Those who know me know of my obsession with three topics: pirates, illicit economic activity and Star Trek. Let's just say I was a bit giddy earlier this afternoon when I read this post over at the Faculty Lounge discussing a new article in the journal Economic Inquiry by Paul Krugman titled "The Theory of Interstellar Trade."
How should interest charges on goods in transit be computed when the goods travel at close to the speed of light? This is a problem because the time taken in transit will appear less to an observer traveling with the goods than to a stationary observer. A solution is derived from economic theory, and two useless but true theorems are proved.Krugman settles the question by laying out the "First Fundamental Theorem of Interstellar Trade":
When trade takes place between two planets in a common inertial timeframe, the interest cost on goods in transit should be calculated using time measured by clocks in the common time frame and not by clocks in the frames of trading spacecraft.