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

Perry writes:
>CurtAdams writes:
>> Well, that's a cute joke, but Robin had a serious question that
>> deserves an answer. There are a *lot* of
>> smart/rich/persuasive/powerful people on this planet, yet almost
>> negligible investment on these hypothetical super-projects.
>
>... You are right that "super-projects" on the scale of tens or hundreds
>of billions are rare, but I have an easy explanation for that: most
>people, even rich people, are reluctant to risk more than a very small
>percentage of their net worth unless there is a strong likelyhood of
>success, so raising money on that scale requires a lot more in the way
>of guarantees than are available.

The question is: if interstellar colonization will be such a good
investment, and if most of the returns from that will go to owners of
near-solar mass, and if most of the near-solar mass will be owned
by the first projects to go grab it, and if such projects are nearly
feasible now, why aren't hundreds of billions being spent now on
such projects? The size of any one project isn't the point; it's the
total spent on all such projects.

One answer is to say that investors *don't* believe most colonization
returns will go to owners of near-solar mass, or that they don't believe
most near-solar mass will go to people who try to grab it via near-current
technology. If there are no obvious property rights that one could grab
now that would give a big lock on interstellar colonization, the prospect
of big returns won't induce a big race now to grab such property rights.

Even in this case there would be the lessor puzzle of why investors who
thought ROI will increase dramatically in the forseeable future don't save
more now in an attempt to smooth out their future consumption, bidding up
the value of intermediate term assets in anticipation of their future usage.
Such anticipitory savings would smooth out ROI over time.

Robin Hanson
hanson@econ.berkeley.edu http://hanson.berkeley.edu/
RWJF Health Policy Scholar, Sch. of Public Health 510-643-1884
140 Warren Hall, UC Berkeley, CA 94720-7360 FAX: 510-643-8614
Received on Tue Mar 24 00:16:06 1998