Towards the individualization of prices
I detailed in my article on the new money the three USPs digital money has over fiat money; this is why shifting from fiat to digital is as important for our economy and even our society as shifting from cash and cheques to electronic fiat money and credit/debit cards was about half a century ago. In my article on digital identities, I also explain why identifying the participants of the upcoming digital economy is a fundamental precondition, and that these participants will not be only humans. I want to explore here the possibilities offered by the combination of digital identities of consumers, machines, products, assets and dedicated currencies.
Who buys what?
Let’s first imagine that each of us is equipped with a digital identity which will interact with payment systems in ways we will explore here. I list several attributes grouped in categories which could build up our digital identity in my article. Let’s just take a couple of attributes and see how these could have an impact on the purchases of the digital economy.
When I want to purchase an article, the payment system would ask for specific attributes of my digital identity which could have an impact on the price or the purchase itself:
- if I am a minor (under 18 in most European countries) and I try to buy a pack of cigarettes, then the payment is rejected
- if I have diabetes and I try to buy a pack of M&M’s, then the system could also reject my request
- if a government subsidies public transportation or gas, they could make the subsidized amount or percentage dependant on my income.
Public spending must become much more accurate than it is now. As accuracy leads to fairness and efficiency in public spending. The French government has been giving up 18 cents of taxes on each liter of petroleum for months to help French people cope with the inflation. But most people who profit from this subsidy do not need it; they have SUVs and other large cars, and could afford to pay for gas even without the 18 cent rebate from the government. This significant public spending is very much diluted as we cannot differentiate the people who are benefiting from the subsidy: rich people, foreigners etc. benefit from it as well. If the income or the income bracket of the payer was taken into consideration, two people belonging to two different brackets would pay a different price for gas. A base price of gas would be displayed by petrol stations, the price without rebate, and customers would get a rebate according to their income level.
Condition purchases made with allocations
The same French government offers a specific allocation of about €300 in August to help families cope with expenses linked to the start of the new school year. Every year, a significant portion of this allocation is suspected to be spent to buy alcohol, flat screens etc. Products will also be equipped with a digital identity, which could possibly contain following attributes:
- category
- subcategory
- manufacturer
- brand
- mass/volume
- unit of mass/volume
- retail price
- components/ingredients
- provenance
- ecological footprint
- selling restrictions
The back to school allocation could be programmed so it could only be spent for food or stationery, which would be categories. Any attempt to spend the allocation, which would be an impermanent currency, for items of other categories would be rejected by the payment system.
Let the consumer carbon footprint impact prices
Since we know the CO2 footprint of all products, we could make it part of their digital identity. And since climate change has become a reality also in the developed world, we could imagine that the individual carbon footprint could have an impact on the price of products and meals, as money might be the best pedagogical tool we have. We could imagine that States would give a monthly CO2 emission allowance and that prices would start to rise as soon as a citizen reached this allowance, for example 200 kg per month. Once this threshold has been reached, people with normal revenue wouldn’t be able to afford any flight and meat would also become a luxury, until the next month or unless your vegetarian friend accepts to let you pay with her wallet. I would recommend my article on the market ecology to see further examples of this concept (carbon footprint has an impact on prices).
Eco-friendliness and the value of assets
In Europe, each device, home appliance, house and flat is labelled with an energy consumption index ranging from A (most efficient) to G (less efficient). Specialized professionals carry out an evaluation of the energy efficiency of your house or flat and attributes it the corresponding letter. In the current system, tenants have hardly an interest in renovating their house or flat as the tenant ends up paying utility bills. What if the tax rate of rents would depend on the energy efficiency index of the house/flat? Rents would be paid onto the wallet of the house/flat, a portion of that money would be transferred instantaneously to the fiscal authorities, the rest would go to the landlord’s pocket. The lower the energy efficiency, the higher the tax rate. That would motivate a couple of landlords to change single glazed windows…
There are lots of ways to make our consumption and tax systems more efficient, provided we assign a digital identity to consumers, machines, institutions, products etc. and we adopt digital currencies and registers systematically.
