Money
Four New Currencies

In the Second Dimension there will be several dedicated financial instruments that will act almost like currencies (we’ll call them meta-currencies). They will be needed in order to bring to life the segments of the Spectrum of Demand that are underserved in the First Dimension.

Vouchers and TCs

Below is a short list of some goods and services that are essential to the subsistence of individuals in large, diversified societies. In the First Dimension, products and services like low-income housing and affordable healthcare only exist if they are provided for free, or heavily subsidised, by government, or by charitable organisations. In the Second Dimension, they will have a dedicated meta-currency.

 

Fundamental need

Meta-currency to address it

Nutrition

Voucher

Clean water

Voucher

Sewage & waste removal.    

Voucher

Household furnishings

Voucher

Affordable housing rental

Targeted catalyst

Structured healthcare

Targeted catalyst

Basic education

Targeted catalyst

Legal aid

Targeted catalyst

 

Vouchers and targeted catalysts (TCs) are alternative currencies that are restricted in use. Vouchers may be redeemed only for certain essential goods, like food staples, toiletries, clothing, drinking water, cylinders of cooking gas, household wares like crockery and linens, and simple furniture. Stand-alone shops as well as supermarkets, retail chains, second-hand stores and factory outlets would be able to register with a local (Area-level) voucher agency and would thus be able to accept vouchers as payment from their customers, and later exchange them for the national cash currency (money) through the same government agency. 

TCs are used to acquire services like sewage removal, housing, healthcare, education and legal aid. They are designed to incentivise the service provider to give better service. This is because they have variable value: when redeemed, the value of a TC depends on the overall rating of the service provider. This rating is directly linked to the multiplier applied to the voucher. Let’s take a local school as an example. If a school provides good education, it will receive a high quality rating score. How exactly this score is computed and certified can be discussed elsewhere and could vary from one country to another. For a government school, the school’s rating could be the same as its principal’s scorecard achievement for a given year. Alternatively, there could be a standardised system of evaluating school performance based on KPIs, such as graduation and university enrolment rates, but also on subjective elements, like annual parent satisfaction surveys. This could be certified by a Regional or National certification authority. Now, poor families would receive, from their Community administration, TCs that allow them to enrol their children in the school of their choice. Depending on the family’s income level, these TCs might cover the entire cost of attendance, or only part of it. A school with a high quality rating would be able to redeem the TCs it has earned from parents for a revenue higher than the face value of the TCs, whereas an underperforming school might receive less than the face value. This creates a win-win situation that provides for the poor the opportunity to get better services. 

The table below shows a potential way to set up the system. It gives service providers (such as the local school in our example) a strong incentive to perform above expectation. A provider—whether he is an educator or a plumber or a landlord or a dentist—who has a low rating due to consistently poor evaluations will receive only $60 when he redeems a $100 TC received in payment from his customer. A very good service provider, on the other hand, might receive as much as $200 when redeeming the same TC.

 

Redemption value of a TC with face value of 100

Level of service provided
(certified by a standards authority)      

Poor      

Below 
Average     

Acceptable     

Good       

Outstanding

Value of TC

60

80

100

150

200

 

Families who receive TCs from their Community government may rent affordable housing from registered landlords using their TCs; send their children to a school of their choice using TCs; purchase health insurance coverage from a provider of their choice using TCs; and seek the assistance of a registered member of the bar to help enforce their rights, while paying with TCs. 

The system of vouchers and TCs rests on two fundamental prerequisites. First, the economy must be entirely electronic. All transactions are captured electronically, so there is no need for physical currencies. Every citizen must be equipped with an electronic smart card that records all income and expenditure. This “dematerialisation” of currency can be achieved at minimal cost almost everywhere.

Second, every citizen’s economic existence must be captured in its entirety (income as well as expenditures) and tracked over time in a unique electronic account known as the Aggregate Economic Activity (AEA) record. This information be held in a decentralised citizens’ database that is replicated at each level of government and is secured by encryption using blockchain technology. Thus each citizen’s AEA would be able to track all financial transactions that concern that citizen—income, expenditures, bank and credit accounts, investments, property value, etc. This AEA would be compared on a quarterly basis to a ‘poverty line’ threshold. If the AEA falls below the threshold for, say, two consecutive measurements, then the system would automatically trigger the issuance of an appropriate number of vouchers and TCs from the Community to the individual or family in need. The AEA would be transparent, as opposed to the current blind distribution of subsidies.

