by Don Tapscott
That’s the wrong response to turmoil, according to renowned Peruvian economist Hernando de Soto. “The Arab Spring was essentially and still is an entrepreneurial revolution, people who have been expropriated,” said de Soto. “Basically, it’s a huge rebellion against the status quo,” and the status quo is serial expropriation—the repeated trampling of citizens’ property rights by their governments until they have no choice but to work outside the system to make a living.14
So trampling more rights is the worst possible response because it pushes more people—such as journalists, activists, and entrepreneurs—outside the system. During the past twenty years, voter turnout has dropped in most Western democracies, including the United States, the United Kingdom, France, Germany, Italy, Sweden, and Canada. In particular, young people are looking to bring about social change outside the system, certainly not by voting. Most Americans think their Congress is dysfunctional and deeply corrupt. And for good reason: as in many countries, U.S. politicians are beholden to wealthy contributors and interest groups, and many members of Congress go on to become lobbyists. Case in point: 92 percent of Americans want background checks of people buying guns, but the rich and powerful National Rifle Association thwarts any legislation to effect change. So much for a “government of the people, by the people, for the people.”
The more citizens don’t feel their political institutions reflect their will and support their human rights, the more these institutions overstep their authority, the more citizens question the legitimacy and relevance of the institutions. Political sociologist Seymour Martin Lipset wrote that legitimacy is “the capacity of a political system to engender and maintain the belief that existing political institutions are the most appropriate and proper ones for the society.”15 And increasingly young people look to bring about change through means other than governments and even democracy. The bumper sticker “DON’T VOTE! IT ONLY ENCOURAGES THEM” tells the story.
“For individuals, it might not be desirable for them to be in a searchable, verifiable database of recorded history that governments could potentially use to exploit or subjugate people,” de Soto said. “The legislation of most of the countries in the world is so badly done, so unwelcoming, that the cost of coming into the legal system doesn’t make sense to poor people. And a country with too many poor and disconnected people causes too many problems.”16
As legitimacy fades, libertarianism ascends. But it’s not the answer to what ails the body politic. In this troubled world, we need strong governments, and ones that are high performance, effective, responsive, and accountable to citizens.
What should governments do? “Build, streamline, and fortify the laws and structures that let capitalism flourish,” de Soto wrote in The Wall Street Journal. “As anyone who’s walked the streets of Lima, Tunis and Cairo knows, capital isn’t the problem—it is the solution.”17 So what’s the problem? “Getting their people identified,” he told us. “There is no way a government can go in and force people inside the system. So I think that governments all over the world right now are willing to turn the system around.”18
That’s where the blockchain comes in. The design principles of the blockchain should drive this transformation as it supports and enables higher levels of the following:
Integrity. To rebuild the public’s trust in political institutions, elected officials must behave with integrity. Trust must be intrinsic to the system, encoded in every process, not vested in any single member. Because the blockchain supports radical transparency, it is becoming central to rebuilding trust between stakeholders and their representatives. Ongoing transparency is critical to maintaining this relationship.
Power. Everyone has a right to take part in the government, directly or by voting. Whoever is elected must conduct affairs in the full light of day as a peer among peers. With the Internet, citizens took more responsibility for their communities, learned from and influenced elected officials and vice versa. With blockchain, citizens can go one step further: they can advocate for sealing government action in the public record in an unalterable and incorruptible ledger. Not just checks and balances among the powerful few but broad consensus of the many, for example, to effect background checks on potential gun owners.
Value. Votes must have value. The system must align the incentives of all stakeholders, be accountable to citizens rather than big money, and invest tax dollars wisely. The machinery of government must be high performance, better and cheaper with technology.
Privacy and Other Rights Preserved. No spying on citizens, no arbitrary interference with privacy, family, or home, no attacks upon anyone’s honor or reputation. No arbitrary seizure of property—real estate or intellectual property such as the patents of inventors—without compensation. No censorship of news organizations, no interference with efforts to assemble. People can register their copyrights, organize their meetings, and exchange messages privately and anonymously on the blockchain. Beware of any politician who argues for trade-offs between personal privacy and public security. Remember, it’s a false dichotomy.
Security. Everyone must have equal protection of the law without discrimination. No arbitrary detentions or arrests. No one person or group of people should live in fear of their own government or law enforcement agencies or be subjected to cruel, inhumane, or degrading treatment from members of those agencies because of their race, religion, or country of origin. Members of police forces can’t withhold evidence of undue use of force, and evidence can’t go missing. It would all be logged and tracked on the blockchain.
Inclusion. Using the Internet, citizens became more involved, learned from one another. With the blockchain, the system can cost-effectively engage all citizens, recognize everyone as a person before the law, and provide equal access to public services (e.g., health care, education) and social security.
