The principles of functioning of modern society in the second half of the 21st century

Posted by

Slovenská verzia

The value foundations behind this document

The first basic value that the constructs contained in this document stand on is equality of people. A person who is lucky enough to be born into today’s relatively developed technological society has not only the rights, but also certain responsibilities following from this privileged position – he/she quite possibly did not do anything to earn them. It is the basic duty of modern man to divulge the values and the well-being that he himself enjoys with every breath to those areas of the world and those people who were less fortunate in the lottery of fate.

Until the last African is fed, and the last North Korean labor camp prisoner is freed, it is the essential duty of every human being to remain calm and act so that the greatest possible equality of opportunity is achieved. The sun shines equally on us all and we are all members of one team whose basic duty is to give everyone according to their minimum needs – and in return – each individual should give to society according to their maximum abilities. This way, it is possible to ensure that there will be enough material goods for all.

In the near future, the Earth will undergo a rebirth into a new society – thanks to the advances in medicine, people will no longer die of diseases or old age. We will all enjoy eternal life in our young and healthy bodies. The first thing that comes to mind is that the planet will quickly become overpopulated due to the virtual absence of death. It is highly probable that the children of our children will not be able to procreate at will and the arrival of a new person into this world will be a privilege that is earned by humanity’s shift toward a sustainable life with the ever-increasing human population.

The second tenet that this document stands on is the belief in technological progress and the possibility of its systematization without threatening the members of society with its consequences. I hold that humanity needs to figure out a way to make technological progress safe. Humanity happens to be at a point in time when knowledge from one scientific field is applied to other fields, resulting in even more knowledge. Human knowledge is growing exponentially. Today we are already in a situation where too much progress in biotechnologies is very dangerous – it is possible to effectively modify viruses for relatively little money. For example, according to parasitologist Flegr, COVID 19 is evidently a modified virus that escaped from the laboratory. Having watched his video, this does not seem like a far-out hoax.

The only way to control what the scientists are working on and what their results are is to introduce significantly more transparency to the core of society. There must be a tool at the core of society that allows you to see what people are involved in just by taking a look at their data. A system, which allows you to find out more about a person from the other end of the planet than you know now about your closest family. Humanity must begin to function as one big global family where the worries are shared among the ablest members and joys are shared among the weakest members.

The third pillar of this document seamlessly follows the second. It presupposes the existence of a global, distributed, centralized and largely transparent settlement/transaction system in which every exchange of values in society takes place. Or, to put it differently, there must be an information system at the core of society in which all money and people’s assets are registered. Cash will be phased out. Every single exchange of values must take place in this information system. For example, when purchasing goods, the goods are removed from the seller’s assets account in the system – say, a car – and money is added to the financial account. The exact opposite happens with the buyer’s data – a car will be added to his assets account and money will be withdrawn from his financial account. By large, the data in such a system should be transparent – this means that the public should be able to monitor large transactions, for example those of the politicians. In the beginning, and probably to a limited extent – for example, each politician would have to specify a list of investigative journalists who can check his/her data at will. Every such query into someone else’s data will be logged in the system, and this logging cannot be turned off even by court or police order. In other words, when somebody audits your data, the very auditing will be recorded in the system, and you will be informed about it. All important system events will be recorded in a hashed form shortly after their occurrence in a third-party blockchain system to ensure that the data cannot be modified by the organization operating the system. It won’t be possible to change the data in the third-party blockchain – and even if the data do get modified, it will be clear that the modification happened at some point in time and the amount thereof. Therefore, if any transaction in the Visible Money system occurs and is immediately recorded in the blockchain system (for example, Amazon Quantum Ledger) and subsequently disputed, it will be possible to compare the data in the Visible Money system with what has been stored in the blockchain since the transaction was created. It will either check out and the Visible Money server is proven right, or it won’t, and the project has some explaining to do.

The existence of such a social setting will cause a revolution in human relations. For example, corruption will be solved once and for all. If politicians have their accounts scrupulously examined by dozens of people, a new Putin or Orbán will never emerge because they will be brought to court and removed from power after the first fraud or attempt to abuse their position.

