Talent Is More Expensive Than Capital (one)

Talent is more expensive than capital. This is conditional on the moment. In the industrial age you couldn't have economic progress without machines, and you couldn't have machines without the capital to build them. People didn't open source raw materials.

Then you had the information age. And the information age started the movement towards a greater reliance on talent than capital. But you still had to build out an infrastructure, and that infrastructure required capital. People didn't open source routers.

Now we are moving into the creative age. The creative age rests on the infrastructure built in the information age. But in the creative age the relative return on invested capital is huge compared to any other age. One laptop computer can yield new art that grosses millions of dollars. Because the information age reduced the cost of economic transactions while increasing the reach of the artist, the creative age is possible.

But the creative age is a talent dependent age. No amount of capital can create opportunity the way talent can. If you lose capital there is always more. If you lose talent, you are probably out of business.

Of course there are still companies that make money in industrial and information markets. But the return on invested capital will continue to diminish to such an extent that these markets will continue to experience a rise in the cost of capital, while the creative markets have such incredible return opportunities that capital will flood to them. This, of course, will reduce the cost of capital in these markets, making capital cheap.

But there are only so many talent people in the world. And you can grow capital faster than you can grow talent. So talent is more expensive than capital.

There broader implications of this are astounding. Including the fact that capitalism will end up to be the only reliable way to move power to the workers. The means of production will in fact be in the hands of the producers, not the bankers.