Now the Feds Want to Track Your Car

Now the Feds Want to Track Your Car

Now the Feds Want to Track Your Car

Last week, the National Highway Traffic Safety Commission (NHTSC) formally proposed to mandate that all new cars be equipped with “vehicle-to-vehicle” (V2V) communications, also known as connected-vehicle technology. This would allow vehicles stuck in traffic to let other vehicles know to take alternate routes. It would also allow the government – or hackers – to take control of your car any time they want.

The good news is that the Trump Administration will take office before the NHTSC has a chance to put this rule into effect, and may be willing to kill it. The bad news is that this rule will feed the paranoia some people have over self-driving cars.

This article, for example, considers self-driving cars to be a part of the “war on the automobile” because they offer an “easy way to track the movements of individuals in society.” In fact, the writer of the article is confusing self-driving cars with connected vehicles. As I’ve previously noted, none of the at least 20 companies working on self-driving cars or software appear to be making V2V an integral part of their systems. This is mainly because they don’t trust the government to install or maintain the infrastructure needed to make it work, but also because self-driving cars don’t need that technology.

It is not too much of a stretch to imagine the state of Washington will just turn peoples' cars off after they have driven so many miles each month.There are good reasons to be paranoid about connected-vehicle mandates. First, they will give government the ability to control your car, and some governments in the United States have shown that they are willing to use that control to reduce your mobility. The state of Washington, for example, has mandated a 50 percent reduction in per capita driving by 2050. This is a state that has forbidden people to build homes on their own land if they live outside of an urban growth boundary. If they can’t reduce per capita driving through moral suasion, it is not too much of a stretch to imagine that they will just turn peoples’ cars off after they have driven so many miles each month.

Second, if every car uses exactly the same vehicle-to-vehicle software, they will be incredibly vulnerable to hackers. Remember that hackers figured out how to remotely control a Jeep that Chrysler had wired to the cell phone network. Chrysler responded by recalling 1.4 million cars to install a firewall between the network and the car’s operating system. But now the government wants to mandate that all cars connect their operating systems to the cell phone or other wireless network, with no firewalls allowed.

While the risks of mandatory V2V systems are significant, the benefits are tiny. Marc Scribner of the Competitive Enterprise Institute notes, “As NHTSA readily admits, hypothetical safety benefits of the mandate will be trivial for the next 15 years, at which point far superior automated vehicle technology may be deployed to consumers,” especially if manufacturers aren’t locked into technologies prescribed by the government.

People should not be paranoid about self-driving cars because none of the technologies required for self-driving cars would allow someone to remotely control your car. But people should be paranoid about V2V communications, especially those mandated by the government. Some automakers are already offering various connected technologies with their cars, such as OnStar, which leaves it up to consumers whether they want to buy those kinds of systems and gives manufacturers incentives to keep their systems hack-proof. But government mandates for connected vehicles are both dangerous and pointless.

Republished from Cato.

Randal O’Toole

Randal O’Toole is a Cato Institute Senior Fellow working on urban growth, public land, and transportation issues.

This article was originally published on FEE.org. Read the original article.

Falcon 3.0

Falcon 3.0

The Absurd World of Agriculture Subsidies

The Absurd World of Agriculture Subsidies

The Absurd World of Agriculture Subsidies

I’ve argued before that the Department of Housing and Urban Development (HUD) should be the top target of those seeking to shut down useless and counterproductive parts of the federal government.

And if President-Elect Trump’s choice for HUD Secretary, Ben Carson, is as sound on housing issues as he is on tax issues, presumably he will work to close down the bureaucracy that he’ll soon be overseeing.

But I just read a Wall Street Journal column about agriculture subsidies that has me so agitated that I may change my mind and make the Department of Agriculture my top target for elimination. Here’s some of what Jim Bovard wrote:

President-elect Donald Trump’s vow to “drain the swamp” in Washington could begin with the Agriculture Department … Farmers will receive twice as much of their income from handouts (25%) this year as they did in 2013, according to the USDA … big farmers snare the vast majority of federal handouts. According to a report released this year by the Environmental Working Group … “the top 1 percent of farm subsidy recipients received 26 percent of subsidy payments between 1995 and 2014.” The group’s analysis of government farm-subsidy data also found that the “top 20 percent of subsidy recipients received 91 percent of all subsidy payments.” Fifty members of the Forbes 400 list of wealthiest Americans have received farm subsidies, according to the group, including David Rockefeller Sr. and Charles Schwab.

Indeed, agriculture subsidies are basically a huge transfer of wealth from the poor to the rich.

… in 2015, the median farm household had a net worth of $827,307. That includes a great many residential, gentlemen and hobby farmers. The largest class of farmers—those who produce most farm products and harvest the largest share of the subsidies—have a median net worth of $2,586,000. By contrast, the median net worth for American households in 2013 was $81,200, according to the Federal Reserve.

In his column, Jim also explains some of the bizarre consequences of various specific handout programs, including the fact that American taxpayers have forked over $750 million to Brazil in order to continue huge (and impermissible, according to our trade commitments) subsidies to American cotton producers.

But the sugar subsidies are probably the most economically insane.

The U.S. maintains a regime of import quotas and price supports that drive U.S. sugar prices to double or triple the world price. Since 1997 Washington’s sugar policy has zapped more than 120,000 U.S. jobs in food manufacturing, according to a 2013 study by Agralytica. More than 10 jobs have been lost in manufacturing for every remaining sugar grower in the U.S.

Let’s look at some more evidence, this time dealing with dairy subsidies.

Charles Lane of the Washington Post wrote earlier this year about America’s government-caused cheese problem.

… as of March 31, 1.19 billion pounds had accumulated in commercial cold-storage freezers across the United States, the largest stockpile ever. …each American would have to eat an extra 3 pounds of cheese this year, on top of the 36 pounds we already consume per capita, to eliminate the big yellow mountain.

Why is there something as silly as a giant stockpile of cheese?

If you’re guessing it’s the result of a foolish government policy, you’d be right.

… the U.S. government has a long-standing pro-cheese-eating policy, which grew out of the need to do something with the subsidized excess of milk products generated by federal pro-production dairy policy… Two decades ago, in fact, the Clinton administration’s Agriculture Department helped form a promotional organization, Dairy Management Inc., funded by a congressionally authorized, federally collected dues requirement for dairy producers. Its $140 million annual budget has helped develop such fast-food items as Pizza Hut’s cheese-topped crust and Taco Bell’s double steak quesadillas, as well as cheesy pizzas for the federal school lunch program. …dairy farms are protected by a subsidized insurance program in the 2014 Farm Bill.

What’s the answer to this mess?

Well, even an editorial writer for the leftist Washington Post recognizes that markets, rather than subsidies, should determine cheese production.

