New Philip Rosedale Simulation Suggests Limits of UBI On Rich/Poor Divide

What you're looking at above is a follow-up simulation of wealth inequity by Philip Rosedale, who recently created a simulation which showed how a divide between rich and poor will emerge even when everyone starts at a hypothetically equal state, income-wise.

This new simulation basically models the injection of universal basic income -- a solution to the rich/poor divide recently popularized by Presidential candidate Andrew Yang. But as Philip writes, while UBI helps in the short term, his new simulation suggests that the wealth gap quickly starts growing, even with UBI:

Even with money printing left [i.e. UBI] on, wealth inequality continues to increase again, until about three years later we are back to where we started!

What happened? The explanation is that even if you give everyone the same amount of new money, the richer people still get a larger proportion of that new wealth - and if you wait long enough, things get right back to the worst case scenario. Printing money does slow the process down (from a year to a few years, in this simulation), but it can’t stop the inevitable creation of a fortunate few ultra-rich.

This is something to consider as we look at how to fund various basic income programs: this simulation suggests that if they were to be funded purely by inflation, we would probably not get the outcome we want.

You can see this happening in the simulation above, with an increasingly small number of Mega-Have Greens units growing larger and larger in size, while the Middle Class Blues grow smaller, and the many, many Impoverished Reds grow smaller still.

Notably, Philip supported Andrew Yang's Presidential campaign during the Democratic primary last year. And as he told me for a previous post, he believes a revised version of UBI could still work:

"Wealth-tax-powered basic income, could be encoded as algorithm in a cryptocurrency.  Doesn’t require big companies or government to get going.  Will post the simulation in a few days."

And yes, he adds, "Virtual worlds might be able to help demonstrate the concept."  

Subscribe to Philip Rosedale's Substack for that big reveal.

Comments

[irihapeti]

with wealth tax then there is no need for contact (income/consumption) taxes. The dots are taxed regardless of contact/activity

when wealth (contactless) tax is redistributed proportionately (poorer dots getting more than richer dots and not less than some minimum) then the game never ends

without proportionality then the game stops no matter the parameters

in the extreme proportional example. 100 people start with $1 each. After 1 round half the people have $1.50. Half have 50c. The wealth tax is $50 dollars. $50 / 50 people is 50 cents each. This game never ends

we can inflate this thru the game maker injecting more $ tokens into the game after each round. But is actually only inflationary when the activity/contact rate is not greater than the injection rate and where the volume of activity/contact is the measure of growth. The injected $ reflecting the total value of that growth

[irihapeti]

ps. just mention (if it hasn't already been recognised) that with a wealth (contactless) tax system, then the game maker injects more $ tokens into the system when the economy (contact/activity) is growing and less when the economy isn't

which is seemingly counter-intuitive when we are used to a income/consumption tax system. Basically when the contact/activity (economy) stagnates/recedes then the rich dots pay to top up the poor dots, not the game maker