Your education in personal computers can be informal. As I’ve said, my fascination began with game playing, as years later Warren Buffett’s did. My dad got hooked when he used a computer to help him prepare his taxes. If computers seem intimidating to you, why not try doing the same sort of thing? Find something a personal computer does that will make your life easier or more fun and latch on to that as a way of getting more involved. Write a screenplay; do your banking from home; help your child with her homework. It is worth making the effort to establish a level of comfort with computers. If you give them a chance, you will most likely be won over. If personal computing still seems too hard or confusing, it doesn’t mean you aren’t smart enough. It means we still have work to do to make them easier.
The younger you are, the more important this is. If you are fifty or older today, you may be out of the workforce before you’ll need to learn to use a computer—although I think if you don’t learn, you’ll be missing out on the chance for an amazing experience. But if you are twenty-five today and not comfortable with computers, you risk being ineffective in almost any kind of work you pursue. To begin with, finding a job will be easier if you have embraced the computer as a tool.
Ultimately, the information highway is not for my generation or those before me. It is for future generations. The kids who have grown up with PCs in the last decade, and those who will grow up with the highway in the next, will push the technology to its limits.
We have to pay particular attention to correcting the gender imbalance. When I was young, it seemed that only boys were encouraged to mess around with computers. Girls are far more active with computers today than twenty years ago, but there are still many fewer women in technical careers. By making sure that girls as well as boys become comfortable with computers at an early age we can ensure that they play their rightful role in all the work that benefits from computer expertise.
My own experience as a child, and that of my friends raising children today, is that once a kid is exposed to computing, he or she is hooked. But we have to create the opportunity for that exposure. Schools should have low-cost access to computers connected to the information highway, and teachers need to become comfortable with the new tools.
One of the wonderful things about the information highway is that virtual equity is far easier to achieve than real-world equity. It would take a massive amount of money to give every grammar school in every poor area the same library resources as the schools in Beverly Hills. However, when you put schools on-line they all get the same access to information, wherever it might be stored. We are all created equal in the virtual world, and we can use this equality to help address some of the sociological problems that society has yet to solve in the physical world. The network will not eliminate barriers of prejudice or inequality, but it will be a powerful force in that direction.
The question of how to price intellectual property, such as entertainment and educational materials, is fascinating. Economists understand a lot about how the pricing of classical manufactured goods works. They can show how rational pricing should reflect cost structure in a very direct manner. In a market with multiple competing qualified manufacturers, prices tend to drop to the marginal cost of making one more of whatever they are selling. But this model doesn’t work when applied to intellectual property.
A basic economics course describes the curves of supply and demand, which intersect at the price appropriate for a product. But supply-and-demand economics gets into trouble when it comes to intellectual property, because ordinary rules regarding manufacturing costs don’t apply. Typically there are huge up-front development costs for intellectual property. These fixed costs are the same regardless of whether one copy or a million copies of the work are sold. George Lucas’s next movie in the Star Wars series will cost millions to make, regardless of how many people pay to see it in theaters.
The pricing of intellectual property is more complicated than most pricing because today it is relatively inexpensive to manufacture copies of most intellectual property. Tomorrow, on the information highway, the cost of delivering a copy of a work—which will amount to the same thing as manufacturing it—will be even lower, and dropping every year because of Moore’s Law. When you buy a new medicine, you’re paying mostly for what the drug company spent for research, development, and testing. Even if the marginal cost of making each pill is minimal, the pharmaceutical company still may have to charge quite a bit for each, especially if the market is not huge. The revenue from the average patient has to cover a sufficient share of the development expenses and generate enough profit to make investors glad they took the substantial financial risks involved in developing a new drug. When a poor country wants the medicine, the manufacturer faces a moral dilemma. If the pharmaceutical company doesn’t waive or drastically reduce its patent-licensing fees, the medicine won’t be available to poor countries. However, if a manufacturer is to be able to invest in R&D, some users must pay more than the marginal cost. Prices for drugs vary greatly from country to country and discriminate against poor people in rich countries except where governments cover medical costs.
One possible solution, a scheme whereby a rich person pays more to buy a new medicine, to see a movie or to read a book, may seem inequitable; however, it is identical to a system already in place today—taxation. Through the income tax and other taxes, people with high incomes pay more for roads, schools, the army, and every other government facility than the average person does. It cost me more than $100 million last year to get those services because I paid a significant capital gains tax after selling some Microsoft shares. I have no complaint, but it is an example of the same services being provided at vastly different prices.
The pricing for highway access may be set politically rather than on the basis of costs. It is going to be expensive to enfranchise people in remote locations because the cost of bringing wiring to far-flung homes and even small communities is very high. Companies may not be eager to make the necessary investment, and the geographically disenfranchised may not be in a position to make the investment on their own behalf. We should expect heated debate about whether the government should subsidize connections to rural areas, or impose regulations that cause urban users to subsidize rural ones. The precedent for this is a doctrine known as “universal service” which was created to subsidize rural mail, phone, and electrical services in the United States. It dictates a single price for the delivery of a letter, a phone call, or electrical power regardless of where you live. It applies even though it is more expensive to deliver services in rural areas, where homes and businesses are farther apart than in areas of concentrated population.
There was no equivalent policy for the delivery of newspapers or radio or television reception. Nonetheless, these services are widely available, so clearly under some circumstances government intervention isn’t necessary to ensure high availability. The U.S. Postal Service was founded as part of the government on the assumption that that was the only way to provide truly universal service. UPS and Federal Express might disagree on this point, however, because they have managed to provide broad coverage and make money. The debate as to whether, or to what degree, government needs to be involved to guarantee broad access to the information highway is certain to rage on for many years.
The highway will let those who live in remote places consult, collaborate, and be involved with the rest of the world. Because many people will find the combination of rural lifestyle and urban information attractive, network companies will have an incentive to run fiber-optic lines to high-income remote areas. It is likely that some states, or communities, or even private real estate developers will promote their areas by providing great connectivity. This will lead to what one might call the “Aspen-ization” of parts of the country. Interesting rural communities with high marks for quality of life will deliberately set out to attract a new class of sophisticated urban citizen. Taken as a whole, urban areas will tend to get their connections before rural ones.