Universal Dividend

[NewLibertyStandard]

Thanks for the explanation in English.

You're welcome.

The main problem is how to verify users of an inherently anonymous commodity.Gold cant tell if you have mined other gold for instance.This probably ties into the need for a verification process that doesn't verify you to a central agency such as the state.

Exactly! I really want to figure it out, but a practical solution may not exist.

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[Anonymous]

Thank you very much NewLibertyStandard!

I'm moving to France! I've got to try for some cooptation!

It sounds dirty when you say it like that...

[bytemaster]

I want to believe that you all have brains and honestly want to help humanity.  However, I see many arguments that are not supported by sound logical deduction. So, I will try to address some of them now and ask that you all respond to my earlier question about those who choose not to use your system.

1) What is the penalty for people not using your money?

2) Why should anyone voluntarily use your money?  

Holding currency in an inflationary monetary system is like depositing money in a bank at a negative interest rate.   You do not do it unless you have to.   I do not care what "fairness" reasons you may have, you must still face the reality of everyone making decisions that are best for them.   So speculate all you want about a grand scheme to "fairly" distribute a currency between all people from generation to generation, but all your speculation is for nothing because you would have to convince individuals to accept your money system and there is no reason for them to prefer your system unless they are the ones receiving "something for nothing".    

For the sake of fairness, let us assume that all resources in the world were evenly distributed among all people. Equal land, resources, bitcoins, dollars, gold, silver, etc.   This is as "fair" a situation as one could hope to create given the God-like economic power your system requires.  Now a new baby is born.  Who must give up a share of their resources to support this new baby?   Everyone?  Just the parents?  At what point does the baby receive his "share"?  18?    

Now suppose two people make a trade.  Is the resource allocation still equal?  Is it better or worse than before?   Why would they make a trade?   Clearly the trade would not have happened unless both parties perceived they were better off than before.  This is the heart of all voluntary transactions and thus all voluntary transactions increase to sum of each individuals perceived value of assets owned.

Now, take a resource from someone and give it to someone else.  How do you prove that this benefited society?  Clearly one person experienced a loss of value and another a gain in value.   Both parties cannot be said to have gained from this forced transaction.  Because all value is relative and individual it is impossible to prove that the benefits to the person receiving free resources outweigh the costs to the persons from whom resources are taken. Using the threat of violence and death to force one individual to give up his resources for another based upon an unprovable utilitarian economic calculation seems quite barbaric and is equivalent to forcing a personal religious belief on all "for their own good".

Everything I stated above holds and does not depend upon any concept of "money", simply barter starting with an even division of all resources.  

So based upon those principles what is money but another resource that was evenly allocated to all people?  Sure you can make more money just like you can make more of anything.  The result of increased supply is lower exchange values.   There is nothing more immoral about creating money by what ever means than creating a loaf of bread.   It is just another good on the market.

So someone created a bitcoin and is offering them on the market.  It does not matter that it is 50 BTC per block or 20BTC per block or 0 BTC per block.   It does not matter how they get distributed, whether auctioned, or what ever.  The point is that there are only so many bitcoins around and if you want one, you need to find someone who has one and offer to trade.  End of story.  

You are now proposing the creation of the Universal Dividend Coin.  Offer it on the market as yet another good.  This particular good is given for free to everyone simply for existing and its supply grows at a known rate.  Each year it loses value relative to anything that remains rarer (assuming demand is equal).   Thus compared to a bitcoin or even gold the Universal Dividend Coin would be losing value.  

So what does any sane individual do?   Take your free dividend, sell it and buy a bitcoin.  They have just transferred their wealth from an asset losing value at 5% per year to one gaining value at 5% per year (assuming the goal of the 5% inflation rate was price stability).  Thus there would exist a demand for bitcoins and a much lower demand for the Universal Dividend Coin.

Now the next question is, why would anyone offer goods or services in exchange for this universal dividend coin (UDC)?  Would it make sense to acquire an asset that is losing value at 5% per year?  Would not said merchant immediately exchange this UDC for a BTC?  If both are equally easy to trade, why would a merchant pick UDC over BTC to begin with?
  
