BitCoin: Mercantilism's Rebirth For The 21st Century

Free market economy depends on re-investing profit and dividends back into capital costs of new or continuing enterprises, and with the departure of mercantilism and gold, silver or other mineral backed currency. Mercantilism was the norm of the dominant economies of Western Europe from 1500's till the around the First World War which is the beginning of use of fiat currency that allows nation-states to print paper currency and set the value or manipulate the value of currency  while managing inflation through monetary policy independent of the value of rare metals that was central to national economies prior. Why mention these archaic economic terms in relation to 5 year old cryptocurrency, BitCoin? Because BitCoin proselytizers often cite the alternative currency as benefitting the economy by assuring the that no nation or corporation or regulatory body could increase the money supply because it relies on peer-to-peer network and is limited by math of cryptography, so BitCoin currency is incapable of inflation inducing monetary or any monetary policy since it is regulated by the algorithm in an open source network that can be audited, checked, and double-checked by those that are coders; the end results is that removing inflation (at least monetary policy created via inflation) from our economy incentivizes accumulation of currency and removes the disincentive of being inflation-ed-out of wealth and encouraging that wealth back into the market to chase the greatest return on investment. BitCoin, like the absolutist monarchs at the height of mercantilism, seeking out the greatest accumulation of currency rather than the best and most efficient use of limited resources. I will acknowledge that our current monetary system is overly reliant on state involvement and subject to corruption, as well as intrinsically tied to infinite growth within a world with limited resources-- so it is obvious that there needs to be reforms, it is just that BitCoin isn't anything new or something that humanity has not already tried.

So last week's announcement by Circle to offer BitCoin exchange and banking services sans fees for withdrawing or depositing BitCoins as every other BitCoin exchange does as a means to turn a profit should not be considered as anything other than warmed over the common practice of the 18th century of mints of the European monarchs that provided the service of coinage free of charge to ensure that the gold and silver would be minted and accumulated within their borders. Though the concept of competition between the BitCoin exchanges mirror the competition between the egos of the monarchs is an inelegant analogy, they both share a truth that the economic purpose of these currencies are devoid of benefitting the real economy. Mercantilism encouraged an excessive amount of resources to be deployed to conquer and maintain global colonies without providing direct benefit to the mother country other than bragging rights; BitCoin is able to remove state-induced inflation but does not improve purchasing power of the individuals whom use the currency but actually could cause a downward pressure on the income of labor and stagnate the economy as it benefits savings far greater than our current economic paradigm. The motivating factor to promoting this new mercantilism is that if you have inherited wealth and little income from wages from a job, then there is all the incentive in the world for you to return to mercantilism and stop the slow slide of inflation that may force the wealthy to be entrepreneurial like their ancestors or (G-d forbid it) seek out employment like the vast majority of the economy.

Trading gold bullion, a favorite hobby of those believing doomsday is coming and those that identify themselves as "real 'Mericans", assume that since gold is tradable and currently has high value compared to inflationary fiat currencies then when 's##t hits the fan' they will be all ready to barter and continue participating in the economy as a post-apocalyptical consumers; what they fail to realize is that if 's##t hits the fan' day ever comes then only resources that are essential to life will have any value and gold and doubly so crypto currencies will be valueless. These doomsday preppers and survivalists make up the vocal minority of those calling to get rid of fiat currency, but their voices are amplified by those with accumulated fortunes who seek to retain those fortunes for their progeny without lifting a finger-- in essence a return to Gilded Age where labor was cheap and the uber-wealthy were like living gods. Powerful and wealthy individuals express these latent desires by hiring a small conclave of private investigators to tail Eliot Spitzer because Spitzer rattled Wall Street's cage as Ken Langone did, or compare the trials and tribulations of the most comfortable and wealthiest in world history to that of the Jews in Nazi Germany as Tom Perkins did, or prophesied that gold would reach $5,000 an ounce (when it actually took a drubbing to below $1,000) and that their are some people that deserve to be paid $2 hour such as those with mental disabilities as expressed by Peter Schiff, or to mint his own silver coinage with his face on them like David Koch did in his failed campaign for Vice President on the Libertarian ticket. The fact that the survivalists have bought into the malarkey that the uber-wealthy have sold them as viable economic and public policy demonstrates exactly how duplicitous the new mercantilists are. If the argument is being made that due to rampant government spending that devalues the American dollar will lead to a collapse, but that can be avoided if we end deficit spending and stop taxing the uber wealthy while only tax wages from employment (thereby taxing only the income the uber-wealthy avoid), while the same argument states even if they are unsuccessful the gold coins being sold to them by hucksters like Glenn Beck and Alex Jones will still hold their value even after the collapse is detached from reality and wholly wrongheaded. But this shell game does have the benefit that having a critical mass of duped voters that can show up to rallies demanding to give tax breaks to those that couldn't use it except to become morbidly wealthy, cut government services that are essential to themselves ("Get rid of social security-- because private charity will take care of me when I'm old!"), and stop regulators from enforcing environmental and financial laws because they like reading by the light of the burning cuyahoga river and swindled out of their homes by auto-penned eviction notices. A crowd of old white people is 'great optics' for the elected officials that have already been bought and paid for by those that want to see greater economic disparity even if that is delivered in means made verboten by both Ayn Rand Objectivists and Austrian School of Economics.

