After finding Copiosis, I struggled over how it prevents “inflation”. Net Benefit Rewards (NBR) replaces money and offers great improvement over today’s currencies. Yet, NBR’s unlimited nature seems problematic. Luxuries one gets using NBR, unlike NBR itself, come in fixed quantities. A limited supply obtainable through an unlimited “currency” seems like an inflationary perfect storm.
Admittedly, NBR differs from today’s currencies in so many ways, calling it a “currency” makes no sense. Still, from a basic economics perspective, I had to ask: Won’t inflation exist in Copiosis?
The question bothered me.
So I revisited basic economic concepts. Then I compared our current system and Copiosis based on what I remember. I wanted to understand how inflation works. That way perhaps my fears would prove unfounded.
My fears did prove unfounded. But I wanted to share my findings because I think others might come to similar conclusions I first came to and think inflation in Copiosis is inevitable. It’s not.
Generally, supply, demand, and pricing in a freely-operating economic system operate in the following ways according to basic economics.
The price of goods depends on supply and demand. If demand for goods increases, prices go up. A reduction in supply creates the same thing. Basic economics says the opposite as well. If demand decreases, relative to supply, prices go down.
Of course, all else being equal in terms of supply and demand, prices still might change. If the money supply shrinks relative to the total supply of goods available, then we might see price fluctuations.
Increasing the money supply also hikes prices. Decreasing it pushes prices down. Some countries tax individuals and businesses for this reason. Taxes work better than just printing money to cover their debts, because, in theory, printing money causes inflation.
Now, as I understand it, if productivity increases, the money supply may be increased without inflation. In this case the total supply of goods goes up, ideally causing lower prices. More goods and services production coupled with increased money supply counteracts upward price pressure.
That’s what I generally remember from basic economics. So, how would this apply to Copiosis?
Copiosis flips the calculus
Obviously, we know NBR and money differ greatly.
But, Copiosis, like any economic system, must deal with supply, demand, and scarcity. And although NBR doesn’t facilitate two-way transactions, like money, one must use NBR to get luxuries.
That means, all else being equal, an increase in the total amount of NBR supply will create two outcomes. It will cause luxury producers to increase their luxury gateways, i.e. inflation. Or it will cause shortages.
An unlimited amount of NBR can be awarded to people in the Copiosis economy at any time. But luxury supply at any time is limited as production can only produce so much.
That seems like a perfect recipe for inflation, yes? It sure seemed so to me.
Something else occurred to me while thinking about this. In transitioning to Copiosis, debts and assets like cash and stocks convert to NBR. That way no one gets harmed financially.
But if NBR distributions post-transition happen at unreasonable levels compared to the amount of NBR already in the system, people who are wealthy before the transition might feel “cheated”. Or they might feel their wealth decline in terms of purchasing power of their original NBR. That is, if luxury producers increase their Gateways, i.e. if inflation happens.
So what mechanisms prevent NBR “inflation” or otherwise prevent the pre-Copiosis wealthy from feeling cheated after the transition?
What Copiosis does
Being a strong proponent of this new idea, the following describes my conclusions drawn from thinking through this.
A. Nothing stops the pre-Copiosis wealthy from receiving NBR at rates relative to new NBR flowing into Copiosis. In other words, since (for the sake of argument) the number of people on earth who can hold NBR will not increase in an appreciable way over time, the “wealthy” and anyone else can get as much NBR as they want. Provided they produce Net Benefit Value. And, the wealthy will have more property on average generating NBR, assuming they put that property to good use.
So far so good with regard to ensuring the wealthy aren’t harmed. Transitioning to a future better than today requires not harming the wealthy. Any idea harming them will not garner wealthy people’s support. Those running Copiosis understand this important point.
B. The Copiosis algorithm considers supply and demand when creating NBR. While these aren’t the only algorithm variables, the ratio of demand of goods to the supply of resources influences how NBR gets generated. That helps curtail inflation too.
C(1). In our current economic system, purchasing power equals wealth. The assumption: the more goods one owns or can acquire, the “better off” one is. Supposedly, this equals better quality of life, as well as a greater sense of well-being, or “happiness”.
But, let’s zoom out a little. Having a better, happier life is really the goal, with wealth acquisition a means to that end, is it not? But, studies show that financial wealth correlates to happiness and well-being only indirectly, and only up to a certain point, beyond which diminishing returns destroy that correlation.
So beyond that point wealth correlates not at all with happiness.
