Thursday, July 20, 2017

How I Paid for My Haircut, and Much More, In Bitcoin

How I Paid for My Haircut, and Much More, In Bitcoin

How I Paid for My Haircut, and Much More, In Bitcoin

In the early days of Bitcoin, by which I mean only a few years ago, people would dismiss the new currency this way, “Can I use it to pay my local sandwich shop? If not, it is not a money.”

That’s true as stated but trivial. If you don’t have it, or if you have it and can’t find anyone to take it, it is not a money for you. In that same way, I don’t own any Birr, the currency of Ethiopia, and no one I know would take it if I did. Still, it’s a money somewhere.

In some prisons, mackerel cans serve as money. In others, It’s Ramen noodles. Indeed, anything you acquire not to consume but rather to use in future exchange is technically serving a monetary function (that is, it is used for indirect exchange).

It’s a Process

In that same way, Bitcoin has been a money for some people somewhere since October 5, 2009, the date that the first dollar exchange ratio was posted. That it took so long to get to you and me is not a surprise. Carl Menger wrote that this is the way money emerges in a market, gradually, in ever expanding circles based on access and success in doing what money is supposed to do.
Men have been led, with increasing knowledge of their individual interests, each by his own economic interests, without convention, without legal compulsion, nay, even without any regard to the common interest, to exchange goods destined for exchange (their “wares”) for other goods equally destined for exchange, but more saleable.
In other words, there is not some switch in the sky that transforms a non-money into a money. Discovering what goods are saleable is a matter of discovery. There is no obvious and immediate answer, and the answer is always changing. It’s a process that gradually unfolds, as human ingenuity comes up with solutions to practical problems.

It’s been this way with Bitcoin. It was a curiosity. Then an investment. Then a solution for the technically inclined. Then a thing to push harder for wider acceptance. More and more people got involved, and merchants began to accept it. Then the demand grew and grew. Some have proven that you can live off Bitcoin if you are enterprising enough.

Now, keep in mind that cryptocurrency’s main use is not in fact using it at the local sandwich shop. You can do that with dollars, which is probably why it has taken so long for the physical-world market to become friendly to it. There are rarified places that accept it (I have far less trouble spending this stuff abroad) but most places do not.You can get nearly anything with Bitcoin but you may not be able to use it as payment with everyone from whom you want to buy.

Innovation in Money

I’ve not known entirely what to make of these various objections to Bitcoin I’ve heard for years. Are they tossed out as a problem to be solved or as a suggestive proof that there is no such thing as computer-created money that is not based on an existing approved currency? If the point is to debunk it fundamentally, I’m confident that the incredulity will gradually die off.

If the point is to raise an existing limitation (“wallets are not user friendly” etc.), that only speaks to the early point in this period of history in which we find ourselves. The whole point of innovation is to solve problems, and, as we know from the block-size debate, Bitcoin is far from complete.

Let’s consider one problem in particular: allegedly, you can’t use it for a sandwich. Actually, that problem has been solved.

There are many vendors out there but I chose to experiment with BitPay’s Visa card. It’s relatively new and not in broad circulation. Only 24,000 have been issued in the US and foreign nations.

Still, I have to say that it is wonderful. It can do anything that a regular debit card can do. You can buy groceries. You can get a drink at a bar. You can pay for a haircut. You can buy fast food. You can use it to shop online, buying anything from Amazon or eBay. I’ve used it to do all these things without a hitch.

But why bother with this circuitous method when any old credit card will do? Here’s a story to explain. I was at the UPS store to mail a letter and used it. The clerk became really excited when he saw it. It turns out that he loves mining new coins with strange names in hopes that one of them will be a hit. We struck up a wonderful conversation and we both experienced a sense of camaraderie that otherwise would never have existed.

There’s another factor to it also: the sheer fun of it. My goodness, I’m paying for stuff with a money invented by a handful of code monkeys that only a few people on planet earth even believed was possible a decade ago. That factor – downplay it if you want to – is truly underappreciated.

How It Works

How does this thing work? You sign up and get your card and go to the website to fill it up with Bitcoin. That immediately transfers to your use. Now you can carry around spendable Bitcoin.

Now, astute readers will be asking the question: what happens when the value of Bitcoin changes. Does the purchasing power of the debit card change with it? The answer is no. Your dollar value is locked in the moment you pump crypto into the card. Technically, what happens is that you are transferring Bitcoin to BitPay in exchange for which you have dollars to spend at whatever the prevailing rate is. BitPay accepts the downside risk while the user loses the upside benefit. So, yes, technically, you are not exactly spending Bitcoin when you use it. You are spending dollars.

If you prefer to sell Bitcoin at the time of the spending, there are other options such as the Shift card. If you are clever, you can use one card to protect against a falling price and another card to capture a rising price. 

It’s also true that by using such a third-party intermediary, you are giving up a key feature of Bitcoin, which is its peer-to-peer network that allows instant trading between individuals. But don’t blame Bitcoin for this. Government regulations have made it extremely difficult to move between different monetary ecosystems. None of this would be happening if the US Treasury had permitted a free market in monetary exchange instead of imposing egregious regulations.

The beauty of this service is that it makes navigating between dollars and Bitcoin extremely easy and secure. For all the limitations, that alone makes it all worth it for me. Plus, as I mention, it is fun.

From the very beginning of public awareness of this new technology, there has been this expectation that it should be perfect in every way or else it is not valuable. That’s ridiculous. That didn’t happen with railroads, electricity, flight, or the world wide web. Everything has to go through a process of improvement through user feedback and entrepreneurial innovation.

Bitcoin is already money, just not yet a universal money. But you can feel it every day: the promise is there. It is just a matter of time and effort.

Jeffrey A. Tucker

Jeffrey Tucker is Director of Content for the Foundation for Economic Education. He is also Chief Liberty Officer and founder of, Distinguished Honorary Member of Mises Brazil, 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 Read the original article.

Wednesday, July 19, 2017

Governments Don’t Give People Rights

Governments Don’t Give People Rights

Governments Don't Give People Rights

Today’s Quotation of the Day is from pages 22-23 of Georgetown University law professor Randy Barnett’s must-read 2016 book, Our Republican Constitution:
If one views We the People as a collection of individuals, a completely different constitutional picture emerges [from the one seen today by “Progressives”]. Because those in government are merely a small subset of the people who serve as their servants or agents, the “just powers” of these servants must be limited to the purpose for which they are delegated. That purpose is not to reflect the people’s will or desire – which in practice means the will or desires of the majority – but to secure the pre-existing rights of We the People, each and every one of us.
Each of us has, throughout our lives, many agents. Some are formal (such as lawyers and realtors) while others are informal (such as the friend who agrees to run an errand for you). These people serve us, and we, in turn and in various ways, serve them – for example, we pay them money for their services.

