I ssue 1 .

0 1 - Mar / Apr 1993

School's Out
Th e h ype r le a r n in g r e volu t ion w ill r e pla ce pu blic e duca t ion
By Lewis J. Per elm an

Dear I nform at ion I ndust r y Ex ecut ive: Could your business benefit fr om a few hundred billion dollars in new sales? Good. Let 's t alk . We all know t hat t he world econom y is going t hrough what som e call a " second indust rial revolut ion" as k nowledge- based businesses replace product ion - based businesses at t he core of econom ic act ivit y. I n t he t r enches of t his rev olut ion a host of com panies are scram bling t o capt ure t he high ground of t he new m ult im edia, t elecom put ing m ega- indust ry t hat is springing up from t he digit al int egrat ion of m any div er se ent erprises. But cont rary t o w hat y ou have heard during t he recent elect ion, schools are one of t he principal barriers t o t he gr ow t h of not only t his new indust ry, but t he whole world econom y. Replacing t he bureaucrat ic em pire of educat ional inst it ut ions w it h a high - t ech com m ercial indust ry will pull t he cork out of t he knowledge- age bot t leneck - opening up an annual m arket wort h $450 billion in t he US alone. Recent cam paign r het or ic aside, t he r eal t hreat posed t o our econom y by educat ion, schools and colleges is not inadequacy , but excess: t oo m uch schooling at t oo high a cost . The convent ional " t echnology" of t he classroom is a t housand - year- old inv ent ion init ially adopt ed t o discipline an esot er ic cadr e of acet ic m onks. The inst it ut ion of cont em porary, " public" educat ion is a 19t h- cent ur y innov at ion designed as a worker - fact ory for an indust rial econom y. Bot h have as m uch ut ilit y in t oday's m oder n econom y of adv anced inform at ion t echnology as t he Conest oga wagon or t he black sm it h shop. Am erica current ly has t he m ost schooled workforce in it s hist ory : I n t he last t w o decades, t he num ber of college graduat es absorbed by t he US workforce soared from less t han 11 percent t o m ore t han 21 percent . I n a r ecession t hat has dragged on for nearly t hree years, t he m ost educat ed worker s have borne a dispr oport ionat e share of unem ploym ent . A whit e- collar m iddle m anager is about t w o- and- a- half t im es m ore likely t o becom e unem ployed now t han t he average worker. Dan Lacey, edit or of Wor kplace Trends, est im at es t hat 70 percent of t he unem ploy ed in t he ongoing wave of cor por at e st aff cut s are m anagers, professionals, and t echnicians, m ost of

whom hold college degr ees. Because t he cut s are perm anent , fewer t han 25 percent of t hese people will find sim ilar new j obs t oday, down from 90 percent a decade ago. Econom ist Gary Schilling expect s t hat at least 10 percent of all college grads will be unem ploy ed during t he '90s; re- cent Labor Depart m ent st udies indicat e t hat anot her 25 percent t o 50 percent will wind up " underem ployed" in j obs for which t heir diplom as are irr elevant . As for t he m y t h t hat a gr eat er " invest m ent " in educat ion will yield t he " high skills" t hat prom ise " high wages," t he recent collapse of t he Soviet Union m eans t hat US com panies such as Sun Microsyst em s, AT&T, and Cor ning Glass now can em ploy world - class scient ist s and t echnicians in Russia and ot her count r ies for salaries of $60 a m ont h. And I ndia prom ises t o add anot her 400,000 new engineering graduat es a y ear t o t he w orld pool of educat ed t alent . So t he value of academ ia's diplom as is deflat ing ev en as t heir cost cont inues t o balloon. The nearly $450 billion Am er ica spent on schools and colleges in 1992 represent s an inflat ion - adj ust ed increase of 40 percent , or $100 billion, in educat ion spending in t he last 10 years. That 's half again m ore t han what 's spent on defense or t he federal deficit , for services of dubious and declining wort h. Why is t he educat ion sect or - equal w it h healt h care as t he largest indust ry in our econom y - a cent er of declining product ivit y, while advancing t echnology is m aking every ot her inform at ion business m ore