[p2p-research] Artificial Scarcity Is Subject To Massive Deflation | Techdirt

Ryan Lanham rlanham1963 at gmail.com
Thu Nov 5 17:30:19 CET 2009

I actually thought this comment by Reasons...clearly a smart guy...was even
more interesting...
 The glass is twice the size it needs to be...
by [image: icon] Eric Reasons <http://blog.ericreasons.com/>


Thanks for the link and the kind words. You're absolutely right that I
didn't focus on the *opportunity* side in that post, but I definitely see it
as being there. "Deflation" is a value-neutral concept, and it has it's
advantages, particularly in this economy.

Let me clarify a bit. I believe that this efficiency will make the economic
markets they affect "shrink" in terms of economy and capital. It doesn't
mean that the number of variation of the products available will shrink,
just the capital involved.

Innovative deflation lets $100 Million at Craigslist undercut $100 Billion
dollars that used to service the same thing in newsprint. We're getting
better and more varied services and products (especially in intellectual
property) for much cheaper, but it's also costing lots and lots of jobs
without replacing them, taking money out of the economy.

My big fear is that a "knowledge economy" is being touted as our obvious
salvation, but much of what a knowledge economy brings in with it may be
prove terribly difficult to monetize in the long run, at the same time that
this efficiency is driving out employment in traditional markets without
replacing it.

As I wrote in a related

Couldn't we take advantage of this deflation to help cushion the blow of
falling wages? How much of our income is dedicated to intellectual property,
and its derived products? If wages decrease at the same time as
cost-of-living decreases, are we really that bad off? Deflation moves in
both directions, as it were.

Hours will be cut. Wages will fall. So too will the cost of living fall as
these efficiencies are passed on the consumer. The balance between these two
forces will be the key to determining how painful the transition is.

Thanks again for the link and the discussion.

On Thu, Nov 5, 2009 at 7:45 AM, Paul D. Fernhout <
pdfernhout at kurtz-fernhout.com> wrote:

> http://www.techdirt.com/articles/20090624/0253385345.shtml
> "In discussing the basic economics of scarce and infinite goods around
> here, sometimes certain points get lost or confused. One of the key points
> that we've tried to make (but that sometimes gets lost), when we say that an
> old model is obsolete or going away, is that you can try to hang onto that
> business model, but the economic trends are clear: it's not going to last.
> So, you can try to keep charging for information in a highly competitive
> market, and maybe you can pull it off for a little while. But betting your
> future business on it alone? Good luck.
>  The Citizen Media Law Group points us to an even better explanation of
> this very point, by Eric Reasons, noting that artificial scarcity is facing
> massive deflation. It's such a great concise way of making the point, I wish
> I'd thought of it:  ..."
> --Paul Fernhout
> http://www.pdfernhout.net/
> http://www.beyondajoblessrecovery.org/
> _______________________________________________
> p2presearch mailing list
> p2presearch at listcultures.org
> http://listcultures.org/mailman/listinfo/p2presearch_listcultures.org

Ryan Lanham
rlanham1963 at gmail.com
Facebook: Ryan_Lanham
P.O. Box 633
Grand Cayman, KY1-1303
Cayman Islands
(345) 916-1712
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