Depreciation of knowledge

There have been lots of coverage of the Beijing Autoshow which opens over the weekend. Despite being strapped for cash, practically every carmaker in the world is there, together with tons of new model. The stories generally are about the fast-growing Chinese market, its (hopefully) ready acceptance of renewable energy, or more often, the rise of Chinese auto companies.

One industry person made the observation that it took Japanese automakers decades to achieve international recognition, South Koreans a decade, and perhaps only a few years for the Chinese ones. The underlying story was the incredible rise of Chinese companies. But is this really a Chinese story, or is it more a reflection on our general economic model? The rapid decline of the worth of knowledge to be precise.

The industrial revolution was a real game changer, in the sense that those with knowledge were able to keep a much larger share of the surplus, to the detriment of those providing mere resources. However, rapid distribution of knowledge means that people can hold on to the benefits of having it for less and less time. Knowing how to make steel was enough to guarantee a respectable living standard for generations. Now we can witness the life cycles of Cisco, Yahoo, and dare I say it, Google with our own eyes. Success just seems to last shorter and shorter. This, I think, is the paradox of our time, knowledge is rapidly depreciating in a knowledge economy.

What does this mean? As benefits from our economic activities are accruing less to the knowledge holders, it only means that power is returning to the primary producers. The farmers and commodity producers of the world are getting a larger share of the spoils. So, Jim Rogers is right.