Confusing Economic Factors With Moral Ones; Explaining Economics Is Not Anti-Intellectual

from the make-something-and-sell-it,-if-you-can dept

JohnForDummies points us to a blog post by John Cook that attacks those who explain economics of abundant/infinite goods by misstating our argument as a moral rather than an economic one. The crux of his complaint:

There's an anti-intellectual thread running through these arguments. It's a materialistic way of thinking, valuing only tangible artifacts and not ideas. It's OK for a potter to sell pots, but a musician should not sell music. It's OK for teachers to make money by the hour for teaching, but they should not make money from writing books. It's OK for programmers to sell their time as consultants, and maybe even to sell their time as a programmers, but they should not sell the products of their labor. It's OK to sell physical objects or to sell time, but not to sell intellectual property.

This is a huge strawman of an argument. It is not anti-intellectual at all, but actually involves understanding the economics, rather than wishing the world were a way it is not. No one is saying you shouldn't sell "intellectual" output, but that it often will not be possible, economically, or that it doesn't make the most sense to do so. And that is economics at work. With ideas and intellectual output, the content is abundant and infinitely available in a digital form. In economic terms, it is non-rivalrous and non-excludable, such that the supply curve drives the price to $0. It's not being against intellectual output, it's recognizing the reality that it does not make economic sense to try to sell it when the economic forces at play will increasingly push the price towards $0.

It's certainly not about "valuing only tangible artifacts." In fact it's quite the reverse. Cook seems to be confusing price with value again, and missing the fact that we're showing how you can use the value of those intangible ideas to increase the price of scarce goods (which do not need to be tangible at all -- just scarce). It's basic economics.

Honestly, when I saw the title of Cook's post, I thought I was going to agree with it. It's called "Make something and sell it." This is, in fact, the very model we espouse here on a regular basis. But we point out that you can only sell what people are actually willing to buy, and that means understanding the economics at play, and selling what is scarce, while using what is infinite to make those scarce products even more valuable, thus driving up the price.

Filed Under: business models, economics, intellectuals