We can have a viable social welfare program that even conservatives can support
For those who don’t know, blockchain technology is what underpins bitcoin and other “cryptocurrencies” you’ve heard about. In short, a block-chain is a network, like your social network on Twitter and Facebook. But instead of people, each dot in the network is a list of transactions: buying and selling of something — in the case of bitcoin, it tracks who buys and sells bitcoin. Because this information is distributed across the entire network, rather than just being in one database in “the cloud” or on a computer, everyone has access to the same information. Nobody can hack just one node and take down the system. Most importantly for the discussion to come, it also means that you don’t need a central source to dole out funds to individuals, they can get funds themselves by trading directly with others or by generating new funds by working on a problem (a process called mining — don’t worry about that yet).
I personally think that the blockchain bubble is not a bubble but a craze. People don’t seem to understand the technology but feel that it is a useful solution to just about any problem. It is innovative in many ways. And in many ways, it isn’t a bubble, but the effect of the internet-type thinking on the idea of currency, so its the .com bubble’s effect on currency and finance two decades later. But what sort of social problems can it solve? I propose that this technology is perfectly suited for any system that works well when distributed and is negatively impacted by centralisation.
Social welfare systems are just that. Social welfare systems are those systems designed to help individuals in a specific area overcome some negatively impacting event or condition. For example, the food stamp program in the US is there to help the impoverished get enough nutrition to be a functioning member of society.
Now, before conservatives try and make an argument that is a blanket statement against welfare, remember that many of the countries most conservative regions depend a lot on social welfare programs (for many reasons we can discuss elsewhere). Also, it is useful to keep the libertarian free-market economist F.A. Hayek’s words in mind. In The Road to Serfdom, we stated that any well-developed society should be able to assure everyone “of food, shelter, and clothing, sufficient to preserve health and the capacity to work.”
One thing that is often not discussed in relation to these programs is the amount of centralization that is good for them and how decentralization could help. Let’s take a US welfare program for an example. The US has a federal program for welfare. This means that it has a head in Washington. It then distributes money to states and local municipalities that can then distribute to people who need them.
This means that there are multiple steps in this system that are also hidden. For example, funds need to be collected by the governments (state and local) and then fed into the central office in Washington. So, money comes from people in community A, goes to community B (possibly C) and then back to B and then back to others in community A.
What if we cut out Washington? How much money and time could we save if we allowed for funds to transfer within the local communities using blockchain technology?
What would this require?
Well, it requires new blockchains be created in local jurisdictions that would like to have a social welfare net for the people in their community.
Why should this be localized? Because we cooperate with those people we feel are in our group. I think we can take this as a given. In all but the most extreme cases, we are all willing to give our neighbour a cup of milk without requiring they repay us. Many communities who have been affected by disasters are also able to come together and donate massive amounts of time and resources to help the needy. Local blockchains would be able to provide a stable and secure system for providing continuous aid to those in need. Localizing these blockchains also ensures that local communities can effectively operate in local economies. A social welfare system in San Francisco or Boston is going to be far more expensive than one in a rural mid-western or Appalachian area. The diversity of economies in the US is not just a matter of cost of living and expenses. Diversity is also a factor to consider in the problems that social welfare addresses. For example, just in the healthcare space, there are vastly different issues in Vermont than there are in New Jersey, despite their being in the same general area of the US. The same goes for Florida vs. South Carolina. Having localized systems would allow for resources to still be pooled in the community — albeit more efficiently — and subsequently used to address the unique issues of each jurisdiction.
This idea also requires “wallets.” For those who are unaware, every person who owns bitcoin has it in a “wallet”. This isn’t the leather wallet we’re used to, but a digital storage unit (sometimes in the cloud, sometimes not) that allows you to store and use a crypto currency. In a social welfare program, wallets would be physical. It is unreasonable to assume that people on welfare have smartphones and it is unethical for us to force them to have them in order to receive benefits. However, other technology, like chip and pin technology that runs our new credit cards, or USB technologies provide simple, efficient, and cost-effective solutions that could allow for cryptocurrencies to be stored and — when needed — transferred in exchange for whatever goods or services the social welfare program is covering.
Another thing to address is mining. For those who don’t know, mining is how blockchains are secured and new coins are created; it is done by having computers solve increasingly complex problems — the more problems you solve the more secure the network is and the more coins you get for helping solve the problem. Technically, cryptocurrencies and blockchain technology doesn’t require mining (which is expensive). Benefits of not using a mined coin is that the networks work faster, allowing WAY more transactions a second on the network, which is likely required if we’re assuming that such technology be used to support welfare beneficiaries in massive cities like New York. Blockchains without mining typically operate with a “main node” that watches transactions and allows them to be checked. This node would be an algorithmic oversight to the network, ensuring that nobody spends more benefits than they currently have. This would be a benefit for social welfare systems which — despite the wants and suggests of many on the far left — must adhere to a strict budget to ensure sustainability of the system.
What would this allow?
Well, this would significantly decrease the required bureaucracy to run a welfare program, making it more cost effective and thus appealing to fiscal conservatives. Given that expenses and credits can be tracked computationally, no human oversight is required beyond that to support the technical system. No more paperwork.
This would allow for clear oversights and accountability. The distributed ledgers would allow for us to secure spending limits on transactions, perhaps lessening abuse within the system.
It would also allow local communities to see how welfare recipients are spending their benefits, thus allowing them to be more adaptive to local needs of their people. Because of the scalability of this, communities can be defined through a boundary, a jurisdiction, or through simple clustering of the network itself (such as those detected by louvain clustering algorithms).
Most importantly, it allows for individual communities to take charge of taking care of their neighbours and family and stops the reliance on Washington. Washington has a problem: it doesn’t always view us as one of their ingroup. It is clear that our neighbour might be a friend to us, but could be a “deplorable” to Clinton or Pelosi. Similarly, a friend to Sanders could be a “monster” to Trump. By returning the power back to our local communities, we allow for our own communities to take care of our own, and it stops to subservience of our communities (and our leaders) to the poisoned politics of Washington.
