Steemit is addressing an interesting economics problem

in steemit •  3 years ago 

Steemit is addressing an interesting economics problem. I read an article many years ago in the Atlantic about how the GDP fails to account for a lot of the good but unpaid work we do in the economy: volunteer activities, taking care of kids, etc. On the other hand, the GDP accounts for a lot of "bad" things like buying home security systems and paying divorce lawyers. Things people would be unlikely to up-vote. Here's the article if you really want to read it:

http://www.theatlantic.com/magazine/archive/1995/10/if-the-gdp-is-up-why-is-america-down/415605/

The GDP, of course, is just an impersonal summation of all monetary transactions. We call it a productivity measure but it doesn't really give us a sense for whether we are producing good or bad things. It's just things. Anyway, with Steemit and platforms of its ilk (which will surely follow), we not only have a way to measure goodness but we can loosen the transactional rigidity built into the GDP. A crypto-based rewards system provides the mechanism to pay for otherwise free labor and gives us a currency that can float in relation to the value produced. 

My simple example is a mom who will (almost) always take care of her baby so she doesn't need to get paid for it. So there's no monetary transaction and it doesn't get factored into the GDP. But moms certainly want to be commended for the job they do. Like everyone, they tend to do better when recognized for their efforts. I'm not necessarily advocating a Steemit for moms but you get the point. There's real economic potential in creating Steemit's for a range of human activities.

Will all of this work? One big question is why a crypto-based rewards system has any relationship to other currencies, but it does. The market has already told us that. The price might be too high (who knows) but I suspect the underlying reason for any price is that we envision an ecosystem of services provided in the Steemit fashion. We also envision a time when currencies like STEEM will be tradeable for other such services or things in the traditional economy. In other words, despite my attitude toward the transactional nature of the GDP, the fact is that currencies exist because things can be purchased with them. I don't know exactly how this is going to happen but we have solid reason to hope.

Steemit is a good test case for some fundamental ideas in economics, not to mention the social sciences in general. The team is to be commended for taking a bold first step.

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nice post @bavak, upvote done

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@bavak @blackjincrypto

Steemit is my life

The world is quickly growing tired of the current economic system. As you rightly point out, terms like GDP, which are so freely thrown around to justify economic decisions or point out their successes, are insufficient and outdated.

In the post-depression and baby boomer generations people simply wanted to know that enough money was being made - thus quantitative measurements like GDP worked for them. Today's information generation wants a qualitative measurement - they want to know whether that money is coming from good or bad sources, and going towards worthy or unworthy recipients. Thanks to banks and governments, the flow of fiat currency is all too often shrouded in so much secrecy that this becomes impossible.

This is why blockchain technology is so popular with the switched-on generation of today, and it's why cryptocurrencies are the future. Finally, we have a totally transparent, decentralized record of every transaction ever made that's built right into the currencies themselves.

Psychologically speaking, I can only imagine that the more people have knowledge (and therefore, power) of a currency and its use, the more they will want to use it themselves. A new crypto-based economy is already here, and people are making millions off it right here and now. As soon as it really takes hold of the public consciousness (and Steemit, as a blockchain-based social network, is by far the best means we've ever had of making that happen), governments, banks, corporations, retailers - basically everyone who uses money - will either have to get on board, or get left behind. Gold simply isn't as shiny as it used to be.

  ·  3 years ago (edited)

At the moment, everything is very muddy, but i just got feeling that we'll break thru all barriers and STEEMIT will stand up close with the Giants like Reddit and Twitter.

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Not muddy. Just beta. :-)

Excellet post!

"when currencies like STEEM will be tradeable for other such services or things in the traditional economy"

How awesome would it be just to send steem dollars to "blizzard" with memo "2x Overwatch" and receive it instantly on your email or the next day outside your front door.

What's a "good" of "bad" thing?

Whatever I can manipulate the masses to believe is positive or negative at a particular point in time?

Steemit doesn't give you an ability to measure goodness.

It enables you to measure the inclinations of a minority of influential users.

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Great question and, unfortunately, I don't have a great answer. I think, however, that an economic value judgment produced in a smaller community that creates its own currency is more accurate than, say, a central bank doing it on the basis of aggregate transactions for the whole economy. And, in the case of blogging, the central bank would traditionally not even consider it economic activity because it is unpaid. Can the smaller group be wrong? Of course. Can they be controlled by influential individuals? Yes. All human groups can have these flaws. The model here is still being tested but it looks like progress and decentralization is usually a good thing.

  ·  3 years ago (edited)

>The price might be too high (who knows) but I suspect the underlying reason for any price is that we envision an ecosystem of services provided in the Steemit fashion.

No. Price is dictated by traders in the short term. Human clairvoyance isn't that strong, neither are there enough flush gamblers.

Only time will tell, but certainly we are all on a great path. Keep marching

I like the idea behind your post. Steemit is designed to reward good behaviors that are under-paid by the current economic system, based on the value they provide to the community.

Any thoughts on this? https://steemit.com/steemit/@timcliff/steemit-lifetime-recruitment-bonus-how-rewarding-recruitment-can-help-grow-the-steemit-community

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Yes, thanks, I replied in your post as follows:
"Very interesting. Providing recruitment rewards is an example of how a Steemit economy will, over time, evolve toward the provision and compensation of a whole host of value added services."

