Different economic systems, one floating megacity: introducing Witness

Witness Building Witness
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#67

I want to take part in the webinar.
Yes

Introduce yourself
This sounds awesome!
I’m an economist working in the Research Department of a central bank. I’ve done some policy work, Public Economics, Public Choice Theory, a bunch of Macro stuff, incentives in debt issuance, defense budgeting.
I’m very interested in market failures, and see most of them as relating to externalities. These are often sadly not solvable by markets, and government often (usually) sucks as resolving them as well, but is usually better than nothing, so we use it.
I’m also a lifelong sci-fi/fantasy fan.

(EDIT: Forgot to mention that I gave a presentation on the Economics of Science Fiction Universes at the Helsinki WorldCon in 2017)

My interests, beyond looking around at all the cool stuff, is looking at failure points. Where do the various systems break down? Why do they or do they not? What’s their patch/solution/escape valve/preferred murder mechanism/eventual death spiral? How can we do our best to fix them?

Witnesspedia entries
I don’t know yet, I need to read a lot more.
I’m fascinated by Avantgrid - WTF??
DR - opt-in total Communism with an as-close-as-we-can-get-to-omniscient central planner that is not part of the system nor being incentivized by it directly. What to Big Mother get out of it? Over what dimension/s is it optimizing? How do we avoid it turning into a paperclip maximizer? Though I suppose that last is limited by the computation power required to run it, since it sounds like it rises exponentially rather than linearly, making WORLD DOMINATION practically impossible.
Hygge - a viable MMT system? How does it control inflation? Maintaining a low unemployment rate is a good start, but usually not enough. And the handwaved giving all the basic stuff is…interesting.

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#68

I want to take part in the webinar.
Yes

Introduce yourself
I am a writer who is very interesting in alternative social models and how we can evolve better ways of being. I would like to contribute ideas and other evolutions.

Witnesspedia entries


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#69

I want to take part in the webinar.
Yes

Introduce yourself


Witnesspedia entries


#70

Hey @Nightface, @killerpuppytails welcome! These are very intriguing hints.

Night, it would have been fun for you to have been at last week’s discussion on Mazzucato’s Mission Economy, as she had a very sharp criticism of market failure theory. For what it’s worth (and having been a part of the attempt to use MFT to fix the environment) I agree with her. :slight_smile: But then we were missing a contrarian voice, since @petussing (who agrees with you) could not make it.

Yeah, I have been wondering the same myself. The best I can do is some kind of Leontiev input-output matrix analysis. Literally the oldest trick in the book, since Quesnay was already using it in the 17th century! Hopefully you or someone here can do better than me.

#71

Thanks @alberto!
I’m really new, so not familiar yet. How would I find out about those kinds of discussions? I would love to be in on some of them in the future, time zones permitting.

Regarding the inflation question for Hygge, some initial thoughts - do we think of these economies as basically closed/autarkic ones? I think of this mainly in the sense of possibly incompatible economic systems/philosophies. If they’re basically closed, then the MMT thing becomes at least possible. All money comes from the economy and stays in the economy. There’s no need of a separate central bank or it’s a part of the Ministry of Finance, since there’s no need of a separate inflation-controlling/money-issuing/monetary-stabilizing authority. The government does all of that internally.

If the economies are open, then this is all much more complicated. Money can leave the economy, making it impossible to tax back to properly limit inflation. The government could contain inflation and have Hygge at full employment, and then have a foreigner come with a large pile of local cash and start buying things. This would cause inflation, so the government would have to raise taxes/issue bonds. How long does this take to work? I mean, can they increase taxes in real time and have people pay more immediately? If not, you could get into an inflationary dynamic, and only deal with it through taxation with a lag.

I think external trade would make inflation control difficult in the short-term. They could control inflation on average over time, but not necessarily at any particular point.
How are they penalized for inflation? I mean, what happens? How does it constrain the government directly? For absurd example, do the people get angry and riot if prices move too much?

There’s also the whole question of flows of people into and out of the nation/economy, but I’m still trying to think about that one and what the incentives are to emigrate versus the costs of it. Do people do that a lot? What percentage of the population changes Distrikts in a…year, say? Is this “foot voting” a real constraint on governments/cultures?

