Here is a true story.

A young, idealistic woman graduates from college with the intention of doing public interest law. She goes to law school, does the work, and graduates with honors.

While looking for a job at a Legal Aid society or a firm that will let her do a lot of pro-bono work, she temporarily takes a job at a new business that her computer-engineer-friend is starting up. He needs a lawyer to do the legal papers and negotiations.

There are three other people working for this business.

Within two years, the number of employees has grown to over 200. The employees who began the company, including our lawyer friend, have seen their stock options increase in value many times over.

Without intending it, wanting it, or working toward it, she is a multi-millionaire. Her computer-engineer-friend who founded the company? He is building a mansion in the country, and last month he brought home a Porsche on a whim.

Twenty years ago, this story would have been unbelievable. Today, it happens on a daily basis thanks to an information revolution that some call the New Economy.

What is so new about it? As the people of Martinsville can attest, there has been a shift from manufacturing to service industries. Factories that make actual products have moved to cheaper labor markets, and many more people are now employed at desk jobs.

There has also been a dramatic speed-up in technological development, centering on the Internet and the networking and communication that it makes possible. And finally, knowledge and information have become increasingly important when it comes to making money.

When Bill Gates, the president of Microsoft, has more personal wealth than the gross national product of some small countries, it is a clear sign that something new is happening. Gates got so rich by getting in on the ground floor of the New Economy with a product that he pushed by any means possible.

Increased and sometimes ruthless competition is another aspect of the current economy. As technological advances permit businesses to go global, they suddenly find themselves competing with new businesses in new markets, many of which are unregulated in terms of tariffs and trade barriers, environmental regulations and labor standards.

They move factories, downsize their staff, and rapidly shift their business strategies according to changing markets. They have to, or they won't survive. Companies that shift quickly and streamline effectively reap huge profits, so a lot is at stake.

How did we get here? According to the Progressive Policy Institute (PPI), the previous economic pattern lasted from around 1938 to 1974. Its foundation was manufacturing, where stable and hierarchical corporations churned out products for a domestic market.

Examples such as General Motors, textile factories and the steel industry come to mind.

But by the late 1970s and on through the 1980s, our economy underwent a series of shocks as recessions rolled through the old manufacturing centers. Productivity slowed down as well as growth in wages. Many businesses failed, and many others went through a massive restructuring process.

IBM may be an example of a company that straddled both economies, leading the new computer revolution but using the tools and internal order of the old manufacturing system. Eventually it toppled under its own weight, unable to keep up with the rapid pace of change set by new companies like Microsoft.

As further indication of our changing economy, PPI claims, “Between 1969 and 1995, virtually all the jobs lost in the production or distribution of goods have been replaced by office jobs. Today almost 93 million American workers (holding approximately 80 percent of all jobs) do not spend their days making things — instead, they move things, process or generate information, or provide services to people.”

Virginia has fared relatively well in this New Economy. At least, parts of it have fared very well and other parts much less so

We rank 12th out of the 50 states in “The State New Economy Index,” a project that uses 17 categories to examine how states have participated in the new system.

The table on page 7 shows the categories and Virginia's score in each one. It tells us a number of things: first, our workforce ranks very high in so-called Knowledge Jobs, which must look good to high tech companies looking for a home.

Second, as a state we have taken great advantage of the Internet, with almost 40 percent of adults having access to it. And finally, high tech jobs compose a relatively high percentage of our jobs in comparison to other states.

Even though the implications of the New Economy push far beyond mere high tech industries, our solid base in computer, telecommunication, and electronics-related businesses makes us a strong participant in the changes overtaking our economy.

But all parts of the state have not participated equally.

High tech jobs are overwhelmingly concentrated in a corridor running from Charlottesville to Hampton Roads and from Richmond to Northern Virginia. Virginia Tech creates a pocket in Blacksburg, but much of the rest of the state is left out.

New business announcements include a Nextel expansion in Hampton, NEC America's engineering plant in Fairfax, Avenir's software facility in Prince William County, and Intel in Fairfax again.

