In course of the recent discussion about Universal Basic Income Dan Larimer, the genius founder of EOS along with a few other ground breaking block chains has come up with another philosophical piece on the fundamentals of wealth distribution, taxes and justice, published on Medium:

(image source)

Quick Summary

I try to summarise as briefly as possible: Currently property is typically defined by the perpetuation of an earlier appropriation, which by nature can always be understood as violene (e.g. wars, coerxion, unrightful taxes etc) even where it is about natural resources, because it uses ressources inherently belonging to all generations, not only the one currently able to exploit it.

The proposed solution to establish a fair distribution of wealth, would be a 5% tax on all available ressources distributed to everyone (either on a global or at least national scale), which would basically remover the vast majority of poverty world wide. Such a system would be simple and also remove the necessity of rampant governmental requirements of proof.

The whole analysis part of the article is absolutely stringent and – given he current discourses in politics worldwide – surprisingly candid: It proposes little less than a gradual transfer of wealth over the ourse of 100 years by a 5% annual property tax.

This is not an income tax!

This get’s us right to first issue with this proposal, namely that it doesn’t target profits you make from your wealth, but the assets owned thmeselvers. In ase of a farmer, it wouldn’t go for the revenue a farmer would make from his land, but it would cut 5% of the value of the farmer’s land, including of course all the equipment, machinery etc.

Dan argues, that a good entrepreneur would easily make more than the 5% annualy based from the working capital, but i guess the example of the farmer makes it easy to grasp that this assumption is not natural, and many classical economic endeavors (except maybe cutting edge services in IT, finance, pharma), remain well below that rate, farming for sure, but also house rentals, large scale commerce etc.).

And other than crypto-tokens, real word assets and ressources are not always too easy to evaluate: what’s the fair value of a house (that hasnt been sold for decades)? How do you calculate the worth of an oil-well? Based on daily market prices, which fluctuate between 25 and 100$ ? And if we are talking about all resources, what about the trees in a national park? What about the city hall? Do we expect those to generate the 5% of their actual worth annually?

Economic instability and inflation.

Dan discusses the issue of soaring inflation because of on overflow of perceived need for a population, and that the majority would need to learn and understand, that they keep transfers low for them to remain sustainable. But of course the system can be played the other way around just as easily.

Let’s imagine you own a house and you can generate a realistic income via rentals of 10% net, you would be effectively taxed 50% of your income. So what you would do, knowing that your tenants do have a basic income anyway, you just double the rent, to have a more decent net revenue, and you tenants are likely to pay, a) beacuse they need a place to live b) they can afford, it because the have their basic income + income from their own business operations. So the result would be a soaring inflation and leveling of the effect of the UBI.

Opposition from elites

And of course, as this would be a gigantic effort of redistribution of wealth, not withstanding the high moral ground such a tax would be it would meet the opposition from just every entity, which is currently on the beneficial side, the 1%, big corporations, the state, you name it. They would do all in their power to prevent such systems to come into effect, and given their wealth, they have a lot of power and influence, they would not hesitate to wield, just as they have wielded it since the dawn of time.

What has this to do with eos?

Speaking on broad terms, Dan doesn’t adress any means of implementation, but certainly he would be thinking of crypto, and EOS in particular when proposing such things, because the well knowntoken inflation, would solve two issues, once the evaluation (assuming that EOS would be the world reverse crypto currency of course) thing. Wheneverything is tokenized its easy to deduct a percentage of assets, via inflation, which would go to everybody.

But being on crypto we would require to prevent cybil attacks, and provide a proof of identity. Dan now claims to have the solution for that, be it a reputation model, or something else, we dont know, but let’s assume that’s solved?

Would crypto or maybe eos be that tool of revolution, that with its Universal Income model distributes wealth to everyone willing to join, thus disrupting the current circle of power of the wealthy and elites forcing them to comply to this irresistible piece of tech?

I have to admit i do like that narration

But to be honest. It’s more than unlikely these things will happen, and even more so that EOS will be the vehicle to provide us with it. If we look at how EOS works, it becomes pretty clear, who is running the game, and thats the whales and exchanges that act in their sole interest alone. So the technical setup might be different, and i am not arguing about the decentralisation here, but the fact that pretty swiftly, a circle of elites has established – maybe a different one, but still.