This is such a fun experiment/idea!

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#72

And you would be welcome. In fact, if you have some knowledge you would like to share, we would be happy to organize a discussion around it, with you doing the sharing. We are going to file these events with the tag #learning-program. It is going to be minimal overhead, no social media hustling, no nothing.

The next event is already scheduled (see). It concerns Witness, because we feel that, in order to support the kind of economic thinking we want, Witness needs its own social science, the functional equivalent of economics but fit to operate in a multi-paradigm world. We call it aethnography, and are even trying to build a piece of it with ethnography + graphs (white paper, work in progress).

And this brings us nicely to open vs. closed economies.

Look: it’s a participatory, fictional world. We can make it anything we want. If you want to have a go at a closed distrikt, we can make one and build it from the ground up. It would have firm border control (an island, trawled by the larger body of Witness?); there would be no station for the Migrant Train, or perhaps a ghost one, closed, patrolled by guards like the U-Bahn under East Berlin when the Wall was still up…

But me, I would like to look at open economies. “Open” does not need to be wide open. Already in The Assembly we imagined an economy where

This model is inspired to what Cuba was trying to do in the early 1990s, looking for a way to interface with capitalist economies that would not be Washington Consensus-style total surrender. In those years I visited both Cuba (who tried to hold some kind of line) and Albania (who did not, and its public services vaporized: if you wanted to send a letter, you needed to use DHL, because the postal service no longer operated and post offices had been pillaged).

And the same is for migration. In practice, the Distrikts of Witness are subject to the same temptations as the countries of Earth. They want some migrants, but not others, and they would not mind getting rid of some of their own residents. Take Libria:

The reason why I like open economies: because another, slightly more respectable side of Edgeryders is trying to convince the Powers That Be to experiment with different economic paradigms. And all those experiments will fail if they require that the entire world switches to some other regime. So, we need to think through scenarios like yours:

But that’s the entire beauty of the thing: deep, coherent worldbuilding! What do you think?

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#73

I love it and am totally in favor of it!

I think this project (AKA you/hopefully us) should deal primarily with economies that are not closed. Openness is a spectrum, but totally closed is at the very least impractical and more likely authoritarian in the extreme. The DPRK is not a model we want to replicate, except perhaps to show how bad it can be. Now I’m wondering how to steel-man that…

My note above about it being much more complicated is true, but not at all a reason not to think about it. After all, when we talk about economic policy, we try to look for all the holes we need to plug, all the corners where it fails, all the incentives we need to fix or at least not screw up (as best we can).
The biggest downside of complicated is that it’s hard to explain to people, particularly politicians. Since they are those who get the policy advice, they’re the ones we need to work towards. This sometimes means going for third-best solutions, because the first-best is far too revolutionary and the second-best is too complicated to explain to the minister in 5 minutes.

But that just means that we need to think about it more, and about how to explain it better. Cooperative economic worldbuilding seems a great way to do that. :smiley:

I’d have to think about what I can contribute. I know some things about policy advice, but you can learn a lot of that by watching “Yes, Minister” and “Yes, Prime Minister”.
I gave a talk on the Economics of SF Universes at a WorldCon, trying to get across some basic ideas about “what is economics, what are some of its implications, and how can we use them to understand/play around with/poke holes in some of the science fiction we love, with examples.”

I also need to read a lot more of the Wiki so I can avoid repeating question that have already been asked. :slight_smile:

#74

Sorry, I don’t understand the reference (my native language is not English).

Since you already have such a talk, maybe you could simply repeat it for a small audience (possibly of one! At the first talk we were perhaps 10 people). It seems like a low-effort, fun way to start sharing ideas.

#75

Sorry, it’s a relatively recent usage. It means to argue against the best possible version of the other side’s position. It’s the opposite of strawman.
https://en.wiktionary.org/wiki/steelman

Gladly :smiley:
How would we set that up?
Are there a decent number of people here on European time? I’m in GMT+2

#76

Hi, Nightface!

