FISCAL FITNESS: The value of information

It is nearly impossible these days to open a newspaper or magazine without running across the terms "information age," "information superhighway," or "information revolution."

What's so important about information, anyway?

With the single exception of time, information is by far the most important non-human resource in our economy. The primary reason we are so vastly wealthier than our ancestors is that we have access to more information than they did. Most other resources would not even be considered such if we did not have the knowledge about how to use them.

Information is the magic elixir. Petroleum is just a bothersome gooey substance without the knowledge of how to refine it and the ability to build machines.

Think back on your life, particularly about the decisions you made that you now regret. A major reason you made those errors in judgment was the lack of information. Probably the best thing you can say about making mistakes is that at least you gain information!

Information comes in a wide variety of forms. A map is an example. If you can refer to a map as you plan your trip, you will arrive at your desired destination in a more efficient manner. You economize on your use of other resources such as your time, fuel and wear and tear on your car. Information has the amazing ability to increase the efficiency of all other resources.

Time is perhaps the resource that is most enhanced by the information revolution. A consistent trend, particularly in regard to computers, is increased speed. Speed is essentially a measure of how intensively we use time.

In comparison to other resources, information has almost a magical quality. If I use the resources that are necessary for making a car, those resources are unavailable to anyone else. Information, however, is different.

Information is not exclusionary. You and I can both possess the same bit of knowledge. You can use it without interfering with my using it.

We have been accumulating information since the dawn of civilization. It is not a limited resource. It is virtually the opposite of limited -- it multiplies as we use it.

Generating new information is part of what the information revolution is about, but it's also about organizing and disseminating the information that already exists. There is what you might think of as informational logistics -- getting the information to the right places and people at the right time in the right form. The Internet with its World-Wide Web, fax machines and cellular phones are some of the main players in informational logistics.

One important indicator of the value of information in our lives and the economy is the fact that a person's income is roughly proportional to the amount of information he or she has accumulated.

Like other resources, information has a cost. Part of what the information revolution is about is reducing the cost of generating, processing and distributing information. Computers continue to drop in price. The portion of the population that can afford to own one keeps increasing.

The invention of the printing press was itself a kind of information revolution. The printing press dramatically reduced the cost of information and was a major step toward making knowledge available to the masses. The printing press was invented by one person, yet it changed the lives of virtually everyone.

Computer software is developed by relatively small groups of people yet it increases the productivity of millions of others. Even those not directly working with computers benefit in the form of reduced prices for the products they purchase.

Just a hundred years ago music could be experienced only through live performances. The development of compact disks and low-priced stereos have made quality music reproduction accessible to almost everyone. What a difference!

One of the exciting aspects of a revolution is that it is unpredictable. It's fun to speculate about what's going to happen next.

Information also has the ability to build on itself. It's like a ladder that keeps extending itself no matter how high we climb. When it comes to information, not even the sky is the limit.

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◼ FISCAL FITNESS - North Coast Journal November 1995

Ron Ross Ph.D. is a former economics professor and author of The Unbeatable Market. Ron resides in Arcata, California and is a founder of Premier Financial Group, a wealth management firm located in Eureka, California. He is a native of Tulsa, Oklahoma and can be reached at rossecon@gmail.com.