While we have only last month celebrated the ARK moving into its development phase 2, there is an unique opportunity to share with you a few thoughts on a potential phase 3 as outlined in our white paper.
You might remember our project mission: triple health, that is health in an economic, social, and environmental dimension. While we try to work on the environmental dimension within development phase 2, it also prepares an economic application for phase 3: structuring a potentially global meritocracy around the concept of individual ecosystem service remuneration.
Phase 3 asks a very fundamental question: how can we distribute wealth fairly and sustainably across the world? A basic universal income is one part of the answer. The second part is a bit more difficult because we are immediately confronted with two sets of questions:
- shall this basic universal income be conditional or unconditional?
- if it is conditional, what are the conditions that need to be fulfilled on an individual level to obtain this miraculous paycheck?
A UBI – in whatever form – provides a behavioral incentive. Paying an unconditional UBI could easily turn into a perverse incentive, undermining different aspects of social cohesion and environmentally acceptable or desirable behavior. Paying a conditional UBI would require a certain authority to define the desired behavior.
In an era of climate change, a conditional UBI constitutes an enormous incentive to transform our societal behaviors towards a more sustainable way of living. I strongly believe that it is only a question of which values these conditions are based on. I am also convinced that distributed value accounting must be part of the equation since we don’t want to establish another bureaucracy which oppresses instead of liberates people.
Contribution to the wellbeing of communities and commons, to people and the planet, is, therefore, a centerpiece of how a glocal currency could be issued and structured. Such an Earthcoin is quite different from Sam Altman’s Worldcoin, which seems to focus more on the global economic aspiration rather than the need of being part of a human scale group of people in a human scale ecosystem. A tribe and place where my impact counts.
Its however always a good exercise to benchmark one’s own vision with others. Therefore, I share with you today a glossed essay by Keith Teare, a staff member at Exponential Review, a tech newsletter which I skim every week to find now and then a worthwhile piece of information. Enjoy the read and share your thoughts with us.
[Quoted text hereafter is the above-mentioned document. Comments in Italic are mine]
ONE PERSPECTIVE ON WORLDCOIN
I’m Keith Teare. It’s an honor to step into Azeem’s shoes today.
While I am not here to speak about myself, I do want to give you some brief background as it is relevant to how I perceive Universal Basic Income – and Worldcoin. I was born into a poor family in Scarborough, UK. My mother qualified for us to get free school meals and uniforms, and while I appreciated the food, I was embarrassed at the handout. Universal Income is an attempt to meet life-sustaining needs for everybody. As an investor focused on automation, I believe this need will accelerate. I experimented with the idea of UBI at Ubi Network two years ago, and learned first-hand about its opportunities and challenges.
When I first heard about Worldcoin’s vision, I found it hard to contain my excitement. OpenAI CEO Sam Altman (former president of Y Combinator) and physicist Alex Blania set on the mission to create a human-centric coin that can be distributed to every person on earth. This could be done by leveraging advancements in biometric technology and blockchain. It is a UBI scheme using a new currency and identity chain. They describe it as “[a] new, collectively owned global currency that will be distributed fairly to as many people as possible.”
Worldcoin uses a device called Orb to establish a unique user ID through retina scanning, ensuring that each unique user is registered and can access the services. Two weeks ago, they announced a $100 million round of funding at a $3 billion valuation. The investments came from Khosla Ventures and Andreessen Horowitz. This is the largest financial commitment to universal basic income in the entire history of the concept. It’s also the first time institutional money has been invested into Worldcoin’s crypto-based vision for UBI.
The concept of a global currency is audacious. That it will be collectively owned is intriguing. That it will be distributed fairly represents a clear social agenda. And that it will go to as many people as possible underlines that the team at Worldcoin are serious about their objective. If the Worldcoin proposal is taken at face value, the primary intention is to create a new way of distributing wealth outside of the control of nation states, directly to people.
The background to Worldcoin is best understood by examining Sam’s work at OpenAI (which Azeem and Sam discussed on the Exponential View podcast in 2020). He recently penned an essay entitled Moore’s Law for Everything that I covered in my own newsletter That Was The Week. Inspired, or perhaps provoked, by his work at OpenAI, Sam contemplates the near future when AI and robotics have reduced the cost of labor for most things to zero. This consequently leads to the removal of human labor.
And subsequently the need to reward environmental education or other purposeful occupations with an income.
His point echoes the labor theory of value as developed by Adam Smith, David Ricardo, Karl Marx and the classical economists. As automation is responsible for more and more of human output, the labor contained in products and services will shrink towards zero. As that happens, prices will also trend towards zero because the cost of production of everything will trend towards being free.