In contrast, Super Sack Bag will be expanding its plant making bulk containers in far southwest Lee County, and Martinsville on the southside will be getting a customer service call center from National Catalog Corp. (a poor replacement for Tultex.) And southwest and southside Virginia also get new prisons, hardly indicators of strong participation in the New Economy.

The chart below shows that any changes in our economic system have not changed the historical distribution of money in our state. The areas with highest median household income have remained the same as those in the old economy, with Northern Virginia far above the rest.

But this doesn't show the whole picture.

Within the parts of Virginia with the highest income, there are significant pockets of people who live close to the edge. For example, in Hampton Roads, core city poverty is a serious problem in Norfolk, Portsmouth, Hampton and Newport News, and a number of those cities have been destroying public housing at a rapid rate.

In Charlottesville, there is a double economy in which those on the bottom make minimum wage cleaning the buildings where the New Economy thrives.

And in Northern Virginia, where the median household income runs above $70 thousand a year, there are one million households who face the high cost of living but earn under $30 thousand a year.

Built into this New Economy are almost all the topics which have come up in the Virginia Organizing Project's “Understanding the Economy” articles: globalization, living wage, corporate welfare, the actions of the Federal Reserve Bank, and increasing inequality in wages and wealth. The problems pointed out in earlier articles show that this economy is creating as many problems as it is solving.

Wages around the state have just begun to grow in the last two years, and they still have not surpassed the levels of 1989, before the last recession. In response, local groups in Richmond, Charlottesville, Alexandria, Williamsburg, and Wythe County have realized that they must push their cities, counties, or major employers to establish living wage standards to force prosperity to trickle down to those on the bottom.

The profits of the New Economy have been centered in managerial and technological workers, and the service workers have been left behind.

The rapid growth of the New Economy has frightened the Federal Reserve Bank (Fed) numerous times in the last few years. Concerned that inflation was over the next rise, they have taken a hard line on interest rates.

Whenever economic indicators showed that wages were beginning to rise, the Fed increased rates in order to slow down the economy.

So far, the Fed has been successful in holding down wages and prices, and thus inflation. But without doubt those actions have hurt low-paid workers and increased the wage gap.

The Fed will continue to control our economy using the only tools available to them, and they will continue to hurt working class members of our society as a result.

Globalization is a direct result of this New Economy, and it has put new competitive pressures on corporations and workers. Competition in wages forces factories overseas, leaving cities and communities with empty mills and long lines at the Virginia Employment Commission.

Rapid flows in capital (money) from country to country threaten to destabilize entire regions of the world, as in Asia a few years ago.

Also the pressures on the environment threaten our natural world to an extent never seen before. The disturbing news of the rapid warming of our atmosphere over the last decades fails to have an impact on international economic policy. The lure of big profits is too strong.

Finally, the New Economy has driven corporate welfare to new heights of excess. States and cities gush tax breaks in order to keep that last textile mill or auto factory in town.

The Virginia Economic Development Partnership passes out subsidies like crackers to any high-tech business that looks their way. One way or the other, taxpayers are bankrolling a lot of the costs which corporations could themselves afford to pay.

“Our state is riding a new wave,” said VOP Secretary Denise Smith, “just as the industrial revolution changed how business was done so will this new Information Age. We have to understand the impact of this new wave on our people, its shape, its height, its underlying force, when it will break or whether there are rocks below, who will ride it to shore and who it will drown.”

“We have to understand the New Economy in order to respond and live in it. We can take advantage of the new tools it gives us like e-mail Action Alerts only if we can ensure access to those resources and then we can fight the parts of the new economy that hurt our friends and loved ones,” Smith said.

“No citizen can avoid becoming a part of this New Economy; it permeates everything in our lives everyday, from the scanners at the checkout counters to our medical records. It is not beyond our reach to understand what this means in our lives, nor is it beyond our reach to control it. This economy can control us, or we can organize to control it. The power is in our hands,” Smith said.