Tuesday, October 14, 2008

Paul Krugman, Nobel Prize Winner and Interstellar Economist

According to a story at io9.com, Nobel Prize winning economist Paul Krugman, who is also a New York Times columnist and professor of Economics and International Affairs at Princeton University, was initially inspired by Isaac Asimov's "Foundation" books.

Paul Krugman wanted to be Hari Seldon.

He wanted to be a psychohistorian.

"Psychohistory depends on the idea that, while one cannot foresee the actions of a particular individual, the laws of statistics as applied to large groups of people could predict the general flow of future events. The character responsible for the science's creation, Hari Seldon, established two axioms:

1: that the population whose behaviour was modeled should be sufficiently large

2: that the population should remain in ignorance of the results of the application of psychohistorical analyses"

That alone is pretty cool. But here is where it gets really good. In 1978, while Krugman was an Assistant Professor at Yale University, he authored a ground breaking paper titled "The Theory of Interstellar Trade".

Just the cover page alone tells you this will not be your typical dry and indecipherable economic treatise.

A footnote discloses that
"This research was supported by a grant from the Committee to Re-Elect William Proxmire"

For those of you too young to remember, William Proxmire was a long time Senator from Wisconsin whose publicity gimmick was handing out his famous "Golden Fleece Award" to highlight what he considered to be wasteful government spending, often in the area of basic research.

On the next page, he states that

"This paper extends interplanetary trade to an interstellar setting. It is chiefly concerned with the following question: how should interest charges 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 travelling with the goods than to a stationary observer. A solution is derived from economic theory, and two useless but true theorems are proved."

This is some pretty good shit! But wait! There's more!

"The remainder of this paper is, will be, or has been, depending on the reader's inertial frame, divided into three sections. Section II develops the basic Einsteinian framework of the analysis. In Section III this framework is used to analyze interstellar trade in goods. Section IV then considers the role of interstellar capital movements. It should be noted that, while the subject of this paper is silly, the analysis actually does make some sense. This paper, then, is a serious analysis of a ridiculous subject, which is of course the opposite of what is usual in economics."

I LOVE this guy!

The rest of the paper gets VERY fucking technical while still being highly entertaining and clearly demonstrates why this guy just won the Nobel Prize in Economics.

You should print off the .pdf and keep it in the can for your leisure reading. Straining to understand what the fuck he is talking about will help you take the Browns to the Super Bowl.

1 comment:

Doc said...

crap: i'm already reading three books and now I'm gonna have to reread the Foundation books all over again, also. though, given the advent of Mule's departure come Jauary 20th, followed by the first movie (i'm optimistic they'll nail a trilogy), that's probably a good thing.

and hardly work.

you know, krugman has been an amazingly easy read since he started writing for the times, as well as full of what always seemed to be common sense suggestions: too bad Mule never took him seriously, we might have prevented some of the current fiasco.