Thought of the Day

October 13, 2005 | Books I Read | By: Mark VandeWettering

I’m currently reading ::amazon(“0670033847″, “The Singularity Is Near”):: by Ray Kurzweil, and it’s kind of an over-the-top utopian view about the future. His basic hypothesis is fairly radical: that the accelerating innovation in the world will result in a vast leap in human evolution in the 21st century.

I don’t know that I buy the hypothesis, but I’ll address that more in a later post. Today’s idea for the day was on depreciation. Much of our current economy is tied up in technologies which will be realistically only worth half as much in as little as 14-18 months (namely, computer power). No other capital investment depreciates this quickly, and yet the overall industry is the very model of growth. This is because unlike the old historical economic view, computers aren’t capital assets, they are resources: exploitable resources whose price is racing to the bottom, and who is carrying many other industries (biomedical, communications, and manufacturing) straight to the bottom with them. This “deflation” that we fear in (say) the price of our homes is actually driving innovation and economic expansion.

I just hadn’t thought of it that way before.

Share Button
Be Sociable, Share!

Write a comment






5 × = five