Difference between revisions of "Alloc"

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Allocs are a digital post-scarcity currency used on Earth. It is distributed through a universal basic income (UBI) large enough to lead a decent life, especially as many public and even private services do not require payment at all.<ref>{{Chn|14|Bloodlines}}</ref> While it is economically inefficient to make many of these goods free and most certainly would not be sustainable in any modern-day economy in the real world, the Earth in To the Stars produces so much that it is not really a big deal to offer many products for free for mostly socialistic reasons such as keeping social unrest down.  
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Allocs are a digital post-scarcity currency used on [[Earth]]. They are distributed primarily through a universal basic income (UBI) large enough to lead a good life, especially as many public and even private services are free.<ref>{{Chn|14|Bloodlines}}</ref> A person can receive an enhanced Alloc income for "productive" work such as scientific research or military service, as determined by [[Governance]].<ref>{{Chn|1}}</ref>
  
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Certain forms of monetary policy exist such as increased allocations given for "productive" work (as deemed by Governance), particularly military service<ref>{{Chn|1|A Wish}}</ref>. Moreover, price setters, of which include [[Governance]] are advised by AIs (notably [[PAL]]) to fix the prices for many goods and services on Earth and resist making too many changes to these fixed prices. This is done in order to ensure that Earth's economy stays the same from year to year. This consistency ameliorates many effects of the business cycle such as short term recessions. This ultimately ensures that the quality of life for those living on Earth is, more or less, the same year over year.   
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Colony worlds generally use their own currencies instead.
  
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The value of an Alloc is itself tied to the Nominal GDP (NGDP) of Earth; thus it can be regarded as a sort of NGDP voucher. This leads to Allocs being under near constant deflation since it is expected that the NGDP of Earth grow year to year. This for typical economies would be horrible since it deincentivizes spending since the value of a single Alloc is always growing, spending it today would be losing out on value you could've had from growth in the future. This ultimately leads to the bank having to loan out money at a negative interest rate. Of course, no bank would ever want to pay someone to borrow money and no one would realistically want to anyways, since they could just get more by letting their money sit at home since it already is worth more everyday and no loans are made at all.  
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Allocs are economically inefficient in several key respects, and would not be sustainable in any modern-day economy. Even in the post-scarcity economy of [[Earth]], [[AI]]s are crucial to maintaining their integrity.
  
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This is mitigated in TtS because firstly all money is electronic and secondly, Governance directly controls the banking system; thus, Governance can simply enforce loans to be made. In practice, however, Governance opts for timed expirations on Allocs which reset on every transaction. This is implemented using different classes of Allocs with varying expiration times, some longer and some shorter. Governance simply controls how much of each kind of Alloc is put into distribution to control how quickly people spend their money and thus how much money circulates around in the wider economy.
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==Context of [[Earth]]'s Society==
  
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In practice, Allocs almost never expire because not spending ones Allocs is essentially wasting them. People tend to plan to spend all their Allocs, and if  will also try to find extra things to spend on if necessary since even an impulse buy is better than an expired Alloc.  
+
Unemployment is TtS is sky-high, in excess of 50%. Most of the 50% who ''do'' work aren’t paid decently–they work mostly because they want to. With [[AI]]s and automation, the economy doesn’t need more than a small percentage of the most skilled workers to produce what everyone wants. Allocs and the economy in general are designed to keep demand up (by giving everyone enough money to live comfortably), and to prevent those few skilled workers (or worse, a capital-owning leisure class) from turning into a new [[hyperclass]].<ref>[https://ttshieronym.tumblr.com/post/33142923484/economy-question-and-aliens "Economy question and aliens." '''Incubator Archives''']</ref>
  
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This timed expiration puts into context Ryuoko's behavior in Chapter 23 when she thinks to Clarisse, "Speaking of which, I should probably put some consideration into what I should do with my spare Allocs."<ref>{{Chn|23|Lost Love}}</ref> Another notable example is in Chapter 32 where Ryuoko states, "why don’t we go somewhere a bit more upscale for dinner? I’ve got a lot of Allocs now, and I don’t know how to spend it all."<ref>{{Chn|32|Decisions; Implications}}</ref>
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An important takeaway: [[Ryouko]]'s family is quite unusual in that, by Volume II, every member has a well-paying job.
  
