How Ethereum Could Deliver Universal Basic Income
There are many reasons that the world is beginning to look toward the viability of universal basic income (UBI). Some studies on the practice of distributing income to those who are in need have proven that UBI can have a positive impact on impoverished communities. During 2011, a pilot test ran by UNICEF distributed basic income grants to residents of Madhya Pradesh in the form of monthly rupee payments.
Economist and professor at the School of Oriental and African Studies, University of London, Guy Standing asserts in his paper, “India's Experiment in Basic Income Grants,” that contrary to opponents of UBI, recipients were engaged in more agrarian and business related self-employment practices rather than participating in casual wage labor. Standing points out, "Money is a scarce and monopolized commodity, giving moneylenders and officials enormous power." With a modicum of financial redistribution, many were able to pull themselves out of bonded labor and the region ultimately saw a decline in distress-driven emigration.
In the same vein, a paper titled “Activation of Minimum Income and Basic Income: History of a Comparison of Two Ideas” by sociology researcher Gianluca Busilacchi posits, "Basic income creates more occupation and frees part of a person's time, creating flexibility in the labour market."
Other independent research found that the US economy might see as much as $2.5 trillion in growth if a UBI were to be integrated. To that end, several cities outside of India are or will be testing their own UBI pilot programs, such as in the cases of Oakland, California; Utrecht, Netherlands; Ontario, Canada; and in the countries of Scotland, Brazil, and Finland.
So, the question arises, if it’s being tested around the world, and these trials are suggesting UBI can be overall beneficial, is there a delivery system that could better distribute this income to recipients?
One might look to existing governmental institutions to leverage the bureaucratic fiscal management of a resource destined for the destitute, and why not? Aid is already distributed in the form of social security income (SSI) payments, welfare checks, EBT cards (formerly food stamps), and by various other state-sponsored methods through these types of organizations, and while they have often been the subject of political scrutiny, many individuals rely on these institutions. What if there was a better, more efficient way to not only disburse aid to those in need but also to identify them? A modern way.
Enter the Ethereum blockchain. The merits of Ethereum are numerous when it comes to distributing aid. It can deliver a level of autonomous transparency, allowing for easy system management and oversight. Furthermore, the Ethereum blockchain allows for the implementation of permission layers that can keep private consumer data from prying eyes. Ethereum can do all this more efficiently than bureaucratic organizations, eliminating from the equation third parties that manage funds and may take a cut in the form of processing fees.
If the financial information of taxpayers is already tracked by government agencies via Tax IDs or Social Security numbers, it can be digitally fed into an API that interacts with the Ethereum Virtual Machine. A system like this could then be easily adapted to suit proper distribution governed by autonomous application of executable distributed code contracts (EDCCs).
Opponents of UBI contend that it enables illicit use of allocations. A cryptocurrency-based dispersal could deliver a means of transparency to offset these worries. Low transaction fees are another appealing feature that Ethereum can provide.
UBI Tokens backed by a government would be widely accepted by merchants who provide an assortment of goods and services. Anything that fiat money can buy, UBI Tokens would also be able to purchase. They could be used to pay for groceries, utilities, or even to take the kids to a movie. Some might even choose to invest in their futures with fiat currency while the economy is stimulated by the commerce provided from UBI tokens.
“No conditions were imposed on recipients. This we regard as crucial. Those who favor conditionality say in effect they do not trust people to do what is in their best interest and that the policymaker knows what is.”
AI can study spending trends and provide variable caps, as deemed algorithmically logical in line with the goals of financial prosperity. By identifying successful cases where individuals surpassed the necessity for UBI by reaching a pre-set income threshold it may be possible to actually create a real system of financial footholds. This type of social service could prove to be invaluable to humanity.
If it is successful for social application, other forms of subsidies may become tokenized and run through similar systems, perhaps eventually putting an end to questions lingering over corruption, deep pockets, and so-called pork barrel politics.
An important note is that such a system would only work in the presence of a more robust identification system, integrating with verifiable income records to ensure honest practices and curb manipulation. To that end, the 45th presidential administration is researching ways to effectively modernize identity provenance and transition away from the Social Security number, a known target for identity thieves. If such a blockchain-based system of identification is implemented with tax ID metrics ingrained into it, it will represent a significant step towards the basis of the system with which an AI could integrate and aid in the distribution of UBI.