La Renta — Basic Income With A Twist

When a New Home isn’t Enough

That the new neigh­bour­hoods are of high­er hous­ing stan­dards than the Colo­nias Pop­u­lares, where many res­i­dents cur­rent­ly live, makes lit­tle doubt. The mod­ern Impre­sos Pop­u­lares are built using state-of-the-art habi­tat-print­ing tech­nol­o­gy, pair­ing seis­mic resilience with ingen­u­ous ways to opti­mise resources usage and access to sun­light. But even pro­vid­ed free of charge might not suf­fice to con­vince res­i­dents of the Colo­nias to leave the hous­es they often built with their own hands, to instead move into areas where eco­nom­ic activ­i­ty is uncer­tain. 
	The ques­tion then made itself clear: how can one offer a fair incen­tive that alle­vi­ates doubts and makes the pro­posed alter­na­tive a clear improve­ment. Sim­ply hand­ing out mon­ey was not an option, as the risk of it land­ing in the wrong hands was sim­ply too high. From this chal­lenge, an answer quick­ly became evi­dent: the CDRMX project should ensure every relo­ca­tee a guar­an­teed income that would allow them to cov­er their needs, and some wants. But that income should not just give peo­ple mon­ey to consume—it should also stim­u­late the Impre­sos’ econ­o­my. We would have to think a way to incen­tivise invest­ing local­ly: la Renta was born.
	La Renta is a uni­ver­sal income with a twist: it is grant­ed at the start of every month, and deval­ues itself in full at the end. This means any mon­ey not spent is lost to the user. As La Renta is designed to cov­er more than the basic needs, there should remain mon­ey at the end of the month. From this, dif­fer­ent strate­gies exist to keep the ben­e­fits of that over­head: it can be saved, at a loss, or invest­ed at a return.

A Currency For The Impresos: The Mexicoin

To avoid prob­lems linked to dis­trib­ut­ing the income in Mex­i­can Pesos, a new cur­ren­cy was cre­at­ed. The Mex­i­coin is a new cryp­tocur­ren­cy devel­oped for local use only, and which can only be used for the pur­pose of dis­trib­ut­ing La Renta. It relies on the HashMesh: a cus­tom tech­ni­cal infra­struc­ture designed specif­i­cal­ly to offer “fast, secure, fair, and low-cost trans­ac­tions on net­works of any scale.” 

Mex­i­coins exist sole­ly with­in what some may call a microso­cial­ist sys­tem: its min­ing is cen­tralised and capped, and it can­not be bought using oth­er currencies—you can exchange Mex­i­coins for pesos or dol­lars, but not the oth­er way around. 
	The HashMesh is the infra­struc­ture sup­port­ing Mex­i­coin, which is the cur­ren­cy sup­port­ing La Renta. While these two ele­ments help proof the fic­tion and keep tech­ni­cal objec­tions at bay, the unique­ness of this project lies in it act­ing as a self-sus­tain­ing ecosys­tem. Its pri­ma­ry goal is to ensure every­one gets their allo­cat­ed income, and its sec­ondary goal that the mon­ey ben­e­fits local economy. 

A Composite Economic System

To achieve this dual objec­tive, the sys­tem brings four dif­fer­ent accounts into play: the first two are pri­vate, equiv­a­lent to a cur­rent and a sav­ings account; one is a type of invest­ment port­fo­lio keep­ing track of sup­port­ed projects; the last is a col­lec­tive account owned by the entire Impre­so. They are called la Cuen­ta, los Ahor­ros, los Proyec­tos, and el Tarro.

1. La Cuenta

The first account is La Cuen­ta, on which La Renta is deposit­ed at the start of each month. 1500 Mex­i­coins for adults, 1000 for chil­dren, no exceptions—within the pro­posed eco­nom­ic mod­el, that’s more than enough to live com­fort­ably. La Cuen­ta is the cur­rent account used for dai­ly trans­ac­tions, and is ful­ly devalu­ing. That means that at the end of the month, every Cuen­ta goes back to zero before being refilled. Any over­head auto­mat­i­cal­ly goes to a sec­ond account called Ahorros.

