Community Welfare Program
No one can deny that there is a growing wealth gap. Everyone understands that this is a real problem. With these two lines of text, there is no need to doubt the usefulness of a welfare program.
Author: YS Koen
Klaten, First published: June 05, 2023 – Updated: November 05, 2023
Table of Contents
Preface
Wealth gap, income inequality, and financial exclusion are all words that make us feel uncomfortable but are as old as the modern money system.
Adam Smith already wrote in The Wealth of Nations (1776) Book 1, Chapter 8:
“What are the common wages of labour, depends every where upon the contract usually made between those two parties, whose interests are by no means the same. The workmen desire to get as much, the masters to give as little as possible. The former are disposed to combine in order to raise, the latter in order to lower the wages of labour.
It is not, however, difficult to foresee which of the two parties must, upon all ordinary occasions, have the advantage in the dispute, and force the other into a compliance with their terms. The masters, being fewer in number, can combine much more easily; and the law, besides, authorises, or at least does not prohibit their combinations, while it prohibits those of the workmen. We have no acts of parliament against combining to lower the price of work; but many against combining to raise it. In all such disputes the masters can hold out much longer. A landlord, a farmer, a master manufacturer, or merchant, though they did not employ a single workman, could generally live a year or two upon the stocks which they have already acquired. Many workmen could not subsist a week, few could subsist a month, and scarce any a year without employment. In the long-run the workman may be as necessary to his master as his master is to him, but the necessity is not so immediate.
We rarely hear, it has been said, of the combinations of masters, though frequently of those of workmen. But whoever imagines, upon this account, that masters rarely combine, is as ignorant of the world as of the subject. Masters are always and every where in a sort of tacit, but constant and uniform combination, not to raise the wages of labour above their actual rate. To violate this combination is every where a most unpopular action, and a sort of reproach to a master among his neighbours and equals. We seldom, indeed, hear of this combination, because it is the usual, and one may say, the natural state of things which nobody ever hears of. Masters too sometimes enter into particular combinations to sink the wages of labour even below this rate. These are always conducted with the utmost silence and secrecy, till the moment of execution, and when the workmen yield, as they sometimes do, without resistance, though severely felt by them, they are never heard of by other people. Such combinations, however, are frequently resisted by a contrary defensive combination of the workmen; who sometimes too, without any provocation of this kind, combine of their own accord to raise the price of their labour. Their usual pretences are, sometimes the high price of provisions; sometimes the great profit which their masters make by their work. But whether their combinations be offensive or defensive, they are always abundantly heard of. In order to bring the point to a speedy decision, they have always recourse to the loudest clamour, and sometimes to the most shocking violence and outrage. They are desperate, and act with the folly and extravagance of desperate men, who must either starve, or frighten their masters into an immediate compliance with their demands. The masters upon these occasions are just as clamorous upon the other side, and never cease to call aloud for the assistance of the civil magistrate, and the rigorous execution of those laws which have been enacted with so much severity against the combinations of servants, labourers, and journeymen. The workmen, accordingly, very seldom derive any advantage from the violence of those tumultuous combinations, which, partly from the interposition of the civil magistrate, partly from the superior steadiness of the masters, partly from the necessity which the greater part of the workmen are under of submitting for the sake of present subsistence, generally end in nothing, but the punishment or ruin of the ringleaders.
But though in disputes with their workmen, masters must generally have the advantage, there is however a certain rate below which it seems impossible to reduce, for any considerable time, the ordinary wages even of the lowest species of labour.”
This goes on for much longer, but the bottom line is that the citizen loses to the master. Translating this to modern times, salaries do not rise in proportion to the cost of living. Adam Smith described this in 1776, but what has been done with it?
Besides that, we are now also dealing with a new “industrial revolution.” Technology will change a lot of work; the entire generation born now will get jobs that don’t exist yet. One crisis follows another since the Great Recession of 2007-09, the European Debt Crisis (2009-2019), Argentina’s monetary crisis, and Covid with all its consequences, to name a few. The current situation is not getting any better. So, there is no immediate expectation that things will improve for the citizens. There will be a hardening between the upper and lower classes, the Master and the commoner. Adam Smith wrote about it.
