28th April 2018

Financing GWRF

Financing GWRF

If the EF is to finance its Global Welfare State, as presented in Scenario 5, including the Global Wealth Redistribution Fund, it would need substantial capital. What would be the source of such capital that would support the needs of the EF itself, as well as the programmes envisaged for the members of the subsidiary zones, which by 2040 may include more than half of the World’s population?

To answer this question I will present several sources of capital or significant cost reductions in most sectors that should be available from 2030 and by increasing annual contribution, the total capital should be sufficient to cover the spending target in 2040. These are:

  1. Tax rise. This is the most typical source of finance for every government, although in this case even more important is the reason for doing that and its ultimate outcome
  2. Significant fall in prices. This could be a direct fall in prices (low inflation or even deflation) and indirect, through product substitution and product efficiency (much greater value)
  3. Substantially lower cost of government achieved by highest level of process automation and self-service
  4. Significant redistribution of wealth from extremely wealthy individuals by limiting the maximum value of assets a person can hold. Any excess would be 100% taxable, although an individual could direct up to 30% of the excess to a nominated charity
  5. Much higher than predicted GDP growth. This source is rather unusual, since it involves turning a problem (too low GDP growth) into an opportunity (much higher growth than would have been expected)
  6. AI-generated new type of wealth, most of which would normally not be included in the GDP growth. This is the generator of wealth in every aspect. I immediately admit, that a lot of the savings in this category will impact the fall in prices, or will have already been in some way included in the previous sources. However, there would still be some ‘leftovers’ which are difficult to quantify and will emerge as new capabilities, never possible before, e.g. humanoid assistants providing elderly care in care homes.

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