Published On: October 26, 2022 07:45 AM NPT By: Bimal Pratap Shah
The metaverse is an emerging space that will break platform boundaries bringing together siloed ecosystems into a decentralized world. The metaverse is expected to have 5 billion users by 2030 providing an economic opportunity worth 13 trillion US dollars.
The United Arab Emirates (UAE) recently took a bold step to create a new global standard for measuring a country’s economy that has traditionally been denominated in Gross Domestic Product (GDP).
Even though the basic idea of GDP started to surface in the 18th Century, the modern concept of GDP was developed by an American economist named Simon Kuznets in 1934. He was an expert in statistics, mathematics, and economics who came up with the idea of using a single measure of GDP to capture all economic production by individuals, companies, and the government by adding the value of the finished goods and services and subtracting the cost of intermediary products, or by adding up all salaries, profits, and investment incomes. Despite having invented the metric, Kuznets had warned the US Congress about the dangers of focusing too narrowly on GDP for he believed “the welfare of a nation cannot be inferred from a measure of national income.”
GDP was adopted as the main measure of a country’s economy in 1944 at the Bretton Woods conference in the USA. However, less than two decades after the conference, a few economists started to notice the metric’s weakness. In 1959, American economist professor Moses Abramowitz was the first to seriously question whether GDP accurately measured society’s complete well-being as he was not convinced that “the long-term changes in the growth rate of welfare can be gauged even roughly from changes in the rate of growth output.”
After the end of World War II, GDP took the first world by storm and somewhat peaked in the 1970s. By that time, a growing number of economists had already started pinpointing the weakness of the metric because the GDP-boosting activities had increased the ecological footprint creating an ecological deficit. Massive amounts of forests were destroyed for agriculture, airports, and industries. Oceans were depleted with fish stocks, and worst of all, environment-polluting fossil fuels were burned irresponsibly leading to climate change. Even before the climate crisis became evident, climate activists and renegade economists were already protesting against these reckless and short-sighted GDP-boosting activities that had negatively impacted human health and the planet’s well-being. In 1972, King Jigme Singye Wangchuk of Bhutan was the first to discard GDP by declaring a plan to focus on Gross National Happiness.
The adverse effect of GDP-increasing activities on climate change had become so serious by the turn of the millennium that political leadership around the world started putting greater emphasis on ecological health and the planet’s well-being. In 2006, China created a new index for “green GDP” – a measure of national economic output that considers environmental factors. In 2009, the French Government published a report together with Nobel Prize-winning economist Joseph Stiglitz calling for an end to “GDP fetishism.” Around the same time, the British Government also came up with a plan to start surveying happiness in addition to other economic measures. Countries around the world were also taking similar measures.
The United States has also finally become extremely serious about moving beyond GDP to calculate the wealth of the nation to measure the economic value natural resources provide to society to illustrate how a robust economy depends on a healthy natural environment. Earlier this year, the White House announced a new “A New National Strategy to Reflect Natural Assets on America’s Balance Sheets”calling for public input to ensure that natural resources are accounted for in economic decisions. The climate crisis has finally forced the world to think beyond GDP.
The world is now on the cusp of the Fourth Industrial Revolution requiring countries to move beyond GDP. The digital revolution is now on full throttle and rapidly reorganizing the world significantly contributing to an increase in GDP. The Infrastructure Development Consults (IDC), predicts that 65 percent of global GDP will be digitized by 2022 and that digitally transformed organizations are expected to contribute to more than half of the GDP by 2023, accounting for 54.3 trillion US dollars. The World Economic Forum predicts that 100 trillion US dollars will be added to the world economy through digital transformation by 2025. Amid the radical digital revolution, digital economists have started questioning, “whether GDP is an appropriate metric to measure the digital economy.”
