My Second Life Avatar Neotoy Story answers THE DAVOS QUESTION in this 6 minute, 13 second Machinima about the importance of Holistic Economic Metrics.
TRANSCRIPT:
When I first read THE DAVOS QUESTION on YouTube I almost felt as though it was either too broad or too narrow to answer, but since that's never stopped me before I thought I'd try anyway. After a lot of thought I came up with at least one idea that seemed to stick given the scale and scope of the question. My answer? Holistic Economic Metrics CAN make the world a much better place. Let me explain.
In the modern free market environment the price of any good or service is determined by the classical supply and demand model. In a sense value can be equated to what people are willing to pay, and is therefore relative rather than absolute. For example, a barrel of oil may be valued at 99 USD ~ this is essentially an arbitrary number, and represents nothing more than what the market will pay.
This is a problem, a very big problem that threatens the very survival of our civilization. In contemporary economics it is assumed that the wisdom of the free market will prevail. For example, if the oil supply cannot meet the market demand the price will continue to rise until it becomes unfordable, at which point consumers will switch to a more economical alternative.
This assumption however is based on yet another assumption ~ the market has assumed that the value of a barrel of oil is relative rather than absolute, the market has determined that 99 USD is an appropriate value. What the market does not assume is that it has no real idea whatsoever how much a barrel of oil is worth in relation to an assortment of relevant factors that are routinely ignored.
What this amounts to is an economic fabric poked full of holes. These holes represent the absence of critical information, information that a free market economy simply cannot survive without. The obvious rebuttal to this statement would be the presumption that the free market system is working and has been for centuries, but without accurate metrics it's impossible to say that with any certainty.
From an environmental perspective the opposite seems to be true. The economy may appear to be thriving, but if the environment is being destroyed as a result, the free market will inevitably engineer its own collapse. Which is why, as my response to the davos question I have selected "holistic economic metrics" as my answer. It is imperative that we reveal the long-term, bigger picture now.
Because a barrel of oil is not just a barrel of oil, it is a symbol that represents the vast spectrum of results and unintended consequences that cannot be summarily reduced to 99 USD, or even potentially 9 million USD. Until our species makes the choice to do the math, it's impossible to gauge the actual economic cost of our industrial practices and by extension the goods and services they generate.
This is just one example out of billions, all of which are connected and intertwined in an intricate global network that remains essentially invisible to the very people who brought it into existence. This lack of transparency is dangerous. Historically its caused nothing but trouble. I think it's time that humanity stopped speculating about the value of natural resources.
This can be achieved by putting a price on all the hidden costs associated with industrialization. When I look at a barrel of oil, I don't see a steel drum full of light sweet crude, nor do I see 99 points added to my score. What I see is a hundred new cases of asthma, a dozen carbon-monoxide related deaths, an acre of ocean covered in plastic, drowned birds and dead fish.
It makes no sense for a genuine free market to ignore these significant values. There's no religious or political ambiguity in these numbers, this is something that everyone can agree upon. It's in the best interest of every human on earth to understand the real value and cost of everything from a barrel of oil to a diamond engagement ring. We need to stop pretending that our economy is self sustaining.
The real value of products and services can be determined by subtracting the holistic cost from the artificial market value. Sticking with the classic example, if the holistic cost of a barrel of oil is 100 USD and the artificial market value is 99 USD the product is quite obviously not economical. In which case it is clearly insane to support an industry that has no profit margin!
The current model tries to simulate this process but fails. Our economic system in its current form is simply not advanced enough to comprehend the consequences of its own actions. It is like a blind giant lumbering from continent to continent leaving incalculable ruin in its wake. I propose that we give this giant a set of eyes so that it might tread more gently and maybe someday even look upon itself.
(less info)
