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The Free Market Sucks, Capitalism Is A Failure, And I’m A…

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New Zealand Prime Minister Jacinda Ardern recently demonstrated her ignorance of economic theory by publicly stating that capitalism is a failure, and the entire field of economics needs to be redefined to take into account “people’s ability to actually have a meaningful life.”

She blisters capitalism and free market systems for failing to be a cure-all for society’s problems, ignoring the fact that economic alternatives to truly free markets have been used to squelch innovation, spread misery, and as an excuse to commit genocide.

By using this kind of flawed reasoning, she plans to secure her government’s grip on New Zealand’s economy by not only boosting the minimum wage and writing child poverty reduction targets into law, but also depreciating home values by building thousands of “affordable” homes.

SIMETRI Research

In theory, that might sound like a good way to get homeless people off the streets and reduce the suffering of children who had no say in the families they were born into. In reality, government programs that are meant to reduce poverty throw the incentive structures offered by free markets out of whack. Capitalism was never meant to solve all of society’s ills. Rather, it provides a way to motivate the impoverished to do what it takes to lift themselves out of poverty.

And This Is Relevant To Cryptocurrency Because…

Not only can cryptocurrencies reach markets that banks and PayPal won’t touch, but there are also decentralized platforms coming down the pike that could prove that free market systems can be more effective than governments at lifting entire populations out of poverty. It’s just a matter of making sure that people who are economically “with it” know how to market these platforms in an environment in which governments and politicians are often ignorant, bumbling, or flat out pandering for votes.

Free Markets Better Than Government at Fighting Poverty

Until the mid- to late-1960s, poverty levels in the United States were falling steadily and showing healthy year-to-year declines. Then poverty levels stopped dropping and spent the next several decades bouncing between 12% and 15%. What changed in the 1960s that could have caused poverty rates to stop declining? President Lyndon Johnson started his war on poverty!

The problem here is that the government is very good at spending hundreds of billions of dollars every year on a government bureaucracy that is supposed to help people but not so good at making sure that the money is actually being used to help people who may just happen to be down on their luck. Much of the money that is budgeted for welfare programs is actually spent on the salaries and benefits of the bureaucrats that administrate the program. Sure, welfare programs are good at fighting poverty because they’re basically jobs programs for people who do nothing but handle meaningless paperwork all day.

The other side of the coin is … I don’t like to use the phrase “welfare fraud” because that gets jumped on by people who say that lazy welfare rats aren’t the majority of people who use the welfare program. However, during one of the few times when I sat in with the ladies’ group at church, I overheard the women talking about how some people abuse the welfare program. One of the ladies had overheard some obviously expectant mother on a bus saying that she couldn’t wait to give birth so that she could get a bump in her welfare benefits. That’s definite abuse of the welfare system.

A lot of this could be solved purely by enforcing some common sense rules for receiving welfare. The rules exist, but lax enforcement makes it possible for people like this nameless expectant mother to game the system. For instance, thousands of welfare recipients in Maine were eliminated from the food stamp program because the state government stepped up enforcement of work and volunteer rules – a move that may not be completely unfair considering that taxpayers can reasonably demand that they get something out of their tax dollars, even if it’s just proof that welfare recipients are genuinely trying to lift themselves out of poverty.

One the one hand, it makes sense to set some commonsense rules that make it difficult for the impoverished to abuse the system. On the other, the ability for the government to set conditions for receiving welfare benefit is one reason I’ve hesitated to support government-run UBI. I’ve seen real proposals for UBI programs that include limiting the number of children that recipients can have, and the people making the proposal was quite serious. Again, this sounds like a commonsense proposal that would reduce the epidemic of impoverished parents having children that they can’t support, but that won’t stop accusations of genocide and forced sterilization from flying if Congress ever took such a thing up for consideration.

The natural question to ask here is: why should we assume that the government has the best interests of the impoverished in mind when it debates issues that affect the less privileged, let alone be better than free market capitalism at boosting the chances that the less privileged can escape poverty? As importantly, what was Lyndon Johnson’s real motivation for helping the poor? Was it to help accelerate the reduction of poverty in the United States (and the war on poverty obviously fails by that metric), or was it to perpetuate the cycle of poverty by disincentivizing upward mobility so that Democrats could continue to attract votes by claiming to care about the poor and giving away free money to bureaucrats and poor voters who didn’t mind leeching off the system?

Will Work For Bitcoin

What is one thing that an impoverished individual with no home address, bank account, or photo ID has in common with Bill Gates (besides the fact that they are both members of the species Homo sapiens, and neither likely believes that capitalism is a failure)?

If they can get their hands on an Android tablet, they can download a Bitcoin wallet right now. With a mobile device loaded with a Bitcoin wallet and the ability to sack out within range of a reliable Wi-Fi connection, the homeless person suddenly has 2/3 of what he needs to lift himself out of poverty.

