Universal Basic Income vs. Actional Economics

The world is changing, and even the countries that don’t experience the levels of disparity that are extreme are toying with the idea of Universal Basic Income (UBI) to create a better safety-net for its citizens.

On the one hand, I will argue UBI is a big step forward compared to the existing systems, but for a different set of reasons then customarily presented. On the other hand, I will argue that Actional Economics may be a better way to achieve a similar goal, without the political objections that are faced by UBI.

UBI creates a minimum income for everyone, which along with initiatives like negative taxation or guaranteed employment establishes a safety net that has the potential to allow people to make better life decisions: take time to focus on health or childrearing, taking care of a family member, experiment with creative, civic or business pursuits. It allows for an opportunity to go back to school or make different employment choices, compared to the decisions we would make if earning a living was our primary or only motivation.

After all, most wealthy people are not idle but are engaged in work, business, civic, governance or humanitarian pursuits. UBI would be creating an environment where nobody could be impoverished, allowing everyone to benefit from increased automation.

Another significant benefit would likely be increased social trust. In an environment where people know they are going to be taken care of, the fear of being ripped off will be lessened, reducing with it the marketplace friction and reducing the cost of the transactions.

Because it would be universal, it would also eliminate much of an administrative headache that is traditionally ascribed to existing safety-net programs.

On the other hand, because it implies a more substantial tax burden for the well to do and corporation, carries with it a stigma of supporting the lazy, and perhaps correctly suggests that many entry-level jobs that are less than satisfactory will go unfilled, etc. UBI and other similar initiatives don’t enjoy sufficient support necessary to implement them or even experiment with them widely enough to learn more.

UBI, while helping create a society with more even prosperity and thus indirectly affecting every other issue facing humanity, will also do nothing to tackle corruption, environmental impacts, bigotry, disinformation and many other ills that plague our society.

In short, UBI proposes to minimize the negative impacts of a competitive economy and allows human instinct for cooperation to enable a better quality of overall life. At the same time, it reduces also will likely produce a reduction in the need to compete, minimizing the competitive advantage of societies that thrive on competition. It does not drive people to compete, cooperate or be productive, instead, relying on their inherent instincts to do so.

I think there is a better system. One that can cause productive competition and cooperation while creating an excellent safety net for its participants. I invite you to examine ideas of Actional Economics and consider if it is a solution that can perhaps augment or even eliminate the need for UBI.

Actional Economics (AE) is a way of replacing transactional economics that relies on two-column accounting with a system that would depend on multicolumn accounting to encourage or discourage every action (including transactions) by a person in a non-transactional way.

Let me illustrate, in the traditional transactional economics I buy food at a cafe and pay money for it. The money I have is reduced precisely by the amount that is received by the cafe. The impact of that transaction on the society as a whole, on my health, or the environment, for example, would not be recorded.

It does not sound shocking in the above example. But this lack of a record encourages everyone to do things that will take advantage of the commons like the environment or public knowledge and discourage behaviors that would contribute to the common good. From the transactional economic standpoint, looking narrowly at a single transaction, selling poison and healthy nutritious food, for example, is identical.

Actional economics proposes that we record each action with impacts on social, civic, informational, environmental, etc. commons. The act does not even need to be evaluated in real time but can be assessed in retrospective, if it is not a typical action with clear cut consequences.

The value would also adjust it based on transaction validation that happened: Did we self-report? Do we have evidence? Are there witnesses? Did it get externally audited? How credible are the witnesses and auditors? And this credibility can change dynamically adjusting the validity probabilities applied to the actions.

We don’t even have to agree on multiple valuation systems that can apply their own set of values and have a mechanism for converting from one to another.

This system could rely on a distributed recordkeeping and have participant policing, auditing and arbitration be the kinds of positive actions that get rewarded.

In practice, this means that when I buy lunch in a cafe, that action is evaluated from the standpoint of:

  1. My health: food nutrition, what else I already consumed, how much movement I had during the day.
  2. The environmental impact: evaluation of the food choices and packaging.
  3. The social impact: am I eating alone, or with others.
  4. Economic: how many resources am I consuming vs. the resources that I am making available for everyone else.
  5. Etc.

If my choices along each metric are positive, I earn reputation points that will impact the costs of various future actions to me, if negative, I am reducing my reputation for that particular variable.

One significant advantage of this system will be the idea that I can create publically available knowledge economy goods: ideas, software, art, knowledge, data, teaching, service without a counterparty that would be required to buy them for me to do so. I could even make physical goods available to others in the very same way.

As people use, modify and benefit (or are harmed) by my contributions, my reputation is affected. And unlike the existing system, our reputations will not be competitive. Since, if everyone creates value for everyone else, everyone benefits, then you gaining more reputation does not reduce my reputation for contributing to a better world.

Since every contribution would be recorded, anyone who seeks to earn a living will now be able to do so without the guaranteed employment or other similar government programs. All they would need to do is do things that positively impact the commons.

