There is still a lot of conversation surrounding universal basic income (UBI). It seems this kicks into overdrive each time we see hype surrounding technology. The fear. according to many, is that automation is advancing to such a degree that jobs will be lost. That means large sections of the population will be unable to find work.
This is conjecture with the opposing view claiming that technology "always created more jobs than it destroyed". I see a couple problems with this argument.
To start, while it might be true on an overall basis, that does not mean things worked out well for many involved. The Luddites are the poster children for the anti-tech stance. Yet, we have to remember that things did not end well for them.
A second issue is whether the above claim is even true. While there was a time when it was safe to allude to, the question is does it still pertain. A case could be made that we ended that run 25 years ago.
Here is the United States Labor Force participation rate as put out by the St. Louis Fed.
This measures the percentage of people age 16 (or older), non-institutionalized citizens in the workforce as compared to the overall population.
As we can see, it is dropped a great deal since the peak of 1998. We are back to mid-1970s levels. Keep in mind, prior to the 1970s, the labor force was mostly men, means we were dealing with much of the population staying at home.
We are not seeing that now. What could be the difference? My theory is we are in the most powerful technological age ever, a fact being reflected in the workforce.
Universal Basic Income
Many believe UBI is the solution. To put it simply, it is not.
We can start the process by pointing out that government would be in the middle of it. This means that it will become politicized, as most things are today. Can you imagine your income is cancelled because you support a particular candidate or party? All those woke people, if the political winds change, no more money. Of course, those who like guns and fishing, well you are done when the other party takes over.
Being at the mercy of governments is slavery.
Another issue is basic math. I know some run the numbers and declare how it will be no more expensive than it is now. That might be true. What is overlooked, however, is most countries cannot afford what they are spending now. As long as the debt can be sold, the party continues. If that ends, it is a completely different situation.
Countries in Europe are looking hard at this proposition. They have a couple major issues. To start, they cannot sustain what they already promised. A country like Spain has an insane pension plan, one that is not affordable.
The other problem is many of these countries face demographic declines. A contracting population, along with aging, does not bode well for these types of programs. There comes a point where the working class simply cannot be taxed anymore.
That said, we can expect these programs to eventually roll out as governments try to stay relevant. Their time is passing, something I believe will unfold over the next few decades.
Here is where we see an alternative step in.
Web 3.0: Universal Basic Assets
This could also be called Universal Basic Equity.
We discussed the idea of the network state over the last couple years. This is a premised that is ingrained in the Web 3.0 model. The central idea is that we have a digital ecosystem that expands, crossing the line into the physical world. We are uncertain how this will look yet we know more of our world is being digitized. When this happens, the line between the two fades.
Web 3.0 offers a much different concept than UBI. Instead of people receiving payments, individuals have assets in the network. Here we see terms such as equity or stake applying.
The idea is that people can simply have a piece in the overall value of the network. This is an asset that is provided to those who are involved with it. There are likely to be many different ways to accumulate the assets, many tied to the participation in the ecosystem. Over time, as one's stake grows, the ability to enjoy a stream of income based upon the activity exists.
Many believe that network states will step in for government in many areas. We are already seeing this happen in a few isolated cases. Having stake through tokenization in the network means that one is able to capture the increases in value that can occur.
Network effects help this as the ecosystems grow. Also, basic decentralized finance (DeFi) and other financial services means people can leverage their holdings for even greater opportunities.
For example, let us take Ethereum. We know it is possible to post that as collateral on a loan. Let us expand this and focus solely on a home. Now, people can forgo a traditional mortgage by utilizing DeFi.
Now let us expand this to an asset that is in the form of a NFT that one received for simply participating in the network. At the moment, most of cryptocurrency is still in the "buy to gain an asset" mode. This will shift to rewarding people for their activities. Again, we see early formations of this.
Suddenly, people have resources whereas they did not before. They have a piece of a valuable system that is growing. Unlike our present system which is exclusionary for most, this includes anyone who opts to participate.
Once the asset is acquired, it cannot be taken. This is the idea of decentralization. True account ownership means the assets are safely in your wallet.
We are also dealing with something that is not geographically based. Instead, people can join whatever network interests them. Here is where we see a major shift. People are able to tap into larger, more resilient economies.
In Conclusion
At present, we see just the framework going into place. That said, we can see how this transition could unfold. We are dealing with something that will be measured in the hundreds o trillions of dollars. If the Internet is between $50T-$75T like many are estimating, Web 3.0 will be a 10x of that.
On a planet with 8+ billion people. we can see that is plenty of value captured. Automation is only going to keep increasing economic productivity in many areas, especially in the digital realm.
Web 3.0 is a way this can be redesigned. Those who are in the early days are positioning themselves to acquire the assets related to these networks. Over time, this should serve people very well.
We are going to see massive changes over the next couple decades. All of this is starting to emerge.
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