Let us illustrate the AEA mechanism with an example. Given below is the annual income and expenditure statement for a household of five people in a poor country, such as India. The household is supported by just one working adult, an unskilled labourer who earns no more than Rs 10,000 per month, which amounts to roughly $2,000 a year. This is the family’s only source of income, and it is shown in the column labelled “Inflow”. In the column labelled “Outflow” is the AEA threshold (the amount needed to lead a life of basic human dignity) for a given year, as assessed by the competent Area-level authority, and broken down into the specific goods and services required.

 

 

Inflow       

Outflow      

Currency   

Income as an unskilled labourer

$2,000

 

Cash

Family nutritional requirement

 

$3,800

Voucher

Family clean water requirement

 

$500

Voucher

Sewage and waste disposal requirement

 

$500

TC

Housing rent/mortgage

 

$2,000

TC

Health care insurance

 

$400

TC

Education expenses

 

$3,600

TC

Legal aid contingency

 

$200

TC

Total

$2,000

$11,000

 

 

In this case, the shortfall is $9,000. In such a situation, the Community government would automatically issue welfare payments to the impoverished family totalling $9,000. These payments would not be made in cash, but rather in vouchers and TCs. The great advantage of offering vouchers and TCs, and dematerialising cash, is that local and regional governments would have access to data to measure the impact of these financial instruments on their goal of eliminating poverty. The use of separate meta-currencies would also ensure that the funds can be spent only on essential goods and services, instead of being wasted on unnecessary expenses, like alcohol or dowries or luxury items.

Once the destitute begin to receive vouchers and TCs they will rapidly move out of poverty, thereby reducing the need for such subsidies. From the point of view of the Community government, the goal would be to reduce the number of families receiving welfare payments as quickly and comprehensively as possible. The Community Leader and his team would be strongly incentivised, via the score card system, to implement policies and reforms to address fundamental issues like poor education, poor infrastructure, shortage of work opportunities, ease of doing business, etc., which have a direct impact on poverty. 

Apportionments

Apportionments are intended to enable the trade in public and common goods by assigning fixed units of each good to individuals or institutions. A simple type of apportionment is an Environmental Per Capita Quota (EPCQ) for natural assets like forest cover, which we already discussed in the page on capitalism. Here’s the infographic again:

[image]

This way of distributing responsibility for environmental assets ensures, first of all, that such assets are valued, preserved and maintained. In our example, the rural community would have a vested interest to maintain its forest rather than logging it and turning the land into suburban housing units. The apportionments system would help right many of the imbalances that plague First Dimension economies, starting with the divide between urban wealth and rural poverty. Some of the wealth generated by urban communities would flow directly to rural ones, providing much-needed economic development and hopefully encouraging workers to remain there rather than migrating to overcrowded cities.

Apportionments can also be used to trade undesirable externalities like pollution and waste. Imagine that landfill acreage, sewage and industrial waste could all be traded in apportionments exchanges just like Certified Emission Reductions (CERs) were traded under the Kyoto Protocol. Moreover, apportionments can also be made to work in favour of social goods otherwise spurned by First Dimension capitalist economies. In the discussion on capitalism, we imagined a scenario in which every cinema, in order to maintain its license, had to devote 20% of its prime-time screen time to films from independent production companies; and every magazine was compelled to devote a certain number of pages in each issue to high-quality journalism. These requirements could be grouped under one classification, namely, “cultural apportionments”. And they, too, could be traded between enterprises that have too many and those that have too little. Other legislative prompts included the requirement that cities commission a number of new low-income housing units corresponding to the number of high-income units built by private developers within city limits; and that Big Pharma companies earmark a portion of their R&D budget to contagious diseases found primarily in developing countries. These proposals, too, could fit well in an apportionment system, grouped as “infrastructure apportionments” or “technology apportionments”. But whereas natural resources can be apportioned on a per-capita basis, here social goods are being apportioned on institutions, including private companies and local governments.