Will this be overthrown by the masses of small holders? I was hoping for that, but it sure isn’t happening, maybe because things are too complex, maybe because holders actually looking for safety of their assets, etc. but it seems doubtful. It didn’t happen, even not now with EOS on Ledger, with Scatter sucessfully audited? Likely all those holdings are on exchanges, never looking into the political aspects of this tokens.

So is a fork the solution? Will Telos deliver? Time will tell, but apprently the major dapps come from professional and well funded players? Will the risk to get themselves exposed to… from an enterpreneurs viewpoint rogue policy making? I doubt it.

So small holders might want to vote with their feet, but where are they supposed to go, when the cool dapps all are someplace else?

Don’t get me wrong, i am a big supporter of EOS, and what Dan proposes is in broad terms a fair distribution of wealth. The big issue is the practical establishment of this and as much as it might be disruptive, i doubt that blockchain can solve this issue, at least not in the long run. The corrupted curation system of reddit, as well as the botched start of the EOS governance layer, proves that those things would need to be structured much more carefully and meticulously and maybe have a consistent and narrow texture from the beginning on.

What is your stance on URI and UBI? Do you see it as something blockchain-tech could and should further, thus enabling a break-through in broader politics? Is it meant for that? Is it or when will it be capable to do that?

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  1. Workin2005

    Great post @conceptskip. I’d love to think a UBI that just gave people money (crypto) would work…but I don’t. Instead we should be working on a system that provides opportunity to those who don’t have it. I addressed this in another post, but I’ll copy my response below.

    “UBI is exactly the same model every failed communist/marxist society has tried in the past. It’s not just been tried…it’s been tried (under different names) hundreds of different times over many cultures over thousands of years. The result is always the same…a complete disaster. Why? Because consistently giving people something for nothing completely destroys innovation and progress. What’s that old joke about Communism? “The people pretend to work while the government pretends to pay them.”
    We all would love to think people work hard just to better humanity…but it’s not that simple. Yes, most want to better humanity, but they also expect to be rewarded for that work..and they should. Their work is what gives money its value. They create products we all want..and they have to do it as well, or better than the other guy. Otherwise people will go somewhere else. This creates quality while naturally causing people to find their own personal gifts and thrive.
    We all like to think money doesn’t motivate us…but would you really work just as hard for half the pay? Of course not. Would you work harder if your pay doubled? Tripled? Of course you would. In a healthy, sustainable economy, people are paid based ONLY on 3 things:
    1. Their ability to perform a job (can they physically to it).
    2. How well they perform the job.
    3. How easy it is to replace that person with someone else of equal or greater ability.
    THAT’S IT.
    This is why professional athletes make millions while a cop or firefighter makes significantly less. I’m not apposed to making sure people have equal opportunity. We all agree with that. But handing out something for nothing has NEVER worked and has ALWAYS ended in disaster. Perhaps a UBI that was tied to some type of work would be a better solution. I realize people think work will be scarce as tech improves, but history shows us that’s never been the case. Yes jobs change with technology…always have, always will. But there are still jobs out there. We may all be working from home on our computers, but we can all do something. Any type of UBI that’s not tied to productivity will not work in my humble opinion. That said, with technology, we could easily have a UBI that was tied to some form of productivity…even if that’s just sitting at a computer and taking surveys all day (extreme example).
    Redistributing wealth has never been a good model. The reason is, your usually taking from the most productive minds who are fueling the economy. If those people start producing less (which they will if you just confiscate a good portion of their income) the economy will stop thriving. It’s not a matter of if they “need the money”, it’s a matter of simple human behavior. Punish those who drive the economy, and the economy will suffer. Period.
    That in turn makes the money you “redistribute” worth less and less…and it just snowballs from there. So instead of punishing those who are successful, we should be looking at ways to open up opportunity to those who don’t have it. I know the argument is, “give them money and they will have opportunity”. Unfortunately, it’s NEVER worked out that way. Instead, we should be looking at ways to do things like funding education for those who can’t afford it. We should be finding ways to teach people to fish…not just giving them a handout. That’s just my $0.02.”