The problems of developing countries will also be solved, i.e. the countries where democracy doesn’t have roots deep enough to develop from scratch. Visible money will be an instant and ready-to-use social system that can be applied anywhere and without the flaws of liberal democracies. It will be enough to teach the population to use the system, show them how to control the politicians in it, and maybe eliminate the early setbacks that cannot be predicted yet – and the country will gradually prosper and flourish. Such a system could turn the post-Putin Russia into an exemplary liberal democracy.

The existence of such a system will be the holy grail for the management of the state and the economy. If there is a system that concentrates all business in society, it will also be a game changer in the management of the state. Economic indicators such as inflation/deflation will not be measured ex-post but set in advance. The economy must not – and should not – function by simply printing 30% new money and praying that the whole system won’t collapse. A macroeconomist and/or politician must be 100% sure what his planned measures are going to cause – or refrain from implementing them.

The Visible Money system will also make human technological progress much safer. For example, there may be a situation where the management of society needs to find out who bought a special part for certain specific experiments in biological laboratories. The ability to to do so may one day be detrimental to the survival of an entire civilization. On the one hand, the management of modern society must allow such surveillance, if necessary, but on the other hand, it must be resistant to abuses such as those we are currently witnessing in China. The solution is to turn the potential spying into a transparent opportunity that will be served to all parties involved, and allow the party that was subject to an audit to defend itself by learning about the action, and at the same time allow it e.g. to audit the state officials who carried out the data query with new standard mechanisms and allow it to instantly shout out to the world about the potential conflict of interests of said officials.

On the other hand, the existence of a centralized system with all transactions in society can be a very dangerous thing. Things such as people at the yesterday’s demonstration in front of the parliament losing their last paycheck. Or, for example, negative interest rates. If money exists only in electronic form, completely new possibilities and tools for influencing the events in society will come into play. The administrator of this electronic system will have a ring on his finger that rules them all. Therefore, enormous efforts must be made to ensure that such powers cannot be abused – however, there will be solid prerequisites in place in the form of transparency of financial and property flows of politicians. Therefore, the system must not be in the hands of governments, let alone private corporation. The development and maintenance of such a system must be the responsibility of a newly created international organization that will be accountable to the entire community of nations.

The system could become a very sensitive and neuralgic point, the collapse of which would result in a collapse of the entire civilization. Therefore, it is vital for the system to be partially distributed. This means that there will be separate and completely independent hardware-separated sub-parts of the system – the so-called nodes.

The individual nodes will function largely independently of each other. Each node will serve its users according to geographic or other rules. In the event of a temporary outage of a single node, only the users of that particular node be affected.

Political system in the world in the second half of the 21st century

I opine that in the long run humanity as a whole must be governed by a planet-wide government and parliament. A single global government, one global currency, one global settlement system.

And, for local decision-making, some of the executive and legislative work will be probably delegated to the local level as is the case in the current countries and states. Issues that concern the planet as a whole should be decided at the global level. The decisions regarding the global economy should be made at the global level – i.e., for example, macroeconomic decisions regarding a single global currency. However, local parliaments should draft the documents necessary to make the decisions on global issues.

Fundamental changes should also occur in the negative phenomena of current politics, such as populism. All forms of populism that play with people’s feelings could be potentially questioned by looking at the detailed financial flows of the politicians. Populism is mostly used by the people who use lies as their working method. When there is an easy way in society to verify the financial flows of politicians, these individuals will be confronted with their conflicts of interest and gradually pushed out of key areas, such as politics.

I hope that even the perfidious techniques such as nationally oriented politics will become a relic of the past with a bad aftertaste. I believe that through a generational shift and proper education, it is possible that the young generation will look down on this interplay with the first signal system and feelings with justified disdain.

The awareness of “I, a living and perceptive being”, “I, an Earthling”, followed by the rather insignificant “I, a Slovak”, should be strongly instilled in the minds of young people.

Change of power

The political system to manage society is a relatively complex phenomenon and the preparation for its proper use and the energy invested is highly worthwhile in the long run. For example, similar to the development of information systems, it is true that you have to think before you act. This should also include the election process and selection of the political establishment.