So we can see here economic proof that unless you outlaw BTC and any other currency then no one with a brain would ever hold a UDC for any longer than it took them to find a better ROI than -5%.  

Thus the conclusion is that the government would have to create a tax on someone and then issue "social security checks" to all.   The UDC is just a "fancy" way to implement such a tax, and wealth redistribution scheme but it can only succeed if all other currencies are illegal.  

[NewLibertyStandard]

bytemaster, nothing I described attempts to make people equally wealthy. There would still be rich and poor, just not starving. Bitcoin has infinite inflation over a few years. A constant inflation rate has infinite inflation spread out over infinity. Bitcoin therefore has an infinitely higher inflation rate than an constant rate of inflation. Why do people accept an infinitely higher inflation spread out over a few years instead of an infinitely lower inflation rate spread out over eternity? If you are not a botnet operator, then you would be guaranteed to generate a larger portion of the total number of bitcoins given a constant inflation rate as opposed to the infinitely higher inflation rate that we are currently experiencing.

[kiba]

bytemaster, nothing I described attempts to make people equally wealthy. There would still be rich and poor, just not starving. Bitcoin has infinite inflation over a few years. A constant inflation rate has infinite inflation spread out over infinity. Bitcoin therefore has an infinitely higher inflation rate than an constant rate of inflation. Why do people accept an infinitely higher inflation spread out over a few years instead of an infinitely lower inflation rate spread out over eternity? If you are not a botnet operator, then you would be guaranteed to generate a larger portion of the total number of bitcoins given a constant inflation rate as opposed to the infinitely higher inflation rate that we are currently experiencing.

The fact that there will be only 21 million bitcoins forever and the fact of inflation is factored into the price. Bitcoins is very predictable and people can plan their economic calculation around that.

[NewLibertyStandard]

bytemaster, nothing I described attempts to make people equally wealthy. There would still be rich and poor, just not starving. Bitcoin has infinite inflation over a few years. A constant inflation rate has infinite inflation spread out over infinity. Bitcoin therefore has an infinitely higher inflation rate than an constant rate of inflation. Why do people accept an infinitely higher inflation spread out over a few years instead of an infinitely lower inflation rate spread out over eternity? If you are not a botnet operator, then you would be guaranteed to generate a larger portion of the total number of bitcoins given a constant inflation rate as opposed to the infinitely higher inflation rate that we are currently experiencing.

The fact that there will be only 21 million bitcoins forever and the fact of inflation is factored into the price. Bitcoins is very predictable and people can plan their economic calculation around that.

It's a lot harder to plan for inflation when the rate of inflation starts EXTREMELY HIGH and stays EXTREMELY HIGH for the first four years, curving continuously down with huge drop offs every four years than to plan for an inflation rate which is constant from the beginning to the end of time excluding the very first bitcoins created.

[Red]

It's crazy how people can write an enormous reply, without referring to any bit of content from your post. Let me try too!
---
I am immensely grateful that you did the research and I didn't have to. But, I didn't read anything that didn't strike me as textbook European Liberalism/Socialism.

You mentioned once that you were a "very traditional USA democrat". Did you find any of that enlightening?


The first section seems to be the standard: "The country/state is like a corporation. Each citizen should receive an equal share of the profits but the (X) are hoarding all the profits for themselves!"

The second section seems to be the old Robin Hood refrain. "We should take from the rich and give to the poor, because everyone knows (Y) and all that money is just going to flow back to the rich anyway. The rich are always happy. Why shouldn't we make the poor happy too? After all, its better for the rich to live in a world filled with happy poor rather than violent poor!"

It seems very much like those decade old internet chain letters, where someone periodically updates (X) and (Y) to the demons of the day. In today's case the current demons are (X) = the central banking system and (Y) = corruption/conspiracy/incompetence. The solution is money creation.

Today the they assert "government supported banking" is "incompetent" and instead of fairly distributing the profits from "money creation" they neglect "holes" and send the money to "bubbles". Distributing the 5% profit equally fixes that.

I've seen the same thing, but "elected officials" were "corrupt" and "tax-revenues" profits went to "insiders". Distributing tax-revenue profits equally fixed that.

