Money Transfer: Part 2

This chapter continues the discussion from the "Money Transfer: Part 1" chapter. It discusses aspects of one-way money transfer that are related to limits, restrictions, loans, taxes, monetary policy, physical assets, and soliciting help.

Overview

The first four sections discuss restrictions and limitations related to one-way money transfer. Specifically, these sections deal with who can send, who can receive, the lower limit on what can be transferred, and the upper limit on what can be transferred within the society and across society boundaries.

The next three sections discuss the implications of money transfer in relation to taxes, monetary policy and borrowing.

Giving gifts is similar to giving money, as both affect the wealth of the giver and the recipient. The section "International Transfer of Physical Assets" discusses the accounting mechanism of handling physical gifts.

Finally, the last section discusses the need for "Soliciting Monetary Help", and outlines the process.

Who can Give? Who can Receive?

Within a society, any kind of entity can be a party to a one-way money transfer.

An individual can donate (that is, initiate a one-way transfer of money to someone else) as long as they have money in their money account. The donation amount can only be up to the amount of money available in their money account. In other words, collective credit cannot be used for one-way transfer of money.

An individual can donate as long as the donor (the giver) does not have any outstanding balance in their social credit. The idea behind this restriction on donations is as follows: One can donate as long as one is not taking social credit help from the society. One can help others, but if one is taking help from the entire society, then while taking such help, forwarding part of the help is not the true intent of such donations.

Donors can have unpaid collective credit because such collective credit has standard investments as its collateral.

Citizens are permitted to send and receive money across society boundaries. At an individual level, individuals can ask for monetary help from other individuals and those other individuals can choose to give money as that help. Asking for help and giving help are freedoms. However, these freedoms are not unrestricted. We have already seen two such restrictions just a few paragraphs earlier. There are others mentioned in subsequent sections.

An organization is not permitted to receive money as a one-way transfer across society boundaries. Here is the reason: For illustration purposes, let us assume that there is a charitable organization who wants to just receive money (presumably as donations) from someone in another society. This organization, being an organization, represents a social cause. A society is also a monetary sovereign. If a society deems that some social cause is important enough and that cause needs some money, then the society being a monetary sovereign can create the money and fund the social cause. Thus, a Utopian society does not need a charitable organization to receive donations from citizens of another society for the work that the organization deems as a social cause in that organization's society.

Here is the reason why an organization is not permitted to send money as one-way transfer across society boundaries: An organization has owners. Directly or indirectly all such owners are citizens. If a citizen wants to help someone, the citizen will do it. An organization cannot do it across society boundaries on behalf of their owners.

Here are additional perspectives that prohibit organizations from sending money. If we were to allow organizations to help across society boundaries, then we would still only allow such donations for social causes; never to individuals, as such donations can easily be interpreted as bribes. Furthermore, if we consider such donations by organizations for a social cause in some other society, then that society is in a better position to take up that social cause in their society; and that rules out organizations from making donations across society boundaries.

Self-owning entities are not permitted to receive money across society boundaries. That is because a self-owning entity is an organization-like construct; it has a purpose; it has a cause and perhaps the cause is a social cause. Thus the line of thought that applies to why organizations cannot receive money by way of money transfer across society boundaries applies to self-owning entities. Foundations are typically set up as self-owning entities. These are either fully funded by some large amount of money or they are funded through donations. This rule essentially makes it impossible for self-owning entities (and hence such foundations) to run on international donations.

Self-owning entities are permitted to give money across society boundaries. In their role as self-owning entities, they are somewhat like citizens. Self-owning entities pay wealth-based taxes, and taxes for wealth redistribution, but they never receive social credit. At the time that they wish to give money, they can do so if they have paid all taxes that are due. Of course, this can be automatically done by designating an account from which to pay those taxes; so this should never be a hindrance to a well-managed self-owning entity. This rule essentially means that self-owning entities can give money only to individuals as every other kind of entity cannot receive money transfer across society boundaries. This rule enables foundations to give "prize money" to individuals anywhere in the world.

Utopian societies will be open to receiving physical help when they need such physical help; usually this happens when the society encounters some physical hardship - like a natural or man-made disaster. But, at a social level, money from some other society is never required, never expected and hence not implemented.

No Upper Limits for Money Transfer within a Society

Within a society, there are no upper limits to the amount of money that can be transferred using the one-way money transfer mechanism. This is similar to the situation in which a person earns a lot of money, and spends it all on various kinds of services, and therefore does not accumulate any wealth.

Within a society, who possesses the wealth is not an important consideration.

If a wealthy person were to give away their wealth and later need to use the Utopian Payment Model for essentials, then that would be perfectly alright, as the money that supports the costs associated with the Utopian Payment Model remains within the society.