In the long run, everyone — consumers, producers, middlemen, grocers — would probably be better off if governments just left the dairy market to its own devices. And a lot of other markets, too.

Working the System

By the way, since we’re on the topic of subsidies to the dairy industry, a Bloomberg column exposes some of the perverse consequences of government intervention.

… some farmers tried to limit the supply of milk by killing off their own cows. No, you read that correctly. This mysterious state of affairs was revealed in a nationwide class-action lawsuit against dairy cooperatives, groups of farmers who pool their supplies but, as a whole, serve as middlemen between the farmers and dairy processors … The “herd retirement program,” as it was called, was led by Cooperatives Working Together, run by the lobbying group National Milk Producers Federation, and supported by farms producing almost 70 percent of America’s milk … The path that leads to killing perfectly good dairy cows begins with a 1922 law, the Capper-Volstead Act. The statute was designed to protect both dairy farmers and consumers from profiteering middlemen.

This story actually is a perfect storm of government stupidity. The federal government has programs that subsidize the dairy industry. That then leads to overproduction. Producers respond to overproduction with a plan to kill cows, which somehow triggers antitrust intervention by the government.

Heaven forbid we actually get the government out of the business and simply allow markets to work!

And if antitrust laws and agriculture subsidies are a bad combination, then you won’t be surprised to learn that foreign aid and agriculture subsidies are another bad combination. In other words, two negatives don’t make a positive, as explained by Jim Bovard earlier this year in another column for the Wall Street Journal.

The Obama administration’s plan to dump a million pounds of surplus peanuts into Haiti at no cost has sparked a firestorm from humanitarian groups … Haiti has about 150,000 peanut farmers. The industry is “a huge source of livelihood” for up to 500,000 people, Claire Gilbert of Grassroots International told NPR, “especially women, if you include the supply chains that process the peanuts.” …the Peasant Movement of Papaye, denounced the peanut donation as “a plan of death” for the country’s farmers … American aid has a sordid record. In 1979 a development consultant told a congressional committee: “Farmers in Haiti are known to not even bring their crops to market the week that [food aid] is distributed since they are unable to get a fair price while whole bags of U.S. food are being sold.” … After the 2010 earthquake, Haiti’s president, René Préval, pleaded with the U.S. to “stop sending food aid so that our economy can recover and create jobs.” Former President Bill Clintonpublicly apologized the same year for the devastating impact of subsidized U.S. rice imports: “I have to live every day with the consequences of the lost capacity to produce a rice crop in Haiti to feed those people, because of what I did.”

The peanut program may be even more inanely destructive than the sugar program.

The real culprit here are federal peanut programs with an almost 80-year record as one of Washington’s most flagrant boondoggles. Subsidies have encouraged farmers to overproduce and then dump surplus peanuts on the USDA, which winds up stuck with hundreds of millions of pounds. That food has to go somewhere, and the department sees Haiti as the ticket. Food-aid policies have long been driven not by altruism, but by bureaucratic desperation to dispose of the evidence of failed farm policies … The cost of peanut subsidies is predicted to rise 10-fold between 2015 and next year, reaching $870 million—which approaches the total farm value of the whole U.S. peanut crop itself. The USDA expects to spend up to $50 million a year to store and handle surplus peanuts, and industry experts are warning that federally-licensed warehouses might not have enough space to hold the next crop.

Though this humorous image reminds me that ethanol handouts also may be the most counterproductive and wasteful agriculture subsidy.

Agriculture subsidies are bad for taxpayer and bad for consumers. They are a corrupt transfer of unearned wealth to special interest groups.

P.J. O’Rourke came up with the only appropriate solution to this mess.

This first appeared at the author's website.

Daniel J. Mitchell

Daniel J. Mitchell is a senior fellow at the Cato Institute who specializes in fiscal policy, particularly tax reform, international tax competition, and the economic burden of government spending. He also serves on the editorial board of the Cayman Financial Review.

This article was originally published on FEE.org. Read the original article.

Team Solo or Team Vader?

Team Solo or Team Vader?

Team Solo or Team Vader?

Han Solo is a smuggler – yes, a free trader. He is admittedly aloof to the politics of the rebellion, yet his black-market trading makes him a natural enemy of the empire. He only joins the rebellion out of mercenary interest, agreeing to fly Luke and Obi-Wan to Alderaan. For payment. Few questions asked.

Han is just trying to earn a buck, and smuggle in peace. He doesn’t care about the empire, or the rebels. Nor does he discriminate when doing business with Jedi, whom he thinks are members of a bogus cult. They needed a lift, they offered payment, he offered the Millennium Falcon.

In this galaxy, the Millennium Falcon is just called "Uber."In this galaxy, that’s just called “Uber.”

Oh, and he likes guns.

As ruthless anti-heroes go, Han Solo’s badness yields social good. His “self-interest” is truly selfish, and purely profit-driven. His self-interest merely found common cause with the self-interests of the rebels – they all desire freedom from the empire’s tyranny.

Han’s socio-political aloofness puts him at odds with principled rebels, like Princess Leia. To Han, the empire is mostly a nuisance – one he avoids by staying off the grid, and trading with crime bosses like Jabba the Hutt.

The empire is certainly a nuisance to Leia and the rebels too. However, in their case, this nuisance has manifested itself in a much uglier form than what Han has faced. Han may not enjoy the inconveniences of the anti-free trade environment, but Leia watched as they blew up her entire home planet and murdered everyone on it. Now, that is personal.

Han is your average, everyday free market capitalist. He is not an ideologue, and he doesn’t care about the big picture. I promise you, Han does not vote, watch cable news, or care who the next emperor will be. He doesn’t care what the Supreme Court has to say, either.

Economics drew him into the rebellion. And somewhere along the way, fighting for the cause became its own reward. But down to the end, Han remains the rebel among the rebels – the reluctant mercenary, driven by economic self-interest, and inadvertent champion of a great cause.

A temple of intergalactic liberty.

The Dark Side

I don’t know if George Lucas intended the pro-liberty motif running through the story, but I believe it explains the visceral attraction we have for these movies.

Humans in general want to be free from arbitrary power. We know this story, and we have seen it many times throughout history. We have seen many Han Solos.

But we have also seen a few Darth Vaders. And we should never underestimate the power of the Dark Side to obscure this desire for freedom with the siren call of demagoguery.

Humans also desire harmonious order, and we respect legitimate authority. Freedom is not an enemy of order or authority. Yet, tyranny attempts to pervert both. Tyranny tells us its prescriptions for authority and order will bring about true freedom, and protection from our enemies.

I can’t imagine that Lucas did not recognize the overtly fascist, Nazi tropes he was using with Vader and the empire. The empire is unambiguously evil, oppressive, and dictatorial. You are not supposed to like Darth Vader. He is not a difficult villain to spot. And nobody is led to think the Dark Side is a benign form of government that just hasn’t been “purely” implemented.