We used to tax the rich to give to the poor, but as Galuel pointed out. Taxes are unpopular with everyone at the moment. Money creation is a more politically correct way to take from the rich.

I think the first false analogy is that where the state is like a corporation, it is much more like a non-profit corporation than a for-profit corporation. And also the fact that most countries whose citizens make this assertion, tend to be deficit spending so there are no profits.

The second metaphor fails, because in reality they usually mean, "take from the rich and give to the middle-class like me!" But what happens is a taking from middle and working classes, to give to those who find working inconvenient.

But that's just me. I'm a Republican. :-)

[NewLibertyStandard]

Red, my comment to you may have been misdirected. You asked about cooptation and I think somebody asked somebody about Universal Dividend and I thought it was you but I don't feel like searching through to verify whether that's correct or not. I was interested in the topic and wanted to write a reply to the question that I'm now not sure even existed. Anyway, if any of my comments confused you, or anyone else, sorry. Take them for what they're worth whether they're directed correctly or not.

I wouldn't say enlightening is the right word. I found it very intriguing. I do lean left, but I'm definitely not a socialist. It's not because of the negative connotation of the word socialist that I'm not a socialist. In fact it has quite a positive connotation to me personally and I very much respect socialists. The Democratic philosophy just appeals more to me than socialism. Some conservative principles also appeal to me, but unfortunately the word Republican holds a negative connotation in my mind. But I live in a very conservative area, so I very much like many Republicans personally.

I don't mind other people being rich and I'm not out to give everyone an equal amount of money. But I am in favor of giving all people as much of a standard minimum dignity as possible no matter their situation. I'm not talking about Basic Income, but rather compromises reached by congress working together or not working together. I'm quite satisfied with what congress comes up with because we elected them and they're just doing the best they can for the most part. Now that's not entirely true, because I'm much less satisfied when Republicans have the majority, but even then I wouldn't say I'm terribly dissatisfied. It's just that I'm quite polarized and like it when we (Democrats) are in power, making our progress. So nationally, I'm quite satisfied right now and I don't want banks or the Federal Reserve or the government to fail.

But Bitcoin is very interesting in that it offers a playground of sorts to try out fiscal theory without risking the wellbeing of millions or even billions of people. I'm quite practical minded when it comes down to real politics, but low risk experimentation to find and create superior solutions is wonderful.

Concerning the rate of inflation in the current implementation as compared to my ideal implementation, the actual impact is not that different in either case. In one case you have a certain amount of very divisible coins in some people's possession and in the other case you have a slightly different amount of very divisible coins in the same people's possession. The exchange rate might be a bit different, but for all practical purposes, they're going to be just as useful in either scenario. But just because they're effectively the same on our very small scale doesn't mean I should just say they're pretty much the same while we're having a conversation about the topic. Sure, some of my hyperboles might be a bit extreme, but I'm just trying to express concepts that would actually be quite meaningful if they were applied on a much larger scale. I don't think that the Basic Income would really work with the current implementation of bitcoin, but I still find it interesting to think about how it could be implemented and what the effect of it would be if it was implemented.

[Galuel]

Look, if you tell people that you are going to be debasing the currency and that they can use it or not then that isn't stealing. So it's wrong to call the method in the OP stealing.

But I don't want to invest into a system where my contribution is able to be watered down and given to everyone every year forever. It's also my guess that other producers won't want to get involved either.

I wouldn't like to be in a money system where money globally inflate, and I receive nothing too. BUT you missunderstand Universal Dividend which is NOT such a thing. ALL members receive the Dividend.

In fact you must understand the real effect of Universal Dividend on your own goods.

Imagine you have a f fraction of the total money. You receive a 5% dividend, that is to say your money is then f + 5% / N where N is the number of participants.

Your PERSONAL (Local IS NOT global) inflation of money is (NEW MONEY - OLD MONEY) / (OLD MONEY), that is to say :

(f + 5% / N - f) / (f) = 5% * (1/N) / f

So your PERSONAL inflation MONEY rate DEPENDS exactly of the money you own, il you own exactly 1/N of money your personal inflation rate IS TOTALLY EQUAL than GLOBAL one, and you "lose" nothing in this point of view. If you have LESS money than 1/N than your personal inflation rate is HIGHER, and it's progressively LOWER if you keep more than 1/N fraction of money.

