Alchemy: Turn Knowledge Into Gold, by Soundview Executive Book Summaries, Soundview Executive Book Summaries, March 1991.

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Redefine Recession
School for Life
Will Japan Bury the West?
 

     Former U.S. Treasury Secretary W. Michael Blumenthal regards information as "the key to modern economic activity--a basic resource as important today as capital, land, and labor have been in the past."  But developing new information is only half the battle; information is useful only to the extent that it can be efficiently distributed.

Information Processing
     Following the invention and development of writing five thousand years ago and the printing press only six hundred years ago, the third major advance in information processing is the computer.  While its speed is an important factor, the computer's true value lies in its ability to sort through and collate data, to link different sectors of society through communications networks, and to transmit the information through these networks.
     Even with this technological advancement, the main constraint on innovation today is the ability of engineers and entrepreneurs to make use of all the new developments.  To increase the size of the pie, we must continue to improve our ability to process information so that

technology will advance at a faster rate.  The result will be an increase in the effective supply of existing physical resources and the definition of entirely new ones--increased, unlimited wealth for everyone.

A Cornerless Market
     As a result of modern technology, we effectively have access to an unlimited supply of resources.  What, in practical terms, does that really mean?  For one thing, the key to achieving wealth is no longer the accumulation of resources.  Many who attempted to exploit the fear of resource scarcity have already learned that lesson.
     In the 1970s, various cartels tried to corner markets by dictating the price and supply of such basic goods as bananas, copper, rubber, and timber.  By the mid-1980s, all of the cartels had been driven out of business.  They had mistakenly believed that nations couldn't survive without these commodities, and that they'd pay any price rather than do without the goods.
     As prices rose, consumers began looking for substitutes.  For example, as the price of copper rose, the telecommunications industry accelerated the development of new technologies such as fiber-optics that didn't depend on copper wiring and cable.  By the end of the 1980s, U.S. telephone companies had installed 1.5 million miles of fiber-optics cable.
     In the Alchemic world, the market has no corners.  As a result of technology, one can find a substitute for virtually any raw material.

The Key to Wealth
     If accumulation of physical resources through attempts to corner the market doesn't lead to wealth, what does?  Efficiency in distribution.
     Technology has driven production costs of a product down to an average of just 20 percent of its retail price.  The other 80 percent lies in distribution costs and profits.  With few exceptions, we haven't applied to our distribution networks the technological advances that have so profoundly transformed the rest of the
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