A society without scarcity
- The world is more "on-edge" than ever. There is reason to be hopeful thanks to (NGU) technology but also reasons to be concerned. We certainly have a scarcity of strong leaders and lack of role models in society. In the vacuum created by modern-day politics, I would argue we are seeing "bottoms-up" but seemingly predictable nationalistic reactions. Rising from poor leadership, institutions & lack of planning.
- Many of us on Stacker News are too young to remember or have experienced true scarcity of our goods & services. We have lived through nothing but abundance of any food, any toy, any tool or any service for relatively accessible & affordable prices. Thanks to mass production, the rise of the internet superhighway & offshoring/outsourcing.
- What we may be about to go through however, is an era of scarcity. Scarcity of more than just political intelligence. Something that may be the opposite of the AI / IOT utopia many are anticipating.
- The resources that we value - time, money, jobs, labour, tools, land and raw materials - exist in limited supply. Despite what markets have us believe. There are simply not enough resources to meet everyone's needs and desires. Especially not during times when others may wish to sabotage access for others.
Why don't we study scarcity more?
- Is therefore our modern society prepared for true scarcity? Both in terms of our necessary resources, supply chains, but also for our money?
- If we haven't lived through times of scarcity, shouldn't we be aware of what awaits us?
- What has history & psychology told us about how humans deal with scarcity?
The effects of scarcity on humans
- The limited research I did, seems to tell us that scarcity leads to more scarcity. How can that be?
- When looking into the findings on how scarcity has affected humans previously, I came across this article from Harvard in 2015.
- The article surfaces many studies and psychological experiments conducted to examine the effect of real scarcity, hunger & poverty on the mind. Now scarcity need not automatically result in poverty, but the effects were more extreme than I imagined...
What effect does scarcity have on individuals?
- Poverty & scarcity itself taxes the mind.
- During periods of stress and tough self-control tasks, glucose levels plummet in the frontal cortex (the region associated with attention, planning and motivation). Low blood sugar can deplete physical capacities; plus a struggling mind can create similar chemistry in the brain, and trigger the same debilitating results.
- When stress is less intense, being scarce in resources (poor) can increase the amount of compassion we have for others.
- Other studies with universities have found that for poor individuals, working through a difficult financial problem produces a cognitive strain that’s equivalent to a 13-point deficit in IQ.
- In India, where sugarcane farmers are paid annually after the harvest, farmers’ attention scores were the equivalent of 10 IQ points higher after the harvest than just beforehand, when farmers were relatively poor. And yet this result had nothing to do with the intelligence of the farmers.
- “It seems that to understand the psychology of scarcity, we must also appreciate the psychology of abundance. If scarcity can engage us too much, abundance might engage us too little".
Poor borrowing choices increases scarcity
- While scarcity can help people focus on costs and benefits, it can also cause stress that shifts attention and steals cognitive bandwidth from us for critical decisions.
- At first during studies, the poor performed better than the rich did; scarcity made them focus more intently on the task. Even when taking out loans to get ahead.
- But soon after and by the final rounds, more time & resources went to paying back loans, and the poor lost rounds that the rich won easily. Early borrowing created a vicious circle for the poor.
- Studies show the intimate link between success and failure under scarcity. And scarcity, no matter whom it menaces, inevitably leads to more scarcity.
Scarcity of resources also exacerbates scarcity
- Water resources as mentioned in this chart post on SN are increasingly becoming targets of attack. Plus disputes over access to water can also act as triggers for unrest. Creating a doom-loop of more scarcity. And that is a worrying trend we are already starting to witness.
- Torreon Creekmore of IARPA ('Intelligence Advanced Research Projects Activity') stated: “When crops fail and prices rise, people don’t have the money to purchase food, which can lead to stealing, then riots, social unrest, and mass migrations.” Leading to more scarcity. People in positions of leadership are aware that our vulnerabilities are not just limited to water systems but agriculture too.
