Here’s one reason to think time travel a la Back to the Future or one of the truly great but definitely most NSFW episodes of South Park will never work: we don’t have contemporary or historical reports of time-traveling arbitrageurs. Today’s nominal wages are much higher than nominal wages in the 1970s, and obviously nominal prices in the 1970s are much lower than nominal prices today. I don’t see any reason to think nominal wages won’t be much higher in fifty or a hundred or two hundred or five hundred years. Rational arbitrageurs should be earning money in the future and spending it in the past. Since we don’t have any recorded instances of that, I’m skeptical that we’ll ever actually master time travel the way it’s depicted in Back to the Future.
Of course, time travel might be so expensive that people might not be able to say “hey, let’s go to the Sunbury Road Taco Bell in 1995 for lunch” (I was a regular frequent visitor in high school), but I suspect there are a lot of other markets where time travel arbitrage would be profitable. Long vacations and sabbaticals might be one example. If I just wanted to sit on a beach and read for six months, it would surely be cheaper to do it in 1955 than 2015. Would you also imagine a number of future music buffs who would be willing to pay enormous amounts of money to see Elvis live? How many hipsters would pay enormous amounts of money to get an apartment in Hamburg in the early 1960s so they could say “yeah, I was a Beatles fan before they were cool“?
Using 2015 dollars in 1955 might be a bit of a problem as the government has since closed the gold window and as the printing is probably a little bit different, but this is easily solved with currency exchanges where I could exchange my 2015 dollars for 1955 dollars. The fact that we don’t see the law of one price ruling all markets across all of time suggests to me too that time travel the way a lot of us envision it won’t ever happen.
Of course, I could also be getting the time travel rules wrong. What am I missing?
Acknowledgement: a cousin posted this picture of a 1972 McDonald’s menu on Facebook a few days ago, and that inspired me to write this.
READER COMMENTS
Econoc
Jul 28 2014 at 12:54pm
You forget the law of one price, and how arbitrage eliminates differences in prices. This will make nominal wages and prices equalize over time. Even if you can back to 1972 to eat at McDonald’s, there will be no free lunch.
Tom West
Jul 28 2014 at 1:00pm
I’ve always assumed that if time-travel existed, eventually someone goes back and messes up history so that time travel is never invented.
The time line where time-travel is never invented is stable, so that’s the one we live in.
Cameron Mulder
Jul 28 2014 at 1:06pm
My theory is that time travel doesn’t happen until after the singularity. Since this will likely mean a post-scarcity economy, there really isn’t much reason to do some type of time-travel arbitrage.
Shane L
Jul 28 2014 at 1:08pm
Depending on the costs, some modern drug gang could go back in time 2000 years and conquer the Roman Empire with automatic weapons…
…or something.
Adam
Jul 28 2014 at 1:15pm
Rules of time travel: you can’t travel back beyond the point in time at which time travel was invented.
Economic insights: I guess the point of your post is that we might be able to infer the presence of time travellers through the power of prices, even if they made an effort to blend in with our world. But as you already say, enormous transaction costs would certainly blur that message to the point that it’s impossible to see.
(Not That) Bill O'Reilly
Jul 28 2014 at 1:27pm
“Using 2015 dollars in 1955 might be a bit of a problem as the government has since closed the gold window and as the printing is probably a little bit different, but this is easily solved with currency exchanges where I could exchange my 2015 dollars for 1955 dollars.”
Given the catastrophic potential of misused time travel, I imagine its use would be heavily regulated by the government. In that situation, intertemporal currency exchanges would almost certainly be illegal, and the people with access to 1955 dollars would be a relatively small fraction of the population so there is only so much opportunity for a black market to develop. So the simple answer seems to be that transaction costs are too high.
(Not That) Bill O'Reilly
Jul 28 2014 at 1:29pm
Also, even if there were an intertemporal currency exchange, wouldn’t by definition eliminate the nominal advantage of your 2015 dollars? They’re not going to trade a dollar for a dollar–the trade will be based off the purchasing power of the relevant dollar, with a small premium built in to make the venture profitable.
MikeP
Jul 28 2014 at 2:00pm
As we learned in Terminator, you go naked. Something about the field generated by a living organism. Nothing dead will go.
Also, you can’t go back to the future because there is no time machine in the past to take you.
So if you want to go naked without any money or tradable commodities and stay there forever, there might be a desire to travel back in time. I would recommend checking out nudist Kibbutzes for evidence of time travel.
MG
Jul 28 2014 at 2:05pm
I believe that the “rules of time travel” (those that allow for travel back to the past) limit how far back the future traveler can go to the time when time travel was enabled. Thus, no sign of time traveling from the future may just mean we have not invented time travel — yet.
Chris Brennan
Jul 28 2014 at 4:27pm
Perhaps nobody is doing it because time travel takes such large amounts of energy that the cost far outweighs the benefits of any arbitrage like this.
Maybe only a Type II or III civilization would even be capable of producing the necessary energy. And if they could then they’re probably not looking to exchange it for goods and services from our era or earlier.
