Ev Ehrlich's Everyday Economics

The Right-Brained Economy

Aldous Huxley once remarked that man made the automobile in his own image.  But if humans ever created a machine in celebration of themselves, it was the computer.

The culture of market economies has always treasured the ability to analyze and process information.  The second most popular books in the sixteenth century, after Bibles, were math textbooks that taught how to exchange currencies and extrapolate prices.  A short generation ago, our economy's "best and brightest" were numbers crunchers: they were the "whiz kids" who first pioneered financial engineering and high-powered capital market theory, or brought modern management to Robert MacNamara’s Ford and Pentagon.

But today, thanks to technology, everybody's a whiz kid.  Today, if you know one thing, you can talk to most of the population of the Earth: that thing is their phone number.  And now, armed with one other thing, you can learn any fact, see any image, or gather any data – an internet address.  There is now almost nothing that the computer on your desk cannot tell you.

This evolution in information technology is about to change our culture.  As computers get cheap and the internet flourishes, we are becoming overloaded with data – data from markets, websites, spreadsheets, desktop publishing, powerpoint presentations.  Anyone can now be a numbers cruncher, an analyst, a data producer.  The people who prosper in this world won’t be those who add to – or are distracted by – the clutter.  The Information Revolution is automating the left side of our brains – the side that analyzes and manipulates data.  And as a result, a new and different set of skills and abilities is becoming more important –– judgment, intuition, creativity, and insight.  In short, the Information Revoluton is creating a new, right-brained economy.

The advent of this right-brained economy is challenging all of our institutions.  How will business schools develop these traits in their charges, or recognize them in their applicants?  How will companies identify and reward managers who demonstrate these skills, or build their organizations around them?  How will the obsolete data-crunchers perilously positioned in the path of this technology adapt?

It was no less a seer than the late Timothy Leary who said, "Computers...will replace you only to the extent you think like a bureaucrat, a functionary, a manager... or a chess player.”  Not long after Leary’s departure from the scene, IBM's chess program, Big Blue, beat international chess wizard Gary Kasparov, making Leary’s point.

And so, the ultimate paradox: the machines that compute and analyze will ultimately reward the artists, poets, and philosophers who know what to do once the machines are done computing and analyzing.  They will be tomorrow's CEOs.

The New Gilded Age

November, 1999 — The financial pages have recently been replete with signs of the new world to come.

The first, of course, was that the President and the Congress have agreed to repeal the Depressionera laws that prevented competition in the financial services industries. It's a longoverdue improvement, but it really comes down to this: having proved unable to come up with new products to sell you in their own markets, the nation's bankers, brokers, and insurers have decided to sell you each other's.

Pity the poor banks. They once sold you a mortgage and a credit card, but now you can get those anywhere, so their current plan is to sell you insurance and stocks and bonds, which you already get somewhere else. The banks' greatest strength was once the fact that they had a building in every neighborhood where you could drop in and do business. Today, dropping in increasingly means logging on, and those brickandmortar branches are an albatross — the most expensive way to service customers. In Britain, you can do your banking at the supermarket and remember, they had the Beatles first, too. Instead of going to a bank, you'll be applying for a mortgage or a consumer loan at the supermarket, at a kiosk at the mall, or at WalMart pretty soon.

And, of course, online. In fact, what deregulation probably will change most is what bankers, insurers, and brokers put on their websites, because that's where they'll find the people in the "mass market" for financial services. Along those lines, a second recent omen of the future was a study just released by the Investment Company Institute and the Securities Industry Association. It showed that fully half of all Americans own some kind of stock. It's not utopian collectivism, but it's not bad for capitalism.

But with this widespread ownership comes the reality that finance has become more than a mass market product. It has become a mania, a social pursuit. Cutrate stock trading has allowed millions of people to ride the wave and consider themselves geniuses — for the moment. CNBC and other financial news providers offer entertainment to the public disguised as cutting edge financial information. Cell phones can now call you the instant a stock's price reaches a certain level: believe me, if you need to be called by your cell phone the instant stock prices reach a certain level, get out of the market. Now.

And that raises the third sign of the times — the successful initial public offerings — IPOs — of Martha Stewart and the World Wrestling Federation. Are these really worth the billions investors paid for them? Perhaps — it's unlikely that everyone who bought a piece of them was God's own fool. But they are also symptoms of a New Gilded Age, in which anything and anyone can be a brand, a business, a product, a customer channel, a value stream, an investment, all at just $9.95 a click. Buoyed by our own prosperity, liberated by a technological renaissance, we are finally free to pursue the logical outcome of human experience over, lo, these many centuries —thinking about money.