Our favorite economist (and best of the best among New York Times Op-Ed columnists) is Nobel laureate Paul Krugman.
In recent years, Dr. Krugman has made a compelling case for government actions to stimulate growth, job formation, educational excellence, and infrastructure – as opposed to the fallacies, fakery, and futility of Ryan/Romney coddle-the-rich/bash-the-poor counterfeit economics.
But there was a day, as the Economist noted last week, when the world was saner and less grim and a younger Krugman – then “an oppressed assistant professor” – wrote a paper called “The Theory of Interstellar Trade.”
He described it as “a serious analysis of a ridiculous subject, which of course is the opposite of what is usual in economics.”
The paper explained why interest rates on Earth and on a hypothetical planet he called Trantor would seek the same level if there were trade between the two. We don’t claim Krugman’s endorsement for the following elaboration, but he started it
Whatever the interest rates, Einstein’s Special Theory of Relativity tells us that an investor on a starship traveling to Trantor at nearly the speed of light would age more slowly than the bankers she left behind. When she returned, having aged, say, five years while a century or two had elapsed back home, her savings would be worth trillions in compounded interest.
Her only problem would be the cost of fuel for the trip.
During the Cold War, the U.S. devoted 4.4% of all government spending to send a few astronauts to the moon. The nearest star – where Trantor might be orbiting – is ten million times that far away.
A true starship, moving at even a tenth of the speed of light, would burn up more energy getting there than all of Earth’s civilizations use in a year. So you win big money from the banks, then lose most of it to the oil barons and the electric company.
Even so, that’s better than today’s deal, which is you lose to all three.