In Economists Wake Up: It’s the 21st Century, I write,
Along the Akerselva River in Oslo Norway, the buildings of the industrial era have been re-purposed or replaced. The same is true in Pittsburgh, Pennsylvania or Birmingham, England. But economists still inhabit the world of the 19th century, in which hordes of interchangeable workers in stark factories toil in the service of the owners of capital.
Read the whole thing, along with today’s other blog post.
Pricing digital goods becomes real when we have digital bearer instruments for real goods, via personal contract. Thus, if I can give a bot power of attorney to sell my car, than I can also price my digital writing. The transaction costs of pricing go way down, everywhere for goods, not labor. Labor markets remain chaotic.
How would a digital bearer instrument provide excludability to an essay?
If we can support digital bearer cash then we can micro price entry to gated access. Micro pricing means also that I can pay off the ad stream and shut it down, in my search protocol as it can carry cash while searchng.
Micropricing in this way is problematic. Money transactions require accountability. A transaction needs to be worth the effort required to account for it, for the buyer, the seller, and the intermediary. I can see that problem being solved for sellers and intermediaries, but not for buyers. Technology can drive down the non-human costs of a transaction, but it will always require some of our mental space for it to work. There is a reason this hasn’t caught on.
It hasn’t been done because we didn’t understand pricing until a few years ago. Now we can auto-price.
“Over the last two hundred years, the economy has evolved to become more complex, with intangible factors playing a much bigger role than when most economic activity consisted of agriculture and manufacturing.”
Within that 200 years, we discovered the linkage between electricity and magnetism, developed the electric motor, discovered new forms of energy to go along with this new mode of energy transfer and manipulation, etc. I often read laments that things aren’t advancing as fast as they were in the early 20th century. Well, duh, we’ve done all the easy exploitations of what used to be interesting scientific curiosities. Extending the average life expectancy is much harder when you are doing it on the geriatric end of medicine rather than the pediatric.
I like to refer to this paragraph from Henry Adams’ 1889, ‘History of the United States During the Administrations of Thomas Jefferson’ to give perspective on the fact that just a bit over 200 years ago, a time traveller from the 8th century of what is now England, would not have found things so different economically in the U.S. Nor were things, yet, so dramatically advanced in 1900. Nineteen-eighteen was more of a different world, but nothing like 2018.
“If the physical task which lay before the American people had advanced but a short way toward completion, little more change could be seen in the economical conditions of American life. The man who in the year 1800 ventured to hope for a new era in the coming century, could lay his hand on no statistics that silenced doubt. The machinery of production showed no radical difference from that familiar to ages long past. The Saxon farmer of the eighth century enjoyed most of the comforts known to Saxon farmers in the eighteenth. THe eorls and ceorls of Offa and Ecgbert could not read or write, and did not receive a weekly newspaper with such information as newspapers in that age could supply; yet neither their houses, their clothing, their food and drink, their agricultural tools and methods, their stock, nor their habits were so greatly altered or improved by time that they would have found much difficulty in accommodating their lives to that of their descendants in the eighteenth century. In this respect America was backward. Fifty or a hundred miles inland more than half the houses were log-cabins, which might or might not enjoy the luxury of a glass window. Throughout the South and West houses showed little attempt at luxury; but even in New England the ordinary farmhouse was hardly so well built, so spacious, or so warm as that of a well-to-do contemporary of Charlemagne. The cloth which the farmer’s family wore was still homespun. The hats were manufactured by the village hatter; the clothes were cut and made at home; the shirts, socks, and nearly every other article of dress were also home-made. Hence came a marked air of rusticity which distinguished country from town,—awkward shapes of hat, coat, and trousers, which gave to the Yankee caricature those typical traits that soon disappeared almost as completely as coats of mail and steel head-pieces. The plough was rude and clumsy; the sickle as old as Tubal Cain, and even the cradle not in general use; the flail was unchanged since the Aryan exodus; in Virginia, grain was still commonly trodden out by horses. Enterprising gentlemen-farmers introduced threshing-machines and invented scientific ploughs; but these were novelties. Stock was as a rule not only unimproved, but ill cared for. The swine ran loose; the cattle were left to feed on what pasture they could find, and even in New England were not housed until the severest frosts, on the excuse that exposure hardened them. Near half a century afterward a competent judge asserted that the general treatment of cows in New England was fair matter of presentment by a grand jury. Except among the best farmers, drainage, manures, and rotation of crops were uncommon. The ordinary cultivator planted his corn as his father had planted it, sowing as much rye to the acre, using the same number of oxen to plough, and getting in his crops on the same day. He was even known to remove his barn on account of the manure accumulated round it, although the New England soil was never so rich as to warrant neglect to enrich it. The money for which he sold his wheat and chickens was of the Old World; he reckoned in shillings or pistareens, and rarely handled an American coin more valuable than a large copper cent.”
I think the only answer to the “how are we going to get paid” is found in the evolution of the music business. A variant of it works in the software business too.
You publish a song, or a piece of code for free. You then get paid to play live, or maybe get a complex new interface to work for a company.
You aren’t paid for creating the idea. You are paid for propagating the idea. Of course, anyone can hire a propagator who didn’t create an idea, but it seems everyone always pays up to hear an original artist play a cool new song, even when they can hear a good local band play it for much less.
The idea of writing or authoring something, then having it retain perpetual value is probably not ideal. Ideas get their power when they are engaged. Perhaps this is a necessary correction.
If I were to say the biggest problem with Economics is how much it interacts with other Social Science disciplines. I still say a lot of the basics of Economic is true and I still see the Great Recession in general supported basic Keynesian models. However, the Economic models interact too much with society that they need to be updated as society changes.
In terms of John Keynes he believed that the working week would decline. In general he was right but did not see that people would spend a lot more time with human capital and retirement.
Does this come close?
http://www.treasury.govt.nz/publications/media-speeches/speeches/macroeconomic-framework
“(3): The Functions of Financial Intermediation” << this remains the most perplexing lack, given the 2006 housing drop leading to the 2008 MBS drop & fall in the Great Recession.
It might be that there are too many theories, without enough evidence to choose between them, so I as an interested non-specialist (blog reader, not so much paper reader) haven't seen theory plus evidence that's very strong.
It's also likely that the definition of evidence is too vague to get wide agreement on the boundaries.