Professor Erik Brynjolfson at the Massachusetts Institute of Technology’s (MIT) Sloan School of Management recognized GDP’s shortcoming in accurately measuring the digital economy because anything with zero price has zero weight in GDP even though consumers still get a lot of value from digital goods on the Internet even though they have zero price e.g. using Wikipedia. Therefore, to make GDP relevant for the digital age, Professor Brynjolfson developed a new metric called GDP-B where B stands for the benefits consumers receive from free and subsidized online services. Brynjolfson argues that with GDP-B, it is also possible to understand where the value is coming from in the digital economy or to measure well-being while GDP is only helpful to learn about wages and interest rates.
The UAE is already moving beyond GDP-B and wants to measure the country’s economy with Gross Metaverse Product. At last month’s Dubai Metaverse Assembly at the Museum of the Future, Omar bin Sultan Al Olama, the Minister of State for Artificial Intelligence, Digital Economy, and Remote Work Applications, announced the government’s plan to go all in on crypto and Web3. The UAE wants to prove the metaverse, eventually, could carry enough of a MARKET CAPITALIZATION that would RIVAL some of the world’s largest economies. The state minister also said that “Gross Metaverse Product will be able to create billions of dollars in returns for Dubai by experiencing emirate in the metaverse.” The Dubai Metaverse Assembly was a follow-up event to last July’s announcement of the Dubai Metaverse Strategy which aims to create 40,000 jobs and add 4 billion US dollars to the emirate’s economy over the next five years. In any case, the Gross Metaverse Product is an ultra-radical idea that is ahead of its time. It will take a while for the world to make sense of the shift.
The metaverse is an emerging space that will break platform boundaries bringing together siloed ecosystems into a decentralized world. The metaverse is expected to have 5 billion users by 2030 providing an economic opportunity worth 13 trillion US dollars. The UAE was quick to recognize that the metaverse will be a growth lever because an increasing number of people are living online. The UAE’s Ministry of Economy is also planning to establish a virtual office with an auditorium in the metaverse to hold meetings and sign contracts. For now, tourism, education, government services, retail, and real estate will be the main sectors that will be measured by the Gross Metaverse Product. Creativity will be the key currency of the metaverse economy, but adopting a user-centric mindset to innovate around a decentralized and transparent business model will be key for businesses looking to thrive in the metaverse. The metaverse, however, cannot be ubiquitous until a proper global legal and regulatory framework is in place.
The main legal hurdle for the metaverse will be jurisdiction. The UAE or anywhere that the metaverse operates, will have no control over sales, trades, and commercial activities of this newest digital world. Simply put, governing the metaverse will be even more challenging than governing social media platforms that are disconnected from countries’ jurisdictions. The major headache for governments will be to make sense of the metaverse transactions that will ultimately turn into trades involving IMPORTS and EXPORTS between affiliated or non-associated metaverses. Governments might use the legal tools and the mindset of the analog world of the 20th Century to govern the metaverse because political elites and bureaucracy fear digital technology that is moving at breakneck speed. Cryptos will likely be the native currency of the metaverse posing a real problem for a country like Nepal where cryptos are still banned. The neo-bourgeois have applied the 18th century style authoritarian mindset to ban cryptos in the Age of the Metaverse. This trend will not change until representative democracy is replaced by direct democracy.
The very fact that cryptos are still banned in Nepal proves that the country is being ruled by politicians who are driven by outdated political ideologies that were created before the invention of GDP. Looking at the way mainstream political parties governed Nepal for the last three decades, it is highly likely the country will also miss the metaverse boat and lose talents, business, and investments to metaverse-friendly jurisdictions like Dubai. In the article titled “BitGorkha: A Decentralized Crypto Country,” which was published in Republica on February 16, 2022, I discussed how Decentralized Countries (DeCos)” will supersede nations as we understand them today and that the bigger threat to the status quo will not be cryptos, but promiscuous nationalists moving between DeCos depending on circumstances. New civilization structures like DeCos will emerge in the near future as nation-states fail to cater to people’s changing needs in the era of the Fourth Industrial Revolution mainly because modern nation-states were not built for the Internet.
