The Blockchain can (will) Mitigate Income Inequality
By: Brian Kean
Tags: Income Insurance, Blockchain Technology, Cities, Token, Economic Development

The Blockchain can (will) Mitigate Income Inequality

Citytokens will recreate the construct of value and link it to the immediate environment

Photo by Clay Banks on Unsplash

Something these days is not jibing. Americans, despite all of our flaws, eccentricities and myriad contradictions, never would have elected a “Donald Trump” to be president if something wasn’t severely amiss.

It was shortly after his election that the unexplainable took form; acquired tangibility and led me to declare whilst snowshoeing through a noise-less forest concealed under thick blankets of snow: Ah-ha! I know what the hell happened.

Having just finished up an intense week in Davos at the Annual Meeting of the World Economic Forum (WEF), all of the smart talks and late night drinks, which inevitability led to near treacherous walks along the Promenade, I uttered the name for my new discovery over and over like a mantra, blockchain, blockchain, blockchain.

Don Tapscott gave a talk about his book Blockchain Revolution during the week and as you do at Davos, after he finished I co-opted him. Time is limited and people figure that if you are there then you might have some worthy thoughts that can further along the discourse. Concerning blockchain, I had nothing to add. My enthusiasm, however, masked my ignorance and Don happily chatted with me for nearly 10 minutes.

Feeling that this technology could solve a lot of the problems society faces today, grilling him was not made easier given that I still didn’t fully understand just what the technology was all about. One month later, nevertheless, I was in Geneva meeting with Klaus Schwab, the founder of WEF, and telling about the idea that had come to me thanks to his annual meeting and my talk with Don.

CityToken: the quality of value all around us

There is a crisis of value in our society — not moral values but economic value. We aren’t making value any more; well, actually, value is being made constantly by the vast majority of Americans but there doesn’t exist a system that can fairly monetize that value. The traditional one of time given by employees to employers resulting in a “fiat currency” reward has failed society. As a result, the majority of humans are not being fairly rewarded for the greatest resource they have — time.

Time multiplied by skill equals efficiency and profit. Humans are becoming considerably more efficient thanks to many things but most importantly technology. As a result, they are working less and being paid less but profits soar. Because fewer man-hours are actually needed, jobs in many communities have either vanished or simply don’t pay living wages leading us to status quo that demands something new. I would even say that something radical must be tried. Enter the CityToken.

Because value is either doled in non-sustainable amounts to employees for being tremendously productive and hyper-efficient for big corporations — the local fast food joint being a part of this big business — the value being added by one employee far surpasses the value extracted by that employee. Thanks to such astronomical profits by larger corporations they are able to lower prices thereby driving local businesses into bankruptcy. In very short order, most of the jobs in a community become concentrated with the big corporations. The communities are effectively taken hostage to the interests of Big Business with the ethos of limitless profit where the shareholders are kings in the ever-expanding array of fiefdoms.

Many communities eventually lose the ability to take care of even the most basic needs of its citizens. An existing and core, or intrinsic, value, however, exist in every community in the world. This value can be measured by the physical infrastructure and lay-out of the city — is it good for commerce, is there a port, a logistical hub, etc.; value can even be realized in the things the city needs — what needs to be done? — and the services it offers to its citizens.

Let’s imagine we have arrived on a train into a mid-sized city. Exiting onto the platform, the filth all around is quite surprising. Garbage cans, when found, overflow and spill down onto the stairs which take us below the platforms, to the station itself. Once inside, it is shocking to see how rundown the old, grand station looks. Feeling nervous that something could happen in the large, mostly-abandoned hall, we scurry out to the street.

That wreck of a train station is a bundle of value, though. There is so much that could be done, like perhaps, just sweeping it out each day and picking up the garbage, but instead goes unattended to. The reason for this is really quite simple to explain: the city has no money for cosmetic upkeep. It cannot afford the cost of a maintenance contract; and yet, there is 28% unemployment in “this city” with most of those non-working residents situated in the adjacent community — meaning plenty of available people to take care of the station; and, to benefit from doing so.

Citizen A

Citizen A can’t get across town to a part-time job because firstly taking the bus back and forth each day is too costly. In addition, the price of day-care for a month will eat into the rent budget.

The city, however, creates a blockchain and introduces a CityToken. Available for use to all residents after signing up for the program, Citizen A chooses the train-station job (an activity) from the city’s value catalog and agree to do the task for CityToken reimbursement. The earned tokens are stored in a crypto wallet and can be exchanged for services within the community.

Citizen A uses the earned tokens on the city bus; or, he can offset the cost of day-care at the city’s community center — or a local church that agrees to take the city-created value — by using a mix of tokens and fiat currency (dollars). This is an example of new value creation that is fully created locally and spent locally, further creating value.

We have just turned the entire value-creation and remuneration construct on its head. Because these exchanges will be happening so fast and frequently, the blockchain provides us with a perfect decentralized and trust-less system that can protect the program from corruption and theft — obviously, issues of hacks can always happen but in the short-term, the tokens are only liquid in the given community and for a predetermined list of value-activities so benefits from stolen tokens will be limited.

Citizen A had been in a funk for nearly a decade ever since the community’s major employer closed down. Without the tax base, the city declined rapidly and with each passing year less and less upkeep was being undertaken. After a decade, the community doldrums were beginning to effect more than one generation of residents; youth were moving out and those stuck were falling prey to diseases of despair — drugs, alcoholism, obesity, etc.

Dropping out of a community’s flow, or never having been in it to begin with, is devastating to our citizens today. Many of these people, not lost in despair but created by it, looked to a Donald Trump to save them — to radically alter a system that obviously favors so few at the expense of so many. Trump proved to be just like the rest if not worse, in my opinion. His 2017 Tax Reform was catastrophic to these communities.

A CityToken program can give people who haven’t meaningfully worked in years, if ever, the magical power of adding value to the community. New and responsible citizens are born. We, the residents of our communities, are in fact its owners. If the elected officials fail to provide towns with efficient enough reasons for businesses to set up shop, then really, cities have no rights to forbid us from using services that can’t be paid for — the cities are failing us, right? Unfortunately, that’s anarchy regardless of how right it may sound.

As it is today, the only value we can really earn is from the time we give to an employer; and, more often than not the time we give benefits nameless, faceless corporate entities located thousands of miles from the actual failing communities. The corporations earn money and like imperial overlords extract our value, time and effort creating wealth and then offering as little as possible in return — the jobs seldom offer living wages.

If the park across from my house is not mowed, filled with broken glass and the swings are hazards to the kids, why can’t I expect to earn some value if I fix those swings? By adding value to the community by making the swings safe, children play more securely and happily; they spend more time outdoors where grandparents engage them as opposed to being glued to TVs; neighbors engage each other and the community grows. Is this not another form of value? We cannot, however, expect poverty-stricken citizens to volunteer their time — let’s pay them in CityToken.

Imagine this: a CEO from a large company drives down the street and sees this Mister Rogers-esque joy unfolding in the local park. He stops and smiles: this is where we will set up our headquarters. Two years later, 3000 full-time jobs have been added to the community and the CityToken program is thriving in communities all over a lost and desperate America. Communities are being revitalized not through the raising of taxes or the selling out to big corporations but thanks to the value of its most important resource: It’s residents.

I won’t quote John Lennon here, but I am telling you I am on to something big.