19
The Most Valuable Asset in the
Global Information Economy
My lesson on the emerging global information economy starts, and then abruptly stops, during half-time of the Green Bay Packers-Denver Broncos Super Bowl. My teacher is Rashi Glazer, Ph.D., a Stanford-trained marketing expert who is now a U.C. Berkeley business professor and one of the world's leading experts on the marketing end of the information revolution. I pull him away from the television commercials and corner him on a sofa in the living room of Joe and Valerie JanLois, a Danville couple who are organizers of the Natural Law Party in northern California. I have joined John Hagelin, Mike Tompkins, Kingsley Brooks and about 30 other party organizers and supporters for an afternoon away from party building to watch the AFC finally put one over on the NFC.
I hope to talk with Glazer about the booming U.S. economy, the onset of the knowledge and information age, tax reform, and the role of government in fostering a better educated, more enlightened workforce. Instead, he gives me five minutes of polite but slightly distracted conversation as he keeps one ear and one eye tuned to the television at his left, until I realize I am taking him away from his work. Glazer is, after all, a marketing consultant, and the $2.6 million per minute TV commercials being aired on the Super Bowl will be the subject of a lecture in the MBA class he'll teach next week. He can't really talk to me now, he needs to watch television. We arrange to meet tomorrow after class, and then happily return to our potato chips and the game.
It's been almost 30 years since I first walked across Sproul Plaza at the University of California at Berkeley. Back then the issues were clear-cut, polarizing, and proper nouns: Vietnam, Civil Rights, the Cold War. The campus was a seething cauldrun of political opinions and activism. Today, the issues are abstract, subtle, confusing, and all lower-case-but just as crucial and worthy of debate: the makeover and takeover of the world's food supply by a handful of biotech companies; the crisis over the content of health care, not just the delivery of it; and the massive sales of U.S. weapons all over the world. But today, as I head towards Rashi Glazer's class in the new $50 million Haas School of Business, all is quiet on Sproul Plaza.
Compared to the weary old classrooms in which I sat through lectures on political science and journalism back in the late '60s and early '70s, Glazer's classroom feels like a executive meeting room in a business conference center. Brand new, clean, smartly painted, the room is tiered and horseshoe-shaped. It comfortably holds 50 people-about 20 too few for this class, so students are jammed into corners for today's session, an optional review for MBA students who want to bone up on some basics.
Glazer is a good teacher. Every few minutes he ends his thought with a question, pulling students into the discussion. It's a class on marketing accounting and he's talking about fixed costs, variable costs, contribution margins, and break-even points ("but we're not in business to break even"). The hour-long session slides by quickly and before I know it. I am spilling out into the hallway with a bunch of 20-year-olds. I spot Glazer and together we begin our climb up five flights of stairs and through an endless maze of corridors before we finally arrive at his office. I like it. Tidy but not obsessively so. One wall is covered with books. For a desk he's got three rectangular tables pushed together in a u-shape and stacked high with papers. On the table against the far wall is a Mac computer ("Old and slow," he confides. "I need a new one.")
Glazer is not only very smart (one of his advisors at Stanford called him the most intelligent student he ever taught), but his students say he's very accessible and very likeable. He's about 5 foot 8 inches, weighs a solid 150 pounds, has thinning blond hair and deep set, penetrating blue eyes. I'm way overdressed. He's wearing khaki slacks, a white dress shirt with light blue stripes, open at the collar, and Rockport casuals. I'm in a suit.
Before we get into the information revolution, I want to ask him some basic questions. I know he is a supporter of the Natural Law Party, but I am curious to know-as I am with just about everyone I meet-did he once consider himself a Republican or a Democrat?
Leaning way back in his chair, one leg crossed over the other, Glazer admits that he was neither.
"I've voted over the years, but I had no party affiliation one way or the other. I looked at politics as not very relevant," he says. "I felt that the two main parties didn't really differ in their approaches, and anyway, I tended to look at economic and social factors as driving the nation's fortunes, not political factors," he says.
Glazer says that one of the reasons he doesn't put too much trust in the political system is that the solutions promoted by the two main parties don't work, sounding a familiar Natural Law Party theme.
