If It Is Broken, Fix It

Transcript

okay awesome uh great to be here let's see oh too fast okay cool awesome before I begin I want to give a big thanks to the edcon team uh the organizing team everyone who's participating in this event I know it's not easy easy to organize events like this and so I I applaud you all thank you thank you big round of applause for everyone who's organizing events this team it's great um yeah like uh like my friend mentioned so a little bit about me I'm Skyler I work on I work with the ethereum foundation specifically I work on the Devcon team uh so Devcon is the the ethereum developers conference that the ethereum foundation puts on last year it happened in Bogota and the next one will be next year in Southeast Asia in a yet

to be announced location uh towards the end of next year so hope to see you all there or if not there our team also leads the uh uh the event called Dev connect which is a week of ethereum uh events independent ethereum events all focused around specific topics so like Mev day later two days uh things like that that will happen this year in Istanbul who hears from Istanbul anyone okay got a few got a few hands um in November of 2023 so hope to see you all at devconnect and or Devcon uh and hopefully both but today we're not going to talk about events we're going to talk about uh the title of my talk is if it's broken fix it this is a

departure from my normal talks around like proof of stake first proof of work and Roll-Ups and things like that uh to something a little bit more I don't know high level um I think it's relevant to anyone in this room who is a terrestrial being living in the society uh or who's a digital Nomad uh visiting or living in foreign countries or who is working on the future of autonomous worlds or Virtual Worlds or digital reality or things like that um but uh quick quick pull of hands how many of us here work remotely how many work remotely so quite a few of us quite a few of us work remotely many of us no matter around to different countries staying for a month or more in places uh we some of us have moved to foreign

countries where they're cheaper Maybe uh from where you have originally uh where you're originally from and some of us work remotely while living in a lower cost of living country and are earning higher than average salaries for your region I think this is actually like a big benefit of crypto I think I think the big benefit is that it's a remote first industry it is and I think it was it is the first truly worldwide industry uh what's an important part of hiring people it's paying them and until crypto paying internationally was a nightmare and so now with crypto we have one big benefit which is the ability to move to maybe to to Regions where cost of living is lower your salary is considered high or vice versa a bigger benefit in my

mind is locals in regions where cost of living is lower can now get jobs remotely from companies based and other places that pay higher than their average salary uh in both cases what's happening is more money is moving out of regions that might have more money into Regions that have less money and I think this is a leveling of the playing field globally and I think it's one big benefit that crypto can bring to to the world uh but is it all roses and sunshine I ask uh because some might might disagree so Kami here is my friend uh also in the crypto space and this tweets came out just uh less than a month ago uh it said Colombians and meditation are increasingly getting

priced out of their own city as a result of digital Nomads moving here and and staying long term uh everything is too expensive digital Nomads temporary colonizers gentrifiers go home it says a lot of foreigners are staying here long term because it's cheap if you're converting USD but it's destroying the local economy undoubtedly tourism is good for the country but when it turns to foreigners taking apartments and houses from locals that's where it becomes bad so how can we coordinate wealth redistribution from foreigners to locals when they visit the country and I would say what's the problem here the problem here is foreigners are our digital Nomads are entering a country that's become nicer because of the people there and they're increasing the value that's being brought into that country and in turn what's happening is rents are rising prices are rising and

so what's the proposed solution well one solution she mentions here which I saw otherwear elsewhere in the thread is I think the solution is foreigners should stay in hotels when they visit the key problem is they're driving up housing costs because foreigners are renting incentivizing airbnbs that take housing away from locals other proposals are that we should limit foreign investments into these regions we should limit foreign presence into these regions we should just not allow digital Nomads to stay longer in certain places and in my opinion both options are worse in in these cases we're bringing or these digital Nomads are bringing foreign money into the country and and that's arguably a good thing internet and the crypto the internet and crypto in combination in many ways levels the playing field globally allowing people