Would a real-life Darth Vader command our respect, confidence, and pride? Would we dismiss Han Solo as a selfish, self-serving misanthrope?It’s just bad.

So imagine my surprise when the audience kept cheering Darth Vader at the opening night showing of Rogue One. Not just the first appearance onscreen – but each time Vader came on, people cheered. They cheered as Vader was plowing through a hallway of rebels! (Albeit with crazy Jedi skills.)

I don’t mean to psychoanalyze my fellow audience members.

Well, sure I do.

Look, who among us doesn’t root for the fictional villain sometimes? Vader is a powerful Jedi who commands respect and confidence. Like Han Solo, Darth Vader is independent and ruthlessly self-interested. But Vader’s ruthlessness emerges as a desire to control others. Han is content to control of his own life, and leave others in peace.

Vader’s limitless power (and sweet black cape) make him an excellent villain. But he’s also an excellent archetype for the fearless leader – the powerful leader, vanquishing his enemies.

Tyranny is effective if it inspires fear among dissenters. But it is most effective when it inspires pride and confidence among the tyrant’s followers.

The audience’s cheers for Vader were likely a burst of pent enthusiasm for a familiar character, rather than a chilling peak at the social spirit of our age. But I wonder: would a real-life Darth Vader command our respect, confidence, and pride? Our cheers, and hosannas? Would we dismiss Han Solo as a selfish, self-serving misanthrope? Would we resent the rebels as enemies of order and authority?

Would we trade the renegade freedom of Han Solo, for the kind of “freedom” promised by the empire?


Robert Coleman


Robert Coleman is an alumnus of Berkeley and Pepperdine Law, and a corporate attorney.

This article was originally published on FEE.org. Read the original article.

Obamacare Is Literally Killing Us

Obamacare Is Literally Killing Us – Megalextoria

Obamacare Is Literally Killing Us

The death rate increased 1.2% last year, and life expectancy fell in 2015, the most recent year for which data is available. Female life expectancy dropped from 81.3 to 81.2 years, and male life expectancy fell from 76.5 to 76.3 years. As ABC News notes, “A decades-long trend of rising life expectancy in the U.S. could be ending: It declined last year and it is no better than it was four years ago.”

The core elements of Obamacare went into effect in 2014. Americans’ health has thus been deteriorating even as the provisions of the Affordable Care Act were supposed to be providing improvements.

The Economic Policy Journal predicted in 2012 that “life expectancy will decline under Obamacare.” In 2009, the dean of Harvard Medical School, Jeffrey Flier, predicted that Obamacare would cost lives by harming life-saving medical innovation. In 2013, two doctors wrote in the Wall Street Journal that Obamacare is “bad for your health,” and that it would eventually have a devastating effect on medical innovation by driving down investment in medical devices.

Supporters of Obamacare claimed its Medicaid expansion would save lives, but it does not appear to be helping. Despite its enormous cost of billions of dollars annually, expanding Medicaid does little to improve health outcomes for recipients. As Bloomberg News’ Megan McArdle noted, expanded Medicaid eligibility in Oregon had “no impact on objective measures of health” for recipients. Likewise, a study in the New England Journal of Medicine noted that “Medicaid coverage generated no significant improvements in measured physical health outcomes in the first 2 years,” even though “it did increase use of healthcare services.”

Obamacare’s expansion of Medicaid reduced employment in the states that participated in it by a statistically significant extent (1.5% - 3%), according to a recent study by Georgetown University’s Tomas Wind. The substantial reduction in employment due to Obamacare’s Medicaid expansion was not predicted by the Congressional Budget Office, although the CBO did predict that other provisions of Obamacare would shrink employment. In February 2014, a Congressional Budget Office report estimated that “the new healthcare law will cost the nation the equivalent of 2.5 million workers in the next decade.” It will also increase the size of the national debt by hundreds of billions of dollars.

Obamacare tax credits contain even worse work disincentives than Obamacare’s Medicaid expansion, for many older workers. For example, they effectively create a 35,618 percent marginal tax rate for a hypothetical 62-year-old whose income rises by $22, by triggering the sudden loss of $7,836 in government tax credits. That leaves the worker more than $7,000 poorer for the sin of earning a few extra dollars. Real world examples of how Obamacare punishes hard work are found here.

Health insurance premiums will also increase significantly next year, according to the Obama administration. Such premium increases contradict President Obama’s claim before Obamacare was passed that Americans would save $2,500 a year under it.

This first appeared at the Competitive Enterprise Institute.

Hans Bader

Hans Bader is a senior attorney at the Competitive Enterprise Institute. He graduated from the University of Virginia with a B.A. in economics and history and later earned his J.D. from Harvard Law School. Before joining CEI, Bader was Senior Counsel at the Center for Individual Rights.

This article was originally published on FEE.org. Read the original article.

Compute! – June 1988

Compute! – June 1988

Analytical Engine, BAB/A/003

Analytical Engine, BAB/A/003

Not So Voluntary: White House IP Czar Promotes Shadow Regulation of the Internet

Not So Voluntary: White House IP Czar Promotes Shadow Regulation of the Internet

Should IP rights be enforced via shadow regulations that aren’t vetted or endorsed by users? According to a just-released report, the U.S. Intellectual Property Enforcement Coordinator (IPEC) thinks they should. We disagree.

We’ve written here about the danger posed by Internet regulation done through private agreements. These agreements, sometimes called codes, standards, or “best practices,” have a tendency to become shadow regulations, which can limit individual freedom. They’re also a way for governments to control the behavior of Internet users, or to favor some users over others by quietly coercing Internet companies to disguise government policy as “voluntary” private agreements.

The Intellectual Property Enforcement Coordinator—an office within the Obama White House—has released a strategy document that seems to put the weight of the federal government behind these shadow regulations. The plan gives lip service to transparency, good research, and respect for freedom of speech. Unfortunately, the plan also praises and encourages the negotiation of private agreements between Internet companies that fail to uphold those same values.

The IPEC (or “IP Czar”) is tasked with coordinating patent, copyright, trademark, and trade secret enforcement within the federal government, and writing a strategic plan every three years. The office doesn’t have power to make laws or change federal agency policy directly, but its conclusions carry a White House imprimatur.

We’ve raised concerns about private copyright enforcement agreements between the Motion Picture Association of America and Internet domain name registries, domain name blacklists created by U.S. pharmaceutical companies, and copyright filtering agreements among user-content websites being pushed by the European Commission. These agreements put strong powers of censorship into the hands of businesses with many conflicts of interest, and they promote the building of censorship technologies and programs that tend to be co-opted by still more corporate interests, or by repressive governments. The IPEC Strategic Plan nonetheless gives quiet nods to agreements like these. It even refers to the MPAA’s controversial private agreements with two domain name registries as “Domain Name Registry Best Practices,” even though those agreements weren’t developed with any broad input and don’t purport to be best practices for others.

