Philip Rosedale Launches New Project Using What He Learned Building a Successful Virtual World Economy to Fight Inequality in the Real World

FairShare is a new project from Philip Rosedale with a snarky tagline that pretty much encapsulates what he has in mind: Eat the Rich, but slowly.

“I want to give people something like the Linden Dollar but just as an iPhone app that they basically can use to buy and sell anything from each other,” as he put it to me in a call last week. 

During the COVID lockdown, Rosedale created complex economic simulations which showed him a frightening thing. As it happens, I wrote about one exactly two years ago:

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 people in a small community trying to look after each other," as Philip puts it to me now, "you will basically end up with a kind of a natural, almost a thermodynamic problem, where some randomly chosen people will basically just end up getting more and more money.”

He sees that in the state of the real world economy: “If you recognize that the economic system we have is so broken, the only safe assumption is we're going to have a violent revolution, as has been had many times throughout history." He even views current political movements through this lens:

"The whole thing with Biden forgiving student loans, that's called 'Jubilee'. It's one of the things that happens on the way to revolution every time. Because one of the things you can do is you can start forgiving debts once the people that are getting screwed get mad enough."

Some metaverse platforms might help with inequality, he believes, but then again, others will not: “Roblox is a lottery you're not going to win,” as he puts it, echoing concerns we discussed here. “You can't go into Roblox and say, I'm gonna make my living in here. Maybe you can go into Second Life and say that.” 

FairShare aims to solve this seemingly intractable problem by offering people who sign up a universal basic income modeled after one that’s helped keep Second Life’s economy thriving for twenty years: 

“You have some kind of tax that drains money out of the system -- a sink, in Linden Lab terms. But then you also have a faucet that puts money into the world. But the money always goes in equally for everybody.”

And no, Philip's solution is not based on cryptocurrency, which he considers part of the problem: "Bitcoin and Ethereum are increasingly controlled, that the wealth inequality [among people who own it] is worse than the United States."

FairShare works on a digital currency, but the challenge is making sure each person only receives their UBI allotment, and people don't try to game the system.

"The way that we did this in Second Life was we only give a basic income to people with a credit card." That's given the virtual world economy a stable base of UBI recipients of around 150,000. But that's not scalable to millions and then billions of people.

Some in Silicon Valley have suggested distributing a UBI that is tied to people's retina scans... but that would only lead to a Minority Report-style market for eyeballs.

Instead, FairShare's UBI distribution is based around groups of people who know each other well, through their own FairShare-stamped digital currency.

"So what we basically said was, let's build a mechanism that allows people to democratically vote people into a group." (Or vote them out.) The group also votes on the dividend rates and taxes for their FairShare currency allotment.

That will lead to dozens and then hundreds and then, perhaps, thousands and millions of FairShare friend groups, each with their own digital currency with varying rates of value.

"So we're basically using the foreign exchange pricing mechanism to allow bridges to get built between all these different currencies."

That way (if I understand right), different currencies in the FairShare system will have an incentive to maintain similar rates of value. While also encouraging new people to create FairShare friend groups of their own, so they too can buy and sell with other groups in the network -- and collect that sweet, sweet UBI.

"It's something where when you signed up, found a group of friends, you suddenly got $50 a day for the rest of your life,” as he puts it. “That would be pretty viral."

Yes, $50 worth of FairShare digital currency every day; Philip modeled that out to be the optimal UBI rate.

More about it here, though again, it's still very early days. As with most Philip projects, it's astoundingly ambitious and has the potential to change the world, while also being sufficiently complicated that it will be difficult to drive adoption. Part of me thinks the best and easiest way to stave off violent revolution is, you know, make the wealthy pay more taxes. But in the US at least, that's probably not going to happen for at least the next 2-3 years.

File photo of Philip

Comments

[Luther Weymann]

Socialism is such a wonderful concept. It has worked so well for so many centuries. I hope Phil's project is as successful as High Fidelity.

[kdm]

Don't you know, Luther, that wasn't real socialism.

[Rin]

Now of course I can have a nice chuckle about people .. usually from the US .. talking about socialism but well, that is about Philips newest idea. And I have to say that I doubt that it will have any real world impact. I don't have much faith in his ideas anyway, but so far everything that came out from the so called tech elites was just more libertarian or ultra capitalist ideas dressed up in nice words and lofty words.