So the change of your value Goods + Money is a completely personnal choice depending of your estimation of how much prices of GOODS will change, and how much fraction of total money you own when you make your decision. If have less than 1/N money you will have more than 5% and so perhaps you estimate it's good, but if you have more, you will have less than 5% and you'll think is not ok.

If you have much more 1/N fraction of money, and keep it, the prices of the goods will decrease as an effect of DEFLATION because the reste of economy will have less money, so with less money much lower are the prices in money. So it's absolutely NOT CLEAR to know what to do, and you always take a risk.

So a little inflation rate is good to maintain correct money circulation in economy.
Little inflation rate is good to share money creation process in front of time and next generations
Little inflation symetricly allowed is good to attract new members, and so new producers

5% is not arbitrary ! 80 years is life expectancy.

The total fraction of money each member of a fix community of N in long term can receive so :

1/N [1 - 1/(1+x%)^80]

see DEMONSTRATION in Universal Dividende Justification N°2

And to reach 1/N created money for all, you need f(x) = [1 - 1/(1+x%)^80] to be as near 1 as possible, and as low as possible to reach the most efficient point.

http://img11.hostingpics.net/pics/9200265_pour_cent_inflation_optimisation.jpg

The most efficient inflation rate for a 80 years life expectancy is between 4,75% and 5,25% with a very near ratio near 1/N of 0,98.

[NewLibertyStandard]

Watch, we'll get a great new currency widely adopted and suddenly life expectancy will triple.

[Galuel]

Watch, we'll get a great new currency widely adopted and suddenly life expectancy will triple.

With 70 years of life expectancy 0,98 is reached with a 5,50% Dividend, and with 60 years with a 6,50% Dividend.

It's absolutely NOT arbitrary ratio.

It's about 1/N money creation for each individual member during his life for all times.

[Galuel]

By the way, since 5% is the optimal dividende for an 80 years life expectancy we can estimate what should be the universal dividend in monetary zones.

There are 15 000 billion US dollars in M3 more or less (see M3 shadow stats) for 303 millions of citizens.

So the Dividend whould be in 2010 of : 15 000 / 0,303 * 5% / 12 = 206 dollars / month / citizen

In EuroZone we have M3 = 10 000 billion euros in circulation and 322 million of citizens.

So the Dividend whould be in 2010 of : 10 000 / 0,322 * 5% / 12 = 130 euros / month / citizen

With great differences into the zone : Minimum social in France is around 500 euros / month / citizen, like in Germany, and minimum legal work income is around 250 euros / month in EuroZone countries such Slovaquia and Hongria (which is not legal is France and Germany where minimum work income is around 1200 euros / month).

[bytemaster]

All your numbers are great and all, but assuming you do not outlaw competing currencies, why should anyone save in your currency?  If no one in their right mind would save in your currency, why should they use it for any transaction at all? 

You say there are no "poor" in your system.  That means that there is no incentive for a large number of people to work.  Many may simply choose to "live off of the dividend". 

Why use the currency instead of a tax and redistribution scheme?  Clearly, if there is a way to avoid the tax then people will.

Fundamentally your view depends upon the idea that the rich did not earn and are not entitled to what they have and that the poor do not need to earn it. 

Clearly, if the majority feel that no one should be "poor" and everyone should have a minimum level of food, shelter, clothing then let that majority set up a charity and give those people a dividend.

[Galuel]

All your numbers are great and all, but assuming you do not outlaw competing currencies, why should anyone save in your currency?  If no one in their right mind would save in your currency, why should they use it for any transaction at all? 

You say there are no "poor" in your system.  That means that there is no incentive for a large number of people to work.  Many may simply choose to "live off of the dividend". 

Why use the currency instead of a tax and redistribution scheme?  Clearly, if there is a way to avoid the tax then people will.

Fundamentally your view depends upon the idea that the rich did not earn and are not entitled to what they have and that the poor do not need to earn it. 

