In Search of Mass Safety Nets: Thought Experiment into Network State UBI (2nd Edition)

Open questions and thought experiment around social contracts, social safety nets, and universal basic income on the network.

This essay is a 2nd edition of an essay summarizing reflections from a series of discussions together with network state community members (referenced anonymously) in a discussion thread called Network State Safety Net. It is part of an ongoing collective effort by a community of early adopters to discuss and tinker with network state thought experiments. So, these ideas and reflections are likely imperfect, and they are more like works in progress to invite more open discussion and debate.

Reflections

We've seen a Satoshi moment -- to use a crypto analogy -- with Balaji Srinivasan’s The Network State (if Balaji can allow this Satoshi comparison). But there is, arguably, still a very long road ahead. There could be a lingering concern: that these are all great ideas, but we could end up seeing a number of nice-to-have small niche online "clubs" -- sort of analogous to how after Satoshi and Bitcoin, there have been thousands of memecoins that have provided very few actual utility or value.

When times get tough, an online society (or "club") around anime or tailored suits or dieting or any number of niche interests probably won't stick. Ideas around frontiers and exits are great -- and valuable -- but people jumping from one online "club" to the next probably would fizzle at some point. So what could we do to turn nice-to-have into must-have?

A community or society could be built around special interests or moral judgements, but arguably states -- or similar root level organizational structures -- organize social contracts to provision more fundamental needs and safety nets: from ensuring safety from predators in hunter gathering tribes to stamping guarantee of "eternal salvation" in church states to providing grain and farm land in Medieval fifedoms or monarchies to installing social security safety nets and infrastructure in modern nation states.

Counterclockwise: Hunter-gatherers, church state, monarchy, and nation state (Source: Public Domain)

State could arguably be defined as any root level apparatus or infrastructure structuring governance and/or social contract(s). So, in this broad definition, a state is not necessarily just a modern day government as we know it (though it could be); for example, in relative terms back in the hunter-gatherer days, the village structure could arguably be the "state". Balaji has also astutely pointed out that the the state could be separated from the church or the nation, and it could be tagged with the network.

So what are some fundamental safety nets that the masses depend on the nation state for, which the nation state no longer provisions as efficiently as desired -- which the network could eventually compete on? Centuries earlier, the founders of nation states designed a more efficient social contract compared to those of the church state or the monarchy state. How could future founders of network states design even more efficient social contracts? To use another crypto analogy, we've seen the Satoshi moment, we move to defining “smart contracts” in the form of new social contracts on the network. Many open questions ahead.

Safety Nets

One could be curious about what potentially essential must-have safety-net(s) a network state could provide for the masses (in the millions) and how safety-net could be structured, so that the network state movement as a whole goes beyond a number of enthusiasts joining "online nice-to-have clubs".

For example: The church state hundreds of years ago provided the masses with the safety-net of eternal salvation. Obey the Church or else the Pope could excommunicate you to eternal damnation. The nation state in the past decades has provided the masses with the safety-net of social security (and in some countries, near universal healthcare, etc). Support the nation so that you are provided safety, security, rule of law, pension, etc. The masses clung to the church states and have been clinging to nation states because of their power on creation and distribution of what is deemed essential.

Then, what about the network state? Open question: If we were to "design" a "social security" system for network states, what would this look like?

Thought Experiment: UBI via Network State

One proposal for designing a "social security" system for network state: A universal basic income for the network state. For the masses, it would try to provision the safety-net of basic financial security while so that everyone could be free to self actualize.

Premise: Nation states could be slow and inefficient with experimenting with universal basic income, and politics always get in the way. So, what if the network, instead of the nation state, implements some sort of a universal basic income.

Design (I'm not an economist or lawyer, so this is probably very flawed at the start...so I welcome corrections/enhancements):

1) Gather a large enough critical mass of a network (the exact threshold T is debatable).

2) Have members of the network each opt-in for a lock-in period a certain amount (similar to making social security contributions). The total amount is converted into BTC, gold, or other stablecoin / stable store of value and stored in a network state treasury.

3) Issue a token (say, UBICoin), that has an expiration date. The token amount's value at any given time is backed by the stable store of value in the network state treasury. Because the token has an expiration date (for example, issued 1/1 and expiring on 12/31), it could be reissued indefinitely without causing a "bank run" on the treasury.

