A famous claim in economics is that the cost of services (such as health care and education) tends to increase relative to the cost of goods (such as food, oil, and machinery).
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This seems right: people around the world can barely afford the rising healthcare and tuition costs they currently face - costs that seem to increase each year faster than overall inflation. But a sharp decline in the costs of health care, education, and other services is now possible, thanks to the ongoing information and communications technology (ICT) revolution.
The cost of services compared to the cost of goods depends on productivity. If farmers become much better at growing food while teachers become little better at teaching kids, the cost of food will tend to fall relative to the cost of education. Moreover, the proportion of the population engaged in farming will tend to fall, since fewer farmers are needed to feed the entire country.
This is the long-term pattern that we've seen: the share of the workforce in goods production has declined over time, while the cost of goods has fallen relative to that of services.
In the US, about 4 per cent of the population in 1950 was employed in agriculture, 38 per cent in industry (including mining, construction, and manufacturing), and 58 per cent in services. By last year, the proportions were about 2 per cent, 17 per cent and 81 per cent, respectively. In the meantime, healthcare and tuition costs have soared, along with the costs of many other services.
But a productivity revolution in service-sector delivery is now possible. As a professor, I feel it in my classroom. Since I began teaching 30 years ago, it seemed the technology was rather fixed. I would stand before a class and give a one-hour lecture. Sure, the blackboard gave way to an overhead projector, and then to PowerPoint; but otherwise the basic classroom "production system" seemed to change little.
In the past two years, everything has changed - for the better. At eight on Tuesday mornings, we turn on a computer at Columbia University and join in a "global classroom" with 20 other campuses around the world. A professor or a development expert somewhere gives a talk, and many hundreds of students listen in through videoconferencing.
Information technology is revolutionising the classroom and driving down the costs of producing first-rate educational materials. At Stanford University this autumn, two computer-science professors put their courses online for students anywhere in the world; now they have an enrolment of 58,000.
The same breakthroughs now possible in education can occur in health care.
The US healthcare system is notoriously expensive, partly because many of the key costs are controlled by the American Medical Association and private-sector health insurance companies, which act like monopolists, driving up costs. Such monopoly pricing should be ended.
Yet there are other reasons for high healthcare costs.
Many people suffer from chronic ailments, such as heart disease, diabetes, obesity and depression. These diseases can be expensive to address if they are poorly managed. Far too many people end up in the emergency room because they lacked the advice and help to keep their conditions under control without institutional care, or even to prevent them entirely.
Now information technology is coming to the rescue.
Innovative companies such as CareMore in California are using ICT to keep their clientele healthy and out of the hospital.
When CareMore's patients step on the scales at home each day, their weight is automatically transmitted to the healthcare unit.
If there is a dangerous weight swing, which could be caused by congestive heart failure, the clinic brings the patient in for a quick examination, thereby heading off a potentially devastating crisis.
The promise of great cost savings and major advances in service delivery is at hand.
The world's economies, rich and poor alike, have much to gain from accelerated innovation in the information age.
A Jeffrey D Sachs is a professor of economics and director of the Earth Institute at Columbia University. He is also a special adviser to the UNsecretarygeneral on the Millennium Development Goals
* Project Syndicate