who are in a certain region to work remotely and receive an a salary that's higher than average is arguably leveling this playing field globally so what's the problem the problem here is that rents are rising because this value these values are increasing right and the cafes the restaurants the services that exist in these areas like medicine but all over the world they receive some of the money they receive some of the money but who do all of them have to pay at the end of the day all of them at the end of the day have to pay landlords and so with more money coming in rents are rising the landlords say oh you make more money well that's great now you can pay more rent and what option do you have you don't have much because more wealth is

flowing in all around that region and higher rents are landlords all around the region can start to charge higher rents so here we have a situation where the people the society are the ones making the city nicer they're making it safer they're making nice restaurants they're creating nice shops they're paying taxes which contribute to a good Metro cleaner air nice Parks the people in the society are the ones that are making this region nicer but ultimately they don't the wealth they don't reap the benefit from the society increasing in in value who reaps the wealth the landlords do and so what's the problem here is I would argue many others the problem is land speculation and so

here's a quote from a sign that was created a long time ago it says uh everybody works but the vacant lot I paid 3 600 for this lot and I will hold till I get six thousand dollars the profit is unearned increment made possible by the presence of this community and Enterprise of its people I take the profit without earning it for the remedy read Henry George and so the problem here argued by many is that the problem is really land speculation if we think about land land no one person created land no one person is making its value increase uh in the case of land many times nature created it and made its value uh created its value so it's either land located next to a beach it's

land on a hill with a good view it's land sitting on lots of oil rich with natural resources or in other cases Society made this land increase in value Society he created nice restaurants Society paid the taxes for the Metro that made that land nicer Society pays for the police force local artesians have come to this area and made it more enjoyable to live there created public Parts Etc so like this land that's 2.5 million dollar empty lot in San Francisco this is not valuable because the landowner did anything with this lot it's an empty lot why is this land valuable it's valuable because of everything that exists around that land everything that exists that the society has created around that plot of land but the landlord gets to reap all of that

benefit by owning this land and so we we live in a world where one type of person benefits it's the landlord and so here we enter an economic theory called georgism uh georgiaism basically states that land speculation is near the roots of inequality near the root to the cause of inequality the root flaw is essentially that you can buy an empty piece of land say this nice piece of land in this downtown made-up City by mid-journey and you can do nothing but wait for society to make that land more valuable in the future you sell that land for more thanks to nothing you did rather stealing the wealth generated by Society or in other words enslaving Society to work for you and so here we have land speculation like that's the

incentivization to buy an empty plot of land hold it do nothing wait for society to make it more valuable and then sell later on so you have uh and you have extra money why would you spend that money improving the land like building housing to me to meet the demand so that housing prices lower around the world when you can go buy another piece of land and hold it for longer to make even more money so this is the flaw with land speculation and the argument why it's the root cause of a lot of inequality so what's the solution the solution many georgiaists argue is a land value tax so there's two parts of property in here the land value tax differentiates land assets from improvements to that land so you have the raw land and you have

improvements to that land improvements to that land can be things like houses like apartment complexes like hotels or like this conference center or gymnasium that we're sitting in today those are all improvements to the land as would be like mining the oil or farming a piece of land uh and a land value tax is different than property tax property taxes tax both land and improvements so property tax actually are perversely like they they punish you for building stuff for for improving the land for creating more housing and they reward you for keeping the land vacant so in many ways property tax have perverse incentives to incentivize more empty

lots around the world rather than creating and improving land so they can be used and uh so land value tax basically is a heavily tax on squatting on the land uh with land value tax you are 100 the owner of the improvements that you do on top of that land which won't be taxed which incentives incentivizes the more productive use of the land incentivizes using it productively to build things like housing and so some of you might be sitting here saying like oh tax is gross like like but wait but wait this tax is a little bit different it's a little bit more unique uh so many proponents of this also argue that this tax should be distributed in the form of Ubi back to all of its constituents and so this kind

