One of the many problems with economics as currently formulated.

Economists make a grave mistake when they fail to mention open-source software as one of the critical innovation of our era.

The economics profession as far as I can tell is completely unable to deal with anything that doesn’t directly intersect with official currencies in a standard inflationary monetary environment.

In other words, anything that isn’t on an official balance sheet somewhere is utterly ignored no matter how much effect it has on the actual economy.

In fact, it’s worse than that — anything that actually helps real people is a net negative in economics! To see why this is so, imagine if there were a machine created that provided free energy and also could create any product up to the size of a house ex nihilo.

According to the economics profession, the economy just would’ve cratered. GDP would quickly drop to near-zero as everyone could and would have what they need for free. There would be no profit any longer and the whole concept of profit would quickly become meaningless.

But according to economics as structured currently, the world would be experiencing the most enormous depression in recorded history. This despite the vast majority of the world’s people being immeasurably better off.

Like the above free energy and free stuff machine, open source software, the internet, other communications technologies are all modern artifacts and practices that have made billions of people remarkably better off but are not captured at all (or count as a negative) in modern economics.

Despite the insistence of economists that they actually haven’t mismeasured all of these things, they very much have. The profession can’t help but doing this due to the way it’s geared, and then must for self-consistency insist that its assessments are perfect and capture all that there is to be captured.

Else scary unapproved ways of living and organizing societies might creep in at the edges. And we just couldn’t have that, could we?