efficient ? The answer is clear: Educat ion is t he last great bast ion of socialist econom ics. Public educat ion is a redundant t erm : More t han 90 percent of t he services provided by educat ional inst it ut ions in t he US are owned, operat ed, subsidized, and/ or regulat ed by governm ent . Schools and colleges are as product iv e and innov at iv e as Soviet collect ive farm s. You m ay be st ar t ing t o get a glim m er of why t he shut - down and replacem ent of educat ion is t he great est business opport unit y since Rockefeller found oil: At t he sam e t im e Am erica is barely scrounging up t he capit al t o affor d t he $80 billion t o $100 billion it w ill t ak e t o replace t he nat ional t elecom m unicat ions infrast ruct ure w it h fiber - opt ics, hundreds of billions of dollars are being shoveled annually int o t he black hole of educat ion's socialist econom y. Am erica's biggest and m ost t echnologically ar chaic infor m at ion m ar ket is squandering a t reasure equivalent t o t he world's eight h- biggest nat ional econom y on t he feckless paper chase for academ ic diplom as. But w ait a m inut e, y ou say: Don't t he " know ledge workers" of t he new econom ic age need t o learn a lot m ore t o be product ive and com pet it ive? Sure. We all need t o learn m uch m or e, m uch fast er, and m uch bet t er; not j ust t o get ready for work, but t o keep up wit h t he elect ric changes and ex plosion of inform at ion t hat perm eat e our increasingly check er ed car eers. Mor eover, learning is t he work t hat t wo - t hirds t o t hree- quart ers of US workers now get paid t o do, and is, in fact , t he cent ral product ion process of t he im m inent knowledge- age econom y. But schooling has becom e an obst acle t o t he kind of learning t he m odern work force needs. Much of what t he public widely believes about t he funct ion and value of schooling is not only wrong, but oft en t he opposit e of r ealit y . Hum ans ar e genet ically designed t o be act ive learners; passively absorbing knowledge fr om an " ex per t " t eacher j ust doesn't work. Research proves t hat t he m ost effect iv e hum an learning act ually t akes place in t he cont ex t of real - life ex perience, not in classroom s. Mor e t han 99 percent of what t he average Am erican now learns in a lifet im e is not learned in any classroom .

As t he growing unem ploym ent of our m ost schooled workers dem onst rat es, academ ic success is at best irrelevant and m ay even be harm ful t o work ing product iv ely in t he real w orld. The exploding inform at ion base and int elligent t ools of t he m odern econom y m ake t hinking skills far m ore im port ant t han t he m em or izat ion of fact s or rot e ex ercises. And, in cont radict ion t o t he one dim ensional not ion of academ ic " apt it ude" t hat 's valued in t he bogus currency of m easures such as I Q or SAT scores, people have at least seven independent kinds of int elligence, or t alent , and a dozen or m ore dist inct yet effect ive " st yles" of learning. But schooling is st ill necessary for " socializat ion," right ? Nope. Research shows t hat m any if not m ost of t he act ual socializing effect s of schools are harm ful: The losing m aj orit y of st udent s get wounded self - est eem , while t he " excellent " few percent of st udent s get a false sense of superiorit y and securit y. Think about it . I n what ot her dom ain of work or social life is a prem ium placed on y our abilit y t o sit in rows of desks in a room , be t alked at for 40 or 50 m inut es, and t hen, when a bell rings, t o walk down a hall t o anot her r oom t o r epeat t he sam e ex perience again and again during t he day ? The good news is t hat a new w ave of t echnology I call " hyperlearning," or HL for short , offers a t echnological replacem ent for t oday's educat ional m orass. HL is not a single dev ice or pr ocess, but a universe of new t echnologies t hat bot h possesses and enhances int elligence. The " hyper " in hyperlearning refers not m erely t o t he ext raordinary speed and scope of new infor m at ion t echnology , but t o an unprecedent ed degree of connect edness of knowledge, ex