Wednesday, March 10, 2010

The Production Function for Ideas

After class last week, Ammon and a few others were talking about whether idea creation – which we haven’t included in our growth models yet – might have increasing returns to scale.

Think for a little bit now about how quickly ideas evolve once we figure out an algorithm to digitize them …

What was the latest thing to completely blow your mind? For me, it was getting lost in a small city in Iowa this past summer, and not being able to get directions from my cellphone without having an accident. So, I tossed the phone on the floor to concentrate on the street signs, and a few seconds later my phone told me to turn left in 3 blocks. It wasn’t so much that it could give me directions that surprised me, it was this it troubleshot its user.

So consider this from Kottke:

One afternoon … Cope clicked a button and went out for a sandwich, and [his program] spit out 5,000 beautiful, artificial Bach chorales, work that would've taken him several lifetimes to produce by hand.

What will happen to growth rates if the creation of ideas does in fact have increasing-returns-to-scale?

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