THE BLOG
01/23/2015 09:50 am ET Updated Mar 25, 2015

Sharing Prosperity in the Age of Information

Dave and Les Jacobs via Getty Images

The accelerating pace of revolutionary advances in information technology and artificial intelligence are rendering obsolete established protocols for measuring economic growth and regulating economic activity, while exacerbating the vast gulf between the haves and the have-nots. The technology encased in a typical cell phone today would have occupied a warehouse only a few years ago. We are embarked upon a new world order in which the old rules no longer apply.

The new technologies make possible rapid advances in the quality of human life -- more prosperity, better health, and hope for the future. But dramatic transitions can foster mass dislocations, unemployment, social upheaval and even war. The problem we face is both national and global, and requires revolutionary economic and social interventions to accommodate the evolution in technology.

We have been through this before. In the 19th century, 90 percent of jobs were in agriculture. By 2010, less than 5 percent of the work force produced vastly more food than the 90 percent of earlier days. The displacement of millions of farm workers was traumatic but eventually led to increased prosperity.

To adapt to this new age, we need viable statistics. Unfortunately, our economic metrics are obsolete. The spectrum of frequencies in infinite space is becoming the most important underpinning of production, but we still see finite "land" as the key factor of production. Physical resources are still important, but information and knowledge are the new sources of power and wealth. The ground is shifting beneath our feet.

In this new information age, a "bit" of information costs nothing to reproduce and next to nothing to distribute, but zero price does not equate to zero value. We are "spending" our most scarce resource "time" in producing value without receiving compensation for our investment and labor. People deserve compensation for their labor and the goods they produce. Without it, they have little incentive to labor, produce and innovate, the government cannot impose reasonable taxes on routine transactions and a disruptive lawlessness sets in.

In this new world the very concept of "pay" cries out for redefinition. It does not always involve direct cash compensation. You may be paid with units of information that have intrinsic value. We may consider Google searches to be free, but Google is reading your mail and making billions by selling information about you to advertisers. If you send a message including the phrase "legal dispute" Google will post lawyer ads on the right side of your screen. You are being sold because you clicked the "Agreed" button on the terms and conditions when you signed up for Google.

We define productivity as the amount of product produced per man hour, but that antiquated concept is already out of date. Smart man-made machines like "Baxter" and "Watson" are now competing with skilled labor. Baxter is a robot that learns what a worker does and imitates the process. Baxter costs the equivalent of about one year of the salary of a skilled worker and only a few cents per hour to operate. "Watson" is IBM's new thinking computer that rose to fame on the TV quiz program "Jeopardy." Ask Watson a question and he -- or it -- will return with answers backed by evidence and hypothesis with a measured degree of confidence.

Watson and Baxter and their future offspring will most certainly be part of the future labor force but we do not account for them in our economic analysis. They should be factored into our estimate of productivity if it is to be a valid indicator of progress.

Our national income per capita keeps growing but our median income, a more relevant measure, is declining. We must find ways to raise shared prosperity through capitalizing the opportunities created by the information age. We must improve the public schools, align education and training with real world jobs and also encourage the entrepreneurial spirit. The new technologies offer an abundance of opportunities for new ventures.

Technological advances are likewise widening the digital wealth gap among nations. This is a global problem demanding a global solution. We live in an interconnected world. The sinewy bonds of commerce and travel are eradicating national boundaries. The rapid pace of transformation is not the same everywhere. A few nations are leading the race into the new era of advanced technologies, others are marginal players and still others are being behind. A major portion of the troubles in the world is born of economic scarcity, lack of opportunity and a sense of being isolated from the greater world.

The time has come for a new Bretton Woods -- the gathering of delegates from 44 nations in 1944 in New Hampshire that reflected a sharply redrawn international landscape in the wake of World War II. We need another Bretton Woods to develop protocols applicable not just to an age which may be nearing its end but also for the next wave -- which we hope will be the age of knowledge and wisdom, not a bleak modern version of the Dark Ages. The greatest threat to our species is anarchy. Cyberspace is overrun with predators of every stripe who believe they have the right to seize anything that is not nailed down. The lawlessness of the digital world must be contained. The future looks brighter when we recognize the need for change and have an enlightened vision of the future. Shared prosperity depends on redefining the economic rules in this new world. Poverty, hopelessness and despair are the greatest threats to international security.

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LT. General Clarence McKnight (U.S. Army-Ret) is the former head of the United States Signal Corps. He is the author of "From Pigeons to Tweets" a book that chronicles the evolution of the tools and policies that led to many amazing and breakthrough changes in the military.

The Honorable Bijan R. Kian is a twice Senate Confirmed Former member of the Board of Directors of the Export-Import Bank of the United States, a former member of the White House Business Council, reporting directly to two presidents of the United States from both major political parties.