I started working at NVIDIA nine months ago, so Moore’s Law is a daily theme in my head of late. And given my interest in economics, I sometimes wonder whether Moore’s Law will ever have a measurable impact on economics. Certainly, if computers and robots start doing a majority of the “manual labor” in the world economy, then Moore’s Law may start to have an impact.
So I started thinking: what if productivity doubled every eighteen months? Of course, this question is qualitatively different (massively so!) from the prior paragraph. But what if? What would economics look like?
Or to put it another way: What if the total of whatever you owed were cut in half every eighteen months? How would you behave? How would your actions change?
Probably most of us would borrow and spend like there were no tomorrow! I.e., the rational choice would then to become Keynesians overnight.
I think that my point may be that the difference between an Austrian and a Keynesian gets pretty blurry near such a singularity. Kind of like a black hole starts to make physics (Newtonian, quantum, whatever) pretty blurry.
You say: But that’s not the real world.
And I agree.
But again, this is just a thought experiment about the difference between an Austrian and a Keynesian. The difference still seems to be with the creditor – if every creditor forgave half of all debts every eighteen months, everyone would be Keynesian.
(Aside: Congress and the Fed could “make this happen” by printing 35% (or so) more “money” every year. (And, of course, spreading the “money” out much more evenly than just giving it to Wall Street!) The results would be horrible, of course – everyone would flee the dollar, a crack-up boom would occur, etc.
Unless Moore’s Law starts to effect the economy. Or something else occurs, like the efforts of Focus Fusion give everyone free, clean energy.
Or, suppose all creditors just take the new dollars because they’re happy enough – everyone has enough food, shelter, clothes, entertainment, etc. Or the government is powerful enough to make all creditors take the new dollars.
Or some combination of all of the previous statements.
A combination of the previous statements just about results in what we have today – the Fed printing money, everyone getting Social Security, everyone starting to get health benefits, etc.)
What would Mises say about an exponential explosion of productivity?