"They're kind of phony solutions. Most money is spent on bandaging up problems that already exist, rather than solving or preventing them. But worse than that, many solutions are 'anti-ecological'-they have toxic byproducts-and I don't mean just environmental, but also social, economic, and political. They create another problem which then demands another solution which then creates another problem. So many products exist that are designed to clean up other problems created by someone else. Health care is an obvious example. So many health care products and services lead to other problems which then create a demand for new products and services. It's a vicious cycle that doesn't end."
Glazer leans forward to make a point. He says it's hard to comprehend the extent to which problems are an economic engine.
"Entire industries are devoted to helping people overcome something that shouldn't exist in the first place. It's an enormous waste of knowledge and intelligence. For example, our most talented accountants spend their time helping people understand and fill out tax forms that basically cause more problems than they save. In our legal system, consider the amount of time, money, and talent that goes to cleaning up problems that were created elsewhere. Our whole economy has a vested interest in problems. If problems went away suddenly, the economy and our social infrastructure would probably collapse."
But we're talking about a political party-the Natural Law Party-with programs to solve problems at their root and prevent new ones from arising. What's going to happen to the economy?
"It's a political process, it's not a revolution, so change won't happen overnight," he says smiling. "As a more prevention-oriented approach begins to be phased in, there might be some dislocations, but nothing dramatic."
Rashi Glazer is recognized in the tight-knit circle of academia as one of a number of leaders in the field of business marketing. But in the emerging field of the information-based or knowledge-based economy, he is virtually in a class by himself. He is among the most knowledgeable and most sought-after speakers at academic conferences worldwide, and is a top consultant to Hewlett-Packard, Intel, Motorola, and large phone companies, such as AT&T, Southwestern Bell, and Pacific Bell. His book, The Marketing Information Revolution, published by Harvard Business School Press, offers a definitive treatment of marketing changes coming with the global information economy.
I say to Glazer, imagine for a moment that you're a consultant to the President of the United States. Where is the economy is headed?
"We're obviously moving into a new era of economics," he says. "We are moving out of the industrial revolution into a kind of a post-industrial revolution, where the real assets of the economy are no longer matter- or energy-based assets, such as steel and oil, but information- or knowledge-based assets, such as computer software and consulting. Early thinkers talked about this 30 or 40 years ago, but now it's apparent to everyone that more and more of our gross national product, and the world's gross product, are information- or knowledge-based assets, such as a software company using a ten-cent computer disk to sell a $500 computer program."
The real impact of this change can already be seen in seismic shifts in the job market.
"The industrial revolution has been about machines gradually replacing human beings as labor, until now the idea of human beings as labor is becoming obsolete," he says. "Companies just don't need as many people as labor in the workforce, and that's why we see so many dislocations across the board. In the information revolution, however, companies will see the value of human beings not as labor, but as intellectual capital. In the new economy, the real assets will be people who can process information and create new knowledge.
"And as knowledge and information become the real asset of the economy, it's clear that there are going to be massive transitions that will require individuals to learn new skills. For this reason, education must be our number one priority.
"But when most people talk about education, they talk about training workers in a new set of skills, such as how to use a computer. The Natural Law Party takes it a step further when it suggests that it's not a matter of simply educating people in specific skills, but in educating a person in such a way that he or she is a perpetual learner. The real value of an individual as an economic asset is not just the ability to have a particular skill, but the ability to learn any skill. This is going to be the key for individual survival, corporate survival, and national survival. Individuals who think that whatever they know today is going to be relevant five years from now are deluding themselves. If you think that, you're probably going to be out of a job. On the other hand, if you assume that what you know today is going to be obsolete five years from now, then you redefine your job in life to be a constant learner. To the extent that you see yourself that way, then you'll always be employed because you'll always be learning and you'll always be of value. And to the extent that government has a role to play in making individuals wealthy, making companies wealthy, and making society wealthy, then that government has a role to play in fostering, through education, individuals' capacity to constantly renew themselves. If you read the Natural Law Party's platform, particularly its section on consciousness-based education, you see that the party articulates this better than any other political party."
