The only big lever for change in the health care system is digitization. Health care as a system is so broken that every process must be taken apart and looked at in a new way. Fortunately or unfortunately, that's what happens when industries digitize. Today only 22% of health care is digitized, although all cement manufacturers are digitized and all traffic control processes are digitized. Every industry in the country has already automated. Only doctors still use paper records.

In the next few years, health care will be digitized and information will be the backbone connecting all the processes. Digitization can standardize and automate processes, which cuts costs. Northwestern University automated its labs and dropped its time for lab results from eight hours to 1.5 hours; its costs are also 30% lower. Human handling is less, and malpractice is less. The software does error-checking for mistakes in transmission of judgment. (Pharmacies that automate have ZERO error rates in dosage or prescription.)

The baby boomers will push health care into the 21st century. They demand more of health care, and will push it to be faster, cheaper, smaller, easier, simpler, prettier, more efficient, more secure, with more features, better access, and more service. They know what can be:

Signing authority can be built into email, so the doctor doesn�t need to be there. Calendaring of surgeries dynamically can happen, with automatic synchronization. Retrieval time on charts can drop. Entire records can be displayed on a PDA.

Patients can then "order" their own care (make appointments).

The technology exists now to move information quickly around an office without a person physically carrying a chart into a room. In some hospitals, robots deliver charts. Diagnostics can be connected through high bandwidth, reshaping the physical shape of hospitals: clinics and mobile units can take health care to the patient, instead of making the patient go to the doctor�s office.

Duke University physicians found out that monkeys with neural implants can not only drive a computer with their thoughts, but they can figure out that they can project their thoughts directly into the computer. Blind people can drive with a chip implanted in their brains and a computer to process the information. If monkeys and blind people can process information digitally, I'm sure we can get doctors and hospitals there.

There's so much awesome medical technology: Imaging is now three dimensional, and can find the presence of tumors and look at them any way you want, from any angle; a surgeon can specify what he wants to see, and make all the surrounding tissue translucent or transparent. He can virtually remove skin, remove tissue, remove part of the skull, then replace the tissue. Now he goes into the body laparoscopically, which is called minimally invasive, but soon surgery will be done within an MRI machine, and the surgeon will track what he�s doing in real time.

There's already a surgical robot (DaVinci) that is like a 3D Nintendo for surgeons. They can sit across the room from the patient and guide the instruments. No standing for hours, no scrubbing. Soon the doctor can be in New York and the patient in France.

Several area hospitals already have the Cyberknife --a linear accelerator that has a map of your skull and your tumor, moves around your head and shoots electrons at it. No pain, no anaesthesia, no invasiveness.

Robots also already deliver pharmaceuticals to the bedside. The robot doesn't bring the patient the wrong drug.

Nanotechnology makes possible the virtual colonoscopy:you swallow the camera and it delivers the image of your digestive system.

Entire laboratories exist on a chip: quantum dots can bar code proteins and watch them in action.

Your genome can be read in real time. Tissue samples can be analyzed by computers. Remember the sick bay on Star Trek where they scanned patients with a "tricorder"? The tricorder is coming, and it won�t be a hospital device, it will be a home health device that costs $20-$700.

With all this medical technology in the operating room, why is the hospital still not fully digitized? If the information technology processes in the health system matched the bedside processes, we could aggregate and analyze data and provide a massive database for physician decision support. Care would get better (or at least standardized). Expert systems now can find patterns and can supply missing information for decision support; doctors don�t use them because they self-select to trust their own judgment. But expert systems at the clinical moment could standardize care.

Decision trees can enable a physician�s assistant (or a monkey) to make a diagnosis with 70% probability and find out what tests could give you 100% probability. They can also provide a session record, an accountability track and education about rare cases and how you differentiate them. (Latent in this system is that 90% of what doctors do can be replaced by software.) You can even digitize an entire patient and test out therapies on the virtual patient.

So fight for digitization in health care. Ask for email. Ask for electronic medical records. We need them if we want to have health care we can afford in the future.

Nothing is more convincing as an indicator of how the high tech industry has changed than last week�s 60th Anniversary Gala for the American Electronic Association, its premier trade association.