The plan also calls for “best practices, through a multistakeholder process, for Internet search providers to address search result rankings of significant commercial-scale piracy and counterfeiting sites,” and “private sector best practices” for takedowns under the Digital Millennium Copyright Act, “led through a multistakeholder process.” But the plan offers no examples of any arrangements actually in use today that were developed in a multistakeholder process, nor provides much motivation to platforms or copyright holders to employ such a process now. And as we’ve written, merely labeling agreements among companies and governments as “multistakeholder” says nothing about whether they are transparent and accountable to everyone affected.What’s worse, these shadow agreements are hardly voluntary.

Whenever a government calls on private companies to take actions that aren’t required by law, there’s a specter of coercion. The occupant of the White House can direct favorable or unfavorable treatment towards companies based on how they respond to requests for “voluntary” action. The IPEC Strategic Plan calls for government “benchmarking” of private enforcement agreements, implying that the government will judge outcomes by its own criteria and step in to regulate if the “benchmarks” it sets are not met.

When these requests happen in an area like copyright, where normal democratic processes have led to a firm rejection of expanded enforcement power, we need to be especially cautious. In these situations, government “support” for private action begins to look like bypassing the democratic process.

On the positive side, the IPEC plan contains a strong statement about the importance of limitations on copyright (as well as trademark and patent rights). It refers to limitations on copyright, including fair use, as “the basic principles that have permitted the Internet to thrive.” It also recognizes limitations on copyright as part of the legal protection for free speech. But neither a shout-out to fair use nor the talisman of “multistakeholder” policymaking are enough to protect Internet users against censorship, nor to give them a voice in the functioning of the Internet.

Having declared themselves champions of allegedly “voluntary” enforcement of IP laws by Internet companies and other private gatekeepers, IPEC and the various federal agencies that produced this strategic plan must commit to making sure that private enforcement processes respect Internet users’ freedom, and remain accountable to users.

Source: Not So Voluntary: White House IP Czar Promotes Shadow Regulation of the Internet | Electronic Frontier Foundation

Classic Christmas Movies Declare Taxation Is Theft

Classic Christmas Movies Declare Taxation Is Theft

Classic Christmas Movies Declare Taxation Is Theft

“And it came to pass that there went out a decree from Caesar Augustus that all the world should be taxed. And all went to be taxed, everyone to his own city, for to disobey the Roman emperor meant certain death.”

The message in the opening lines of The Little Drummer Boy (1968) is as rich and pleasing to the ear as Greer Garson’s euphonious narration.

That there was "no room at the inn" was not a natural occurrence. It was caused by the government, like virtually all human misery.First, that Bethlehem was so crowded and that there was “no room at the inn” for Joseph and Mary was not at all a natural occurrence. It was caused by the government, like virtually all human misery. Second, that all taxation occurs under the threat of violence, for to refuse to pay would result in “certain death.”

This is all within the first 30 seconds of the film. A libertarian couldn’t ask for a better start.

Taxation is repeatedly denounced throughout the story. Garson continues by noting that “there were good people who could ill afford the cruel tax.” Even the film’s chief villain, Ben Haramad (voice by José Ferrer), who kidnaps Aaron in order to compel him to perform in his traveling show, addresses his audience as “fellow taxpayers,” indicating that as bad as he might be, he is one with his audience in suffering under a much more cruel and malicious oppressor.

I couldn’t have been happier that my seven-year-old daughter was exposed to all of this, along with a very age-appropriate introduction to the gospel stories. With the central lesson of Thanksgiving – that communism is lethal and private property essential to human survival – effectively erased from popular consciousness, it was refreshing to see these foundational libertarian ideas surviving in a classic Christmas special.

Santa Claus Is Comin' to Town

Next, we queued up another oldie from the same DVD compilation: Santa Claus Is Comin’ to Town (1970). This one didn’t disappoint either. Again, the general misery within the aptly named “Sombertown” has the same source: government. One cannot help but see the parallels between Burgermeister Meisterburger’s idiotic law against toys and the US government’s War on Drugs. All of the familiar characteristics are there.

First, the law is completely ineffective in stopping the children of Sombertown from playing with toys, aided by a young, energetic Kris Kringle. When the government confiscates the toys, Kringle brings more. When the government starts searching houses, Kringle hides the toys in stockings hanging by the fire.

Of course, each government's failure to prevent human beings from engaging in activity that is harmless to others results in ever more oppressive measures. As they do in the “land of the free” today, the government finally resorts to “no-knock raids,” with armed men breaking down the doors of innocent and guilty alike. Parents and children huddle together in fear.

Meisterberger demonstrates government hypocrisy when he breaks his own law by playing with a yo-yo given to him by Kringle. What an effective analogy for the government’s own involvement in drug trafficking, both by street cops “gone bad” and by the CIA in its vast covert operations.

"By and by, the good people realized how silly those laws were, and forgot all about them." If only the good people of the US would attain similar wisdom.Meisterburger further emulates the US government with ridiculous overreach in enforcing his unjust law, arresting not only Kris Kringle but his whole family, his future wife Jessica, and even the reformed Winter Warlock. All are charged with “conspiracy,” a tactic utilized by the government to circumvent the rules of evidence in court and put over 2 million people in prison.

The story also features a useful idiot in Jessica, who at first blindly supports the law, until Kringle gives her a china doll. Realizing how harmless to others her own enjoyment of the doll is, she finally begins to question the wisdom of prohibition.

Kringle escapes the dungeon with the help of the Winter Warlock’s flying reindeer and remains an outlaw for many years afterward. However, the story ends happily as the libertarians outlast the oppressive Meisterbergers, who eventually “died off and fell out of power.” As narrator Fred Astaire relates,

“By and by, the good people realized how silly the Meisterberger laws were. Well, everybody had a wonderful laugh and then forgot all about them.”

If only the good people of the United States would attain similar wisdom.

Within this pleasant little Christmas story, youngsters couldn’t be taught a more radical libertarian lesson. The government is evil. Its edicts are often unjust and result in needless misery. The hero of the story is an outlaw who practices civil disobedience to bring a little happiness to his fellow man. Regardless of your feelings on drug prohibition, there are a thousand other parallels to real-world government oppression.

Conservatives often complain that modern Christmas specials have scrubbed Jesus Christ out of the holiday, turning it into a secular celebration of gift-giving and merrymaking. That’s not hard to understand coming out of “progressive” modern Hollywood, whose animosity towards Christianity rivals its animosity towards free enterprise. It also explains why these wonderfully libertarian themes have disappeared from today’s politically correct holiday fluff.

