- The Washington Times - Friday, January 21, 2000

CAMBRIDGE, Mass.

I am not hyperventilating about the AOL-Time Warner merger because, in the perspective of the whole American economy, the "content" they provide is small potatoes.

News and entertainment content make up less than 5 percent of the U.S. GNP. And that is roughly the ratio it will have in tomorrow's world. Because information technology is moving into every sector of activity, from personal to professional, we are really just mapping over the old way of life with new technology. The ratios will stay roughly the same.

On the other hand, "information work" white-collar office work constitutes 60 percent of the U.S. economy. When the simple, repetitive aspects of this work are fully automated, we will probably see productivity increases in the range of 300 percent, paralleling the gigantic leaps of the Industrial Revolution.

In the meantime, networking will enable the import and export of "information labor" that can be done electronically from any distance, not just among the advanced nations, but from poor to rich countries.

India already has some 30 million literate, English-speaking office workers available to process the medical records of the big American insurance companies. As the birthrates in Japan and Europe continue to shrink, they may well come to depend on imported information labor.

Despite all the sizzle of the AOL-Time Warner deal, the fact is that we have barely begun to enter the realm of the information society and economy.

c First, for all intents and purposes, there is still no automation. We are still not offloading simple, repetitive work onto computers; we continue to have to use our eyes and fingers and minds to tell the computer what to do.

c Second, there is no speech recognition as the dominant interface. Humans weren't born with keyboards and mouses, but with speech as our mode of communication. That will come.

c Third, there is no decent information access. We have what I call structural or syntactic access you punch in some words in a "search engine" and may or may not get the response you are looking for, along with loads of junk.

c Finally, except for a bit of e-mail, there is as yet precious little collaboration across space and time.

All this, however, will surely come in time, placing the AOL-Time Warner merger in its proper place as an important but very small step on the way to an information marketplace.

Nonetheless, from the perspective of those not taking them, small steps often seem very big in any new era.

For the rest of the world, some argue the perception is growing that an American "faste caste" is taking off and with it, productivity and wealth, leaving the "downcast" behind.

This is not true of the richer parts of Europe and Asia, at least. They will lag behind a few years, as they did in adopting color television or fast food, but will come along sooner rather than later. Europe, an older continent, has a natural reluctance to embrace change. They want to wait and see how the American teen-ager makes out first.

The knowledgeable, richer segments of, say, India or Brazil, as well as Eastern Europe, will fill in the gap of information labor until automation comes. Already there are reports Indian doctors are transcribing medical audio dictation from American doctors into text, then sending it back. The cost is about one-third what it would cost in the United States.

Over time, those costs will rise, of course. The wage gap is an entry phenomenon. The Bangalore programmers started three or four years ago with wages of about $5 to $10 an hour; today they are up to about $40 per hour. This kind of wage acceleration, then, will be followed by exchanges of products and services in the information marketplace, entrepreneurship and the creation of new companies. As the cost differential closes around the knowledgeable parts of the world, automation will look more attractive to companies trying to save on cost. That is the logic of technological advance in market economies.

The prospects are not good at all in the poorest countries like Nepal or Bangladesh or the Central African Republic. Illiteracy is the first, and greatest, hurdle. That is followed by the lack of infrastructure, weak institutions and corrupt politics.

That gap between the "downcast" and "faste caste" will be the hardest to bridge. Ten percent of the American GNP is devoted to the purchase of software and hardware. In Germany that figure is 7 percent. In Bangladesh it is one-tenth of 1 percent.

Where is the money going to come from to buy the software and hardware in such a place, not to speak of financing education? However successful the forging of an information marketplace in the advanced world, this question will not go away.

Michael Dertouzos is director of the Massachusetts Institute of Technology's Computer Laboratory. His comments are adapted from a talk with Global Viewpoint. 2000, Global Viewpoint. Distributed by Los Angeles Times Syndicate.

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