Importantly, the ‘power’ of each of these agents to act for us is confined to the purpose for which we hire that agent. I delegate to my real-estate agent the power to represent me in selling my home; I do not thereby delegate to her the power to sell my car, to decide how my children are to be educated, or what I may eat for lunch.

Under the American constitutional system, elected officials are agents of the citizens of the politically defined regions from which these officials are elected. These political agents are no more the originating sources of their own powers and duties to represent the citizens who are their principals than, say, is your realtor the originating source of her power and duties to represent you, the person who hired her to sell your house.

Rights pre-exist government. Therefore, even if – as most people believe – government is necessary to help to secure individuals’ rights, government does not create that which it itself is created to help to secure. Your real-estate agent might be necessary to sell your home, but this fact does not thereby make her the source of your home’s value or the owner of your home.

And just as no amount of agreement by other homeowners and realtors to the proposition that your home now belongs by right to your neighborhood makes your home belong by right to your neighborhood, no amount of agreement by fellow citizens and political representatives that your property now belongs by right to the collective makes your property belong by right to the collective.

When any such transfer of ownership occurs – wherever there is any such stripping away of rights from the individuals who possess them – what is really there is a brute exercise of raw power regardless of how gaudy is the philosophy that is used to portray this occurrence as something more profound.

Reprinted from Cafe Hayek.

Donald J. Boudreaux

Donald Boudreaux is a senior fellow with the F.A. Hayek Program for Advanced Study in Philosophy, Politics, and Economics at the Mercatus Center at George Mason University, a Mercatus Center Board Member, a professor of economics and former economics-department chair at George Mason University, and a former FEE president.

This article was originally published on Read the original article.

The Isgur Portfolio System (DOS, Macintosh, Atari ST)

The Isgur Portfolio System (DOS, Macintosh, Atari ST) 

MegaCon 2017: Richard Dean Anderson

MegaCon 2017: Richard Dean Anderson

The EU’s Chief Brexit Negotiator Is an Anti-Anglophone

The EU’s Chief Brexit Negotiator Is an Anti-Anglophone

The EU's Chief Brexit Negotiator Is an Anti-Anglophone

When the European Union Commission needed to appoint a negotiator for its talks with the United Kingdom, the task was of essential importance. This person needed to be a distinguished diplomat, a careful communicator in the media, and a connoisseur of the intricacy of the relationship between the British Isles and the continent. The toxic political environment surrounding Brexit deserves an open-minded and calm voice to represent the 27 remaining voices of the European Union, which all have individual interests in remaining faithful trading partners with the UK.

Unfortunately, who we got is French politician Michel Barnier.

When the news broke that Barnier would be appointed by Commission president Jean-Claude Juncker, many Brits were outraged. The political editor of The Sun tweeted:

Barnier's Previous Dealings with the United Kingdom

Michel Barnier embodies the archetype of a Brussels bureaucrat: his entire life has been inside politics, never working in the private sector in his life. In France, he was known for his advocacy for the European Union and further political integration. In 2005, after the French voted down the proposal for an EU constitution in a referendum, former president Jacques Chirac threw him out of the cabinet.

Between 2010 and 2014, Michel Barnier was the EU Commissioner for Internal Market and Services and infamous for his political priorities. After the financial crisis of 2008 hit the continent, Barnier was vocal in his support for a European Banking Authority, a proposal which was staunchly opposed by financial institutions in the City of London, the UK's financial heartland. Even German bankers criticised the implementation in ineffectiveness of the European Banking Authority (EBA), as the disagreements on an EU-level as to what it should actually do made directing it virtually impossible.

Barnier's EBA soon started regulating on its own. In 2013, the agency asked for a cap on the bonuses of managers, as it desired "guidelines on sound remuneration policies". These rules included a limit on awarding variable remuneration to 100% of fixed remuneration, or 200% with shareholder approval, and were opposed by both the government and UK regulators themselves. The British government even challenged the rules in the European Union Court of Justice.

In 2016, Brits were put off by the news that banks will likely raise provisions by 18 percent in order to offset the EBA's new accounting rules, which will apply from 2018 on.

One thing was clear, Michel Barnier would never set a friendly foot in the City of London again.

The Most Unconstructive Negotiators Imaginable

When the UK government under Prime Minister Theresa May appointed Brexit secretary David Davis the man certainly was in for one bumpy ride. Upon arrival in Brussels, the chairman of the Liberal Democrats in the European Parliament Guy Verhofstadt told the newly appointed minister "Welcome to Hell".

The EU wanted to make one thing clear from the start: it was going to make an example out of Britain. After the first negotiating between Davis and EU officials, Barnier said that the union "would make no concessions".

He added passive-aggressively:

"I will do all I can to put emotion to one side and stick to the facts, the figures, and the legal basis, and work with the United Kingdom to find an agreement in that frame of mind."

Far worse is Barnier's tendency to deliberately provoke the British. The EU’s chief Brexit negotiator demanded for the negotiating talks to be held in French, even though there are no official languages in the talks as all documents and speeches are translated regardless. In a similar fashion, EU Commission president Jean-Claude Juncker claimed that he prefers to express in French, as ‘English is slowly losing importance in Europe’.

Trade Relations between EU and UK

It frankly doesn't seem out of character for EU officials to despise the anglo-saxon view on the world. Not only is it rare for the continent to show appreciation for anything outside of the Queen and Harry Potter, the spirit of entrepreneurship and gratitude for the advantages of free-market capitalism seems rather repulsive to many Europeans. In fact, the differences in work ethic are apparent. In Michel Barnier's home country France, challenging the 35-hour working week is almost political taboo. Meanwhile, the UK profits off of the flexibility of less rigid labour regulations.

And yet, no matter how anti-British European Union officials might be, they have to comprehend that worsening trade relations with the United Kingdom will be detrimental to both sides, and especially the European public which the EU pretends to care so deeply about.

In April 2017, EU imports exceeded EU exports by £6.9 billion ($8.8 billion), meaning that the EU is more dependent on the Brits for trade relations than vice-versa. Getting back to WTO-tariffs means harming German car manufacturers, Italian parmesan-producers and French wineries.

The European Union needs to finally embrace free trade across the board, not only for its privileged members. Sneering at the Brits might be fun for boosting your own ego and publicity. It is not for the regular people who depend on trade.

Bill Wirtz

Bill Wirtz studies French Law at the University of Lorraine in Nancy, France.

This article was originally published on Read the original article.