Whatever your religious beliefs, even if you have none at all, you can’t go wrong watching these classic Christmas specials with your children. Not only will they learn the true meaning of Christmas, but they will be exposed at a young age to the founding American principle that government is evil.

God bless us, everyone.

This first appeared at the author's website.

Tom Mullen

Tom Mullen is the author of Where Do Conservatives and Liberals Come From? And What Ever Happened to Life, Liberty and the Pursuit of Happiness? and A Return to Common  Sense: Reawakening Liberty in the Inhabitants of America. For more information and more of Tom's writing, visit www.tommullen.net.

This article was originally published on FEE.org. Read the original article.

The Dangerous Economic Nationalism of Trump’s Right-Hand Man

The Dangerous Economic Nationalism of Trump’s Right-Hand Man

The Dangerous Economic Nationalism of Trump's Right-Hand Man

The President-elect’s chief-strategist, Steve Bannon, has a vision for remaking America in the wake of the Trump campaign’s upset victory. In Bannon’s view, laid out in remarks for a 2014 Vatican conference, modern capitalism has failed our nation, and the West generally. Specifically, capitalism has failed to fulfill the government’s responsibility to create a civil society—an economic and social order in which all citizens can expect to contribute and flourish. It is no surprise, then,  that the working classes in Europe and the United States feel increasingly displaced and harbor a growing mistrust of elites.

In Bannon's view, we are locked in a clash-of-civilizations that has been going on for thousands of years.


I have a great deal of sympathy for Bannon’s core observation. There is little doubt that over the last thirty years, globalization has exposed less-educated workers in the Western world to rapid social change, while denying them most of the economic gains.

However, I break sharply with Bannon over his response to the problem. He sees a solution in turning inward. He advocates policies, ranging from restricted immigration to an adversarial trade strategy, that seek to slow and even reverse the forces of globalism. His preferred self-description, “economic nationalist,” makes this explicit. American policy, Bannon suggests, must advance the interests of American citizens first, our cultural counterparts second, and it must be prepared to do so at the expense of the interests of foreign civilizations.  There is no room for a globalist, cosmopolitan end-of-history in this telling. Instead, we are locked in a clash-of-civilizations that has been going on for thousands of years, and can be expected to continue for as far into the future as anyone can see.

This Manichean disposition towards global affairs and international economics is dangerous. Not only has trade-driven growth lifted hundreds of millions of people out of crushing poverty but it has created an environment in which democracy is ascendent and totalitarianism is in retreat. Yet, this victory is nowhere near complete. Bannon’s economic nationalism risks destructive trade wars, self-defeating mercantilism, and corrosive industrial policy. To be clear, I don’t necessarily think Bannon is a mercantilist per se. His policy views aren’t laid out explicitly enough to be sure. His background as a Harvard MBA and a successful investment banker, as well as his caution in laying out specifics, lead me to suspect he is aware of some of the dangers of this type of policy.

What he seems unaware of, or unconcerned by, are the sentiments he is stoking, and the public choice dynamic he is setting in motion. In the best of times, isolationist impulses among the populace and rent-seeking by business must be aggressively resisted. Where the gains to economic liberalization are diffuse—cheaper products and more advanced technology—they are taken for granted. Where the gains are concentrated—intellectual property and supply chain efficiencies—they are the target of political manipulation. There is no natural constituency for a free, open, and level playing field. That consistency must be constantly cultivated through discourse, negotiation, and dedication to a humanitarian cosmopolitan vision.

Rapid improvement in living standards around the world may grind to a halt.

When that vision is directly attacked, when negotiation is replaced by confrontation, and discourse by demagoguery, the field of liberalization dries up. It’s all too easy to see the parallels to the turn of the 20th century when the cosmopolitan economy of the late 1800s turned inward in a wave of nationalization. Indeed, Bannon himself cites that parallel.

The worst version of that parallel presages a great-power war, but even in a more sanguine take our rapid era of technological progress is threatened. The global market upon which high-tech innovation depends will be threatened. Rapid improvement in living standards around the world may grind to a halt. This is a future we have a moral obligation to fight against.

Republished from the Niskanen Center.

Karl Smith

Karl Smith is the Director of Economic Research at Niskanen Center.

This article was originally published on FEE.org. Read the original article.

Preview for X-Kaliber 2097 (Super Nintendo)

Preview for X-Kaliber 2097 (Super Nintendo)

Canadians Confused by the Correct Use of the Term Liberal

Canadians Confused by the Correct Use of the Term Liberal

Canadians Confused by the Correct Use of the Term Liberal

The Canadian Broadcasting Corporation has been following the political upheavals in the US with some curiosity. In light of this piece, they called me to discuss where the Republican ticket is representing capitalism well. In the course of the interview, I described myself as a fan of commercial society, free enterprise, deregulation, and therefore a classical liberal. I said later that I’m a radical liberal.

Much to the amazement of the producers, it was this section of the interview (which was heard by more than a million people) that caused the biggest response. They were flooded with comments of confusion. Why does this guy call himself a liberal?

The topic is complex because the meaning of the word has changed so much in the last 100 years.The producers were intrigued enough to do an entire segment on the topic, the results of which were interesting and substantial. Of course the topic is complex because the meaning of the word has changed so much in the last 100 years. The corruption of the term became so intense following World War II that the leftover liberals had to change their name to libertarians.

And today matters are in flux. In Eastern Europe and large parts of Latin America, the term is used correctly. In Europe, it is a mix. In the UK, the word liberal is coming back as a description of people who celebrate commercial society, favor peace, support civil liberties, and reject big government. In the US, the term has been left on the table, but is still mostly associated with the opposite of its traditional meaning.

The result of the CBC’s investigative efforts are as follows.

On last week's episode of The 180, we spoke with Jeffrey Tucker, a self-described 'classical liberal.' He argued Donald Trump is giving capitalism a bad name, by presenting himself as a titan of industry, when he's really more of an entertainer.

After that interview, we received notes from people questioning Tucker's bona-fides as a 'liberal,' since he spoke highly of individual liberties, free markets, and limited government. Some said Tucker was clearly a 'neo-liberal,' some said he was a 'large R conservative,' presumably meaning Republican, while others thought the term 'classical liberal' had plenty of negative connotations all on its own.

So what is a classical liberal?

First off, you should totally click the play button on this page to hear the audio explainer. It's got all kinds of fun music and clips of people using the word 'liberal' in weird and hilarious ways. Like when Rush Limbaugh said the Soviet Union and Cuba and China were run by 'liberals.' Weird.

Part of the problem with the word 'liberal' is it's used differently across time, and across countries. In Canada, the word mostly means a supporter of the Liberal Party, or someone in the political middle. In the United States, it means a strong social progressive, and in some circles can mean a socialist or a communist. In Europe it's associated with internationalism and free migration. In Australia, in the words of Australian Liberal Party leader Malcolm Turnbull, it means the primacy of "freedom, the individual, and the market."