In the Second Dimension, apportionments will work by creating a “mandated demand” for certain things. The utility and desire parts of the Spectrum are powered by natural demand, which is essentially an individual’s desire for something, satisfied by the market. Mandated demand, however, is created by the government, which can encourage institutions to channel funds in certain directions, and so it mandates demand for certain goods and services with legislation. For example, an Area government could mandate that 1% of the funds spent on any public building must go towards visual art in the building. Or it could require that, for every person living in a housing development, there must be at least three square metres of green space in the plan, thus encouraging developers to plan for parks and natural spaces in urban areas.

In the Third Dimension, however, there will no longer be any need for government intervention or legally binding rules. By then the effect of the Utility Index will be pervasive and ingrained in the mentality and operations of every enterprise, just like profitability is nowadays. The ever-present aspiration to achieve a better score in the Utility Index will naturally spur enterprises toward the creation and maintenance of desirable public and common goods valued by the Third Dimension, everything from pristine mountain lakes to kinetic art.

Debits / Credits

Debits and credits can be thought of as units needed to correct imbalances. They are automatically generated with each activity or adjustment that is depletive or accretive to the GNR. Once generated, debits and credits may be traded among government agencies and between different Communities, Areas and countries. For example, let us revisit the case of an Area government that has decided to fill in a wetland in order to create an industrial zone. While this decision may have some beneficial effects, such as creating new jobs, it will also have a depletive effect on GNR. Assume the depletion is valued at $55 million, caused by the loss of biodiversity and by damage to water catchment. The depletion of the GNR triggers a debit of $55 million that the Area government responsible for this land use change must pay into a regional GNR fund. The Area may, in turn, opt to recover the debit value from industries that purchase or rent space in the new industrial zone.

A different Area government, on the other hand, may rehabilitate thousands of acres of previously unusable wasteland to create an ecological buffer zone filled with forest, water bodies, or prairie. This would amount to an accretive adjustment to GNR of, say, $300 million, which, in turn, will trigger the issuance of a $300 million credit to the Area from the regional GNR fund. In this manner, accretions and depletions to the GNR are not only elements in the calculus of economics, but also a veritable financial instrument that can be traded. At each level of governance, there would exist a special fund that can issue, receive and allocate debits and credits generated by activities in its jurisdiction.

We can also extend this concept to issues of continental importance, such as the development and water management of riparian systems. A country that alters the course, or the water volume, or the rate of flow of a river upstream of other countries—not unlike what China has done with the Mekong and, increasingly, with the Brahmaputra—can cause profound changes in the economy and livelihoods of communities who rely on the river downstream. In such cases, the credit/debit system would ensure that any changes, such as hydroelectric power stations or diversion canals, are undertaken only after extensive consultation of all nations affected. Rather than block all development projects planned by one country, the debit/credit currency would offer a mechanism to compensate affected countries for losses they might suffer, as well as reward countries that safeguard and improve natural resources and landscapes.

Local Government Accounts in Higher Dimensions

In order to illustrate how the new meta-currencies (apportionments and debits/credits in particular) function in higher dimensions, and what effect they have on financial operations, we will use the example of Sewari, a small, poor community in rural Rajasthan, India. Please click on the this link to view the infographic:

A Story of Hidden Assets

 

Sources of Government Income

In the foregoing example we’ve shown the budget for a typical rural Community in the Second Dimension. It is a very simple example, with simplified expenditures and incomes, and apportionments derived from natural resources only, not from social goods. Nevertheless, the example shows that such a Community can easily make ends meet and pull itself out of poverty in a relatively short time if these economic measures are implemented: 

Use of multiple financial tools (rather than just one cash currency) in order to address all aspects of the Spectrum of Demand

Local control of basic services (such as welfare) and revenues (such as property tax and natural assets)

Abolition of poverty via automatic issuance of subsidies to the poor (vouchers, TCs)

Valorisation of GNR assets within the Community’s purview (debit/credit mechanism)

Maintenance and development of such assets to generate a sustainable income stream (apportionments system)

Engagement of the entire Community in self-governance.

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