The economic cycles of financial and business fluctuation have returned and some would say more disruptive to our future lives. And while investors experienced a robust 2017 in stock market equities, 2018 is in fluctuation — market has peaked and undergoing a correction in equities as 10 year bonds rise on concerns of inflation. And while US population embraces low 4 percent unemployment rate and the potential of future wage growth in hourly and salary wages from employers on the recent approved overhaul of the US tax reform in more than 30 years, congress can’t seem to legislate how to balance, limit [approaching $20 trillion] or reduce the overspending to avoid repeated government shutdowns. John Adams, 2nd President of the United States said it best, “There are two ways to conquer and enslave a country. One is by the sword. The other is by debt.” The legislative extremes between congress and the federal reserve battling each other at both ends of the spectrem: economic growth and monetary policy.
States fear the rise in borrowing and shutdown potentially leaving critical services exposed from the lack of federal resources, reduced productivity and limitations to special programs for the states to conduct business. The states could be left waiting in line again as in 2013 to obtain government funds for the most urgent services. All underpinned as the deficit keeps climbing where the US debt-to-GDP ratio is 104 percent. Eventually, the stock market will not bear the pressure and the Federal Reserve will have to support more debt by printing more money and raise interest rates. Its of some support coming from the tax reform of 2017, the repatriating tax will incentivize US-based companies that do business overseas to return their internationally held cash of billions to US homeland. A tea tax on US multinational corporations.
It’s Just Time
States need to transform and make themselves more powerful in the terms of their own self interest in exercising control to protect their vital budgets, tax revenue, statewide services and programs. Independently, states have their own agendas in legislative cycles to drive new monetary policy, budget, borrowing and taxes. But new economic and technology cycles have emerged that could offer solutions to improve the process and execution of the policies into the state systems and infrastructure. Consider the forthcoming technology disruption on the horizon in the potential of transforming states legislation to validate, gather digital consensus, and distribute decisions with delegated self executing actions including public transparency into the policies voted in each states congress, all while avoiding the federal debacle going on in Washington DC.
States senators are listening and discussing the rise of Bitcoin, a digital currency which in the last few years was a mere whisper by the most fervent software developers and enthusiastic digital currency miners of Bitcoin and altcoins. Today its showing explosive levels of activity and driving interesting opportunities for further investigating — the underlying technology called “blockchain” and driving the new Internet infrastructure investment of the future.
The freedom of states operating on a decentralized blockchain with self executable policies for state programs to budget, collect taxes & fees and audit are acting in the best interest of the people consuming the states programs. States could take it a step further and create their version of a state-backed digital currency, leveraging the blockchain infrastructure as the intermediary of voting on policy in what is called delegated proof of stake [DPoS] to achieve delegated consensus for states governance of policies and their multistakeholders.
A State Designed Blockchain
States can transform themselves in the adoption of a state designed blockchain by leveraging a digital record of the governing and policy subtask activities that sit on the blockchains decentralized ledger and voted with a delegated proof of stake. Recently, California Assembly Bill 2658 was submitted by Assemblymember Ian Calderon which expands the definition of electronic records and signatures on the blockchain.
The states legislative agenda should be to form their blockchain research group and explore the benefits of the distributed ledger technology and its implementation to record the interconnections of state systems to record, verify and audit of budgets, revenues, taxes, statewide programs and their distributed processes. The states blockchain use cases are many and include a few for:
- Taxes and collection
- Financial budgeting and reporting
- Procurement and provisioning
- Registering titles and deeds
- Identity and access to funding and programs
- Auditing budget and revenue
- Employment and workforce data
- Protected allocation of funds: welfare, healthcare, pension, fire and police
An example is states and cities hold the right to assess and tax property on a home, land and commercial property. A smart contract would carry the assessment rate as a percentage and apply the rate by tax jurisdiction to a digital ledger with an immutable entry to the states designed blockchain. The tax legislation is carried out on the decentralized digital ledger built on a state blockchain, thus increasing efficiency of tax policy and hopefully state debt management. Imagine now applying the blockchain and consensus to regulate fees collected for pensions and state healthcare programs.
The states network infrastructure is in place from the Internet boom. It’s time to upgrade! And if every state was on the blockchain, it sets up the construct for federal government to also be communicating with the states blockchain. Those states who adopt this new future of decentralized policy making digitized into the blockchain could play an important part in adoption and even become a bit patriotic to making states united and self reliant. Think of it as a body of federated chains of states that work on consensus and drive policy built and recorded on the blockchain.