A Deeper Understanding of the Inspiration for Orb Land, a Platform Liked by Vitalik Buterin: Harberger Tax, Shared Owner

33 0 0

Introduction: On May 21, 2024, Vitalik liked a project called orb.land in Warpcast. After in-depth research, he was quite interested in the design ideas behind it. So I spent some time reading the book Radical Markets and had some insights that I would like to share with you. Of course, I found a more detailed article about the project itself, which is convenient for everyone to read and understand. In general, the book proposes a politically left-leaning ownership system – a shared ownership mechanism, combined with the Harberger tax model, which あいms to solve the social injustice caused by the excessive monopoly of resources. This is inspiring for solving the problems facing the current Web3 industry, such as the recently popular high-valuation VC coins.

What is Radical Markets about?

First of all, I would like to briefly introduce some basic information about this book. The full name is Radical Markets: Breaking the Power Struggle between Capitalism and Democracy and Reshaping Our Economy. It was co-authored and published by Glenn Weyl and Eric Posner in 2020. Glenn Weyl is a principal researcher at Microsoft Research and a visiting professor at Yale University, focusing on innovative research on market design and public policy. Eric Posner is a professor at the University of Chicago Law School and a well-known legal scholar. His research areas include contract law, international law and legal theory.

In general, this book aims to address a series of deep-seated problems in modern capitalism and democracy. Specifically, it mainly involves the following key issues:

Wealth and income inequality: In modern society, wealth and income inequality is becoming increasingly serious. The traditional capitalist system often leads to a small number of people accumulating a lot of wealth, while the majority of people face economic pressure. The authors believe that this inequality is not only unfair, but also leads to social and economic instability.
Inefficient allocation of resources and assets: Many resources and assets cannot be effectively utilized under the existing market system. For example, in the land and real estate markets, many assets are idle due to speculation and hoarding, and fail to fully realize their economic potential. This not only wastes precious resources, but also exacerbates the shortage of housing and land.
Defects of the democratic system: There are many problems with the current democratic system, such as defects in the voting system, political polarization, and excessive influence of interest groups. These problems make it difficult for the democratic system to truly represent the interests of the people, resulting in inefficient and unfair policy making.
Global Immigration Issues: Existing immigration policies are often subject to strict national control, limiting the free flow of labor. This not only affects individual economic opportunities, but also hinders the overall 発達 of the global economy. The authors believe that the free flow of immigrants can significantly improve the efficiency of global resource allocation and promote economic growth and social progress.
Data and privacy issues: In the era of big data, personal data has become an important economic resource. However, most data is currently controlled by a few large companies, and individuals right to use and benefit from their own data is restricted. The authors propose that individuals should be given more data rights to achieve fairer data use and benefit distribution.
Market monopoly and lack of competition: Many industries have serious market monopoly problems, and large companies control the market through mergers and acquisitions, hindering fair competition and innovation. The authors believe that stricter antitrust policies are needed to break this monopoly and promote fair and healthy development of the market.

In response to these problems, this book provides some solutions, which can be summarized into five points:

Shared ownership: Weil and Posner suggest a system called Common Ownership Self-Assessed Tax (COST). This system would reduce monopolistic behavior and promote efficient use of resources by putting all assets in a state of continuous public auction through self-assessment and public pricing. This self-assessed tax is the so-called Harberger tax.
Voting reform: They proposed the quadratic voting method, which means that each citizen has a certain number of voting points in each vote, which can be distributed according to the importance of a certain issue. This can more accurately reflect the publics preference for different issues and avoid the opinions of the minority being ignored.
Immigration policy: The author suggests establishing a Labor Market Auction to determine the number and conditions of immigration through bidding. This method aims to more effectively utilize the economic potential of immigrants and promote the optimal allocation of global labor resources.
Data rights: The book also discusses the property rights of personal data, advocating for giving individuals ownership and control over their data to ensure that the use of data can truly benefit the creators of the data rather than just profiting from large technology companies.
Antitrust policy: They emphasize the need for stronger antitrust laws to prevent market monopoly and advocate for the dispersion of economic power of large corporations to promote fair competition and innovation.

It can be said that the economic model designed by Orb Land for Web3 personal consulting service scenarios refers to the first mechanism, namely the so-called shared ownership system combined with the self-assessed tax system, hereinafter referred to as the shared ownership system. So what is the shared ownership system and what is its effect?

