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

Hal F. writes:
>... Robin Hanson ... argues that an economic singularity will probably
>not occur for at least 100 years. Part of the reasoning is that
>investments which could have produced high growth rates instead get their
>excess returns "burned up" by premature investment. ...
>Robin mentions that if there could be property rights to prevent
>competition in developing the technology, then the burn-up could be
>avoided, ... Robin seemed to suggest a loophole ...
>So it seems that the burn-up could be avoided if there were not likely
>to be property rights in the fruits of the premature developments.
>If later competitors can come in and grab much of the value of the
>premature investment (say, via leaked research results, or because
>the technology was appropriated by government), then there is not the
>incentive to invest in the premature research, but rather to wait and
>hope someone else does so.

Whether this is a loophole depends on what it takes to enter the last
minute grab, and who gets the fruits of that grab. Let's take your
nanotech example, and assume that everyone expects someone to invent a
an assembler design, which then becomes public domain info.

The big question is: who will making most of the money from selling
nanogadgets in the first decade or two?

If the limiting resource is carbon, because most designs need lots,
then the returns go to people who own carbon reserves, such as tapped
oil wells, as yet untapped oil and coal deposits, etc. Anticipating
the huge demand for carbon, people would then bid up the price on
carbon reserves, and sink lots of real capital into finding and
tapping more. And without property rights in new ideas for how
to tap more carbon, they'll burn resources up to the point where
average returns equal marginal/market returns.

If the limiting resource is instead labor skilled at designing
nanodevices, huge fractions of the population anticipating nanotech
would invest in learning how to do nanodesign better than the rest.
They'd invest in this up till the point where their next unit of
investment only gets them the market rate. The people who just happened
to be better than others at nanodesign would get an above market rate
of return on their learning investment. But people who didn't know
whether they were such a person would take a gamble, on average getting
only the marginal return.

If there's no way to anticipate what sort of skills would make one
a good nanodesigner, other than being a warm human body, dynastically
minded people would invest in having as many descendants as possible.
To the extent that there isn't time for such investments, or people
aren't dynastic, then you finally have a loophole - returns to then
nanotech revolution go on average to all the warm bodies around then,
without being burned up in a race to get there first.

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: 510-643-2627
Received on Wed Jul 22 18:50:53 1998