Technology is a powerful tool but it alone cannot achieve the change we need. In the spirit of the saying “The future is not something to be predicted, it’s something to be achieved,” let’s reinvent government for a new era of legitimacy and trust. It’s time to stop the tinkering.
HIGH-PERFORMANCE GOVERNMENT SERVICES AND OPERATIONS
The critics of “big government” are right in one sense. When it comes to efficiency, government services and operations have a long way to go. Governments are organized into silos that don’t share information. Bureaucracy too often trumps common sense or shared practices. Citizens rarely have one-stop shopping for government services. Every country has countless tales of politicians and bureaucrats squandering taxpayer dollars.
Blockchain can improve client service, increase efficiency, and improve outcomes while enabling both integrity and transparency of government. The potential to improve all facets of government is significant, but some are especially important in the developing world, where governments are establishing new processes and can leapfrog the systems of long, stable, and open governments.
Let’s look at two broad areas where we can apply the blockchain: integrated government and the public sector use of the Internet of Things.
Integrated Government
Estonia is cutting administrative inefficiencies and providing integrated services to its residents and businesses by creating an electronic ID card for everyone and using a blockchain-enabled Internet backbone known as the “X-road” to connect across multiple programs and databases in both public and private sectors. Others can do it, too.
Many countries such as Canada, the United Kingdom, and Australia have explicitly rejected the concept of a central population registry and single government ID as a matter of public policy. This decision stems from a concern for personal privacy and an aversion to expanding state power, especially in granting or revoking identities.
However, as Estonia shows, if we hash official documents (passport, birth certificate, marriage license, death certificate, driver’s license, health card, land titles, voter ID, business registration, status of tax payments, employment nu
mber, school transcripts, etc.) that currently exist in multiple databases into a single blockchain, blockchain-enabled networks could deliver integrated services without going through any central processing. Not only could this model protect privacy, it could enhance it by allowing people to verify the accuracy of their information, and to see who accessed or added to that information (i.e., a permanent information audit).
In fact, in the future it makes sense that each citizen owns her identity information rather than a government. As we explained in chapter 1, just as networks and mass collaboration can eliminate the need for a government to issue currency or for a bank to establish trust, people won’t necessarily even need a government-issued identity card. Said Carlos Moreira of the cryptographic security company WISeKey, “Today you need an organization with endowed rights to provide you with an identity, like a bank card, a frequent flier card, or a credit card. But that identity is now yours and the data that comes from its interaction in the world is owned by someone else.”19 On the blockchain, the individual owns the identity. Your “personal avatar” could decide what information is provided to whom under your command. It could also make choices about integrating data. However, rather than everything you do with government being integrated in some massive government database, the integration is achieved by the virtual you—owned and controlled by you.
Better integration would support life events such as marriage. Melanie Swan, founder of the Institute for Blockchain Studies, explained: “The blockchain—with its structure that accommodates secure identities, multiple contracts, and asset management—makes it ideal for situations such as marriage because it means a couple can tie their wedding contract to a shared savings account, and to a childcare contract, land deed, and any other relevant documents for a secure future together.”20 Some have suggested that the blockchain could become a public documents registry outside any government sanction or involvement. The world’s first blockchain-recorded wedding took place at Walt Disney World, Florida, in August 2014. Smart prenuptial contracts, anybody?
Beyond integrated services, governments could register and manage documents with transparency and reliability. Consider the staff time spent in issuing, verifying, updating, renewing, and replacing people’s official government records. In addition to ensuring document veracity, blockchain-enabled registration through peer-to-peer networks would support self-service, where people verify a document through the network, not through a registrar, as well as personalized service—when you generate an official document, it automatically contains your relevant information and access rights to that information, and tracks who accesses and uses it in the document metadata.
For example, the U.K. government is investigating the use of the blockchain in maintaining numerous records, especially for ensuring their integrity. Paul Downey, a technical architect with the U.K. Government Digital Service, noted that the perfect register “should be able to prove the data hasn’t been tampered with” and should store a history of the changes that have been made, plus “be open to independent scrutiny.”21
Blockchain-based systems can infuse efficiency and integrity into document registries of all kinds and many other government processes. Let’s combine supply chain management with the Internet of Things to tag a new piece of equipment with a smart chip that communicates its provenance, ownership, warranties, or special information. Government procurement offices could track items and automate processes at every step: purchasing, releasing payment, paying sales taxes, renewing a lease, or ordering an upgrade. That’s simply better asset management, reducing administrative costs to taxpayers while increasing revenues to governments.22
Particularly interesting are national and local opportunities to connect different blockchain networks for greater efficiency across jurisdictions. For example, departments of motor vehicles could connect drivers’ databases across state or provincial boundaries to create a virtual database that facilitates confirmation of driver identity, status, and track record. Or in the U.S. health care system, “Suppose the patient, insurance company, doctor and a government payer all had their financial records come together on a single ledger, visible to all, for any given transaction. The potential for transparency would be matched only by the opportunities for new levels of efficiency,” said Swan.23
The Internet of Public Things
We already wrote about public transportation on the Internet of Things. That’s perhaps the easier IoT opportunity for government: record smart devices in a blockchain ledger for life cycle asset management of buildings, work and meeting spaces, vehicle fleets, computers, and other equipment. As with bAirbnb, government employees could dynamically match available supply and demand, lowering security, maintenance, and energy costs through automated access, lighting, and temperature controls, and tracking location, repairs, and roadworthiness of government vehicles, as well as the safety of bridges, rails, and tunnels.
