Harberger Taxes + Crypto: Abundance Through Scarcity with Graven Prest

Transcript

topic that I strangely happen to know something about. Like so many weird regulations out there. I'm uh curious like why are you excited about them? Well, that's what the talk will be all about. But um I think honestly we can change the world with these things. Um there's you've heard of them because there's been a lot of nerds for a lot for a while that have been really excited about this and we're just now getting more into experimentation and seeing what they can do in the world and it's just exciting. I want everyone to know about it. All just all from this random tax.

That's super cool. Uh yeah, I can't wait to, you know, while we're just waiting for uh Justin, give me Yep. Okay, fantastic. Let's get started. Cheers. All right. Hello everyone. Thank you for being here today at ETH Denver coming to my talk. I know uh Bology and Kevin Awaukee are talking at Shelling Point. So that's a tough competition. I appreciate you being here. Maybe you didn't get a ticket to Shelling Point, but I'll still try to make your time worth it here. Um, since I'm not a bology, you might not know who I am. I'll just introduce myself by saying that I am a public goods maxi. Um, I'm an optimist. I believe that one day we can live in a

world that looks like that or at least representative of that where we have fantastic technology, humans, nature, all that coming together to live harmoniously. Um it won't be utopia but it can be protopia. That's a better term that I like. We can progress towards something better if we can work together and apply the right systems. One of the secrets that I believe to uh realizing this future is accepting this truth that digital scarcity is good. Um clearly the goal isn't to create scarcity everywhere. That's not what that last picture was all about. Um and I know that that's a caricature of

crypto in general. Uh we just take something free like a JPEG, slap some artificial scarcity on it, and I'm going to be rich, not you. I'm going to leave the rest of the world behind. Right? That's that's the crypto caricature. Um, but there are things in the world that are inherently scarce um or derive meaning from being scarce. We can create an emotion. We can make a connection with something because it's scarce. But then there's also practical things out in the world where scarcity is needed. Um, our brains, our attention spans are limited and the internet is full of things that infinite possibilities and somehow somewhere in that information pipeline we need to narrow it down so

that we can comprehend it. In web 2, what we did was trust an algorithm, right? We said, "Yeah, figure it out for me. Tell me what's important to me." We do it all the time. Social media, Google search, all of that. And ah, did that work? Is that producing the results we want? I don't know. In web 3, we have a new opportunity. We can start to design things purposefully. We can embrace scarcity in places where it makes sense and hopefully channel it into a better way.

And so ultimately, this is how I see it. I believe that yes, the goal isn't to create scarcity everywhere. It's actually the opposite. It's abundance. But this is the universe. It's life. You must find balance. You got to embrace the fact that some places there will be scarcity. And instead of wishing it away, embrace it and find a way to create more of that abundance. And this is where I believe harbor taxes come in. There's a lot of confusing terminology, competing nomenclature for what harbor taxes should be called.

partial common ownership, salsa, cost, depreciating licenses, all sorts of names. But regardless of what you call it, I do think it's a superhero. So, this mean this meme has a double meaning. There's some awesome stuff we can do with Harbor Taxes. So, what are they? Um, well, some of you might have heard of them. Um, Vitalic tweets about them every once in a while. That's why so many nerds are excited about it. Um, and it it really got reinvigorated by a book radical markets came out in 2018. Um, but the roots of this idea go way way back to Henry George in the late 1800s.

So what are they? Um, harbor taxes are a way to efficiently and productively allocate scarce goods. Another name for that is property rights, a property rights system. And if you disagree with everything else that I say the rest of this presentation, if you can just walk away with one point, it's that there are other forms of property rights that if you live here in the United States, it's dominant around the world. Private property rights. You don't even think that you can design something different, but you can.

And so Harbor taxes are one of the most amazing ones, one of the most exciting ones and maybe the most efficient way that I know of to allocate scarce resources. And how it works is a possessor of a scarce asset must set an always for sale price for their assets. Uh that always for sale price is public, meaning someone can come buy it from you um based off that price. The second rule is that you must also pay a proportional fee based off that for sale price.

There's no way around it. That's if you don't pay your your fee or your tax, you lose the asset. So, let's think about what this actually does, the dynamic that this creates. When you sell something, right, you want to sell it for the most amount of money possible. This this is normal. This is what we do in private property rights. But there's no negotiation in a hardware tax system. So, even more important, you're going to want to set the highest price possible. There's no negotiation. Someone can call you call you on it at any time. You want to feel like you sold it for a good amount of money, but that's not left unchecked.

