Impact

Imagine you were made King for a Day and had the power to decide how money is distributed in the economy. How would you do it?

Maybe you'd distribute all the money equitably: every man, woman and child gets the same share. What would that look like? Well, maybe everyone has the same amount but not everyone knows how to use their money equally. Some people are gonna save it, some will gamble it away, and some will offers people an option to handle their money for a fee (thus making billions in the process).

If you come back after a few years you're likely to see a level of inequity that's not too far from what we see in the economy today (or at least strongly trending in that direction). Don't believe me? Just look at the economy of Russia; within 35 years since the fall of communism their level of inequity (Gini Index) is about the same as that of the US.

At the other extreme you could be "hands off" and let the market do its thing. What would that look like? (Part I)

You’d definitely get a lot more productivity than at the other extreme, but not without a cost. Now instead of equal resource distribution you get distribution based on a power law – a few people will have most of the planet’s resources while most people will have significantly less. The real problem though is that the market can’t fix the problem of negative externalities; so you have some people at the top who made incredible contributions to society, but others may be there simply because they figured out ways to offload a lot of costs onto society to get to the top.

But is this really the best solution we can come up with? Why should there be a tradeoff between productivity and fairness, or between self interest and the public interest? Well, there may be a better approach, which doesn’t involve merely moving up or down the scale of self-interest vs. public interest. Maybe we can optimize for both… (Part II)

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Abundance Economy book: book.abundance.id