Tuesday, July 18, 2017

Seattle’s $15 Minimum Wage Experiment Does Not Bode Well for the Rest of Us

Seattle’s $15 Minimum Wage Experiment Does Not Bode Well for the Rest of Us

Seattle's $15 Minimum Wage Experiment Does Not Bode Well for the Rest of Us

In an important article in the Seattle Weekly, Daniel Person summarizes the situation in Seattle pretty well in the title of his exposé “The City Knew the Bad Minimum Wage Report Was Coming Out, So It Called Up Berkeley,” here’s a slice:
Two weeks. Two studies on minimum wage. Two very different results. Last week, a report out of the University of California – Berkeley found “Seattle’s minimum wage ordinance has raised wages for low-paid workers, without negatively affecting employment,” in the words of the Mayor’s Office. That report, produced by the Center on Wage and Employment Dynamics at Berkeley, was picked up far and wide as proof that the doomsday scenarios predicted by skeptics of the plan were failing to materialize.

And while another study that came out Monday from researchers at the University of Washington (UW) doesn’t exactly spell doomsday either, it wasn’t exactly rosy. “UW study finds Seattle’s minimum wage is costing jobs,” read the Seattle Times headline Monday morning. The study found that while wages for low-earners rose by 3 percent since the law went into effect, hours for those works dropped by 9 percent. The average worker making less than $19 an hour in Seattle has seen a total loss of $125 a month since the law went into effect.

There’s an old joke that economics is the only field where two people can win the Nobel Prize for saying the exact opposite thing. However, by all appearances, these two takeaways on Seattle’s historic minimum wage law are not a symptom of the vagaries of a social science but an object lesson in how quickly data can get weaponized in political debates like Seattle’s minimum wage fight. In short, the Mayor’s Office knew the unflattering UW report was coming out and reached out to other researchers to kick the tires on what threatened to be a damaging report to a central achievement of Ed Murray’s tenure as mayor.
And here’s the key takeaway of what Person uncovered:
To review, the timeline seems to have gone like this: The UW shares with City Hall an early draft of its study showing the minimum wage law is hurting the workers it was meant to help; the mayor’s office shares the study with researchers known to be sympathetic toward minimum wage laws, asking for feedback; those researchers release a report that’s high on Seattle’s minimum wage law just a week before the negative report comes out.
In other words, if you don’t like an unflattering study from a team of researchers from the local university that accurately exposes some of the negative employment effects of the city of Seattle’s $15 minimum wage, you shop around – out of state in this case — for a more favorable study of that questionable and risky public policy experiment.

And what didn’t the Seattle mayor’s office like about the UW study? Let’s find out by looking at some of the key findings of the 63-page NBER study “Minimum Wage Increases, Wages, and Low-Wage Employment: Evidence from Seattle” by Ekaterina Jardim, Mark C. Long, Robert Plotnick, Emma van Inwegen, Jacob Vigdor and Hilary Wething (all six are professors in the Daniel J. Evans School of Public Policy and Governance at the University of Washington). The selected excerpts below help tell the story that the city of Seattle didn’t want to hear (emphasis added):

This paper evaluates the wage, employment, and hours effects of the first and second phase-in of the Seattle Minimum Wage Ordinance, which raised the minimum wage from $9.47 to $11 per hour in 2015 and to $13 per hour in 2016. Using a variety of methods to analyze employment in all sectors paying below a specified real hourly rate, we conclude that the second wage increase to $13 reduced hours worked in low-wage jobs by around 9 percent, while hourly wages in such jobs increased by around 3 percent. Consequently, total payroll fell for such jobs, implying that the minimum wage ordinance lowered low-wage employees’ earnings by an average of $125 per month in 2016.
Our preferred estimates suggest that the Seattle Minimum Wage Ordinance caused hours worked by low-skilled workers (i.e., those earning under $19 per hour) to fall by 9.4% during the three quarters when the minimum wage was $13 per hour, resulting in a loss of 3.5 million hours worked per calendar quarterAlternative estimates show the number of low-wage jobs declined by 6.8%, which represents a loss of more than 5,000 jobs. These estimates are robust to cutoffs other than $19. A 3.1% increase in wages in jobs that paid less than $19 coupled with a 9.4% loss in hours yields a labor demand elasticity of roughly -3.0, and this large elasticity estimate is robust to other cutoffs.

These results suggest a fundamental rethinking of the nature of low-wage work. Prior elasticity estimates in the range from zero to -0.2 suggest there are few suitable substitutes for low-wage employees, that firms faced with labor cost increases have little option but to raise their wage bill. Seattle data show that payroll expenses on workers earning under $19 per hour either rose minimally or fell as the minimum wage increased from $9.47 to $13 in just over nine months. An elasticity of -3.0 suggests that low-wage labor is a more substitutable, expendable factor of production. The work of least-paid workers might be performed more efficiently by more skilled and experienced workers commanding a substantially higher wage. This work could, in some circumstances, be automated. In other circumstances, employers may conclude that the work of least-paid workers need not be done at all.

Importantly, the lost income associated with the hours reductions exceeds the gain associated with the net wage increase of 3.1%. Using data in Table 3, we compute that the average low-wage employee was paid $1,897 per month. The reduction in hours would cost the average employee $179 per month, while the wage increase would recoup only $54 of this loss, leaving a net loss of $125 per month (6.6%), which is sizable for a low-wage worker.
Here’s one thing the UW study didn’t consider yet, because it’s too early: The additional $2 an hour increase in the city’s minimum wage that just took effect on January 1 of this year from $13 to $15 an hour for large employers. Once local employers feel the full effect of the 58% increase in labor costs for minimum wage workers from $9.47 to $15 an hour  in less than two years, it’s likely the negative employment effects uncovered by the UW team for 2016 will continue this year and into the future, and could likely increase.

Here’s some additional commentary on the developing Seattle minimum wage story:

1. The Seattle Times Editorial Board warns that “Seattle should open its eyes to minimum-wage research.”
Murray’s office said it had concerns about the “methodology” of the UW study. But the strategy is clear and galling: celebrate the research that fits your political agenda, and tear down the research that doesn’t.

The minimum-wage experiment sweeping the country needs good, thorough, independent research. Seattle led this movement, passing the highest local minimum wage in the country. Does City Hall really want to know the consequences, or does it want to put blinders on and pat itself on the back?
2. Forbes contributor Tim Worstall writes today that “As I Predicted, Seattle’s Minimum Wage Rise Is Reducing Employment.”

3. Max  writes in today’s Washington Post that “A ‘very credible’ new study on Seattle’s $15 minimum wage has bad news for liberals.

