How will on-line gaming change the world?

Here is your typical breathless futurism, pulled off Digg.  Let’s assume the guy is right, and there will be purely virtual marriages, replete with virtual you-know-what, and many people will live full (virtual) lives without ever leaving their living rooms, etc. 

In this world virtual nookie and related activities reap high-productivity gains and the price of such activities falls rapidly.  They become a tiny percentage of gdp, much as agriculture has today, even though they are very important for our utility.  The low-productivity activities — most of all face-to-face meetings — take up a big chunk of gdp, much as health care and education do today.  Imagine that meetings for a cup of coffee are highly expensive (in relative terms), they require subsidy, and Robert Samuelson writes Op-Eds about how they will bankrupt us.  Shocks to "the meeting sector" can send the economy into a tailspin. 

In relative terms, transportation costs, broadly construed, will be exorbitantly high.  By comparison, standard legal tariffs won’t much matter and political boundaries will lose most of their influence over the geographic distribution of economic activity.  Immigration will cease to be a major political issue, if only because it is so (in relative terms) costly.  Why cross a border when you must give up many of your virtual lives to buy the bus ticket?  Dialects will proliferate and styles of art, at least those in meatspace, will take divergent paths.

As with education today, people will try to get their (costly) meetings over with early in life.  Again, in opportunity cost terms, it’s not worth it for most people to give up so much virtual life just to go see Cleveland.  Maybe meetings will become the new middle class entitlement, and subsidies to Amtrak will replace Social Security or Medicare as the largest item in the federal budget.  Some columnists will claim that the government can supply meetings more cheaply.  Conservatives will insist that people have to pay for their own meetings, and that certain social classes are taking advantage of the meetings privilege.

The price of land in cities will be very low, since people will have been able to spread out and conduct most of their lives from a distance.  So meetings are inefficient, but when they do occur they will never be cramped.  People will talk with their hands much more, because there will be no danger of hitting the people at the next table.  Umbrellas will be large and bulky, and you won’t need to get that flu shot.  Restaurants will have room for expansive smoking sections.

The Alchian and Allen theorem will imply that only high-quality meetings will take place.  Why incur a high meeting/transport cost for a mere piffle of a kiss on the cheek, or for the exchange of a small piece of gossip?  Meetings will be highly intense, extremely memorable, and involve well thought out sexual extravaganzas.


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