New models for funding
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The automation budget concept is certainly one way to fund the automation of public services and will over time lead to large savings on the public sector. These can then diverted to solving some of today’s issues and/or for lowering tax rate.
Let’s discuss other models for funding or lowering the cost of public services. In somewhat haphazard order:
Quadratic Funding
Regional Joint Investment
Self-owning infrastructure
Harbinger’s Tax
Universal Service Provision Fund
Quadratic funding
Quadratic funding is a slightly different way to fund crowdsourced ideas on what the public side should do. In it the public side matches individuals’ contributions to a project based on the number of people who contributed. I.e. larger number of funders ensures more public side contribution compared to similar amount from a few. It ensures that funds go to projects that serve a broad public instead of a few backers with large funds.
In mathematical terms everyone’s’ contributions are first reduced by taking a square root of the amount. Then all contributions are calculated together and raised to the second power. This gives the sum that the public side gives to the project as matching support.
If say a hundred people gives a euro, the sum of square roots is again 100 and this to the second power is ten thousand. If a single person would have given a hundred euros the square root is ten and that to the second power is again a hundred. A big difference.
There are a couple of weak spots in this scheme as well (as there are weak spots in everything).
Quadratic funding requires a good way to ensure that each participant is really a unique human being. Otherwise, it would be too easy to generate hundreds of synthetic identities to put in one euro instead investing same amount as individual. This is called a Sybil attack.
As public side is also an identity provider, ensuring the true identity of participants is not a big problem. However, QF can also be used as a mechanism in decentralised project. GitCoin grants is one example of a project using it today. There is an ongoing discussion whether the identity system needs to be airtight or not. At least it needs to be one where manipulation is more costly. (As a side note: there is ongoing development for solutions on how to ensure that every participant is unique while not knowing who they were and even preventing the participants to ever reveal that they participated into a funding round. Such schemes makes bribery or threat of violence hard as participants cannot reveal information even if they wanted).
A more mixed question comes from the origin of money. In a welfare society public side gives out a lot of subsidies to individuals and various associations and using that money to advocate to get more money does not fulfil the need to have skin in the game. This is however a general problem where various practically completely government funded organisations hire well-paid staff to lobby for more funds from the government. True perpetual movement machines for producing nothing.
Lastly QF does not work for topics that only a few people believe today but turn out to be valuable in the future. Some other mechanism needed for that.
Regional Joint Investment
There is a tendency to align standards and have regional (or global) policies implemented. Standardisations organisations have done this for a long time, trade treaties affect in this direction and latest developments are large supranational unions like EU. This means that quite a few laws are getting aligned.
It is obvious that if several nations would join together and implement the automation of regulation only once, costs would be much lower. In EU region there are 27 nations and a common implementation would bring the cost for automated decision to a fraction. Perhaps not quite to 1/27, but a significant drop anyway.
If governments are not interested in lowering their spending, then perhaps ideas like Citizens’ Budget would help. This would allow groups of citizens in different countries to co-operate and agree that if you automate that policy, we automated another one and then we share across.
Self-Owning Infrastructure
The autonomous Schrödinger fund model offers totally new ways of organising services. Services can own themselves.
Let’s say that a group of people start a fund for autonomous car fleet. The cars collect enough funds for running costs, repairs and renewal with some growth built in based on need.
They can decide to remain as decision makers for the fund or they can let loose and let the fund own itself.
The purpose of such model is to run important infrastructure as a service without a margin. Keep prices as low as possible and let the originators and rest of the community reap the benefits.
Such a model could well be applied for
Harbors
Airports
Railroads and metro
Online health diagnostics services
Self-driving fleet or cars and trucks
Drone delivery fleets
Waterworks
Electric Grid
Waste collection
Content/Libraries
The infra need to be built to be self-adapting. Growing when demand increases and reducing when decreases. This is how practically all natural systems – for example our blood circulation grows automatically when we grow without any central control and on the other hand if we reduce physical activity, blood vessels adapt by shrinking. Clearly there are algorithms for doing this. Murray’s law is an example how nature does it.
Modular designs where for example roads are built from large lego like pre-fabricated elements are a good fit for self-adaptation. Modules can be detached and moved to somewhere else when a road or harbour is no longer needed. More on that later.
Many infrastructure elements like water works, electric grid are natural monopolies that owners can use and do use for exploitation. When they are owned by public side, they become forms of indirect taxation. Self-ownership will stop this and bring costs down.
Many infrastructures today are subsidised by society for a number of reasons. Subsidies lower costs and this in turn increases usage which is good both for economic activity in general and allowing less affluent people to use them. There is also competition between cities and countries and low infra costs are one attraction point for foreign direct investments.
