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Re: [Asrg] Short-term versus Long-term focus: A bit of economics

2003-06-03 02:18:24
From: "Bob Wyman" <bob(_at_)wyman(_dot_)us>

The issue here, as almost always, is a trade-off between
tactical short-term and long-term benefits. It is very much like
computing the present-value of some quantity of money. For instance,
what has more value? $100 in your bank account today? Or, $1,000 in your
bank account in 20 years? The answer, of course, depends on what you
think the interest rate or cost-of-capital is. Similarly, when thinking
about spam, you can ask which is more valuable: A system that rapidly
limits spam to 50% of its current level or one that eliminates it
completely in five years?

In my previous note, which suggested an objective economic
analysis as the basis for deciding between a short or long term focus, I
should have noted that it appears that the "cost of spam" is increasing
at a compound rate. Some suggest that this rate is equal to as much as
50% per year.
Given compound growth in the "cost of spam", the present-value
of any future solution is drastically reduced as the time to implement
and deploy that solution increases. Similarly, the future-value of any
short-term reduction in the cost-of-spam is drastically increased as the
time to implement the short-term reduction is reduced relative to the
time-to-implement the long-term ideal solution.
I suggest that an economic analysis of spam argues clearly and
unambiguously for the greater value of even the smallest short-term
reductions in spam rather than more perfect solutions that may be
possible in the long-term.

Your argument is backwards. The economic corollary is to a large debt that we owe. If we make the minimum payments the total debt will go down slowly. Even if we pay off half of the debt, the interest will still be there compounding what remains. If we fail to make payments greater than the critical maintenance amount our debt will grow. The best option is to pay off the debt as soon as possible. Only then will we be free of the continuing burden.

My original point was that there is an opportunity cost associated with putting effort into a direction. To maximize results the most effort possible should be directed in the most advantageous direction. The entire world seems to be working on short term, self beneficial solutions, and they seem to be producing a constant supply of these types of solutions. I feel time spent on longer term solutions would be of greater benefit in the long run than just adding to the existing supply of short term solutions.

John Fenley

==============================
I think this is a better economic model:
==============================
Consider the following situation: I owe $1000, and am being charged 10% interest compounded annually. If I pay $100 per year, I am only paying interest. I could pay $100 per year for 30 years, and still owe that $1000. Over that 30 years, the total cost would be $3000 and I would still owe the original $1000. Therefore paying the $1000 up front saves $3000 over the thirty years. Short term solutions are like paying the interest. The spam problem could go on indefinitely, and the sooner a permanent solution is found, the less total energy will be lost to combating spam.

I feel this is a more accurate model of the costs of spam, and it argues for a permanent solution as quickly as possible. We are not getting the interest as you implied, we will have to "pay" it until a solution is found.

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