Consider the case in which the giver and receiver of the money are in the same society. In this case, there is no change in the total wealth of the society. If society had previously helped the receiver, then as a result of the giver's support, society may need to offer less help. However, the giver might require more assistance than before. Overall, society's responsibility toward its citizens remains unchanged, as does the wealth needed to fulfill those responsibilities. This makes one-way transfer of money within a society's boundaries unobjectionable, even when generous individuals give away all their money.

Upper Limit for Money Transfer across Society Boundary

There is an upper limit on the one-way transfer of money across society boundaries. When citizens engage in the one-way transfer of money across society boundaries, they may transfer up to 10% of their typical wealth within a calendar year.

We want members of society to be independent and self-sufficient, which means we do not want them to rely on the Utopian Payment Model. If citizens were allowed to give away all their wealth to someone outside society, then these "helpful and generous" individuals would end up relying on other members of their own society to cover their essentials (that is, using the Utopian Payment Model for essentials).

The giver of excessive help may seem generous to the recipient, but in reality, the giver's generosity depends on receiving help from others. This is contrary to the spirit of asking, giving and receiving help.

Furthermore, helping someone outside one's own society, and then seeking assistance from within, indirectly forces others in the society to support outsiders. This makes it unacceptable. Therefore, there must be limits on such help-giving activities.

In general, the ideas of "giving gifts" and "giving help" are considered good. But, when such help is given to someone outside the society, and it is given in excess, and to the detriment of the giver or the giver's society, then the act of giving such help becomes objectionable to the rest of the society and hence the upper limit.

This upper limit is set proportional to the citizen's wealth; specifically, it is not an absolute number. Making it proportional to a citizen's typical wealth enables wealthier citizens to help more people outside their society. After all, "giving help" is noble, so we should not limit it to an absolute number, but setting a limit relative to the giver's wealth is appropriate.

The percentage mentioned above is for illustrative purposes. In fact, it is a policy parameter. Its initial value can be 10%. Its value can be changed by citizens if they desire to do so.

Minimum for Each Money Transfer

The minimum amount acceptable for each money transfer, whether local or international, is one-hundred-thousandth (that is, 1/100,000) of the average wealth of all citizens in the giver's society.

This minimum eliminates the possibility of citizens making an excessive number of one-way money transfers, each involving an extremely small amount.

Therefore, if the average wealth of all citizens in a society is 100,000 dollars, the minimum donation (one-way transfer) by someone in this society is 1 dollar. A giver in such a society cannot donate just half a dollar.

Similarly, if the average wealth of all citizens in a society is 300,000 dollars, the minimum donation (one-way transfer) by someone in this society is 3 dollars. A giver in such a society cannot donate just a single dollar.

Likewise, if the average wealth of all citizens in a society is 1,000,000 dollars, the minimum donation (one-way transfer) by someone in this society is 10 dollars. A giver in such a society cannot donate just 3 dollars.

Money Transfer and Taxes

There are no specific service charges associated with the transaction of one-way money transfer. This is true even when it is an international money transfer. The costs associated with conducting such transactions are borne by the UFIs of both societies.

While there are no specific service charges for one-way money transfer, all citizens collectively bear the costs associated with it when they pay taxes.

After a one-way transfer of money (or physical assets), the transferred wealth belongs solely to the receiver. Therefore, the possessor of the wealth is subject to wealth-based taxes and taxes for wealth redistribution in their society.

Money Transfer and Monetary Policy

When money is transferred within a society, the total amount of money in that society does not change. Therefore, it has no effect on the actions of the monetary policy.

However, when money is transferred from one society to another, the total amount of money in both societies changes. It decreases in the giver's society and increases in the receiver's society.

In the giver's society, since the wealth has decreased, the monetary policy of that society will rectify the situation within its designated Return to Normal Period number of years.

Similarly, in the receiver's society, since the wealth has increased, the monetary policy of that society will rectify the situation within its Return to Normal Period number of years.

The Return to Normal Period policy parameter, as discussed in the Monetary Policy chapter of Building Utopia book, can be different in the two societies.

Money Transfer is Not Borrowing

It is possible to think that international money transfer could be used as a mechanism to borrow internationally. However, money transfers do not function as loans.

Previously, we discussed that organizations cannot send or receive money across society boundaries. Hence, organizations cannot be borrowers or lenders by informally using "one-way transfer of money across society boundaries" as loans.

Citizens can send and receive money across society boundaries.

Since there are upper limits on money transfers, the amount of money that a person can send to someone else is limited by their typical wealth. There are no restrictions on the amount of money one can receive. So, while one can receive unlimited amounts, there are restrictions on the amount one can send.

