The free world

This is a favorite topic of mine, the idea that seems prevalent that there is a whole lot of free stuff that isn't being captured in GDP, but has real value, and we should count it to see how great the virtual world is, and so forth. I touched on this last week in a post where I talked about Yglesias's idea that low-selling books should be virtually given away rather than sold for big amounts of money.

The larger issue is expressed well in an older post by Yglesias:

One noteworthy trend we’re experiencing of late is the rising prominence of social production—the creation of valuable information goods on a non-commercial basis. Probably the clearest example is Wikipedia, a hugely useful service that doesn’t produce any economic “value” in GDP terms. Of course valuable activity that doesn’t register in GDP is nothing new—just ask moms spending time taking care of their kids. But the transition to the digital economy is changing things in important ways. In particular, it’s simultaneously making it cheaper than ever to produce and distribute information goods, but harder than ever to capture revenues from information goods.

This is true, but Matt sees this in extremely positive terms, particularly with the idea that retirees will embrace the free economy:

In the future, it might be common for grandpa to spend a couple of hours a day tinkering with open source software. Or maybe he’ll make it his business to attend city council meetings and write on the web about them. People will write whole books and distribute them for free to people’s kindles. A lot of this material may have a “crank” quality to it. But much of it will be genuinely well-informed, and reflect a lifetime of knowledge. Already, I can see in DC’s local blogosphere that there’s a fine line between an annoying busybody and a vital source of information. As the cohort of people with the most time on their hands to just pursue their interests becomes more digitally literate, I think we’ll probably see an explosion of non-commercial activity in a variety of fields. And one important source of success for commercial enterprises will be finding ways to hybridize commercial and non-commercial elements of the production/distribution process.

He kind of limps to the close (endings are tough for me too):

One important implication of this is that we’re almost certainly shifting from a world in which a large and important set of activities aren’t captured in the national economic statistics to a world in which a large, important, and growing set of such activities isn’t captured in the conventional statistics.

I think this is all way too positive. Ultimately, an economy is about doing something or making something that can be exchanged (generally using the medium of money) for something of value that you want. All this free activity is cool and neat, but a whole lot of it comes from a community that is fortunate to have the leisure time to do things that happen to be of interest to others.

Wikipedia is useful (don't tell John McIntyre I said so), but few are lining up to pay for it. There is a hobby quality to it, and to a lot of what passes for so-called "social production." The Internet is great in that a lot of things that people might have done for fun can now be made useful for other people, but we shouldn't confuse that with the workings of a real economy. Some of the most successful projects of the past few years have uncertain realities in a financial sense, and rely on the contributions of people who choose to work on them...and can choose not to work on them.

It's nice to think that a whole army of grandpas are going to go out and donate their time to things that profit a lot of people who are better off than they are, but that's not a sustainable resource that anyone can count on. There's a reason that we have newspapers that assign people to cover city council meetings and write about them and get paid for them - it's called work. I don't think the populace should have to work their civic knowledge around Granddad's annual trip to Florida.