COVID has further fueled absolute poverty; the result of Covid was also that the specter of inflation is rampant, and prices keep rising. These are all issues of which citizens feel the consequences directly but do not notice much of the improving economies. This creates tensions that benefit no one. Problems arise at the borders of Western countries, both in the United States and Europe. There is talk of a refugee crisis, where there will still be understanding for war refugees, but economic refugees are not welcome. The government is expected to provide solutions to all these problems. However, the results are superficial as governments face rising debt and higher interest costs.
The business world is just as guilty of this, fattened by the era of free money since the ‘Great Recession.’ After all, free money was not free, and now every entrepreneur feels the consequences of the dramatic increase in interest costs, which hinders real growth.
Have we, as citizens, been left to our own devices, and should we sit still when punches are thrown? No, that’s what this project is about. We can make changes for ourselves. We can take action to empower ourselves and our neighbors so that we become less dependent on what the government does. Whether that neighbor lives directly in the house next to yours or whether they are the neighbors of the online community will be the same. We can and must solve this together and achieve a sustainable solution. Read more about the welfare program and what it will mean for its members in this article.
CWP in one informal sentence:
Empowering people to strengthen their communities will create a more prosperous future for all without neglecting the pressing needs of every individual.
Why bother developing this? That question is easy to answer: name one region without problems regarding poverty, income inequality, or the wealth gap. Many countries have social services for their citizens. The reality, however, is that these countries are also spending less and less on social services for their citizens, measured by percentage of GDP. Take the Netherlands as an example. Public social expenditure in euros has more than tripled since the 1980s, but compared to GDP, it has decreased significantly from 23% in the ’80s to 17.6% in 2022. Compared to total Government expenditure, that percentage has fallen from 46.8% in 2005, when the highest rate was measured, to 38.7% in 2019, the latest available data. This is even though mandatory private expenditure for social security has increased drastically. Proportionally, citizens’ incomes have remained unchanged since the 1980s; the economy and GDP have grown significantly. However, what citizens get back is paid out of pocket while social services continue to be eroded.
The Netherlands is not alone in this; look at the data.[1] Let the data speak for itself. Poverty is increasing worldwide, and costs are rising. It’s been a hot topic since the Great Recession of 2008, but what has been done about it? The above figures tell the truth. It’s time to change that. Don’t expect governments to turn the tide because then you will be left empty-handed. We, the citizens, can do this ourselves. Then, we don’t have to worry that things will deteriorate again over time. Take matters into your own hands; Collaboration yields much more than waiting for nothing to be done other than just staring at the problem. IDIFY-CWP’s solution is not a McDonald’s hamburger that is the same everywhere in the world. It is a framework that can be adapted in detail to the target group anywhere in an instant. As long as the framework is not changed, this program can be implemented anywhere in the world. It will benefit the people who need it the most.
The Community Welfare Program from the member's perspective
If structural changes need to be implemented to improve certain situations over time, this can be done by simply entering a dictation. However, this will cause a lot of resistance, which will only bring unrest. The wiser decision is to look at the group that will undergo the changes and bring about the changes from within the group’s strengths. In this case, it will be solidarity that ensures success. The same solidarity that provides that a group of individuals merges into a community.
In that context, the word community has much more value and meaning for the project, fully expressing its true impact. The strength of the program is precisely its communal character. Community in the sense that members do this together and together ensure that the community gains more power to become a safe environment. You can derive happiness directly from your neighborhood community. The proverb goes: a good neighbor is worth more than a distant friend. Creating a thriving environment starts with gathering individual members and shaping the community. When it begins with the individual members, we need to think from their first perspective and lay the foundation from which they can work. Let’s see what the CWP looks like for members; what do they get with their membership?
Membership
Who can become a member, how can membership be obtained, and what do members get for this membership? At the program’s start, the group’s composition consists of all households in a specific neighborhood community. However, a group formation can also consist of individuals. The average annual income of group members serves as a criterion for participation. In this case, the average yearly income is based on the family income. The organization has determined that the program’s beneficiaries are members of communities whose average household income cannot exceed the GDP per capita of the country. Explicit mention is made of the average, which means that if one or more households have an income higher than the GDP per capita, they can still participate in the CWP as long as the group average is lower. For example, if a community consists of individuals, annual income may be half of GDP per capita.
