Modern Monetary Theory and a Basic Income for All

Everything’s amazing and nobody’s happy. Beyond the natural human impulse to never be satisfied and create itches that will never be scratched, this general air of dissatisfaction has been stoked by a system of extreme wealth stratification, the result of an inherited, upside-down economic model where we give money to the top, and we expect it to trickle down.

Universal basic income (UBI), or income guaranteed to individuals by some system they are participating in (usually the government), is one solution growing in popularity, especially during the pandemic, to better spread the wealth and reduce inequity. It is certainly the most straightforward attempt we've seen yet to address the major flaws in our global economy.

However, solutions designed to redress the problems of the past, rather than the problems of the future, are almost surely doomed to failure because they are playing in the sandbox of old paradigms.

Edward DeLeon is the founder and CEO of Anatha, a decentralized technology company building the "Blockchain for Good."

A better solution is UBI that works with a new set of strategies, enabled by new technologies like crypto and artificial intelligence (AI), to go beyond fiat currencies and taxation while empowering governments and the people they serve simultaneously.

Zero-sum game

Traditional economics is marked almost exclusively by extractive systems. This is seen in governments' currencies and the way goods and services are distributed. For me to have this gold or oil, I also have to prevent you from having it. In that kind of ecosystem, taxation makes a lot of sense. Government is creating its own extractive property to fund itself and support the order and infrastructure that compose a functioning society.

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Most proposed UBI systems require an extractive property, usually taxation, which is inefficient and often unfair. Taking money from one person to give it to another is not just unjust but unsustainable as you are only shifting around existing wealth, not creating new value.

The advent of distributed autonomous organizations, rather than extractive ones, opens up the possibility to reorganize society

Future economies built on information, information services, data, engagement or attention offer another paradigm. Information and attention – unlike commodities – are non-rivalrous goods. In these systems, sharing will be much more valuable than extracting, and thus taxation will make less sense. When you tax something, you simply reduce how much people conduct the taxable activity, which reduces the amount of tax revenue you are generating.

In new economies, you can simply use inflation models for new digital currencies to fund the government directly from the money supply and eliminate taxation altogether. Doing so would not only be more efficient for the end user (you and I) but for the government as well, allowing them to paradoxically increase their own budget while no longer bothering us with the onerous task of filing our taxes every year.

Solitary, poor, nasty and brutish is no way to go through life

Human history has been marked by poor management of scarce resources, leading philosopher Thomas Hobbes to observe that life was “solitary, poor, nasty, brutish and short.” This is not the best elevator pitch for society. Legacy systems are the sum of this poor management married with human impulses guided by trial and error.

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As we enter a new era of technological empowerment, we should try to clear at least that very low bar of nasty and brutish, while eliminating the collective, monomaniacal reliance of government and industry on the extractive.

Part of the solution may lie in the complete transition to automation, assisted by the developing wave of AI and crypto, which will remove the kind of harsh systems that promoted no-cost (slavery) or low-cost (industrial age) human labor, as well as legacy government initiatives that are extractive, such as taxation. Automation, if deployed well, promises solutions to remove the need for anyone to take a hard labor and low-wage job ever again.

As always, with more solutions come more problems. There are fears that the coming wave of automation will remove worker agency and create even more wealth stratification, with some people living above the automation line and some people living below it. Those who live above it will become emperors and the rest of us will be the hoi polloi and suffer from tremendous structural violence.

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This can be solved by taking the automation line and placing it at the very bottom of civilization so that no human being lives below it. The distributive properties of cryptocurrency can help us better do this effectively.

When we can effectively do that, with post-extractive technologies like AI and crypto, there will be systems that will emerge that allow for that possibility, to make poverty, food lines and the tent cities that have defined this early decade as an inhumane relic of the past, just like slavery. If nothing else, the advent of distributed autonomous organizations, rather than extractive ones, opens the possibility for us to follow a new way, a better way.