    1. Conceptskip Post author

      Wow, you should have published that as a proper article, i think you made the 300 words! 🙂
      There are a few important points that you make, yet i think we don’t agree. In my view, a basic income if established, wouldn’t lead to the downfall of economy, i rather say those in power will be able to prevent this from happening or if happening playing it in a way, the effect will be nullified.
      I think there are different degrees of wealth distribution, and especially in the past 10 years we have seen a distribution from the 99% to the 1%, that should not be overlooked. Not sure were you are at, but if you are a bit aware of economic history of the US, it’s a notable point, that thee most prosperous times have been the 50ies and 60ies which still had a tax system in full swing that has been largely following a Roosweltish New Deal style set up, with effectively high company taxation and close to prohibitive inheritance taxes, and very little exceptions, which today have become the norm. This might be a coincidence, but i do see a structural relation. It is important for enterpreneural risks, that you – apart from actual wealth and personal success, needn’t worry about being poor, homeless, and your family starving in case you fail, in contrary, this fear is a constant threat, that keeps people sticking to the little they have, and prevents innovation. Also if you look at the famous multi-billion company leasers, especially gates, jobs, musk, and not the least dan himself, all of them come from families with a certain degree of wealth (but not in the millionaires rank), which allowed them to experiment with new ideas and approaches, because they knew, if they would fail, they still wont need to worry about their lives.
      And as you say what everyone wants are equal chances, but this doesn’t come out of the blue, it would need to be achieved.
      To summarise my arguments: UBI is not a deficient system per se, but given the current structure of power will either be prevented from ever to be established, or if established would be played by the powerful in a way, to nullify its intended effects.

      1. Workin2005

        Thanks for the reply. I love you man…and respect your opinion, but STRONGLY disagree. I do live in the US, so lets focus on that.
        First, the distribution of wealth toward the top 1% in the last decade took place due to INSANE regulation and tax rates on business. Not the opposite.
        Corporate tax rates under Obama were higher than any other country. Due to that, jobs flocked away in mass. The labor participation plummeted. Yes, technically the unemployment rate went down, but that was due to people literally giving up and dropping out of the work force….so they weren’t calculated in. The labor participation rate plummeted from 2009-2016.
        Trump (who I despise as a person, but think many of his policies have been excellent) came in and massively cut regulation and cut taxes. Not only did the unemployment rate go down, the labor participation rate skyrocketed. So much so that we now have more jobs available in the US than we do workers to fill those jobs. I don’t like what Trump is doing on trade, but that’s another story.

        As far as the tax rates being higher in the 50’s and 60’s, that’s a VERY misleading statistic that’s been debunked countless times. I don’t blame you for using it. I’m just saying most people don’t understand what really happened. I’ll explain….
        In the 50’s, the top marginal rate was 90%, but it applies to almost NO ONE. The real test is the average marginal tax rate…i.e, the average rate paid on the next dollar of earned income. That’s what tells you about incentives working folks face in any given economy.
        There’s been countless studies showing times of great economic growth (like the 50’s) were also correlated with very low effective tax rates. One of the most famous was a study in 2009 by Robert Barro and Charles Redlick. They calculated average marginal tax rates inclusive of federal income taxes, Social Security taxes, and state income taxes. In the 1950s, the average marginal rates equaled just 25%, versus 37% in the 2000s. This is just one of many studies showing the same.
        On top of that, you have to consider that in the 50’s, people received SIGNIFICANTLY more in social security than they paid in. This also lowered the effective tax rate even further than 25%.

        I realize most people don’t get this. Big government ALWAYS wants you to think that the evil 1% is to blame…but that’s just untrue. You could confiscate 100% of those in the 1%, and it wouldn’t even fund the government for 1 year. Further more, did you know that every single time in history (going back to JFK), when the federal tax rate was lowered, federal income tax revenue actually went up? How is that? Because companies were able to keep more of their money. They in turn could invest in innovation, which meant more jobs…which meant more people working and paying taxes. I could go on and on.

