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Ted, thanks for your kind words. Many thanks are of course due to you for laying the foundation. Marcus, I can understand your designer friends' reactions if they only saw the Ars Technica and Kotaku articles. That was some creative reporting. Ars Technica said we're suggesting that NGOs should promote gold farming, and Kotaku claims the Bank wants to create a fair trade market for farmed gold. Both claims are untrue, which is apparent if you read the actual report -- but I understand most people won't be able to do that, since it's long. The Economist's Schumpeter provided a short but more accurate summary: As for future prospects, I agree that new game designs are making gold farmers increasingly unnecessary. What's interesting, though, is that new opportunities simultaneously appear in the more widely conceived virtual economy.
Ted, Great essay. I was very skeptical of your exodus concept when you first came out with it, but it's starting to make so much more sense to me now. I guess you were ahead of your time! (well, of me, anyway) I think that many people's immediate reaction is to say that we need to develop a better measure of economic activity, like an extended GDP, to capture all that online buzz. But another way to look at this is that it's one of the things currently undermining the whole concept of GDP. In Animal Spirits, Akerlof and Shiller call for a re-fashioning of macroeconomics as a psychological and sociological field of enquiry, very much like you do above. To present my own casual criticism of mainstream macroeconomics, let me comment on your apology for laissez-faire capitalism. The rapid rise in material prosperity since mid-1700s is surely a great achievement and has contributed immensely to human well-being. But I think that as we arrive in the 2010s, we in the developed world find that material prosperity is no longer the bottleneck that limits our well-being. Consumer theory in economics assumes that the satisfaction of wants increases well-being, but it's a simple empirical matter to show that in many cases this is no longer so. New iterations of clothes, shoes, toiletry, toys, Christmas decorations and Happy Meals, which our economy produces at an intensifying pace, will not result in greater happiness, even if our human impulses do drive us to desire them. On the same grounds, it's possible to question the idea that economic change is always for the better. Yes, given a free market, Facebook wins over writing letters. But the notion that the resulting societal change is for the better is only an assumption. It may be impossible to show it empirically. Likewise for the professor replaced by a machine. GDP was certainly a relevant measure 50 years ago, but to what extent is it now?
Toggle Commented Nov 12, 2010 on An Exodus Recession? at Terra Nova
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Nov 12, 2010