating internal >divisions represents a very different ethos. > >We need to create an economic order that values knowledge as public >property. > > > >© 1999 Keith Rankin > > > >------------------------------------------------------------------------ > > > >Articles | Commentaries | NZ Links > >--------------------------- ONElist Sponsor ---------------------------- > > GRAB THE GATOR! FREE SOFTWARE DOES ALL THE TYPING FOR YOU! >Tired of filling out forms and remembering passwords? Gator fills in >forms and passwords with just one click! Comes with $50 in free coupons! > <a href=" http://clickme.onelist.com/ad/gator3 ">Click Here</a> > >------------------------------------------------------------------------ >