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Another important implication in the timed expiration of Allocs is that barring special long-term or indefinite duration Allocs reserved for use by Governance or major organizations, there is no way for to effectively save money except by "buying" certain specialized investment vehicles. This is precisely how Ryuoko's parents managed to "save" up Allocs to give to Ryuoko at the end of Chapter 14.
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==Deflation==
  
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Of course, the last problem with deflation is that it not only increases the real value of any holdings of the currency, but also any debts in that currency. In most modern economies in the real world, this would be a problem since to some extent, locking up a lot of money in the wealthy in terms of the increasing the value of the debts other people owe them is bad for the economy since wealthy individuals typically spend less with each extra dollar they hold than poorer individuals (poor people just have more things they need to buy in general). In TtS, there is much less inequality for a large number of reasons and Governance actively seeks to keep this inequality at a low level; therefore, money not circulating around due to increasing debts is not as big a deal.
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Most real-world currencies experience "inflation", where the prices of goods and services increase over time. In other words, the value of the local currency decreases over time. However, Allocs in To the Stars instead experience "deflation", where their value increases over time.<ref>[https://ttshieronym.tumblr.com/post/33142923484/economy-question-and-aliens "Economy question and aliens." '''Incubator Archives''']</ref>
  
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Before the contact war and to a large extent still in TtS, 50% of the population of Earth is unemployed. They simply aren't necessary with the high amount of AIs and automation. Only certain skilled workers are necessary to produce all the goods and services that everyone wants. This isn't particularly important since UBI given out alleviates demand issues in the economy and the supply is plentiful. Most of the economy ends up being structured around keeping inequality low (such as by making sure skilled workers don't become super rich like the [[Hyperclass]]) and aggregate demand consistent.<ref>[https://ttshieronym.tumblr.com/post/33142923484/economy-question-and-aliens "Economy question and aliens." '''Incubator Archives''']</ref>
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An Alloc's value is tied to the Nominal GDP (NGDP) of [[Earth]], as a sort of NGDP voucher redeemable for some fraction of [[Earth]]'s productive output. As [[Earth]]'s NGDP grows year-to-year, a single Alloc's value increases in proportion to it. Without price controls, the prices of goods and services would thus decrease over time. This constant deflation would, normally, have several negative effects:
  
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An important takeaway from this is Ryuoko's family is actually quite unusual in this regard since it has multiple people in well-paying jobs.
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# Deflation disincentivizes spending. Spending an Alloc today means forgoing value you would have had in the future. This lowers overall demand in the economy.
 +
# Deflation disincentivizes banking and loaning. Banking interest rates would naturally be negative, meaning Allocs you put in a bank would lose value, and banks would refuse to loan Allocs unless the return is expected to be higher than NGDP growth. This stunts business development.
 +
# Deflation increases inequality. Both debts and stored cash increase in value, hurting the poor and helping the rich. This hurts social cohesion and long-term economic growth.
  
−
Recently, basic Alloc distribution has been decreased due to the [[Contact War]]. Military requirements given by [[MAISL]] encouraged PAL to start more strongly considering economic efficiencies which lead to some previously free services now costing Allocs. As the war drags on, these economic efficiencies will be tolerated less and less as efficiency is prioritized over comfort.  
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To mitigate these tendencies, [[Governance]] has implemented several measures:
 +
 
 +
# Expiration. After a certain period of time, an Alloc "expires" unless it is spent, which resets its expiration date. This is possible because Allocs are entirely digital.
 +
# [[Governance]] control of banking. Governance will store and loan Allocs even when it is not in the best interests of its balance sheets.
 +
# Price controls. See [[#Price Stability]].
 +
 
 +
Expiration, and other concerted efforts by [[Governance]] to keep inequality low on [[Earth]] (particularly strict controls on returns from investment), outweigh the inequality-increasing tendencies of inflation.
 +
 
 +
To see these effects in story, consider [[Ryouko]]'s behavior in Chapter 23 when she thinks to [[Clarisse]],
 +
"Speaking of which, I should probably put some consideration into what I should do with my spare Allocs."<ref>{{Chn|23}}</ref>
 +
and in Chapter 32, where [[Ryouko]] says,
 +
"Well, actually, why don’t we go somewhere a bit more upscale for dinner? I’ve got a lot of Allocs now, and I don’t know how to spend it all."<ref>{{Chn|32}}</ref>
 +
 
 +
==Price Stability==
 +
 
 +
Governance price setters, largely [[AI]]s (notably [[PAL]]), fix the prices for many goods and services on [[Earth]] and resist frequent changes to these fixed prices. This consistency ameliorates many effects of the business cycle, ensuring that the quality of life for those living on [[Earth]] does not suddenly degrade. There are significant downsides to this approach, such as long-term mispricing between the relative value of jobs leading to inefficient allocation of labor, but these are absorbed for ideological reasons.<ref>[https://ttshieronym.tumblr.com/post/33142923484/economy-question-and-aliens "Economy question and aliens." '''Incubator Archives''']</ref>
 +
 
 +
The most important fixed price is 0. While it would be more efficient to micro-price cheap goods such as synthesizer food outputs, large data transfers, or travel in high-traffic areas, humans tend to have irrationally negative reactions to such "nickel-and-diming". Micropricing can significantly lower perceived quality of life despite their minimal impact on "real" quality of life. Thus, for ideological reasons, [[Governance]] and even private enterprises absorb the inefficiencies.
 +
 
