When economies 'de-industrialies' industry does not decline in absolute terms. Just the opposite is true. It's just that we became so damn good at manufacturing that with competition and all that - that we do not need so many people in the factories.

People have reacted to those market pressures and got into services. And so the share of industry went down in relative terms.

> I would be willing to bet you that they have no interest in becoming a service economy.

I completely agree with you. More so, I believe China (and other developing nations) is pursuing a knowledge economy. We were pursuing it too, until neocons like Brooks took over 7 years ago and got us stuck in the middle of the transition.

What is a knowledge economy, exactly? The Wikipedia article (http://en.wikipedia.org/wiki/Knowledge_economy) is a whole bunch of bullshit. Knowledge economy seems contradictory to me, because information is free.

Knowledge is not just information, it's one of those fuzzy humanistic things where cultural practices, ethical frameworks and individual talent allow some individuals to apply information more effectively than others. As an example consider Santiago Calatrava; there are probably several thousand people who know as much or more as he does about the history and engineering principles of building bridges, but he adds unique value to the projects he is given that would be difficult if not impossible for another engineer to duplicate.

The knowledge economy is a bit of a misnomer because by it's very nature knowledge creates multiple measures of value, not all of which can be measured in terms of _valuta_. It's also problematic in that knowledge is embodied in individuals, and while you can build information systems that support it's cultivation in individuals, it is not possible to treat knowledgeable individuals as interchangeable plug-compatible components.

It means an economy based on "knowledge workers" rather than industrial age laborers.

"the second meaning, more frequently used, it refers to the use of knowledge to produce economic benefits."

"A key concept of this sector of economic activity is that knowledge and education (often referred to as "human capital") can be treated as: - A business product, as educational and innovative intellectual products and services can be exported for a high value return. - A productive asset"

Its a fallacy that all knowledge is free. Localized, and application specific knowledge, are definitely not freely available.

Information is definitely not free, my friend. In the long run, yes, the value of information is zero. Yesterday's trade secrets are tomorrow's old news. But in the short run it can be extremely valuable.

Think about Seagate's QA numbers, or their profit margins, or Amazon's official opinion on FIFO warehousing, etc. All "secret" and all fairly worthless if they were leaked. But as they stand that data are vital to their businesses.

Yes, that is all valuable information, but it's a long way from forming the basis of an economy.

Basis? Maybe not. Linchpin? Absolutely.

knowledge != information