That last one, the Australian definition, is probably closest to what political scientists consider a classical liberal view.

John Locke

If you want to get what classical liberalism is, and where liberalism as an ideology comes from, you gotta know about this guy, John Locke.

Locke was an English philosopher who lived in the 17th century, and one of the most important people in the development of liberalism, both classical and modern, according to Barbara Arneil, Professor of Political Science at the University of British Columbia.

"In essence what he introduced to the political lexicon was the idea of individual rights. He said individuals have rights by nature, and if the government does not serve those rights, then the people could get together and reject the government. So in essence, this idea of individuals and their rights begins the notion that the government is answerable to individual people."

This was still a time of kings and emperors and lords and barons, so Locke's ideas were rather significant. And these liberal ideas influenced a good deal of western society, including the founding documents of the United States of America.

"Thomas Jefferson drew a lot of his philosophy from John Locke. He saw him as the greatest political thinker. So there's a lot of Locke in the American Declaration of Independence. On the economic side, Locke was also somebody who developed the idea of the right to private property. So we have both the political and economic repercussions and we see them right around the world. All the bills of rights, really originate with Locke's original idea."

So if someone says they're a classical liberal as opposed to modern liberal, they're probably more in line with Locke's original sentiments.

Times change, so do words, and so do ideas

At some point, liberalism shifted from its emphasis on individual liberties, to include regulating business, and using the government to support individuals, rather than simply leaving them alone. According to Lee Ward, Associate Professor of Politics and International Studies at the University of Regina, the shift is part of the industrial revolution throughout the 18th and 19th centuries.

"The term liberalism takes on a new kind of meaning, politically. Sometimes called 'welfare liberalism. At that point, liberalism is accommodating the new demands produced by industrialization. So classical liberals in the 17th century were talking about an economy that was very rudimentary compared to what we have today. A bank in the 17th century doesn't mean the same thing as a bank in the 20th century. So by the time you get to the 20th century, liberalism has changed."

To Barbara Arneil at UBC, it's not simply that the definition of liberalism changed, it's that over time, some people changed their conception of 'freedom'. Whereas classical liberals think of liberty as being free from interference, modern liberalism considers whether the government can support people in society to freely pursue their goals.

"I think the thread that remains throughout all liberal thought is the idea of the individual and their freedom. So initially, freedom is understood as being free of restraints. But now we have a different definition of freedom, and it's about  having the necessary supports to have freedom that has any meaning."

The concepts of liberalism, both classical and modern, are political philosophies and ideologies not specific political affiliations, and these concepts, among others, influence parties across the Canadian spectrum.

Labels and insults

In the United States, 'liberal' is often used as an epithet. To some degree, the terms 'neo-liberal' or 'social conservative' or 'socialist' are also used as negative descriptors in Canada.

To Ward, it's not particularly helpful to use philosophical terminology as a pejorative, or to try and sum up a person's character or values with a snippy line about liberals, conservatives, socialists, or anarchists.

"I worry that sometimes we throw out terminology as weapons, as rhetorical jabs. Understand that behind all of the different perspectives and ideologies, there's some claim to justice there. And even if I disagree in large measure with much of what's being said, there's is some truth that is being expressed. There's something good in it. As good as it is to be engaged in politics and to really care about what's happening, it's also good to step back sometimes and to understand that when we use terms like conservative, liberal, progressive, socialist, they're all reflecting a certain claim to justice, and there's probably something in each of those that we can agree with."

According to Ward, if we could understand that behind all the terms we throw around to describe people, there is a rich intellectual history, we could have more respectful and constructive political debate.

Jeffrey Tucker

Jeffrey Tucker is Director of Content for the Foundation for Economic Education. He is also Chief Liberty Officer and founder of Liberty.me, research fellow at the Acton Institute, policy adviser of the Heartland Institute, founder of the CryptoCurrency Conference, member of the editorial board of the Molinari Review, an advisor to the blockchain application builder Factom, and author of five books. He has written 150 introductions to books and many thousands of articles appearing in the scholarly and popular press.

This article was originally published on FEE.org. Read the original article.

EFF to Tech Leaders: Stand With Users and Tell Trump We Need Strong Encryption, Internet Freedom

EFF to Tech Leaders: Stand With Users and Tell Trump We Need Strong Encryption, Internet Freedom

Technology company leaders are reportedly meeting with President-elect Donald Trump and members of his transition team tomorrow in New York. Mr. Trump’s relationship with technology companies has been frosty, and his statements during the campaign and recent cabinet picks raise serious concerns about the new administration’s commitment to protecting the digital rights of all Americans and fostering innovation. They also point to the deep need for Mr. Trump and his team to talk to those who represent the users of technologies, not just the companies that build and sell those technologies.

Mr. Trump has criticized Apple for refusing to attack the security of the iPhone and says that fighting ISIS propaganda could require closing parts of the Internet. Users have a stake in each of these discussions, since they suffer when their technologies are insecure and when legitimate voices are censored. 

We urge tech leaders in attendance to press Mr. Trump on these topics, and let the president-elect know that they will stand with their users and the core values of privacy, security, freedom of speech, and transparency.

Encryption

First up: defend strong encryption. Tech leaders must explain to the transition team that it is technically impossible to design a "backdoor" that allows law enforcement access to devices and communications without compromising everyone’s security. EFF and the overwhelming majority of the tech community supported Apple when it correctly resisted FBI efforts to force its programmers to write and sign software code to bypass the lock screen of a seized iPhone. Not only would that weaken security for all users, it would also violate the Apple’s First Amendment rights by forcing it to endorse a position—favored by the government—that it disagrees with. Tech leaders should make it clear to Mr. Trump’s transition team that talk of building backdoors for law enforcement is a non-starter.

Mass Surveillance

Second, we urge tech leaders to voice their opposition to mass surveillance by the NSA. We’re deeply troubled by Mr. Trump’s cabinet picks, such as Senator Jeff  Sessions and Representative Mike Pompeo, who have advocated the restoration of the expensive and useless mass telephone records surveillance under the Patriot Act. The program eviscerated the privacy rights of hundreds of millions of innocent Americans with no proof of a countervailing gain. This embrace of unconstitutional surveillance is particularly chilling given the historical misuse of domestic spying programs against political opponents.

Sessions, Trump’s Attorney General pick, has also supported requiring companies to reduce the security they offer to their users to facilitate law enforcement access, and last year floated a proposal to allow federal agents wide access to online personal information without first obtaining a warrant. Meanwhile, Pompeo, Trump’s CIA director nominee, has called for reviving metadata collection and combining that “with publicly available financial and lifestyle information into a comprehensive, searchable database,” presumably including millions of innocent Americans.

