Panoply

Panoply is an idea for a modern economic system with the following features:

• Free market principles.
• Basic income security through citizen's dividend.
• Taxation on use of nature. Environmentally conscious.
• Soft demurrage through soft inflation.
• Hierarchical organization. Economic states can exist within economic states.
• Enables a diversity of economic experiments.
• Supports a Peer2Peer world.

The word 'panoply' fits well since it denotes "A complete set of diverse components." and "Something that covers and protects."

Panoply operates a free-market which is likely to be even more efficient than current mixed economies. At the same time, this proposed economy is more stable, humane, and resilient to automation.

Assumptions

• Nature may be relatively scarce for all our wants, but it is certainly sufficient for our basic needs.
• Labor is relatively abundant and getting more so with automation, robotics, globalization, and the rise of public commons such as open source.

How the system works

In Panoply, money is in direct correspondence to scarce natural resources. Public policy determines the amount of scarce natural wealth available for private and public expenditure. This is the amount of land, energy, and material resources we are willing to put to use in the short term, while keeping in mind long term sustainability goals. This is converted to money issued by the government. Public policy additionally determines taxation levels designed to limit the hoarding of natural resources. For instance, citizens would not pay tax for owning a house or a small garden, but larger property is subject to land-value tax. A simple criteria for this is the Kantian ‘imperative’: “If everyone owns this much of nature, will we suffer from scarcity?”

Money from natural resources and taxation goes mainly into an egalitarian periodically distributed basic, a citizen's dividend. The rest may go to purely governmental operations and programs. Correspondingly, the resources are made available for purchase or rent. The citizen's dividend as income guarantee should be sufficient to cover shelter, food, education, computerization, health care, entertainment, and investment in private and public projects. Since money is fed into the system by the government, we get a ‘soft’ demurage effect which further discourages hoarding.

Large projects are driven by channeling individual resources. Lending and investment is done Peer2Peer and via Crowdfunding. This may be further augmented by graph propagation of lending to allow delegation of investment planning—as in the example of Ripplepay. This gives direct incentive for community building, since large resource pools are only possible through either channeling people’s trust or through democratic public programs.

Note that Panoply is modular due to the nature of the monetary system. Money is flowing both up and down in the institutional hierarchy since each level gets money from its mother institution equaling the sum of its total members. This modularity enables communities to subscribe to diverse economic parameters while still being part of a larger system. The diversity has several advantages.

Economic states are then free to choose the size of their public governments. Additionally, some economic states may choose to incorporate behavioral economics or, say, incentivize healthy behavior by higher taxes on unhealthy consumption, lower taxes on green energy, and so on. Modularity has the added advantage that Panoply can be implemented at relatively small scales.

Individuals or communities are then free to create complimentary currencies that directly reflect their values with respect to human resources. For instance, in a local community, people can subscribe to a time bank or a LETS system, or use Ripplepay with an effort-based currency. In that sense, you can think of Panoply as simply a natural resource economic management infrastructure that can exist in parallel with the current or alternative economies.

Advantages

“You never change things by fighting the existing reality. To change something, build a new model that makes the existing model obsolete.” —Buckminster Fuller

• Civilized, gives people equal economic opportunity and income security via citizens' dividend.
• Massively parallel decision making and pricing based on a market (the best of Capitalism).
• Environmentally conscious.
• Resilient to future changes in automation, robotics.
• P2P lending encourages community building, nurturing trust, and long term thinking.
• Resolves the tragedy of the commons in a mature way: P2P trust effectively limits the effects of free-loaders, instead of ruining the entire playing field.
• Can coexist with a host of alternative economic paradigms.

Possible additions

May vary between economic states:

• Using behavioral economics to incentivise healthy behavior, as in the example of higher taxes on unhealthy food, lower taxes on green energy, etc.
• Reputation scoring and peer-review mechanisms to help facilitate crowdfunding.
• Complimentary currencies such as LETS, time bank, or other scarce currencies.
• The system can be made harsher by requiring the youth to earn their 'right of passage to adulthood' by passing certain requirement such as serving in the public good for a year, continuing education, or making a sum of money.

