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Economy in the Federation


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So it's been mentioned quite a lot in Star Trek media that by the time of the 22nd century, human kind no longer uses currency at all. It's a perfect society where hunger, need for acquisition and disease have been eradicated. 

It's strange. We don't know what it's like to live in a society like that. We want to eat? We pay. We want go on vacation? We pay. The system may make many people corrupt and so but it works to be just in what you receive.

But if we try to imagine it... If you were in the Federation you go to a restaurant and what? You leave without giving anything? Why would people even want to work? I mean for example those waiters in the restaurant... were they born wishing to be waiters? I doubt it, but then what's the incentive? 

I'm not complaining about the system at all, but it does seem a bit unrealistic. I realise Star Trek is this perfect utopia where people dance in rainbows, but using in-universe reasons, what's the logic behind it? 

I recently found myself simming in a situation where in this century you would normally pay but supposedly in the 24th you wouldn't, and I didn't know what was the correct way to proceed. Any insight on this is appreciated. 

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One of my favorite articles about this subject that we actually ended up sharing a link to on the 118 Facebook page:

https://medium.com/@RickWebb/the-economics-of-star-trek-29bab88d50

So, behind the scenes there is a massive internal accounting and calculation going on — the economics still happen. They just aren’t based on a currency unit, and people don’t acquire things based upon a currency value. People just acquire things from replicators, from restaurants such as Sisko’s or coffee shops like Cosimo’s, or, presumably, get larger things from dealerships or (more likely) factories. This could still be called “buying,” as a throwback.

Two points here: first, the accounting is done in energy units, so that there is no need for currency. And why not? Resource allocation is mainly about energy anyhow, doubly so if it’s only robots building most things. And secondly, if you never had money, never saw it, and it didn’t physically exist to measure things, you’d pretty much tell people, like a certain 20th century oceanographer, that you don’t have money in the 24th century, regardless of some automated accounting. This jibes with Federation people knowing what money is — because other societies have it — but saying they don’t use it. Because they don’t.”

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1 hour ago, Sotak said:

But if we try to imagine it... If you were in the Federation you go to a restaurant and what? You leave without giving anything? Why would people even want to work? I mean for example those waiters in the restaurant... were they born wishing to be waiters? I doubt it, but then what's the incentive? 

Say you’re Joe Sisko and you want somebody to help run your restaurant. Are you gonna go with the guy who has previous experience working in a restaurant or the guy who hasn’t ever done it? Or even if you wanted to open a restaurant yourself, how would you start to learn the business? Probably by working in another restaurant.

Likewise, say you want to see the stars and travel in class aboard a Galaxy class starship. What if you don’t want to go to (or can’t get into) Starfleet Academy and you don’t want to enlist? Joining for a tour or two as a civilian bartender or waiter in Ten Forward doesn’t seem like such a bad gig then. Work a few shifts and then enjoy the rest of your time aboard the Enterprise! I’m sure there are plenty of us who would sign up to pour Picard’s drinks.

And if you had other skills, you could try getting a place aboard without being in Starfleet by serving as a teacher, a botanist, or even a barber...

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56 minutes ago, Roshanara Rahman said:

One of my favorite articles about this subject that we actually ended up sharing a link to on the 118 Facebook page:

https://medium.com/@RickWebb/the-economics-of-star-trek-29bab88d50

Pretty deep on the analysis of the subject. I think I have a much better view of how this works now. We really only see capitalism against communism in the world, and since I'm not really knowledgeable about economics at all, it was specially informative. Thank you so much for sharing that, I think I'll use it for reference throughout my entire life :) 

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45 minutes ago, Roshanara Rahman said:

Likewise, say you want to see the stars and travel in class aboard a Galaxy class starship. What if you don’t want to go to (or can’t get into) Starfleet Academy and you don’t want to enlist? Joining for a tour or two as a civilian bartender or waiter in Ten Forward doesn’t seem like such a bad gig then. Work a few shifts and then enjoy the rest of your time aboard the Enterprise! I’m sure there are plenty of us who would sign up to pour Picard’s drinks.

And I hadn't thought of that, actually. It does make sense for some people to do that, and yeah there are plenty of people in the Federation. And if their ideals are those of free determination and self-improvement, which would be the necessary incentive for people to learn and do things with their own lives instead of expecting any other reward. Makes sense, while it also ensures there is no corruption or theft because there is not even a need for it. Win-win situations are always the best.

Again thanks for the answer! It sure got me thinking, while it also made me a little better how to handle things from now on. Very insightful.