        The bottom line is, handing out money to people has never worked. You pointed you Bill Gates, etc…saying they came form middle class families so they could take risk. That’s true, but their families worked to become middle class. It wasn’t just given to them. If people are given something for nothing, they don’t “learn how to fish”. The MOST effective way to help someone, is teach them a trade. Educate them.
        Look…this isn’t an easy topic to discuss. I get that…and there’s no easy answer. But I know giving away money won’t work. It has to be tied to some type of education or productivity. I’m all for helping those who need it…but not by handing them money. If that worked, every communist society in history would have been a huge success. Let’s find a way to invest in people. Investing doesn’t mean giving them money. If that worked, why is it 75% of lottery winners go broke? Because they don’t value the wealth they were given. Instead, let’s do things like fund education for the uneducated, etc…

        Also, we have to get past this whole “inequality” term. People in Venezuela right now have great equality…yet they are literally eating dogs in the street. Their economy is in ruin. That’s one of many examples.
        In the US, there is more inequality, but people considered to be in poverty in the US, would be considered rich in the majority of other nations. Go to many places in the Middle East, or Africa or Venezuela….these areas have equality, but the people have nothing. Then look at America. Those considered to be in “poverty” in the US have iPhones, air-conditioning, flat screen TV’s, etc. Yet statistically, we have more so called “inequality” in America. Would you rather live under “equality” in Venezuela or “inequality” in America? That’s a rhetorical question obviously.
        My point is, equality of assets is NEVER going to happen in a prosperous society. It can’t. But that doesn’t mean it’s a bad system. There’s obviously no perfect system…and we should continue to improve. All I’m saying is, lets not make the same mistakes of the past. Let’s not hand out money and expect the world to suddenly be singing “Imagine”. It’s been tried too many times with awful results. Instead, lets look for a merit based system that rewards hard work and gives real opportunity to as many as possible. I’m all for weeding corruption that’s often found in the the wealthy few. That’s where blockchain can shine. If we ended the backroom deals, lobbying, etc…those with money wouldn’t have the power they have today. That would naturally help create opportunity for more. These are things we should be looking at…not handouts. Wow…I really should publish this. lol
        Sorry for the rant. I hope you don’t take offense. I certainly don’t know everything and am always willing to learn. That said, I just don’t see how a hand out will ever result in a prosperous, sustainable society.

        1. Conceptskip Post author

          Hey man, absolutely no offense taken! Nothing better than an indepth civilised debate. I fear we wont reach an agreement, but again you make some strong points, and certainly food for thoughts, especially the different look at the tax setting of the 50ies and 70ies, which is new to me.
          I think the focal point of our discussion should be equal opportunities for everyone, which is quite different from forced equality of everyone (which i think also no one really wants).
          Only two more things: First i strongly doubt that any of the current employment situation in the US has much to do with Trump, he’s just harvesting the fruits of the Obama era. And secondly, social transfer, doesn’t automatically lead to desaster as you might think, in fact is was quite successful here in Europe for decades, of course this has only worked fpr independent national economies, which don’t exist anymore.

          1. Workin2005

            Glad to hear it. It’s nice to be able to have a civil debate. I do think some form of UBI may become beneficial, I just feel it needs to be tied to some form of productivity.

            I’ve got to respond to your final statements. We’ll have to respectfully agree to disagree on Obama’s economy. He propped the economy up on quantitative easing, bailouts and endless spending. Sure that can work for a time, but it’s COMPLETELY unsustainable. If I own a failing business, I can stay open if I keep throwing money at it, but eventually the money runs out. Eventually, the business has to actually make a profit to be sustainable. Obama didn’t seem to understand that. He literally doubled the national debt in 8 years. To put that into context…he spent more than every president in US history COMBINED.
            He left us with an unsustainable model and countless people out of work. Look at the labor participation rate between 2009-2016. It crashed the longer Obama was in office. Literally within 1 year of Trump taking office, it was skyrocketing. Obama just subsidized everything, which is why the rich got richer while the middle class lost their jobs. Companies weren’t growing under his administration, they were consolidating.

            As I said earlier…I’m no fan of Trump as a person. But many of his policies have been working. Especially when you contrast them to Obama’s. the contrast in economic performance between the two presidents is undeniable. Obama’s multitrillion-dollar spend-and-borrow policies produced 2 percent growth. He’s the only president in history not to achieve a 3% growth rate during any of his years in office. In his final year, Obama handed off to Trump an economy that was limping at 1.6 percent. Obama actually said that, “this might be the new normal”. Those words literally came out of his mouth. They were quickly proven wrong.