per ience, m edia, and brains - bot h hum an and non- hum an. The " learning" in HL refers m ost lit er ally t o t he t r ansform at ion of know ledge and behavior t hrough experience. Hyperlearning is weaving t he fabr ic of a new econom y out of four k ey t echnological t hreads: * First is t he " sm ar t " environm ent , w here every art ifact y ou t ouch or are t ouched by - cars, houses, t oilet s, clot hes, t ools, t oy s, what ever - is endow ed w it h it s ow n int elligence. The special significance of t his int elligence is t hat it increasingly includes t he abilit y not only t o aid hum ans t o learn, but t o act iv ely part icipat e in t he process of learning it self. * Second is what m y colleague Geor ge Gilder calls t he " t elecosm " - t he grow ing broadband com m unicat ions infr ast ruct ur e t hat m akes all knowledge accessible t o anyone, anywhere, anyt im e. For bot h hum an and non- hum an learning, t he t elecosm m akes t he " best and bright est " available everywhere. * The t hird t hread is a kit of " hyper m edia" soft ware t ools needed t o navigat e t hrough a k nowledge dense univ erse. I n relat ion t o m ult im edia, hyperm edia is an ex panded, m ult i - dim ensional v ersion of a book index. Hy per m edia pr ov ides t he t echnical bridge t hat leads t he user away from inform ing and t oward underst anding. * The fourt h and last t hread in t he m at r ix of HL t echnology is brain t echnology, a broad cat egory represent ing t he applicat ion of biology and ot her sciences t o t hinking and sensing syst em s. I n a sense, brain t ech is t he " w ild car d" in t he HL deck. I t cont ribut es m uch of t he basic science and t echnical t ools t hat under lie t he ot her t hree areas of hy perlearning t echnology. But it also offers a growing pot ent ial for biot echnology t hat can alt er t he learning process from t he inside out . The first m aj or social im pact of t he HL revolut ion is t o m ake schooling obsolet e. That 's no sci - fi scenario; it 's happening t oday. For ex am ple: Two of t he v aluable feat ures t out ed in an advert ising brochure for Micr osoft 's new dat abase program Access are " Wizards" and " Cue Cards." The brochure ex plains t hat t he wizards t ake t he place of " a professional program m er" by asking you

quest ions about t he form or repor t you want t o creat e. Then " y ou sim ply click one but t on...and t he wizard does t he w or k for you." The Cue Cards provide t he ser vice of an " online coach wit h infinit e pat ience" t o t each you how t o use t he program , wit hout t aking t im e off from t he j ob: " You nev er have t o st op work t o page t hrough a m anual... You lear n as you w ork w it h y our ow n dat a," inst ead of " m essing wit h...a canned t ut orial." These HL feat ur es ar e not br eakt hr oughs, but exam ples of t he " expert syst em s" and " em bedded t r aining" found in t housands of product s in t he m ark et place t oday . You don't have t o go t o a professor in a classr oom t o get expert " know - how" or t raining. The expert ise and learning are im m ediat ely available " on dem and" or " j ust in t im e." The ext inct ion of academ ic educat ion also rem ov es one of t he key barriers t o t he econom ic opport unit ies in t he knowledge age: credent ialism . The m ain focus of t radit ional educat ion is not learning, it is screening out ; m ax im izing failure in t he nam e of " st andards" in order t o label t he m inorit y of surv iving st udent s " ex cellent ." I n t he new econom y, wher e m indcraft replaces handicraft as t he m ain form of work, HL m akes obsolet e t he t eaching, t est ing, and failure on which academ ic credent ialism rest s. Aut om at ed inst ruct ional syst em s build r eal- t im e, cont inuous assessm ent and feedback int o t he learning processes t hat ar e ev er m ore em bedded in t he m any t ools of t he sm art environm ent . The m indcraft econom y will r eplace degrees and diplom as wit h precise inst rum ent s t hat cert ify at t ainm ent of com pet ency. Cor por at e t eam s link ed by " groupware" net works will give lit t le or no prem ium t o what y ou did in school fift een years