We could have an income ceiling that would still exorbitantly high allowing a very luxurious living, but not so high that any individual could jerry rig the economy and the government in their favor, it would essential to include all types of income for all legal individuals to be treated the same (until the Supreme Court changes their opinion would be inclusive to corporations and other fictitious legal entities)-- say $30 million a year. Those that currently earn more than that a year wouldn't be de-incentivized as they would basically be 'Brewster Millions' every year, and whatever opportunities they gave up beyond that income cap would certainly be picked up by someone that hadn't made hit the income ceiling yet spreading the wealth while retaining some aspect of economic meritocracy.

But this is of course a non-starter, for the individuals that currently earn a billion dollars a year or more make up the 700 individuals that hit contribution limits in the 2012 Federal elections, which have been removed with the SCOTUS McCutcheon decision and that along with the disembowelling of the McCain-Feingold legislation allowed dark money into our elections have certainly transformed our democratic implements in November into vestigial afterthoughts of the auctions that occurred long before the ballots for the primaries were even printed.



So lets all get ready to make the heady decision, shall we be crucified by gold or BitCoin?

Return To Gilded Age, Sans Employing The Masses

Company scrip, company stores, and a unfettered markets was at it's height the first third of the 20th century. End result of the excessive wealth disparity was the Great Depression, had the free market solved itself there would have been no need for government intervention, and modern day Libertarians, Objectivists, and Free-marketeers would have been proven right. Popularity of Keyesian economics the world over is based on the outcomes that it has provided. Free-marketeers argue that the invisible hand will set the economy straight for the most part without any government intervention and that their ideology is the most persuasive. Then why was the New Deal so popular? Why aren't the same people that complain about the faceless Big Government not also giving the same weight of opposition to the faceless Big Business that has tendency to over reach and create harm en mass?

Whether Union Carbide's Bhopal disaster, BP's Deep Horizon off-shore rig and Texas City refinery, Massey Energy's Upper Big Ranch Mine explosion, or Freedom Industries chemical spill the first full of this year, modern economy has placed the individual low on the priority when decisions are made by the grand decision makers who have successfully extricated themselves from resulting effects of those decisions. But the answer from the corporate shills and deluded libertarians/objectivists is always "that only if the government got out of the way, it would all resolve itself." So to be honest with ourselves we would have review history that brought about a muscular interventionist government, that initially was effective but ever since the Powell Memo has only been lip service from the establishment left and derided outright by the establishment right.

United Fruit's Santa Marta Banana Massacre, Rockefeller's Ludlow Massacre, Triangle Shirt Waist Factory, the Johnstown Flood and a countless other tragedies show that unfettered capitalism lead to excesses that concentrate resources at the expense of the masses. Free market (at least the Ayn Rand and Mises interpretation of it) is almost completely incompatible with human contentment for the vast majority of the population and proponents assume to be the economic victors through some innate worthiness while the opponents to  deifying 'the invisible hand' are viewed by Free-marketeers as simply trying to cheat some perceived natural order of 'takers' being eliminated to make way for the 'makers.' I apologize to over generalize the Free-marketeers' perspective, but either they hold the opinion of being the economic victors or they are sadists believing they will be the victims under their own proposed economic rubric. In the unrealistic belief that Free-marketeers were to believe that there would be some Utopia if the government were to allow profit motive run free without concern for outcomes, and that they there would be a win-win results for participants within the economy; again I would have to point out that criticism of Big Business would be necessary and yet not forthcoming from Free-marketeers. A perfect free market would require, universal access to perfect information so that each particpant would have opportunity to make fully informed rational decisions whether hiring an employee and knowing exact work output at previous employment or school or consumer to know exactly the profit margin when comparing competing products or services to judge which is the best value. This would eliminate privacy for every individual (both homo sapien and  incorporated varieties), there would be universal access to information and transparency. No business would be allowed proprietary information or company secrets; no boss would be free from informed criticism from his/her employees regarding ability to compensate; no barrier to enter market just because there is a lack of contact information to an existing client base and what they are paying their current vendors.

