This is the fourth part in a five part series of posts that lay out the basics of what we are trying to build with Catallax. The series will follow the following schedule and I’ll update the list with links as the articles go live:
- Demurrage, Catch Up, and Pref Dividends
- Passthroughs, Legacy, and Folding the Blockchain
- Privacy, Accounts, and Transparency
- Selective Citizenship and Citizen Override (today)
- Loans and a new kind of Capitalist
The Catallax system requires some ‘central’ authority to exist to set decay rates and pull the levers of the economy to keep the economic piston pumping. A huge benefit of cryptocurrencies is the ability to do away with centralization. In the same way that we took a long / short position on privacy, we will also take a long / short position on centralization.
In our opinion, the world is not ready to overthrow the nation state. There may be a day in the distant future where we can reach this kind of reality but we believe that there needs to be a bridge between now and then. In order to neutralize too much authority, we propose a scenario of Selective Citizenship and the Citizen Override.
Selective Citizenship allows for citizen accounts to elect to pay a tax out of their pref flows that go to an institution that they want to be a part of. These institutions can be State level institutions or something smaller like a local utility district or school system. We contend that one of the killer apps of ethereum and other cryptocurrencies is taxation. Once municipalities realize that by issuing their own form of crypto they can make taxation automagical you will begin to see a lot more municipalities issuing crypto. Catallax seeks to speed this revolution by adding a taxation layer into our system.
We are also short authority and believe that citizens should maintain control over the ruling authority. Therefore we put forward the idea of the citizen override. The citizen override provides the opportunity for citizens to give an authority the right of easy taxation, but give the citizens an easy way to turn off the faucet and override the ability of the account to operate.
An example of how this would work on the largest scale would be the US nationalizing a Catallax currency and enforcing that all citizens elect the USA tax. This tax mechanism replaces the IRS. In return citizens now have a method to turn off the faucet by voting. If Congress reaches a 23% approval rating like they have now, the citizens that pay the tax can turn off the government's access to pay representatives their salaries.
In a more realistic scenario, the first Catallax system will start in a state of benevolent dictatorship, evolve an authoritative court system, establish a legislative council that will turn into an elected body and then eventually pass to a form of constitutional organization where citizens have significantly more control over their governments than they currently do.
Our civic institutions have taken a serious hit in the last few decades as capitalistic organizations have found profit avenues that have made us less dependent on those civic organizations. The Selective Citizenship system seeks to restore that civic infrastructure by giving grassroots organizations a dead simple way to generate revenue. Because the money that is taxed is money that is already flowing away from citizens it is much easier to convince someone to elect the tax. They are going to be losing the money anyway, so why not have it go to a group seeking to improve the local street infrastructure or establish new green spaces?
This governance may be one of the last parts of the system to come online, but it is one of the most important pieces and any of our supporters should demand that these items stay central to the conversation of Catallax and its future.
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