The selection of new politicians should be much more thorough than now. If through the process candidates are selected who stand at the very top of society in all respects, the election cycle could be extended to 6 years. The remunerations of the politicians should be such that they compete with the top management salaries in the private sector. Singapore’s Prime Minister has a salary 4 times that of the US president – currently at $2.1 million a year. I think that even this amount isn’t enough. If a top athlete can make hundreds of millions of dollars a year, a politician’s salary is ridiculous. It is true that a politician is paid from public money – on the other hand, if a hockey player makes a mistake, the worst-case scenario is that his team loses the game. However, if a politician makes a mistake, millions – if not billions – of people can suffer as a result of his bad decisions. Paying a politician some decent money is an investment that pays off very quickly. When deciding on these matters, we should not succumb to mundane sins such as envy. If someone has a problem with the potentially high salary of politicians, no one is stopping them from trying to run for office.

The math in public finance suggests that the government can pay large sums of money to a small number of people with relative ease – but paying even small sums to a large body of people is a huge burden. A few million extra for the political elites is the most reasonable thing we can do in the field of public finances if it really translates into the quality of leadership.

On the other hand, if a politician makes a mistake, he/she should be personally liable for it – for example, in the case of negligence, up to the total amount of money he/she earned in politics, and in the case of a deliberate conflict of interests, a draconian prison sentence and confiscation of property. A politician must understand that the risk of being exposed is far greater than any potential gain from a conflict of interest.

No one will be able to hide any money because it will be simply impossible in a society where money is transparent thanks to Visible Money. Thus, the politician will not be able to rely on the fact that he/she hid some assets. Including the possibility of transferring the assets to his/her relatives. Incidentally, the solutions to issues such as financial fraud will also be based on this principle. If someone is demonstrably enriched at the expense of someone else, it will not help him because all money and assets will be visible, and it will be very easy to take them away from a criminal.

Testing the politicians for more than basic knowledge of economics or geopolitics will be mandatory within the process to change power. If a politician fails these tests after half a year of preparation for office, he/she will have to retake them until successful. The fact that in the vast majority of cases the state is a very bad owner, or the harmfulness of inflation and the mechanisms by which it causes harm and the harmfulness of politicians’ interventions in the market environment, are some of the things that a future politician must be able to recite by heart when woken from a dream!

Same with geopolitics. It is a threat to the survival of our civilization if a fool like Donald Trump comes to power, waking up in the morning and suggesting to his advisers that the USA withdraw from NATO?

The fundamentals of economic functioning of modern society – tax collection, the social safety net, and the individual’s right to a basic scaled level of meeting their needs

Tax collection

Currently, solidarity in society and the payment of taxes is done by deducting a larger or smaller percentage of our income. This is the traditional form of collecting the funds to finance the needs of the state. However, it suffers from many ills – from the most basic ones, such as people not understanding, why they should use their earnings to pay for something that works questionably at best – health care and education, and in worse cases even supporting organized crime with their money – carousel frauds with the collection of VAT, or artificial interventions of the state into the economy and distortion of the market environment through gifts from the politicians to selected groups of entrepreneurs (tax breaks for large investors) and unfair redistribution of wealth.

The second and relatively new way for the countries to finance their needs is quantitative easing, also known as money printing. Printing money can only be done as a whole at the level of the economic area that uses a common currency. The printing is carried out by the central bank, which produces money by artificially creating it in information systems. This is achieved by the state and its issuance of bonds, collection of money for these bonds, and the central bank buying these bonds with artificially created money.

This method of financing the state has one major disadvantage. No economy can produce so much wealth as its central bank can print. Quantitative easing is thus a blank check for the politicians who tend to use it to finance the often senseless and populist measures whose main aim is not to solve the problems in society but to score political points. Thus, quantitative easing actually taxes the economically weakest in the state; and it can be labeled “blood money” if blood is the losses of the poorest groups of population. The newly printed money backed by nothing but trust in the state has an inflationary effect – it increases the prices of everything in the economy. The newly printed money is collected from all, but mostly from those at the bottom of the economy’s food chain – that is, pensioners and people dependent on benefits who have been paying the new higher prices with their old income levels for the longest period of time.