 +
==Alloc Classes==
 +
 
 +
Allocs are created with different "classes" which may affect their allowed uses or expiration dates. Allocs may change classes upon being spent, for example when transferred from an individual to a business.
 +
 
 +
Some very long-term or even indefinite expiration class Allocs exist, but only for use by [[Governance]] or favored large organizations.
 +
 
 +
Saving Allocs is possible via specialized investment vehicles, with restrictions. This is how Ryuoko's parents managed to "save" up Allocs to give to Ryouko at the end of Chapter 14.<ref>{{Chn|14}}</ref>
 +
 
 +
==Relationship with Other Currencies==
 +
 
 +
The value of an Alloc is very strong against colonial currencies. In general, [[Governance]] incentivizes investment and loosens its strict limits on capitalism in the colonies, in order to expedite their growth. The effects can be seen in the story in many places. For example:
 +
 
 +
In Chapter 5, when [[Ryouko]] receives information from the military:
 +
There was an informational guide on Alloc distribution, conversion to local colonial currency, and the investment opportunities she might pursue in the colonies, if desired.<ref>{{Chn|5}}</ref>
 +
 
 +
In Chapter 14, when [[Shizuki Sayaka]] suggests a role in the colonies as part of [[MSY Finance]] for [[Ryouko]]:
 +
"And make us a tidy colonial profit, I'm sure," Kana said dryly.<ref>{{Chn|14}}</ref>
 +
 
 +
In Chapter 31, when [[Ryouko]] visits the colony of [[Bismarck]]:
 +
She consulted Clarisse quickly. Converted into local currency, the sum was astronomical—she could probably have bought that "nanofabricated jewel" hundreds of times over.<ref>{{Chn|31}}</ref>
 +
 
 +
==Effects of the [[Contact War]]==
 +
 
 +
Recently, basic Alloc distributions have been decreased due to the [[Contact War]]. Military requirements given by [[MAISL]] have also encouraged [[PAL]] to close economic efficiencies, including adjusting job salaries and reducing the number of free goods and services. [[Governance]] does this with great reluctance, but at the same time, it prepares for the possibility of even worse circumstances:
 +
 
 +
{{quote|Mandatory Session did indeed serve a good purpose, though. Instituted at the start of the current war, it was intended for the eventuality that the war got so serious that the government was obliged to switch the economy from what they called "eudaimonic" back into a scarcity mode. If that ever happened, family Allocs would start being tied to productivity, essentially making productive activity nonvoluntary. And if things truly got bad, they might even have to go back to something capitalistic.|{{Chn|1}}}}
  
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{{quote|Mandatory Session did indeed serve a good purpose, though. Instituted at the start of the current war, it was intended for the eventuality that the war got so serious that the government was obliged to switch the economy from what they called "eudaimonic" back into a scarcity mode. If that ever happened, family Allocs would start being tied to productivity, essentially making productive activity nonvoluntary. And if things truly got bad, they might even have to go back to something capitalistic.|{{Chn|1|A Wish}}}}
 
  
 
==References==
 
==References==

Revision as of 16:02, 7 April 2021

Allocs are a digital post-scarcity currency used on Earth. They are distributed primarily through a universal basic income (UBI) large enough to lead a good life, especially as many public and even private services are free.[1] A person can receive an enhanced Alloc income for "productive" work such as scientific research or military service, as determined by Governance.[2]

Colony worlds generally use their own currencies instead.

Allocs are economically inefficient in several key respects, and would not be sustainable in any modern-day economy. Even in the post-scarcity economy of Earth, AIs are crucial to maintaining their integrity.

Context of Earth's Society

Unemployment is TtS is sky-high, in excess of 50%. Most of the 50% who do work aren’t paid decently–they work mostly because they want to. With AIs and automation, the economy doesn’t need more than a small percentage of the most skilled workers to produce what everyone wants. Allocs and the economy in general are designed to keep demand up (by giving everyone enough money to live comfortably), and to prevent those few skilled workers (or worse, a capital-owning leisure class) from turning into a new hyperclass.[3]

An important takeaway: Ryouko's family is quite unusual in that, by Volume II, every member has a well-paying job.

Deflation

Most real-world currencies experience "inflation", where the prices of goods and services increase over time. In other words, the value of the local currency decreases over time. However, Allocs in To the Stars instead experience "deflation", where their value increases over time.[4]

An Alloc's value is tied to the Nominal GDP (NGDP) of Earth, as a sort of NGDP voucher redeemable for some fraction of Earth's productive output. As Earth's NGDP grows year-to-year, a single Alloc's value increases in proportion to it. Without price controls, the prices of goods and services would thus decrease over time. This constant deflation would, normally, have several negative effects:

  1. Deflation disincentivizes spending. Spending an Alloc today means forgoing value you would have had in the future. This lowers overall demand in the economy.
  2. Deflation disincentivizes banking and loaning. Banking interest rates would naturally be negative, meaning Allocs you put in a bank would lose value, and banks would refuse to loan Allocs unless the return is expected to be higher than NGDP growth. This stunts business development.
  3. Deflation increases inequality. Both debts and stored cash increase in value, hurting the poor and helping the rich. This hurts social cohesion and long-term economic growth.