Free Speech

Third, industry leaders should push back against Mr. Trump’s attacks on free speech and Internet freedom.

Requring social media companies to act as censors has the very real threat of going too far. Trump called those raising free speech concerns “foolish,” and he shouldn’t get away with that. Any speech-limiting practices and policies must be narrowly applied, transparent, and easily correctable, or they will inevitably be targets for gaming and harassment. Special care should be taken to protect researchers and speech that criticizes the government and its agents.

Net Neutrality

Fourth, Trump opposes net neutrality, a key principle for protecting the future of our open Internet. Tech companies should stand with their users and urge the president-elect to preserve the FCC’s open Internet order and rules that prevent companies from using customers’ private information for profit.

Protecting User Information

Finally, Trump has also talked about creating a database of some or all Muslims. He says he plans to round up and deport millions of illegal immigrants. Both of these will likely involve combing through databases of information about Americans that have been compiled for other purposes.

If the Trump administration moves ahead with these plans, it will need Silicon Valley’s cooperation. Tech companies may face unprecedented demands to build such databases, or to search for, analyze, and hand over private data of and about their users. These companies hold our private conversations, thoughts, experiences, locations, photos, and more. All of this is vulnerable to misuse by a hostile administration. Tech companies must tell Trump that they won’t cooperate in building, or providing user information for, systems that enable discrimination, intolerance, or ethnic targeting forbidden by the Constitution.

Many technology companies have already taken stands against previous government demands for user data, pushed for more transparency, and some have even gone to court to challenge law enforcement efforts to access customer data without a warrant or to fight gag orders. We've recommended that companies implement strategies to gather and store as little data as possible about their users so that when the government comes knocking, there’s nothing to give.

Now’s the time to double down. We urge tech leaders to send a clear message to the Trump transition team that technology companies will not be agents of the government, especially when it comes to programs that defy the Constitution and violate our civil rights. Mr. Trump is famously unabashed in his use of social media to get his thoughts and messages out. He understands the power of technology to speak directly to users and communicate to a willing audience. Tech leaders need to be equally bold. They must stand up for all of the users of these tools and reject efforts to weaken the privacy and security that their users rely on. And users need a seat at this table. Mr. Trump, we’re waiting for your call. Or tweet.

Source: EFF to Tech Leaders: Stand With Users and Tell Trump We Need Strong Encryption, Internet Freedom | Electronic Frontier Foundation

Bitcoin Economics in One Lesson

Bitcoin Economics in One Lesson

Bitcoin Economics in One Lesson

Henry Hazlitt’s 1946 book Economics in One Lesson is regarded as a classic introduction to free market economics. Nobel prize winning economist Milton Friedman said of the book: “[Hazlitt’s] explanation of how a price system works is a true classic: timeless, correct, painlessly instructive.” The book’s titular lesson argues:

The art of economics consists in looking not merely at the immediate but at the longer effects of any act or policy; it consists in tracing the consequences of that policy not merely for one group but for all groups.

The entire premise of the book is found in this one sentence, and the chapters that follow are filled with examples of what happens when economic central planners focus on policy effects to one group while ignoring the secondary effects of their policies on all other groups. Hazlitt goes on to explain, in Chapter 17, the effects of governmental price fixing:

Let us first see what happens when the government tries to keep the price of a single commodity, or a small group of commodities, below the price that would be set in a free competitive market.

The argument for holding down the price of these goods will run something like this: If we leave beef (let us say) to the mercies of the free market, the price will be pushed up by competitive bidding so that only the rich will get it. People will get beef not in proportion to their need, but only in proportion to their purchasing power. If we keep the price down, everyone will get his fair share.

The first thing to be noticed about this argument is that if it is valid the policy adopted is inconsistent and timorous. For if purchasing power rather than need determines the distribution of beef at a market price of $2.25 cents a pound, it would also determine it, though perhaps to a slightly smaller degree, at, say, a legal “ceiling” price of $1.50 cents a pound. The purchasing-power-rather-than-need argument, in fact, holds as long as we charge anything for beef whatever. It would cease to apply only if beef were given away.

A similar situation exists in Bitcoin where the independent development team known as Bitcoin Core is artificially suppressing the cost of full-node operation — in effect, impeding free market forces. “This is for the benefit of the consumers,” they say, ignoring the effects of this policy on the >99.9% of Bitcoin users who do not run a full node. As Hazlitt notes, this line of thinking is inconsistent because, regardless of the price at which something is fixed, there will always be people who cannot afford it. The only sound logical conclusions to be drawn from this line of thinking are to either set the price at zero or to allow the price to be dictated by the free market. More tenuous still is the supposition that current full node users will be “priced out” by a block size increase.

Not your typical full node users.

But schemes for maximum price-fixing usually begin as efforts to “keep the cost of living from rising.” And so their sponsors unconsciously assume that there is something peculiarly “normal” or sacrosanct about the market price at the moment from which their control starts. That starting or previous price is regarded as “reasonable,” and any price above that as “unreasonable,” regardless of changes in the conditions of production or demand since that starting price was first established.

Bitcoin Core’s central planning inherently declares the cost of node operation today to be reasonable, but this is done without providing any hard data about which users are running a node, much less what their needs are, which costs they can bear, and so on.

In discussing this subject, there is no point in assuming a price control that would fix prices exactly where a free market would place them in any case. That would be the same as having no price control at all. We must assume that the purchasing power in the hands of the public is greater than the supply of goods available, and that prices are being held down by the government below the levels to which a free market would put them.

Now we cannot hold the price of any commodity below its market level without in time bringing about two consequences. The first is to increase the demand for that commodity. Because the commodity is cheaper, people are both tempted to buy, and can afford to buy, more of it. The second consequence is to reduce the supply of that commodity. Because people buy more, the accumulated supply is more quickly taken from the shelves of merchants. But in addition to this, production of that commodity is discouraged. Profit margins are reduced or wiped out. The marginal producers are driven out of business. Even the most efficient producers may be called upon to turn out their product at a loss. This happened in World War II when slaughterhouses were required by the Office of Price Administration to slaughter and process meat for less than the cost to them of cattle on the hoof and the labor of slaughter and processing.

Centralizing Bitcoin

In Bitcoin, block space is the commodity supply being artificially restricted. The producers of this commodity are the miners (although they do not produce a physical good, the analogy holds). Restricting the availability of the block space commodity indeed discourages the further production of such. New entrants into the Bitcoin mining business are thereby disincentivized: if the cost of producing a bitcoin has already reached its marginal level, then the profits available to new market entrants are not great enough to incentivize the risk-taking required of new mining operations. By dictating such policies and not allowing goods to be subject to the free-market-at-work, Core discourages new competitors and directly contributes to the centralization of mining!