2. Los Ahorros

Los Ahor­ros is a sav­ings account which oper­ates in two dif­fer­ent ways based on the Mex­i­coin time­stamp. It’s devalu­ing any coin deposit­ed after March 1st of the cur­rent year by 20% each month, while keep­ing pre­vi­ous funds whole. For chil­dren, the miss­ing 500 Mex­i­coins to their Renta are deposit­ed on this same account with a spe­cial stamp that locks them until their 18th birth­day. 
	The rea­son behind this sys­tem is to dis­cour­age cap­i­tal­is­ing, so that most of the Mex­i­coins left untouched at the end of the month will be inject­ed in a local, par­tic­i­pa­tive econ­o­my pow­ered by Los Proyectos.

3. Los Proyectos

Los Proyec­tos are at the very core of the par­tic­i­pa­tive econ­o­my mod­el. Think of it as an incen­tivised kick­starter, which allows res­i­dents to invest their spare Mex­i­coins in return for goods or ser­vices — nev­er mon­ey — that will make their life cheap­er, or more com­fort­able, or more fun. For instance, a small spender, whose main expense in terms of enter­tain­ment is going to the movies will prob­a­bly invest in a local cin­e­ma project that, once fund­ed, will grant them a free movie tick­et each week. They will spend less on movie tick­ets, and have more mon­ey to invest else­where. This way we can fund qual­i­ty school­ing and retire­ment homes, local com­mu­ni­ty gar­dens, sport and cul­ture events, col­lec­tive gifts, secu­ri­ty ser­vices, etc… We are get­ting a lit­tle clos­er to the idea of dis­trib­uted pol­i­tics in the sense that most pub­lic projects are vot­ed for through par­tic­i­pa­tive econ­o­my. 
	It might some­times hap­pen that a project doesn’t get fund­ed in the allo­cat­ed time­frame, which shows it isn’t a pri­or­i­ty for the dis­trict. In this case, the project is can­celled and all allo­cat­ed funds are auto­mat­i­cal­ly redis­trib­uted to each contributor’s Ahor­ros, and will be deval­ued month­ly until March. The Mex­i­coins lost in this process are col­lect­ed on a col­lec­tive account known as El Tarro.

4. El Tarro

El Tar­ro allows pub­lic ser­vices to cov­er func­tion­ing costs. We have esti­mat­ed that 7.8% of all pro­duced Mex­i­coins will fall back to pub­lic use through that sys­tem which, con­sid­er­ing the low­ered infra­struc­tur­al costs of print­ed dis­tricts and the pri­vate injec­tion of fund in local ser­vices, will keep all basic main­te­nance expens­es cov­ered, with some to spare. This also acts as a buffer that lets the machine keep infla­tion under control.

Case Studies: La Renta Eradicates Poverty, not Wealth

In order to illus­trate the pos­si­bil­i­ties offered by La Renta, var­i­ous cas­es were imag­ined and dis­sect­ed. They cor­re­spond to dif­fer­ent spend­ing, sav­ing, and invest­ing behav­iour, as well as ways to use allo­cat­ed Mex­i­coins collectively—for instance as part of a fam­i­ly. These exam­ples show that, while there exist ways to build wealth with­in this sys­tem, these go through dif­fer­ent chan­nels in ways that prof­it the com­mu­ni­ty as a whole. It is also a much need­ed par­a­digm shift to con­sid­er that when the com­mu­ni­ty ben­e­fits, so does the individual. 

The Investor

The best way to take advan­tage in the sys­tem is to invest in projects. Con­sid­er some­one who backs projects with good chances of suc­cess. Once fund­ed, these projects give out perks — a week­ly fruit bas­ket or a month­ly the­atre tick­et — which allow them to reduce spend­ing, and to invest more. The occa­sion­al fail­ure (here in August) leads to invest­ed funds being trans­ferred to Los Ahor­ros, and each month 20% of the remain­ing sum is lost to El Tar­ro. There is an under­stand­able spike in spend­ing dur­ing Christ­mas sea­son, fol­lowed by a log­i­cal deci­sion to save all in Feb­ru­ary, just before Los Ahor­ros are locked. By the end of the year, this investor has saved half a Renta, invest­ed three, and con­tributed 2.7% of their income to the collectivity.