I traveled to California from Arizona to attend, and when I arrived at the Fairmont I was completely alone. So during the reception, I wandered over to an exhibit put up by The Computer Museum. There was an Apple 2, an IBM PC, a TRS-80, a Commodore Pet. Most of those machines came out in the seventies, over twenty-five years ago. But they represented a mid-point, rather than a beginning�of the industry, which gave its first achievement awards in 1943 and counts among its awardees Robert Galvin of Motorola and several others known primarily for their work with radios and transistors. In fact, the invention of the transistor seemed to mark the actual beginning of �high technology.�

But rather than triumphant, this celebration seemed a little sad. One of the original founders of Fairchild was wheeled in by a nurse, his tuxedoed legs stretched uselessly out in front of him. �Look, these are your friends,� his female companioned said brightly. �This is your party. �

I�m not sure he recognized anyone, or even took in the occasion.

The room seemed divided into two camps: aging veterans, among them Regis McKenna, Andy Grove and former Secretary of Defense Bill Perry, who remembered the former glory days of innovation, invention and discovery, and younger people primarily involved in sales. For all the sense of discovery or innovation in the room, I might as well have been at a trade association for meat packers.

High tech is clearly a mature industry, and Silicon Valley is feeling the pain of people with a chronic disease.

While I was in the Valley, I also visited with a friend of mine who recently relocated to the Bay Area from Lake Tahoe. He recently attended the all-star �Silicon Valley 4.0� Conference co-sponsored by my old friends at Garage Technology Partners. Greg said that while there was a great cast of characters in attendance and at the podium, the consensus was that no one knew yet what version 4.0 of Silicon Valley would offer.

Some obvious changes:

There will no longer be companies hiring large teams of local engineers to develop software. Some jobs in our economy are gone, never to return. One partner in a large consulting firm has recently been re-assigned to outsource 4,000 of that company�s support jobs.

We will have to figure out what role we play in a distributed, global universe. Silicon Valley might provide the capital or the management for companies that actually produce products in other states where the cost of living is less expensive � or even in other countries. The Valley will still exist as a center of innovation because of the concentration of talent and capital � but it may no longer generate local employment as is did in the past.

Some very fine minds are at work on these problems. My common little mind says this represents opportunity for other states, regions, and countries. The aging of the electronics pioneers and the companies they founded is not unpredictable. It has happened in the food industry, the clothing industry, and the automobile industry, where maturing markets bring about consolidation and more predictable growth.

Which brings me right back to the book I am still reading: �The Gifts of Athena.� I�ve now finished a chapter on health, in which the author shows how knowledge � in this case the germ theory of disease � produced �recipes� � techniques and practices of cleaning house � that actually lowered mortality rates and extended life. Some of these techniques were high tech, such as pasteurizing milk, but others were not (cleaning the toilets and bathing the children).. The whole area of domestic science has probably done as much to advance society economically and improve quality of life as any invention of the Industrial Revolution.

So what�s the takeaway from the AEA Gala and its surrounding events? Knowledge is broad, discovery sometimes random. Economic development can come from anywhere. Even if semiconductor products are being manufactured in Malaysia and software is being developed in Pakistan, America can still be an economic powerhouse.

The most important thing we have is not our factories, which are perhaps unresponsive to changing conditions, but our minds and our educations. If we don't nourish those, we may truly lose our position of world leadership.

I am reading a fascinating book that arrived unexpectedly in my mail from Michael Crow�s office. He�s the president of Arizona State University, and known around these parts as a change agent. Getting a book in the mail from a university president confers an awful lot of responsibility on the recipient.

The book is called �The Gifts of Athena: Historical Origins of the Knowledge Economy,� and the author is a history and economics professor at Northwestern, Joel Mokyr. For those who have forgotten Athena, she was (and probably still is) the Goddess of Wisdom. For those who haven�t read anything written by a professor recently, this book isn�t exactly a Tom Clancy.

I thought I�d better at least start it, because I might run into Dr. Crow at a cocktail party and have to answer multiple choice questions after two glasses of wine. Once I started it, I couldn�t put it down. That is to say, I couldn�t find a reason not to finish it, since it is one of those rare books that illuminate both big and little truths.

From now on, I want you to apppoint me your designated reader: I have read this book on behalf of everyone out there who needs to know what�s in it.

As a busy, literate adult, I�ve come to find out that most books contain only one important truth � the idea that inspired the book. Once you get past the first chapter, in which that one large truth is revealed, the book begins to repeat itself, saying the same thing over and over in different language. With my know-it-all attitude and my time constraints, I usually get about half way through the average business or self-help book and throw it across the room.

But �The Gifts of Athena� is a book that actually develops a hypothesis worth following� that in order to advance an economy, there have to be two kinds of knowledge: �epistimic� or propositional knowledge, and prescriptive knowledge. Propositional knowledge is the theory behind how things work. Prescriptive knowledge is the �how to� knowledge � the user manual. We can stumble on a discovery � nuclear fission � but we also must know how it can be used. Is it a bomb or a power source? Or both?

