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Not Intuitively Obvious

We as a society are faced with an interesting problem.

In the same way that it is no longer possible to intuitively understand modern physics, it has become difficult to intuitively understand modern economics.

For example, Bruce Horovitz reports that when 7-Eleven distributed 4.5 million free Slurpees last July 11, Slurpee sales for the day rose by 38%.

Numerous studies also show that filesharers (who exchange music for free) also spend more on music.

As use of the internet and virtual goods increases, these sorts of phenomena are going to become more common.

The problem is that whereas physics exists outside of a legal framework, economics does not.

The various national legislatures are all trying to adapt to the internet using démodé economic thinking: if you have one guy giving away apples and the guy next door is selling them, of course the guy selling them won't do well.

But this is not necessarily true, and the opposite is often the case.

So we're busy creating a legal framework that oppresses the parts of our economy that could be providing the most growth.

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