Friday, December 18, 2009

Speculations of the future

1. What Battling Spacecraft will look like (HT: MR)
2. Disappearance of currency
All transactions would be made with POS or cell phones, backed by interest-bearing assets, in one form or another. You might think that's unlikely today but it's at least possible in the future. In any case, it's a thought experiment.

In this world there would no longer be a trade-off between currency and interest-bearing assets, as we find in traditional Keynesian models. There would be no substitution out of one and into the other and there would be no swapping of currency for interest-bearing assets.

What would the macroeconomics of this world be like? Would the AD curve slope upwards? Would increases in employment be contractionary? No and no. It would only be slightly different from our current world, a point Kroszner and I made in our book Explorations in the New Monetary Economics. It just doesn't matter that much if you pay for your retail transactions by leaving a five on the counter or by using a credit or debit card backed by interest-bearing assets.

3. Krugman - Stross interview - This was an interesting pairing - perhaps because in his younger days Paul Krugman contemplated about The Theory of Interstellar Trade? Sci-fi author Stross had some interesting insights:

CS: I think things have changed a lot in the last 30 years, but not in the direction that somebody 30 years ago would have expected. The 20th Century, and going back to the 19th Century, the real visible vector of change technologically was transportation speeds. ....

PK: ... What you came out believing if you went to the New York’s World Fair in 1964 was that we were going to have this enormously enhanced mastery of the physical universe. That we were going to have undersea cities and supersonic transports everywhere. And there hasn’t been that kind of dramatic change. ... My favorite test, which shows something about me, is the kitchen. If you walked into a kitchen from the 1950’s it would look a little pokey, but you’d know what to do. It wouldn’t be that difficult. If someone from the 1950’s walked into a kitchen from 1909 they’d be pretty unhappy – they might just be able to manage. If someone from 1909 went to one from 1859, you would actually be hopeless. The big change was really between 1840 and the 1920’s, in terms of what the physical nature of modern life is like. There’s been nothing like that since. So we can do fancy information searches in a way that no one envisioned 30 years ago – as one of my colleagues at the Times, Gail Collins, likes to say all the time where are the flying cars?

CS: Yeah, where is my food pill, where are my jetpacks. .... I think that what has been happening rather than progress continuing and accelerating in a visible direction that everybody’s expected from 1960, we’ve seen immense progress in other directions and the effects are not immediately obvious because they take time to sink in. ... It’s not a great cognitive leap from aeroplanes capable of carrying loads to bombers. It’s a hell of a leap from idea of getting a cheap camera chip and adding it to a mobile phone and coming up with a phenomenon of “Happy Slapping”. I don’t know if everyone knows what Happy Slapping is, it isn’t Slapping, and it isn’t Happy, but its where kids basically find some random stranger beat them up while one of their friends videos it with their camera and then upload it to YouTube. As social phenomenon go, that’s not one you can predict from the input technology. That’s a second order effect. ...

CS: Actually, if I had to make a guess at one of the major things that’s going to affect us in the next 20 years … periodically, I keep hearing about peak oil and the long emergency that’s going to come … and it’s going to be very, very grim … and how our food travels an average of a couple of thousand miles between where its produced and where we consume it. I have a slightly different way of looking at this. We’re going to come to the end of cheap energy not because energy is going to be innately expensive because we’ve used all the oil up, but because we can’t afford to keep pumping more carbon into the air. Now we’ll be able to actually maintain an oil-based economy indefinitely. My betting is on Craig Venter, the guy who founded Celera Genomics tried to bootstrap a private enterprise genome program. His current venture with Shell is to try and crack the problem of producing diesel oil using genetically produced algae. And they’re throwing large amounts of money at this problem. I would reckon in 50, 60 years time Shell will still be selling you oil. It won’t be oil they’ve pumped out of the ground, though, it will be oil they’ve synthesized using atmospheric carbon, so it will be carbon neutral. That’s a whole lot cheaper than switching to a hydrogen economy because you don’t have to scrap all of your plant and tankage, just keep using the same stuff. But going a step further, there’s a huge inefficiency in these hub and spoke models of distribution and shipping stuff long distances. If you can produce stuff locally, and distribute it locally, that gives you a huge advantage. I think one of the things logistics is going to … well, computers are going to give us, is much tauter supply chains between production and consumption.

PK: That’s by the way one of the mysteries … we don’t quite know why there’s so much stuff being shipped long distances,

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