The Price of Stardust

Platinum is a metallic element with the atomic number 78. Platinum is most commonly used in catalytic converters and jewelry for those that feel gold is too cliché. Due to Platinum’s relatively high density it is one of the rarest elements in the Earth’s crust. That combination of utility, shiny, and scarcity also means platinum goes for over $1400 an oz.

That astronomical price tag is why a dream team of space investors met in late April at Seattle’s Museum of Flight to announce the launch of a firm called Planetary Resources with the stary-eyed goal of mining asteroids, which are theoretically chalk full of platinum and other rare earth elements. The investors include Peter Diamandis, Eric Anderson, Larry Page, Eric Schmidt, Charles Simonyi , and James Cameron; or in terms of their resume: the creator of the X-Prize, the founders of Google, a former Microsoft lead programmer, and the father of the fraking terminator. While their entire business structure rests on still theoretical/fictional technologies, with that much brain and financial power working together I think we should all take this plan seriously.

Not everyone shares my optimism regarding this project. Critics state that if one successfully begins mining asteroids for precious rare-earth elements, these resources will no longer be scarce, thus decreasing their price and ultimately destroying the original motivation for asteroid mining. While this is somewhat true, it’s a bit of an overly simplistic critique.

It is basic economics that in the short-run if one increases supply, the price drops.  I’m not disputing that. However, the real word is not so static. Supply and demand possess a more dynamic relationship then that. When the price of these materials fall, that will spur interest and innovation. Current global production of platinum is only 30 tons a year; palladium 24 tons, rhodium and iridium a mere 3 tons each. A lower price means that more engineers and scientists will have access, enabling them to develop new uses for these materials. Eventually these new uses will result in an increase in demand, gradually pushing the price back up. Thus this is actually a fairly sound business venture.

Economic arguments aside, I think this an amazing idea. Sure it’s crazy, but it’s crazy in that fantastic we-can-do-anything-we-want way that the US used to specialize in. In 1961 Kennedy said we’d go to the moon, 8 years later we did! Somehow over the years we as a nation have lost this brilliant insanity. I think it’s time we took it back and I applaud Planetary Resources for leading the charge. 

Face Palm

I assume the majority of my audience is familiar with the premier social networking site Facebook. If not you should really get out from under that rock, it’s filthy down there and you’ll catch a cold. What my dear readers may be less familiar with is the fabulous debacle that has been the IOP (initial public offering) launch of Facebook as a publicly traded company.

As of May 29th, a mere 11 days after the IOP, the price of FB stock has dropped 24%. On May 29^th specifically there was such a sudden drop in the price that special SEC rules had to be instituted to prevent further drops from predatory short selling. Furthermore, several lawsuits have been filed against FB alleging insider trading. One of the lawsuits claims that FB and its underwriter, Morgan Stanley, failed to properly share negative forecasts with investors prior to the IPO. Since FB profits are down there is probably something to the lawsuit.

While FB misfortunes in the stock market are bad for Mr. Zuckerberg, I love every minute of it. Mostly it’s because I loathe Zuckerberg and think he’s a git, but I have more logical reasons as well.

I would like to draw your memory to the late 90’s and the Dot-Com boom and bust. It was that fun time when everyone thought it was a great idea to invest all their money into companies that didn’t do anything but were on the internet so it all made sense…somehow. Eventually this model imploded in a spectacular fashion and the same thing is happening to FB albeit in a less spectacular fashion. 

FB doesn’t really make or produce anything, instead it gets money through two primary methods: First, it gathers and sells consumer data to advertisers. Anything and everything you’ve ever written or listed on FB has already been sold to some ad man pretending he’s Don Draper. Second, FB gets money when users click those annoying links on the side of the browser and buy something (ads which most of us ignore).

What FB lacks in substance it makes up for it hype, or as least it did. For the last year the rumors of FB going public have been lurking all over the internet, but when it actually happened it was a whole lot of Meh. While I may not have the most stalwart faith in the corrective power of the market, I think this is a case of it working wonderfully. 

