Virtual policies

Recently, Real Life’s Reserve Bank of India (RBI) cut the policy rate by 25 basis points. After a string of data that seemed to suggest lower-than-expected inflation and a slowing economy, the rate cut was widely expected. However, it is also understandable why RBI chose to be cautious, cutting rate only by 25 basis points and not 50 basis points or more as many had suggested. The reason as put by RBI: “A conclusive segregation of transitory and structural factors driving the disinflation is still elusive”. English translation: RBI stopped short of agreeing with the notion of a downward “paradigm shift” in inflation, hence the cautious cut. 

As seen above, Real Life actors such as RBI try to manage supply of money to keep inflation in check, their primary goal. But virtual worlds see money as something they have created. For them, “managing” money has a meaning different from what RBI understands: to manage money is to design trades and markets so that players enjoy what they are doing. Monetary policy in games and social media is aimed at making people happy and keeping them in the game. But by bringing out inelegant statements like “a conclusive segregation of transitory and structural factors driving the disinflation is still elusive”, Real Life’s RBI doesn’t inspire much fun among Real Life gamers.  

What if money managers like RBI had the same objective as game designers: that of fun? We know that people like to have money. In the real world, you get money only by working for someone else, by selling something, or as direct cash transfer under a subsidy scheme or government programme. But virtual worlds rain money almost on demand: you kill a monster, you get a coin. For very hedonic reasons, money in the form of tokens is rained on signing up to an app. Money in the form of cashback is added on an item’s purchase, on firing up an app, or for no reason at all.

So now imagine a real world in which the government gave you money every time you sang in the shower, commuted to work, or exercised. What if this was the way the government injected money into our world, not as a result of RBI lending to banks and banks lending to you, but as pure fiat money given away to make people happy? Then, like game designers, the government would have to open up “drains”, in order to remove money from the economy so as to keep inflation in check. One easy drain would be to take money and literally destroy it. The only Real Life example I can find is Augusto Pinochet, a Chilean dictator-general who rounded up banknotes and set them on fire, bringing down overnight both money supply and the runaway inflation caused by it. 

No stranger to burning up mountains of cyber notes, virtual worlds can also do the opposite — direct disbursal of money to make people happy while they are running about doing things in games and social media. Real Life, too, could reward people with small direct payments for doing things it wants to promote, such as yoga, lawful behaviour, attending school. 

Would this pump lots of money into the system? Of course, but this need not lead to runaway inflation. Game and social media operators have learned how to manage their money supplies. When they turn on the tap, they can also open up the drains. 

And if the concern is paying people to do things they should do anyway, consider this — games and social media often give people money for doing nothing at all. What if everyone got Rs 1,000 per day simply for being human? It's not as far-fetched as you might think. People in rural areas already earn direct cash transfers for performing meaningless tasks under an employment guarantee scheme called MGNREGS. 

Obviously, raining money for no reason at all would mean huge national debt. Or will it? Right now the government operates on a cash-flow basis — what it spends must be collected through fees, taxes, or borrowing. But why? The governments of virtual worlds simply issue money when more money would help their world and destroy it when there is too much. They operate under no budget constraint whatsoever. Why not let the real government do the same? Print rupees if Real Life needs rupees, and if Real Life has too many rupees, tax activities to throw rupees away. 
 

ashish.sharma@bsmail.in