ago, but t hey w ill be quit e int erest ed in what knowledge, sk ills, and t alent s you can bring t o solving specific problem s right now. The new, high t ech processes of cert ificat ion will ident ify t he nat ure and degree of specific abilit ies a worker m ay hav e, and t hen offer t he m ost efficient learning resources needed t o address any short com ings. The broader and per haps m ore dr am at ic social im pact of t he hy perlearning revolut ion w ill be t he large- scale displacem ent of t r adit ional " em ploy m ent " by a new form of hum an capit alism in which ownership of int ellect ual capit al pr ogr essively replaces labor. This developm ent doom s polit ical prom ises of " j obs, j obs, j obs" t o inevit able disappoint m ent ; but it also opens a hopeful new pat h t o econom ic secur it y . I n past econom ic revolut ions, t hose wor kers displaced by t echnological innov at ion first shift ed from j obs in agricult ur e t o m anufact ur ing, and t hen from m anufact uring t o services. The lack of product iv it y growt h in t he ser vices sect or has been t he m ain culprit in t he st agnat ion of US living st andards for t he past t wo decades, but ironically, t his m ost recent recession clearly m ark s t he realizat ion of effect ive aut om at ion and v ery real product ivit y gains in t he serv ice indust ry. These im prov em ent s should be welcom e pr ogr ess, but t he legions of w hit e- collar service work - ers now being shed right and left by Am erican corporat ions appear t o have now here t o go: We seem t o hav e run out of new em ploy m ent sect ors. The answer t o t his dilem m a lies in t he grow t h of t he " k nowledge sect or" as a unique, fourt h sect or of t he m odern econom y. The pract ical currency of t he knowledge sect or is int ellect ual propert y, or m ore sim ply, soft ware. Unlike ener gy and m at erials, inform at ion is pract ically boundless. So in t heory, t he soft war e- based knowledge sect or need never run int o " lim it s t o grow t h." Unlike m ost product s, soft war e can be t aken wit hout being lost . By t he sam e t oken, inform at ion m ay be licensed or leased t o a large num ber of people at t he sam e t im e wit hout it s value being div ided or dim inished. This m akes int ellect ual propert y, or soft w are, ext rem ely profit able t o own and t herefore ver y at t ract ive t o st eal. So inform at ion's special nat ure also m ak es propert y law far

m ore crit ical t o inform at ion - based businesses, even as it m akes enforcem ent of t hat law m ore com plicat ed. Knowledge- age t echnology m akes t he v alue of physical goods, as well as services, depend increasingly on t heir knowledge cont ent . The creat ion of knowledge t hrough learning and t he em bodim ent of knowledge in soft war e now hold t he k ey s t o wealt h. So far, m ost econom ist s and polit icians rem ain r elat ively clueless about t his new econom ic realit y . Many st ill claim t hat m anufact uring is t he essent ial cor e of a " com pet it iv e" econom y. The t rut h is t hat soft ware is t he m ost im port ant business in t he m oder n world. The st ock m arket underst ands what t he polit icians have yet t o grasp: t hat Microsoft is wort h as m uch as, or even m or e t han, Gener al Mot ors. GM's asset s are m easured in t he m egat ons; m ost of Microsoft 's asset s could be st ored on one or t wo com pact CD- ROM discs, w eighing only gram s, and could be carried in a coat pocket . More t o t he point , GM has hundreds of t housands of em ployees, while Microsoft has only a few t housand. Ownership of capit al, par t icular ly in t he form of int ellect ual propert y, from now onward will be progressiv ely m or e im por t ant t o personal and fam ily incom e t han t he perform ance of " labor." The core of full- t im e em ploy ees in our econom y is shrinking t o t he v anishing point : The m aj orit y of t he fut ure " wor kforce" is dest ined t o be m ade up of cont ract ors and consult ant s, including t em poraries and part - t im er s, whose role is m ore one of " supplier" t han " em ployee." As int ellect ual propert y becom es m or e cent r al t o t he v aluat ion