Krugman is hilarious. In the theory of relativity, time dilation is a difference of elapsed time between two events as measured by observers either moving relative to each other or differently situated from a gravitational mass or masses. An inertial frame of reference is a frame of reference that describes time and space homogeneously and in a time-independent manner. Trantor is a fictional planet in Isaac Asimov's Foundation Series and Empire series of science fiction novels. Trantor is depicted as the capital of the first Galactic empire. It consisted of an enormous metropolus and was home to a population of 45 billion human inhabitants at its height In neoclassical economics, perfect competition would drive profits equal to zero making the inequality equation 2, an equality . As time is on the y axis in the graph, the amount of time it takes to travel in space from planet to planet must be a fraction of the distance in light years because of velocity limitations, therefore E'T' must be steeper than 45 degrees. From the point of view from a stationary observer, traveling back and forth will take 2N years (N each way) and the economic test criterion for whether it's worth making the voyage is whether or not the profit from the voyage is greater than the opportunity cost of the time spent away- which is defined as what the capital invested in the voyage could have returned if invested for 2N years in interest bearing bonds at an interest rate r*. Because of the exponential power of compounding, the greater 2N is, the greater the price of the goods upon return, Pe, will need to be in order to make the voyage an economically rational move to make. The High Frontier: Human Colonies in Space is a 1976 book by Gerard O'Neill The book discusses a road map for what the US might do in outer space after the Apollo program and after putting man on the moon. It imagines large manned habitats in the Earth-Moon system and gives plans for the creation of large sustainable space colonies that could become self-sufficient through agricultural production and automated repairs. In the book, the ideas were (and still are) technologically feasible (costs were the major impediment) This paper was written in 1978 but was not published until March 2010 in the journal Economic Inquiry. Paul Krugman is a nobel prize winning economist best known in academia for his work on international economics including trade theory, economic geography, and international finance. Krugman wrote the following about Interstellar finance on his NY Times blog in 2013: "The theory of interstellar trade is a well-understood topic, with an extensive literature consisting of one paper (pdf) I wrote in 1978. Interstellar finance, however, is less well covered. That’s all about to change, however. I’m reading an advance copy of Charlie Stross’s Neptune’s Brood. (Hey, I have connections!) And it is the best thing by far written on the subject to date, partly because it is, as far as I know, the only thing written on the subject to date. It’s also a fantastic novel." Core assumptions of conventional economics are that individuals and corporations are profit/utility maximizing agents, individual decision makers are rational At the time of writing, Krugman was an Assistant Professor at Yale. When he finally published and publicly announced the paper 30 years later, this is what he had to say: "Thirty years ago I was an oppressed assistant professor, caught up in the academic rat race. To cheer myself up I wrote — well, see for yourself. Joshua Gans of the University of Melbourne scanned a copy of the thing I wrote — back then academics did their work with typewriters, abacuses, and stone axes — and was good enough to send me a copy. Ladies and gentlemen, I give you The Theory of Interstellar Trade." Perhaps Krugman is joking here because Adam Smith's work, The Wealth of Nations, appeared in 1776, several hundred years after the initial settlement of Massachusetts and Virginia. Essentially, Smith uses 300 years of colonial rule to rigorously examine the colonial experience and its impact on the English and colonial economies. Smith did no approve of excessive regulation of colonial trade by parent countries (England) and believed that the discovery of the New World marked a divide in the history of mankind in addition to all the wealth that it brought. Reason why interstellar economics is different from ordinary trade theory. William Proxmire was an american politician that started the "Golden Fleece awards". The awards were presented monthly between 1975 and 1988, and their purpose was to give media attention to projects Proxmire viewed as self-serving and wasteful of taxpayer dollars. The first Golden Fleece Award was awarded in 1975 to the National Science Foundation, for funding an $84,000 study on why people fall in love. This is the core parable answered in this paper.