Hot Waitresses

Economists love their indicators. We believe by looking at some chosen statistic, broader implications can be drawn about the economy. Some of these indicators make a lot of sense and tell us important things about the health of the economy. For example the Case-Shiller Index measures housing prices while the Purchasing Managers Index gauges confidence in the manufacturing sector. However, in the rush for individual economists to standout several loopy indicators have been developed, my favorite of which is the Hot Waitress Index.

The Hot Waitress Economic Index “indicates the state of the economy by measuring the number of attractive people working as waiters/waitresses.” The idea being that as the number of sexy people working service industry jobs increases, the more dire the economy and vice versa. It assumes that in good economic times attractive people (particularly females) can find work as models or actresses. As finances contract, those jobs dry up and hopeful models and actresses are forced to find work in other areas, the most common being in the service industry (the low entry and exit costs of the service industry make it a natural choice). This indicator even works in places that lack a strong media industry because the attractive people will stay in their hometowns instead of migrating because they believe that they will not be able to get the jobs they want.

So if your waitress at the local bistro could be described as a “butter face,” remember it’s good for the economy. 

Economic Impact of Gay Marriage

With the President’s recent endorsement of Same-Sex marriage and the subsequent vitriolic condemnation for the right, I figured now would be a good time rise above the demagoguery and take a different look at what gay marriage would mean. Specifically, I want to see what the economic impact gay marriage would be, if any. To do this I had to collect a couple of statistics: percentage of the population that is homosexual (H), current US population (U), percentage of the population that marries per year (M), and the average cost of a wedding (W).

H: Percentage of the population that is homosexual

This is actually a pretty difficult figure to determine. Different surveys and polls fluctuate between 2% to 25%. Alfred Kinsey pegged the figure at 10% in his book 1948 Sexual Behavior in the Human Male. In 2008, Indiana University’s Center for Sexual Health Promotion conducted the National Survey of Sexual Health and Behavior, determining that 7% of women and 8% of men identify as either homosexual or bi-sexual. For simplicity I’ll just average this figure to 7.5%.

U: current US population

Based on the 2010 US Census the current US population is 313.5 million people.

M: Percentage of the population that gets married per year

According to the US Census 2.2 million marriages occurred in 2009. If we divide 2.2 million by the US population (313.5 million) we can determine the percentage of the population that gets married per year. 2.2/313.5= .007, meaning that every year .7% of the US population gets married. Since there really isn’t any reason to assume that homosexual couples would marry at significantly different rates than their straight counter parts, we can extrapolate this .7% to same-sex couples  (the real rate would be higher if anything since many long term couples have been denied the right, for decades in some cases, resulting in a surge of weddings upon legalization).

W: Average cost a wedding

Reuters  did all the heavy lifting for me regarding data collection. Unsurprisingly New York averages the most expensive weddings at over $65 thousand and West Virginia was the lowest at $14 thousand. The national average is $27,017. This number only covers the ceremony itself; the honeymoon and guest expenses are not included. As with our M statistic, there is no reason to assume that same-sex couples would spend any less on their weddings.

With our statistic in hand, we can now develop a formula:

H*U*M*W=Economic Impact of Gay Marriage per year

7.5%*313.5 million*.7%*27,017= $4,446,660,488

In case you’re having difficulty reading that number above, it says 4.4 BILLION dollars. That’s billion with a big ass B. Remember, this is just covering the impact of same-sex weddings. I haven’t even delved into what impact same-sex divorce would have. Weddings remain a local affair so this is money that goes directly to small businesses across America: bakers, dressmakers, florists, caterers, wedding planners, etc. While none of my calculations were extremely rigorous, they do provide a rough estimate of what would happen, and I’d call 4.4 billion dollars one hell of a stimulus package. 

The “Official” Strip Rules for Settlers of Catan

Settlers of Catan is one of my favorite board games to play. It combines the commercial and strategic elements of Monopoly and Risk without importing those games’ ability to ruin friendships. As much as I love the Settlers, I do realize that it lacks an element of sexiness, so I decided to do something about that.

Presented here are the modified rules for the board game Settlers of Catan. These rules have been created based on the premise that naked anything makes it better. These rules are official only in the sense that they have no connection to the manufacturer and I chose to use the word “official.” Enjoy people.