FAQ

Q: What will motivate people to work if everyone has income security?

A: Lots of research has been done about the psychology of human motivation. It is helpful to separate work into three categories:

1. Work that is driven by passionate people: this includes everything from scientific research, mathematics, invention, development, art, medicine, education, public service, and so on. This category will actually benefit from income security. Albert Einstein did not labor to discover relativity for money. Scientists at the Manhattan project did not build the nuclear weapon for money. Nikola Tesla did not invent modern electricity and the AC motor for money. Alan Turing and John Von Neumann did not invent the modern computer for money. Soldiers and firefighters do not put their life on the line for money. Alexander Fleming put his discovery of Penicillin in the service of our health for free. The best teachers are the ones doing it for passion. And free open source software is the most advanced. Psychological research has shown that tying an extrinsic reward, such as money, to these types of activities makes people perform worse. People no longer do their best, but only what is sufficient to earn the reward. Imagine what kind of world we will have when everyone is free to do what they are passionate about?
2. Work that exists just to keep the current system surviving. This includes countless legal, bureaucratic, financial, marketing, governmental, and security activities that will be much less needed when the system changes.
3. Finally, there is proper labor: the type of work people generally try to avoid but nevertheless is needed. This type of work is being eliminated quickly by automation, and so this segment will continue to decrease as we advance in robotics, AI, 3D printing, and a host of other technologies. However for the near future, we may assume that there will be a small amount of need for such labor. Here’s how Panoply addresses this need:
   1. DIY. With free access to information, we see a rise in Do-It-Yourself activities. DIY is generally more rewarding psychologically than purchasing a service.
   2. People will work for credibility and trust. Any time a person wants to create a large project, they will need their peers to invest, and so people are motivated to demonstrate credibility and trust by doing the hard work.
   3. People, especially young males, will work for super-relativism - which panoply allows to a small degree. In fact, research in psychology shows that people only care about small local super-relativism - they want to show off to their friends - rather than absolute wealth.
   4. Individuals or communities are free to create complimentary currencies that directly reflect their values with respect to human resources. For instance, in a local community, people can subscribe to a time bank or a LETS system, or use Ripplepay with an effort-based currency. In that sense, you can think of Panoply as simply a natural resource management infrastructure that can exist in parallel with the current or alternative economies.
   5. Although I am not sure that is strictly needed, the system may even be made harsher by requiring the youth to earn their 'right of passage to adulthood' by passing certain requirement such as serving in the public good for a year, continuing education, or making a sum of money. A year of public service for a life time of financial security is bargain.

Q: Why do we need a different type of money that is tied directly to natural resources?

A: Currently, our economic system is based on bank issued debt-based money. This means that banks print the money and everyone, including the government, borrow with interest. This has been criticized by many to force a growth imperative, that lead to environmental abuse and grave injustices. In response, there has been several proposed complimentary currency systems, with varying levels of successes. However it remains difficult to demonstrate a system that combines scalablity, fairness, and resilience to trends in automation and robotics. By tying natural resources directly to the system:

1. We insure that money is denominated with actual physical wealth - this way the money does not loose its value when it is distributed with a basic income.
2. We bring attention to the level of resources we are spending. This drives civic debate informing environmentally conservative policy and the creation of direct sustainability incentives.
3. With Peer2Peer lending and graph propagation (Ripplepay), everyone is effectively a bank. Credit worthiness is then determined by Peer2Peer and community values, not a bank algorithm.

Q: How can we transition?

A: Panoply is currently being studied as a theoretical model. Transitioning models with different pros and cons are being debated, they can be broadly categorized into:

1. Continuous: this regards Panoply as a vision or a 'theoretical limit' to help guide continuous policy tinkering.
2. Discontinuous: in the event of a financial collapse (Europe, US, etc), a regime change (such as the Arab spring), or a civic decision.
3. Complimentary: this attempts parallel implementation with the current economy.

Q: If someone has a personal vision for a different system for the future, should they care about Panoply?