Take the case of aspirin. A Rev. Edmund Stone drew attention to willow bark, which he thought would serve as a remedy against ague because it grew in damp places and God planted remedies where diseases originated. This was a pretty trivial epistimic base. But it started a chain reaction of innovation. Sixty years later, chemists learned that the effective ingredient in willow bark was salicin. Fifteen years after that, Karl Lowig isolated salicylic acid, which worked to cure ague but had terrible side effects. And then Felix Hoffman stumbled on acetyl salicylic acid � a compound that was effective and had few side effects. When Bayer hit the jackpot with aspirin, scientists STILL didn�t know how it worked.

Only in the 1970�s did the epistimic base catch up with the drug. And with this extension of the epistimic base of an existing technique, more innovation was made possible. Bufferin, Theraflu, whatever.

The example of aspirin shows us that when knowledge is accessible and communal, innovation becomes possible. The expansion of knowledge produces more technology, which expands knowledge further, producing a virtuous cycle. Easy access to epistimic knowledge makes it possible to innovate further.


Before the Industrial Revolution, according to Mokyr, epistimic knowledge was in the hands of the few. It was scant, and difficult to share.

Take the printing press for example. Although it advanced communication for some people, it didn�t cause real economic development because most people couldn�t read. Or if they did, they read the Bible, because access to knowledge was controlled by the Church.

Somehow, around the time the Industrial Revolution began, knowledge became more widely shared, and technology advanced immediately. During this time, the factory arose. Why? Because it became known that it was cheaper to move people to the technology than to move technology to the people. The factory also created discipline in the means of production, and even greater shared knowledge, which led to formal research and development and quickened the pace of innovation.

(Interestingly enough, in this century the cost of moving people has become greater than the cost of moving knowledge, so we are beginning an era of telecommuting. Wonder what the consequences for innovation will be.)

I haven�t finished the book yet, but I think I can see where he�s going: knowledge and innovation, widely shared, feed on themselves. That�s why the semiconductor, once only the miracle of main frame computing, is now a feature on children�s shoelaces that light up, and microwave ovens that sense when the food is cooked. And why the laser is used to cut diamonds and cure nearsightedness. Or why the aspirin is now used to prevent heart attacks. The epistimic base broadens, and the innovation continues.

All right. It�s official. We have given up our rights to be a democracy. As Jefferson (I think) said, a democracy requires an educated electorate. We don�t have one.

Don�t get me started on the state of the education system. But I believe that�s the real culprit in yesterday�s election in California. Pissed off voters elected a body-building, girl-groping rich man without a shred of government experience to the Governor�s Mansion. What exactly do they think they accomplished by doing this?

Arnold, according to his acceptance speech, thinks he is going to be the people�s Governor. He says he will reach out to everyone. That�s after a career or defining himself as different and special, and living in splendid, movie-star isolation.

Everything he says sounds like it�s part of a blockbuster movie script about a political campaign. His speeches sound like they were written by a mediocre TV writer. During the campaign, I often got the feeling that he didn�t even know what he was talking about; he rehearsed and memorized the lines, but they were in another language.

I doubt that he has spent much time in Sacramento, a hot, unglamorous city where the government of California lives. It will be interesting to see where he resides as Governor: can he commute from Malibu? Certainly not on California�s freeways, where everyone else is caught in the absurd traffic. He�ll have to fly in a private jet, the way all the rich people avoid what has happened to ordinary air travel.

Why did Californians elect him? Because they hated Gray Davis and they didn�t know anything about any of the other candidates. Because they don�t know how to vote.

No one in America really follows politics anymore. They only follow the mass media, and its views of politics. �I�m mad as hell and I won�t take it anymore� is actually a line from a movie. So when they are angry at the incumbent, they elect a Jesse Ventura, an Arnold Schwarzenegger. When things don�t get any better, they will turn on him, too. Because an uneducated electorate just elected an uneducated leader.

The Shorenstein Center did a study called �The Vanishing Voter,� which was published as a book in 2002. The book showed that from 1960 to 2000, voter turnout decreased steadily, as Americans lost the tradition of civic involvement. That�s because we lived in a largely peaceful world in which the economy, with the exception of the real estate crisis in the late �80s, was good.

Suddenly, in 2001, the economy turned sour, especially in California. Jobs and people fled the state. A generation of uninvolved, inexperienced voters looked around for a scapegoat. Ahhh, it must be the Governor. Armed with little information about what powers the Governor of California actually possesses to affect its economy, and less about how long-term trends produce consequences that are controlled by forces way outside the state of California, the mob decides to vote for a recall.