4. Ben Casselman and Kathryn Casteel express their concerns in FiveThirtyEight that “Seattle’s Minimum Wage Hike May Have Gone Too Far.” Here’s a slice:
In January 2016, Seattle’s minimum wage jumped from $11 an hour to $13 for large employers, the second big increase in less than a year. New research released Monday by a team of economists at the University of Washington suggests the wage hike may have come at a significant cost: The increase led to steep declines in employment for low-wage workers, and a drop in hours for those who kept their jobs. Crucially, the negative impact of lost jobs and hours more than offset the benefits of higher wages — on average, low-wage workers earned $125 per month less because of the higher wage, a small but significant decline.

“The goal of this policy was to deliver higher incomes to people who were struggling to make ends meet in the city,” said Jacob Vigdor, a University of Washington economist who was one of the study’s authors. “You’ve got to watch out because at some point you run the risk of harming the people you set out to help.”

“This is a ‘canary in the coal mine’ moment,” said David Autor, an MIT economist who wasn’t involved in the Seattle research. Autor noted that high-cost cities such as Seattle are the places that should be in the best position to absorb the impact of a high minimum wage. So if the policy is hurting workers there — and Autor stressed that the Washington report is just one study — that could signal trouble as the recent wage hikes take effect in lower-cost parts of the country.

“Nobody in their right mind would say that raising the minimum wage to $25 an hour would have no effect on employment,” Autor said. “The question is where is the point where it becomes relevant. And apparently in Seattle, it’s around $13.”
Bottom Line:

If booming, high cost-of-living Seattle had a hard time absorbing a $13 an hour minimum wage last year without experiencing negative employment effects (reduced hours, jobs and earnings for low-wage workers), it will have an even more difficult time dealing with the additional $2 an hour increase that took place on January 1 without even greater negative consequences. And if Seattle’s risky experiment with a $15 an hour minimum wage represents the “canary in the coal mine” for cities around the country that want to increase their minimum wages to $15 an hour, those cities may want to hold off for a few years to get a final count of the “dead canaries” in Seattle before proceeding.

Reprinted from AEI.

Mark J. Perry

Mark J. Perry is a scholar at the American Enterprise Institute and a professor of economics and finance at the University of Michigan’s Flint campus.

This article was originally published on Read the original article.

Australian PM Calls for End-to-End Encryption Ban, Says the Laws of Mathematics Don’t Apply Down Under

Australian PM Calls for End-to-End Encryption Ban, Says the Laws of Mathematics Don’t Apply Down Under

"The laws of mathematics are very commendable but the only law that applies in Australia is the law of Australia", said Australian Prime Minister Malcolm Turnbull today. He has been rightly mocked for this nonsense claim, that foreshadows moves to require online messaging providers to provide law enforcement with back door access to encrypted messages. He explained that "We need to ensure that the internet is not used as a dark place for bad people to hide their criminal activities from the law." It bears repeating that Australia is part of the secretive spying and information sharing Five Eyes alliance.

But despite the well-deserved mockery that ensued, we shouldn't make too much light of the real risk that this poses to Internet freedom in Australia. It's true enough, for now, that a ban on end-to-end encrypted messaging in Australia would have absolutely no effect on "bad people", who would simply avoid using major platforms with weaker forms of encryption, in favor of other apps that use strong end-to-end encryption based on industry standard mathematical algorithms. It would hurt ordinary citizens who rely on encryption to make sure that their conversations are secure and private from prying eyes.

However, as similar demands are made elsewhere around the world, more and more app developers might fall under national laws that require them to compromise their encryption standards. Users of those apps, who may have a network of contacts who use the same app, might hesitate to shift to another app that those contacts don't use, even if it would be more secure. They might also worry that using end-to-end encryption would be breaking the law (a concern that "bad people" tend to be far less troubled by). This will put those users at risk.

If enough countries go down the same misguided path, that sees Australia following in the steps of Russia and the United Kingdom, the future could be a new international agreement banning strong encryption. Indeed, the Prime Minister's statement is explicit that this is exactly what he would like to see. It may seem like an unlikely prospect for now, with strong statements at the United Nations level in support of end-to-end encryption, but we truly can't know what the future will bring. What seems like a global accord today might very well start to crumble as more and more countries defect from it.

We can't rely on politicians to protect our privacy, but thankfully we can rely on math ("maths", as Australians say). That's what makes access to strong encryption so important, and Australia's move today so worrying. Law enforcement should have the tools they need to investigate crimes, but that cannot extend to a ban on the use of mathematical algorithms in software. Mr Turnbull has to understand that we either have an internet that "bad people" can use, or we don't have an Internet. It's actually as simple as that.

Source: Australian PM Calls for End-to-End Encryption Ban, Says the Laws of Mathematics Don't Apply Down Under | Electronic Frontier Foundation

Monday, July 17, 2017

When Governments Tried to Ban Coffee

When Governments Tried to Ban Coffee

When Governments Tried to Ban Coffee

Calestous Juma’s excellent and entertaining Innovation and Its Enemies is an interesting tour through the histories of coffee, printing, margarine, farm machinery, transgenic crops, and other innovations that people have fought at various times. It reminded me that we shouldn’t take liberty and the rule of law for granted.

The Great Coffee Debate

In the chapter on coffee, Juma discusses how Middle Eastern and European societies resisted the beverage and, in particular, worked to shut down coffeehouses. Islamic jurists debated whether the kick from coffee is the same as intoxication and therefore something to be prohibited.

Appealing to “the principle of original permissibility — al-ibaha, al-asliya — under which products were considered acceptable until expressly outlawed,” the fifteenth-century jurist Muhamad al-Dhabani issued several fatwas in support of keeping coffee legal.

This wasn’t the last word on coffee, which was banned and permitted and banned and permitted and banned and permitted in various places over time. Some rulers were skeptical of coffee because it was brewed and consumed in public coffeehouses — places where people could indulge in vices like gambling and tobacco use or perhaps exchange unorthodox ideas that were a threat to their power. It seems absurd in retrospect, but political control of all things coffee is no laughing matter.

The bans extended to Europe, where coffee threatened beverages like tea, wine, and beer. Predictably, and all in the name of public safety (of course!), European governments with the counsel of experts like brewers, vintners, and the British East India Tea Company regulated coffee importation and consumption. The list of affected interest groups is long, as is the list of meddlesome governments.

Charles II of England would issue A Proclamation for the Suppression of Coffee Houses in 1675. Sweden prohibited coffee imports on five separate occasions between 1756 and 1817. In the late seventeenth century, France required that all coffee be imported through Marseilles so that it could be more easily monopolized and taxed.

A Society of Laws, Not Men

This brings a few things into high relief. First, there have been few things as constant as government interference with liberty, and coffee shows how governments are keen to interfere when power and treasure are at stake. Second, we can’t take the rule of law for granted.

