Re: poly: Re: Why interest rates may stay low

From: Peter C. McCluskey <>
Date: Fri Mar 27 1998 - 08:25:13 PST (Robin Hanson) writes:
>Peter McCluskey writes:
>>How does that clarify anything? If you observe people value 1 gram here
>>and now the same as the promise of 10 grams later, that gives you one ratio
>>with information about the combined effects of discount rates and relative
>>bottlenecks. Do you have a way of separating those two effects that doesn't
>>involve something similar to my assumptions?
>I don't think you can do what you're trying to - constrain real rates of
>return just by calculating a simple mass ratio. I think you have to use
>some economic theory to make a best estimate of rates of return. That means
>thinking about prices.

 I don't think the "prices" you are hoping to find correspond to any
observable phenomena. You originally said:
>4) Mass and energy at our and nearby solar systems can become a bottleneck
> resource, and so worth more (and priced higher) than mass far away.
 Worth more what? You are talking as if prices were something other than
a relationship between commodities (i.e. as if you expected to find God's
unit of account).
 I expect that economic historians estimating real interest rates over long
periods of time normally do that by finding a commodity or basket of
commodities whose supply and utility are fairly stable over that time
period. I have tried to produce a standard that encompasses everything
of finite supply that I expect to be usefull. I agree with your complaint
that it's disturbingly far from the stable ideal.
 If economists had found a better way of analyzing this kind of phenomenon,
I think you would be able to find an economic history paper which said
something like this:
    In January 1945 in central Germany, after adjusting for the effects
   of inflation, average prices were still X% above normal because of
   war-induced shortages.
Your failure to report any analysis resembling this reinforces my confidence
that it isn't possible to improve on this part of my analysis.

>>... Investors ... almost always decide based on history that it would be
>>better to wait until the changes involved appear to be a decade or so away.
>>... been persistent patterns ... wasting their time or deluding themselves.
>> The fact that my hypothesis bears more resemblence to typical crackpot
>>theories than to ideas that have been valuable to investors in the past
>>certainly makes me nervous, but the lack of investor interest in them
>>adds virtually no information to that.
>Could that insensitivity be changed by knowing just how carefully investors
>have considered the types of arguments that persuade you? Does anyone know

 Sure. If you showed me a significant number of investors discussing the
feasibility or timetable of nanotech that showed familiarity with the
chemistry and physics involved and some proposed pathways to getting there,
I would have to rethink my position significantly.

>what happens when space fans pitch long-range projects to big investors?

 The space fans aren't able to present clear and objective analyses of
the expected costs and revenues. Investors are left seeing much uncertainty
about whether the returns will be above average, and inherently large risks
to starting such projects now. While the uncertainty over returns under my
hypothesis is probably larger, there are medium-risk ways to bet on it,
such as buying cheap land.

 Also, in some cases they aren't able to predict who will reap the benefits
10 years from now of today's investments, yet are being asked to make large
bets on such predictions. I don't think benefiting from my hypothesis depends
on identifying specific companies or technologies that will prove lucky.

Peter McCluskey  |  | Has anyone used           | to comment on your web pages?
Received on Fri Mar 27 16:30:49 1998

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