4) Network state "citizens" / network members are issued a fixed amount of UBICoin (Total UBICoin supply / T) at the beginning of each year (t = 1/1), with a programmed expiration at the end of the year (t = 12/31). It would be similar to an annual social security payout, except with an expiration.

5) Network members must accept payment of goods and services through the UBICoin. Because there is an expiration on UBICoin, there is high velocity of money. A self contained network economy emerges. (The premise, again, is a large enough network threshold T).

6) As more members join the network, more contributions are made to the network state treasury, which in turn increases the UBICoin issuance pool.

Critiques

The above universal basic income network state proposal may have plenty of flaws. The purpose of the above section is to just make an illustration. As many in the Network State Safety Net discussion thread had astutely noted, the network offers much more potential than a simple distribution. Several in the discussion thread had also pointed out the potential for encouraging community values, network activity, and positive engagement.

Based on feedback, in addition to a fixed UBI, there could also be a Variable Reward structured around the following:

1. Level of commitment to network state/network society/community values, such as Health, Wealth, and Truth as suggested by colleagues in our discussion thread.

2. Amount of activity on the network, as suggested by other colleagues in our discussion thread (we can come up with fair metrics for this).

3. Amount of contributions to the network state (such as promotion, newsletters, contributing tech skills, etc).

To fund this variable reward, the network state could set up a for-profit arm or make additional investments. The variable reward drives commitment to network state values, culture, and contributions.

That said, it's not a case of design it and they will come. Building on the discussions above, perhaps we can in many ways combine the solve-basic-safety-net state-as-a-service axis with the dynamic organic community/society engagement axis.

Since publication of the 1st edition of this essay, the proposition has received plenty of critiques and criticisms — and that's all good and healthy. Part of the purpose is to invite debate and discussion so that the thought experiment could be challenged, modified, and refined. Some have pointed out the inherent inefficiency in UBI systems, while others pointed out the potential underestimation in the technical complexity of translating a centralized safety net to smart contracts. Community members have also pointed to potentially establishing a “sovereign wealth fund” that could mitigate some of the shortcomings of a straight UBI and offer deflation to living costs. For reference, here is link to a wonderful post written by an astute writer on the “sovereign wealth fund" concept for network states.

All these criticisms are welcome. It is exciting to see the community being excited to continue debating, exploring, proposing enhancements down this thought experiment rabbit hole. Like the early 1776 experiment or other startup paradigm changing movements, it takes a continuous effort from a community of thinkers, builders, and movers over time.

Common Denominators

With regard to the network state movement as a whole, one could argue that a way for the movement to become historically significant is to do at least one of the essential provisioning that legacy nation states do — be it social security or other fundamental aspect or safety net for the masses — but do it even better, so that a big enough (and this would need to be a very big threshold) critical mass is achieved and it becomes too big to ignore. Bitcoin had to some extent succeeded in this endeavor, while hundreds of shitcoins failed. By being too big to ignore, you move the needle so that existing legacy players need to consider you and you become a legitimate competition to legacy operating systems. Or else we keep thread-milling with many "online nice-to-have clubs". Individualist exits and club hopping won't do it.

Long time ago, I read a paper (forgot the name of the author) comparing the American Revolution with the French Revolution. The thesis was that, the American Revolution succeeded because the 1776ers sought basic common frameworks that made all of the thirteen colonies come together (largest common denominator), whereas to an extent the French Revolution failed because each class and cross-section of the 1789ers wanted the new society to be after their special interests as much as possible. Going along this vein, perhaps, a network state that may really scale and would move the needle (in terms of being taken seriously by legacy players) would be one that addresses at least one most fundamental citizen need for the masses (common denominator) better than legacy nation states.

This is essay 4 of 4 essays for The Network State (TNS) Creators Cohort #3 (by 1729 Writers). 1729 Writers is a group that writes to reflect on the network state movement, AI, trans-humanism, and other techno-socio topics.

Disclaimer: This post is academic in nature, and it does not constitute any formal political, scientific, legal, financial, social, religious, or ethical advocacy. For earlier posts and musings, please visit whatifwhatif.substack.com.