of helps close the loop of the value creation cycle so Society the land the society the people in this world are the ones making land more valuable they're the ones increasing the values of these lands and instead of the landowner reaping all of the benefit of that instead of landowners reaping the value The increased value this value is then taxed and then redistributed back to society in the form of a Ubi so it's quite an interesting concept and this tax is also unique in some other in some other forms so the first one is with this tax there would be outcome there would be no deadweight loss so dead weight loss when you're talking about taxes is basically the concept if you want less of something tax it so in the case of let's say cigarette direct taxes

like when you when the government taxes cigarettes what happens is that the cigarettes producers end up having to produce some some marginal producer of cigarettes ends up being unprofitable and then there's less cigarettes that are created and therefore the prices increase and so you end up getting less taxes on you you end up getting less cigarette sales same with sales tax if you increase sales tax you get Less sales same with income tax or labor tax you end up getting less labor but but in those all those cases the the supply of this asset is is fluctuating you can so you can change the supply of labor you can change the supplies of cigarettes but with land you can't change the supply of land land is fixed and so when you tax land value you don't get less land you don't get less demand you get

less land speculation so this is one of the algorithms for this tax is that there's no deadweight loss with implementing a land value tax uh there's also incentivization a more efficient use of land so we want land value taxes to cause it to be cheap to buy and use land but expensive to squat and not use the land uh if we remind if we remember back to the issue with Medellin the rising rents was an issue blamed on the nomads but now Nomads can visit the city spend their money increase the value of the land uh increase the values all around and the benefit instead of being robbed by the landlord gets redistributed in the form of Ubi to the to the to the society and the landlords who create things on top of their lands

like our apartment buildings and airbnbs should indeed be rewarded to that and they would be in this system another thing you get is you get goodbye nimbyism hello yimbiism so nimbyism is not in my backyard and yumbism is yes in my backyard in many cases today if you own a house and they're going to expand a highway behind your house you're incentivized to say please don't do that not in my backyard that's going to decrease the value of my land but in this new system with a land value tax you might say okay you can increase you can increase the width of that Highway it will decrease the value of my land but that's also going to decrease the value of my land value tax and so I end up paying less in land value tax and I end up saying yes in my backyard so

there are some interesting benefits with this unique aspects of this particular tax but you might be asking what does this have to do with crypto like why or why are we talking about this here I'd say for one we're all terrestrial beings living in society and so I think we all hope that the future looks better than the past and uh and I think this is one way in which we can get there more specifically a lot of us are nomads are we really benefiting local economies by nomading to various regions we are after all bringing wealth from other regions right well I would say the reality is like although we have a small impact on local businesses in the long run the ones who really reap the benefits of our presence and increase economic activity are the you guessed it landlords I don't

think we should stop long-term nomading like some people suggest I don't think we should stop the hiring of remote workers across the world locals being able to work remotely and increasing their salaries good but I do think that if we really want our digital nomading to bring our bringing of foreign wealth into new regions to help those in the local Society who really deserve it and not just enrich the landlords more we need to encourage more policies that incorporate land value tax around the world but many argue that this would be really hard this is maybe too late in the real world to do many landlords feel like they have the ownership they have the right to keep extracting this value in land value so and while I agree it would be hard I do not think it's impossible I think it's something that we can help support and increasing the

knowledge around this theory is I think one part of it but if it's broken in the real world at least we can fix it in Virtual Worlds and so like I mentioned in the beginning I'm a big believer that the future of in the future Virtual Worlds autonomous worlds digital reality metaverse whatever you want to call it will become ever more important in in our world and so as we're creating these new worlds which we are at and we have the opportunity right now to avoid making the same mistakes that are real in in our real world uh so one one such one such topic is autonomous worlds it's it's a one dimension here's our world is a container for entities and coherent enough internal rule sets about how they how they behave when a system of

entities and rules Comes Alive it becomes a world uh there's this group called Xerox park that's working on autonomous worlds and helping making it easier to create them on top of ethereum uh and if you want to scan that QR code that'll bring you to check that out which I think is really cool but with Virtual Worlds we have something super unique we have for one the opportunity to recreate things from scratch so we can start from the beginning uh and that's super powerful and two we have a lot of new abilities and opportunities in the physical world a policy maker who would Implement land value tax is more like a politician or a bureaucrat they can only do so much but in the digital world a game designer is more like a god they have complete control over over everything in that in that system and

