Re: economics

Kragen Sitaker (
Sat, 12 Jun 1999 00:53:43 -0400 (EDT)

Please, keep in mind that I am economically naive, so maybe I'm
overlooking something obvious here.

Rohit wrote:
> But as an economist, I keep coming back to the ground truth: money is
> money, and nothing else is. If I'm so damn thrilled to get a purple
> Bonneville, I should put at least a dime on the table for the
> privilege -- to say nothing of the $3,000 for a Ford holographic
> blue-purple paint job :-)
> But if I'm not willing to pay for it -- i.e. that prices have been
> flat throughout this era of exploding consumer choice -- then there's
> something else mysterious at work here. Maybe it's that I could
> always walk out on GM and go somewhere else to get my purple
> transportation. That means that even after a trillion dollars of IT,
> industry hasn't gained any pricing power.

Let's look at something unambiguous: scientific computer simulations.
These are mostly limited by the speed of the computers available to run
them. This means that if you buy a machine that's twice as fast, you
can run your simulation twice as fast, and get more value out of it --
maybe more or less than twice as much, but more.

It is incontrovertible that the supercomputers used for these
applications have increased substantially in speed since the 1970s
while *decreasing* in price.

So people running scientific simulations are getting more value for
less money. Does that mean that they could always walk out on Cray and
buy a supercomputer somewhere else that was a hundred times as fast?

> And if it doesn't have pricing power, it doesn't have fundamentally
> increased profits, which means more money doesn't end up in your
> pocket, either. It's a race to the bottom, as each industry
> computerizes straight into a perfectly competitive market, reaping no
> excess earnings.

Like I said: more leisure time really means a bigger pool of labor,
which means earnings go down. Which, for most Americans, they have
done pretty steadily for the last 25 years.

> If there's no more money on the table, then something very fishy is going on.
> Like an engineered stock-market bubble papering over the rotting
> weakness of a genuinely deflationary economy.

I do not understand the reasoning here. If Moore's Law -- double the
value every 18 months for the same price -- has begun to apply to
purple Bonnevilles, why does that make you think of a rotting, weak,
deflationary economy?

As I said, I am economically naive. Perhaps the connection here is
obvious to those skilled in the art.

<>       Kragen Sitaker     <>
According to my medieval text in the seventh century a finalizer raised a
dead object named Gorth who infected every computer in Cappidocia ending
Roman rule in the region.  -- Charles Fiterman on