Decentralized Democracy.pdf

This text describes foundational principles and practical approaches to reverse-engineering personal income taxation, public goods provision and fractional reserve banking in a decentralized fiat currency system that can exist at the state and local levels outside of the traditional government context. The main characteristics of decentralized democracy are as follows: the people vote on the money supply and its sources, and on tax, interest and reserve requirement rates; the majority voters may be financially liable to minority voters if group spending fails; the voters can purchase political representation as a service; existence of a non monopolistic fractional reserve central banking system; existence of a securities market infrastructure that extends to the small and medium business; existence of a market for public policy. This text delves into the concept of strong decentralized democracy, emphasizing the replication of core functionalities of traditional governmental and financial systems without relying on a central authority. It explores the construction of decentralized political units on the scale of cities, provinces and nation states, leveraging existing models to address known challenges by employing public choice theory and institutional design theory. This text advocates for a reverse-engineering approach that maintains the functionality of traditional systems while decentralizing power structures.