The Equity of Microequity
There is no doubt that the world is moving towards technological singularity, but the inequality gap is also progressing in step.
The argument that those on the lower socioeconomic scale are better off than they were 30 years ago because the technology and wealth has uplifted everyone proportionally, well that isn’t the case. Maybe we do a comparison from the last 100 years ago, or, if we are just looking at the gains for those coming out of abject poverty, we can say things are better off now than before. But in fact, for some developing countries, the urban working poor has not had a real increase in their standard of living for the last 30 years.
A summary from the world bank states:
East Asia and the Pacific is the world’s most rapidly urbanizing region, with an average annual urbanization rate of 3 percent.
By 2018, half of the region’s population will be urban — more than 1.2 billion people in all, or one-third of the world’s urban population.
City-led growth has helped lift 655 million people out of poverty in the last two decades.
But the region also has the world’s largest slum population: 250 million people with poor-quality housing, limited access to basic services, and at risk to hazards such as flooding.
On one hand we have discussions about big data, machine learning and AI. On the other hand, we have urban capital city populations in 2020 that have dirt floors, cinderblock walls and malnutrition. The truth is though, the system works really well, but it doesn’t work for everyone. When it doesn’t work for everyone, the gap that separates the haves and the have-nots is not about wealth — there will always be the poor and the rich — but the growing gap becomes a hard barrier by restricting access to opportunity and long-term stability.
We see this in the use of technology where even the urban working poor have access to a $100 smart phone or where young professionals in these developing markets have the latest iPhone which is equal to four months of their wages. But, as consumers, they never will have a chance to participate in the financial growth of these companies, as they are never in a position to.
FYI, 5000 PHP (Philippine Pesos) = 103.00 United States Dollars
The biggest issue with the urban working poor is that they are living day-to-day or week-to-week. There is never enough cash and anything saved is usually used to lend to another family member with a medial or financial emergency. Even if there is access to buying local stocks, there is such a lack of transparency and market liquidity that it almost always becomes a short-term speculative action rather than building long-term wealth. Without this understanding that wealth needs to be built upon wealth, the foundation never even gets started to begin with.
In picking the equity that makes the microequity, our focus was in picking high tech companies that are innovative and are driving global wealth and growth. These are the companies that touch millions of people across all age ranges and demographics and have scaled to encompass the whole world. We call them our MATTANG group of stocks.
Sweet and Simple!
A play off of the FAANG group of stocks, our stocks include, Microsoft, Apple, Tesla, Twitter, Amazon, Netflix and Google. We picked these stocks to tokenize into microequity because all of them are amazing in their own way and they dominate because of network effects, strength of their own ecosystem and the responsiveness of their management. Even for someone working in the US, these companies represent the best of the best.
The significance of someone in the developing/emerging world being able to hold even a microequity of 1/10,000th of the value, would be better than just having a bank account (banking the unbanked), they would be able to have something that is connected to the leaders of growth in our modern world. They could see how this microequity has a value that grows year on year, backed by companies that release innovations that they use, but do so at a global scale. They could begin to see how financial markets can work with real transparency and liquidity as well as understand that it is a long game.
The change that we hope to accomplish is not a matter of tokenizing for efficiency or unlocking hidden capital, but making a bridge from the highest echelons of our society to the urban working poor and igniting the realization that we are common in our humanity. The barrier between being a consumer and a participant may have been unthinkable, but really it is only a few micro steps away.
Sinjin
Managing Director MESE.io
September 23rd, 2020
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