Facebook’s Libra Isn’t a “Cryptocurrency”

In mid-June, Facebook — in cahoots with 28 partners in the financial and tech sectors — announced plans to introduce Libra, a blockchain-based virtual currency.

The world’s governments and central banks reacted quickly with calls for investigation and regulation.  Their concerns are quite understandable, but unfortunately already addressed in Libra’s planned structure.

The problem for governments and central banks:

A new currency with no built-in respect for political borders, and with a preexisting global user base of 2.4 billion Facebook users in nearly every country on Earth, could seriously disrupt the control those institutions exercise over our finances and our lives.

The accommodation Facebook is already making to those concerns:

Libra is envisaged as a “stablecoin,” backed by the currencies and debt instruments of those governments and central banks themselves and administered through a “permissioned” blockchain ledger by equally centralized institutions (Facebook itself, Visa, Mastercard, et al.).

To put it a different way, Libra will not be a true cryptocurrency like Bitcoin or Ether. Neither its creation nor its transactions will be decentralized and distributed, let alone easily made anonymous. A “blockchain” is just a particular kind of ledger for keeping track of transactions. It does not, in and of itself, a cryptocurrency make.

In simple terms, Libra is just a new brand for old products: Digital gift cards and pre-paid debit cards.

The only real difference between Libra and  existing Visa or Mastercard products is that Libra’s value will fluctuate with the “basket” of currencies and bonds it’s backed by, instead of being denominated in one particular (also fluctuating — you experience the fluctuations as changes in the prices of goods) currency like the dollar or the euro.

When it comes to the goal envisaged by cryptocurrency’s creator, the pseudonymous Satoshi Nakamoto — to free money from control and manipulation by  governments and central banks — Libra is a dead end. Instead of being manipulated by one government or central bank, Libra will be manipulated by all of them.

Cryptocurrency is, to get biblical, new wine in old wine skins — it bursts those skins, by design. Libra isn’t new wine. It isn’t even a new wine skin. It’s a blend of the same old wines, in the same old skins, with a fancy new label. And there’s nothing to suggest that the old wine is getting better with age.

Fortunately, these structural defects also mean that Libra isn’t a threat to real cryptocurrency. Accept no substitutes.

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Donald Trump, Socialist

“Tonight, we renew our resolve that America will never be a socialist country,” US president Donald Trump announced in his State of the Union address in February.  His base, as he had hoped, cheered him on in setting himself up as foil to Bernie Sanders and Alexandria Ocasio-Cortez.

In the three months since, though, Trump has doubled down on his own socialist policy proposals. On trade and immigration, he’s 21st-century America’s most strident — or most empowered, anyway — advocate of an indispensable tenet of state socialism: Central planning of the economy by the government.

Trump wants the government to control what you buy and who you buy it from. Thus, his “trade wars” with Canada, Mexico, the European Union, and China, powered by tariffs intended to advantage “Made in America” goods (and their politically connected makers) over others.

Now he’s announced a plan for “merit-based” government control of immigration under which bureaucrats in Washington decide how many, and which, immigrants the American economy “needs,” instead of leaving such decisions to markets and individuals.

In the past I’ve bemoaned the fact that “socialism” has come to mean such different things to so many different people. From its 19th century definition of  “worker ownership of the means of production,” it’s been continually re-defined to characterize everything from Marxist-Leninist totalitarianism to a more all-embracing “democratic socialist” welfare state powered by heavy taxation on “the rich.”

That’s a pretty broad net. But except among anarchist socialists, state control of the economy is the axis on which all versions of socialism turn, and Trump is clearly all-in on the idea.

He even lends a socialist cast to the  excuses he makes for his economic policies. He continually positions himself as protecting workers from the “dog-eat-dog” competition of capitalism (while avoiding using that word negatively). By adding an emphasis on political borders to those excuses, he changes the discussion from “labor versus capital” to “American labor versus foreign capital.”

That approach is nothing new. See Stalin’s “socialism in one country,” for example, or the marriage between central economic planning and nationalism characterizing the fascism of Mussolini and Hitler.

America’s Republican president campaigns against socialism while attempting to implement it. Meanwhile, America’s progressives  campaign for socialism while attempting to thwart actual worker ownership of the means of production (e.g. the “gig economy”). Talk about cognitive dissonance!

Notice what’s missing from the discussion on both major “sides”: Freedom.

Freedom to move within and across political borders.

Freedom to trade within and across political borders.

Freedom to plan our own lives and live them instead of turning that power, and that responsibility, over to the state.

Neither major political party even convincingly pretends to care about those fundamental human rights anymore.

The entire public discussion revolves around what the politicians should “allow” or “forbid” the rest of us to do next, based on an unquestioning assumption of their moral authority to make such decisions for us.

