A New Transaction Type

Swap Donations Icon

January 12, 2022

The pandemic has forced many people out of jobs and livelihoods. This has then led governments to turn to give dole-outs, pandemic loans, and stimilus checks.

Those measures try to ease the present burdens by transferring it to the future, from the reasoning and hope that the pandemic will be gone by then. That would then allow economies to go back to normal and the debts to be repaid.

However, our model * from 2015 shows that things will not get better anytime soon. In fact, it’s supposed to worsen as 2024 approaches**. This is currently proven with the Delta variant being worse than original Covid in terms of severity, and the Omicron variant being worse than Delta in terms of spread.

*The model is based on Socrates’ Law on Social Cycles combined with Adam Smith’s Profit Cycles, as well as Smith’s data on wheat prices from the 13th century

**Update March 2022: This has been proven by the Russia-Ukraine War

The proper policy from 2020 would have been to hunker down instead of hoping for a short term recovery from pent-up demand. Massive dole-outs will just lead to a huge debt burden that cannot be paid on time. The debts serve the interest of the financial system which gains employment even during crises situations.

For example, if a debt cannot be paid on time, then it is slapped with more interest charges or fees as a deterrent to late payments. This then leads to the very common phenomena of debt slavery, and even suicide from debt.

Metaphysically, a country commits suicide when its people revolt and replace a functioning government with a chaotic one, leading to civil war or invasion.

Two Solutions: Donations in Kind and Swap Donations

Instead of debt and dole-outs, the natural solution to such a dire economic situation is donation*. In Pantrynomics, donation is the fourth revenue kind, as an improvement to Adam Smith’s system:

Revenue Caste Socratic Class
Rent and Taxes Warriors, Leaders, Nobility Tyrants
Wages Workers, Employees, Shudras Democrats
Profits Merchants, Businessmen Oligarchs
Donations Researchers, Priests, Academics Aristocrats (Philosophers)

*A government’s dole-out can be considered a donation if it comes from a foreign government that is not suffering as much. The dole-outs of most countries are sourced from public debt which come from taxes (rent payment to government for citizenship) and not donations.

Economics is descended from Mercantilism which bunches up all such revenues as “income”. This then leads to the problematic system of income taxes which leads to tax avoidance and evasion. Moreover, it enshrines money, making money the only way to make payments.

1. Donations in Kind

A money donation only works if there is a functioning financial system in the affected society. In the case of severe natural disasters, even the telecoms and electrical infrastructure can get totally destroyed, making the financial system not operational.

What use then is a monetary donation by bank transfer when that account cannot be accessed?

What use then is a cash donation at the affected site when there are no supplies to be bought in that society?

Thus, donations in kind are the first and most basic solution to extreme crises.

2. Swap Donations

After a society restores its basic functions through donations-in-kind, the people still might not have enough capital to start their livelihoods or even gain employment. For example, going to the office requires one to be in office clothes and have had breakfast, a bath, and means to get to the office. In this sense, the clothes act as an employee’s direct capital and his water supply and transportation are his indirect capital that allows him to get regular wages.

We cannot expect our office clothes nor our home water lines to be donated. Instead we can get them from swap donations.

Unlike a donation where the transaction is one way, a swap donations is a two-way transaction or exchange. In an ordinary donation, the donor (benefactor) gives to the beneficiary and gets nothing back. But in a swap donation, the donor gets some kind of product or service from the beneficiary.

A common example is our parents giving us food and housing in exchange for being good children. A child who disrespects his parents or does crime or drugs is kicked out of the house, ending the swap donations.

Another example is a homeless person singing and playing guitar at a bus stop in exchange for money or food. A donor gives money, as a swap donation, in exchange for hearing more songs or even a suggested song.

This is different from an ordinary donation where:

  • the parents just provide for their children without any requirements
  • the bus stop donor just gives money and passes by without enjoying the song or music

Swap donations allow a more sustainable way to accumulate the daily revenues in order to build one’s capital which will then be the key for him to get out of poverty. This transaction type can be extended beyond the family and the poor:

  1. News companies: Instead of having a paywall that only accepts a specific money price, news sites can allow viewers to donate whatever they can to see that article
  2. Struggling Artists: They can allow swap donations in exchange for higher quality versions of songs
  3. Book sellers: They can give copies of their books via swap donations in order to allow the later editions and volumes
  4. and so on

Unlike normal commercial for-profit transactions, swap donations are tax-exempt. They are not even reported to the tax authority individually since reporting would incur a cost in terms of time and effort.

However, their values are much below commercial prices. A swap donation with normal commercial prices will be regarded as a normal barter transaction and can be taxed accordingly, with the barter transaction being paid in kind.

Updates
Swap donations are implemented in Pantrynomics as Social Points