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Plato’s Library: Why information is the true source of new wealth

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Jonathan Bartlett

Jonathan Bartlett explains the relationship between information and prosperity as set out in Eric Holloway’s new paper: our ability to “read from Plato’s Library” of new ideas provides us with an ever-growing supply of
side information that powers the economy:

Information theorists often use analogies from making bets to understand the impact of information on economics. Perhaps surprisingly, there are many structural similarities between betting at a casino and betting on a business (by starting or investing in it). Both start with outlays of capital which may decline to zero, be partially returned to you, or (as you hope) returned as a multiple. The difference is that, at the casino, the casino sets the odds for a payout. In business, the odds are set by external factors. But why is it that so many people can make money in business but few if any make money gambling at a casino?

The difference is that, in business, we can introduce “side information” to the problem of increasing our capital. Side information is information that we know but it isn’t simply dictated to us by the environment. Before the iPhone was invented, there was no known price that an iPhone would sell for. Apple CEO Steve Jobs had to draw on his own side information about what users wanted, needed, and would pay for, in order to make the bet that the iPhone would work out. It wasn’t a guarantee and Apple could have lost their investment. As it happened, the side information that Jobs brought to the table allowed Apple to not only make money for itself by selling phones but create opportunities for users to make money, thus adding to overall wealth. This was all done by using side information on what users wanted and needed in a phone.

This phenomenon of side information has been described primarily by two economists— George Gilder and Peter Thiel . More.

Jonathan Bartlett is the Research and Education Director of the Blyth Institute.

Also by Jonathan Bartlett: Google Search: Its secret of success revealed: The secret is not the Big Data pile. No, Google found a way to harness YOUR wants and needs


Be Choosy About What You Automate: Having automated many processes, I can assure you that that is the First Rule of Automation

VMH, talent gives insight which can drive innovation. Innovation is famously disruptive. For example, how many have seen the Moon orbiting us (hence, the month)? How many have seen fruit etc fall? How many mathematically connected the two, effectively mixing in the structure of space so the effect at a distance of a flux is duly attenuated as an inverse square function? Millions vs just one. And that was it 24 year old student back home because of plague at his uni, revolutionised the world. KF kairosfocus
Well, gee, golly. I kinda thought TALENT was the source of New Wealth. Now you're telling me that the Beatles and Michael Jordan got rich because of some special access to secret information that no one else knew about... Unless your organization is spending (wasting?) a huge chunk of change on Research, everybody else in your business also knows about New Technology. But the question is: what you DO with the nifty raw facts? For decades starting at the end of the 19th century, sciencey kinda guys would impress after dinner guests by instantly engraving a leaf onto a copper plate, right there in the parlor. This was done using The Monroe Effect, which involved a small explosive charge and a paper cone. NO ONE could think of any PRACTICAL application for this bit of Science Information. That is until A. Hitler, Chancellor of Germany, who had no training in Physics or Chemistry. At the beginning of WW2, one of the most modern and well constructed defensive forts in the world stood on the Belgian border with Germany. The fort was called Eben-emael, and it was considered to be impregnable. But the German Chancellor, who again knew practically NOTHING about designing explosive devices, called in a group of military engineers and asked them whether the Monroe Effect could be used to "cut" holes in steel and concrete. After some thought, the "experts", said, yes, we just need to introduce a "stand-off" to allow the blast to focus into an inverted cone and aim the point of that cone at the offending armor... So the German army did some quick prototypes, experimented a bit with sizes and weights, and spent the winter of 1939-40 making up some dozens of "mines". In the spring of 1940, German paratroops landed directly on TOP of Eben-emael, which was of course NOT defended, and went about employing their Shaped Charges to methodically eliminate the turret-mounted guns of the fort. The fort then surrendered, essentially without a fight. So, EVERYBODY had access to information about the Monroe Effect, and only ONE person on the planet could think of any USEFUL application for it. And THAT is Talent, not "access". And of course TALENT is always in short supply. And I think most entrepreneurial kinda guys KNOW that. But if ya just wanna sell some books, tell people that all they need is INFORMATION, and they can be millionaires. vmahuna
It is no secret that knowledge is power, and power can lead to wealth. Who controls the flow of information controls society. In Germany Hitler and his propaganda machine controlled the flow of information, leading to the possibility of the holocaust. Our schools control the flow of information to our children. It is important that we make sure that they do so in an unbiased fashion. Sex education is a prime example. For years schools taught a bare minimum of the biology, and an abstinence only approach. This only led to ill-informed teens and unwanted pregnancies. We see a similar bias with the teaching of evolution to the exclusion of all other possibilities. Ed George

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