To mitigate these tendencies, Governance has implemented several measures:

  1. Expiration. After a certain period of time, an Alloc "expires" unless it is spent, which resets its expiration date. This is possible because Allocs are entirely digital.
  2. Governance control of banking. Governance will store and loan Allocs even when it is not in the best interests of its balance sheets.
  3. Price controls. See #Price Stability.

Expiration, and other concerted efforts by Governance to keep inequality low on Earth (particularly strict controls on returns from investment), outweigh the inequality-increasing tendencies of inflation.

To see these effects in story, consider Ryouko's behavior in Chapter 23 when she thinks to Clarisse, 

"Speaking of which, I should probably put some consideration into what I should do with my spare Allocs."[5]

and in Chapter 32, where Ryouko says, 

"Well, actually, why don’t we go somewhere a bit more upscale for dinner? I’ve got a lot of Allocs now, and I don’t know how to spend it all."[6]

Price Stability

Governance price setters, largely AIs (notably PAL), fix the prices for many goods and services on Earth and resist frequent changes to these fixed prices. This consistency ameliorates many effects of the business cycle, ensuring that the quality of life for those living on Earth does not suddenly degrade. There are significant downsides to this approach, such as long-term mispricing between the relative value of jobs leading to inefficient allocation of labor, but these are absorbed for ideological reasons.[7]

The most important fixed price is 0. While it would be more efficient to micro-price cheap goods such as synthesizer food outputs, large data transfers, or travel in high-traffic areas, humans tend to have irrationally negative reactions to such "nickel-and-diming". Micropricing can significantly lower perceived quality of life despite their minimal impact on "real" quality of life. Thus, for ideological reasons, Governance and even private enterprises absorb the inefficiencies.

Alloc Classes

Allocs are created with different "classes" which may affect their allowed uses or expiration dates. Allocs may change classes upon being spent, for example when transferred from an individual to a business.

Some very long-term or even indefinite expiration class Allocs exist, but only for use by Governance or favored large organizations.

Saving Allocs is possible via specialized investment vehicles, with restrictions. This is how Ryuoko's parents managed to "save" up Allocs to give to Ryouko at the end of Chapter 14.[8]

Relationship with Other Currencies

The value of an Alloc is very strong against colonial currencies. In general, Governance incentivizes investment and loosens its strict limits on capitalism in the colonies, in order to expedite their growth. The effects can be seen in the story in many places. For example:

In Chapter 5, when Ryouko receives information from the military: 

There was an informational guide on Alloc distribution, conversion to local colonial currency, and the investment opportunities she might pursue in the colonies, if desired.[9]

In Chapter 14, when Shizuki Sayaka suggests a role in the colonies as part of MSY Finance for Ryouko: 

"And make us a tidy colonial profit, I'm sure," Kana said dryly.[10]

In Chapter 31, when Ryouko visits the colony of Bismarck: 

She consulted Clarisse quickly. Converted into local currency, the sum was astronomical—she could probably have bought that "nanofabricated jewel" hundreds of times over.[11]

Effects of the Contact War

Recently, basic Alloc distributions have been decreased due to the Contact War. Military requirements given by MAISL have also encouraged PAL to close economic efficiencies, including adjusting job salaries and reducing the number of free goods and services. Governance does this with great reluctance, but at the same time, it prepares for the possibility of even worse circumstances:

Mandatory Session did indeed serve a good purpose, though. Instituted at the start of the current war, it was intended for the eventuality that the war got so serious that the government was obliged to switch the economy from what they called "eudaimonic" back into a scarcity mode. If that ever happened, family Allocs would start being tied to productivity, essentially making productive activity nonvoluntary. And if things truly got bad, they might even have to go back to something capitalistic.
—Chapter 1: "Title"


References

  1. ↑ Chapter 14: "Bloodlines"
  2. ↑ Chapter 1: "Title"
  3. ↑ "Economy question and aliens." Incubator Archives
  4. ↑ "Economy question and aliens." Incubator Archives
  5. ↑ Chapter 23: "Title"
  6. ↑ Chapter 32: "Title"
  7. ↑ "Economy question and aliens." Incubator Archives
  8. ↑ Chapter 14: "Title"
  9. ↑ Chapter 5: "Title"
  10. ↑ Chapter 14: "Title"
  11. ↑ Chapter 31: "Title"
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