The Lottery of Utopia & Economics

Our cultures stand in the way of utopian economies.

Our cultures stand in the way of utopian economies. You can have the brightest analytic minds conjuring logical plans, but economic ideas are bound to fail without a holistic approach.

But what the hell do I know? I’m not an economist.

As

Mike Sowden

from

Everything Is Amazing

tells us, you don’t need to be an expert to write about a topic.

Furthermore, economics is not a science. It doesn’t take an expert economist to get things right. In fact, it usually takes an expert economist to get things wrong.

1. Actively managed stock mutual funds (managers who ran 2,862 funds examined by S.&P) have performed even worse than a blindfolded monkey. Dow Jones Indices didn’t do as well as the hypothetical monkey (serial coin flipper), who beat them in several other tests, too.¹

2. Belgium didn’t have a government for over 15 months. Yet their economy somehow managed to outperform those of the UK, Germany, France, Italy, Spain, the Netherlands, Finland, and Switzerland in the last quarter of 2011.²

3. The Wall Street crash in 1929. Irving Fisher (an influential economist who developed theories that underpin our understanding of economics) claimed that “stock prices have reached ‘what looks like a permanently high plateau.’” Three days later, the entire US economy collapsed.³

4. The 2008 financial crisis. I’m pretty sure I don’t need to spill any ink on this one.

This list could go on forever, but the point is this: Economists are bereft of human understanding and brimming with unwarranted self-confidence sometimes get things wrong. Many economists are brilliant, benevolent beings willing to support my life’s project.

Economic theories are bound to rational models. Unfortunately, humans are far from rational. Like everyone else, economists aren’t immune to:

1. Confirmation bias: People tend to seek and interpret information in a way that confirms their existing beliefs and hypotheses. Yes, this is exactly what I fell victim to with those four points you just read.

2. Anchoring: Many economists anchor their predictions to previous forecasts or established economic models, even when these may not accurately reflect current conditions.

3. Groupthink: Economists often work in environments with shared beliefs and group dynamics that can reinforce certain viewpoints.

4. Subconscious decision-making. For example, just handing out hand sanitizer can cause people to make more conservative decisions.⁴

5. Loss Aversion: Economists, like many individuals, may exhibit loss aversion, a bias where they are more sensitive to potential losses than gains.

Now that we understand why economists are often wrong, let's explore economic theories that could create a utopia.

When I want to think about creating utopias, I turn to

The Elysian

by

Elle Griffin

. She leaves my heart brimming with optimism, but my mind spinning with counterarguments.

Although we share similar hopes and dreams for the world, I disagree with some ideas and approaches.

We don’t need to “degrow” the economy.

Griffen’s argument essentially goes like this: since companies can get more value from intangible assets (assets that are not physical, such as computer software, licences, trademarks, and patents) than from tangible assets (assets you can touch, such as food, books, medicine, and houses), we can continue to grow the economy without harming the environment.

Unfortunately, the ICT (Information Communication Technology) industry currently accounts for 2-3% of global emissions, and all analysts agree that ICT emissions will not be reduced without major concerted efforts involving broad political and industrial action.⁵

Streaming music results in higher carbon emissions than buying CDs,⁶ Bitcoin mining may be responsible for 65.4 megatonnes of CO₂ per year, which is comparable to country-level emissions in Greece,⁷ and although companies like Facebook, Google, Microsoft, and Apple are committed to achieving net zero, they’re all contributors to e-waste.⁸

Proponents of economic growth will argue that once we have more clean energy and better recycling programs, none of this will be a problem. But when a company’s priority is to deliver profits, even the so-called green companies become destructive and corrupt.

Wind energy and recycling companies have been part of corruption scandals around the world.⁹¹⁰¹¹ ¹² Governments in sunny countries like Spain discourage their citizens from installing home solar panels to instead deliver profits for solar farms.¹³ And many countries refuse to use more nuclear power because it’s too expensive.

But let’s return to these intangible assets.

To the regular citizen, hedge funds seem shadowy and strange—partly because they control many intangible assets we can’t see or touch. These massive investment firms manage close to $2.2 trillion.

Because hedge funds deal only with the sophisticated investor, they have almost no restrictions on what they can invest in or how they can invest, short of breaking the law…

…They do it by hiring the best and the brightest. Some have more PhDs than many college math or economics departments.

