Monday, March 2, 2009

Crazy Ideas for Crazy Times: Social Credit

Yet another non-video-game post. Be forewarned, this post is full of crazy ideas.

First, background: I see both the government and corporations as basically serving the same purpose, which is that they're ways of organizing human capital so that we can accomplish projects that take many people to complete. The downside of corporations is that strict pursuit of the bottom line will often cause them to compromise the projects in the name of reducing cost or increasing profit, while the downside of government is that it has a very slow feedback mechanism, which results in lower efficiency. Both can get a lot worse if the wrong people get into positions of power, and both are capable of good when the right people are in positions.

Anyway, so the question is, how could we get the best of both worlds? How do you allow people to give immediate and variable feedback to projects without dumping those projects into the free market? How about we have a pseudo-free market with explicit controls? I'm not talking about the economy at large - I'm talking about a separate self-sustaining economic structure. What you do is you take some of the money that people are being taxed, and instead of having the government spend it, you turn it into social credit.

What's social credit? Well, it's like money, except that you can't spend it anywhere - you can only spend on specific kinds of projects (government sanctioned projects, essentially), and generally speaking, you're not "buying" anything with it - you're just choosing where this money should go.

So let's say you want to upgrade the theater at your local public school, for example. In order to raise the capital to pay for the project, you could ask people to donate their money, but they'll be hesitant because they could buy something else with that money (so you're asking them to sacrifice something personal in order to get the public good). If you have social credit, however, the situation is different - everyone has money that's already set aside for investment in public goods, that they CAN'T use to buy personal goods with, so if they want the school to have a new theater, they'll contribute some of their social credit toward the project.

Now that's pretty cool, I think, but here's where it gets crazy. You can have any corporation become "social credit approved" on the condition that it accepts no other form of payment and makes it services available both to those who pay and those who don't. Now this would not be a practical move for many companies, but for some, particularly information-based companies, this can be an effective source of funding. There's another advantage for such companies built into this system: piracy vanishes. Completely. There is no such thing as piracy when you give away your products for free to begin with. Instead of trying to convince people to pay you for mp3s and computer games that they can just as easily download for free, you just give them the products for free, on the understanding that the consumer has a set budget that they can only choose to spend supporting companies like yours - so if people like your stuff, they'll just hand you money.

So that's the crux of it. Now feel free to let me know what's wrong with this idea. Also feel free to comment that you don't get what I'm talking about - it's still kind of fuzzy around the edges.


Sam said...

This has been proposed for arts funding before, in the form of a tax credit that individual taxpayers will decide the recipient of.

In general, using this system for all government projects seems like this system would be very swingy - tons of people would give their credits to whatever projects are currently doing poorly: i.e. if the roads are bad, everyone will give money to the roads at once, defunding other things; when those start failing, they'll shift en masse and the roads will fall into disrepair again.

I also question how accountability would work when the only way to register discontent with how a basic service is being provided is to withdraw funding - THAT's certainly not going to improve service in the short term. I suppose you could give your money to a different government contractor, but having multiple contractors competing for "social credit" in a single area is unlikely to work for any of the public services we currently grant monopolies over (i.e. utilities). If competition worked properly in those areas, we wouldn't offer gov't monopolies in the first place.

Ellipsis said...

Good points. There are a couple more elements I would introduce that could help alleviate the problems.

First, and this I had in mind all along, not all taxes get transformed into social credit - most taxes still get allocated by the government for necessary programs (education, transportation, healthcare, law enforcement, defense, and legislation). So things that need to be funded get their base funding either way - the question is what to do with money that we could choose to invest in a variety of different areas.

For the government-run government sanctioned projects, you could also probably set a budget cap - if you raise more money than is actually needed for a project, the extra money goes to the greater category the project is part of (infrastructure or transportation, in the case of roads). For social credit businesses, the money gets reinvested in the business (the business gets to grow and employ more people).

The last restriction I would consider is putting a cap on how much someone can spend on a single project, so that in order to raise a lot of money for project X, you have to get a lot of people to support it, rather than a couple people to give a lot.

So yeah, as long as important things all get a baseline budget to start with, it's not really a problem if this results in a lot of money going to a particular thing - that theoretically indicates that whatever is getting that money is actually very valuable if so many people want to contribute to it.

Ellipsis said...

By the way, I've discovered since positing this the existence of a greater social credit movement that started in the 19th century - it's not exactly what I'm talking about here, and I can't claim to have been influenced by it prior to this post, but some of the basic concepts behind it seem to match up to the basic concepts behind what I'm saying.

Just an interesting note.