With that second rule, you're paying the ongoing fee. No one likes paying too much. Even if you like paying too much, you can't continue to do it because your bank account's going to run dry. So, there's a nice balancing force there. And the outcome for this is back to the balance, right? Um there's all sorts of e economic jargon and math to prove this, but the outcome is if you have an appropriate fee rate, the dominant strategy, the winning strategy in the market is to be honest about your self-assessed valuation of your asset.

So there's no games being played. Just be honest and and be productive. you can't just sit on assets, squat on them, and withhold them from the rest of the market. So, uh, you start to get a more productive market, honesty, and you start to see some really beautiful things. Um, if that was the end of the story, that would be a worldchanging idea. Economies are made or uh you make or break economies through the allocation of scarce resources. But that's not all. With hardware taxes, we have this other mechanism. We collect these funds and what should they be used for? Public goods, right? Things that we all share

and all benefit from. And if we do that, especially on blockchains, we have quadratic funding, retroactive public goods, all these amazing ideas to fund and and create more with public goods. We need funding mechanisms for that. And I think Harbor Taxes is one of the most exciting So hopefully you're getting excited about what what these can be used for. Um and the next question is where can you apply these? The the canonical example in this going way back to Henry George is land. Uh humans have needed it to live to produce to to exist and thrive. Um as we move more of our lives online um you can yeah have metaverse

land. I work on a project that does some of that, but there's other forms of land when you live on the internet. Could be your your name. Um, it could be real estate on on a web page. Um, ads or some sort of privileged position in a system. That's like real estate. It's like land. But to take it back to what I talked about earlier, um, harbor taxes are perfect for allocating scarce resources. So think any system where there's some scarcity that's inherent or needed for it to function well harburger taxes are a great candidate for managing that that point in the system.

So if these are so great why why do maybe most of you not even know what harbor taxes are? Why don't we have them implemented everywhere yet? Say we're working on it. But there's kind of been three reasons that I'm going to walk through and try to convince you that we can overcome these and actually start to see hardware attacks take over. First is technical. This idea came around in 1879 with Henry George. I mentioned him a couple times now. He wrote a book called um uh uh progress in poverty. And uh it sold millions of copies. It was like up there with the Bible uh with top sellers back in the day. People were super excited about it. But to actually implement his version of the idea um

there wasn't a self assessed mechanism. So he was trying to create an administrative mechanism to do that. It's too expensive, too hard, didn't have the technology. In 1962, Arnold Harber, the namesake for what we're calling harbor taxes today, um uh gave a speech where he talked more about like using self- assess mechanisms. Um there are other people that used uh had proposed that and used it in different forms but I guess he got the namesake. And then only finally in 2015 um we got smart contracts and I believe smart contracts are the perfect substrate to try to implement these things at global scale with minimal administrative overhead. There's also

the bonus that it's really hard to move from one form of property rights to another one especially when it's kind of unproven. Blockchains, smart contracts also gave us the ability to create new assets so we can experiment and people have been [clears throat] uh the first harbor asset on chain was probably Simon de la Ruvier's this artwork is always on sale in 2019. Um it's a really cool conceptual art project. Um you should check that out. Um other people building in the space Nifty Apes is doing some things with loans. fuel gnomomen which you can't really see on the slide there is doing like a ens with with harbor taxes and then the project I work on the geo web we're trying to use it for creating

consensus for geospatial augmented reality and finally there's a group within radical exchange radical exchange is the nonprofit that spun off of the book uh radical markets there's a group there that's trying to develop standards smart contracts reusable things so that other people can apply this idea on the blockchain Second challenge, [snorts] education and understanding. Um, when was the last time you thought about investment efficiency, allocative efficiency? For the normal person, the answer is never, right? So, it's hard to have an intuition about this sort of thing until you start to use these. And so, uh, most people kind of hear this idea,

maybe it's kind of cool, but they're afraid that the rich are going to take everything, right? They're going to buy it all up and they're going to hoard it. I have one news flash for you. Rich people already do own a lot of stuff and there's zero checks and well, not zero, there's not effective checks and balances on them withholding productive assets and things from the rest that people could use more effectively. And the second, and this is this isn't the whole story, but even just say the rich did buy up everything, they'd have to set a really high self-assessed price. They'd pay a bunch of fees and we'd get more public goods. That wouldn't be so bad if everyone if they were paying their fair share, right? There's no tax loopholes in this system.