1. The rules presented here are only in addition to the rules presented in the game rule book.

2. All players shall begin the game fully clothed. The exact number of articles of clothing is not regulated, but must be within the realms of common sense (i.e. players are not to put on their entire wardrobe before playing).

3. All clothing is weighed the same. A sock or shoe is equal in value to a shirt or pants. Jewelry (watches, earrings, necklaces, etc) does not count as clothing.

4. On a roll of a 7, any player with more than seven cards must also forfeit one article of clothing.

5. The roller of 7 must move the robber to another space on the board and rob another player. The roller can then choose between stealing a random resource card or taking an article of clothing. The player being robbed is allowed to choose which article of clothing is given up.

6. A soldier card can also be used to steal clothing. The card holder forfeits the right to steal a random resource card and the player being robbed is allowed to choose which article of clothing is given up.

7. Clothing can be traded to the bank for resource cards. The trade ratio is 2 articles of clothing per 1 resource card. If the player has a utility port they can trade at 1:1.

8. Players can trade clothing for resource cards with one another, at whatever ratio they feel like.

9. The first player to get another player completely naked receives 2 victory points. If a player loses their last article of clothing on a roll of a 7 from having extra cards or trades their last piece of clothing away, they do not get the points for making themselves naked.

10. Once an article of clothing has been removed it cannot be put back on. Nor can a player put on clothing once worn by another player. This is a strip game after all.

Kick Starting

Tim Schafer  is a game designer that gained a lot of notoriety throughout the 90’s creating computer adventure games (The Secret of Monkey Island, Full Throttle, Grim Fandango). Overtime, however, the popularity of this genre waned and essentially died by 2000. 12 years later Schafer decided that it was time to return to his creative roots and make a new adventure game. Lacking the necessary funding to carry out his goal himself, Schafer contacted every big time game publisher he could. The results were less than successful; every company emphatically rejected his offer, stating that there was not profitability in his idea. A few years ago this would have been the end, a brilliant idea snuffed out before its time, but now there is an alternative.

Using the fund raising website Kickstarter, Schafer was able to market his game idea directly to consumers, asking them to pay for a game that Schafer and his team would then make. The original production goal was 400,000 dollars, that goal was reached in 8 hours. As of May 07, the project has raised 3.3 million dollars. The game hasn’t been made and it’s already profitable! 

The basic way the Kickstarter works is that someone presents an outline of the idea they’re wishing to fund. The idea can be practically anything, from a quirky invention to a post-apocalyptic web-series. To incentivize investment each projects offer special perks and access at different investment levels. Sometime this includes special art or meeting the creators but almost always includes the product being developed. The real beauty of Kickstarter is that is circumvents the traditional development model. The usual product development model is idea is hatched, it’s moved on to management, fiddled with by marketing, put into production, and then finally (and hopefully) bought by consumers. In this model, the consumer is the last (and sometimes least important) element in the chain. Frankly I think this is a stupid and outdated model in some markets.

I love Kickstarter. It’s a new digital voice of the market, if people like an idea they can choose to support it. There isn’t some executive enforcing their own arbitrary views with a militant marketing team, shoving it down consumer’s throats. It’s democracy by wallet. While I don’t think Kickstarter will replace the traditional model, it will compete with it; which in a vibrate economy is always a good thing. 

The Name

I choose the title Intergalactic Economist for several reasons. I think of myself as an economist, as it is where half my formal training lies. I think the word “Economist” is dynamic, commanding, and if you don’t mind me saying a little sexy. My objective nature and dismissal of morality lend as well to calling myself an economist. 

The “intergalactic” portion stems from my generally unique ideas I express. I don’t ever want to be bound to any single idea, but explore the entire cosmos of possibilities. Also, as a child I wanted to grow up to be a space pirate. Unfortunately, NASA does not see “star raping and space pillaging” as legitimate goals for becoming an astronaut. To fill this tragic oversight on the part of the US government, I am currently working closely with the Somali Space Agency. Initial results are less than satisfying, but the engineers assure me that they’ll be ready to launch a raid against the International Space Station by 2015.