I’ve seen this concept mixed with the simulation “hypothesis”. The logic goes that if future simulators are running a “rescue simulation” but only cared (or at least cared more) about the interesting or more agentic people (i.e. rich/white/westerner/lesswronger), they might only fully simulate those people and leave simpler nonsapient scripts/algorithms piloting the other people (i.e. poor/irrational/foreign people).
So basically literally positing a mechanism by which they are the only real people and other people are literally NPCs.
Within the world-building of the story, the way the logic is structured makes sense in a ruthless utilitarian way (although Scott’s narration and framing is way too sympathetic to the murderously autistic angel that did it), but taken in the context outside the story of the sort of racism Scott likes to promote, yeah it is really bad.
We had previous discussion of Unsong on the old site. (Kind of cringing about the fact that I liked the story at one point and only gradually noticed all the problematic stuff and poor writing quality stuff.)