Having self-owning infra does not rule out external subsidies, should there be will for them.
Harbinger’s Tax
Taxes are one way to fund public services.
Harbinger’s tax is a topic that comes up every now and then as a way to define taxes and thus for funding services. It is a concept of continuous tax based on value: the owner sets value for assets and this value is used in taxation (say property or land tax). Anyone can then purchase that item by paying the value quoted in taxation. This means the owner has skin-in-the game and needs to set a realistic price.
One can immediately see big problems in this approach if it would be applied generally.
The most obvious relates to changes in income during lifetime. When a person loses their job, the ability carry costs reduces dramatically. People could take advantage of suddenly unemployed people when they set the price of their house low due to necessity.
Or think about people in their 70s or 80s on a small pension in a fully paid apartment living in a nice residential area. They could be forced to move from their longtime home at any day when someone richer fancies to live there. Sounds fair? The big resulting stress of having to move from own home containing lots of memories will not do good for health. And these moves could continue if they decide to move to another pleasant location.
Harbinger’s tax is also an excellent tool for cyber-bullying – forcing your opponent to constantly be on the move by purchasing their home. A nation state could intimidate its critics, also ministers or members of parliament in another country if they propose unfavourable legislation or dare to speak of bad topics like human rights. Or even better ensure that there is a cheap, good location alternative nearby when victim is “smoked out” of their current home. This place naturally prepared with the latest and greatest spy kits money can buy. Or a wealthier nation could purchase all natural resources, factories and commercial facilities of a poor country, forcing its citizens into economic slavery.
Or in a democratic society if the government ever falls into the hands of a weird cult, they could use the central bank to print humongous amounts of new money that is lent to the government. Then government forces everyone to sell their property to the state. After that everyone is dependent on state and subject to the whims of that cult. Vote wrong and your future is not favourable.
Or a hedge fund could purchase all houses during summer in a small country, add +10% to value estimation knowing that in winter people cannot live outside thus forcing everyone to buy back their own homes with markup. And they could legally do this every year.
Or when a vulnerability is found in an encryption algorithm, I could purchase data centres (also commercial facilities would be subject to Harbinger’s tax) and decrypt all the disks to see what is inside. The possibilities of Harbinger’s tax are endless. Fixes can be tried in legislation but do you trust your politicians and officials to be able to count all unintended consequences in advance with people like the author loitering around?
Reverse Harbinger’s Tax
The idea with reverse Harbinger’s Tax is that someone needs to make a binding offer for your property and you either pay tax based on that amount or sell it to the bidder. This means that if no bids are made your tax is zero.
This has more or less the same problems as the original model. With one addition. The value of property depends heavily on its repair history. For anyone to assess the value of properties, everyone would have to publish all major repairs and renovations for potential bidders to see. For any aspiring burglar this will immediately separate the rich wheat from the poor chaff. Or if you are just nosy, you could find out how much major politicians or your co-workers are investing into their living. Great gossip generator.
Universal Service Provision Fund Model
Universal Service Provision Fund model is used for example in telecommunications in some countries. The core idea is to collect a certain number of operators’ top line – normally 6% - into a fund and use those funds to ensure that everyone in the country has access to telecom services. In practice this means remote and rural areas.
This model is general and can be used in several services areas and the funds can be used in many ways but why not consider building public side platforms. A few examples below
Collect 6% of top line from all transport companies (taxies, ride sharing, buses, trains) to fund common transport and logistics platforms enabling anyone to become mobility/logistics provider using their car or van. No need by the public side to build it themselves, the platform could be created by buying up an existing platform company and making it generally available with extra provisions for privacy and obeying all laws like taxes.
Collect 6% of health area enterprises top line and provide a self-diagnostics platform for anyone. The platform could also be “created” so that public side purchases for each citizen the right to use some commercial option rather than public side development. Or funding for universities that open source their results.
6% is collected from logistics companies and regulator provides a traffic management platform allowing anyone to become drone delivery operator
6% collected from retail and used to fund open-source products that can be home produced with 3D printers and other fab lab machinery
Open sourcing these platforms allows them to be extended, security researchers to study them internally and joint development between multiple nations.
The habit in Finland has been not to ‘earmark’ money for anything but all income goes into a single account where it gets divided in next budgeting round using previous division as template. This is a powerful tool to maintain status quo and ensure that any funny stuff gets stopped before it becomes meaningful and threatens the current beneficiaries of public money. This is because no one speaks for the new stuff except weirdos and some single looneys on substack. So, won’t happen in author’s country, perhaps your country is wiser.
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