They do it by trying to know everything about whatever they are trading. A country has laws making it illegal to run polls the week prior to elections? No problem. Hedge funds will hire their own pollsters for private polls.

— Chris Arnade¹⁴

Many of these hedge funds rely on high-frequency trading (HFTs). HFTs contribute to market volatility as they respond rapidly to price changes and can exacerbate fluctuations, potentially leading to "flash crashes.” They also lead to market fragmentation, where liquidity is spread across various trading platforms and dark pools, making it harder to gauge true market conditions. HFTs also have an unfair advantage because of their high-speed access to market data.

In other words, they ruined the little integrity the stock market world had. They have the intangible assets that pull the strings.

I believe we should spend more time on experiences and art, but when we move our economy away from tangible goods to intangible goods, those experiences and art become digitalized and commodified. We turn to our phones, which make us (arguably) stupider, less social, more forgetful, more prone to addiction, sleepless and depressed.¹⁵

Of course, I make my living (or lack thereof) online, so I plan to find ways to combine the online world with the physical. This is why I’m so impressed by writers like

Lloyd Miner

, who organizes writing workshops in person;

Chris Arnade

, who shows us the beauty of exploring the world through slow travel;

Renée Eli, Ph.D.

, who gets us out of our comfort zone and helps us return to mother earth; and

Poetic Outlaws

, who shares poetry that brings meaning back to human experience.

Honestly, the list of Substackians creating a better internet is endless. The internet and the physical world can work together if profit isn’t the priority. We must crave knowledge and understanding over information, community over followers, and diversity over echo chambers.

Alright, but how the hell do we do that?

In This Changes Everything—Capitalism vs. the Climate, Naomi Klein (known for The Shock Doctrine and No Logo) confronts our economic model's battle against life on Earth. Contrary to what we've been told, we can transition from fossil fuels by challenging corporate power, revitalizing local economies, and reclaiming our democracies.

Like Klein and

Elle Griffin

, I’m not advocating for degrowth and completely dismantling capitalism. We need Green Growth, a model that seeks to decouple economic growth from environmental degradation by prioritizing renewable energy, resource efficiency, and community well-being.

It’s time we stopped defining growth through Gross Domestic Product (GDP), which is often driven by unsustainable practices such as fossil fuel consumption and consumerism. Growth should mean more sustainability, equity, and community well-being.

We need to eliminate the neoliberal economic model, which prioritizes deregulation, privatization, and free-market capitalism. As

Elle Griffin

points out in her article, “An alternative to 'tax the rich,” it’s not necessarily wealth that’s the problem, but its distribution.

Inequality is bad and getting worse. In the 1980s, the richest 10% of the population in OECD countries earned 7 times more than the poorest 10%. They now earn nearly ten times more. When you include property and other forms of wealth, the situation is even worse: in 2012, the richest 10% controlled half of all total household wealth and the wealthiest 1% held 18%, compared to only 3% for the poorest 40%.

—OECD¹⁶

On top of that, CEO pay has skyrocketed by 1,460% since 1978¹⁷ and CEOs were paid 344 times as much as a typical worker in 2022.¹⁸

Should someone who works twice as hard make twice as much? Sometimes. Should someone who is twice as smart make twice as much? Depends on your definition of intelligence.

Either way, working 344 times more or being 344 times more intelligent than your average employee is impossible. Hell, it’s impossible to work five times as hard as your average employee.

Obviously, we don’t live in systems with much merit and equality. Social democracies can fix that if coupled with cultural change. The Nordic countries that implement social democracy have the highest life satisfaction, the least poverty, and the most human freedom—all of which I detail in Debunking Chomsky’s Simplistic Narratives About The War in Ukraine.

How could these bitterly cold countries with prices so high that I’d need to take out a loan for a beer be so happy?

The reason is deeper than regulations. It’s the culture of lagom, the idea of just the right amount, moderation, and balance. Yes, it’s Swedish—I’m not trying to throw Scandinavia into one cultural pool—but the word lagom comes from folk etymology in a phrase used in Viking times: “laget om” – meaning ‘around to the group’ – allegedly used to describe just how much mead or soup one should drink when passing the bowl around in the group.¹⁹

Although their culture gives egalitarian laws and regulations a chance, these places are far from utopian. Let’s take a quick look at some quotes from Michael Booth’s “Dark Lands: The Grim Truth Behind the 'Scandinavian Miracle’” published in the Guardian.