For instance, a poor person can receive a substantial amount of money from a rich person. This amount could be much larger than their typical wealth. If a poor person considers the received amount a "loan" and attempts repayment within just a few days, their limited typical wealth would prevent full repayment.

These considerations highlight the reason why one-way money transfers are impractical for lending and borrowing.

More importantly, a loan is a financial product that involves both assets and liabilities. A one-way transfer of money has "no strings attached". A Utopian society does not treat a one-way transfer of money as a loan. If citizens, through informal agreements, misuse it as a loan, it merely reflects their own perspective and is not legally enforceable as a loan.

Therefore, whether local or international, one-way money transfers do not serve as a lending or borrowing mechanism.

International Transfer of Physical Assets

Since physical gifts are allowed within a society, they should also be permitted between societies.

What happens when a person gives a physical gift to someone in another society? How does it change the wealth of the giver and the receiver? How is it accounted for by the UFI? We will provide answers in brief, as it closely resembles a one-way transfer of money.

Consider a person visiting a friend in another society who wishes to give them a bottle of expensive perfume as a gift. To give this gift, the person must first purchase the perfume bottle. This adds the bottle to the person's inventory of assets. To gift the bottle, the person must carry it to the other society, and hand it over upon meeting their friend. Additionally, the person must instruct their UFI to transfer ownership of the bottle to their friend in the other society. The transfer of ownership involves changing ownership records, which the UFIs of both societies cooperate to implement.

Conceptually, a physical gift is giving away something that one owns. It is a one-way transfer of an asset.

Various limits and restrictions that we discussed for the one-way transfer of money also apply to the monetary value of the physical item being transferred.

Moreover, money and physical assets are simply different forms of wealth. So, the upper limit that we discussed in the context of money transfer applies to wealth - not just to money.

Soliciting Monetary Help

Some citizens may be so poor or in such difficult circumstances that even after utilizing the Utopian Payment Model, they might still need additional help from others. Such citizens may want to ask other citizens for assistance and monetary help. They may want to say "Help me please" or "Fund me please".

When someone needs monetary help, and when someone else is aware of it, and desires to help, then the mechanism of one-way money transfer enables the desire to be fulfilled.

How does one express the need for monetary help? How does one solicit help, and from whom?

Currently, citizens routinely ask other citizens for help. Sometimes, some citizens, the scammers, trick other citizens into giving them help and money by posing as someone in dire need of help.

Both assisting those in need and preventing scams are important social needs. UFI creates a public channel to address both those needs.

Citizens can "enable" a "Fund Me" feature in their digital home. This gives them a link to a personalized "Fund Me" webpage hosted by the UFI. Citizens can place the link to the "Fund Me" page on their personal websites for others to see.

On the "Fund Me" page the citizen requesting help can explain the reasons for needing help, and indicate the amount desired. Other citizens can encounter this page in many ways (like forwarded links or explicit search for such pages), and read the reason for the needed help. There can be settings regarding how long the help page stays up.

On the "Fund Me" page, UFI provides the visitors a "donate button" to donate money to the citizen in need. Citizens can press this button, which takes them to the "donations" page.

On the donations page, potential donors can see the identity of the citizen asking for monetary help, and they can also view this citizen's monetary situation. The UFI displays various metrics about the citizen's wealth. These metrics include the citizen's typical wealth over the past several years, current total wealth, a monthly chart of amount of money-transfers received for the past several years and a chart of last several years of spending by their top-level category. All this information is provided by the UFI using the official records. All this information is for potential donors to assess if the one who is asking for help indeed needs such help.

The idea behind providing significant details about the financial situation about the citizen publicly asking for monetary help is this: If the citizen wants monetary help from the public, then the citizen should be willing to publicly share their financial situation so that those who are willing to give help can assess if giving such help is indeed warranted. The citizens who are the potential donors need assurance that the financial information that they get about the citizen in need is indeed true information. So, the one who is asking for the help cannot be the one who provides the information. A trusted party needs to provide the information. From a social perspective, the only party that the entire society can trust to have correct information is the UFI; because it has all the records. The spending history by top-level category would reveal, to the potential donors, the kinds of things that the citizen seeking help has been spending on.

With all this arranged by the UFI, those who personally don't know the one who asks for such monetary help will have sufficient data to make their donation decision.

For citizens who enable the "Fund Me" feature, society disables their ability to do one-way money transfer to anyone. This restriction lasts for the entire period the 'Fund Me' feature is active, plus an additional time proportional to how long the donated funds are expected to last, based on the citizen's spending rate during the 'Fund Me' activation period. The reason is that other citizens in the society donated their money to this citizen. We do not want this person to be donating such donated money to others.

While thinking about "seeking help publicly" and "enabling donations from public to individuals", one can also think about "society matching such donations". But, this is a bad idea because it forces others in the society to eventually pay for such "matching donations".