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(Any views expressed in the below are the personal views of the author and should not form the basis for making investment decisions, nor be construed as a recommendation or advice to engage in investment transactions.)
Looking back on recorded human history, it becomes apparent how much luck played in the circumstances of our modern existence. Readers of this blog — using internet-enabled devices, sitting in climate-controlled environments, and discussing the best way to allocate modern excess income — are some of the luckiest humans on the planet. The most likely outcome of the ovarian lottery is starvation, slavery, mindless toil, and/or brutal combat. We don’t like to admit the role luck plays in our existence, because it directly conflicts with the notion of self-determined life outcomes.
However, as modern citizens of various nation states, we strive to create level playing fields where individuals can achieve a life of plenty, regardless of their birth conditions. Some countries are more successful at this than others, but in general, things are admittedly a lot better than they used to be — thanks in large part to our most effective field-leveling ideas spreading more easily through international travel and the web.
Nation states have always been a collection of humans who share similar beliefs. A nation state is a squiggly line on a map with a founding story / myth to confer legitimacy on the ruling governing body. Those heretics who live amongst us are either tolerated, expelled, or slaughtered. The number of users or subjects contained in a nation state at a macro level determines the resources their governments can draw on. That is why governments pay great heed to demographics.
The inclusive or extractive nature of a particular government determines its tolerance for the free movement of people. Because if your territory’s power rests on ideals that favour only a small fraction of society, and the switching costs are low enough, people leave. People move because of ideological issues they have with the dominant story or narrative, and/or due to a dearth of resources / opportunity.
The pre-COVID affordability of global travel is an anomaly when viewed over the span of human history. It has not always been — and in some places still isn’t — a given that if you want to practice a certain religion or work in a certain industry, you can just purchase a budget airline ticket and restart your life multiple times.
COVID and the different responses of governments vis-a-vis immigration has shattered the mobility of humans. The location of the womb out of which you emerged is more important than who you are as a person. For those of us used to the mobility and freedom to self-select the community to which we belong, this new reality is infuriating. But this is just a reversion to the mean.
There is hope. 60% of the world is connected via the internet. That is larger than any make-believe nation state. The COVID induced lockdowns accelerated the adoption of all internet-enabled activities. While many of us cannot physically visit our fellow humans in other countries or even our next door neighbors, we can all commune online. That does not diminish the importance of physical interactions; however, unless we are all ready to rise up and usurp the bone-headed politicians in charge of the global COVID response, our reality ain’t changing.
The cost to associate with those who share our same belief systems through the internet has plummeted to almost nothing. At a fundamental level, the new make-believe nation states of the now and future are collections of avatars in various metaverses. As intra-metaverse distinct economies emerge, the ability to “move” to better one’s station also plummets to almost nothing.
The question now is, what types of metaverses will emerge? This essay posits that there will be two types of metaverses: corporatist or closed metaverses, where activity is hemmed in via explicit rules, and creativity is channeled into “acceptable” outcomes; and community or open metaverses, where any and all activity is permitted, and human creativity is allowed to roam free. Because switching costs are zero, open systems, while more expensive to maintain due to a lack of direct profit motive, will over time destroy the initial success of corporate closed metaverses. And of course, the community metaverse will need a community currency … y’all know what time it is. Cryptocurrency will be used exclusively to power the largest silicon nation etched on wafers on planet Earth.
Social media revolutionised the way in which we congregate and communicate. Initially, it was a free-for-all. The major American and Chinese tech platforms, which contain most of the world’s social media users, allowed complete freedom of expression. As the obsolescence of television and printed news became clear, governments on both sides of the ideological spectrum woke up to the “danger” of social media. The ways in which big tech social media platforms were brought to heel illustrates the respective “-ism” a particular government practices.
In China, the Party essentially controls everything. Every post is monitored and overtly censored, and self-censorship is rampant, lest you be deplatformed as a user and suddenly lose the ability to communicate with anyone.
In the “West,” or so-called liberal democracies, the big tech platforms were threatened with the cessation of the limited liability they enjoy from the content posted on their platforms. The giants like Facebook, YouTube, Twitter etc. have whole departments tasked with censoring what they unilaterally determine to be “fake news”. Should you or your business run afoul of these nebulous rules, you are “cancelled”.
Remember Parler? It was a social media platform that became a home for those on the political right in America. Their users challenged the dominant narratives pushed by many of the establishment media platforms, and the company got cancelled.
The moral of the story is that centralised communication platforms will always tend towards illiberalism, because every nation state has an approved story and its longevity as a nation is contingent on as many citizens believing that story as possible. Freedom tends to be a bit of an illusion, and laws can always police the centralised entities that provide the space for interactions.
As metaverses mushroom, the big global tech platforms must provide a product for the people. Because if the people would rather spend two hours daily in the metaverse rather than on TikTok, Instagram, or Weibo, then big tech platforms must adapt. Facebook is already aggressively investing in hardware to power a virtual metaverse, and every other large social media platform will follow.