The shared ownership system brings liquidity to assets through compulsory means, avoiding the unfair problems caused by monopoly

The shared ownership system is a social resource allocation system, and its system design mainly includes the following three aspects:

Self-assessment and public pricing: This system requires each asset owner to make a public self-assessment of the value of their assets. This includes all types of property, such as houses, land, business assets, etc. The price of this self-assessment is not only determined by the owner himself, but also public and anyone can see the price.
Continuous auction mechanism: At any time, anyone can buy the asset at the self-assessed price of the asset owner. This means that owners must set their assessment price very carefully, because if it is set too low, they may lose their property. At the same time, in order to prevent owners from circumventing potential transactions by overestimating the value of their assets, they will be required to pay a certain percentage of the self-assessed price. This tax can be 1% to 7% of the asset value, depending on the specific policy. This tax is also called the Harberger tax, inspired by the concept proposed by economist Arnold Harberger in the 1960s.
Tax purposes: The collected taxes will be used as public revenue to provide public services and infrastructure, or distributed to communities to support economic development. At the same time, this tax mechanism can replace or supplement traditional property taxes, thereby simplifying the tax system and increasing government fiscal revenue.

The above mechanism design brings several benefits. First, this mechanism can effectively reduce monopoly and waste of resources. Since all assets are continuously auctioned publicly, the behavior of monopolizing resources will be reduced, and the allocation of resources will be more efficient. In addition, people will use and develop their assets more actively because the cost of holding unused assets becomes higher. Secondly, it promotes economic liquidity. The public self-assessment asset pricing and continuous auction mechanism will promote market liquidity, allowing assets to be transferred more quickly and reducing market rigidity. At the same time, enterprises and individuals can more easily obtain resources, promote innovation and economic activities. Finally, it increases fairness and social welfare. The taxes collected through this system can be used for public projects and welfare, improving the overall quality of life of society. This method can help reduce extreme inequality in wealth and resources.

The potential impact of shared ownership on the Web3 world

Next, lets take a look at how Orb Land uses this concept to design a Web3 personal consulting service system. Simply put, some expert users can generate an NFT through Orb Land, and anyone who holds the NFT can consult its issuer. The NFT has a shared ownership mechanism. First, when a user purchases an NFT, he needs to set a public selling price, and others can buy the NFT at this price anytime and anywhere. Secondly, when holding the NFT, the holder needs to bear high Haberger taxes, thereby avoiding users from setting sky-high selling prices to avoid NFT transactions. All Haberger taxes and royalties from NFT transactions will belong to the issuer, and NFT holders have the ability to score the issuers answers.

The reason I want to design such a mechanism is that Orb Land wants to bring a continuous cash flow income to the experts who are NFT issuers, so as to ensure their motivation to actively output value answers. However, I think this does not make good use of the core advantages of the mechanism, because in this scenario, NFT carries the right to consult a certain expert user, but this is not a scarce resource, and it is difficult to grab monopoly profits through monopoly. For example, if you own the NFT issued by Vitalik, you can monopolize his right to speak, and he will become your exclusive consultant. No one else can receive any advice from him, which is obviously absurd! Therefore, the value of this model is not satisfactory in this use scenario, because it only hopes to promote the rapid circulation of NFTs through taxation and increase the income of issuers. Therefore, this mechanism is very unfriendly to holders. At the same time, if you only use this mechanism to discover the price of an asset, you will find that this efficiency will be much lower than pricing through free market policies, that is, pricing through supply and demand in the market.

So what is the potential impact of the shared ownership system on the Web3 world? Simply put, the mechanism is applicable where the problem caused by monopoly is the most serious. Here I will throw out a scenario, that is, the recent hot issue of high-valuation VC coins. The reason why high-valuation VC coins are a weapon for cutting retail investors is that the token economics design of most We 3 projects has led to the gradual evolution of an oligopoly market as VC Tokens are continuously unlocked. At the same time, VC has a clear advantage in terms of the amount of funds compared to retail investors. This gives VC the ability to set prices, so VC can raise the secondary market transaction price through high valuations, and then earn monopoly profits. The reason for the low circulation is that after all, there are limited retail investors who can take over the market and cannot take on the large-scale selling of VC in the short term. Therefore, in order to maintain profits. VC usually chooses to sell in a long-term way. In this scenario, it would be exciting if Web3 projects combined with the shared ownership system to redesign the token economic model! As for the specific plan, everyone is welcome to discuss it together.

This article is sourced from the internet: A Deeper Understanding of the Inspiration for Orb Land, a Platform Liked by Vitalik Buterin: Harberger Tax, Shared Ownership, and Antitrust

Related: Research report: Is BigTime able to survive to this day by relying on nesting dolls?

There are many different types of research reports on BigTime on the Internet. Gold players focus on output, merchants, and prices, while coin speculators pay more attention to trends, consumption, and popularity. What people prefer to see is which game can make money, is more popular, and has more benefits. This research report is more from the perspective of games, and explores the future development and solutions of blockchain games through the study of economic models. Before that, I would like to give my current analysis and views on blockchain games: the direction of most blockchain games may not be right, and Play to Earn may be a false proposition. Play is the top priority, Earn is just an addition, and Play and Earn is the development trend of blockchain…