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Awesome, thanks!

I don't know why GDP should be tied to anything other than the total spending within a country. It has nothing to do with wellness.

I see what you are saying about Steemit though. But I just don't think it's relevant to the GDP - which is something very specific.

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I think GDP is conflated with standard of living. It even appears in indexes which try to measure quality of life in various countries. But as you indicate, it shouldn't be used this way. By having a platform like Steemit, where value creation and rewards are closely linked, the measure of that value becomes much clearer. It can make possible a future GDP calculation which accurately describes quality of life as judged by real people.

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I think you are looking for Human Development Index (HDI). GDP is correlated with standard of living, yes, for obvious reasons. But it is HDI that defines social progress. No serious index will confuse GDP with standard of living. They are two different things.

There's a clear correlation, of course, but not a conflation. You can see here - https://sites.google.com/site/csifinalprojecthappiness3/gdp-vs-hdi

I'd appreciate it if you modify your post to reflect this fact. :)

I agree with your perspective on Steemit though.

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Thanks for the link, good material, and a very useful distinction to make. Btw, I'm also a big fan of the Hans Rosling view of the world.

  ·  3 years ago (edited)

Indeed.

Steemit is very much shaking the very foundation of how content creators have been paid for their work in the past - part by giving the community a voice, part by removing the third-parties pestering the entire structure by draining the very people generating a revenue in the first place.

We're still in infancy stages, but it's looking very interesting and extremely promising.

Interesting points. I'm working on an article that briefly touches on these topics. There's so much I would like to write out and very little time!

As one can imagine, economic production and growth, what GDP represents, has a large impact on nearly everyone within that economy. For example, when the economy is healthy, you will typically see low unemployment and wage increases as businesses demand labor to meet the growing economy. A significant change in GDP, whether up or down, usually has a significant effect on the stock market. It's not hard to understand why: a bad economy usually means lower profits for companies, which in turn means lower stock prices. Investors really worry about negative GDP growth, which is one of the factors economists use to determine whether an economy is in a recession.

The Steemit salvation to the economic situation

You can’t get blood from a steem

Step very brave and it will change the world as a whole!

I have written an nice post about STEEMIT ECCONOMICS I am sure you it will help you understand Steemit Ecconomics more https://steemit.com/steemit/@mahekg/know-how-steemit-ecconomics-exactly-work-put-my-heart-and-soul-in-this-post

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Good post.

  ·  3 years ago (edited)

From our perspective, Bitcoin was the first step and Steem is the second.

No one ever became poor by rewarding, encouraging and facilitating human communication, interaction and commerce. Steem is the next big thing. It's already here.

Thanks so much for what you have all done for this amazing platform already.

👍😆 great post...

Read Post-Capitalism by Paul Mason - for a more further analysis of this trend.

Good thinking. Cryptocurrency is enabling so many awesome experiments, we can't help but more forward (being at rock bottom). And don't get me started on what GDP puts in the economic 'growth' category; things such environmental disaster recovery expenses and so forth. Bloody fucking hell. Time to experiment! Steem ahead everybody!

I think you took my ideas from my post about Area 51 and Steemit!

https://steemit.com/area/@steve-mcclair/area-51-steemit-has-arrived

Very happy to be part of this beautiful Steemit community!

Great! steemit definitely awards someone who work hard and contribute to the society but do not get awarded in the traditional economy.

"I'm not necessarily advocating a Steemit for moms but you get the point. There's real economic potential in creating Steemit's for a range of human activities."

Yes, this is actually the underlying "killer app" of the underlying protocol design that can be cloned and adjusted for various human activities.

Great insight, and as a parent who constantly has to make decisions about what to pay for vs what to do myself in the realm of child care and child education, it's very relevant. Perhaps this kind of network can mitigate the opportunity cost of doing the things we should be doing and enjoy doing but provide no monetary compensation.

Looks like this post is upvoted by @blocktrades' account army.

Thanks for putting it so beautifully :)

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Good post bavak, what do you think will happen when people start to sell his SBD?

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It's hard to tell given how new all of this is. We have to let transient effects die down before really appraising the economic model. But, folks seem to be selling their SBD now and it hasn't disrupted anything as far as I can tell. Clearly the price will go down if more is sold, but that's to be expected. In the end we'd expect some sort of balance between buyers and sellers, as in any market.

Repost?

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No, I guess someone else used the same title, or I used their title without realizing.

economic problem as regards, changing the individual income generation. changing the standard of the the averavege guy out there, bringing about another new paradigm of wealth generation

Good article on this infant industry

"One big question is why a crypto-based rewards system has any relationship to other currencies."

Since Bitcoin, cryptocurrencies are all about emitting money through a reward system. One day we will look back and wonder how we had let central banks emit money without work. (I developped this aspect in this article : https://steemit.com/steemit/@jako/why-the-concept-behind-steem-is-far-more-interesting-than-the-one-behind-bitcoin)

Steemit is clearly a new experience in social media and i'm really interesting for following his futur . We are lucky to be here now for see the begining .

One of the reasons why the idea of a universal basic income is gaining a lot of popularity.

Great post, thank you for sharing!!