Take the Danes, for instance. True, they claim to be the happiest people in the world, but why is there no mention of the fact that they are second only to Iceland when it comes to consuming antidepressants?

The Danes also have the highest level of private debt in the world.

The proportion of people below the poverty line has doubled over the last decade. Denmark is becoming a nation divided, essentially, between the places which have a branch of Sticks'n'Sushi (Copenhagen) and the rest. Denmark's provinces have become a social dumping ground for non-western immigrants, the elderly, the unemployed and the unemployable.

Though 2013 saw a record number of asylum applications to Norway, it granted asylum to fewer than half of them.

Finland ranks third in global gun ownership, behind only America and Yemen, and has the highest murder rate in Western Europe.

The list keeps going. But let’s look on the bright side—high taxes!

Huh?

Here comes the number games.

Scandinavian countries typically have a value-added tax (VAT) system instead of a traditional sales tax. There’s all different, but here’s the average.

1. Standard rate (most non-essential items): 25%

2. Reduced rate (for essential goods and services—food, medical supplies, and public transportation): 12%

3. Zero rate (for certain goods and services): 0%

However, my utopia would look like this.

1. Standard rate (most non-essential items): 15%

2. Reduced rate (for essential goods and services): 5%

3. Luxury rate (any brand that charges over 3 times the average for that same good or service): 50%.

Look, if your self-esteem is low enough to pay $500 for a t-shirt because of the logo, then I want to help you. You’ll feel so much better about yourself knowing that money went to helping others.

And I know some fellow nomads want a world that only has a sales tax so they can support the countries where they are temporarily living without paying income tax—that’s called a tax haven. They’re great for corrupt officials, drug dealers, cybercriminals, terrorist financiers, human traffickers, and libertarians. But they suck for the poor. Why the hell should someone struggling to make ends meet pay $3.20 for a Coca-Cola (Bermuda prices) so a rich criminal can avoid their income tax?

So yes, we need income tax in a utopia.

Creating an average sliding tax scale for Scandinavian countries requires some generalizations, as tax systems can vary significantly among these countries. However, I—okay, fine, ChatGPT—created an average sliding scale based on their progressive tax systems.

1. Up to $20,000: 10%

2. $20,001 - $40,000: 20%

3. $40,001 - $60,000: 30%

4. $60,001 - $100,000: 40%

5. $100,001 - $200,000: 50%

6. Over $200,000: 55%

• Individuals with incomes up to $20,000 pay a 10% tax rate on their total income.

• Those earning between $20,001 and $40,000 pay a 20% tax rate on the portion of their income that falls within this bracket.

• The pattern continues for higher income brackets, with each bracket paying a higher tax percentage on the income within that bracket.

Except, this isn’t that utopian. The psychopathic hoarding billionaires are still bending us all over with this system.

So, like those in the treasury department, I pulled some outdated percentages out of ass—but my numbers don’t benefit the ultra-rich.

1. Up to $20,000: 10%

2. $20,001 - $40,000: 15%

3. $40,001 - $60,000: 20%

4. $60,001 - $100,000: 30%

5. $100,001 - $200,000: 40%

6. $200,000 - $300,000: 50%

7. Over $400,000: 95%

Do you want a system based on merit? There ya go. Let’s say the average employee makes $60,000 working 32 hours a week—I should mention that 32-hour work weeks are the norm in this utopia based on the higher productivity success stories from the four-day workweek experiments²⁰.

Look, a CEO can still make seven times as much as the average person. And since it’s impossible to work seven times as hard (that means you work 32 hours a day), this system is still not 100% fair or based on merit. But it’s a start.

Okay, so what about stocks, property, and so on? Isn’t that where a billionaire’s money is anyway?

Yup, that’s why nobody can have more than three lifetimes’ worth of an average employee’s salary in the bank, stocks, bonds, property or anything else that contributes to their net worth. The average lifespan is 73. Let’s round that up to 80 since it keeps going up. 80 (years) x 60 000 (average annual income) x 3 (lifetimes) = $14 400 000.

