Looking in the Encyclopedia

-- Bradford DeLong (delong@econ.berkeley.edu), May 04, 2000

Answers

There's a lot to think about in your article. How do you measure the worth of intangibles or intellectual property. I've run in to this before. I was stationed in Tokyo with the Air Force in the 1980's and got caught up in negociations with the Government of Japan (GOJ). One of my acquaintances was an economist and over dinner one evening pointed out that about 25% of the trade with the US wasn't covered in the balance of trade statistics.

For example: The Japanese air force bought US designs for aircraft from US companies and paid licensing and royalities on each unit built. Because the planes were built in Japan by domestic companies but to American blueprints, no trade by law had occurred. The fees, royalities, and profits flowed out of Japan to the US but since nothing tangible was exchanged, no credit was given. Further, Japan contributed up to a third of their defense budget to direct support of the US military establishment in Japan. Again for no credit.

A tough problem. Let know when you figure it out.

-- James Keaton (jkeaton@iwaynet.net), May 04, 2000.

A corollary is: How and who will pay for future Brittanicas when everyone gets what they need 'for free.'? Are we running down existing stocks and not creating new material?

-- Arthur Cordell (Cordell.Arthur@ic.gc.ca), May 04, 2000.

Brad, I've been pondering your encyclopedia note and I had a couple of questions

you wrote:

>If it is worth an average of $500 per households (as it may well be) then we all are >now $40 billion richer--that is one-half of one percent of a year's GDP.

After I read this I was doing my periodic checking of the lbotalk archives and I noticed you saying over there that exploitation of the third world accounts for less than 2% of US GDP. I agree with the point you were making which is, correct me if I'm wrong, that saying much of american wealth depends on exploitation of the third world is simply incorrect.

So I'm wondering, if 2% is insignificant in that context, why is one-half of one percent significant when you're talking about free encyclopedias? Are you trying to wish away our balance of payments deficit? :)

Also, how do you gauge how many households want britannica even for free? Is it still worth $500 if you don't want it?

-- Dennis Claxton (DENNIS_CLAXTON@fragomen.com), May 04, 2000.

Well, the belief is that free encyclopedias are only a small part of the value of the internet...

-- Bradford DeLong (jbdelong@home.com), May 04, 2000.

oh ok, now I see what you were getting at. any ideas on what might be the biggest value(s)?

-- Dennis Claxton (DENNIS_CLAXTON@fragomen.com), May 04, 2000.

If you tell me what the killer app of broadband internet will be, I'll tell you what the biggest value will be...

-- Bradford DeLong (jbdelong@home.com), May 04, 2000.

Andrew? and don't give us that people are the killer app line, let's make some money here!

-- Dennis Claxton (DENNIS_CLAXTON@fragomen.com), May 04, 2000.