Better happiness happens
Now, let’s look further at what happens in Copiosis.
C(2). Copiosis measures wealth in ways roughly analogous to our current system. The more NBR one has, the more luxuries one can get. But I think Copiosis excels over today. While it provides a mechanism for luxury acquisition, it doesn’t assume or directly imply that more luxuries equate to greater happiness or better lives.
The real power of Copiosis lies in how it measures value.
It specifically measures Net Benefit to people and the planet (but really people, since benefit to the planet is to the people’s benefit). The formula that governs how much NBR flows into the system measures actual benefit people get. That measure bases itself on community values. It doesn’t imply having more “stuff” leads to better life outcomes, as our current system does.
What does this mean when it comes to inflation?
Basic economics tells us increased productivity counter-balances inflation. In Copiosis, Net Benefit Value (NBV) represents the most important thing being produced. I believe NBV directly correlates to overall well-being and happiness.
In that sense, the main thing Copiosis produces is happiness and well-being in people. By definition, NBR (ideally) gets created in direct proportion to societal benefits. This means NBV production cancels out “inflationary” pressure creating NBR might otherwise produce. Producers don’t need to increase gateways because their income doesn’t equate to their happiness.
Game changing details
What’s also interesting is the amount of NBR producers get depends not at all on their gateways. Unlike today where “price” covers costs and also includes a profit to producers, producer “income” in Copiosis comes from how much NBV their output creates. Copiosis disconnects the problematic dynamic between price and profit.
So why would a producer increase a gateway? Doing so makes no sense because that act doesn’t equate to higher NBR income.
Furthermore, one must consider more detail to understand how Copiosis eliminates inflation.
Currently, producers must raise prices when production costs go up. Such cost increases happen when manufacturing equipment, raw materials, labor either get scarce, or when production needs more of such things. Intellectual property issues, such as paying patent royalties to someone, or using resources to protect their own intellectual property, increase costs too.
If producers don’t price their products high enough to cover such costs, they’ll eventually go out of business. That’s because money derived from prices must cover costs and generate profits.
In Copiosis, producers pay for none of these things. Suppliers, vendors and others up and down the supply chain give them at no cost. This happens because (a) they themselves incur no production costs, and, (b) the compensation they receive or “profit” they make in the form of NBR doesn’t come from what their customers (or consumers) “pay” for their output.
Instead, their income, again, derives from how much NBV the create for their customers.
How Copiosis uses greed
Human greed factors large when it comes to price and inflation. In fact, greed drives most inflationary effects.
Producers can raise prices by creating artificial scarcity; for example, by cornering a market and withholding goods from consumers. The De Beers diamond company offers another example. From their inception in the late 1800’s to the start of the 21st century, they controlled 80-85% of rough diamond distribution. Their dominance allowed them total market price control. So they set prices how they wanted. Not surprisingly, diamonds cost a lot.
Producers today also can collude and keep the prices artificially high. Even though laws should prevent this, they don’t always.
Greed often lies beneath such inflationary strategies. But we must look more closely. Copiosis recognizes that many, if not most people, must provide for themselves and their families the best they can. This drives to a large degree all market activity.
Necessities at no cost solves this
Since everyone gets necessities at no cost in Copiosis, no family need fear a lack of basic resources. Producers get more NBR when they benefit more people. The more people benefited, the more NBR producers get. So a producer serves his best interest by distributing his goods to as many people as possible. Doing so maximizes his NBR stream, all else being equal.
This would likely push downward “price” pressure on luxuries too. Lower Gateways mean more consumers enjoying luxuries, thus increasing NBR for luxury producers.
This is also why intellectual property needs no protection in Copiosis. It benefits the IP owner when their IP gets employed as widely as possible. Just like with necessity and luxury providers, IP creators get more NBR when that happens.
None of what I mentioned says anything about actual scarcity. So of course at certain times or for certain goods, lack of resources (like raw materials, let’s say) will make it so that fewer people can benefit from a certain thing. But, (a) this doesn’t describe most goods, which are likely to be plentiful. And (b) any demand/supply imbalance would motivate additional producers to get involved.
That’s because more NBV gets created where actual unsatisfied needs become satisfied. In the case of raw materials shortages, producers will innovate, find new alternate sources of the scarce material. Or they might invent something new that replaces that raw material.
The Copiosis teams says greed offers society benefits when channeled through Copiosis’ NBV process. I agree. I also see how that process efficiently eliminates inflation. The way Copiosis works really is well-thought through.