- Looking at one of the worst possible conclusions, in periods of intense conflict like WWII, between 19-28million civilians were estimated to have died due to hunger, malnutrition or disease. About 30% of the total, and equivalent to the total amount of military deaths themselves. Scarcity of collaboration, critical-thinking, commerce, supply-chains & vital nutrition created scarcity of life.
- Also, today's movement to limit or make meat consumption less popular, compares very similarly with that era... where rationing, price controls & government vouchers for food soon became normalised, particularly for meat. This article titled "Price Controls, Black Markets, And Skimpflation: The WWII Battle Against Inflation" paints a not-so-pretty picture.
Saving prior to scarce times
- On a more positive note, a program called 'Save More Tomorrow' asked people to commit to savings deductions whenever their salary increases in the future; instead of asking them to sacrifice during times of scarcity. The results were encouraging across the board, and in one firm, more than 75 percent of those offered the plan chose to enroll. By the third pay raise (as rare as that would be today), those who had opted-in had more than tripled their savings rates.
- As Bitcoiners, you could argue this is what we are doing. Building our resilience and defences via true savings. Ploughing any excess capital into a superior monetary asset, during the good times (of monetary excess).
- But perhaps we should also consider our security setup, in the event of unpredictable and irrational humans around us. Those who may be faced unprepared with the reality of scarcity, without the experience, forethought and knowledge to cope initially.
Could Bitcoin become MORE scarce than we could imagine today?
- If scarcity leads to poor decision-making and poor collective and individual decision-making, is it not inevitable that bitcoin will get EVEN MORE scarce than 1 of ~21 million?
- Bitcoin is 15 years old. A teenager growing of age. Some estimates argue that ~4 million of Bitcoin is inaccessible or lost. Could that figure conceivably double in the next 15 years as Bitcoin matures and instability plus scarcity rises?
- Yes more people will find their way to Bitcoin. More people will demand the existing share of the monetary network. That is almost a given over a long-enough time horizon.
- However if stresses, debts, conflicts & prices are all on the rise, might we see events of increasingly inaccessible bitcoin? If people lose their seeds to fire, to bankruptcy, to botched confiscation or to passing away - Bitcoin could conceivably be MORE scarce with the same amount of people using it as today.
- Then imagine a worst case scenario were global conflicts to escalate in the coming 5 years. Many people may be unable to access their coin on-chain. What if the total amount of 'lost' and inaccessible Bitcoin were to become 8+ million? Would we see investigative businesses pop-up to try and retrieve and uncover those 'lost' seeds? Would market participants even be able to value the lost total? Would Bitcoin become more or less relevant due to such a shock? Many questions and many topics to explore in this new paradigm of scarcity. Paradigm shifts being a topic @elvismercury also explored in his post this week via #525232.
- On the face of it, the current reaction to self-custody & privacy with Bitcoin is seen by us all as an obstacle to block exits and to maintain influence within the incumbent's grasp. But it could also be that powers around the world, are already aware that increasing events of sabotage and human-induced scarcity may propel ever-more scarcity in satoshis?
- Under such scenarios, self-custody would not only become an "inconvenient" release valve for inflation. With 15 years having now passed, and ~4m coins lost, Bitcoin in the next 15 years may become even more scarce. Not just because more people come to use and depend on it for their savings, but also because the scarce money in circulation becomes more scarce, should another ~4m coins become lost. And scarcity feeding more scarcity.
Eventually, scarce money creates abundance
- Parker Lewis had a great article shared here on SN on how scarce money will ultimately create abundance. As more people seek to work to obtain it.
- However it strikes me that to get to that point, we are sailing some pretty wonky & wild waves. Would be interested in how Stackers think about our journey through scarcity. Many questions asked and many still for us to answer...
Old Bitcoin wallets keep waking up: How many of the 1.8 million ‘lost’ coins are really gone?🔗 fortune.com