you can start creating things um yeah you have a lot more power and so um I ask I guess though are we heading is this the direction we're heading in are we actually going to make these digital worlds uh better than the real life and so this is a quote from palenia many of us follow uh just earlier this month he says we have plenty of metaverse projects and crypto offering virtual real estate for sales the problem is they are missing storytelling and culture what gives virtual land value is narrative Collective lore customizability Etc targeted at crypto native people so I disagree I think the problem these projects are heading for is if they don't Implement land value tax or something something adjacent to to some of these theories then they're going to run into a housing crisis a

virtual housing crisis and here in The Game of Life real life we don't really have much of an option to participate or not but in Virtual life in virtual games we have an option to participate and if your participants if game players enter the game and it's unfair for people who have entered late because people who entered early already bought up all of the land have already speculated in all the land then it's not fun to play and people end up not playing your game and so I think that this is I think we're we're risking not heading down the right direction with virtual reality and gaming and metaverse and that this is something we should consider here's another article like buying like buying on Fifth Avenue back in the 1800s Executives behind the huge metaverse land deals say swelling valuations reflect big plans for the

virtual space I think these rolling valuations are going to reflect a big housing crisis in the future a big land crisis in the future and a game that's not fun to play long term and so I think these these people should reconsider this game and at least consider implementing something along this along the lines of land value tax and and other things so I think another important thing to mention is that this applies to more than just digital land so you're creating a game you're playing a game uh you might not think you have digital land in there but you might have assets that are very land like so for instance land it might be in Final Fantasy Land is the example in in Star Wars Galaxies dungeons is actually the most landlike and in Eve online spaceships are the most land-like uh and there might be instances where it's not

even a game where these things actually apply to digital assets that aren't necessarily a part of a game per se so ens ethereum name service like your skyler.eath or or name that eth if you squint hard enough digital domain names have many similar characteristics to property and actually if you have read vitalik's proposal to ens from September of 2022 so just last year there were many references to land value tax another interesting opportunity might be ai ai after all right is Created from common knowledge should one entity be able to reap the benefits of an Internet of information created by Society could georgeism or land value taxes or something adjacent to be used for

inspiration to redistribute this value back to society Maybe so this slide here is just to illustrate that there are solutions for assessing land value tax things like more of the interesting things maybe like some of the crypto folks here are more aware of are like harburger taxes or modified Harbor taxes or in games specifically blood taxes are quite interesting and if you really want to dive deep there's an article here that's super useful that I'll share again at the end but the message here basically in our digital world we have a lot more opportunity for identifying um land value tax and having people pay that and at the end here I want to just highlight the takeaways so why is rent so damn High Why is it so high in medicine it's not because of the digital Nomads and we shouldn't limit the

digital Nomads in the foreign investment and the leveling of the playing field worldwide the problem is land speculation we should learn about land value tax we should learn about georgiaism and if not implemented exactly how how specified there I think there's a lot we can learn uh and lastly virtual housing crisis virtual housing crisis are possible and likely unless we plan ahead so as we're building the future of our Virtual Worlds we should think about uh about land speculation and and the negative externalities that come from that uh and so if you're building autonomous worlds or games you should research more about land value taxes and and georgiaism and here are some good resources so the top is a book review by Lars Doucet which inspired

this talk a lot and you can scan that QR code to read that book review um and the second article is on game design with land value tax there's also a podcast in there with vitalik and Lars Doucette and the third one is a link to autonomous worlds if you want to learn more about autonomous worlds and if you want these slides just shoot me a DM on Twitter I'm Skyler underscore eth and yeah at the end I think we hear our very future focused crowd we believe the future can be better than the past but we're only going to get there uh uh if we I think I think land value taxes and georgiaism if not directly applied are very relevant in both the creation of future physical worlds and future digital worlds so hopefully this was informative and hopefully some of you go

on to research a little bit more about this and share this in your communities and my time's up so thank you all [Music]