A nation of laws and not of men is not one in which specific products are regulated in specific ways but one in which abstract and universally applicable principles govern exchange.

Finally, we are rich today because we live in a society that values innovation — a society in which opposition to innovation, while strenuous at times, was nonetheless overcome. The example of coffee — coffee, of all things, an innocuous daily pleasure — makes me wonder: which innovations are we fretting about today that will cause our children to look back in puzzled wonder?

Reprinted from Forbes.

Art Carden

Art Carden is an Associate Professor of Economics at Samford University’s Brock School of Business. In addition, he is a Senior Research Fellow with the Institute for Faith, Work, and Economics, a Senior Fellow with the Beacon Center of Tennessee, and a Research Fellow with the Independent Institute. He is a member of the FEE Faculty Network. Visit his website.

This article was originally published on Read the original article.

Top 20 Video Games of Sept./Oct. 2007

Top 20 Video Games of Sept./Oct. 2007

From Bitcoin to Ether: Today’s Blockchain Basics

From Bitcoin to Ether: Today’s Blockchain Basics

From Bitcoin to Ether: Today's Blockchain Basics

Bitcoin and its underlying technology blockchain are game-changing technologies that are reshaping and revolutionizing the world economy. (1)

Often hidden behind the headlines of Bitcoin’s meteoric rise in market value and blockchain’s technological promise is a basic understanding of what these two technologies are and where they come from.

This brief article examines the digital currencies Bitcoin and Ethereum and introduces Blockchain, the technology that facilitates the digital transfer of value and much more.

Bitcoin: The Beginning?

“I think the internet is going to be one of the major forces for reducing the role of government. The one thing that’s missing, but that will soon be developed, is a reliable e-cash.” — Milton Friedman, ‘99’

In 2008, a person or group of people acting under the pseudonym Satoshi Nakamoto published a white paper titled Bitcoin: A Peer-to-Peer Electronic Cash System. The paper introduced a solution to two puzzling issues.

The first was our inability to transfer money digitally between willing participants without the need of a trusted third party. The second was that a function was needed to transfer money digitally with the ability to establish the order of transactions to avoid double spending.

Nakamoto proposed two solutions:

  1. A peer-to-peer currency capable of maintaining its value without a central authority.
  2. A decentralized digital ledger capable of establishing the order of transactions.

The ledger would operate much the same as any other, except that the recorded transactions would be distributed to computers around the world.

In 2009 the ability to transfer value digitally was born in what is widely known as Bitcoin. However, it is the second capacity, now known as blockchain that is proving to be of far greater significance.

Although blockchain has scarcely found its way into mainstream thinking and discourse, it is, as mentioned, revolutionizing the world economy.

Bitcoin and Ethereum

Since inception, Bitcoin has captured the attention of an ever-growing, and yet relatively small, number of investors, enthusiasts, companies, and others around the globe.

As it has grown, it has served the dual function of acting as proof of concept for a “peer-to-peer version of electronic cash” and simultaneously giving rise to thousands of other digital currencies.

The most well known of these currencies by market value are Bitcoin and Ethereum. Bitcoin’s current market value is $37 Billion USD, while Ethereum’s is $16 Billion USD.

Any attempt however to compare the two cannot be accurately described as an apples-to-apples comparison. More about this later. First, let's look at what Bitcoin actually is.


Bitcoin is a decentralized peer to peer electronic version of cash that maintains its value without backing or inherent value. It allows the transference of money digitally without going through a trusted third party such as a bank or credit card. (3)

The first standardized value of Bitcoin was set on October 5th, 2009 at $.0008, calculated using $1USD equals 1309.03 Bitcoin (BTC). It presently trades at more than $2300 USD. This represents 2.9 million x its initial value. (4)

According to the Washington Post, if you had purchased $100 in Bitcoin seven years ago, those coins would be worth more than $73 million USD today. To put this into perspective, if you had invested $100 into when it went public in 1997, your investment would be worth just under $64,000. It is worth noting, however, that digital currencies are significantly more speculative than stocks like Amazon. (5(6)

As the price of Bitcoin goes higher, one question that naturally comes to mind is, Where do Bitcoins come from?


Where do Bitcoins come from if by definition they are not backed by any central authority? Bitcoins are actually “mined” into existence by Bitcoin miners.

The easiest way to think about this is to consider gold miners. Gold miners work to mine gold from the earth. As it is mined, it then enters the economy. Conceptually, Bitcoin is the same.

New Bitcoins are generated through a competitive process called mining. Miners are given Bitcoins as rewards for their services processing transactions and securing the network using highly specialized hardware. (7)

Investopedia offers a more in-depth explanation of the process of mining.

How Are Bitcoins Used?

After Bitcoins are mined into existence, how are they used and what are they used for?

Bitcoins are traded on exchanges like stocks, bonds, and currencies, and are also used as currency in the exchange of goods and services.

The number of vendors and merchants accepting Bitcoins for the exchange of goods and services is expected to grow from the 1000’s to the 100,000's now that Japan is accepting Bitcoins as currency.

Japan is the first nation to officially accept Bitcoin for payments. More than 300,000 merchants will begin accepting Bitcoin payments in that country alone. (8)

Here is a list of 100 major US-based retailers currently accepting Bitcoin.

Bitcoin, however, is not the only digital currency growing in value and capturing global attention. Ethereum shares many of these characteristics with Bitcoin while also possessing several unique qualities.


“I would say Ethereum boasts features and opportunities to things Bitcoin doesn’t. It’s like saying a telephone can beat an orange.” — Vitalik Buterin, 2014 (9)

While Bitcoin was first to market and has drawn most of the media attention, many believe that the Ethereum blockchain, and its currency Ether, is a much more powerful tool.

In 2013, then-19-year old Vitalik Buterin proposed Ethereum in a white paper titled “Ethereum White Paper: A Next Generation Smart Contract and Decentralized Application Platform.”

The development of the protocol was crowd-sold in 2014, raising over $150 million USD. The system itself was finally launched on July 30, 2015.

Ethereum is an open source blockchain platform and its fundamental contention is this, that blockchains can be used for more than just the transfer of money.

Additional use cases include currencies, financial instruments, property, domain names, along with more sophisticated cases like exchanges, derivatives, peer to peer gambling, and identity and reputation systems. (10)

Smart Contracts

“Smart contracts” are one of Ethereum’s most important contributions to the rapidly expanding universe of digital currencies and blockchains.

They can be thought of as a digital means of facilitating the exchange of anything of value in a way that is transparent and removes middlemen such as lawyers, notaries, and others. Smart contracts perform this function by carrying out the terms of the digital contract itself. (11)

Another of Ethereum’s unique characteristics is its digital currency Ether.


