Virtual economy pioneer Philip Rosedale recently unveiled a simulation which suggests that a universal basic income — the kind recently popularized by Andrew Yang — cannot ultimately prevent widening divides between rich and poor.
However, that’s not the end of the story.
In a new simulation just posted on his newsletter, Rosedale proposes a pretty ingenious tweak to the UBI concept — basically, fund the UBI with a transaction tax, and then pay out the UBI itself in a cryptocurrency that decays over time:
To simulate an ideal wealth tax in this simulation (which would have the appealing property of being easy to actually enact and impossible to avoid), you simply make money decay and fund a uniform dividend to everyone…
Using transaction taxes to fund a basic income is supported by real economists as well. This proposal from Economist William Gale at the Brookings institute is to use a 10% VAT tax to fund a basic income, for example. This Cato Institute Study agrees with the idea that consumption taxes are a better way to manage equity than wealth taxes. And political candidate Andrew Yang’s proposed ‘Freedom Dividend’ is funded by a combination of a 10% VAT and a carbon tax.
Creating a cryptocurrency for UBI that decays in value — let’s call it “UBI Coin” for short — incentivizes everyone to spend their UBI on goods and services as quickly as possible. This in turn plows more money into the economy, and prevents growing the rich/poor divide that a standard UBI model can cause.
You can see this in Rosedale’s latest simulation of economic transactions which factors in UBI Coin, where the wealth of each economic player is represented by size and color (Green = rich, Blue = middle, Red = poor). Look:
Compare that to Philip's previous simulation of traditional UBI, where with every transaction, a handful of Greens rapidly become gargantuan, as most everyone else is impoverished. Watch below:
Rosedale, who supported Yang during the primacy race, tells me he’d love to present his proposal to UBI/cryptocurrency advocates like him — especially as Philip's approach doesn’t necessarily require government approval or resources:
