Gain a deeper understanding of the inspiration for Vitalik Buterin's praise of Orb Land – the Harberger tax, shared ownership and antitrust

Original author: @Web3 Mario

Introduction: May 21, 2024 Vitalik likes orb.land in Warpcast, delves into it, and is intrigued by the design ideas behind it. So I spent a while reading the book “Radical Markets”, and I have some experience that I hope to share with you. Of course, I found a more detailed article for the introduction of the project itself, which is convenient for everyone to read and understand. Overall, the shared ownership mechanism, a politically biased left-leaning ownership system proposed in this book, combined with the Harberger tax model, aims to address the social inequities caused by the excessive monopoly of resources. And this is instructive to solve the current problems facing the Web3 industry, such as the high valuation VC coin, which has been very hot recently.

What exactly does Radical Markets say?

First of all, I would like to briefly introduce some basic information about the book, which is called “Radical Markets: Breaking the Power Struggle between Capitalism and Democracy to Reshape Our Economy”, co-authored and published in 2020 by Glenn Weil and Eric Posner, a principal researcher at Microsoft Research and a visiting professor at Yale University, focusing on innovative research in market design and public policy. Eric Posner is a professor at the University of Chicago Law School and a renowned jurist whose research interests include contract law, international law, and legal theory.

Overall, the book aims to address a range of deep-seated problems in modern capitalism and democracy. Specifically, the following key issues are involved:

• Wealth and income inequality: Wealth and income inequality is growing in modern societies. Traditional capitalist systems tend to result in a small number of people accumulating large amounts of wealth, while the longest face economic pressure. The authors argue that this inequality is not only unjust, but also leads to social and economic instability. • Inefficient allocation of resources and assets: long resources and assets are not used efficiently under the existing market system. For example, in the land and real estate markets, long assets have been left idle due to speculation and hoarding, failing to reach their full economic potential. This not only wastes valuable resources, but also exacerbates housing and land shortages.
• Deficiencies in democratic systems: Current democracies have long problems, such as deficiencies in the voting system, political polarization, and excessive influence of interest groups. These problems make it difficult for democracies to truly represent the interests of the people, leading to a lack of efficiency and fairness in policymaking.
• Global migration issues: Existing immigration policies are often subject to strict state controls, restricting the free movement of labor. This not only affects the economic opportunities of individuals, but also hinders the overall development of the global economy. The authors argue that the free movement of migrants can significantly improve the efficiency of global resource allocation and promote economic rise and social progress.
• Data and privacy issues: In the era of big data, personal data has become an important economic resource. However, at present, the control of large long data is in the hands of a few large companies, and the right of individuals to use and profit from their own data is restricted. The authors argue that individuals should be given more long data rights to achieve more equitable data use and revenue distribution.
• Market monopoly and lack of competition: There are serious market monopoly problems in the long industry, and large enterprises control the market through mergers and acquisition, which hinders fair competition and innovation. The authors believe that stricter anti-monopoly policies are needed to break this monopoly and promote the fair and healthy development of the market.

Long wick candle to these problems, the book gives some solutions, in summary, including a total of five points:

• Shared Ownership: Weir and Posner recommend a system called “Common Ownership Self-Assessed Tax (COST”). This system reduces monopolistic behavior and promotes the efficient use of resources through self-assessment and public pricing, in which all assets are subject to continuous public auctions, and this self-assessment tax system is known as the “Harberger tax”.
• Voting Reform: They proposed the “Quadratic Voting”, in which each citizen has a certain number of voting points in each vote, which can be distributed according to their importance to an issue. This can more accurately reflect the degree of public preference for different issues, and avoid the opinions of minority people being ignored.
• Immigration Policy: The authors recommend establishing a “Labor Market Auction” to determine the number and conditions of immigrants through bidding. This approach aims to make more effective use of the economic potential of migrants and promote the optimal allocation of global labour resources.
• Data rights: The book also discusses the property rights of personal data, advocating for giving individuals ownership and control over their data, and ensuring that the use of data truly benefits the creators of the data, rather than just Big Tech.
• Antitrust Policy: They emphasized the need for stronger antitrust laws to prevent market monopolies and advocated the decentralization of economic power over large corporations to promote fair competition and innovation.

It can be said that Orb Land’s economic model of long wick candle Web3 personal consulting service scenario is based on the first of these mechanisms, the so-called shared ownership system combined with the self-assessment tax system, hereinafter referred to as the shared ownership system. So what is a shared ownership system and what are its effects?

