I also don't see the point of making historical simulations of that kind in the first place. It strikes me as unnecessarily complex and costly.

Calibration test: How many policies that have been enforced by governments worldwide would you have made the same claim for? How many are currently still being enforced? How many are currently in planning/discussion/voting/etc. but not yet implemented?

In my own, not seeing the point and this being unnecessarily complex and costly, combined with the fact that it's something people discuss as opposed to any random other possible hypothesis, makes it just as valid a candidate for government signaling and status-gaming as many other types of policies.

However, to clarify my own position: I agree that the second premise implies some sort of motive for running such a simulation without caring for the lives of the minds inside it, but I just don't think that the part about having billions of "merely simulated" miserable lives would be of much concern to most people with a motive to do it in the first place.

As evidence, I'll point to the many naive answers to counterfactual muggings of the form "If you don't give me 100$ I'll run a trillion simulated copies of you and torture them immensely for billions of subjective years." "Yeah, so what? They're just simulations, not real people."

It certainly raises interesting questions, and I can't presume to know enough about human psychology (or future AI development) to confidently make a prediction one way or another.

I'd be careful here about constraining your thoughts to "Either magical tiny green buck-toothed AK47-wielding goblins yelling 'Wazooomba' exist, or they don't, right? So it's about 50-50 that they do." I'm not quite sure if there even is any schelling point in-between.