Individuals cannot register for membership independently. The IDIFY-CWP Foundation has no open-door policy where anyone can become a member. The Foundation nominates (neighborhood) communities that may consider accepting membership of the CWP and thereby comply with the terms and conditions of the program. If a community delegation confirms interest in participating, the IDIFY-CWP Foundation will register all relevant community members. Representatives of communities may submit a request for membership, which must be accompanied by a clear motivation for participation and structure of the group’s composition. The organization will then investigate whether the community in question qualifies for membership. The decision to accept communities is solely in the hands of the organization itself.
Ultimately, it is up to the members themselves to decide whether they want to use the program. We will not force or exclude anyone within the community from membership, even if the person does not immediately meet the criteria. For example, a household with an income higher than GDP per capita or a family that does not have a significant basic income is not excluded from participation. In Indonesia, a household must have a valid registration of the family card. Exclusion from the program can only occur if a household already affiliated does not comply with the program agreements or shows no structural improvement. From a member’s perspective, the duration of the program is unlimited; they decide when to terminate their membership. Members receive a personal financial reserve from the moment of participation. This financial reserve contains a principal amount of two to three times the average annual income of the community members. This is divided into three pillars, each with its specific objective: pillar 1 – personal, pillar 2 – communal, and pillar 3 – future. View the image for a brief description, or read on.
Interest-free Credit System - Pillar One - Personal
IDIFY-CWP strives for a better financial future for its members. It tries to achieve this by making financial resources available through each member’s Personal Financial Reserve Vault (PFRV). Members receive one-third of the principal for personal use under pillar one; this will be made available to the user as a revolving credit. But why provide a credit facility if a better financial future is desired? Debt does not contribute to a better financial future.
Why introduce a form of credit? Let one thing be clear: the credit agreement is not between the user and any organization but between the user and his PFRV; the user borrows an amount from his pot that must be returned over time. This is not a project where the organization throws a piece of candy to the beneficiaries and then tells them to be quiet. This project is developed to implement structural changes that will give beneficiaries a better financial future and make poverty a thing of the past. That does not mean we should make the beneficiaries dependent on donations or a Basic Income program. The change must come from within the user, starting with developing financial discipline.
Each installment payment reminds the user to use an extra sum of money wisely. Additionally, and this is often overlooked, having access to the funds in pillar one immediately makes the user an agent within the community economy. This means that a part often seen as a burden suddenly becomes essential to the system. How the entire project and its economy are designed, the IDIFY-CWP members, through the program, become an indispensable link to the project’s success.
The thoughts behind an interest-free economic system fit perfectly with the philosophy of Blockchain Technology. In this system, no organizations or intermediaries can make money from the counterparty, regardless of the outcome for that counterparty. The structure of the CWP program allows the user to make installment payments on his PFRV; in other words, the member in question pays himself in installments. Who, then, is the recipient of interest? The IDIFY-CWP foundation does not have a business model where it earns money at the expense of those it says it will help. No organization here provides credit to third parties to make a profit. The IDIFY – CWP Foundation is not involved in offering commercial credits. The IDIFY – CWP Foundation is a non-profit organization guiding its members toward a better financial future.
The technological part of this project is being developed on the blockchain; it functions as a peer-to-peer (payment) network where transparency forms the basis for mutual trust between all parties. This should make it possible to make all costs, revenues, and losses public and to receive or pay the share to which each person is entitled. Then, interest payment doesn’t need to be part of it.
An interest-free society within the community forces a different way of thinking; it is not new but almost unthinkable within the current capitalist fiat system. It may not be possible for one party to get the most out of a deal, but everyone is forced to be transparent in agreements. If you always try to get the maximum result when closing deals, you should also realize that the other party may feel like they are on the losing end, which can lead to disagreements in the long run. Still, considering an interest-free society and developing solutions to satisfy all parties can be worthwhile.
Venture Capital – Pillar Two – Communal
The communal part is within this pillar. The members will work with other members of the same community to build a more vital community. Within this pillar, the same amount as within pillar one is available to all members of what they can invest in local business activities for a return. The reason for undertaking this communally is that it will enable spreading capital over more investments. Not just one or two, but ten or more investment opportunities. This significantly reduces the risk factor. Reaching a decision together virtually rules out decision-making based on emotional motives. This also applies to the time frame when an investment must be recouped; it reduces the risk of possible failures and losses. The longer the loan term, the greater the chance that incidents will occur along the way for the borrower.
