io9
How would an interstellar trading empire figure out how long goods had been in transit, for the purposes of calculating interest? After all, if the shipping vessels are traveling at close to the speed of light, the shipping time will seem longer to an observer on the ground than it would to someone traveling on the ship. This is apparently the sort of thing rockstar economist Paul Krugman thinks about when he's not prophesying our total doom. Click through for Krugman's solution to this thorny problem.
Krugman's offbeat look at the economics of interstellar trade (which we really meant to blog last week) comes from a paper he wrote 30 years ago when he was "an oppressed assistant professor." It's full of little jokes, like the idea that space explorers may one day "discover or create a world to which economic theory applies." (Unlike Earth, in other words.)
Krugman unveils two pioneering theorems of interstellar trade: 1) The transit time should be calculated according to the clocks on the ground, not the clocks on the ship; and 2) If sentient creatures can hold assets (such as bonds) on two different planets in the same "inertial frame," then competition will equalize the interest rates on the two planets. In a nutshell, for trade to be viable, you have to have common interest rates and a common framework for calculating transit time, so investors can decide whether to under-write a trip, or just stay on Trantor and buy a bond instead.
If we ever do actually colonize other star systems or start trading with other interstellar civilizations, Krugman may get a freighter named after him for his contributions to space economics. [Conscience of a Liberal]
Comments
It's hard to imagine anything really worth transporting across galaxies other than information or people.
@Gann: Spice... precious, precious spice...
This isn't intergalactic trade--that would be crazy!
This is plain old interstellar trade. So you could ship regular ore. Or biologics.
Krugman rules!
Spice indeed. The thing with spice is, it can be shipped instantaniously via fold space. The price can't change much in an instant. Besides, the Guild would demand payment for the spice before it's delivered.
Ever see the Bristish cover of his previous book, "The Great Unraveling"?
Wicked!
[wordsonwords.com]
@Gann: Yeah, it would have to be pretty fuckin' awesome to warrant waiting five years or more for. Perhaps by the time we're capable of interstellar travel, humanity will be on top of its shit enough to know that "You'd better send those medical supplies now, Alpha Centauri Colony, because we're gonna need 'em" -- but I kinda doubt it.
@Gann: Correction- Information, People, Energy. Spice? I know this is a science fiction site, but come on....
Whoa. Back in the olden days (like the dawn of ocean-going trade) buyers and sellers had to wait years, if not generations, for transactions to be completed and investors paid off. Just plain things like silks, spices, materials -- Stuff -- were worth waiting for, and an entire world industry developed, because of it.
Hell, I betcha Lloyd's has a few boilerplate space cargo, hull and P&I policies all drafted and ready, just in case the Space Race stayed hot enough to develop interplanetary commerce before the end of the 20th century....
@pink_clerical_collar: Good point. But back then people weren't conditioned to expect products to be delivered from the other side of the world in a matter of days, and now we are. I could see Earth's economy adjusting to where it would be commonplace for raw materials, like metals and rare elements, to get shipped in over the course of five-year trips; once you got enough ships making the run, you wouldn't even notice.
But it'd have to make sense from a economic standpoint. And unless, again, there was something pretty fuckin' awesome out there, I can't really imagine interstellar shipment of consumer goods.
Futures trading is still a big deal. Contracts for oil, grain and other commodities that I'm aware of go a year or so into the future.
Start a discussion:
Login with your username and password below. Or comment on this post via email.
Forgot your username or password? New User?