14 400 000 dollars! Nobody should ever want that amount of money. But why three lifetimes? Well, based on the $60,000, Elon Musk has enough for 312,500 lifetimes, so moving it down to one seemed a bit drastic.

I know we should stop reducing human lives to number games, but I’m playing the economist here. So, let’s continue.

These numbers would change with inflation (It’s October 2023 as I write this). By the way, I’m basing it on USD because it’s the most globally understood currency.

I’m not suggesting a one-currency world. However, I’d suggest an international law that requires all countries that want to trade to use wage indexation.

Indexation means adjusting a price, wage, or other value based on changes in another price or composite indicator of prices. It can be used to adjust for the effects of inflation, cost of living, or input prices over time, or to adjust for different prices and costs in different geographic areas.

When considering wages in both the public and private sectors, only Luxembourg, Belgium, Cyprus, and Malta have implemented some degree of automatic indexation. In Luxembourg and Belgium, this system grants a proportional wage increase that entirely offsets the effects of inflation.

But that will increase the deficit!

Yes, but I imagine a utopian economy where billionaires are taxed billions like us thousandaires are taxed thousands. The government will have more than enough money for indexation and social programs.

But let’s be a little less dreamy for a second and look at the nightmare we live in now.

Nolan, stop being a downer. Listen to new enlightenment thinkers to see how much we’ve improved.

I have, and we need people like Steven Pinker to see how far we’ve come, but to create a better world, we must think about how far we still need to go. 47% of human beings live on $6.85 a day,²¹ so those in developed nations—including the Nordic ones—can exploit resources to get cheaper stuff.

Oh, come on, at least we’re not filling arenas to watch people die these days. You’re right; thanks to

Erik Hoel

, I found out we’re doing that online now.²²

Let’s return to my utopia.

When the government spends more money than it receives, it should be weighed against the size of the economy. Modern Monetary Theory (MMT) proponents say, “There are no constraints on the federal budget.”²³ You can learn more about MMT by clicking the footnote link, but some of the key points are as follows:

1. MMT argues that the primary concern for governments should not be balancing budgets but ensuring full employment and price stability.

2. MMT suggests that budget deficits (government spending exceeding revenue) are not inherently bad and can be necessary to stimulate economic growth.

3. MMT proposes a Job Guarantee program where the government acts as an "employer of last resort," providing employment opportunities to anyone willing and able to work at a fixed wage.

4. MMT acknowledges the risk of inflation but argues that it can be managed through taxation, hence taxing billionaires billions.

But does it work? Nobody knows! That’s why expert economists often get things wrong.

What I do know is that there’s a better chance for MMT to create an economic utopia than the greedy scumbags who push the trickle-down effect (tax breaks and benefits for corporations, so the money “trickles down” to everyone else).

Look, I know this might never happen. I’m just having fun learning about tax systems and creating a utopia in my head. What we really need is a worldwide cultural change. Stop the rampant individualism and a craving for more stuff, speed, and convenience festering across the globe. You can have all the social democracy regulations you want, but if the culture is full of people pursuing self-interest, you get corruption.

We need cultural change. For that, we need artists and influential people—those in power know that.

Many pop stars are just mass hallucinations orchestrated by corporate greed and clever marketing tactics. Stop celebrating people with a lifestyle that would take 12.9 earths to sustain²⁴ if we copied them. They plant the seeds with formulaic structures, let the roots take hold by supporting social movements that don’t dismantle power structures, and let the vines grow to monstrous sizes, blocking the view of the wasteland created by the consumerist hell they endorse.

Celebrities have a responsibility to lead by example, but some of these people aren’t leaders; they’re puppets with influence. Buying 20 million dollar homes with 5-car garages and flying in private jets is not the example we need. It’s the exact opposite.

We need real artists, people brave enough to stand up to the system that is making us sick. We need artists who burn the masks of materialism, not those who wear and decorate them with hubris. We need artists who overwhelm us with the truth, confront us with the uncomfortable, and submerge us in the sublime.

We need artists willing to shape the culture instead of being shaped by the culture. We need people to shake us at our core so we become the change we want to see. Then, and only then, will we have a chance at creating a utopia.

Then again, what the hell do I know? One man’s utopia is another man’s dystopia.

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