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I love this question because, to me, it really underpins the whole reason that Star Trek is utopian in the first place. It's not Starfleet that makes this vision of the future compelling, it's the economics, which influence everything else. 

It's hard to imagine just how different things become – even with Star Trek as a vision – when we get this kind of "proto-post scarcity" environment. I mean, just consider one tiny thing: Birth control. What if everyone on Earth, men and women, had access to a birth control pill that was free and could be procured privately from the replicator (no judgments!) at a moment's notice, and be easily used in pill form before or after "interpersonal relations" happen? How would that change every generation on down the line? Just the simple fact that more children would be born into families that wanted them, as opposed to some children being born into situations where their parents may have felt familial pressure to allow the pregnancy to come to terms – that alone would have huge implications on the psychology of much of the world's population. That doesn't even scratch the surface of talking about the data around how planned pregnancies are (at least on a large-scale, statistical basis) healthier for everyone involved, and have long-term benefits for children.

And then go a step beyond that and imagine that no one is ever hungry. No one worries about rent payments. No one has to die alone because their family members can't afford to be there with them in their last moments. These are things that happen now, every day. And we have the ability to change them, but not the willpower. What would it be like for no child to ever feel hunger pains? Or to have to sleep in a car because their parent lost their job? Imagine how stopping those mental wounds from ever happening – that we know have a dramatic impact on long-term mental welfare – would drastically improve everyone's life. 

One of my favorite thought exercises is this question about money and work. This is part of the increasingly popular discussion around Universal Basic Income (UBI) that's become a very hot topic lately. Lots of people who work in tech are beginning to wonder, quite loudly, what happens when automation puts a massive number of people out of work. We've crossed over one threshold with automation already – computers put millions of people out of work, and reconfigured the workforce. For example: Secretarial roles were no longer needed once personal computers became ubiquitous. So many of the women who held those roles pushed into other types of office work, which in turn put pressure on the male members of the workforce to either retire, retrain, or drop out of the workforce. 

The next threshold will be an even bigger reorganization. And we're seeing the first ragged edges of that right now with autonomous vehicles. Tesla autopilot in the family sedan is what gets the most press, but it's actually the commercial semi trucks which will have a much bigger effect first. Trucking is a huge industry in America, so the effects will ripple quite strongly through the economy as 75% or more of long-haul drivers are no longer needed, once commercial semis can drive between cities. (The current prediction is that semis will be driven by humans to outside city limits, where they'll switch into autonomous mode until they reach the outskirts of their destination, where a human driver will jump in the cab and take the vehicle the last few miles to the dock.) We could see that happening in the next 10 years, with drivers being phased out entirely in the next 20. That's just one tiny part of this huge change that automation will make to our economy. 

Check out this infographic that talks more about this: https://futurism.com/images/universal-basic-income-answer-automation/

Perhaps the biggest question around UBI is how to talk about the value of labor and a full-employment economy. Is it okay if people don't work? Will people still want to work even if they have some, or all of their needs paid for? And the early data from UBI tests seem to be the bell-curve we get in so many psychological experiments. There are some people who, when they get UBI, drop out of the workforce. There are some people who work harder because now they have the resources to, say, start a business! But the vast majority of people keep doing what they're doing with a bigger safety net for themselves and their families, and in turn live more prosperous lives because of that. 

So now apply that to the future – perhaps we can expect to see a similar phenomenon. Some people might never work. Video games will continue to improve and some people will choose to spend their lives engaged in this kind of non-sports competition. Some people will work harder than they would now because the ability to access more resources will allow them to bring to bear personal strengths they never had access to. Most people will probably find some kind of meaningful work that allows them to spend more time with their families or engaged in creative endeavours than they would without access to either UBI or some other kind of "Federation Credits"/social welfare scheme. Despite the cynics among us who would believe that most people are lazy and want to do nothing, the fact is that most people want to find meaning in their lives. Most people get bored when they have nothing to do, and even reading an endless supply of books is not what they want to do for the rest of their lives. So they turn to work to give meaning. It might not look the same as today's office job, but people will still want to contribute to society, they'll still to leave a legacy, they'll still want to fill up their time with something.

Will anyone still do menial labor? That's an open question we don't know the answer to, and even "The Economics of Star Trek" editorial doesn't have a strong hypothesis on. I think you can argue that most menial labor, as we know it today, can be whittled down to the bare bones by automation. Surely we'll be able to invent a robot that can scrub toilets within the next 50 years? All that will be left will be to manage the robot workforce. And some people will find joy in that! 