The other 1/3 is the ability to connect with clients who might be willing to take a chance on a new freelancer on a platform that isn’t too picky about the freelancer’s ability to verify his or her identity or confirm a PayPal account. Bitcoin’s chief flaw for this purpose is that it doesn’t have a built-in marketplace for good and services. Ethereum is a little better because it enables the creation of smart contracts, but how many unbanked and unconnected people are going to know how to create a smart contract right out of the gate if somebody hands them an Android tablet?

Don’t get me wrong, Upwork is a decent freelancing site, but there are many impoverished people who wouldn’t be able to use it. Just the fact that PayPal has a list of “approved” countries is indicative of the fact that it does not operate in some markets. Even in a country where PayPal does operate, a significant percentage of the population may not be able to confirm a PayPal account because they cannot open a bank account. That leaves Bitcoin-enabled freelancing sites as an option.

XBTFreelancer already exists, but is centralized and, therefore, vulnerable to being shut down by a government that dislikes the idea of its citizens earning bitcoins. The government of a nation like Zimbabwe, for instance, may not like to be told that its economic policies failed so hard that many of its citizens could theoretically see Bitcoin’s volatility as practically a nonissue compared to the hyperinflation problem that has devalued the Zimbabwe dollar. At the height of Zimbabwe’s hyperinflation problem, prices were doubling almost daily. While Zimbabwe eventually unbent enough to allow for the use of more stable foreign currencies in everyday transactions, ordinary people who may be incapable of fighting back against abusive policies should not count on their government being so flexible in an economic crisis.

In times of economic instability, governments can easily put their own pride ahead of the needs of their people, which means that any effort to use free market solutions to help ordinary people who have fallen on hard times will have to be decentralized and slippery.

Decentralize Freelancing By Using The Blockchain

Blocklancer proposes that freelancing can be revolutionized by handing the job of managing each contract to the Blockchain. While Blocklancer does take the official position that it will have to follow regional regulations, a natural unofficial policy could be that it will be on both clients and freelancers to prove that they aren’t finding ways around their government’s legal and regulatory environment – for instance, by using a VPN to get around China’s censorship.

Blocklancer calls its system a Decentralized Autonomous Job Market that will be difficult to control and impossible to censor. If a snowflake gets butthurt over a job that some client posted, the most that the Blocklancer team will be able to do is tell that snowflake to get lost because the technology makes it impossible to delete that job.

Instead of putting dispute resolution services in the hands of uncaring staffers, the system puts it directly in the hands of stakeholders who have incentive to avoid driving away users by making unfair decisions. Where a Smart Contract might simply implode if the terms are not met, the Token Holder Tribunal can review the case and decide whether this dispute is genuinely a matter of the client being the futz who refuses to pay up when the freelancer had done everything she could to keep up her end of the contract. In any case, the ability for Smart Contracts to implode and destroy the client’s attached work in the process when the client won’t pay up will make it less likely that the client will be able to profit from stealing the freelancer’s labor.

Most attractively to freelancers and clients, Blocklancer will only charge 3% fees compared to the 20% that established platforms like Upwork charge. That means freelancers will no longer have to risk losing jobs because they have to jack up their bids in order to earn a living, and clients can save money because they’re no longer indirectly paying Upwork for the privilege of using a high-priced platform to connect with freelancers.

The element that will be most attractive to underprivileged, unbanked, and unconnected populations is that they will no longer have to verify their identities or confirm a PayPal account in order to earn a living online. That makes platforms like the one proposed by Blocklancer attractive as a free market solution to poverty because it only requires that populations that have previously been left out by an uncaring financial system to put the required effort in and take advantage of this new tool to become self-sufficient.

If Capitalism Is A Failure, Is Poverty A Better Answer?

Despite what politicians like Prime Minister Jacinda Ardern want you to think, impoverished populations can and usually will lift themselves out of poverty if free market capitalists are simply willing to give them the tools to do so. Families and especially children no longer need to be trapped in poverty purely because the government has disincentivized upward mobility. The Blocklancer team has proposed such a free market solution that requires only that it be used by clients and freelancers that are willing to use cryptocurrencies and blockchain solutions to conduct transactions.

Those who believe that capitalism is a failure are failing themselves – failing to note that while capitalism has never promised to solve all the ills on this planet, it can (and often does) reward innovation and a willingness to take advantage of available tools to climb the ladder of success.

So it simply becomes a matter of whether politicians like Jacinda Ardern and governments like New Zealand’s are willing to get out of the way and let us evil free market capitalists do the work of enabling the underprivileged, impoverished, unbanked populations of the world to participate on a level playing field with the rest of us so that the entire human population can be enriched by their ability to add value to the global economy.

DISCLOSURE

Authors at Crypto Briefing are invested in cryptocurrencies. The author of this post may be invested in digital assets mentioned here.

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