Interesting question. Do you know about Mansa Musa, supposedly the world’s richest person ever? He was a Malian potentate in the early 14th century – when he went on pilgrimage to Mecca he caused ruinous inflation everywhere he went, because of the vast quantities of gold carried by his 12,000-strong slave retinue. So it has happened, though not lately. Such a problem may not be relevant to a populous and rich country, but a relatively small place like Hygge could be vulnerable.

But inflation is not a problem. I know this is not orthodox, but it is such an obvious thing. The problem is two-fold: one is uneven inflation, such that the price of one item may rise much more than others. This can be a big problem if that item is, for example, energy, as with the oil price inflation in the US in the 70s – it meant that anything that included oil or oil products saw price inflation, but not other items, and critically, not labor – workers were being priced out of being able to purchase energy-intensive goods, such as heating oil and gasoline, and therefore transportation. It caused a mess. But money inflation is different – it inflates the price of everything equally.

In that case you have the other problem, which is that typically the prices of products would rise faster than the price of labor. So workers would be prevented from buying the things they would normally be able to afford, perhaps including basics like housing. The solution to this, which has been used before, with mixed success, is indexing. If all wage contracts and loans and taxes and probably a few other things are indexed to the inflation rate, then people are insulated from the inflation. This would be especially true in Hygge, where there is a nanny state that has a great deal of control over such things as taxes and contract law. The reason for mixed success in practice has been that the economies were not indexed ENOUGH, so those who were not lost out – but that would not be true in Hygge. And since, as you say, over the long term the inflation would be contained, it would simply be a periodic irritant because of price changes.

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#77

Hi again, Nightface-

Yes, Avantgrid is WTF…

Alberto has mentioned that he would like some economics thinking directed at Avantgrid, though I don’t know exactly what he has in mind…

Alberto?

#78

Alberto-

It’s a useful consideration – the question of the extent and effects of integration into the global economy of non-integrated countries. I spent a lot of time in Russia in the 90s (my wife is Russian, and was an interpreter for the International Monetary Fund at the time). I argued with some IMF economists, who of course went ahead with “cold turkey” for Russia, with devastating results (that arguably led to Russia’s conflict with the so-called “West”, but that’s another conversation…).

It is not clear to me from what little I know why Albania would have lost public services as a result of opening to the global economy, unless they were COMPLETELY inefficient… but this is a guess – I’d be interested to hear – the problem in Russia (IMHO) was that integration should have been pursued at a much slower pace, so that industry standards and work practices would have time to adapt – maybe over a decade – as it was, as you know, whole industries completely collapsed because of poor quality, obsolete equipment, bad management, etc – this is what capitalism is supposed to do, but if it ruins an entire economy then this is not helpful…

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#79

Rule of law broke down. People deserted their secure-and-paid-a-pittance jobs; other people pillaged and vandalized post offices, ripping telephones from the walls and taking everything that could be taken. There was a legitimate government, and it was negotiating with IMF ghouls; but it focused on high level reform based on optimizing static allocation, rather than keeping the lights on.

I travelled it on an old motorcycle, in 1996. The only way to make sure the bike would still be there in the mornings was to pay some local person to sleep next to it. In theory there was a revolution going on, but you would never see police. All young people wanted to leave.

And this was on my doorstep, mind you: I grew up in Italy, so I took a ferry from Ancona to Durres, and there I was. I remember being inspired by the German Vereinigung: Italy could have stepped in and made Albania an autonomous region, not even a particularly big one (Italy has 20 regions). It would have been expensive, but doable, and well worth it. We could have given everyone a European passport and at least basic infrastructure in a couple of years, and kickstarted a cycle of growth for both countries.

The way I have approached this econ problem is this. People dream up some kind of society, with a culture, an ideology. Then, I sit down and wonder: how would its economy work? Suppose it’s very egalitarian. How would one build institutions that would make egalitarianism a (mid- to long-run) equilibrium? So that’s a kind of Nash equilibrium notion, something that is at least in part self-enforcing. The next step is to go subgame-perfect, and try to imagine an economic history that led to that outcome from baseline Witness (late stage capitalism, with a government strong enough to set Project Viking in motion).

