The knowledge economy will be outsourced to low cost countries. There is little rational analysis that suggests otherwise. Information, knowledge and innovation are profoundly connected – lose one and you lose the other two … and so goes our innovation potential. This is not the fault of corporation or of the financial system – they are behaving exactly as expected; a dog will hunt. This is the limitation of the knowledge economy itself – let me explain.
It is very easy and inexpensive for the rest of the world to just watch what the United States does, copy what works and reject what does not work, and then effectively compete. The rest of the World now speaks English so they can now jump on the Internet and learn everything they need to know about us while we are largely unable to reciprocate. In addition, money is global and does not need a visa to work in another country. All of these things stack up against both the US knowledge and foreign knowledge workers. If left alone, these conditions will not go away any time soon.
As a nation, America is either at the edge of something really good or something really bad. We need to do something so radical, so audacious, and so creative, that the rest of the world will shake their heads in disbelief at how America always comes up with an unbelievable play just when the game looks like it is over. It’s called The Great American Hail Mary Pass.
First we must realize that America does not have anyone else to copy or compete with in order to climb to that next rung on the economic development ladder except ourselves. Many Americans are in denial that we too must also develop just like we claim other countries must do. In the past, we have relied on shocks to the global system in order to move forward; usually in the form of wars, but obviously, as a modern innovation strategy, warfare has severe limitations. Maybe we just don’t know how to develop on our own. Perhaps the current financial crisis may be the disruption that we need to see those next few critical steps that we need to take.
Here are some other historical facts to consider. Like all previous development phases, the next economic paradigm will be derived from the earlier economy by integrating the tools of that earlier economy – in this case, the knowledge economy. We have painfully learned that intellectual capital can be found and duplicated almost anywhere on Earth. However, social capital and creative capital cannot be easily sourced elsewhere. Most low cost countries have political or cultural constraints on social capital and creative capital – so they cannot compete with us here; their constitution will need to change. This is where the next Great American Hail Mary pass needs to go.
America has a distinct comparative advantage over most of the World in our cultural diversity, global language, and freedoms of assembly, expression, and association. In addition, and likely as a result, America is inventing one of the most profound technological advancements in human history. One which has the potential to secure American economic prosperity for many generations into the future.
Social Media has the potential – if we are clever – to allow human knowledge and interaction to become tangible outside the construct of a corporation. The new economic paradigm will have factors of production of social capital, creative capital, and intellectual capital, instead of the classical land, labor, and monetary capital model. That means that a team, community, or a social network can be capitalized directly much like a corporation, or any financial instrument in itself, as a means toward increasing human productivity. Admittedly, and as space allows, this is a very vague definition of an innovation economy, but the implications are sweeping and vast. A more detailed structure and description is specified at The Ingenesist Project
It is imperative that knowledge workers recognize this opportunity. We must have a national conversation about the next great leap for knowledge tangibility and not just dwell on the current quagmire or roll over while the dark ages set in. It is essential that we recognize our responsibility to ourselves, our communities, and the planet to build a sustainable economy that reflects long term social priorities rather than short term profit taking – this is ultimately in the best interest of even the short term profit takers! Finally, it is our responsibilities to continue developing this great Internet technology (through social media) that the generation before us created for peaceful, open, and productive means; and obviously never intended to enable a race to the bottom.