Let’s Scrap the IMF, the World Bank, the G-20 and…Start Over

“When I ride my bike up and down Embassy Row in Washington DC, I have a dream. Someday I want to go inside the embassies and tell the ambassadors that there is an alternative to the IMF, the World Bank and the G-20 designed by my company GovBrain. I want to see the joy in their faces when I tell them about League of Nations 2.0!”

Embassy Row, Washington, DC

I begin with the premise that the international financial system, specifically the International Monetary Fund, the World Bank and the G-20, is unfair and dysfunctional, and I seek a better way forward.

League of Nations 2.0 is Fantasy Sports for the United Nations.

League of Nations 2.0 is a “meta-game” comprised of a 190-country computer simulation in which nations compete on how well they govern their people. You get to pick the country you wish to represent in the meta-game and then you become a “fantasy” political leader of your favorite country. Each country receives computerized “power rankings,” not based on hard power and military might, but rankings based on their level of economic freedom, political freedom, public health, pollution control, education and social well-being.

League of Nations 2.0 is based on mechanism design theory. Since 1996, three different Nobel Prizes in economics have been awarded to researchers specializing in this branch of microeconomics, econometrics and game theory. Mechanism design has been described as a means to “reverse engineer game theory.” The designer, also called the policy maker, creates a game or mechanism in order to reach a desired policy outcome. Mechanism design theory has inspired me to create a digital United Nations to improve the level of global governance.

Eventually, League of Nations 2.0 transitions from a “cyber-secretariat” to a crowd-sourced wikinomics network with millions of participants.

It begins with an annual monetary grant with no strings attached, rather than the dreaded loans that come with unfair and often unobtainable conditions and unrealistic reform goals devised by IMF and World Bank technocrats in Washington DC. The never-ending financial crisis in Greece is a good example of how the IMF is failing its mission.

Once the online simulation reaches a critical mass of users in each country, real government reform with actual monetary investment is possible. This is when things get interesting.

After applying for the League of Nations 2.0 program and appointing a team of League ambassadors, a country receives a grant denominated in bitcoin. (Bitcoin is more difficult for rogue governments, armies and terrorists to steal). This annual grant is measured in proportion to each country’s purchasing power parity and in proportion to each country’s initial governance rankings.

Embassy of Latvia in Washington, DC

Citizens then vote online on how the grant shall be spent and whether the funds should be handled by governments or non-governmental organizations. Once there is a consensus on how the grant will improve the quality of the country’s governance and an agreement on who shall administer the program, the bitcoin is released into the ambassadors’ virtual wallet and it is converted into the local currency and administered accordingly.

Countries who do not participate with in-person online voting will still receive computer-simulated rankings based on the probability of how they will spend the money. Low-ranking governments are more likely to steal, misallocate or squander grants while higher-ranking governments are more likely to spend the money on their people. Other governments are more likely to spend money on armaments and defense.

Each year, the global rankings change. The winners who climb the ranks based on improved governance receive larger bitcoin grants, while those who slip in the rankings receive smaller grants. League of Nations 2.0 functions similar to the UK’s Premier Soccer League in which teams are promoted and demoted after the season into lower or higher leagues based on performance.

Embassy of Guatemala in Washington, D.C.

This competition is designed to elevate the overall “state of play” around the world. A rising tide, as the saying goes, lifts all boats. After numerous iterations, global GDP per capita should eventually rise, economic inequality will be reduced, the number of democracies should increase, public health should improve, pollution levels should recover, and global peace and social progress will advance to optimal stages.

Governments that extract political and economic freedom from their people fall to the bottom of the standings. Countries that constantly improve their level of governance and help their citizens live better lives are rewarded, and countries that fail to improve governance are penalized.

Funding for League of Nations 2.0 is provided by international organizations, foundations, institutional investors, corporate sponsors, philanthropic endowments and high net-worth individuals.

One idea I have is to make the initial iteration of League of Nations 2.0 into a Facebook strategy game to test the level of interest in this kind of global reform. Most strategy games on Facebook such as Clash of Clans involve killing people, so League of Nations 2.0 could fill a niche for aspiring politicos around the world who want to help their countries govern better — without the violence. I like the possibility of using a Facebook strategy game because Facebook has a huge user base of people in the developing world who would love to have an alternative to the IMF, World Bank and G-20. These people feel disenfranchised and powerless, and they deserve something better.

Let me know what you think and please leave a note with your ideas about League of Nations 2.0.

Brent M. Eastwood, PhD is Founder of @GovBrain. GovBrain is a software company in Washington, DC that automatically predicts financial market prices based on government information and political events. GovBrain applications monitor the global financial system and give early warnings on asset bubbles and financial crises.