Unless we break that cycle, we’re on our way into the next Dark Age.

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Julian Assange: An Opportunity for the US and the UK to Change Direction on Press Freedom

May 3 was World Press Freedom Day. The annual observance usually focuses on the World Press Freedom Index published each year by Reporters without Borders. Break out the champagne! The United States ranked 48th of 179 countries this year, falling three places from 2018.

A day earlier, WikiLeaks founder Julian Assange appeared in court in London (the United Kingdom ranked 33rd on the Index this year) to contest his proposed extradition to the United States. He faces spurious US “hacking” charges framed to avoid taking official notice of the indisputable fact that his actual “crimes” consist entirely of engaging in journalism.

Not a good World Press Freedom Day look for the UK or the US. But the plodding pace of the UK’s judicial system — his next hearing comes at the end of May, a second one is scheduled for mid-June, and the matter may drag on for months — offers an opportunity to turn things around and get them moving in the right direction.

Reporters Without Borders postures as politically neutral, but their current ranking of the US is largely based not on a deterioration in actual press freedom, but rather on US president Donald Trump’s big mouth. He says mean things — some true, some false, some downright stupid — about the media.

Trump could redeem himself on the press freedom front, essentially wiping the slate clean, by pardoning Assange for all alleged “crimes” committed prior to May 1st, 2019.

Even better, he could publicly justify the pardon, pointing out that this is solely and entirely a political prosecution premised in the notion that it’s a “crime” to embarrass politicians by revealing verifiably true information about their actions.

Alternatively, US Justice Department prosecutors could save him the trouble by just dropping the charges and withdrawing the extradition request.

A pardon and public statement from Trump would be better, though, both for press freedom and as red meat for his own political base. After all, the American politician most frequently and badly embarrassed by Assange’s work is Trump’s own bete noire, Hillary Clinton. The WikiLeaks “Cablegate” dump exposed her plan to have US diplomats bug the offices of their UN counterparts. Then WikiLeaks doubled down and outed her for the DNC’s rigging of the 2016 Democratic presidential nomination.

Failing both of those perfectly reasonable courses of action on the US government’s part, the UK courts could find a reason to free Assange (currently serving 50 weeks for jumping bail on charges that were non-existent rather than merely spurious) instead of handing him over.

Whatever — just pick one and make it happen, guys. The most important outcome here is a free Julian Assange. The bonus material would be explaining why: He’s a political prisoner and journalism is not a crime.

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The Noble Crony: Big Business on the Politics of Business

Tyler’s Big Business insists that the influence of business over American government is greatly overblown:

I am against virtually all manifestations of crony capitalism, but I’m also not sure people are getting the basic story right. Business does have some real political pull, but the basic view that big business is “pulling the strings” in Washington is one of the big myths of our time. On closer inspection, most American political decisions are not in fact shaped by big business, even though business does control numerous pieces of specialist legislation. Voters drive most of the major decisions about the government budget, more so all the time as entitlement spending consumes more of the federal budget. In reality, corporations, as they relate to our federal government, are devoting more and more of their time and energy to minimizing legal risk, deciphering complex government regulations, and trying to avoid major economic losses from adverse decisions coming from Washington or state and local governments.

Big business doesn’t secretly run the Republican Party:

For instance, for years many critics alleged that big business controls the Republican Party. Yet even though the Republicans nominated Donald Trump to run for president, as of late September 2016 not one Fortune 100 CEO had donated to Trump’s campaign, whereas in 2012 about one-third of them had supported Romney by that point. Why did Trump win the nomination? It is obvious: because the voters supported him to a sufficient degree.

Getting meta:

Steven Pearlstein, commonly a critic of big business and former economics columnist of the Washington Post (and currently my colleague at George Mason University), wrote in the fall of 2016: “Indeed, one irony of the 2016 election is that populist antipathy toward corporate America seems to be peaking at precisely the moment when corporate influence on government policy is as low as anyone can remember.” And Jeffrey Immelt, the former CEO of General Electric, wrote in a 2016 shareholder letter: “The difficult relationship between business and government is the worst I have ever seen it.” William Daley, chief of staff in the Obama White House, opined, “Honestly, I don’t think big business matters much anymore.”

I believe these views are exaggerations, as the relationship between big business and Washington has some inevitable cyclical elements, as perhaps those commentators would themselves admit. For instance, after those statements were issued, the Trump administration responded with a tax plan that was very favorable to business, especially large multinationals, and business interests responded with enthusiastic support. So at the time I am writing this chapter, American policy is in some ways especially heedful of business interests, as indeed is sometimes the case. If the influence of business is again high by the time you are reading this book, keep in mind that most of my discussion is focused on what is the most typical state of affairs.