Talent will migrate to a decentralized stack to reap better social-economic benefits as DeCoswith borderless populations boasting large Gross Metaverse Product Will supersede nation-states. Even though digital direct democracy does not make much sense under the current political setup in Nepal, direct democracy will be the norm in DeCos. Direct democracy is when each citizen represents themselves and votes directly on issues confronting the community because all electoral systems are inherently fraudulent under any regime. Furthermore, direct democracy can provide substantive quality. People will participate in governance by frequently engaging in referendum style digital-voting aided by artificial intelligence making parliament obsolete. Furthermore, voting will be as easy as clicking the LIKE button on Facebook posts or YouTube videos. Direct Democracy is already finding its footing in progressive countries. For instance, Thailand is already betting on the metaverse to enable the public to directly participate in politics.
At the “Thailand Metaverse Expo 2022,” which was held from August 19 to 21, 2022, Thuntee Sukchotrat, the Chief of Thai Sang Thai Party’s Digital Transformation, explained how the metaverse will redefine politics and governments because advanced digital technology will make direct democracy a reality. People have limited power only up to the elections under representative (indirect democracy) because elected officials usually don’t fulfill their promises once elected to public office. On the contrary, politicians, under direct democracy will be forced to listen to the people. The Thai public recently participated in a parallel no-confidence vote against the government using the D-vote website. After the success of the D-vote website, the Thai Sang Thai party is setting up an office in the metaverse to offer everyone 24-hour access to the party. Sukchotrat firmly believes “Political technology will create a politics where people will maximize participation and their power.” Even though it might seem as though Sukchotrat was sharing his novel ideas while smoking medical marijuana, his political party is determined to make the direct democracy metaverse a reality in Thailand.
Nepal’s digital transformation is moving at a snail’s pace and if things are to change for the better, the country needs to discard the political rhetoric fit for the 18th Century and also learn a thing or two from Thailand. Nepal should implement direct democracy in the metaverse as well as legalize marijuana. Thailand legalized marijuana in June 2022 promoting it only for medical use to boost the economy that was severely hit by the COVID-19 pandemic. The country could end up becoming the number one destination for both cannabis cultivation and consumption reaping the benefits of the global cannabis market size that is projected to reach USD 82.3 billion by 2027. Good weather, beautiful beaches, and friendly people put Thailand in a better position to beat Amsterdam and the United States to be the preferred destination for cannabis. Thailand’s medical marijuana tourism’s future looks bright because Cannabis Research Firm Prohibition Partners estimates that the Thai cannabis market is expected to be worth USD 21 billion over the next couple of years. Cannabis legalization is not a new thing for Nepal. Cannabis was legalized in Nepal by the visionary King Mahendra. Cannabis was banned in Nepal in the 70s.
Nepal, unfortunately, missed the First, Second, and Third Industrial Revolutions. It will miss the Fourth Industrial Revolution as well because the government is too restrictive on radical ideas and technological innovations. The general practice in highly advanced democracies is that governments typically provide enough room to breathe and space to grow when new technologies are introduced. For example, many advanced countries did not restrict cryptos for almost a decade and only stepped in and started to regulate cryptos once the space became mature. On the other hand, the Government of Nepal banned crypto in 2017 and is still not willing to develop regulations.
Nepal needs politicians who are fit for the era of self-driving cars, cryptocurrencies, medical marijuana legalization, and the metaverse. People should vote for politicians who are willing to embrace Gross Metaverse Product and go full throttle on digital transformation to reap the benefits of the digital economy as well as promote medical marijuana tourism. Both strategies would earn billions of dollars in the foreign reserve for Nepal as well as boost employment opportunities in the country. The government and the political setup are not doing anything to develop a conducive environment for businesses to thrive in Nepal. The neo-bourgeois prefer sending the neo-proletariat to work in the Gulf countries instead of creating an economy measured in Growth Metaverse Product.
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