Some phone app wont even contribute to solving the massive inequality problem that plagues many areas of the world. If he does it worng it might even end in the same place as the crypto-money .. as a tool for speculation, money laundrying and criminals to pay each other.

[Iggy 1.0]

I have a feeling that like Karl Marx's ideas, well-intentioned and quite accurate in prescribing a very real problem, the newest Rosedale utopian idea would end up tragically.

If he can find the VC to start it.

What Rin said, essentially: another Silicon-Valley pipe dream. But as Carl Sagan liked to say, I could be wrong. It would be fun to be wrong, in this case.

[Wagner James Au]

For the record, UBI is not "socialist" per se -- it's been advocated for by figures across the political spectrum, most recently and prominently by centrist (and venture capitalist!) Andrew Yang. It's also extremely popular among right-leaning libertarians in Silicon Valley up to and including Elon Musk.

[Luther Weymann]

Universal income is a good idea according to the rich and financially well-off crowd for the rest of their lives. They always talk about how it will benefit society. They never want anyone to talk about how it will not help society. But do the math, and you can easily see whose tax dollars pay for universal income. The rich and financially well-off want "the commoners" to not think about where their money comes from because they can pretend Universal Income money is magic money that is "just there". No, it's not just there. It comes from 160 million working Americans' taxes and what little corporate tax the government can hold on to. America already has a 30 trillion dollar deficit and a gigantic failing underfunded infrastructure, school systems and an endless list of high-priority government programs that benefit the actual tax-paying citizens of the country. Universal income must come from reducing the current program's funding and adding to the 30 trillion dollar deficit. But the rich and supportive of Universal income will lie to you and say it's magic money. We can "find" it. No, they can't, and they never will. So back to doing the math. Here is where we are right now.

Thirty million illegal aliens are in the USA, with many estimates that 90% do not have the education, skills or western social skills to get a US job.

Two million high school students drop out of high school every year. Estimates are twenty-five million high school dropouts over the last two decades, all under 40 years old. Their job opportunities are near zero, and they mainly compete with illegal aliens for jobs.

About eight million men who used to have jobs have stopped looking and have dropped out of the workforce. About five million women have stopped looking and dropped out of the workforce.

There are an estimated 600,000 homeless, with 99.9% not employed.

30,000,000 illegal aliens with only maybe three million employable,

So 27,000,000 unemployed illegal aliens PLUS 25,000,000 high school dropouts under age 40 competing with the 27 million illegal aliens for the same jobs that don't exist. There are only 15 million open jobs in the USA, and 95% require education, innovative thinking and American social skills. PLUS about 14,000,0000 who have stopped looking for work and dropped out of the workforce PLUS 600,000 unemployed homeless

TOTAL: 67,000,000 people with no income or black market income or supported by others' income.

Some experts say that the Universal Income would push the 67 million to at least 100 million because forty million people already wish they did not have to work and are the type to take welfare and not work.

Here are the rough figures we end up with:
Absolutely no money at all to pay for Universal income.
67 to 100 million people who may not be working right now or don't want to work will get paid to not work
160 million working people will have to have their payroll tax raised to pay for Universal Income
And the rich and financially well-off for the rest of their lives, telling us to shut up because we don't know what we are talking about.
All the while, the 30+ trillion interest payments are eating us alive, the infrastructure is failing, and no matter who we elect, it's always the elite and the corporations who get what they want, never the country or regular folks.

Ultimately, Universal Income is the greatest de-motivator for self-reliance ever devised by man. There is almost nothing that could harm the self-reliance of a country more than Universal Income. China and Russia fully support America's Universal Income and must love the idea.

[irihapeti]

late to the party, but Universal Basic Income (UBI) is a not a panacea, nor is it a solution to wealth distribution, as Philip's modelling has shown

Negative Income Tax (NIT) can be though (see Juliet Rhys-Williams, further see Milton Friedman)

When we model NIT by collision/contact as Philip did with UBI then we find that wealth distribution remains within sustainable bounds in perpetuity

the sustainable difference being that NIT only gives money to the poor, when they are poor and only when they are poor. Unlike UBI which gives money to everyone regardless of their current wealth

some countries in recent years have begun implementing NIT in part. The most recognised being earned family credits