What Free-marketeers actually call for is a stacked deck in favor of the few economic victors, putting the masses of consumers/citizens at the lowest end of priorities. Equality of the market only exists respectively to the size of one's bank accounts. We could trade in the stability that interventionist government provides, but the economic victors and the shot-callers won't allow their own stability and station in life to be at risk. And the deluded Libertarians/Objectivists constantly barking at the public officials that are to blame for all the world's ills never cricitize the real decision makers, the people that fund elected officials campaigns and hire the regulators when they eventually leave the public sector. But those deluded provide a distraction and a false intelectual riguer to rationalize a new Gilded Age, and a Divine Right of Corporate Kings.

What would a Libertarian/private market's response to Cleveland's House of Horrors be?

As certainly anyone with a beating heart in their chest, there is nothing but disgust and anger towards the evil Ariel Castro who kept three girls for ten years in his basement after snatching them up off the street. Two of the three victims (Amanda Berry and Gina DeJesus) being returned to their families and justice will mete out to Castro, a scenario that even the most libertarian acolyte can admit still within the assumed role for government, but what of the third victim that had already been estranged from her family before being kidnapped? Libertarians not wanting the government to provide social workers to Michelle Knight, whom has no means to adjust after surviving such a tragic ordeal nor any support mechanisms since the her family (mother Barbara Knight was in an abusive relationship that endangered Michelle Knight's son) was the cause to her losing her child to the Child Welfare Services, would likely depend on charity to delivery such charity in a world with a negligible level of government service. In a high profile case such as Michelle Knight, there would be charities that would step up, but on the out of the spotlight tragedies such as Michelle's son being abused by Barbara's live-in boyfriend there is not enough charitable infrastructure to supply services to all of the victims of abuse on a daily basis.

In the Libertarian fantasy world, businesses unencumbered by any regulations and government interventions will rise and fall as new competitors creating market pressures on providing profitable services and products to the beck and call of consumers. Monopolies would be held at bay by individuals starting new firms all the time and magically having access to markets through hard work and gumption. But what is to be done to the victims of their circumstances, or victims of crime? Government would continue to dole out punishment to the perpetrators while the victims would just need to suck-it-up and get back to their job or start that Goliath succumbing start-up. Adjusting to life after suffer tragedy, someone out there could offer up for profit service, so that would be available if you could afford it, otherwise you would be out of luck. Who's responsibility for the injustices in the world, who is to make the effort to make things right? Only if you can afford to pay for justice and you consumer that is of a large enough market with dispensable income would you get assistance. Victims of violent crime, being an market that was serviced by a vibrant market of for-profit social workers would have an incentive to create more victims to continue their enterprise. World peace will never be provided when military contractors depend on continued war to profit; violence will always be with us as long as there is systemic incentives to continue servicing the aftermath of violence or selling implements of violence as products; poverty and starvation will end when it is no longer common place to privatize profits while socializing individual risk and liabilities on the least powerful of our society.

There is no market-driven solutions that prevents domestic abuse or child abuse, and dependency on charity to deliver such services when no social safety net is available is fraught with danger. Involuntary taxes paid to provide services, such as social workers to victims of their circumstances, regardless of the end user's ability to pay creates the possibility that a solution can be reached. A solution being reached is often the ideal for government solution (ex. a bridge is built), while a for-profit's ideal is never ending (ex. ferry service across a river); the ideal for the government is rarely met but it is better than the private market's ideal that is to turn the masses into Sisyphus eternally pushing the stone of profits up the hill every fiscal quarter. Though our social safety is the worse solution, it still is far better than all the other solutions.