Basic Points Revenue as an Alternative to Microfinance

Universal Basic Income (UBI) became popular in 2016 after it was adopted by a few Western countries.

In UBI, money is given to poor people without any strings attached. This makes it a bit different from Conditional Cash Transfers (CCT) which imposes conditions that the poor must meet.

What’s Wrong with Universal Basic Income?

In general, studies have found 2 flaws in UBI:

1. It contributes little to alleviate poverty as a whole
2. It is expensive to administer

Adam Smith, the founder of Economics, would be against UBI because:

• It can only be measured in nominal value
• It acts as an expense instead of as a capital – there is no guarantee that the recipient will use it for education to build up his knowledge, or to buy healthy food to build up his body

Development banks want UBI for them to find use for their idle money which is of no value when not circulating. Therefore, UBI is an easy sign that the profits in lending are very low, that banks have to find radically new business models.

Governments of democratic countries like Brazil and the Philippines want it because it lets them placate the poor and prevent public disobedience or the rise of Communism or terrorism. Unofficially, it helps politicians buy votes*. The abandonment of UBI in Finland and Bolsa Familia in Brazil are proofs that UBI is not sustainable.

Microfinance is Better

Smith would rather be in favor of microfinance which are small loans, usually given to poor people to start a micro-business or cooperative.

• The loans would then be used to provide wages, reducing unemployment
• The wages would then be used to pay for the education of children

Loans are supposed to serve as one’s capital, and thus, are not supposed to be spent recklessly as an expense. A capital pays for itself, but an expense does not.

Problems with Microfinance

This solution would not work if there are many regulations against self-made goods or services. Assuming that the law allows solo and cooperative enterprise, then microfinance would have 2 general problems, one with supply and another with demand:

1. The demanders of loans are poor people who are deficient in practical skills like saving, diligence, hardwork, grit, problem solving, etc, otherwise they would not be poor in the first place. This could be caused by childhood development problems, bad environment, oppressive family or community members, and so on.

2. The banks might be predatory or inefficient especially in poor countries where the morals are low, law enforcement is not strict, or infrastructure is undeveloped.

Pros and Cons

Microfinance, UBI, CCT thus have pros and cons:

Pointization Solution

Supereconomics introduces the concept of pointization or the conversion of economic value into points which are pegged to grains. This is part of a commodity-based resource mechanism mentioned in Chapter 2c.

These points are created whenever there is an agreement by two parties.

For example, John can give his harvest of 1 kilogram of potatoes to Martha in exchange for 2 points (assuming that 1 kilogram of potatoes is worth 2 kilograms of wheat).

• John will then have a right to claim those 2 points as whatever Martha is producing.
• If she is a baker, then John can claim bread worth 2 points from her in the future.

Thus, the points are not created by any bank, but by the people themselves judging the value of the goods and services of others relative to themselves and others.

The points can only be created and destroyed as deposits and claims, similar to tags in a baggage counter. As such, the points are not exchangeable and are not legal tender.

So far, only the take tags * of the Resource Based Economy (RBE) has a similar yet rudimentary idea of this.

This service provides the following advantages:

• Like UBI, it mobilizes productivity by letting people feed each other with points
• Like CCT, it imposes conditions between people based on their agreements
• Like Microfinance, the points can be claimed regularly to see which point-producers are actually productive and reliable

When viewed on a macro level, the points-deposits represent an estimate of future productivity.

This is different from money-deposits which represent actual productivity. Money-deposits are governed by interest rates as the ’time value of money’, but points-deposits are governed by the moral sentiments* of the exchangers.

• ‘Monetization’ speeds up an economy by converting goods and services into money through sales
• ‘Pointization’ is the opposite conversion of money into a promise of future resources.

Pointization thus saves companies and societies from a monetary crash, by facilitating a soft-landing.

Basic Points Revenue

The points are very useful during crises. During personal crises, the points manifest as ‘Basic Points Revenue’ or BPR. It will convert anyone’s productivity into points which can be exchanged for food or other basic needs to get through a crisis.

This is similar to how the Inca established a nonmonetary economy using strings called quipu that represented an amount of food in the granary.

A donor can jumpstart the economy by giving food to the poor in exchange for points which the donor can claim through the labor or produce of the poor. For example, if the donor is the government, then:

• it can provide food for the relief of the poor
• The poor will then give back the points by being street sweepers or agricultural workers for the government when at their leisure.

In this way, BPR can create full employment witout being a debt-trap like microfinance, nor encourage idleness as what happens with UBI. It can also be administered fully online, making it cheaper to run.