The shared ownership system brings liquidity to assets through coercive means and avoids the unfairness caused by monopolies

The shared ownership system is a social resource allocation system, and its institutional design mainly includes the following three aspects:

• Self-assessment vs. public pricing: This system requires each asset owner to conduct a public self-assessment of the value of their assets. This includes all types of property such as houses, land, business assets, etc. The price of this self-assessment is not only determined by the owner himself, but is also public and can be seen by anyone.
• Continuous auction mechanism: At any time, anyone can buy the asset at the owner’s self-assessed price. This means that owners have to be very careful about setting their appraisal price, as they could lose their property if it is set too low. At the same time, in order to prevent owners from overvaluing their assets and thus avoiding potential closings, they will be required to pay a percentage of the tax based on the self-assessed price. This tax, which can range from 1% to 7% of the value of the asset, depending on the policy, is also known as the “Harberger tax” and is inspired by a concept proposed by economist Arnold Harberger in the 60s of the 20th century.
• Tax purposes: The tax collected will be used as public revenue to provide public services and infrastructure, or distributed to communities to support economic development. At the same time, this tax mechanism can replace or supplement the traditional property tax, thereby simplifying the tax system and increasing the government’s fiscal revenue.

First of all, this mechanism can effectively reduce monopoly and waste of resources, because all assets are continuously auctioned publicly, monopolistic holding of resources will be reduced, and the allocation of resources will be more efficient. In addition to this, people will also be more active in using and developing their assets, as the cost of holding unused assets becomes higher. The second is to promote economic liquidity, and public self-assessment asset pricing and continuous auction mechanisms will promote market liquidity, so that assets can change hands more quickly and reduce market rigidity. At the same time, businesses and individuals have easier access to resources to drive innovation and economic activity. Finally, there is the increase in equity and social welfare, and the tax collected through this system can be used for public programs and benefits, improving the quality of life of society as a whole. In this way, extreme inequalities in wealth and resources can be reduced.

The potential impact of shared ownership regimes on the Web3 world

Let’s take a look at how Orb Land leveraged this concept to design a Web3 personal counseling system. To put it simply, some expert users can generate an NFT through Orb Land, and anyone who holds that NFT can ask its issuance questions. The NFT has a shared ownership mechanism, firstly, when the user buys the NFT, he needs to set a public sale ask price, and others can buy the NFT at that price anytime and anywhere, and secondly, when holding the NFT, the holder needs to bear the high Harberger tax, thus avoiding the user from setting a sky-high price to sell ask price to avoid NFT being sold. All Harberger taxes and royalties at the time of NFT transactions will be vesting to the issuer, and the NFT holder has the ability to score the issuance’s answers.

The reason I wanted to do this is because Orb Land wanted to bring a consistent cash flow income to the experts who are NFT issuance people, so as to ensure that they actively output the motivation to answer the value. However, I don’t think this makes good use of the core advantages of the mechanism, because in this scenario, NFT carries the right to ask a question to an expert user, but this is not a scarce resource, it is difficult to grab monopoly profits through monopoly, for example, if you own the NFT issued by Vitalik, you can monopolize its right to speak, he will become your exclusive advisor, and no one else can receive any advice from him, which is obviously absurd! Therefore, the value of the model is unsatisfactory in this use scenario, because it only hopes to promote the rapid circulation of NFTs through taxation and increase longing income for issuers, so this mechanism is very unfriendly to holders, and if you only use the mechanism to do price discovery for an asset, then you will find that this efficiency will be much lower than through free market policies, that is, through the supply and demand relationship in the market to price.

So what is the potential impact of the shared ownership system on the Web3 world? To put it simply, the mechanism applies where the problems caused by monopolies are most serious. Here I will introduce a scenario, that is, the problem of high valuation VC coin, which has been hot recently. The reason why the high valuation VC coin is a powerful tool for play people for suckers retail sucker is that the Token Economy design of most of the We 3 projects leads to the gradual evolution of the VC Token with the continuous unlocking of the Oligopoly monopoly market, and at the same time, the amount of funds in VC has obvious advantages over retail investors. This gives the VC the ability to price, so the VC can raise the transaction price of the secondary market through high valuation, and then earn monopoly profits, and the reason for the low circulating supply is because the retail investors who dumb buying the order are limited after all and cannot undertake a large number of VC sell-offs in the short term, so in order to maintain profits. VCs are usually sold in an economize to avoid running short, and in this scenario, it would be exciting if Web3 projects combined with shared ownership systems to redesign the Token Economy model! As for the specific plan, everyone is welcome to discuss it together.