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--- trade_vs_energy_model [2021/03/19 19:39] – freeworlder
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-====== Trade vs. Energy Model ======
-As an experiment for [[https://www.youtube.com/watch?v=qaASCnKNTmA|a video]], I devised a computer simulation of the free trade of wealth and energy using NetLogo's free Agent-Based Modelling (ABM) software. You can view an [[https://openaccesseconomy.org/files/Free_Trade_Model_Wealth_vs_Energy.html|interactive model online]] or download the NetLogo [[https://openaccesseconomy.org/files/Free_Trade_Model_Wealth_vs_Energy.nlogo|source code]]. (A copy of this model also exists in the [[http://modelingcommons.org/browse/one_model/6676|NetLogo media commons]])
-===== Summary =====
-The goal was to create as fair a simulation as possible of a free market trading economy using a few simple parameters. These are:
-  * Each agent would start with the same amount of wealth and energy. (Capital)
-  * Each agent would be given a randomly applied 'skill' attribute (a number of varying value, constrained to a maximum of double the lowest)
-  * Each agent would trade with a fixed number of randomly allocated 'customer' agents
-  * A 'trade' would consist of selling 1 copy of their skill as energy, divided out and paid for equally among their customers
-  * Every trade would expend 1 unit of an agent's energy (regardless of value)
-  * For simplicity, agents are immortal and there are no generations.. (It's assumed that wealth would follow bloodline)
-  * There is always the same amount of money in the system
-===== Observations =====
-Even running the model with conservative values (say 1.5 skill variance) reveals a strong and fast trend of the rich getting richer and the poor getting poorer. Also, while running for a while, we see the 'middle classes' getting completely wiped out and almost all wealth gravitating to the richest 10%.
-Also it should be noted that there is no debt and only those who can 'afford' to pay are selected as customers at each cycle, however these 'poor' agents can still sell their skills as per normal. Also, it should be further noted that no amount of extra wealth or energy enhances any agent's ability to sell their skills.
-===== Safety net =====
-Since the model effectively 'kills' off poor agents without mercy, I decided to add a 'safety net' feature which would roughly mimic the effect of social safety nets like state welfare, charity or microloans. Once an agent is in danger of falling below this 'poverty' threshold, they are awarded an extra wealth credit freely. This credit is then taxed across all other agents equally.
-While this is an effective way to rescue agents from the poverty line, it makes little difference to the trend of the rich getting richer, except slowing it slightly.