Public leaders could also achieve better public outcomes in infrastructure management, energy, waste and water management, environmental monitoring and emergency services, education, and the health sector. In addition to improving efficiency benefits, these blockchain-enabled applications could also improve public safety and health, ease traffic congestion, and reduce energy consumption and waste (e.g., through leaky pipes), to name but a few benefits.
Securing Infrastructure
By intelligently partnering with the private sector and other stakeholders, the government of Estonia has created a public sector infrastructure that enables much greater convenience and access to government, banks, public transit, and other services for its citizenry. In addition to convenience, Estonia also gains competitive advantage in the global economy, attracting business and investment to the country.
Governments already provide services to neighboring jurisdictions (fire and ambulance); outsource to other jurisdictions (data processing); deliver services on behalf of another jurisdiction (federal government processing income taxes on behalf of both the national and provincial/state governments); and sharing services (sharing office buildings).
Estonia’s e-Resident service is useful for individuals anywhere in the world who need an official ID to launch a business, particularly online. Estonia is positioning itself to provide services to foreign citizens that other countries are choosing not to provide. While the services available now are fairly limited, there is no limit to other government services ultimately becoming digital from end to end. For example, publicly funded libraries that are free to local residents could offer access to their digital collections to nonresidents and scholars anywhere in the world for a small fee. What other services might lend themselves to similar treatment, especially digital services where data management and integrity are important?
Offering government services beyond national borders often comes with regulatory hurdles. However, we live in an increasingly globalized world where many of our biggest challenges are not exclusive to one jurisdiction. Global problems require new models for problem solving, for working with other stakeholders. Policy that treats borders as porous, combined with blockchain technology such as the Internet of Things, could do more to address big, intractable issues.
EMPOWERING PEOPLE TO SERVE SELVES AND OTHERS
Blockchain-enabled networks make government services more robust and responsive. Self-service, in anything from renewing a permit to getting an official document, will improve how governments operate. By freeing up time, removing the potential for corruption or other artificial barriers, providing self-training modules online, and paying citizens their social security funds on time, governments empower their citizens.
New models, many to be defined, can empower people to collaborate on public policy goals. Through the blockchain, we can strike a new and appropriate balance between government’s need for control and accountability for an entire budget, and the need for individuals and groups to control and contribute to portions of that budget. Some jurisdictions have been exploring new m
odels to give individuals (recipients of benefits from multiple government programs) or communities (neighborhoods), or even entire populations (citywide) control of their own personal budgets previously controlled by civil servants.
For example, rather than requiring individuals to apply to many different government programs for various benefits, each with the its own criteria (income, assets, number and age of children, type of housing, level of education, etc.), the government platform could personalize a budget based on identity, stored information, and production and consumption patterns including risk factors such as residence in poor zip code, level of education, and purchase rates of cigarettes, alcohol, and processed foods. The individual could then decide how to use the resources to achieve his or her objectives according to his or her circumstances.
Imagine that—rather than persuading some bureaucrat that your child needs a new winter coat, you can decide on your own! The result is increased personal accountability and empowerment. We could do the same at the community level (portions of budgets related to community-specific services such as parks and community centers) or at a cross-government level (establishing priorities and then spending discretionary budget).
Some jurisdictions are already empowering the least advantaged.24 The blockchain could accelerate this trend, allowing taxpayers to see where their dollars are flowing, how fellow citizens are using these resources, and whether programs are achieving results (income changes, educational goals reached, housing found, etc.). The platform reduces or even eliminates the need for time-consuming and complex monitoring and report-backs. While the vast scope of the data and how they’re tracked through peer-to-peer networks may sound scary and Orwellian, it is actually just the opposite. Rather than all the data and authority resting in the hands of some central authority or anonymous bureaucrat, individuals and communities could act based on verified and trustworthy information. At the same time, the blockchain ledger assures accountability for the use of public funds. We can now achieve two previously seemingly contradictory goals: “more government” through more information and context; and “less government” through providing information and better tools for individual and group decision making and action within that context.