The Spender

On the oth­er end of the spec­trum, the spender is some­one who lives a life of rel­a­tive lux­u­ry, spend­ing near­ly all their Renta every month. Despite not doing any invest­ing, this spender only lets 200 Mex­i­coins fall to Los Ahor­ros every month. Their sav­ings top at one third of a Renta, while con­tribut­ing around 4% to El Tar­ro. That strat­e­gy is not the most fruit­ful in terms of long-term plan­ning, but the mon­ey is spent nevertheless. 

The Saver

The tra­di­tion­al method of sav­ing, while pos­si­ble, pro­vides the least return due to the strong deval­u­a­tion of Los Ahor­ros. Some­one who aggres­sive­ly saves a third of their Renta every month will end up hav­ing saved 2300 Mex­i­coins, and con­tributed 3600 to the collectivity—over 20% of their orig­i­nal income. In this sys­tem, pure cap­i­tal­i­sa­tion yields little.

The Family

The last case is that of a cou­ple with two chil­dren, who start the month with 5000 mex­i­coins — it’s of course pos­si­ble to join accounts. They invest wise­ly in the com­mu­ni­ty gar­den and a school fund, and only when they try to fund a restau­rant does their invest­ment col­lapse to Los Ahor­ros and they start pay­ing tax­es. Because it’s close to the end of the year, they change their strat­e­gy and do full-on sav­ing after that, which allows them to push over half their com­bined month­ly income into locked sav­ings, while hav­ing con­tributed 2.14% to El Tarro.

Physical and Cultural Extensions

Because Mex­i­coin is a ful­ly dig­i­tal cur­ren­cy, there is no paper mon­ey or pay­ment card. Instead, every cit­i­zen is giv­en a phone-sized ter­mi­nal let­ting them receive pay­ments: the Mexi­Wal­let. A fin­ger­print scan and pin code is all one need to issue a pay­ment, and since ter­mi­nals are used to receive, not send funds, a lost or stolen Mexi­Wal­let is no big deal. Using it, one can also check one’s accounts bal­ance, nav­i­gate proyec­tos, and com­mu­ni­cate for free with oth­er impre­sos res­i­dents using a local network.

Fol­low­ing the ini­tial CDRMX pre­sen­ta­tion, sev­er­al grass­roots projects emerged that were direct­ly influ­enced by La Renta.
	Among these, a polit­i­cal group cam­paign­ing for deci­sion­less pol­i­tics, propos­ing instead a cen­tral algo­rithm able to autonomous­ly start Proyec­tos based on people’s best inter­ests, as per­ceived through their dai­ly rou­tines or emo­tion­al states. 
	Anoth­er was the Cryp­to­ball, a new sport stem­ming from the prac­tice of invest­ing left­over Mex­i­coins into a phys­i­cal Proyec­to: a ball hid­den some­where on the Impre­so on deval­u­a­tion night, which spills out mon­ey at a steady rate to the account of who­ev­er holds it, for as long as they hold it. In its lat­er evo­lu­tion into an offi­cial sport, the prac­tice sees two teams com­pete in a ver­ti­cal are­na, attempt­ing to hit a fly­er as high as pos­si­ble. The last per­son to launch it scores points until the oppos­ing team gets a hit. 
	Like many sports, pro­fes­sion­al Cryp­to­ball doesn’t come free of shady operations—these were explored in an arti­cle titled I Went to Mex­i­co City to Dis­cov­er How Cryp­to-eco­nom­ics Could Save the Envi­ron­ment, and All I Got Was This Lousy T‑shirt, pub­lished a few years lat­er as a col­lab­o­ra­tion between Goethe Insti­tut Mex­i­co, Cen­tro de Futur­os, and Pitzilein Books.

See also
→ C D R M X — Watch Fic­tion­al Talk @Republica 18

Future Mon­ey, Future Problems — 

 21 May 2018 

In 2018, La Renta had the occa­sion to take a life of its own. It was then pitched by Rajesh Laghari as part of a series of Fin­Tech con­fer­ences at re:publica18 in Berlin. Fol­low­ing this event was an offer by (real) econ­o­mist Joe Rini from IASS Pots­dam to have a clos­er look at the pro­posed solu­tion, which sparked inter­est­ing debate on pos­si­ble ways to make use of such an approach, as well as pos­si­ble improve­ments on the orig­i­nal idea.