Ethereum, like Bitcoin is a digital currency. However, unlike Bitcoin, it is also a blockchain platform. Ethereum’s currency, Ether is used primarily to access the Ethereum network.

The Ethereum Foundation defines Ether as a fuel or a form of payment that is used by clients of the Ethereum platform to pay for the machines that are executing the requested operations. (12)

Unlike Bitcoin, Ethereum has two digital currencies trading in the market. The first is Ethereum which trades under the symbol — ETH. While the other, known as Ether Classic, trades under the symbol ETC.

In June 2016 a large scandal rocked the Ethereum community. A still-unknown hacker attempted to steal more than $50 million dollars due to a software bug. The end result was the creation of a second Ether trading currency.

If it is of greater interest here are two articles that explain the hack in more detail Article 1 & Article 2. For a more technical explanation read this article by Maria Paola Gelvez Gomez, former head of Coinbase in Latin America.

Where Does Ether Come From and What Is It Used For?

Similar to Bitcoin, Ethereum is also mined. Groups of “miners” work to validate and store the transactions taking place on the Ethereum platform. The Huffington Post presented a clear and coherent article on Ethereum mining.

While Bitcoin and other digital currencies can be used to purchase goods and services, as mentioned, Ether is primarily used for transactions associated with accessing the Ethereum network and trading.

What is most important to remember about Ethereum is that it is not only a digital currency, it is also blockchain based platform with smart contracts, and it allows for the building of apps, of which digital currencies are but one expression.


“The blockchain is an incorruptible digital ledger of economic transactions that can be programmed to record not just financial transactions but virtually everything of value.” Don and Alex Tapscott (13)

What is a Blockchain?

Nakamoto Satoshi’s initial description of the framework needed to facilitate the movement of online payments between two willing participants without an intermediary has become known as blockchain.

In its most simple form blockchain is a decentralized ledger. The implications of blockchain however, are far greater than the simplicity its name implies.

Blockchain facilitates the digital transference of value itself. Sally Rivers, Financial Times technology writer describes the relationship between blockchain and digital currencies like Bitcoin: “[Blockchain] is to Bitcoin, what the internet is to email.”

In the same way the internet facilitates the digital transfer of information, blockchain facilitates the digital transfer of value.

Industries in which blockchain technology is being rapidly explored and deployed include the capital markets, financial services, payments and remittances, derivatives, identity and reputation management, governance, sharing economy, supply chain, auditing, stock trading, internet of things, insurance, healthcare, and others.

A Few Takeaways

Digital currencies and Blockchain technology are truly reshaping the world economy. We may, however, be too close to their inception to accurately assess their importance or ultimate impact.

A few key thoughts from this post:

  • Bitcoin was founded in 2008 and launched in 2009. Bringing with it digital currencies and the underlying technology, blockchain.
  • There are thousands of new digital currencies of which Bitcoin ($30bil) and Ethereum ($16bil) are the largest in terms of market value.
  • These currencies are created through a process of digital mining akin to mining for gold.
  • Many of these currencies are traded on exchanges like stocks, and used for the purchase of good and services.
  • Ethereum recognized blockchains can be used for more than digital currencies, and introduced smart contracts.
  • Blockchain is to Bitcoin, as the internet is to email.

One of the best and most insightful presentations on Blockchain is a 30-minute video created by Farzam Ehsani, Blockchain Lead at the Rand Merchant Bank in South Africa. I highly recommend it to everyone.

Referring to the unfoldment of this new technological development, in a polite and slightly prophetic tone Mr. Ehsani shared in his closing statement, “We are on that journey, and there’s no turning back.”

It is indeed true. We are on a new digital journey, and no, there is no turning back!

If you have any comments or suggestions about interesting topics related to blockchain technology, reach out to me on Twitter!

Reprinted from Tradecraft.

Billy Silva

Billy Silva works in business and development and sales at Tradecraft.

This article was originally published on Read the original article.

Friday, July 14, 2017

Bitcoin Showdown

Bitcoin Showdown

Bitcoin Showdown

Investment guru Bill Miller and his son, Bill Miller IV, are big bitcoin bulls, believing the digital currency whose price has soared this year is bound for disruptor status.

"It is a true disruptor and true innovation in money," the elder Miller told CNBC. "We haven't seen that in thousands of years."

Everything is affected by this technology, most notably in the quality of the money we use.

F.A. Hayek’s dream of competing currencies is here. The list of crypto-currencies goes on and on, with the big news being what Bloomberg calls Bitcoin’s Civil War.

“The notoriously volatile cryptocurrency, whose 150 percent surge this year has captivated everyone from Wall Street bankers to Chinese grandmothers, could be headed for one of its most turbulent stretches yet,” write Lulu Yilan Chen and Yuji Nakamura.  

Opposing camps have been dickering for a couple years and “are poised to adopt two competing software updates at the end of the month” raising the possibility of bitcoin splitting in two, “an unprecedented event that would send shockwaves through the $41 billion market.”

Who Decides?

There is no Janet Yellen in the crypto-world to arbitrate this sort of monetary brouhaha. Decentralization is the silky petals of the crypto flower, but this battle between the miners and what is known as Core, a group of developers is thorny and no one knows how it will come out.   

Modern bitcoin miners have acres of warehouse space loaded with computers creating coins. Miners simply want the block size limit increased. The developers “insist that to ease blockchain’s traffic jam, some of its data must be managed outside the main network. They claim that not only would it reduce congestion, but also allow other projects including smart contracts to be built on top of bitcoin.”

The limited block size protects the integrity of the system, but has decreased its functionality and ability to compete as a payment processor.

Chen and Nakamura write,
Behind the conflict is an ideological split about bitcoin’s rightful identity. The community has bitterly argued whether the cryptocurrency should evolve to appeal to mainstream corporations and become more attractive to traditional capital, or fortify its position as a libertarian beacon; whether it should act more as an asset like gold, or as a payment system.
This split in the bitcoin world will test Hayek’s theory,
In this condition the value of the currency issued by one bank would not necessarily be affected by the supplies of other currencies by different institutions (private or governmental). And it should be in the power of each issuer of a distinct currency to regulate its quantity so as to make it most acceptable to the public-and competition would force him to do so. Indeed, he would know that the penalty for failing to fulfil the expectations raised would be the prompt loss of the business. Successful entry into it would evidently be a very profitable venture, and success would depend on establishing the credibility and trust that the bank was able and determined to carry out its declared intentions. It would seem that in this situation sheer desire for gain would produce a better money than government has ever produced.
Hayek continued,
The competition between the issuing banks would be made very acute by the close scrutiny of their conduct by the press and at the currency exchange. For a decision so important for business as which currency to use in contracts and accounts, all possible information would be supplied daily in the financial press, and have to be provided by the issuing banks themselves for the information of the public. Indeed, a thousand hounds would be after the unfortunate banker who failed in the prompt responses required to ensure the safeguarding of the value of the currency he issues.
The bitcoin spat has led to an increase in the price of Ethereum, “a newer cryptocurrency whose popularity has soared thanks to its ability to run smart contracts and its more corporate-friendly approach.”