It's almost five o'clock and Glazer has to meet his wife, Margaret, in 10 minutes. The afternoon has turned dismal: overcast, foggy, and drizzly. I'm enjoying this conversation, and am not at all eager to leave the warm and dry of the office for the cold and wet outside. I have just a couple more questions. I shift gears to America's booming economy. Who should get the credit? Clinton? Reagan's tax cuts in the '80s?
Glazer shakes his head, no. He attributes the boom less to government policies, and more to wealth-generating companies, such as Intel and Microsoft.
Will it last? I ask. Are we headed for a crash?
He shakes his head, no again. He is bullish on the future.
"We are just at the start of a tremendous growth period in world prosperity, and the microprocessor is the engine of growth. The microprocessor is a knowledge- or information-based technology that is making older industrial-based businesses much more efficient. As businesses become more efficient, prices drop and the economy expands. More wealth has been created in the last 15 or 20 years, particularly in California, particularly here in Silicon Valley, than in the last twenty thousand years. I believe we're at the very beginning of a huge prosperity curve."
I ask him about the current budget surplus and the decision not to cut taxes. Glazer says that despite political posturing, taxes will come down dramatically in the United States "no matter what," and the reason is simple: competition.
"Because of the emergence of one global financial marketplace and because of the Internet, governments are going to be competing with each other for money. Right now, if you're a U.S. citizen, your money is here in this country. But the truth is, everyone wants your money-the whole world wants your money. What are they going to give you to get it? They'll have to give you something, such as less taxes-or else you can put it somewhere else."
In another country? I offer.
"Yes, in another country," he says. "And the minute that starts, the first thing to go down is taxes. This is already beginning to happen in the U.S., where states are competing with each other to give favorable tax breaks to companies. And that's only going to accelerate to the point where entire countries are going to be competing for our tax dollars. It's inevitable."
With a trend towards lower tax revenues, how will we pay for skyrocketing prisons, health care, environmental clean-up costs? I ask.
"It forces us to either live with the problem or find a solution. Inevitably, government will be forced to ask, 'Are there new ways of doing things, new solutions out there that work better than what we've got?' Is there some way we can prevent a problem now, so we don't have to deal with it-and spend more money on it-later? That's where the Natural Law Party comes in. It is the only party with a platform that is prevention-oriented, with programs that are more effective and cost-effective than whatever the government is trying today. "
Suddenly it's time to go. Glazer ends with a final look to where we are headed.
"Buckminster Fuller said that in the emerging knowledge-based society, the world will always get wealthier because, by definition, it's impossible to know less. You can only know more, so wealth will always be increasing. Another point that goes along with this is that there's no business that complains about having too much computer power. There's no company that says, 'Gee, I wish we had less power.' Every company wants more and more computer power. What they're saying is they want more information processing capability. So if we look at human beings as capable of becoming the ultimate information processors-as life-long, creative learners-then no company would want fewer people. They would just want more people. This is the kind of education that government should invest in, because this is the real wealth generator. The Natural Law Party talks about this a lot, and business is getting on to the notion. It's the next thing in the information revolution."
I leave this interview with Rashi Glazer very upbeat, very inspired. Glazer's insights-highly sought-after by top business leaders-dovetail perfectly with what John Hagelin, Mike Tompkins, and other Natural Law Party candidates are talking about:
In the heat of the campaign, when we're battling ballot access laws, arguing in court for our rightful place in public debates, and being refused fair coverage by the national press, sometimes I would see the Natural Law Party as a newcomer on the political road, hurrying, hurrying, hurrying to catch up with the Republican and Democratic parties. On one level that may be the case. But the reality is, the Natural Law Party platform is ahead of its time-and, fortunately, not by much anymore. Change is largely market-driven. And the market is driving America towards a prevention-oriented government that values human intelligence and creativity above all else. That realization is very energizing to me, and somehow lifts the pressure of trying to "catch-up" off my shoulders. I am smiling about all this as I snatch a $20 parking ticket off my windshield, and head out for the next meeting.