An investment term in a local venture will be 6 to 24 months. This keeps things clear for all participants and structures the earnings within pillar two for the members. It could be synchronized with the conditions of Pillar 1, automatically increasing the benefits of IDIFY-CWP membership. An interest-free financing structure is also proposed for the second pillar. An agreement must be made between investors and borrowers whereby they share in the proceeds. The Foundation will make several templates available, but in principle, every deal must be negotiated between the parties, with precise agreements made in advance about the amount, a share of the proceeds, and any interim payment.
The IDIFY-CWP part is only one part of the project. The project must apply the community’s economic development to ensure sustainability and sufficient scale. Of course, the activities within pillar two fit in with this. But more is needed. To this end, the Business Development Fund (BDF) will be installed. This BDF will play a crucial role in assessing all funding applications. But also to develop and carry out business activities independently, an essential part of the new community economy. This new economic model cannot use traditional economies’ various tools in their arsenal. There is no debt to money creation, no central banking institution, no money printing press, and no taxes on the income generated by the members. Because these specific instruments cannot be deployed, the new project economy does not have to carry any of the existing economies’ legacies. This creates room for (new) concepts that will form the basis of the community economy, including an interest-free model.
Compounding Investments – Pillar Three – Future
The previous components of the CWP program provide an immediate personal use portion and a joint passive income portion. Then, the next part (pillar three), which will provide future financial support, is a natural continuation. Many participants in the IDIFY-CWP program have never had the opportunity to build up small assets through savings or investments. This creates the situation that if they cannot build a pension, they depend on family members’ financial support for their livelihood. This places a claim on the next generation, which in turn has far-reaching consequences for the financial situation of that generation. This part will make that a thing of the past.
Traditionally, if someone already has some form of savings, for example, after a harvest or a bonus at work, this was often invested in things like livestock or jewelry, which does not have a compounding effect on wealth. Moreover, these are often investments in the short to medium term.
The organization must convince its members to (re)invest these funds for as long as possible. Time plays a crucial role here; the longer the investment can continue, the greater the result will be. The organization will develop and offer sufficient investment products so members can choose. Ultimately, it will also be possible for third parties to deliver products within this pillar, provided that the assets remain on-chain on the project’s proprietary blockchain.
The CWP and the organizational structure
The Community Welfare Program must be independent of any commercial activity and, therefore, cannot be part of a company’s CSR program. That is why the legal structure of a Foundation has been chosen. The foundation will have a general board with the support of a Supervisory Board.
The board of the IDIFY – CWP Foundation will have to achieve a fourfold objective:
- Integrating new members into the network and creating a digital existence for the neighborhood communities.
- Mentoring and educating members
- Expansion
- Positioning of the CWP and its members in the network of the total project
Much of this program can be standardized, and few or no problems or obstacles are expected in those activities. That will be different when members need personal guidance and education. This involves considerable costs, but how far can these costs be passed on to the members? Solutions that do not require these costs to be passed on to members may need to be found, as these services can accelerate and increase technology adoption. These considerations must be made, and the board must respond substantively.
Expansion will have to be carried out in two ways. First, the number of members will have to increase to give this project an economic scale to have a significant chance of longevity. Secondly, expanding the program to other regions and countries would be very welcome. This must be carefully coordinated with the Blockchain technology developers and the Foundation. However, this applies to both; expansion is never a good idea if it’s just a numbers game. Expansion is necessary if everyone wants the project to succeed and all parties involved may benefit.
Positioning may seem like a trivial topic of conversation to outsiders, but it needs to be an essential point of attention for the board. They will have to ensure that the CWP program is never exploited commercially and that the three-pillar structure is never compromised, regardless of the composition of the sub-communities. Within the blockchain network and the project, the IDIFY-CWP Foundation should not be put under pressure. The IDIFY-CWP organization must ensure no discussions arise about whether the project wants to continue the IDIFY-CWP program and who is responsible for its costs. It is costly, but the CWP and its members will boost the project economy and help move it forward.
