by Sven Nilsen, 2017
I used to believe that changing the economic system of the world was impossible. You know, right? Think of all these people living their own lives, with different political views and religions, hard working individuals, and the whole apperatus of canalizing most of this energy to the benefit for a few. Besides, I am not even an economist, so how on earth could I do it?
Then, I realized some important things:
- Money systems are not really this giant monolithic system, but a web of smaller networks
- The change only needs to happen gradually and influence new ideas to take it to the next step
I think the time is ready for thinking closer about a such change:
- The environmental destruction caused by humans is now increasing the probability of causing our own extinction
- We have all the ingredients needed for a such change, all left to do is finding the right receipt
Sometimes it feels like we are making new discoveries and inventions, but we are not moving forward. It is not like I want a such change in itself, but I am still waiting for the current system to do something significant, and despite large efforts, it has not happened yet, like getting some of those greenhouse gases out of the air.
What if I told you that there might be a relatively easy way to fix economic inequality, and increasing efforts to solving climate change at the same time?
Just some observations I made:
- We have these gadgets that can easily swap software for money transactions
- Technology is in the hands of billions of people capable of making decentralized decisions
- There is this new idea, using Gini solvers, that could make the economic system a lot smarter
When money is just bits in computer memory, it opens up the possibility of rapidly shifting from one way of using money, that is harmful to people, to a new way that that instead of destroying the air we breathe and wasting resources and polluting the ocean, gives people a chance to try something different.
Properties I think an ideal economic system should have:
- It should allow people to live decent lives
- It should maximize the gain of technology for people's life quality
- It should prevent over-consumption and degredation of a sustained civilization
- It should motivate people to use their talents and learn new skills
Of course, because these goals are so complex, it is very hard just sit down and design the perfect system. The thing I am thinking about is a way to improve the current state significantly for a lot of people, not solving the whole problem.
A Gini solver is an algorithm that balances an economy to a target level of economic inequality. When tested under random transactions, it is capable of doing this near perfectly for the whole range of Gini coefficients measured in countries across the world, from Skandinavian countries where inequality is lowest, to the most corrupt countries where inequality is highest.
With other words, if you're a person who wants to live in a society with opportunities, then there is an appropriate Gini level that maximimizes your chances to succeed. On the other hand, if you're an evil dictator, you also want to use Gini solver to adjust the economy perfectly enough to exploit the citizens, but not enough to turn on you. No matter what goals you have, using a Gini solver is the smart thing to do, because not using it makes you less capable of achieving your goals.
An economic system with a Gini solver is like making economic systems smarter, quite literally. They get higher "IQ". Not only can you use them to potentially solve important world problems, but you can use them to solve puzzles! (like a magic square)
A very simple Gini solver designed for games
Think of this in comparison with how the economic system works today:
- The current system makes smart people do the work in an extremely inefficient way that serves nobody's interests, for example by destroying the living conditions for human species such as clean air and clean water. (this happens systematically all over the world and because of selfish economic interests that are counter-productive)
- A new system could actually make smart people work in a smart way that serves everyone's interests, because all people get a safety-net, so they do not make stupid decions out of the need for survival.
It does not matter precisely what the goal is. This is how an economic system is supposed to work: It takes the constraints as feedback to make improvements to its own efficiency. Instead of having a clear goal, it reacts by solving problems such that it can continue functioning.
The problem is when economic inequality gets too high, those at the bottom gets isolated from the market, because they need capital to make themselves useful. It is a very basic human need to feel worthful, but the current economic system prevents a lot of people from doing so. The whole system looses brain cells and borrows the energy from things that are important, such as ensuring your children and grandchildren can eat and drink safely, to things that are less important, such as war.
Right now, we still have a world that is worth living in, but this might change very fast if we are not thinking differently. It is not enough to just change the way people behave, because we also need to develop technology to fix the damage already done.
The key is software.
Cash is getting less and less used around the world, so we are moving to systems where the rules are decided by algorithms. The smart thing to do is to use the right sort of algorithm, instead of sticking to a fixed idea of what money is.
In computer science there are ways to approximate the behavior of systems using other kinds of systems, but getting additional benefits out of the new kind of system. This means we can take the concept of money and change it slightly, so on the surface it seems to behave just like ordinary money, but when millions and billions of people use the new system, it produces a vastly different effect.
So, in practice it might not have a extremely noticable effect for an individual, except there will be no poverty, and the whole humanity will not be as much threatened by extinction.
With other words, develop the system using the new algorithms, and then swap the software that people use to make money transactions on the gadgets they carry around.
You give people free money. Yes, you read that right.
A Gini solver is so good at balancing an economy, that printing and burning money systematically can be used as tools. The money burns in the pockets of those extremely wealthy, which does not need it anyway, and new money keeps coming to those who needs it.
So, people will think this: "Of course I want free money! Then I can buy the thing I want! Sign me up!"
There is only one catch: If you keep the money instead of spending it, you get more next time! Some people will choose to spend the money, and others will choose to save it. No matter what they do, the economy will never go out of balance, because the Gini solver is there watching the state and figuring out how to distribute things properly.
Today, people are punished when saving money, because it keeps getting less and less worth. This means that people are wasting their energy, buying things they do not need, and they learn a bad habit.
The way you make people switch from one system to another, is by offering a better alternative. By creating a better money system, think of it as Money 2.0, people will switch to the new software and forget the old one.
In addition to getting free money, the algorithm will be tuned such that people using the new system encourages new people to switch, because they benefit from it!
The result is that as soon the software is working properly, people will switch at the maximum rate society is capable of changing mentally. Which is the best we can hope for!
The same motivation people have to switch, is the same they have will to work: By getting more money, they get more money in the future, so they will try to find ways to get more money.
You can mix-regulate the algorithms with existing systems, to gradually turn the new systems off, if needed.
Fixing climate change is probably one the world's most difficult problems, primarily because it requires a lot of money. Today, almost no effort is done to actually address the problem, because investors see it as impossible and not profitable.
When people switch to the new money system, they will wish they could save even more money much faster, so some might be willing to trade money from the old system against money for the new system.
Since you control the money supply in the new system, all you have to do is increase some numbers, of course by rules that all agree on, and then take the old money and invest it into science and engineering projects.
You do not need infinite amount of money to fix climate change, only enough to produce a sufficient efficient and scalable system.
I will start working, slowly, to make plans in this direction, but I am sharing this idea NOW. Let us see who can make the first or best system!
If no one else start working on this, then I will continue to make slow progress. The reason I am working slowly, is that I am way too much glad in mathematics, reading and doing other stuff. Also, to build the software requires a lot competence I am not very good at, so even if I started working full time on this idea, it would still take many years. Meanwhile, new libraries in Rust will make it much easier to put the software together.
First, I want to develop this technology mostly for fun, and using it in games. If it works, I will build on the ideas and the experience I get. Perhaps I can make some money, and hire people to fill out the gaps? Who knows?
So, if you want to beat me to the goal, then you have to take up the challenge.
I do not believe that I can make a such great impact on the world that everybody uses the system I design. What I hope is to get the general idea out there: Think of what kind of world you want to live in, and design for it.