Friday, 14 March 2008

have space suit, will travel

British astronomers have agreed to beam a 30-second Doritos ad to a solar system 42 light years from Earth. (via /.) But what price should they advertise?

Paul Krugman's 1978 paper on interstellar trade, a self-described "serious analysis of a ridiculous subject, which is of course the opposite of what is usual in economics," takes on the basic dilemma presented by interstellar travel (near-light-speed). Time passes differently for the beings aboard the trading ship and the planets (the famous "Twin Paradox")--so by whose reference frame should interest be calculated in order to maintain consistent values? Krugman argues that "when trade takes place between two planets in a common inertial frame, the interest costs on goods in transit should be calculated using time measured by clocks in the common frame, and not by clocks in the frames of trading spacecraft." The device allowing this resolution is to suppose that a being could trade in goods or bonds, and because the price of bonds will be set planetside, so should be the price for goods.

This makes good sense, but it does have interesting implications. Consider two business plans:

1) exchange my cash for goods I'll trade on Trantor, get in a ship, go to Trantor, sell the goods for an Earth bond to mature upon my return, get back in my ship, return to Earth, and exchange my bond for cash.

2) exchange my cash for a bond. Wait a long time. Exchange my bond for cash.

There are two differences between these two scenarios: in (1) I take on risk but age only a little, and in (2) I take on less risk but age a lot. In fact, I propose that scenario (3) is effectively equivalent to scenario (1):

3) exchange my cash for a bond. Joyride around the galaxy for a while before returning to Earth. Exchange my bond for cash.

Guess which one I'll be taking to the bank?

No comments: