[thelist] a brain teaser

Peter Smulders schmolle at pobox.com
Tue Sep 23 10:25:07 CDT 2003

Hi all,

john at johnallsopp.co.uk wrote:

> I've been reading an old book called Webonomics which talks about the
>  new economic rules the Internet brings. The most interesting thing
> it talks about is that the real world is all about scarcity of 
> resources. There is always more population and demand than the 
> resources will support. The price of everything rises as it becomes 
> more scarce.

This is not the only side of the story: the reverse is true, especially
in local areas. Overly simplified example: water is worthless in
countries like the UK (that have plenty of it), just as oil is in large
parts of the Middle East.

But let's not nitpick on economic theory only used to support an idea
about the economics of information. :)

> On the Internet, it says, this is reversed. There is more 'resource',
>  ie. data, pages, information, than people, and always will be. The 
> scarcity is in readers willing to read your page.

You already note yourself that 'good' sites are still scarce. So much
for the 'Internet reversal' of that mechanism.

> Once you have plenty of something, you lose the desire for it.

I would be careful not to mix models of human desire with supply/demand
mechanisms, but it will do in this case. :)

> I've had these two things in my head for a few days and I can't glue 
> them together into a single statement or theory. I guess what it's 
> saying is that the Internet was something everyone wanted when it 
> wasn't here. But now we've got it everywhere we're no longer 
> interested.

I think this is a flawed reasoning because for one thing, the Internet
being bigger and the use of Internet growing have some relation, but I
don't think that it is as simple as cause-and-effect.

A more practical example: the expected existence of millions of pages in
Chinese over the next ten years will have next to no effect on my
Internet usage, even though that might very well go up. (well, it can't
go up /much/ further, but that is beside the point. :))

The model is just not right either: supply and demand systems are always
constrained by a sector, a product/service (range) or other factors that
in one way or another mean that apples are compared with like fruit. If
you are in the market for chocolate, an abundance of chocolate may make
you desire it less (and probably not in a linear fashion.) But the
availability of potatoes most likely has no effect on your chocolate

The Internet is something different to everyone; as different as
people's opinions, preferences, interests and to a significant extent
their economic needs. One's apples are almost by definition another
one's oranges.

> Old economics can still work if you think only of quality sites.

I (cheekily) dare you to come up with a definition of a 'quality site'
in a way that would make it uniformly acceptable for enough people so
that macroeconomic modeling is sensible.

A wholly different take on this is that information (which is what the
Internet is mostly made of, imho) need be produced only once to be
'consumed' by the entire world population and then some. There is a
popular book in which this is done on a somewhat smaller scale with fish
and bread, but I know of no physical good that has the same production
characteristics. It would follow that traditional supply-and-demand
models are hardly valid for information.

(if you are really looking for a headache, try the same logic for

> Or is it all a load of rubbish, I think too much, I should go and do 
> some work.

Not impossible. I know I qualify for the latter two. :)

Happy thinking,


More information about the thelist mailing list