But it's not actually how it works out. So, I'm going to walk through a quick example here. We have Mr. Moneybags. He's got a big bank. He's bought all the assets. He's valued them pretty high. And you can see he's actually going to lose money. Hardware taxes are an iterative game. There's not just one step, right? Step one, his bank account's going down. The rest of us, the community chest, we've got more public goods. Again, same thing happens. And again, same thing happens. But Mr. Moneybags presumably didn't get rich by making bad investments. So, he's got to lower his self- assessed price, right? He drops it down to 50. He's still net loss. So, we're still getting some public goods.

He's losing a little less money, but you know, he's got to lower it again. So, he's got to drop it down to 10, so he can at least get to break even on this asset. We're still getting some some money for public goods. He's breaking even. But this idea comes through. She can now purchase that asset from Mr. Moneybags in the free market and set a higher self assess price. Notice she didn't have more money than he did. she was just more effective using this asset than he was. So, she could justify a higher price. She's adding to her bank account. She's driving more money to public goods. And it ends up being a a more productive and fair market where it's not just about the capital that you

have. And so, um, fun fact, I was using those I those icons and those names because the game that we know as Monopoly was actually invented by someone trying to teach everyone about Henry George's ideas about land taxes. There's two versions of the rules. One of them was the rules that we know where you try to crush your opponent, take over the world. The other one was, hey, let's work together and grow community wealth. For board games, I guess it's more fun to crush your friend, right? But in society, that might not be what we want, right?

So, this brings us to our last challenge, and it's culture. Um, it's social. You're here, you get it. You're you're part of this movement, crypto. But for harbor taxes, we've got a big hill to climb. Um, especially in United States, it's it's near blasphemy to say that maybe private property rights aren't aren't the best thing ever. Um, and that's just not true. back to the the one point. If you leave here knowing that private uh that property rights can be designed, you can make different trade-offs and you can produce different results, that's a win. Even if you could maybe you can come up with something better than Harvard taxes. But um we need to change that by having these conversations and getting more people to

understand this, go through those examples, but then have conversations and really think about the world that they want to live in. to bring it all back. If we have those conversations, I really do think we can pro progress forward and do some amazing stuff. Um, I would invite you to be part of that. There's lots of ways. Share that monopoly fact. Talk about h [laughter] uh how we can design property rights next Thanksgiving over the dinner table. Try to take it that way. This shouldn't be political. I know it like u I think of it as an apolitical thing, but take that on. uh help us spread the word.

Two, build something. I mentioned the radical exchange uh partial common ownership group. We're we're experimenting. We're at a buildathon. All sorts of great opportunities to do that. And then finally, [clears throat] you can support one of these rad you can support one of these radical experiments. Um I work on a project. Even if you're not into like metaverse, augmented reality, that's all mumbo jumbo. But if you like this economic stuff, come join us on the geo web. Claim some land. uh show that this flywheel can work and we can do some really amazing things. Just going to close. Thank you all for being here at ETH Denver, listening to my talk. I've got a few links up there if you want to scan, follow my work. Um I'll be hanging around all week um in the the Biddle hub

area. Um and uh if there's any questions, I have three minutes. I'd love to engage with any of you. So, um, we have time for exactly one question because, uh, your screen, as you can see, is glitching a bit. So, we're gonna get AV up here to reset it. In fact, uh, Justin, if you want to, uh, come on down and kind of do that reset while we're doing this. I think that might be might be good. So, uh, let's see question. Let's do over here. Cool. What's up, Graven? Great to see you. Great talk. Um, geo web has been functionally alive now for about five to six weeks and harasses are something that's very new to people. So with the launch of Geo web and kind of the

windown from the first month of a thou of a 100 ETH per parcel bringing it into reality, what has um the reaction been like for people who are using Geo web and are you noticing that there's more of a conversation about this unique tax incentive and tax structure? Are people starting to acknowledge it as they're using Geo Web? We got work to do, man, for sure. Um, yeah, we're we're trying to combine a lot of stuff. We've we've gotten great feedback. It's awesome being here at ETH Denver talking to people about this. I'd still say when I say what is the geo web, I kind of leave with the harbor tax thing. Very small percentage of people, even in this small bubble of crypto people, less than 10% know about harbor

taxes. Got a lot of work to do. I would invite anyone that wants to help be a part of that movement. Uh, you can find us. We'll even give you some ETH to to to claim land, walk through, we'll get your feedback. We're trying to improve the UX, all that great stuff. But it really is just about proving these experiments um and creating a more regenerative flywheel. Thank you. Have a good one. Thanks, Graven. I know there's some other questions, so this is a good area to kind of gather and have some post questions. And uh we'll get our uh next talk going right