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:
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.