However, the situation in society will change drastically when all finance is in one single system. Macroeconomists will have a very powerful tool at hand to help them predict in an unprecedented way how the situation changes after a certain measure is implemented. The managing economists of the state will be able to predict the future thanks to the unprecedentedly accurate models of the economy as a whole compared to their predecessors. The models will not be immediately and completely accurate, but by gradually fine-tuning them we will eventually reach a level where, for example, it will be possible to determine inflation ahead of the time. If this can be achieved with a certain margin of error, the macroeconomists will challenge the model to answer their wildest questions. What happens if we print a billion euros and give it to the people in the form of an anti-inflation package/helicopter money? Will the inflation rise by another 2 percent? I wouldn’t be surprised if this aid ultimately did more harm than good. Helping to fight inflation by handing out money is like putting out a forest fire with gasoline. And what happens if we gradually reduce taxes to zero and finance the state exclusively by printing money? I think the answer to this question would surprise us.

If we take the current levels of taxation – for example, the cost of salary of somebody with a permanent job earning 1000 euros gross is 1352 euros (the so-called super gross salary). After the deduction of social security, health insurance and income tax, our model person receives a net amount of 701 euros on his account. But taxation does not end here. Practically, an additional 19% VAT, which also ends up in the state treasury, is levied on any purchase of goods or services. Plus, other taxes – if you indulge in such luxuries as cigarettes, alcohol or petrol. After all taxes, one ends up being taxed at around 60%. That is, if he can curtail the use of gasoline and cigarettes.

In the fiscal year 2021, the expenses of the Slovak Republic amounted to 46.7 billion euros. Gross domestic product totaled 97.1 billion in current prices. On average, this results in a 48% taxation rate.

In other words, if the state printed the money instead of collecting taxes, all the hassle with tax collection would be avoided, people would receive the full amount of what they earn and probably even save some money.

As for the rate of inflation: the recent experiments of the European Central Bank with the rate of money printing in the order of several tens of percent of the money supply (only the ECB’s balance sheet increased by 38% in the first 9 months of 2020) were reflected in the Eurozone relatively weakly: 2020 – inflation of 0.3%, 2021 – inflation of 5%, 2022 – inflation of 10%.

Inflation is counteracted by technological deflation – that is, a drop in prices caused by technological progress. The best example is information technology where Moore’s law applies – that is, the doubling of technology capabilities on average every 18 months. It is highly likely that technological deflation will continue to grow at an ever-increasing rate as the human knowledge grows exponentially.

All in all, I think that humanity could gradually switch to the financing of states through quantitative easing, assuming that there will be an information system containing all transactions in society. With the help of such a system, the eventual overprinting could be prevented.

Social system in modern society

If all money and assets were in one single system, it would be possible to objectively allot fair benefits to people in a bad financial situation. One could not cheat when applying for such aid as all finances and assets would be in one system and largely transparent. Such a situation would also allow an unconditional basic income exactly to the extent that the society can afford, taking into account all the negative consequences of handing out money.

Transparency driven economy

If all assets and money were registered in a single system – and if these data were largely transparent and available, it would cause a boom in the economy due to the fact that the weak points in value creation would suddenly become visible and it would be possible to readily optimize them. If, for example, there are two groceries in a village and one of them has a more advantageous contract with the local bakery, this would lead to the reduction of price for those who pay more. Some might not like it – how and where I shop could be considered a trade secret. However, a trade secret does more harm than good in society. The patents for technological devices and procedures that required a long and financially demanding research should also work in modern society. But the fact that the local bakery gives someone cheaper rolls is not a trade secret. After the introduction of transparency, society will be much fairer and more economically efficient.

As regards the functioning of the state, its operations could be significantly streamlined by giving the public a chance to get involved: whoever comes up with a way to save the government some money will receive a reward in percentage of the money saved when the measures are implemented. And with the transparent government payments, the creative ways to streamline the operations would know no bounds.

Visits: 572

One comment

Leave a Reply

Your email address will not be published. Required fields are marked *