Friday, March 14, 2008

The economics of internet (I)

Since it was widely available for world audience a few years ago, internet has had a deep impact on the way of life around the world ,such that it is not possible to assume a situation without it. How can that impact be explained?. Internet is a communication revolution which allow people to be themselves, to speak out their fears and hopes to a world audience with no real involvement, because it is all virtual, therefore it is all imagination in real time, but it looks like real, and its implications are real. On the other side, it is its impact on transaction cost which has a deep effect on a variety of daily events, more so with the new tecnological development(video, voice, images applications) which make its effect more relevant .
Transaction cost represent a constraint not just for commercial transaction purposes , but also for research requirements in terms of both data gathering and analysis. Throughout internet, any researcher might go virtually any place in the world to get the material or data he or she needs, in a way which is impossible to do otherwise. Imagine a flight to the New York Public library, or for that matter to the NYU or Columbia Universities libraries,just to to check some articles, concerning for instance the impact of environment damages, on global economy. Internet induces an exponential increase in knowledge.
For commercial purposes, it facilitates the commercial transaction and decision making process, reducing the time requirement to get it done. Global Corporations ,are connected into global commercial networks which allows them to get quick access ( saving up to two a more weeks )to the best available alternative to buy any of their inputs , supporting more efficiently the production chain with the “just in time scheme”, and allowing important gains in competitiveness. Because it allows companies a better insight about the markets forces trends and expectations they deal with , it improves efficiency in the management decision process as well.
Far beyond global TV impact ,Internet has made the world a smaller place, because it is faster , in fact it is instantaneous. Besides it is available on the computer screen of everyone , reducing any world event to something “usual” and “closer” which "share space" with your own daily stuff. Moreover, it has concentrated both the past and the future into one single observation through simulation. In short, only the present matter, because has become the connecting point between the past and the future. The uncertainty is about the unexpected event, out of the boundaries, not necessarily about the future itself because somehow we have it already with us in our computer screen!.
There is no other revolution of such magnitude in human history , and beware that we are still away from its limits. Having said that, the next question is this ¿why could anyone cut this flow of communication, information and data exchanges? .Internet means improving welfare level at a global scale ,so it improves welfare levels to a smaller scale as well. It means a global democracy, where an opportunity create more opportunities for others. It allow citizen to evaluate government performance on public issues , improving the effectiveness of public polices.-
It follows that any restriction about this flow of information, would be equivalent to freezing time, while it keep rolling on outside the freezing area anyway . In other word , is like keeping fixed our own clock, while others ´s one , continues moving. -