Avantgrid is a kind of eco-Switzerland: strong local government, island geography, focus on the environment. I do not need to remind you, Philip, or @Nightface, that Kim Stanley Robinson is endlessly banging on about the Swiss in the Mars Trilogy – @hugi, who dreamed up Avantgrid, is in good company. What would its economy look like?

(Maybe we should move this discussion into a different thread, eh :slight_smile:)

Easy: we agree on a date and time, and I set up a Zoom meeting using the Edgeryders account. I propose Tuesday 16th March. European time is great, and there are definitely people living on it. However, two of the most interesting conversationalist and contributors to Witness, @yudhanjaya and @petussing, are in Sri Lanka and Texas respectively. If they express interest, we could try and find a time that accommodates them (given, of course, your own schedule).

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#80

Tuesday March 16th in the evening actually works well for me. Looks like 1900 my time (GMT+2) would be 2230 in Srti Lanka and 1000 or 1100 in Texas. Does that work for people? @yudhanjaya @petussing
I could easily make it later, but I think my earliest would be 1800 my time.

I want to respond to various other things in this thread, but that’ll be later today, as work is currently eating my life.

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#81

My times when I am teaching are Tuesdays and Thursdays between 9:30 and 10:50 AM and between 12:30 and 1:50 PM. So… 10 I cannot make; 11 is possible; a Monday or a Wednesday would be better.

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#82

I’ve noticed that Avantgrid seems to evoke this reaction. I guess it’s a little more eclectic than the other Distriks? I would be curious to hear more about both what fascinates and where the main WTF factor lies?

#83

For me it mostly came from this:

To me it sounds like each trade is a duel. You stand on neutral ground, bring no more than 2 second’s each, force a certain kind of bargaining, and everyone’s proud of this. If I need to buy a box of food from the next Canton all the people involved need to travel somewhere else, treat it like a duel, we all love that, but we hate waste? This is so wasteful, so inefficient! Why would this happen?
This could happen if all Cantons feel threatened by the others. If I think everyone’s always planning to take my stuff, I’ll be very wary whenever anyone visits and treat all trade in a manner which maximizes my security - neutral ground, seconds, pride and defensiveness.

The ledger and money reducing in value with use are strange ideas to me and seem very compute-expensive, but they could fit in with an almost religious or actually religious (See your “Dune” reference) eco-conservation culture. If you’re energy-poor and see up close the damage that harm to the world can do, than keeping close control and track of the energy you use could both make sense and be pro-survival, so there’s a reinforcement mechanism. This still leaves the problem of the deadweight loss - you need to spend energy and resources to store this information and use it. What level of energy use is worth logging depends on the marginal cost of compute, with levels just under that being possibly culturally-religiously monitored, and with philosophies about wasting small amounts of energy is bad thing and builds up to massive costs that we can’t track and harms us all and being…‘sins’?
Some people this works on. Some semi-believe but do because of social sanction in small Cantons.

Makes me think of something like an Avantgrid youth version of the Amish rumspringa or simply teen rebellion - you go to Libria or Hygga and waste some energy! You revel in being inefficient and wasteful and rebellious and fun! But then most of you feel bad, realize you’re harming the world and your friends and family and human race, and go home to Avantgrid to live a low-energy lifestyle, be proud of your self-reliance, and know that by doing so you’re helping save the world. You can even measure it in (CO2 levels? Sea acidity? Species return? All of the above and more.), You can literally see how you’re helping improve the world, both outside your window and in your ledger.

#84

I could also do Monday(15th) or Wednesday(17th) as well as the Tuesday in between. Other weeks are also possible.
@petussing What time zone are you in, Central or Mountain?

#85

Ah. I may be at fault for some of that (the Coasian duels). General observation from bartering goods and running supplies to families during flood situations in Sri Lanka. In low-trust situations, with no clear enforcement mechanisms, people seem to want backup.

#86

I could do Tuesday or Wednesday. My big problem is that March is full of research deliverables and I’m trying to get at least five hours of sleep a day to ensure optimal function. @petussing, how are you for Wed? I gather we’re some 11h apart.