Conclusion
The founders took the initiative for this project because they saw first-hand the consequences of the pandemic and inflation for people in the lowest income bracket. Moreover, all technological developments will quickly change the labor market for the same people. And as if all that weren’t enough, the entire discussion about basic income remains primarily a discussion. All this has contributed to the need to find a solution.
There is a vast difference between waiting for the government to take action and simultaneously commenting from a distance about how wrong everything is or trying to change and improve the shortcomings identified. The same technological developments mentioned above also give us all the tools to take matters into our own hands and take action. Technological developments enable the project to create a protection barrier for members against drastic changes and prepare them for a better financial future. It will take hard work from everyone involved in the project to achieve the goals, but that’s always better than doing nothing and continuing to complain about how bad things are.
This project will not solve the global problems associated with the growing wealth gap, but it will at least reduce the wealth gap problems for those who join IDIFY-CWP. Wealth is a relative concept; we don’t promise to make anyone rich. But we offer options. Through this project, people become an essential part of a mechanism; in this case, it is the community economy, where, in the past, they were sidelined and were only allowed to pick up the breadcrumbs. In the past, other people made the decisions for them, but this project gives them the tools to take decision-making into their own hands. This project teaches those involved to use the available tools. Do more with the possibilities to maximize results. The message will be sent to the rest of the world: staring and debating the magnitude of problems will not solve anything; only taking action will change things.
This is a civil society project, with no government involvement in its development, but expect them to want to be involved in its implementation. That is, of course, not allowed. The more successful the project, the more outside pressure will come. Partly for this reason, the project must contain much more than a community welfare program. The project must provide its much-needed proprietary infrastructure. Think of the blockchain and the P2P payment network. Only then will this project remain autonomous and provide the necessary user protection. Unfortunately, not everything can be decentralized in implementation. Consider, for example, IDIFY-CWP as an organization. They are the stop on the door when it comes to admitting members. Not who gets access or not; it is not a personality election, but the number of new members. This project cannot simultaneously handle an immediate inflow of thousands of new members. Bottlenecks will arise in the use of the project, ultimately leading to its demise unless it can be controlled.
Bottlenecks in the form of too little liquidity in exchanging tokens for fiat currency and vice versa. More applications will also have to be developed to make a more considerable inflow of new users attractive. Usability will be minimal if unlimited members are immediately admitted. This will cause a lot of negativity, putting the project in a bad light. That doesn’t help anyone at all. At the same time, a project economy must be built up that will strengthen the further foundation of the project. The future will show how widespread the token use will be, which in turn will be an indication of acceptable further growth. But that growth will always have to remain controlled growth. Simulations show that the project can be expected to grow from 100 members initially to an average of 15,000 new IDIFY-CWP members per week. More members will never be good; the project and the economy must be mature enough to absorb the influx of those numbers.
The token model of this project will also help with this. There is the Community Token, the token used in the PFRV; members receive these tokens as starting capital. It becomes the means of payment within the community, but it cannot be used anywhere else. As the name suggests, it is an actual community token. Each country or region will have its community token that will initially reflect the value of the locally used fiat currency. It is programmable money; clear conditions are attached to its use. As mentioned earlier, it can only be used within the community and has value if it is exchanged for the Utility Token.
This Utility Token is like a multi-tool; this is the token needed to vote on decision-making within the project, and this is the token that will be used to pay transaction fees. This token is the means of communication with the outside world for every user for whatever needs to be done. Hopefully, It will used for token trading on various trading platforms. In addition, it will also be the only crypto token that can be used by the financial service provider that the network will operate soon. The Utility Token is what it’s all about for everyone involved in the project. IDIFY-CWP is assigned UT, as is the BDF. But for example, 50% of the UT (750 million) will also be held in deposit, which will serve as collateral for the CT. The following 15% (225 million) is used for liquidity guarantee. The last 35% (525 million) will eventually come onto the market gradually. Initially, 7.5% of all tokens (112.5 million) will appear on the market in a public sale. That is almost 21.5% of the total liquid supply. The remainder will become available in phases; at most, 5% of the remaining tokens will become available in each stage.
