Thanks everyone for responding to my previous question. I think I understand it a little better now. I have a number of questions to ask, so don’t think you’re off the hook already!
My previous question asked whether wealth was really just a measure of inequality. And one of the relevant issues is that there are two factors; the size of the pie, and how it is divided up. Alright, let’s keep it simple for dummies like me and ask a follow-up question.
We measure money with dollars. In economic terms, dollars are purely a relative and conventional reality. In people’s lives, though, the concept of a dollar takes on a quasi-absolute sense. $1000 is an actual amount. We understand that it is relative to purchasing power. But that calculation comes secondary.
For example, see this list of the most expensive paintings.
One column gives the “adjusted” price, one the “original” price. Apparently there are people in the world with half a billion dollars to spend on a painting. But I digress! These two prices measure the same thing over time, taking into account the effects of inflation. In a healthy economy, inflation is at a reasonable and fairly steady rate, so such figures remain fairly reasonable.
Thus we treat dollars as primarily an absolute in practice, and calculate a set of variations on that.
Another example of a similar phenomenon is in designing for the web. We have absolute units (mm, cm, in, px) and relative units (%, vw, vh, em, rem). In fact, all these units are actually relative—a mm is different on different screens. Yet there is somehow a conceptual divide between the two kinds of measures.
So what if we were to introduce a completely new way of measuring wealth, one that had nothing to do with the old “dollar”, but which was relative from the start? Let’s do a thought experiment and see where it takes us!
First thing to determine: relative to what? And the answer is: relative to a decent human life.
How much is required to give a human being the basics. Let’s take a leaf from the Vinaya and summarize it thusly:
Obviously it’s going to be more complicated than that, but it’s a start.
This is related to the concept of a Universal Basic Income. One unit is essentially what should be guaranteed as a minimum for every human being to have a decent, healthy, and meaningful life. Let us, then define the basic income unit as the “huwi”: the Human Worth Index.
Cool, so we, as a society that decides in a conscious and rational way how to live and organize itself, decide that every human being earns at least 1 huwi/year. Other incomes are calculated relative to that. I might earn 5 huwi: five times what is required for a decent human life.
The advantage of this system is that it relates wealth, not to some abstract and ultimately meaningless status identifier, but to the reality of human life. If someone earns 1,000,000,000 huwis, that tells us something about our values.
Okay, but this is not a very convenient measure for daily use. Let’s divide the huwi by, say, 100,000 to create a usable currency. Let’s call it the Basic Unit of Currency, or “buc”. Someone earning 1 nubi/year has in the ballpark of 300 bucs/day, which seems reasonable.
We’ve defined income and expenditure in relative units based on the fundamentals of human life. What else can we do with this?
Let’s look at taxes! Currently taxes are pegged to the old quasi-absolute system. Instead, they would be pegged to the huwi. But we can go further, and stop thinking in archaic terms of “tax brackets” and the like. Instead, we can define the total inequality of an economy. How many huwis are acceptable? To put it another way: how much more can we value one life than another?
Currently the richest men have over $100,000,000,000, which the poorest have nothing, or negative value really. But keep the math simple, let’s say the current inequality ration is 100,000,000,000:1. That seems too much.
If I think of my life, I am here in western Sydney, a traditionally working-class neighborhood. I’m staying in a simple flat, 2 bedrooms, one of those very basic blocks built in the 50s or 60s. We have electricity, running hot and cold water, garbage collection, internet. It’s pretty comfortable, and in fact far more luxurious than most of my monastic siblings! But by Australian standards, it’s pretty much entry-level. To get much cheaper, you’d have to start bunking up in rooms (which plenty of people in our block are doing.)
So this is a good, basic life. To be sure, we could get by with much less, but let’s assume something like this is what a huwi will get you.
What, then, can I get with ten huwis? Ten times as much space, I guess! I can understand people wanting to stretch out more, have more rooms or privacy. Fine.
What about a hundred? Is there any reasonable sense in which a hundred times this much? It’s probably just my failure of imagination, but I honestly can’t figure out any genuine reason why anyone would need a hundred times this much.
Fine, so let’s set the inequality ratio at 10:1. That is to say, the richest person has ten times as much as the poorest, or in other words, the maximum income is ten huwis. This would probably be in the ballpark of the level of inequality in a basic village-level culture, and a lot more than the inequality in a hunter-gatherer society. By our standards it may seem ridiculously impractical, but it is our standards that are the exception.
We can do away with tax brackets by taxing this on a logarithmic scale, taking a cure from the special theory of relativity. As a spaceship accelerates, the closer it comes to the speed of light, the more its mass increases and the harder it is to accelerate further. Ultimately the mass becomes infinite and the speed of light cannot be breached. So under this tax system, as income approaches 10 huwis, the tax increases, so that no-one has more than 10 huwis.
What about competition, you say? How are we to motivate excellence?
Well, the thing is, human nature doesn’t change by this. We’re only changing the way we handle payments. People find plenty of ways to compete, to innovate, to develop and showcase excellence. What this does is to recognize that too much of our human life has been subsumed by the market, including our motivation to do better. By moderating the rewards that the market can give us, we promote other means of motivation. That might be status, safety, recognition by peers, the joy of helping people, or the simple satisfaction of doing a good job.
All these are real, and are just as much, if not more, a part of human nature as are economic rewards. After all, plenty of societies get along just fine without any system of economic rewards at all: it is purely a convention that we have conditioned ourselves into. We can uncondition ourselves if we want. I don’t do things for economic rewards, and I never have.
Another problem is that of scale. Currently, wealthy individuals make large-scale investments in things like space travel or medical research. If no-one has that much money, how does that happen? Well, I guess it would happen via networks. People would still have disposable income, maybe a huwi or two, or even just a few bucs to invest. They could get together with other people, each investing a small amount, and create huge projects. What this would mean is that big things, whether it is a food distribution system, or the future of human colonization of space, is not decided by the egos of the rich.
So, to repeat my question: is it possible to redefine wealth relative to the basic requirements of a decent human life? Are there any economic proposals along these lines? Are there any fatal objections to such a system?