I believe that many voters thought a recall would be fun � kind of like charging the goal posts after a football game. They also thought that voting for The Terminator would be fun: let�s put a guy in office who can kick some ass.

That�s cool. It�s our right. The only problem is that it�s irrational, and it solves nothing. Even George W. Bush knows that an angry mob is not Republican or Democrat, it is merely angry. It will turn on everyone. The electorate is Montecore. Someone tapped it on the nose with a microphone, and it went wild.

Imagine being an Iraqi or an Afghani at this moment. Your country has been disrupted and wasted by Americans who came in to �liberate� you and share their great democratic tradition with you. Your leader, dictatorial but at least experienced, has been overthrown, and there�s a vacuum. Then you hear that America has elected a movie star to be governor of the ninth largest economy in the world. And you wonder: �will they send Ben Affleck to run our country? Or should we request Denzel Washington?�

Michael Moore (�Bowling for Columbine�) will have a field day with this election. He�s probably sitting in his room right now wondering whether it should be a book or a movie.

Every time I visit my former foster son in the Buckeye Prison I have to write about it, because it�s so unnerving. This kid was six weeks from finishing high school when his drug experimentation got the better of him and I had to �tough love� him out of my home (he was arrested at a crack house). Two years later, he was sentenced to several years in prison for breaking and entering and all the assorted things drug addicts do in order to survive. He was not too smart; he was selling stolen cars to an undercover policeman.

He was nineteen when he went in; because of mandatory sentencing he will be 24 when he gets out in 2006. In the mean time, he got a GED and has hit the end of the line because the particular prison unit he is in does not offer college classes.

What will he be able to do when he gets out? Face facts; he�ll be unemployable. What few skills he may have had will be obsolete, and prison will not give him many more that are suitable for the knowledge economy. Prisoners have Walkmen and TVs, but not email. They can only have books sent from an outside bookstore. And those can only be paperbacks, unless you�re in minimum security, in which case you can be trusted with hardbound books. But no more than twenty.

I will not abandon him, because he�s quite different now from the way he was when he went in � full of adolescent illusions of immortality. He now knows life is tough, and he is willing to do what I tell him. Guess what I�m going to tell him?

I�m going to teach him entrepreneurship. It�s the one gift I still have left to give him. He will never be able to get a job that will allow him to support himself. He will never receive the skills he needs for employment while in prison (what few courses they do offer are oversubscribed and have long waiting lists because everyone�s bored).

But he survived on the street because 1)he is vigilant and 2)he can sell. These are two skills that can be built upon in entrepreneurship. He will probably be better than I ever was at financial controls, because I was na�ve enough to think people didn�t steal from their employers. Even as a child, he alerted me to the fact that my employees were taking the pens and the scissors home from my office.

He will also be able to take business risk, because it will seem like nothing compared to the personal risk he has already taken. And he will be innovative, because before he became my foster child he supported himself by sweeping used car lots on Van Buren Street when his parents spent the family food money on crack.

Many young people in his position are naturally entrepreneurial: they have no choice. But it seems to me their efforts at entrepreneurship should be encouraged, as I plan to encourage my son. I�m sending him the FastTrac materials and I�m going to go through them with him on the phone. I�m going to personally prepare him for the world he will meet on the outside. I�m going to try to help him develop a legitimate business that may keep him in the mainstream economy rather than the underground economy. And I�m going to try this in more than one situation; I�m going to get sponsors and apply for grants and try to extend this beyond one family.

When you arrive at the Buckeye Prison, even as a visitor, you feel as if you are in the middle of nowhere on another planet. You wait for your name to be called, you divest yourself of jewelry, valuables, and anything else in your pocket that isn�t a single car key, a driver�s license, or a roll of quarters for the vending machines. You go through a metal detector, through a revolving door that leads you into a huge barbed wire desert. You stand against a chain link fence while a drug-sniffing dog whiffs your butt. Then you get on a rickety old bus, driven by an inmate, which lets you off at the gate to the unit. When the bus pulls away, leaving you outside yet another enclosure, you already feel like crying.

Then an electric gate opens and you walk into another room through another metal detector. You sit down in a sterile room full of orange-clad inmates and their family members. A kid you have known since he was nine or ten, who did not ask for the circumstances of his childhood that led him to this moment, comes through a back door to greet you. You want to cry. Until you tell him that when he comes out, he can still be an entrepreneur.