            After 18 months in office, Trump hit 3% growth on an annual rate and the latest projections are that the growth rate for the second and third quarter (which ends Sept. 30) will be over 4 percent.
            Obama is right that this has been a long recovery — beginning in June 2009. But the real economic boom started almost the day after the election in 2016 with the surge in small business, investor and consumer confidence.look up the numbers…they’re staggering. No one on the left, least of all Obama, thought this was remotely possible. Now he tries to take credit for it…which is just hilarious.

            Two years ago, Obama famously ridiculed Trump’s campaign promise of faster growth and a comeback in manufacturing jobs by saying this could only happen if Trump was waving “a magic wand.” Obama’s first chief economist, Larry Summers, proclaimed to the world that 2 percent was the best we could hope for. Other far left economists were so disdainful of Trump’s tax cuts and deregulation, that they predicted Trump would crash the world economy and the stock market in his first year. Obviously they were proven wrong.

            Anyway…I don’t mean to get political. I actually voted for Obama in 2008. I also did NOT vote for Trump (or Hillary) in 2016. I despise Democrats and Republicans equally. Haha…but that said, I’ll praise either side when they do well, and condemn them when they screw up. Personally, I think it’s time for a viable third party. Democrats and Republicans have lost their way.

            Anyway…I agree with you on equal opportunity. That’s what we should be striving for. If that means some form of UBI tied to productivity, I’m open to it. I think blockchain will help create a more inclusive system that wasn’t possible before. I’m excited to see where it leads.

            1. Conceptskip Post author

              Sorry for the late response and thanks for the good discussion. I might have sparked the political thing. What you miss in your argument against obama, that he came in office at the time of financial meltdown. The whole system was on the brinc of collapse, and some weirdo hacker created a cryptocurrency because everyone believed money wont be worth anything tomorrow. Thats the context of obamas policies and if you compare european austerity and american spending its evident who performed better. Of course these easing needs to be taken down again, and thats what happened.
              Anyhow its always good to have a productive debate.

              1. Workin2005

                No worries. I understand this is a very complex issue.
                I feel I need to continue to say, I am NOT a fan of Trump the man, or any of the major political parties at the moment. I’m strictly looking at policies. That said…
                As far as Obama taking over a crisis…yes. There’s no question. I didn’t miss that at all. That fact makes my case. Compared to what he took over, he should have had no problem expanding the economy exponentially better than what he was being compared to. In fact, the relative size of the economy 8 years after the great recession began (when Obama left office), was worse than the analogous measurement 8 years after the trough of the Great Depression. That’s using the most favorable measurement….which is insane. If I really compare apples to apples, it’s much worse. This is why Obama said, “This might be the new normal”.
                Is it really just a coincidence that the minute Trump was elected, consumer confidence skyrocket? Is it a coincidence that the growth rate more than doubled in the first year and a half after Trump implementing reduced regulation and tax cuts? Remember, Obama said that wasn’t possible…and he said that after 8 years in office. He literally said Trump would need, “a magic wand” to fulfill his projections in the first 4 years. Yet, Trump did it in under 2 years. Again, this isn’t because Trump is a genius. Far from it. But he is implementing obvious policies that have worked in the past and obviously work now.

                Anyway…I know in today’s political climate it’s almost impossible to have an unbiased look at it. People usually pick a side and defend that side come hell or high water. I usually end up pissing off those on the left and right of the isle. I’ll criticize both equally when they screw up, and praise them when they do well. One thing is for certain, politicians are not the answer to our problems. The corruption runs deep…that’s just human nature when you give someone power. This is why bitcoin was created…and it’s beautiful.
                We need a transparent system that completely exposes the faults, without considering political repercussions. This is only possible with blockchain. I’m truly excited to see where this leads.
                Getting back to the point of your well written post….If we can find a way to successfully implement some form of UBI, I’m all for it. Let’s just acknowledge the past problems of handing out something for nothing and find a way to address them.
                I think tying a UBI to productivity might be the way to go, but I could be wrong. One things for sure…we need to test this on a micro level, before we EVER implement it on a macro level. I’ll leave it there. Thanks for the great conversation my friend.