Since benefiting the poor, taking care of sick relatives, focusing on child-rearing, learning, engaging in civic activities, or even taking care of our health contributes to a healthy and vibrant society these types of tasks would add to our reputation and create ways of supporting ourselves simply through being.

Everyone who for whatever health, mental capacity, or other reasons cannot create value to the society would likely be well taken care of by anyone and everyone who would want to earn reputation points for doing so.

Frankly, implementing UBI would be quite easy in such a high-transparency society, as we could agree to generate some level of income for merely being willing to participate and make their participation data visible.

Implementation difficulties — creating a system where every action is evaluated from multiple angles appears unworkable. And I must acknowledge that avoiding the administration challenge is a crucial advantage of using UBI instead.

The truth of the matter is that we are already committing more resources to projects like various blockchain implementations that for the most part add no inherent value by their existence and often rely on significant energy and resource consumption, for consumption’s sake. We spend tremendous resources to make current banking and financial institutions work, and the value they distribute is not at all optimized for the common good.

The reality is that we don’t have to evaluate complex actions precisely, we can start by tracking the contribution of the developers who specifically generate public goods.

For example, what if we relied on a combination of human and algorithmic analysis to reward every contribution to Wikipedia or other similar resources? Every kind of knowledge resource from music, art and photo platforms to scientific and educational content creation and popularization. Sites like Medium could even integrate into that algorithm as a way to reward its authors. Any best-practices website like WebMD or sites on government policy can use this mechanism to facilitate rapid development of hypothesis and best practices consensus.

Since the reward would be in terms of reputation, every government and business would be free to develop their own (or follow one of the significant public) algorithms for assessing contributor’s reputation and recognizing certain levels of contribution by discounts and access to resources that would otherwise would not be accessible or free to the contributor. The contributions would be completely distributed, possibly even anonymously.

The net cost to governments and businesses that chose to contribute in this way would likely be offset by their explicit reputational earnings for providing such a recognition. After all, since we are talking about an informational resource, the creation of value is non-linear, and the costs of sharing knowledge are asymmetrical.

Only after a robust public content creation system is well established would we use its internal resources to expand into all other elements of the economy. And by then technological evolution (which follows an exponential path) will make the seemingly impossible task of tracking and assessing everything many times easier than it is today.

Privacy objections — the system I describe will require an unprecedented level of transparency and looks like a tremendous invasion of privacy. Anyone, for example, who disagrees with a government, corporate or cartel interests and wishes their actions to remain anonymous or anyone who is worried about persecution, manipulation, or personal attacks will not welcome such a system.

This is an important objection, that again highlights an advantage to UBI.

At the same time, since a system I propose can be implemented on an opt-in basis, and even using Wikipedia-like avatars, should an individual contributor decide to maintain a level of anonymity, these concerns should be vastly reduced.

In reality, today we already give up a lot of our privacy with a lot less to show for it. After all, today the companies that gather data on us, do so in private, without transparency to their actions.

At least with a universally accessible public record, we would have the option of challenging or even requesting through a distributed democratic process expungement and concealment of the elements of our record that would be in the best interest of the public to keep private.

Fairness objections — to make this system work, it has to have a built-in record keeping, auditing, evaluation, policing and arbitration components. Like any economic system, each of these functions can be manipulated and safeguards against such manipulation are resource-intensive.

The good news is that in a distributed electronic system where every positive contribution adds to your reputation and achieving each increasingly difficult level of reputation gives you access to greater resources there are lots of parties who will be more than happy to perform all of these functions without the need for organizational structure to organize them.

This system can satisfy the fairness concerns of the conservative, liberal, libertarian and authoritarian.

Conservatives, whose view of fairness centers on utilitarian ethics, can enjoy a non-government system where only contributors gain reputation, and there is no redistribution of income.

Liberals, whose view of fairness centers on benefiting the weakest member of society, can appreciate a system that makes corruption unprofitable, encourages taking care of the poor and creates opportunities for all.

Libertarians, whose view of fairness revolves around individual rights, will appreciate that this system does not require participation, or dictate participatory action. At the same time, it moves many governmental functions out of a central bureaucracy into a transparent distributed entity.

Authoritarians, with their view of a need for central control and fairness model that focuses on compliance, will see a great tool to benefit people who comply with rules and norms.

As the world becomes efficient and automated, transitioning from industrial to knowledge economy, we will need an entirely different set of policies to enable the success of the masses. While I see UBI as a move in the right direction, I see Actional Economic System as a more effective and less politically dependent way to impact many of the same problems.

Perhaps most importantly, because it does not have to be governmentally endorsed, at least in the beginning, and because the initial developers of this system will likely enjoy the reputational benefits within the system, making the development of such a system economically viable, Actional Economic System has a better chance of getting off the ground.

As always, these are just musings and ideas, open for discussion. Feel free to comment below, engage on LinkedIn or reach out through olegtumarkin.com

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Oleg Tumarkin

I am on a mission to transform the world, organizations, and people. Radical and incremental change one article at a time. Connect here, or LinkedIn.