And what about the desire to try different things? When human priorities have shifted so incredibly by the point that we no longer need money, perhaps there's simply a societal trend toward trying new things. Maybe I want to be a waiter for a while just to understand the other side of the "server/patron" power dynamic, which in turn gives me the ability to be more empathetic in new ways. Maybe I just spent two years working on an incredible medical project that took all of my brain power and creativity, and for a while I just want to be able to get out of the house and do something with lower stakes that allows me to interact with lots of people and experience joy in bringing them incredible food. Or maybe I just realized that I don't like desk jobs, or space jobs, or even art or sports or video games and I just want a simple job at one place where I can work for the rest of my life.

The point is, there are lots of motivations we can't understand from where we are right now because we're enclosed in a system that creates perverse incentives. But things are so entirely shifted by the lack of want for anything, it will totally reconfigure our outlook on what's worthwhile and what's not. The simple fact of having – let's say, for the sake of what we know of Star Trek life spans? – 120 years of healthy life to "fill up" with something will give everyone a sense that there's plenty of time to get to all the things you want to do, and there's no reason to work yourself to death early in life or spend all that time doing one single thing. Why be a doctor for 80 years when you can be a waiter, a doctor, a librarian, an artist... ?

So many fun things to imagine :) Thanks for bringing this up!

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My question n such a society would be what happens to those on the edge of society the hobos the tramps do they simply cease to exist despite some people nowadays choosing a hobo style lifestyle,. If indeed we do earn energy by working isn't this now a barter society where you "earn" energy you can exchange for housing food or clothing.

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This conversation got deeper than I had expected pretty fast.

But based on Quark's bar alone, is it possible Starfleet gives their officers a small commission (is this the right context for this word? i dunno...)  for their service when dealing with other cultures that still require currency?

I feel Quark was pretty adamant about payments in latinum.  And having a station full of Starfleet officers had appeared to be profitable.  Before the Dominion War of course.

Totally separate fact...I am very glad that this subject was brought up.  A large piece of my character's backstory is the fact that he owes a large sum of latinum to a Ferengi lender for a loan from his pre-Starfleet days.

I have gone on an assumption that either the replication of latinum is illegal (to not crash it's value and make it worthless) orrrr seeing as Ferengi have zero ethics and would do it anyway, that for whatever reason latinum is incapable of being replicated.

Edited by Valin Dermont
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9 hours ago, FltAdml. Wolf said:

I love this question because, to me, it really underpins the whole reason that Star Trek is utopian in the first place. It's not Starfleet that makes this vision of the future compelling, it's the economics, which influence everything else. 

It's strange to think that such a basic aspect of the Federation affects everything else we see in Star Trek and yet it's something not many people understand and are confused by. 

10 hours ago, FltAdml. Wolf said:

The point is, there are lots of motivations we can't understand from where we are right now because we're enclosed in a system that creates perverse incentives. But things are so entirely shifted by the lack of want for anything, it will totally reconfigure our outlook on what's worthwhile and what's not. The simple fact of having – let's say, for the sake of what we know of Star Trek life spans? – 120 years of healthy life to "fill up" with something will give everyone a sense that there's plenty of time to get to all the things you want to do, and there's no reason to work yourself to death early in life or spend all that time doing one single thing. Why be a doctor for 80 years when you can be a waiter, a doctor, a librarian, an artist... ?

So many fun things to imagine :) Thanks for bringing this up!

It's really a utopian society isn't it? I also began to wonder that for example, it's really common for people before going to university to want being something that is in their heart's desire but end up studying something much more economically convenient because what they want doesn't matter unless they want to starve. And it really is unfair, because if you're not developing your skills as much as you can and fulfil your goals, what is there to live for?

It's also mentioned many times that we are capable to change our system into something similar to Star Trek, but I don't think humanity as it is has the mindset for it. We have the resources, we have the power to change, but I don't personally believe the change would be smooth at all even if it happened, which I also highly doubt. If it ever is attempted, it will probably crumble in the first few years.

Or maybe not? I mean if communism is a thing after so many years even if it's proven to be ineffective and highly damaging to a society, who's to say a system like the Federation's won't be attempted, fail to stand for a few years, and then prove to be good for everyone? Will globalisation poison a nation with said system or will its development with proto-post scarcity need to be parallel to every nation in the world? Maybe it's not necessary. Maybe it's like the Federation isn't "poisoned" by the Ferengi, for example. They're just used to different things. Maybe there is hope for humanity yet. 

5 hours ago, Valin Dermont said:

Totally separate fact...I am very glad that this subject was brought up.  A large piece of my character's backstory is the fact that he owes a large sum of latinum to a Ferengi lender for a loan from his pre-Starfleet days.