of businesses, and as m ost " product ion" work is event ually t aken over by m achines, workers in m ost fields will want com pensat ion in t he form of " point s" and " residuals" : t hat is, a share in t he ownership of capit al. Obviously, replacing academ ia wit h a new com m ercial HL indust ry requires overcom ing t he polit ical resist ance of t he seem ingly pr odigious educat ion est ablishm ent . I say " prodigious" because anyone who has wit nessed t he bankr upt ing of t he St at e of California by t he school lobby knows how rut hless, pot ent , and dest r uct iv e t hat r esist ance can be. I say " seem ingly " because t his is a bat t le t hat , wit h t he right st r at egy, is em inent ly winnable. One incent ive for vict ory is t he lucrat iv e prize: a new m arket wort h m ore t han $450 billion in t he US and t hree t o four t im es t hat am ount w orldwide. The pot ent ial HL m arket in t he US alone is 50percent larger t han t oday's t ot al world com put er m arket . Unlike t he long, sorry hist ory of failed governm ent " educat ion reform " effort s, t his st rat egy has t he dynam o of t he free m arket driving it . While t he HL rev olut ion is inevit able and t he HL indust ry is already developing t oday, it s advance will be ham pered and dist ort ed by t he m assive wast e of resources t ied up in t he academ ic em pire. I n part icular, t he w ell- off w ill cont inue t o afford access t o HL t ools at work and at hom e no m at t er what public policies w e pur sue. A business- as- usual policy will only cont inue t o isolat e t he poor, m inorit ies, and disadvant aged fr om t he HL revolut ion, furt her aggravat ing t he econom ic polarizat ion of our societ y . For inst ance, m ore t han half of US high school st udent s in fam ilies wit h incom es of $70,000 a y ear are now using com put ers t o lear n at hom e; but fewer t han one out of 15 st udent s hav e hom e com put ers in households wit h annual incom es below $15,000. As explained before, t he key t o br eak ing down t he exist ing academ ic em pire is t o elim inat e credent ialism . I n pract ice, t hat m eans get t ing t he m aj orit y of em ployers t o st op t ak ing academ ic diplom as int o consider at ion when m aking hiring, prom ot ion, or ot her em ploy m ent decisions. Sim ply put , people's econom ic opport unit ies should depend on only what people know and what people can do. St andar d business pr act ice should reflect t his realit y : There is no j ob in t his econom y t hat t r uly requires an academ ic diplom a or degree for it s successful perform ance.

Elim inat ing t he curr ency of diplom as w ould lead t o a huge dem and for effect ive t ools t o accurat ely assess applicant s' and em ployees' k now - how . Sophist icat ed assessm ent t ools already exist , and t hey are being used by leading em ployers such as t he US Arm y , Corning Glass, and Toyot a. For ex am ple, a m ult im edia wor kst at ion used by Allst at e I nsurance Co. t o t each t he 12 essent ial skills needed by an effect ive claim s agent also can be used t o evaluat e applicant s for agent j obs. Aft er an applicant spends t wo hour s w orking on w hat is basically a specialized video gam e, bot h t he applicant and Allst at e find out precisely how t he applicant 's abilit ies m at ch t he 12 k ey skill requirem ent s. Because int eract ive m ult im edia t raining is far m ore cost - effect ive t han classes, t he applicant m ay need only a few hours of t raining on t he work st at ion t o m ake up any short com ings a far cry from being sent back t o get anot her diplom a. Today , t his k ind of t r aining and assessm ent t echnology is used prim arily by t he largest corporat e and m ilit ary em ployer s. Making com pet ency - based em ploy m ent a universal business pract ice would provoke t he rapid gr owt h of com m ercial HL. The ferm ent of com pet it ion w ould quickly drive cost s down while ex panding t he r ange and qualit y of applicat ions. Funding for t he resear ch and dev elopm ent and vent ure capit al needed t o nurt ure t his new indust ry would com e from a fr act ion of t he hundreds of billions of dollars t hat would be