A: Panoply combines much of what people really care about in many respective ideologies - it aims to be a complete system that supports our humanity. That said, another way to think of Panoply is as an economic framework. It is modular in the sense that it allows multiple systems to exist within its boundary. Citizens can choose to create their own economic states within the system using legal agreements. The citizen's dividend from the mother state goes to fund the child state's land allocation and its basic resources. The state can then issue their own monetary system (or not) and follow their chosen economic ideology. The size of the child state is bounded by the number of its citizens - and its total external transactions. Historically the international allocation of resources has been based on violence. This could not continue forever due to nuclear mutually assured destruction, but it left us with a very imbalanced system. Panoply is a possible replacement for what we have right now. So one of the interesting things about Panoply is that it can function both as an economy and a framework for the co-existance of multiple economies.

Q: Would current incumbents (the wealthy) relinquish their incumbency?

A: Note that if you are rich enough now to have a company build a customized new gadget for you, chances are the gadget will be affordable to the masses in a few years or months.

1. Panoply guarantees a stable, capable, and willing consumer market.
2. They will benefit, just like everyone else, from the increased gift economy in the culture, with increased willingness of people to put their talents and efforts into the public domain through creative commons, open source, wikinomics, and so on. And in turn how this would accelerate cultural production.
3. More simplicity in terms of paperwork, financial management, setting up businesses.
4. Hedge for risk to self and children (and grandchildren ...) in case of unexpected loss of wealth.
5. More personal security from theft and less threat of family members being kidnapped or inequality-caused violence. Less worry about children being emotionally manipulated for money.
6. Medical facilities will be more equipped to handle emergencies in case of a disaster.
7. Another important point is that, from a psychological point of view, we see a large cost to financial affluence: http://www.ncbi.nlm.nih.gov/pmc/articles/PMC1950124 Especially for the children: http://www.ncbi.nlm.nih.gov/pmc/articles/PMC1948879 http://www.thepriceofprivilege.com
8. Most important, in my opinion, is that compassion brings happiness. Creating a world that is fertile for compassion would increase everyone’s well being. "If you want others to be happy, practice compassion. If you want to be happy, practice compassion." - The Dalai Lama. Unless, of course, if the said wealthy person happens to be among the 1-2% of the population classified as psychopaths - which unfortunately is common in a patriarchal society since psychopaths are attracted to power.
9. In the US, the bigger problem is not the wealthy per se, but the large percentage of people who aspire to be http://www.conceptualguerilla.com/?q=node/47
10. As we are theoretically living a democracy, the idea is to get enough people to support the system - including many of the wealthy - yet we do not need to wait until everyone agrees.
11. Change can be pursued on multiple fronts and it is unreasonable to expect to persuade everyone. Many will have psychological barriers against such system. Good ideas take time to transition from being seen as 'crazy' to being declared 'obvious'.

Q: How is sale or rent price determined for a given property?

A: If the property is privately owned, then it is market value. Public properties are subject to auction, with predetermined rules.

Relevant Links

• Discussion on the Future of the Economy
• A better system of economics
• Principles for Designing a New Economy
• P2P in a Nutshell
• Social Credit
• Georgism
• Publications of David Autor, many on unemployment trends
• Some Brief Thoughts on How to Ensure a Good Future
• Introduction to Alternative Currencies
• Ripplepay
• Americans are misinformed about distribution of money
• Five Interwoven Economies: Subsistence, Gift, Exchange, Planned, and Theft
• Deep Discounting Errors?
• World's Largest Electronics Manufacturer Foxconn wants 1 million more robots in 3 years
• Land-value tax
• Automation Insurance: Robots Are Replacing Middle Class Jobs
• Buddhist Economics
• Beyond a Jobless Recovery
• Solar may be cheaper than fossil fuels in 5 years
• Sustainable and Responsible Finance. Appeal.
• Lets-Linkup
• Central Planning and The Fall of the US Empire
• Robotic Nation
• Robotic freedom
• Manna, short story
• Acceleration of Addiction
• Basic income from a millionaires perspective
• Citizen's dividend