And actually, part of the reason I've been thinking about this subject is precisely the issues Dermont is having with money. Since I was under the assumption that the Federation was sort of a communist-capitalist society in which money doesn't exist but you still have free will to choose your career paths and such, I was slightly confused by your character arc, but dismissed my questions for some time believing that I really didn't comprehend anything about economy in Star Trek and everyone was informed on the subject. I'm glad to see there is actually quite a big explanation for my questions, because it really is much more complex than I originally thought. 

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1 hour ago, Sotak said:

It's also mentioned many times that we are capable to change our system into something similar to Star Trek, but I don't think humanity as it is has the mindset for it. We have the resources, we have the power to change, but I don't personally believe the change would be smooth at all even if it happened, which I also highly doubt. If it ever is attempted, it will probably crumble in the first few years.

Or maybe not? I mean if communism is a thing after so many years even if it's proven to be ineffective and highly damaging to a society, who's to say a system like the Federation's won't be attempted, fail to stand for a few years, and then prove to be good for everyone? Will globalisation poison a nation with said system or will its development with proto-post scarcity need to be parallel to every nation in the world? Maybe it's not necessary. Maybe it's like the Federation isn't "poisoned" by the Ferengi, for example. They're just used to different things. Maybe there is hope for humanity yet. 

Keep in mind how they got there in the story, though: The Third World War kills over 600 million and utterly tears down everything to the point that human society, as we know it, no longer exists. 

Governments have the ultimate power - and motivation - to quell dramatic social change. When there’s no one left with that kind of power it leaves a vacuum. In the Star Trek story, there are no significant government structures on Earth that would exercise pressure against the kind of new society that Earth moves toward after first contact. The Vulcans essentially seed the new Earth society by inspiring humanity to work together, motivating them toward a goal (space exploration), and showing them a new model for governance.

It’s a bit like saying an alcoholic only quits drinking once they’ve hit rock bottom. It would take a drastic event for Earth to move in this direction.

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11 hours ago, Ferier said:

My question n such a society would be what happens to those on the edge of society the hobos the tramps do they simply cease to exist despite some people nowadays choosing a hobo style lifestyle,. If indeed we do earn energy by working isn't this now a barter society where you "earn" energy you can exchange for housing food or clothing.

Basically what the article Rich shared posits is that everyone gets a “bank account” with all the money they could ever need when they’re born. You can still work and make more money, but why would you care how much money you’re making if you already have enough to live comfortably your whole life? You might earn “credits” from Starfleet but you don’t notice or worry about them.

As far as the “hobo lifestyle,” sure, people may still want to live outside of society. They would just have whatever resources they wanted to do that with. 

7 hours ago, Valin Dermont said:

This conversation got deeper than I had expected pretty fast.

But based on Quark's bar alone, is it possible Starfleet gives their officers a small commission (is this the right context for this word? i dunno...)  for their service when dealing with other cultures that still require currency?

I feel Quark was pretty adamant about payments in latinum.  And having a station full of Starfleet officers had appeared to be profitable.  Before the Dominion War of course.

Totally separate fact...I am very glad that this subject was brought up.  A large piece of my character's backstory is the fact that he owes a large sum of latinum to a Ferengi lender for a loan from his pre-Starfleet days.

I have gone on an assumption that either the replication of latinum is illegal (to not crash it's value and make it worthless) orrrr seeing as Ferengi have zero ethics and would do it anyway, that for whatever reason latinum is incapable of being replicated.

Check out that article Rich shared above - it has some interesting theories on this, like the idea that that drinks are a “loss leader” at Quark’s - they’re free, as long as you gamble or pay for the holosuites, just like at casinos today. And that people do have a way to exchange currency with other cultures through the “Federation Credit,” but that this is, in fact, a “third party currency,” sorta like bitcoin. His hypothesis is very interesting and works quite well based on what we’ve seen onscreen!

Re: Latinum, good discussion about that here: https://scifi.stackexchange.com/questions/5337/why-can-latinum-not-be-replicated

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On 4/15/2018 at 5:39 AM, Valin Dermont said:

Totally separate fact...I am very glad that this subject was brought up.  A large piece of my character's backstory is the fact that he owes a large sum of latinum to a Ferengi lender for a loan from his pre-Starfleet days.

http://memory-alpha.wikia.com/wiki/Federation_credit

I'll leave that there.  It's a short, but interesting little blurb.  On one hand, we have Gene Roddenbery who said that no type of money or credit existed, but the article cites several examples of money being used.  And I do think that some sort of Federation credit -must- exist, if for no other reason than the economics of trade with other races who do happen to use money.  Here's a quote from the above:

