How Blockchain Technology Can Help With UBI - Re: American Equity by Sam Altman

Would Universal Basic Income Work?

As America gets wealthier, so do its citizens. This sounds like a dream, or a new take on the old  American dream.

American Equity is a reasonable proposition that despite taking a lot of work in the foreseeable future, immediately brings to mind all the most relevant questions raised in the country in the last few years, especially during the global Pandemic, when poverty significantly increased.

The idea is to share the US GDP between citizens of the country. Everyone gets a monthly amount of money and is free to spend it however they want.

First and foremost, let me bring up the most well-known example of the UAE and Saudi Arabia. Oil is considered a national resource that belongs to every citizen. Unlike in most other countries, this isn’t merely a formality, but an actually implemented system.

Oil profits don’t end up in rich men’s pockets. Instead, it is invested back into the country. We see the results: stunning futuristic Dubai in the middle of a desert, and similarly well-developed cities in the UAE. That’s not all, of course, but it doesn’t take a genius to see the difference.

But in this discourse, beautification of the surrounding environment isn’t necessarily the main issue for a regular Joe. Universal basic income is. This isn’t a new idea – a guaranteed payment for every citizen. Unlike a pension, this money is provided from birth and unconditionally.

The goal of UBI is to ensure that everyone has the means to purchase the necessary items, i.e., survive. So everybody owns their ‘piece of the country’ i.e., a portion of the GDP so it means something.

This is a proposition that’s been often mentioned in the US as well as in other countries. Finland went as far as running a two-year trial in 2017. During the experiment, 2.000 Unemployed citizens received a basic monthly income of €560, the equivalent of the unemployment allowance.

The results showed improved mental well-being and confidence, however, it didn’t encourage the recipients to find jobs. While this can be seen as a counter-argument, it’s worth noting that a small positive effect on employment was achieved, and the overall job market spoiled the results by not providing jobs in the areas the participants were trained for.

From a humanitarian point of view, It’s safe to call the experiment successful.

Now let’s take a look at how this can be implemented.

Imagine a monthly UBI of €4.000 in one of the richer European countries. This is your money and you are free to do whatever you want with it.

Basically, UBI creates a system of more equal possibilities for all. Some people would choose to save up and invest in their education, raising their income, and achieving a higher social status in the future.

Others may prefer to live in the now, spending their UBI right away and remaining on the same level throughout life. The latter case would present its own set of issues such as contingent situations or health emergencies.

For either of those UBI might not be enough, so by raising their income, people would have an advantage that still motivates them to improve their financial status. With equal starting positions similar people would still be in different places by the age of 40.

The only difference is that it’s their skills and knowledge are the instruments for advancing.

In other words, the longer you live and the wiser you approach your funds, the better are your chances to accumulate wealth. Financial literacy becomes not just a skill people are forced to obtain upon reaching adulthood but something crucial from the early years.

If we boil it down to the essentials, UBI provides a world of possibilities. You can save up and get an education while never worrying about your next meal, you can pay rent and bills, and buy groceries, or you can work and demand fair conditions and pay without being afraid to lose a job.

This does sound appealing, considering that you are lucky enough to be born in a country with a lesser wealth divide.

In this case, the lower number of people is a large plus, and this can work easily in places like Norway or Denmark.

Now imagine the same image in the US. The first complication we come across, and, mind that these aren’t counter-arguments but things to consider, is the difference between states. California or Washington are infamously more expensive than Alabama or Texas.

So if your UBI depends on the state you were born in, what happens when you move to a more pricey one? Not just that, but within the US people relocate all the time: for work, family, college, etc.

There may be an interesting technological solution to this, and it’s blockchain. With a digital identification that records movement between states and provides payments from a smart contract, the issue could be fully resolved.

UBI will depend on the current state of residence with the data impossible to alter.

We could easily go further with this blockchain-based UBI service and add an option to not withdraw the funds immediately, but make them work like in the regular bank system.

If a person chooses to keep their UBI in play, they can form pensions, college funds, or just early retirement money, depending on the income.

And with streaming payments there is no need to wait, the money can be withdrawn at any point.

Blockchain isn’t the only technology that comes into play here but the other ones are not necessarily solving the problem as much as pushing the solution.

The conversation of machines replacing men is an old one, and it returns once again with AI technology. For instance, the latest round sees the possibility of artists being replaced by apps.

Universal basic income can leave humans to do what they love, not what they have to do to survive, artists included.

But let’s get back to the point, there is a conversation for economists to be had here, but sharing the GDP between citizens instead of allowing it to remain in a tight circle of rich people is an attractive idea.

And this is one of a few cases where instead of fearing technology, we could embrace it and make it work for us.

Photo by Alexander Grey on Unsplash