Knowledge Glut; amid a Great Information Explosion, the Share of Knowledge That the World Puts to Good Use Is Falling. History Tells Us This Will End Badly
Byline: Danny Quah (Quah is professor of economics at the London School of Economics.)
The headline shocked. BUSINESSES RAISE ALARM: WORLDWIDE OIL GLUT HITS RECORD HIGH. Ok, I made that one up. Such headlines don't appear in a world where news focuses on how we are running out of fuel, rain forest--indeed, all raw materials. Humanity is too quickly eating up too much of too many goods that are costly to produce. But there is one commodity in excess supply. It's knowledge--and in the long run, the overlooked knowledge glut could be more dangerous than the many more obvious shortages.
Though the raw supply of knowledge is booming, the fraction we use productively is plummeting to ever-lower depths. Since knowledge can't be added up the way that, say, oil barrels can, the only way we can tell if knowledge is in excess supply is by asking whether it is underused. As long as benefits exceed costs on the last unit we use, social welfare improves from expanding usage. Unless we do so, knowledge remains in excess supply.
It is now commonplace to think of knowledge as free, but this is half true at best. Invention is costly and getting costlier. Over the 20th century, the average age at which inventors did their best work rose by six years; the average size of innovation teams grew fivefold. R&D workers and dollars now produce an ever-smaller number of patents on average. That's why new drugs cost more than $1 billion to develop.
But dissemination is cheap and getting cheaper. Unlike other commodities, knowledge is easy to copy. This is true of equations, blueprints, chemical formulas and many digital consumer items. And when value is digital, a copy is no longer inferior to an original. Digital entertainment is a quintessential example. So are pharmaceuticals. …