1. INTRODUCTION I want to thank nix for introducing the problems facing our economy. For those who haven't yet, I suggest you read at least the first post in the thread "DIS: The State of the Agoran Economy".
nix pointed out three problems. I've focused on Problem B, which is isolated enough from the others that it deserves a separate proposal. My plan meshes well with the protos flying around on Discord for dealing with the other problems. Problem B occurs because the richest players have so much wealth at this point that it would be nearly impossible for a new player to catch up. To promote the competitive gameplay we want in our economy, it shouldn't be possible for anyone to get an insurmountable lead. For instance, the wealthiest player can currently buy whatever e wants without worrying about anyone else, and it's been like that for a long time. What can we do to solve this problem? 2. WHY TAXATION IS BAD The obvious solution is to tax. It's obvious, but it's also not very good. As nix pointed out, we like the fact that coins are permanent, while the rest of the economy is ephemeral. Making coins disappear would remove that last piece of stability. There's also a psychological factor. Seeing your coins down doesn't feel great and might end up encouraging people to paradoxically hoard the coins they have (this isn't rational, but who is?). Perhaps the biggest problem with taxation is the implementation. A tax sounds trivial to implement, and strictly speaking, it is. However, contracts play a major role in our economy, and taxation would be *extremely* disruptive to contracts. Imagine a contract that stores coins to fulfill a purchase order. Or what about the plundership? Contracts would need, at minimum, a fair bit of adaptation to keep working while subject to taxation. If we wanted to work around that, our tax system would get quite complicated. I'm not saying taxes aren't doable, but we should try other solutions first. 3. MY SOLUTION 3.1. THE BASIC CONCEPT Fortunately, I have come up with a solution that will hopefully solve Problem B with fewer negative impacts while being more fun to boot. The answer is to lean into inflation. Our economy is already inflationary, but as nix pointed out, we aren't scaling rewards to inflation. If we scale payouts to the actual amount of money in circulation, we can make it possible to catch up with the wealthiest players without destroying their coins. 3.2. WHY THIS ISN'T A BAD IDEA While there would at first appear to be problems with my approach, they decrease on further examination. First, some of you will remember that our last scaling economy was an abysmal failure. You may also recall that I was one of its most bitter critics and be surprised by my efforts to reintroduce scaling. However, scaling would work very differently this time around. Last time, we tried to have a fixed amount of money in circulation, resulting in officers sometimes going without pay. My proposal is the opposite of that: officer salaries would increase. That economy scaled based on spending; my model would adjust based on wealth, eliminating fluctuations that occur solely due to inactivity. The final and most substantial improvement is caused by the way this economy interfaces with cards. Coins can't be spent directly, only through auction. The result is that the control on, for instance, the number of proposals is not in the coin system but in the number of legislative cards. Accordingly, there is no way that a glut of coins could cause a surge in proposals or blot erasures. There are some apparent problems with increasing inflation. The first is that inflation might drive down savings since people wouldn't want to hold coins. That's bound to happen in moderation but ends up being a feature -- the system encourages the richest players to spend their wealth. If the system is balanced correctly, it should not make it so that there is no reason to save coins, just discourage long term stockpiling. I hope people will plan to save for a few months, but not to hold wealth permanently as they often do now. The final concern is that the amounts of money involved may become untenable. I acknowledge this as a possibility. Fortunately, even if it happens, it would be easy to resolve. If we decide that the amounts of money involved in transactions have become absurd, we can, with minimal disruption, divide all quantities in the whole economy by 10. Everything would continue functioning with little trouble since, in this scenario, no one would care about the final digits of amounts by that point. I'm hoping we can avoid doing such releveling, but even if we have to, which we might, it would be less disruptive than taxes would be in the current regime. 3.3. WHY THIS IS A GOOD IDEA Having addressed the leading concerns with my approach, let me now discuss the benefits. First off, this would solve the big problem in our economy -- new players would be more able to catch up, and the compensation for services would better reflect their value. It would do this without destroying coins (until and unless we needed to relevel). It wouldn't hurt contracts either, since it would not affect their internal coin holdings. It would push up spending and economic activity by creating an incentive for players to spend wealth more quickly. People would still be able to save for a while, but the values of their savings would decrease over time, so they would want to spend more. In many ways, my proposal is the mirror of the tax system. The difference is that, rather than trying to stop inflation, I'm acknowledging that inflation is here and befriending it. One pleasant consequence is that people will continue to see their coin holdings rise, so long as they choose not to spend *all* of their money. Seeing their balances increase would further encourage them to spend -- if you can spend while still making a net profit, you don't feel like you're cutting into your reserves. 4. CLOSING REMARKS As I said earlier, I don't expect my proposal to stand alone. Instead, others will join it, collectively working out all three of nix's problems. I wanted to point to one specific thing: we're planning to add more items to spend money on, hopefully taking some money out of the economy and keeping the inflation lower than it would otherwise be. Adding more things to spend money on simultaneously with encouraging spending through monetary policy is a recipe for economic activity. I've written the proposal up, but I wanted to post this explanation first for several reasons. One, this is long and a lot to process. [citation needed] (Don't worry, the proposal is much shorter than this post.) Additionally, many of the concerns for the implementation are very removed from this conceptual level. There are things like choosing the right scaling constant (which I call the divisor, for reasons that will become apparent) and a few other concrete issues. The proposal has been through a round of drafting and comments on the Discord, so I hope I've worked out the biggest kinks. With luck, you all will like it. I'll release it on list in the next few days, depending on demand, how the discussion on this goes, and the heavens' aetherial fluctuations. Now for my closing pitch. My proposal will be fun. It'll be fun to try even if it fails, and even more if it succeeds. This is making history. This is trying something new that we've never done before. Seeing how this goes will give us unique information about how Agoran economies work, information that we will transfer to future economic design. We've done taxes over and over again -- this is something new (absent a chapter of Agoran history I don't know about). I truly hope people are willing to give my proposal a try. Yes, it might fail. But it might also succeed wonderfully, ushering in a golden age of economic activity. And either way, we have fun. Yours in Anticipation, Aris
