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Economics of Mittens & Socks

Some of the qualities of digital (including copying and multicasting) amplify “pay it forward”-style economies to a greater extent than trade economies (“quid pro quo”-style).

Sure, trade economies are still amplified since the seller can now sell the same thing to many (given an artificial scarcity mechanism to control price of copyable goods, such as copyright or chained crypto).

However, paying it forward is more awesome: it’s amplified squared, since now the contribution of both sides of the transaction can be multiplied.

In a physical trade economy, let’s say Alice makes one sock. Alice gives it to Bob. Bob gives Alice one mitten in return. The world has one sock and one mitten.

In a physical pay-it-forward economy, Alice makes one sock. Alice gives it to Bob. Bob gives Carol, a third party, one mitten.

In the digital world, if Alice makes one sock, she can easily make copies and then she can give it to one thousand people. They each give Alice one mitten in return for their copy of the sock.

In a pay-if-forward style situation, if Alice makes one sock and gives copies of it to one thousand people, they can each give a thousand others one mitten each. Both sides have been amplified by the life-changing magic of copying, and there’d be one million mittens on Earth. You’re welcome.♥

In this way, the world of ideas and files works fundamentally differently from the world of goods and stuff.

It’s ridiculous to impose artificial scarcity where there is no need for scarcity. The Earth is a multifaceted things and there are areas where there are scarcity, which we need to carefully manage (or systematically manage), and there are areas where there isn’t scarcity and it’s evil to create and impose it.

This is why copyright is so awful.

If I spend more of the Earth’s precious resources preventing you from having the file than just giving you the file I might be fucking up. At least if the reasons why I don’t want you to have the file is economical, that I hope that my depriving you of the file will lead you to pay for the file. That is just wrong.

(If we want to restrict access to files for security or secrecy reasons that’s another matter.)