This is a serious mistake made by many traditional economists who forget that natural capital (i.e. natural resources and human resources) is never free but being exploited to a degree that it can’t be rejuvenated: the planet and people are destroyed in form of biodiversity loss, habitat loss, mental and physical disease, etc.
Connected to this is the subject of externalities which are not accounted for in traditional economics.
More on this by F. Schumacher.
In this world, two things become inevitable. First, fewer humans will be employed, and second, the cost of living will shrink.
The cost of human living will not sink as we see already now unless everybody will also have access to land where food can be grown.
Authors like martin ford emphasize that the cost of human labor services like health and education will increase. this is currently the case. The same is true for real estate. The more people the less land is available.
These two trends make AI and automation the primary source of future human freedom – freedom from work.
But that progress comes at a cost if capital is concentrated in the hands of a few owners. Altman argues for a tax on capital and a transfer of wealth to humanity.
He goes on to write:
We should therefore focus on taxing capital rather than labor, and we should use these taxes as an opportunity to directly distribute ownership and wealth to citizens. In other words, the best way to improve capitalism is to enable everyone to benefit from it directly. This is not a new idea, but it will be newly feasible as AI grows more powerful. There will be dramatically more wealth to go around. The two dominant sources of wealth will be 1) companies, particularly ones that make use of AI, and 2) land, which has a fixed supply.
Taxing capital needs to be understood as a transfer of value from companies to the people via a taxation authority. That authority could be governments, but in the long run is more likely to be in the form of a decentralised autonomous organization (DAO). Like all authority, it depends on people choosing to recognize it. Taxing capital is the same as socializing wealth. The only thing that makes it capital is that it is private. By taxing it, we make it social.
Therefore Georgism/Geoism is the most healthy form of any social tax system: all revenue derived from land must be shared with humanity at large. Only revenue derived from one’s labor is private: https://en.wikipedia.org/wiki/Georgism
That act reduces AI and robotics to a method of production, leaving the value they create to be distributed as needed. Taxing capital, in the final step, leads to an outcome where companies as we know them today will not exist. What we currently think of as a company will cease to have owners benefitting from their ownership.
This is exactly the same line of thought Frederic Laloux shares in his vision of the future in “Reinventing Organization“
Taxation could deliver the proceeds of production to humanity as a whole via a Worldcoin or Worldcoin-like mechanism. Capitalism will have been superseded by a higher form of civilization, where production directly meets need.
The playbook is perfect so far. but there are two major obstacles:
– How to let the powerful capitalist caste go of their assets? There will be massive resistance which can not be overcome without violence (compare Hannah Arendt’s thoughts on Revolution and Revolte);
– A UBI which is a) unconditional and b) not tied to the planet (= ecosystem resources) will not work. What is needed is a global Human Resource Mgt system (HRM) like the ARK which helps to direct human time spent on purposeful activities, such activities which are needed to maintain or restore the health of the planet and people.
Once automation is ubiquitous, and human labor reduced to as close to zero as possible, re-distribution becomes theoretically possible as ownership of capital is phased out.
In this world we — as a human race — can prove that Francis Fukuyama’s recently restated End of History prognosis was premature. Altman’s alternate future suggests distributed ownership, real wealth to citizens, and individual freedom.
More important is his book “The Social Disruption” where he describes how wealth accumulation among other causes leads to a depletion of social capital and thus to conflict, war, and eventually civilization collapse. We see this happening in the US, but also now in Russia.
This begs the age-old question of how we could afford universal income.
AI will lower the cost of goods and services because labor is the driving cost at many levels of the supply chain. If robots can build a house on land you already own from natural resources mined onsite using solar power, the cost of building that house is close to the cost to rent the robots. And if those robots are made by other robots, the cost to rent them will be much less than it was when humans made them.
Again this economic error: natural resources are taken for granted and free of charge.
Schumacher: “The illusion of unlimited powers, nourished by astonishing scientific and technological achievements, has produced the concurrent illusion of having solved the problem of production. The latter illusion is based on the failure to distinguish between income and capital where this distinction matters most. Every economist and businessman is familiar with the distinction, and applies it conscientiously and with considerable subtlety to all economic affairs – except where it really matters: namely, the irreplaceable capital which man has not made, but simply found, and without which he can do nothing. […]”
A businessman would not consider a firm to have solved its problems of production and to have achieved viability if he saw that it was rapidly consuming its capital. How, then, could we overlook this vital fact when it comes to that very big firm, the economy of Spaceship Earth and, in particular, the economies of its rich passengers? One reason for overlooking this vital fact is that we are estranged from reality and inclined to treat as valueless everything that we have not made ourselves.
