Slashdot Mirror
Paul Krugman's 1978 Theory of Interstellar Trade
jerryasher recommends Paul Krugman's blog at the NYTimes, where he introduces a paper he wrote, The Theory of Interstellar Trade, with tongue very much in cheek. Some packrat academician was kind enough to send him a scan, because "back then academics did their work with typewriters, abacuses, and stone axes." Abstract: This paper extends interplanetary trade theory to an interstellar setting. It is chiefly concerned with the following question: how should interest rates on goods in transit be computed when the goods travel at close to the speed of light? This is a problem because the time taken in transit will appear less to an observer traveling with the goods than to a stationary observer. A solution is derived from economic theory, and two useless but true theorems are proved... This paper, then, is a serious analysis of a ridiculous subject, which is of course the opposite of what is usual in economics."
First -- if the player is traveling near the speed of light _with_ the cargo, then he won't notice that the people who are not moving have aged. If the cargo is something useful and rare (fusion fuel, perhaps) or from a far-advanced culture (fusion reactors, perhaps) then he's reasonably assured of finding a market upon arrival even if he didn't get a chance to set up a deal ahead of time.
Second -- I'm not sure that a transaction that takes longer to complete than the life of any trader is necessarily impossible. People make investments they know will outlast them, largely because they hope to sell to somebody younger when they need the money. If I set cargo in motion that will return a $100 million payment in 100 years, I know that I'm not going to live long enough to ever see the return. But, in 50 years I can probably sell the right to the value of the cargo for $5 to $20 million, depending on interest rates (see present discounted value). Some young whippersnapper (or an institution with a long horizon, or somebody else who hopes to trade again) would be happy to take the deal. It doesn't matter that I'll personally never see the dividends; if the payment down the line is certain enough then somebody will be happy to buy it from me.
No, I am saying it would not be there in the first place because the people who would have originally made the deal to transport the titanium would be dead already and thus they would not have made the deal in the first place.
If the transporters were "traveling salesmen" who flew around the galaxy buying and selling, they would need to be both long-lived and long-sighted since the demand for product X is entirely dependent upon time. Let's say they were selling a brand new Earth. 6000 years ago, such a thing would not have been necessary, while today it would be quite attractive at the right price. How could those beings know and prepare such a product 6000 years in the past in anticipation of demand 6000 years into the future? It wouldn't be trade so much as gambling.
... are quite common. We call them "stocks", which are in principle supposed to function in perpetuity, and on the timescales of most investing humans (begin investing at age of majority or shortly thereafter, begin selldown at age of retirement), a suprising number of them are. (Companies older than 80 years old are not terribly uncommon. If you count all the various mergers, divestures, and restructurings that didn't result in common stock investors taking a total bath, there are probably more companies around today that "remember" commitments made in 1899 than there are living people who were alive in that year.)
This is largely just a pointy headed clarification: interstellar trade would be impossible for a host of other reasons. We'll start with "There is nobody to trade with, and finding somebody to trade with would require the 12th century Catholic Church making a deal with Microsoft on behalf of the 28th century Catholic church, without of course knowing that Microsoft exists, what form it takes, or what it values."
Help poke pirates in the eyepatch, arr.
In the end, if you want to run an operation like this, you end up doing something like the Qeng Ho in Vernor Vinge's excellent "A Deepness in the Sky".
Your fleet *is* the company. From what little information you gather, you take things with you that are probably tradeable at destination, and as well you take tools that can work on a wide variety of raw materials, in case you have to do this work yourself (if the locals aren't friendly, aren't at the right tech speed, or just aren't). If you're running to and from a base in the middle, you'll end up having to work out what home base might find useful when you get back from extrapolation of your current trends, while being aware that commodity consumables probably won't cut it.
... and today's pet project has