Can the Universal Basic Dividend be both private and served by Central Banks?
While EU politicians clamour around old postures delaying the inevitable European bonds, we must use this time to reinvigorate the foundational European principles based on Human Rights. But how can embracing these 80 year old ideals bring relevance to the 21st Century? It is even more pressing to digest these considerations hastily, given the current pandemic stressing their sanctity. It’s exactly innovative ideas such as the Universal Basic Dividend (UBD) that should be embraced to riposte the assault on our privacy.
What is clear from recent weeks is that the catalogue of desperate measures has thrown out the rule book for good. The language of war is in the air, with all hands on deck – now, anything goes. But whilst this moment opens up the opportunity for progressive policy, it can also destabilize hard-won battles in citizen rights to agency and privacy.
In this climate, it is necessary to clarify and define the European privacy model. One that preserves all created ‘spores’ of data for the individual over cheaply giving it to anyone. Such an innovative shift has the potential to radically energise the economy; particularly because the technology industry remains one of the few whose market value has grown during the crisis. Decentralizing analytical abilities over data and encouraging new community-based environmental solutions would bring Europe out of its insipid stagnation and enhance its global relevance. Let’s call this ownership model individual data sovereignty.
With the Universal Basic Dividend being a central feature to a politics of equality, where better to start than with a liberating application of privacy. Interestingly, what recently crept into the US legislative melée during the bailout debates was the idea of the ‘digital dollar’. This surfaced in the Take Responsibility for Workers and Families Act but was subsequently negotiated out by Republican Senators. This brief cameo in public represented a significant milestone in the digital currency space, as it signalled a viable option for quick distribution of emergency money, or indeed UBD.
News of this sent the cryptosphere alight as it promises to bring greater technological adoption generally. It also demonstrated that senators building support correlates with the Federal Reserve being structurally able to launch its own cryptocurrency or Central Bank Digital Currency (CBDC). Despite not being the only central bank currently researching their own CBDC, this is a unique time to raise questions about how a UBD would be delivered.
This ‘new policy instrument’ (CBDC) would act as a Distributed Ledger Technology (DLT) under the purview of the Central Bank and therefore wouldn’t be anonymous. This is fundamentally different to Bitcoin because Bitcoin acts as an decentralized and independent accounting chains of blocks that record the movement of those blocks across the system. A decentralized system can have anonymity built in and work to financially liberate the user, whilst a centralized system needs to structurally impose privacy itself and clarify what kind of privacy they adopt.
In this instance, we are talking about a ‘Fedcoin’ or ‘EUROchain’ which acts as programmable money and has real advantages such as: lower transactions cost, higher speeds and systemic efficiency gains. The drawbacks could be significant however; there would be no financial or data sovereignty, and it would leave users exposed to digitized errors and account freezes. With the magnitude of these drawbacks, we should seriously discuss the delivery mechanism of the increasingly popular UBD.
Currently banks and central banks have been spending some years experimenting with incubated systems. Each institution is racing to be the first mover, hence the significance of the recent CBDC commotion. Christine Lagarde (ECB Head) is no stranger to Distributed Ledger Technology and has warned about it destabilizing the financial system during her IMF tenure. She called for greater Central Bank interest in Digital Currencies and now she is overseeing the ECB’s nurturing of a EUROchain. As top down monetary policy cannot uniquely tackle the pandemic induced dual crisis of supply and demand, policy makers are forced to consider “showering consumers with money to coax them back to shops.”
While traditional European bond politics continue, we must consider how the common data market has been consolidated.
If integration is key to European survival, the issue of individual data sovereignty creates an opportunity to break with the traditional model of overbearing surveillance capitalism. Europe should indeed go further than simply having nebulous GDPR regulations and levying a data tax on foreign tech platforms operating in the EU.
Currently, the EU is mulling a five year ban on public facial recognition technology and must seriously consider warnings from civil liberty groups that such technology is the “greatest threat to individual freedom.” For example, the much publicised projects such as Sidewalk Labs, Google’s Smart city venture, suffered inglorious resignations from quality staff concerned about building “urban surveillance technologies.”
As the pandemic rages and both medical and financial data is at stake we must neuter corporate technocratic governance initiatives that may crop up. For example, CBDC may become a public reality soon, medical identifiers may be required for work. This techno-invasion of privacy should be clearly and calmly resisted under COVID-19 and beyond.
The realities of COVID-19 demark a sharp contrast between Western and Asian adoption of technologies to test and contact tracing.
It has already been warned that Europe must stand up to the ‘slippery slope’; but desperately Germany has recently contracted Palantir to extend, on a voluntary basis, viral identification through bluetooth and Wifi tracking. This constitutes a dangerous mirroring of measures employed successfully in Singapore with a dubious American company active with intelligence services.
However, longstanding European hesitancy surrounding medical data accessibility can be turned into a unique strength. As China and the USA thirst for data and posture around strategic 5G technological infrastructures, Europe can take a unique position globally by shifting to a privacy based business model.
A case for the data sovereign individual.
Much ink has been spilled around fears of ‘cashless society’ and their surveillance implications. I suggest that a potential launch of the EUROcoin and a subsequent UBD could be the start of a reorientation of the economy around the data sovereign individual, which could bolster European economic inclusion, productivity and centre around a people based economy. Currently, the cumbersome GDPR legislation, although well meaning, has negatively affected smaller market participants and startups as firms reorient toward privacy-by-design. Legislation should be streamlined to encourage small business market access and an eventual CBDC should redouble efforts to centre individual privacy to facilitate this.
If we establish a European notion of privacy in digital currency, we would not replicate silicon valley’s double edged promises of convenience and efficiency over surveillance and platform reliance. California, the home of silicon valley, has implemented similar legislation to GDPR — showing we are going in the right direction but also not entirely shifting away from the surveillance model.
For sure, there are ‘moral hazards’ still ahead. Technically, in the event of banks collapsing, we could have citizens directly banked with the European Central Bank through the CBDC structure. Being linked directly with the ECB shouldn’t sit comfortably for Europeans despite the ECB’s promises of a rationed use of anonymity tokens. This is not nearly strong enough to allay basic privacy fears let alone shifting towards data sovereignty.
Despite this, blockchain and DLT technologies do hold potential answers to the critical issues of identity, privacy and data sovereignty. The pandemic has brought these concerns to the fore, but there are answers, and we must demand more from Central Banks if we are to build from the bottom up an economy that counters the current proposal from USA and China of centralized data pools to fuel the Artificial Technology and Internet of Things economy.
In this way, it would be possible for Europe to vigorously realign itself with the founding principles of Human Rights in a digital world with digital answers thereby making Europe relevant again. DiEM25’s UBD model already provides a framework through which to engage with the concept of a UBD for all citizens of Europe.
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