Clearly, if the majority feel that no one should be "poor" and everyone should have a minimum level of food, shelter, clothing then let that majority set up a charity and give those people a dividend.

All that has nothing in relation with a money system. I never said there is not "poor" I don't care at all about poor and rich, I just say a faire money system don't create money for some and not fot the others.

That's all. What you do individually and become poor or rich is part your individual choices and individual feeling about what is rich what is poor. What you do with common tool is part of common agreement which needs to be fair to be accepted for most people who is just able to think about what is fair and what is not fair.

[bytemaster]

Well if your stance is that you believe more people would voluntarily adopt your system then go ahead and give it a try. 

My point was that all free-market money comes into existence as a commodity that people must trade for to gain access to.   No one just "gets money" unless that creator of that "money" decides to give them some.   But simply giving people "free stuff" will not make a money system more fair or even more desirable.   

[Red]

Red, my comment to you may have been misdirected. You asked about cooptation and I think somebody asked somebody about Universal Dividend and I thought it was you but I don't feel like searching through to verify whether that's correct or not. I was interested in the topic and wanted to write a reply to the question that I'm now not sure even existed. Anyway, if any of my comments confused you, or anyone else, sorry. Take them for what they're worth whether they're directed correctly or not.

Liberty, now I really feel like an ass! I was being snide about the fact that someone else (not you) wrote a long post not responding to you, just prior to when I was typing. I started writing one as off track as his.

But in between others posted and the association got lost.

Your long post was perfect and exactly what I was looking for!

I shouldn't try to make jokes so late at night. Sorry to cause you grief! (hanging head)
 

[Galuel]

No one just "gets money" unless that creator of that "money" decides to give them some.

So DON'T create money please. Because this is a ponzi scheme.

[Red]

But I am in favor of giving all people as much of a standard minimum dignity as possible no matter their situation.

I favor the same thing, but within limits of course. I'm sure "as possible" means you have your own limits.
In general though, I think this dignity should be furnished by many small groups, rather than a few huge ones.

So we can agree on what we want to happen. Maybe we disagree on how it should happen. Maybe not.

I'm not talking about Basic Income, but rather compromises reached by congress working together or not working together. I'm quite satisfied with what congress comes up with because we elected them and they're just doing the best they can for the most part. Now that's not entirely true, because I'm much less satisfied when Republicans have the majority, but even then I wouldn't say I'm terribly dissatisfied. It's just that I'm quite polarized and like it when we (Democrats) are in power, making our progress. So nationally, I'm quite satisfied right now and I don't want banks or the Federal Reserve or the government to fail.

I'm in complete agreement with you here too!

I like it better (more of the time) when the republicans are making "progress", than when the democrats are in power. But I don't dispair in either case. I choose to be here. I've traveled but this is home.

Even with the Dems in power (soon to be out :-)) I don't want anything to fail. That is like rioting and burning your own neighborhood when your team loses. It's silly.

In general I think the Fed has been hugely successful in their actual job, which is to prevent deflation and keep inflation stable. Others have failed at their jobs, but the Fed has not.

But Bitcoin is very interesting in that it offers a playground of sorts to try out fiscal theory without risking the wellbeing of millions or even billions of people.

In total agreement. That is why I stay around!

Bitcoin is cheap philosophy experimentation. We could launch inflating, deflating, and stable money for the cost of a used car.

But the last thing I want is The Fed experimenting with philosophy.

Again, sorry for the grief!

[Red]

Galuel, would you mind responding to this?

Or even to this?

Thank you!

[bytemaster]

No one just "gets money" unless that creator of that "money" decides to give them some.

So DON'T create money please. Because this is a ponzi scheme.

All money is "created" and is not a ponzi scheme unless you introduce fractional reserve banking or create it as an interest bearing debt.

Gold coins were minted to make them suitable as "money".   Bit coins are calculated, encrypted, and tracked to make them suitable for money.  Money is not a thing, it is an attribute of a commodity that has universal demand.  Cigarettes act as money in prison.  There is nothing wrong with creating more cigarettes or more gold coins.   The thing that makes gold, or bitcoins, or silver suitable for money is that it is DIFFICULT to create the money and the creation process is not POLITICAL.