The collapse of prices driven by reduced labor will enable fundamental needs to be met extremely cheaply: food, care, education, housing, health, and more, would all move towards being free. It is no longer necessary to be utopian to see this possibility. But this economic change will require social change if it is to benefit all.
Exactly the opposite is happening because of scarcity created by excessive capitalism. But even if we would overcome excessive capitalism, we need to install a global governance system which promotes a form of capitalism made of moderation and frugality – we have only one planet with limited natural resources.
s[sThe promise here is similar to what irritates me about Andrew McAffe’s TED talk: abundance in everything. Abundance in everything means lots of waste and little appreciation for the offerings we get every day from mother earth.
I believe that Worldcoin could be the mechanism by which this vision can be realised.
We need to look into the details. so far I have not understood the underlying concept of “fair” distribution. It has not even once been mentioned that there is a need for a conditional UBI if this social and environmentally sustainable currency shall work.
THE LONG ROAD AHEAD
When Facebook announced it was creating Libra as a means of payment tied to a basket of currencies, national governments immediately sought to stop it. And we are all too familiar with the SEC seeking to regulate crypto currencies in various ways. All global technologies have been met with governmental attempts to regulate them – the internet is an obvious example. If the spending-power sits outside of the scope of national regulation, then it is likely nation states will seek to slow or stop it.But because money is whatever people decide to trust, just like the Internet, global money is probably unstoppable. And global UBI requires global money.
If Worldcoin can execute its vision, it will be sending hundreds of dollars a month, or more, to people its network can identify. The core has to be merchants globally accepting Worldcoin as payment – the real value is in exchange for tangible needs like food, housing, clothing, education, leisure, and health. If merchants start accepting Worldcoin as payment, the company will become the biggest company on earth – and consequently, part of the problem. For that not to happen, Worldcoin needs to be committed to a smart-contract that taxes Worldcoin itself and to a DAO or a similar governance system.
Great line of writing, bringing it to the point why we need to do the same no matter whether collaborating with Worldcoin or going solo.
Like all things, the devil is in the details. And the details can be messy.
There have been various challenges to Worldcoin’s vision and execution. Coindesk reported on the challenges of biometric data collection, and the MIT Tech Review described troubling practices they found through an extensive investigation. A recent Buzzfeed article said:
“The currency has not yet been launched, but a BuzzFeed News investigation has found that Worldcoin is already wrestling with a host of problems, from managing angry Orb operators to concerns that the company is using its cryptocurrency as a way to amass millions of biometrics and perfect a new kind of authentication technology for the blockchain era.”
I can’t approve of this at all. it is another 1984 mechanism. I believe that PoS must come from real contributions to real communities/commons. Can’t say however if such an approach can be scaled fast enough.
A global ID is required. What alternatives are there to biometric data?
The focus on data privacy and biometric data is to be expected – and rightfully so. In the ideal case, privacy and security risks will be reduced to a minimum. Encrypted data stored on the blockchain allows it to be tested for uniqueness. But we are not there yet. Biometrics and personal data are held in a centralised database to train algorithms and test the security systems. As the reporters show, the deployment of this technology and testing of its effectiveness has been controversial to say the least. That said, I consider a big part of this problem to be already solved. Apple scans our face or fingerprint without ever storing our biometrics on its servers. And it works very well, so long as the user has a smartphone. Worldcoin is in its testing phase and has not stated how its technology will work. I hope it can learn from Apple’s approach, but we will have to wait and see.
Technology is only half the part. The organizational structure is equally important. And there has been explained nil. Nothing.
Looking at Altman’s vita, one can find however hints:
Altman is an Orwellian 1984 personality with a 100% top-down approach. I don’t think that this will work. Things need to evolve as early as possible bottom-up.
Cryptonews also weighed in with the revelation that:
“Coinbase-backed startup Worldcoin has decided to stop operations in at least seven countries as a result of intensifying logistics challenges that are impacting the company’s launch plans.”
The process of testing is, of course, going to be uneven. The publicity surrounding Worldcoin leaving various countries is a marketing blunder. Communications and messaging are at fault, rather than the process itself. As founder Alex Blania said to Cryptonews:
“You’re still talking to a Series A company, not an Uber. Things are not perfect.”
At this point in time I consider Worldcoin to represent an encouraging and bold vision for the inevitable post-work society. I recognise that getting there is difficult. There will be some real issues along the way in that the system is not as secure as is hoped for in the future. However, I think that this is not a reason to put aside the idea – it should serve as an incentive to work harder for it to fulfill its promise.