If we did nothing else, therefore, the consequence of fixing a maximum price for a particular commodity would be to bring about a shortage of that commodity. But this is precisely the opposite of what the government regulators originally wanted to do. For it is the very commodities selected for maximum price-fixing that the regulators most want to keep in abundant supply. But when they limit the wages and the profits of those who make these commodities, without also limiting the wages and profits of those who make luxuries or semiluxuries, they discourage the production of the price-controlled necessities while they relatively stimulate the production of less essential goods.

The regulators wish to keep the ability of consumers to perform Bitcoin transactions in abundant supply, while simultaneously restricting the available supply of on-chain Bitcoin transactions. Thus the production of “luxuries” or less essential goods is stimulated: Lightning networks, sidechains, centralized clearinghouses, and altcoins. More foolish than the governmental central planners in Hazlitt’s example, many of the goods that Core assumes will pick up the slack for scarcity of on-chain transactions do not even exist yet.

Some of these consequences in time become apparent to the regulators, who then adopt various other devices and controls in an attempt to avert them. Among these devices are rationing, cost-control, subsidies, and universal price-fixing.

The cost of making a normal Bitcoin transaction becomes too high, so the cost of a segwit transaction shall then be fixed at one-fourth the cost of a regular Bitcoin transaction, Core has decided. Problem solved? Hazlitt explains,

When it becomes obvious that a shortage of some commodity is developing as a result of a price fixed below the market, rich consumers are accused of taking “more than their fair share;” or, if it is a raw material that enters into manufacture, individual firms are accused of “hoarding” it. The government then adopts a set of rules concerning who shall have priority in buying that commodity, or to whom and in what quantities it shall be allocated, or how it shall be rationed. If a rationing system is adopted, it means that each consumer can have only a certain maximum supply, no matter how much he is willing to pay for more.

We can see this today in Bitcoin when certain transactions are accused of being “spam” or of taking unfair advantage of the limited block space commodity. Nevermind that these so-called spam transactions pay the fair market rate to be included, or that these transactions are slapped with the spam epithet on no grounds other than their frequency or their size.

The government may try to meet this difficulty through subsidies. It recognizes, for example, that when it keeps the price of milk or butter below the level of the market, or below the relative level at which it fixes other prices, a shortage may result because of lower wages or profit margins for the production of milk or butter as compared with other commodities. Therefore the government attempts to compensate for this by paying a subsidy to the milk and butter producers. Passing over the administrative difficulties involved in this, and assuming that the subsidy is just enough to assure the desired relative production of milk and butter, it is clear that, though the subsidy is paid to producers, those who are really being subsidized are the consumers. For the producers are on net balance getting no more for their milk and butter than if they had been allowed to charge the free market price in the first place; but the consumers are getting their milk and butter at a great deal below the free market price. They are being subsidized to the extent of the difference — that is, by the amount of subsidy paid ostensibly to the producers.

Again, the consumer is told that the price controls are for their own benefit: “Why are you concerned? You’ll be able to make transactions for less than you can now!” But the producers are on net balance getting no more for their block space than if they had been allowed to charge the free market price in the first place. Worse still, if all Bitcoin transaction activity switched to the segwit format overnight, the miners are now being paid the same as before while bearing four times the burden of resources required. That Core does not consider this outcome disastrous is only a testament to the trivial cost of node operation even as resource requirements are increased.

Now unless the subsidized commodity is also rationed, it is those with the most purchasing power that can buy most of it. This means that they are being subsidized more than those with less purchasing power. Who subsidizes the consumers will depend upon the incidence of taxation. But men in their role of taxpayers will be subsidizing themselves in their role of consumers. It becomes a little difficult to trace in this maze precisely who is subsidizing whom. What is forgotten is that subsidies are paid for by someone, and that no method has been discovered by which the community gets something for nothing.

Stunting Growth

Treating segregated witness as a capacity increase, as the Bitcoin Core development team does, ignores that the subsidized commodity is still kept in restricted supply. By not allowing the supply to grow in line with what the free market is capable of providing, discounting segwit transactions allows only for a bit of breathing room until those transactions also end up in short supply and begin rising in cost, as is happening with regular transactions today.

Price-fixing may often appear for a short period to be successful. It can seem to work well for a while, particularly in wartime, when it is supported by patriotism and a sense of crisis. But the longer it is in effect the more its difficulties increase. When prices are arbitrarily held down by government compulsion, demand is chronically in excess of supply. We have seen that if the government attempts to prevent a shortage of a commodity by reducing also the prices of the labor, raw materials and other factors that go into its cost of production, it creates a shortage of these in turn. But not only will the government, if it pursues this course, find it necessary to extend price control more and more downwards, or “vertically”; it will find it no less necessary to extend price control “horizontally.” If we ration one commodity, and the public cannot get enough of it, though it still has excess purchasing power, it will turn to some substitute. The rationing of each commodity as it grows scarce, in other words, must put more and more pressure on the unrationed commodities that remain. If we assume that the government is successful in its efforts to prevent black markets (or at least prevents them from developing on a sufficient scale to nullify its legal prices), continued price control must drive it to the rationing of more and more commodities. This rationing cannot stop with consumers. In World War II it did not stop with consumers. It was applied first of all, in fact, in the allocation of raw materials to producers.

Assuming that the public has a fixed or growing demand for using money transfer systems, of which Bitcoin is merely one type, then the end result of restricting the available supply of Bitcoin transactions is that more and more pressure is put on unrationed commodities. Whether those unrationed commodities are traditional payment methods or altcoins, the end result spells disaster for Bitcoin.

The natural consequence of a thoroughgoing over-all price control which seeks to perpetuate a given historic price level, in brief, must ultimately be a completely regimented economy. Wages would have to be held down as rigidly as prices. Labor would have to be rationed as ruthlessly as raw materials. The end result would be that the government would not only tell each consumer precisely how much of each commodity he could have; it would tell each manufacturer precisely what quantity of each raw material he could have and what quantity of labor. Competitive bidding for workers could no more be tolerated than competitive bidding for materials. The result would be a petrified totalitarian economy, with every business firm and every worker at the mercy of the government, and with a final abandonment of all the traditional liberties we have known.

The Bitcoin economy, unlike state economies, is thankfully one of voluntary participation. While the end result of price controls, a petrified totalitarian economy, will be the same, the consumers in the Bitcoin economy have a choice and do not need to remain participants. Packing up and moving to another cryptocurrency is far simpler than packing up and moving to a country with more favorable economic policies, and this is exactly what will happen (we are already seeing it happen with the news of Circle abandoning Bitcoin this week). Attempting to centrally plan Bitcoin’s underlying economics, as the Bitcoin Core developers do today, is guaranteed to lead Bitcoin down the path of irrelevance.

This first appeared at Medium.com

John Blocke

John Blocke writes at Medium.com.

This article was originally published on FEE.org. Read the original article.