                1. Conceptskip Post author

                  Let’s agree anout having gone quite off-topic. and leave it at that 😉
                  Last thing, being hated by the left as well as the right (or any other biploar extremist positions), means you are right, or at least have the more nuanced view….

                  1. Workin2005

                    I don’t know if I’m right…but I do try to look at everything as objectively as possible. I use to be on the FAR left. I had a bit of an awakening a few years ago and have since moved to the center. Now everyone hates me equally. 😉
                    Anyway…nice conversation. Looking forward to your next post my friend.

  2. CryptosDecrypted

    A thoughtful rebuttal of the likely implementation of a system I’m guessing most of us would embrace. Excellent work. I personally feel a UBI is inevitable due to automation leading to mass unemployment, but it will be patchy and probably represent a subsistence level of economic support. URI would face the full might of those who currently control the lions share of wealth and power making it all but impossible (barring a complete breakdown of macro social control) to achieve.

    1. Conceptskip Post author

      Thank you for your reply and your consideration. To be honest, although UBI/URI is something that we should aspire, i wouldn’t take it for granted. Just look at global politics, to see that everyhwere those are successful that distract from the real sources of the problems, and my assumption is this is only a small foreshadow of things to come. The same with crypto, just take EOS as an example, the community is weak, and the chain is dominated by a few whales.
      What i absolutely not get, is that Dan who on one hand proposes UBI & URI on the other hand advocates a V2 constiution that in my view cripples the jursidictional arm of eos and exposes especially small holders to violence, fraud and Facebook-TOC like contracts, that will leave absolutely no room to maneuvre for the user… At some points those two opposing approaches should meet, only i cant grasp how…

  3. Cryptoslice

    interesting its so hard to tell if it would work. all the current businesses will just sell more as the average joe will have more to spend. it would probably funnel to the top. and inflation would defiantly go way up. i like the idea but i think it would be better to try it with a side chain token not the main eos coin

    1. Conceptskip Post author

      Yes, that’s what i fear, would happen, especiallyif you’d liberalize everything else. Of course also depends on the felxibility or solidity of supply & demand, i chose the housing expample as there the demand isn’t really flexible, in more competitive fields the potential to raise prises might be lower.

  4. Littleboy

    I am not opposed to UBI as long as people are given incentives to improve themselves. Many people oppose it because they think it would lead to people getting free money for doing nothing. If UBI brings greater value to EOS, then I wouldn’t mind supporting it.

    1. Conceptskip Post author

      I am absolutely not opposed to UBI, in contrary (i have spun a few more arguments in my reply to workin’s comment).
      My argument is rather that the big players will be able to prevent it form happening, or taking effect. And to come back to EOS, the launch could have established a viable base for an URI/UBI, but as said, the botched governance, the missing wallets, missing voting structures, referendum contracts, lacking defnition and formation and training of arbitratiors, etc. prevented a proper governmental basis of the mainchain, which has now a state that performs on a technical level, but will always have a whale/collusion issue just like steem does. And whereas the technical infrastructure can still be delivered, i doubt that a strong governance will ever be achievable on the current mainchain.

  5. sandwichbill

    Interesting. The system is driven towards the interests of the wealthy classes, the creditors and those who own property, so a proposal to redistribute wealth and resources by introducing a wealth, or property tax on the top 5% is very unlikely to gain traction. There have been UBI pilots, which have proved to be workable and successful, such as the one in the Netherlands, in which the recepients responded in a positive way, pursuing entreprenerial projects they had always wanted the time to pursue, because, for the majority of people, human nature tends towards aspiration, rather than achieving nothing with their lives, but finding a workable way to fund UBI is the challange. UBI should be looked at hollistically; If people have a means to stay housed and feed themselves then society benefits as a whole by a reduction in crime and the burden on physical and mental-health services.

  6. mix1009

    Wow! Good arguments and debates about UBI. I’ll need to dig deeper to form an opinion. I do feel the need, but not sure about the solution currently proposed.
    Aside from that, why do I feel uneasy looking at the image?