Bloomberg provides a calendar of the coming showdown.
  • By July 21: SegWit2x software is released and supporters begin using it.
  • July 21 to July 31: The community monitors how many miners deploy SegWit2x:
    • If more than 80 percent deploy it consistently, that should signal community-wide adoption of SegWit and the avoidance of a split, at least for now.
    • But if a majority do not deploy, expect anxiety within the community to grow as the focus shifts to the Aug. 1 deadline.
  • Aug. 1: UASF is deployed by its supporters, who begin checking if bitcoin transactions are compliant with SegWit.
    • If a majority of miners still do not deploy SegWit2x or otherwise accept SegWit, and if UASF supporters do not back down, then two versions of bitcoin’s blockchain could come into existence: a UASF-backed one where only SegWit transactions are recognized, and another where all trades -- SegWit and non-SegWit -- are recognized.
    • If a split occurs, bitcoin will likely begin existing on both blockchains in parallel, resulting in two versions of the cryptocurrency. Expect traders to quickly re-price the value of both, likely leading to massive volatility.
Does all of this sound scary to you? Even scarier because no one is in charge?

Here is the greatest of all ironies: it should calm you to realize that no one is charge. That makes a peaceful resolution much more likely. The monetary system in which there is only one agency in charge has for a century led to wars, depressions, revolutions, and devastating economic collapses.

Maybe it is time to try another way. And as alarming as all this sounds, I prefer to boardrooms of inflated egos deciding based on unproven knowledge what they think it is best for you and me.

Douglas French

Douglas French is an Associated Scholar at the Johnson Center at Troy University and adjunct professor at Georgia Military College. He is the author of three books: Early Speculative Bubbles and Increases in the Supply of Money, Walk Away, and The Failure of Common Knowledge.

This article was originally published on Read the original article.

Thursday, July 13, 2017

Labor Unions Are Now Filing Grievances Against Goats

Labor Unions Are Now Filing Grievances Against Goats

Labor Unions Are Now Filing Grievances Against Goats

A major union is rallying its supporters to battle the latest job-stealing enemy: goats.

The American Federation of State, County, and Municipal Employees (AFSCME) and the University of Michigan have had a well-established working relationship with each other for years. But this is largely because the labor union holds a contract with the school, barring it from hiring non-AFSCME members for various positions. Landscaping is among the many career fields supported by the union and is actually at the center of this latest controversy.

While the university has traditionally employed AFSCME landscapers to tend to the school’s outdoor grass-trimming needs during the summer, the school has —albeit on accident— gone a different route this season and union members are anything but pleased.

Blame It on the Livestock

Tasked with clearing poisonous brush and overgrown vegetation that is both extremely difficult for humans to remove and all the more plentiful in the summer months, the university decided to utilize goats to get the job done. Renting a team of 20 goats from local residents, the livestock were expected to complete the 15-acre clearing job before students returned to campus in the fall.

But the goats exceeded all expectations and instead of completing the job by the end of the summer, they fulfilled their task in a matter of weeks. Since the goats had been rented for the season and were still in the care of the university, they were allowed to graze on campus property after they had finished clearing the overgrowth. While this was not the campus’ original intent, this grazing allowed the goats to feed themselves while the university received a cost-effective lawn mowing service on campus. But not all parties saw this cheap labor as a win/win for the campus community.

As animals, the goats themselves were not privy to the terms of the AFSCME’s contract with the school and made the grave error of eating grass that existed outside of the designated 15-acre clearing area. Unfortunately, trimming grass on campus property is a job-protected in the labor union’s contract with the university, making these goats “scabs” in the eyes of the AFSCME.

In a recent grievance filed against the university, the union asserts that “goat crews” on campus have jeopardized the livelihood of its members, specifically its landscapers who are currently out of work. The union claims that these animals have effectively stolen employment opportunities from its members since the goats have essentially offered the same service but at a much lower cost. As a result, the AFSCME believes that the school is in violation of its collective bargaining contract with the union and has sought legal action.

The union’s president, Dennis Moore, commented on the matter saying, "AFSCME takes protecting the jobs of its members very seriously and we have an agreed-upon collective bargaining agreement with Western Michigan.” He continued, "We expect the contract to be followed, and in circumstances where we feel it's needed, we file a grievance."

The university’s spokesperson, Cheryl Roland, responded to this by explaining that, "For the second summer in a row, we've brought in a goat crew to clear undergrowth in a woodlot, much of it poison ivy and other vegetation that is a problem for humans to remove. Not wanting to use chemicals, either, we chose the goat solution to stay environmentally friendly.” Roland also added, "The area is rife with poison ivy and other invasive species, and our analysis showed the goats to be a sustainable and cost-effective way of removing them."

But as ridiculous as this entire debacle is, and it is surely ridiculous, these claims are anything but new. Competition is the enemy of coercive labor unions, who have always depended on the long arm of the state to prop up their monopoly over certain sectors. This is as true today as it was in the 19th century when protectionism in France was becoming all the more common.

The Candle Makers

In Frederic Bastiat’s brilliant satirical essay, “Candlestick Makers’ Petition," he uses hyperbole to highlight the absurdity of the claims espoused by the AFSCME, well over a century before Michigan’s “goatgate” even began.

Written in 1845 as an open letter to French Parliament, Bastiat penned the essay on behalf of the “Manufacturers of Candles, Tapers, Lanterns, sticks, Street Lamps, Snuffers, and Extinguishers, and from Producers of Tallow, Oil, Resin, Alcohol, and Generally of Everything Connected with Lighting.” The grievances contained in his essay were aimed at the enemy of all those in the “light business”: the sun.

