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

Would universal basic income work?

As America grows richer, so do its citizens. This sounds like a dream, or a new version of the old American dream.

American Equity is a reasonable proposal that, despite a lot of work in the foreseeable future, immediately brings to mind all the most relevant questions that have been raised in the country in recent years, especially during the global pandemic, when poverty increased significantly.

The idea is to divide the US GDP between the citizens of the country. Everyone receives a monthly sum of money and is free to spend it as they wish.

First of all, let me address the most famous example of the UAE and Saudi Arabia. Oil is considered a national resource that belongs to every citizen. Unlike in most other countries, this is not just a formality, but an actual implemented system.

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

But in this discourse, beautifying the surrounding environment is not necessarily the main concern of an average Joe. Universal basic income is. This is not a new idea – a guaranteed payment for all citizens. Unlike a pension, this money is given from birth and unconditionally.

The goal of UBI is to ensure that everyone has the means to buy the necessary goods, i.e. to survive. So everyone owns their “piece of the country”, ie a share of GDP, so it matters.

This is a proposition that has often been mentioned in the United States as well as in other countries. Finland went so far as to run a two-year trial period in 2017. During the experiment, 2,000 unemployed citizens received a basic income of 560 euros, equivalent to unemployment benefits.

The results showed improved mental well-being and self-esteem, but it did not encourage the recipients to find jobs. Although this can be seen as a counter-argument, it is worth noting that a small positive effect on employment was achieved, and the overall labor market spoiled the results by not providing jobs in the areas the participants were trained for.

From a humanitarian point of view, it is safe to call the experiment successful.

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

Imagine a monthly UBI of €4,000 in one of the wealthier European countries. This is your money and you are free to do whatever you want with it.

Basically, UBI creates a system with more equal opportunities for everyone. Some people will choose to save up and invest in their education, increase their income and achieve a higher social status in the future.

Others may prefer to live in the moment, use UBI immediately and remain at the same level throughout their lives. The latter case will present its own set of problems as contingent situations or health emergencies.

For some of these UBI may not be enough, so by increasing their income, people will have an advantage that still motivates them to improve their economic status. With similar starting positions, similar people will still be in different places at the age of 40.

The only difference is that it is their skills and knowledge that are the instruments to move forward.

In other words, the longer you live and the more wisely you approach your money, the better your chances of accumulating wealth. Financial literacy becomes not just a skill people are forced to acquire when they reach adulthood, but something crucial from the early years.

If we boil it down to the essentials, UBI offers a world of possibilities. You can save up and get an education without worrying about your next meal, you can pay rent and bills and buy groceries, or you can work and demand fair terms and pay without fear of losing your job.

This sounds appealing, considering you are lucky enough to be born in a country with a smaller wealth gap.

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

Imagine the same picture in the US. The first complication we come across, and remember these are not counterarguments, but things to consider, is the difference between states. California or Washington are notoriously 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 expensive one? Not only that, but in the US people move all the time: for work, family, college, etc.

There could be an interesting technological solution to this, and it is blockchain. With a digital identification that records movement between states and provides payments from a smart contract, the problem can be fully solved.

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

We can 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 banking system.

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

And with streaming payments, there’s no need to wait, the money can be withdrawn at any time.

Blockchain isn’t the only technology at play here, but the others aren’t necessarily solving the problem as much as pushing the solution.

The talk of machines replacing men is old, and it’s coming back again with AI technology. For example, the latest round sees the possibility of artists being replaced by apps.

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

But let’s get back to the point, it’s a call for economists here, but dividing the GDP among citizens instead of letting it remain in a tight circle of rich people is an attractive idea.

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

Photo by Alexander Gray on Unsplash