Also, people time travelling back in time to be fans of things before they were cool would be called out as hipster poseurs they would be. Time travel can’t fix the fact that they made their decision to become a fan way too late to be cool.
Jody
Jul 28 2014 at 4:43pm
As covered in this documentary, crime syndicates control time travel and people are only sent back in time to be executed.
http://en.m.wikipedia.org/wiki/Looper_(film)
Glen Smith
Jul 28 2014 at 4:57pm
So it would only imply that there are certain rules or certain conditions when time travel is discovered? If I am naked as proposed by Terminator, only thing I might be able to take advantage of would be any special knowledge. Utopia could exist when time travel is discovered. Overhead costs would probably eat away any arbitrage advantage anyway. In any case, if my time travel adventures did change your past in anyway, how would you know?
Art Carden
Jul 28 2014 at 8:42pm
@Econoc: the fact that we don’t observe law-of-one-price effects suggests to me that time travel won’t be discovered.
LD Bottorff
Jul 28 2014 at 8:50pm
Pardon my lack of faith, but the problem is that information cannot travel faster than light and it cannot travel backwards in time. Travel back in time all you like, just don’t take any information with you.
Sinclair Davidson
Jul 28 2014 at 10:50pm
Or you could go back to 1986 and write this article yourself: http://www.iijournals.com/doi/abs/10.3905/jpm.1986.10#sthash.VEVHP7IO.dpbs
Alternately given the transactions costs associated with time travel we might already be at equilibrium pricing.
Mark Bahner
Jul 28 2014 at 11:26pm
So I forget to look up Mark Zuckerberg when he was at Harvard, and give him a loan for a 5 percent share in any company he founds?
D-oh!
vlade
Jul 29 2014 at 3:27am
@LD Bottoroff:
Well, it can but in unpredictable ways. For example, due to the quantum effect, statistically few (as in single digits) grains of sand on Earth every year get displaced a few inches instanteneously. Clearly FTL, and a grain of sand is enough to have information associated with it. But since you have no idea which ones will get displaced, you can get into technical definition discussion on whether information is or isn’t moved…
That said, the current physics assumes that the quantum probability field is homogeneous and unchangeable. Apart from observation (which by definition is limited) there’s no – AFAIK – hard constraint which says it has to be so.
So in theory, if you’d figure out a way how to change the probability field (or, probably easier, figure out how to cancel some quantum interferences, although in practice result would be the same), you could achieve FTL.
Oliver
Jul 29 2014 at 8:10am
Time travel would be more than time travel for arbitrageurs…
A thing normally overlooked in discussions of time travel is the duplication of matter:
If you go back to the 60ies to e.g. buy gold (or a Beatles album, whatever…) and you take money, this money would be duplicated. The note/coin has to exist at the time where you are going to – and when you bring it back FROM the future you have essentially duplicated it (that should be the same for the atoms building you but never mind that).
So, for bringing back one 1$ bill (approx. 1g) it should cost you (via e=m*c*c) about 9*10^13 J… This means that bringing “a million bucks” should cost the world energy consumption of 2008. And this is without the suitcase…
It seems to me that a society that can spent this amount of energy will have no more need for arbitrage (and, possibly, economists…)
MikeP
Jul 29 2014 at 1:56pm
For example, due to the quantum effect, statistically few (as in single digits) grains of sand on Earth every year get displaced a few inches instanteneously.
Citation needed.
Note that there are a trillion trillion atoms in a grain of sand and a few inches is a billion times an atom’s diameter. The probability of a grain of sand tunneling that distance unchanged is blindingly miniscule.
John Carney
Jul 29 2014 at 3:04pm
Perhaps this is how certain well-known investors seem to defy the rules of efficient markets.
JA
Jul 29 2014 at 4:57pm
I’ll just leave this here
http://www.craigslist.org/about/best/sba/469985878.html
[broken html removed–Econlib Ed.]
JeffM
Jul 29 2014 at 5:42pm
All of this is irrelevant since the world ended in 2012 and you are all figments of my imagination!
I’ve never seen so many comments on one post on Econlog. Obviously, time travel is exciting to economists! 😉
Maximum Liberty
Jul 29 2014 at 5:47pm
My theory is that time travel is theoretically possible and totally useless. It is like rewinding a video tape. Yes, you are going back in time, but you become younger as you do, and lose the informational content you gained. When you hit play on the tape again, you’re right back where you were, knowing what you knew then. So, you once again do exactly what you did before. It’s even more Groundhog Day than Groundhog Day.
This might be the fifteenth time you read this blog post. Are you going to do something different this time?
Max L.
John T. Kennedy
Jul 29 2014 at 8:57pm
Perhaps time travelers have simply identified better opportunities for profit.
Todd Kreider
Jul 30 2014 at 2:00am
bump for time travel!
Richard Haas
Jul 30 2014 at 12:36pm
Since I am not on Facebook I will post here in response to your cousin that:
In my neighborhood, Cheektowaga, NY, the menu was not just smaller but some days very much smaller. In 1960 I went to a McDonalds with my mother after a dentist’s appointment. The boys in front of me ordered cheeseburgers. The woman behind the counter looked at them very sternly and said, “No, its Friday. Order fish.”
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