On 10/15/20 8:40 PM, Aris Merchant via agora-discussion wrote: > 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
+1 -- Jason Cobb
