Comment by vkou 13 hours ago
> we might still be paying taxes in rice.
As long as the largest form of economic activity was agriculture, and access to hard currency was limited, people were paying taxes with food (or labour in their landlord's fields).
We pay taxes in money because we have a diversified economy, where 90% of us are not subsistence peasants, and the money supply & availability of banking is large enough that we (or our employers) have cash on hand.
> Using rice as currency is not too different from using Joules as currency
There are enough differences that we still need to worry about them: Would you really have no preference between them when there's a famine? Which one would you rather have when someone announces they've just cracked fusion power generation?
Even among such "suitable" commodities (durable, fungible, divisible, etc.) there are differences in risk/utility which don't vanish simply because there's a market for exchanging the two.
Fiat currency is significantly more isolated from such confounding factors, at least as long as people assume the government will continue to exist. It doesn't go crazy
> it's ultimately for the most part powered by people eating.
I am reminded of the subsistence farmer's reasons [0] for not converting everything they have to/from coinage:
> The thing is, as the food supply contracts, the price of food rises and the ability to buy it with money shrinks (often accelerated by food hoarding by the wealthy cities, which are often in a position to back that up with force as the administrative centers of states).
> Consequently, for the [farming] family, money is likely to become useless the moment it is needed most. So while keeping some cash around against an emergency (or simply for market transactions – more on that later) might be a good idea, keeping nearly a year’s worth of expenses to make it through a bad harvest was not practical.
[0] https://acoup.blog/2020/07/24/collections-bread-how-did-they...
> No, there are significant differences: [...] does not make them equivalent as currency.
Did I say rice was exactly equivalent to energy, or did I say that it was not too different? Surely you can see that rice is more analogous to energy than to drill bits.
>So while keeping some cash around against an emergency (or simply for market transactions – more on that later) might be a good idea, keeping nearly a year’s worth of expenses to make it through a bad harvest was not practical.
Hence the point of notes. "Rice is not such a bad thing to base your currency on" doesn't mean wallets should be literal fistfuls of rice grains in bags that you lug around.
I'm not a big fan of how abstract modern monetary systems are, and I'm still trying to decide whether they confuse people by accident or design.
It’s a complicated engineering system with high capex to drive a steam turbine. It’s hard to compete with something like that in a market increasingly driven by intermittent periods of essentially free energy. Too cheap to meter didn’t work out for nuclear either.
I guess the convenience of money is that it doesn't even need to exist, they can just be numbers in an SQL table (other database types are available). Imagine needing to ship tons of rice when buying an RTX 5090. Or even buying a datacenter full of them. Nvidia or Apple would need giant silos for all the rice they have (or I guess there'd be Central Rice Storage, and a ledger to say who owns how many tonnes)
It's funny how too many of us are obsessed about keeping our number in the database as big as possible...
This is basically where banks come from. Then next thing you know there wouldn't actually be central rice storage and people would be saying that things were better when we were on the rice standard.
Hard to imagine, but maybe in the future products won't be physical either.
I understand the individual sentences in your post, but I don't understand what overall argument it makes.
(It also fails to take into account the practical aspects of collecting taxes, which is why food and labour were a common currency for them pre-industrialization, and money is the common currency for them post-industrialization. My post addresses the issue of collecting taxes more than it does the issue of generating wealth.)
It's possible I might have misunderstood your point. What I was getting at is that the economy being diverse is not a reason for money to be pegged to rice. Perhaps you were talking about the physical act of paying? "We pay taxes in money" = "we give stacks of paper to the government [rather than bags of rice]"?
Yes, I was talking about the physical act of paying - and the form that payment could take when you're trying to extract taxes out of cash-poor subsistence peasants - and how in that kind of world, taxes in a single, fungible type of good (food, days of service in agricultural labour) are common.
The economy being diverse, and not just a bunch of peasants barely making ends meet is a great reason for me to not be taxed in rice. I don't grow rice. I don't know anyone who grows rice. I'd have to take money, buy rice, give it to the taxman. This is... Not ideal. (Just like the taxman getting paid in <whatever random non-food good I produce is not ideal.)
Even in pre-industrial societies, where where taxes-in-food were common, city-dwellers paid taxes in cash.
>We pay taxes in money because we have a diversified economy
It's all a fiction, though. Ultimately wealth can be translated to very raw things, like energy, space, and time. Using rice as currency is not too different from using Joules as currency, as it's ultimately just captured and stored solar radiation. The issue with using food as money is not that the economy is diverse, as it's ultimately for the most part powered by people eating. The issue is that if you spend money to make a km^2 of land usable for factories that produce, say, semiconductors, that's not exactly translatable to tons of rice.