Even in 2018, big business is hardly dominating the agenda. America’s corporate leaders often promote ideas of fiscal responsibility, free trade and robust trade agreements, predictable government, multilateral foreign policy, higher immigration, and a certain degree of political correctness in government, all ideas that are ailing rather badly right now. Again, you can expect some cyclical ups and downs, but the losses sustained by these causes is a sign that big business is not in charge. The resurgence of interest in doing something about national infrastructure is another example of a business priority surviving in the national debate, but it may or may not happen, and it seems to depend more on the personal priorities of Donald Trump than the strength of the business lobby. Even if a major infrastructure program does break through and become policy, it will have taken decades for this talk to have come to fruition.

Once again, though, I say Tyler sells business short.  There are major policies where the business community prevails over the popular will.  Indeed, there are major policies that would be helpless political orphans without the patronage of business elites.  But happily, business has both prudence and justice on its side.

Land-use policy is the clearest case.  If the construction industry were not tirelessly clawing for the right to build homes and offices, regulation would have long since choked off development.  Psychologically normal people cotton to virtually all complaints about new construction.  “Traffic!”  “Noise!”  “Harm to the environment!”  “Hurting property values!”  “Crowding our schools!”  “Not in My Backyard!”  Only lobbying from builders counters this mad populist negativity, allowing the creation of the structures in which we all reside.   Thank you, business.

The same goes for labor market regulation.  Psychologically normal people love minimum wages, firing restrictions, mandated benefits, and the right to sue your employer.  But these regulations have awful side effects – especially unemployment.  Without business resistance to this feel-good legislation, the U.S. would likely be stuck at 10% unemployment or worse.  Thank you, business.

Finally, don’t forget immigration.  While business hardly favors open borders, it almost never opposes existing immigration – and routinely argues for a bit more.  How much does this sway policy?  Probably a lot.  Most obviously, without the nay-saying of immigration-dependent businesses, the Republicans would probably have probably passed the RAISE Act years ago.  Thank you, business.

Why doesn’t Tyler say any of this?  My best guess is Straussian.  He knows that business makes policy better – but he also knows that business influence works best in the shadows.  Hailing the political benefits of business puts those benefits at risk.  Sadly, perhaps he’s right.

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Tortured “Complexity”

When someone is about to start doing some mental contortionism in order to try to justify statism, they’ll often make the statement, “it’s a very complex issue“. No, it really isn’t. They’re lying to try to appear deep and smart and to justify the unjustifiable.

“Gun control” isn’t a complex issue. You have no right to forbid weapons of defense to anyone, and you can’t delegate a right you don’t have.

“Drug legalization” isn’t a complex issue. You have no right to forbid the manufacture, possession, or sale, nor the ingestion, inhalation, or injection of substances. You can’t magically acquire that right just because you think it’s necessary. You have no right to have people do things you have no right to do without asking them to become bad guys. Prohibition is enforced by bad guys, only.

Immigration” [sic] isn’t a complex issue. You have the right to allow (or bar) anyone on (or from) your property. For any reason or no reason at all. You have the right to hire or trade with anyone. Your rights end at your property lines– the only legitimate borders.

“Taxation” isn’t a complex issue. It is theft– specifically extortion. Nothing can make it something else.

Complex issues” look complex only when someone adds all sorts of twists and turns, bells and whistles, bows and ribbons, and flags and laws. At the base, there’s probably a simple ethically right thing to do and hundreds of wrong things to do. They have to tell lies to justify the wrong things– the statist things.

When someone lies and calls a simple issue a complex issue you can be certain they are looking for ways to justify doing wrong. I’ve run out of patience with the lies told to harm others.

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World’s Dumbest Phrases

It seems an inordinate number of the World’s Dumbest Phrases start with one particular word: “our“.

Our government”, “our president”, “our military”, “our CIA”, “our elections”, “our police”, “our borders”, “our schools”, or whatever. Dumb, dumb, dumb.

If that seems insulting, good. It’s intended to be, and a person probably wouldn’t be insulted if they didn’t know it’s true.

Now, “our” isn’t always a dumb word to use. If you and I share real-world ownership in something, “our” is a valid word. Suppose we go in together and buy a sword, and we have an arrangement where we both get to use it. It is our sword.

Something doesn’t become “ours” just because you want to impose it on me at my expense when I have no use for it. It’s also not “ours” if you’re trying to spread the guilt around; smearing me by claiming I share in your guilt. If you want it, and it is harmful, but I have opposed it from the beginning– or even if I withdrew my support when I got smarter– you don’t get to pin it on me. I disavow your ethical and economic disasters. They are your responsibility. Suck it up.

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