saved when t ax and t uit ion payers w er e freed fr om paying fr uit less t ribut e t o t he diplom a m ills. So abolishing credent ialism it self would go a long way t o st im ulat e t he grow t h of t he new HL indust ry, even as t he source of t he educat ion lobby's polit ical clout is cut off at t he root . But t hat nascent indust r y will not be able t o grow fast enough t o sat isfy t he public need for educat ion's replacem ent unless t he $450 billion a year t hat t he educat ion sect or now absorbs is liberat ed t o follow t he consum er . This leads t o anot her essent ial st ep in t he HL revolut ion: com m ercializat ion.Fam ilies and st udent s m ust have freedom of choice when it com es t o spending t heir m oney in t he m arket place. But " choice" is not enough. Governm ent - cont rolled inst it ut ions need t o be replaced by privat e ent erprises; alt hough " privat izat ion" is not sufficient , eit her. I n addit ion, t he profit m ot iv e is essent ial t o driving t echnical innovat ion forward. I n recent years, school choice has becom e a hot issue. But choice alone is an inadequat e st rat egy t o achieve t he benefit s of a m arket econom y in t he learning sect or, or t o unleash t he growt h of t he st rat egically crucial HL indust r y. Because classroom t eaching is obsolet e in t he HL era, choice offered in t he form of " v ouchers" t o pay t uit ion for schools are as irrelev ant t o hyperlearning as choices of horses are t o m odern t r ansport at ion. I nst ead, we need t o form a coalit ion t hat dem ands t he com m ercial privat izat ion of t he ent ire educat ion sect or , based on a st rat egy of m icrochoice using a financing m echanism of m icrovouchers. I f your choice in t elev ision pr ogr am m ing worked t he way school choice is proposed, changing channels from HBO t o CNN would r equire unplugging t he TV set , t ak ing it back t o t he st ore, exchanging it for a differ ent m odel, and m ov ing t o a new neighborhood. I n realit y , of course, v ideo choice am ong dozens or ev en hundr eds of opt ions requires no m ore effort t han pushing a but t on. Sim ilarly, m odern HL t echnology can offer t he indiv idual even m ore choices of " t eachers" and " schools" t han a cable TV has channels. HL's broadband, int elligent , m ult im edia syst em s perm it any one t o learn any t hing, anyw here, any t im e - and w it h grade A result s - by m at ching learning resources precisely wit h personal needs and learning st yles. Using m odern elect ronic card- account t echnology, m icrov ouchers can allow individual fam ilies or st udent s t o choose specific lear ning pr oduct s and serv ices not j ust once a y ear or once a sem est er,

but by t he week, day , or hour. Unlik e vouchers for school or college t uit ion, m icrovouchers will creat e a t rue, wide- open, locat ion- fr ee, com pet it ive m arket for learning which has t he elast icit y t o efficient ly and quick ly m at ch supply and dem and. The hy perlearning r ev olut ion is inevit able: I t is being driven by t he unst oppable, onrushing adv ance of knowledge- age t echnology. The businesses t hat seize t he HL init iat ive t oday are t he ones m ost likely t o at t ain leadership in t he new econom y. Revolut ionary changes in Am er ican hist ory have alm ost always com e from t he grass root s up, not from Washingt on down. Abolishing cr edent ialism by im plem ent ing HL in t he w orkplace, com m ercializing learning t hrough a new growt h indust ry, and dem anding real choice in learning environm ent s are all pr ocesses t hat can t ake place in t he free m ark et - independent of t he governm ent . So t here you have it . Hyperlearning offers inform at ion indust ry leaders one of t he m ost rewarding opport unit ies any business can hope for : solving som e of t he world's m ost crit ical social problem s, building t he key indust r y of a new age, opening t he floodgat es t o a worldwide econom ic boom , and, in t he process, cr eat ing billions of dollars in new sales and profit s for your st ock holders. Are you ready t o get st ar t ed? Gr eat . Let 's do lunch.

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