Thursday, August 22, 2019

A Brief History of Simulated Wealth

About sixteen hundred years ago, people on average began consuming more than what nature had allocated to meet their basic needs. At that point, personal wealth switched from depending on access to people to depending on access to resources. This enabled wealth to flow to fewer people who could trade and consume more resources. Extraction of resources increased environmental degradation which made fewer resources available for trade (the difference being "waste"). Perhaps as soon as 2025 there will be more waste than what people consume for basic needs, and more people will die than are being born. With fewer resources and fewer people, wealth will become more evenly distributed until everyone is dead. 

That scenario is based on a simulation of civilization, with a likely future where people do not work to reduce waste that is increasing faster than they are creating it (such as greenhouse gases that by amplifying climate extremes and chaos are making more of the world uninhabitable). In an alternative future projected by the fictional denizens of the simulated world "Hikeyay" featured in my Simulated News blog, total consumption is humanely forced down until 2040 so natural ecosystems can assist fighting climate change, resulting in wealth being cut to 1/6 of its starting value this year and wealth inequality dropping by more than half while waste is totally removed. Waste could come back with a vengeance if its external sources aren't disabled, but the means of stopping it cannot be done with wealth compensation if additional consumption is to be avoided.

The inherent dependency of wealth on per-capita consumption and transactions (proportional to the square of population) is also true of economic activity (embodied in gross domestic product) both as an observation and as a fundamental aspect of any economy. If everyone is consuming the same amount, such as meeting their basic needs, people's economic activity and wealth (the amount of resources being exclusively used) will vary with differences in population between groups. If people are consuming different amounts of resources (such as when consumption exceeds basic needs), then those who have the most resources (as wealth) will be at the focus of the most activity.

Performing functions such as removing waste would undoubtedly require some consumption of resources to create, deploy, and maintain any technologies involved. Offsetting existing consumption is one way to avoid this problem, which governments traditionally accomplish by collecting taxes and ensconcing wealth as capital "owned" by its citizens that cannot be traded by them. Other species (as our species once did) perform many such functions as part of meeting their basic needs, and as "resources" meeting the basic needs of others, therefore making that work and its results essentially free. Using other species in this way is ideal if we are to limit our consumption, while using institutions such as government is justifiable only until existing consumption can no longer be offset, such as when taxes keep citizens from meeting their basic needs. 

In the admittedly unlikely future of Hikeyay, people will work together to improve the scope and health of natural ecosystems while reducing their personal consumption and population to what can be maintained with the amount of available resources projected for 2040 by a coordinating institution that collects and processes observations from around the world. In the worst case, externally increasing waste is unstoppable and people end up barely meeting their basic needs until diminishing resources crash the population. In the best case, a stable population consumes the same amount per person as the world did around 1920. This is what I see as the best case for us too.

BELOW: L = life expectancy, h = happiness, Fert = fertility, Cum P = cumulative population, World P = world population, R = total consumption, Cap = capacity, C = per-capita consumption. Year of plot indicates associated phase with dark triangle below x-axis.

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