Whether this is a lot or not is not the question; due to the growing number of members and attractiveness for other users, one must act cautiously. A situation may arise where liquidity shortages may occur, which will cause the growth of the IDIFY-CWP to slow down. Token trading is essential to the project for several reasons. New IDIFY-CWP members will initially want to convert a significant portion of CT to UT and exchange it for the fiat currency of choice. Not only them but also the companies that obtain financing within pillar two will follow the same route. The good news is that all of them will also be buyers of the UT, and these will be exchanged for CT. So, there will be plenty of activities in the UT from the project.
That next step in the development phase towards maturity makes the project more valuable to everyone involved. In the first phase of the project, the focus of the token activities will mainly be on the IDIFY-CWP members who will actively use the UT and CT in combination with fiat currencies. This is also an excellent opportunity to test token liquidity. In the next phase, existing IDIFY-CWP members will have fewer exchange transactions involving tokens and fiat money. The usability of the CT will fully mature as more applications will be available within the community, keeping more IDIFY-CWP member activities on the chain. A different set of users will also enter the project. While in the first phase, the project will have to rely entirely on the IDIFY-CWP members and the first Utility Token holders, in the second phase, you will get users who want to benefit from the possibilities that the project economy will offer.
The arrival of these “outsiders” is heralded by the purchase of the UT. To facilitate this, a financial service provider must be established that only serves clients who want interaction between the UT and fiat currencies. The service provider may offer custody services for other cryptocurrencies and tokens, but only when they are exchanged for UT or taken into custody. Other transactions or exchange services for other crypto tokens will not be part of the product range of this service provider. The service provider must be part of the project and, therefore, not serve other projects. This is being done because history has shown that interactions between fiat currencies and crypto can quickly deteriorate if services are provided with a profit motive for the financial service provider. It should serve the project and its members, not treat it as one of its many customers.
Due to legislation and regulations, a financial service provider on the border between crypto and fiat currency will never be a Decentralized Autonomous Organization. But again, it will have to serve the members, and therefore, it will have to function as efficiently as possible to provide on- and off-boarding solutions for the users. This makes using the project’s applications accessible, and acceptance will only accelerate. Everything must be focused on user-friendliness and safety.
This side of the project, IDIFY-CWP, will not lack suitable users, but rather, a brake on the influx of new users will have to be applied. It will be possible to increase those numbers to a maximum of 15,000 new members per week, but this will require the entire project to have passed that initial startup phase and have sufficient applications available to users. IDIFY-CWP will have to work closely with the BDF and the Alrisha Foundation, the foundation for blockchain development and all its applications.
The IDIFY-CWP program aims to change the conversation around income inequality and the wealth gap forever. From now on, that conversation must be about taking action. In equivalent economies such as Indonesia, this will require less extraordinary effort, but how different will this be in advanced economies? What should be clear to everyone is that the problem will not be solved if it remains a one-sided program. It is not just about giving; change must come from the communities that will be served, which can only be achieved through performance. That is also why this program is community-oriented. We must work together to build a better, more equal future.
The beneficiaries owe this to all those who make this project possible, not only the developers but even more so the donors. No government is involved here, no charity organization, but people from civil society. This is precisely a project where no master determines the fate of his subjects. We are all equals here, and together, we can ensure success.
The challenge will be establishing a community economy wherever this project is rolled out. A project economy will be created, but beneficiaries of this program must also work with the project organization to build a local economy to reap the full benefits of participation. Therefore, the possibility of scaling must be available when an IDIFY-CWP branch opens in another region or country; the support base must include at least 10,000 future members. Again, it’s not just families who should have access to membership as they are given at the start of the project. The organization is open to any proposal.
It is expected that these types of initiatives will be even more necessary in the future. That is why IDIFY-CWP will do everything it can to lay a solid foundation and always continue to work on improving the model. But the time for discussion must be over; now it must be shown that all this talk must end and that citizens will take matters into their own hands and bring the change. If we leave it to the politicians, it will take a long time before a model for a basic income program is developed, and then we have to see who will come out on top. We don’t need permission, and we don’t need to wait for the “leadership”; we have the trust of a permissionless and decentralized system. We, the citizens, can be in charge of the outcome; we come together as a community, and we work together to benefit together.
It’s time to take action!!!