July 21, 2017

Putting Money where my Mouth Is

Filed under: Uncategorized — admin @ 12:09 pm

Steven Pinker in “Better Angels of our Nature” remarks how humans have become less violent over every timescale (millennia, centuries, decades etc.) and proposes several reasons: better medicine, richer society, etc. But a major one is how we expand our notion of who we empathize with. It used to be the family, the tribe. Then it became the commonwealth, the country. Now it’s a globalized society, with facebook, etc. and we are debating animal rights, more people than ever are becoming vegetarian, etc.

What would it look like in a post-automation future, though? Capitalism drives technology ahead but creates externalities. People who are unemployed still need to eat. So a form of Basic Income / Single Payer is inevitable. But also, on the COMMUNITY level: entire communities can go bankrupt. Detroit and Puerto Rico are recent examples, with Illinois approaching bankruptcy. In Europe, the PIIGS countries had similar fates after joining the Euro. Why? In the case of Detroit, automation played a big role. But one thing common to all of these is that they can’t print their own currency. They don’t have control over their own monetary policy. But more than that, trade imbalances can carry dollars / euros away from the country, leading to more austerity / unemployment. Automation may exacerbate this if capital is concentrated in some sectors and not others.

I think that decentralization is a crucial component to making communities resilient. The Bristol Pounds currency is a big inspiration to me. They have their own local currency, that’s worthless outside Bristol. That means it circulates inside, and the community can’t run out of it. This makes it more resilient and vibrant. Oakland just opened its own bank to serve local businesses, becoming the first city in the country to do so.

If you think about where the value of money comes from, it’s the confidence of being able to trade it for something you want at the time. So, the more people accept it in your community, the more valuable it is to the community. This is a network effect, and really, *money is an app*, which can run on a community platform. So it makes it perfect for Qbix Platform.

Today with Etherium, new currencies can be produced that take advantage of a global consensus. But we don’t even need a global consensus within a smaller community. The Interledger Protocol enables payments across communities. Communities can have their own currencies, and there doesn’t have to be a global ledger or wasting energy for proof-of-work mining. This is a major breakthrough in decentralization. (In fact, peer-to-peer payments and Secure ScuttleButt Protocl are the next step in true decentralization.)

The Right Way to do Basic Income

I’ve spent years debating politics and economics with people across the political spectrum, and it’s paid off. In my other posts, I have explained how a Universal Basic Income is an inevitable outcome of automation and not just helps people survive, but helps both increase liberty and efficiency of labor markets. Now, I think I know exactly how to implement it.

It has to be built into the local currency.

Prices vary from place to place, but they are typically similar within a certain local community. People ask, “how can we afford a Basic Income, and who is going to pay for it”? They have in mind a progressive tax scheme, some sort of negative income tax where everyone files a tax return, etc. Libertarians object that force is involved when taxes are collected. But none of that has to happen. The community simply has a currency that almost everyone accepts, and this currency automatically prioritizes people’s basic needs before everything else. It’s built into the system.

Ultimately I’d like to see a currency which has the following properties:

  • It’s a cryptographically secure app run by a local community
  • There’s provably random polling of community people to see how much they spend on basic necessities
  • This determines the rate of inflation – which is linear like ETH and not exponential – and everyone in the community gets UBI this way.
  • (Optional) If the community wants to lower prices for e.g. food, it can implement a single payer system by having the first hop for each coin be earmarked for food, etc. and put pressure on the food vendors to keep their prices low for that hop. In any case, after it’s spent, the coin behaves like every other.

This seems to me to capture the right model for everyone. Money stays in the community. Everyone needs to eat / have health insurance / etc. anyway, and there is no free lunch: everyone has to pay for these things anyway without or without wealth redistribution. So the living wage is built into the currency itself, with the option to collectively bargain for the basics. No one is taxed to pay for the basic income, there are no political decisions around that. The inflation is managed proportional to the cost of basic living. And even the voting is replaced by random polling, to minimize problems associated with voting (which I wrote about before).

The only political decisions would be around who to accept into the community, basically guests could “immigrate” and receive the UBI, or just visit.


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