"Almost a century later, the Federation would have paid 1.5 million Federation credits as a lump sum and then 100,000 credits every Barzanian year for the rights to the Barzan wormhole. (TNG: "The Price")

So let's assume for the moment that these credits do exist.  What are they worth, then, and what are they used for?  My assumption would be that, unlike our current real-life currencies, they're backed up by something real and tangible, and that they aren't meant to be hoarded like money is.  The Federation wants for very little in the way of basic life requirements.  If you're an alien race that isn't a Federation member but still does trade with them, your planet really needs food, and you have X number of Federation credits that you earned by sending art and luxuries that the Federation's interested in, perhaps you can then exchange those credits for vast amounts of replicated basic foods to help you get through a famine.  

It seems unlikely to me that individual citizens would have access to more or less of these credits than, say, a Starfleet officer, whom one could argue is a more productive member of society than someone who just chooses to live life traveling Earth in the 24th century equivalent of a RV.  If that were the case, then you'd start getting a little too close to that acquisition of wealth problem, and a capitalist society.  I would assume that Federation citizens (Starfleet included) have access to credits not in the form of a regular paycheck, but from a collective pool, perhaps set up to be accessible from an individual starship or colony, that citizens could draw from in order to trade them for alien goods and services. 

Either way, it doesn't seem like a good idea for Starfleet to let its officers have no way of paying for goods from a culture like, say, the Ferengi, where if you're not making monetary transactions, you're basically not dealing with them at all. :)

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On 4/15/2018 at 12:39 PM, Valin Dermont said:

But based on Quark's bar alone, is it possible Starfleet gives their officers a small commission (is this the right context for this word? i dunno...)  for their service when dealing with other cultures that still require currency?

I feel Quark was pretty adamant about payments in latinum.  And having a station full of Starfleet officers had appeared to be profitable.  Before the Dominion War of course.

Totally separate fact...I am very glad that this subject was brought up.  A large piece of my character's backstory is the fact that he owes a large sum of latinum to a Ferengi lender for a loan from his pre-Starfleet days.

I have gone on an assumption that either the replication of latinum is illegal (to not crash it's value and make it worthless) orrrr seeing as Ferengi have zero ethics and would do it anyway, that for whatever reason latinum is incapable of being replicated.

I've just been re-watching DS9 with a friend and have been thinking about this a lot. 

It would be pretty feasible that non-federation aligned civilizations would have their own currency and would use it. Now, this wouldn't mean that Federation Credits (a term used in TOS but I think could be extended over to TNG as a unit of measure of energy given to each person) wouldn't be accepted with another civilization, they would just have to convert it the same way we convert USD to Euro. 

If a starfleet officer walked into Quarks and ordered a drink, Quark would definitely have a way to credit the drink ordered (what good business man wouldn't?) think of it like a even more advanced debit/credit card system. Just because that drink was ordered in Federation Credits (FC) doesn't mean wouldn't be able to then exchange it into Latinum through some sort of station-board bank, federation or privately run. Quark would then pay Rom and his staff in Latinum because that's what currency the shop trades primarily because it's a Ferengi bar. 

All that being said, it would still be possible to gamble, take out credit and make bad loans in this system. If you go to Europe and get in debt with a gang they will still want to be paid. It wouldn't matter if you had an American credit card. 

The reason that Quark and other neerdowells preffer to work in Latinum is because, like cash today, it's MUCH harder to trace than a computerized credit system and you could hide it under your mattress. 

 

As for what Latinum IS, I would think that it would be some sort of metal with a incredibly complex matrix (cosider the fact that it's a liquid when it's not encased in gold, as we see Morn regurgitate some in this form) similar to dilithium, or maybe even a rare type of organic metal since we know that replicators can not recreate living tissue, so any replicated version of it would be detectable as a fraud. 

 

These are just my speculations but I hope they help!

Edited by Dante Termine
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  • 2 weeks later...

One way that I personally like the way it was handled in our 118 is that the Federation doesn't have a currency per se, they follow pretty much the idea of energy being used as a way of buying and selling. The base idea though is that they do track the value of the "currency" so that other cultures who have not shed their money systems are able to convert their currency into something that can be used to "buy" things in the Federation while the Federation citizens can convert the value out of Federation energy credits into a currency of value to the culture that functions with money. In essence, 10,000 credits for a starfighter would be a measurement of how much energy credits it would take to build one. It's a measurement, not a coin. 

That way it meets the "no money" idea but still has a way to make cultures like Ferengi still function and exist and willing to work with the Federation politically. 

https://wiki.starbase118.net/wiki/index.php?title=Currency

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