“We are suffering from the ruinous competition of a rival who apparently works under conditions so far superior to our own for the production of light that he is flooding the domestic market with it at an incredibly low price,” Bastiat writes. He then calls upon Parliament to remedy this unfair competition by asking for the following:
“We ask you to be so good as to pass a law requiring the closing of all windows, dormers, skylights, inside and outside shutters, curtains, casements, bull's-eyes, deadlights, and blinds — in short, all openings, holes, chinks, and fissures through which the light of the sun is wont to enter houses, to the detriment of the fair industries with which, we are proud to say, we have endowed the country, a country that cannot, without betraying ingratitude, abandon us today to so unequal a combat.”
In a not-so-subtle jab aimed at members of French Parliament who often pretended to support consumers by instituting monopolies for their “own well-being” Bastiat says:
“You no longer have the right to invoke the interests of the consumer. You have sacrificed him whenever you have found his interests opposed to those of the producer. You have done so in order to encourage industry and to increase employment. For the same reason, you ought to do so this time to
Bastiat’s “Candlemaker’s Petition” was a satirical exaggeration to make a point: imagining producers asking the government for protection against competition offered by a part of nature. Yet today, we have a union earnestly doing exactly that in real life. 21st-century reality has become more absurd than 19th-century satire.

Brittany Hunter

Brittany Hunter is an associate editor at FEE. Brittany studied political science at Utah Valley University with a minor in Constitutional studies.

This article was originally published on Read the original article.

Compute! (November 1981)

Compute! (November 1981)

Wednesday, July 12, 2017

Government’s $15 Minimum Wage Advocates Aren’t Paying Their Interns

Government’s $15 Minimum Wage Advocates Aren’t Paying Their Interns

Government's $15 Minimum Wage Advocates Aren't Paying Their Interns

Almost all of the lawmakers who co-sponsored a bill to raise the federal minimum wage to $15 an hour also hired unpaid interns to supplement their staffs, a survey shows.

report from the Employment Policies Institute reveals that 174 of the bill’s 184 co-sponsors, or 95 percent, hire interns who are paid nothing.

“It’s hypocritical to rally for a $15 minimum wage when these lawmakers don’t pay their own entry-level employees a cent,” said Michael Saltsman, managing director of the Employment Policies Institute.

Last month, the Congressional Progressive Caucus introduced the legislation to more than double the minimum wage, to counter what the lawmakers see as wage inequality amid a higher standard of living.

The Institute said it called the offices of House and Senate members and also checked congressional websites June 6 to 8 to determine intern compensation.

The study counted members of Congress who advertised a limited number of stipend positions as having paid interns, even if they also use unpaid interns. So the 95 percent figure is conservative.

Sen. Bernie Sanders, I-VT, a leading voice in the calls for a $15 minimum wage, is the only senator to offer an hourly wage to interns, the study found. However, Sanders’ office offers $12 an hour while he proposes $15 in the private sector.

Progressive lawmakers will argue that paying interns more will limit the number of available opportunities, the Employment Policies Institute notes, yet don’t recognize this same concern in the private sector.

“It seems that Washington, D.C., is the only place where hypocrisy is a virtue,” David Kreutzer, a senior research fellow at the Heritage Foundation’s Institute for Economic Freedom and Opportunity, said in an email to the Daily Signal, adding:
As employers, members of Congress fully understand that paying higher wages means they will hire fewer workers. Nevertheless, these same members support harmful labor legislation with rhetoric that runs 180 degrees against the truth proved by their own experience.
What would this hypocritical minimum wage do?

Studies over the years have found that increasing the minimum wage has an adverse effect on employment, particularly for low-skilled workers who are supposed to be helped the most, according to the Federal Reserve Bank of San Francisco.

One survey concluded that two-thirds of the newer studies on the minimum wage, and 85 percent of the most convincing studies, found consistent evidence that increasing the minimum wage leads to job loss for low-skilled workers.

David Neumark, an economist and professor at the University of California at Irvine, and William Wascher, a deputy director at the Federal Reserve, published the study in 2007.

Research has shown that a raise in the minimum wage decreases employment opportunity for two reasons, according to the Federal Reserve Bank of San Francisco.

First, employers tend to invest in other equipment or capital when low-skilled labor becomes more expensive. Second, as wages increase, employers are forced to charge their customers more, which leads to less demand.

Studies have also shown that when the cost of low-skilled labor increases, employers are more likely to hire higher-skilled labor and fewer low-skilled workers.

Perhaps these politicians are providing us with a picture of what will happen when their policy is fully put in action.

Reprinted from the Daily Signal.

Christine Roe
Christine Roe is a member of the Young Leaders Program at The Heritage Foundation.

This article was originally published on Read the original article.

Tuesday, July 11, 2017

Necromancer (Atari XEGS)

Necromancer (Atari XEGS)

Do Schools Really Need More Money?

Do Schools Really Need More Money?

Do Schools Really Need More Money?

A common chorus of if/then statements dominates most contemporary discussions of education reform: If schools had more money, then they would do better at educating kids. If teachers were paid more money, then they would do better at educating kids. If there were more taxpayer support for traditional public schools, then we would have better education outcomes.

But is more money really the answer? Or is the problem with the structure of forced schooling itself?

School Spending

An article last week in The Atlantic echoes the refrain that more dollars equal better education. The article highlights recent remarks by Harvard University professor and filmmaker Henry Louis Gates Jr., who states that more money for poor school districts and more money for teachers in those school districts will lead to better education outcomes, particularly for disadvantaged youth.

Gates says: “We have to have a massive revolution in public education in the United States.” He suggests: “Bus the dollars from the rich school districts to the poor districts. We need to allocate the same amount of money per student per school.”

But does more money for poorer schools actually work?

A U.S. Department of Education (DOE) report issued two days before President Obama left office raises question marks about the correlation between money and education outcomes. The report highlights the results of the School Improvement Grants, a program in place since President George W. Bush’s administration but that President Obama resuscitated and expanded in an effort to help the country’s underperforming schools.

According to The Washington Post, this block grant program was “the largest federal investment ever targeted to failing schools,” sending $7 billion of taxpayer money into the program between 2010 and 2015.

The DOE report found that despite this infusion of federal dollars into the nation’s worst schools, there was no difference in test scores, graduation rates, or college enrollment between the schools that received the grants and those that did not.

The failure of the heavily funded School Improvement Grant experiment to lead to meaningful education improvement for under-performing schools mirrors broader national data showing no link between school spending and student achievement.

More Money, Same Problems

A comprehensive 2014 report by the CATO Institute reviewed 40 years of data on per pupil student expenditure and academic outcomes. It found that while spending has skyrocketed, education outcomes remain poor:

I agree with Professor Gates that we need a “massive revolution in public education in the United States”; but I disagree that allocating more money for forced schooling is the answer. Empowering parents and expanding education choices for all young people could be just the education revolution we need.

Reprinted from Intellectual Takeout.

Kerry McDonald

Kerry McDonald has a B.A. in Economics from Bowdoin and an M.Ed. in education policy from Harvard. She lives in Cambridge, Mass. with her husband and four never-been-schooled children. Follow her writing at Whole Family Learning.

This article was originally published on Read the original article.