Tuesday, September 09, 2008

End of the World Economics

There has been quite a bit of publicity regarding the Large Hadron Collider starting up operations tomorrow. I can't remember the last time that a physics experiment got this much attention before the fact. The strongest opponents of the project think this will spell the end of the world in a cataclysmic event; personally, I think this is a bit like arguing that Wal-Mart is bad for the economy, but I'm not quite equipped to take the challenge.

Nonetheless, this got us to talking about the end of the world. Let's say that you knew with 100% certainty that the world would end in one week. How would the economy change?

What stuck in my mind the most would be the credit markets would basically cease to exist; selling a good on credit is basically giving it away, as you wouldn't see the final payment (unless the horizon were tremendously short). Could you make the same argument for monetary purchases as well to a lesser extent? There would seem to be a race to acquire goods-- consumable goods at that-- not money, per se; he who dies with the most money still dies. Would barter reign supreme?

Would contracts be broken without repercussion? Would crime go up, via Becker's model, since the punishment for crime would drop significantly? Would private security enjoy a short term boom?

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