Government Planners Will Fail at Regulating Bitcoin

The world is changing. And due to certain technologies and information, citizens of this globe are thinking differently. The advent of the Internet has brought us vast amounts of subject material that has changed our thoughts on government. Encryption has taught us how to keep things private while using the web. And with Bitcoin, the decentralized currency has also altered the way we think about central banking. Now because of these modified revisions of how we deal with authority bureaucrats everywhere are fussing. They don’t want you to share information on their corruption via the web. The nation states do not want you to encrypt your messages and they surely don’t want you walking around with a “Swiss Bank” account in your pocket.

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“When people are free to act, they will always act in a way that they believe will maximize their utility. Any exchange that takes place in the free market occurs because of the expected benefit to each party concerned. If we allow ourselves to use the term “society” to depict the pattern of all individual exchanges, then we may say that the free market ‘maximizes’ social utility, since everyone gains in utility.” — Murray N. Rothbard

The Technological Free Market Scares Bureaucratic Manipulators

Recently, Obama spoke to a crowd at the SXSW technology conference explaining how there is a need for government to have mechanisms to help enforce taxation. The president tells SXSW attendees, “If in fact you can’t crack that all, if the government can’t get in, then everybody is walking around with a Swiss Bank account in their pocket. There has to be some concession to the need to be able to get into that information somehow.”

However, Obama probably isn’t talking to his fellow bureaucrats stuffing away billions offshore as reported by the Panama Papers. Over 11.5 million leaked documents describe public officials from all around the world trying to dodge their own tax system. No, Obama is speaking to ordinary citizens like who are possibly carrying some Bitcoin in their smartphone.

Now, Bart Chilton, former CFTC commissioner, states in a CNBC article that “Obama needs to make a move on Bitcoin now.” Chilton is seemingly calling for more regulation on the cryptocurrency and some basic ideas for the feds to pillage the network. Chilton notes that decentralized currency enthusiasts are not too keen on the government’s hands in the cookie jar. Chilton states, “Many bitcoin devotees wanted little to do with government legislators or regulators and regulators were dubious of this new currency.”

Chilton then goes on to describe how the government has failed to classify the digital money the right way. Some officials say it’s currency, some say it’s a commodity, and other have no idea what to think. From the perspective of Austrian Economics, the bureaucracy will never understand this new free market form of money. Regulating Bitcoin will ultimately fail because officials consistently fail at basic economic calculation. When the network is decentralized it is even worse for them to grasp this market. Ludwig von Mises explains in his book Socialism saying:

“Without market prices for the means of production, government planners cannot engage in economic calculation, and so literally have no idea if they are using society’s resources efficiently. Consequently, socialism [and regulatory interventionism] suffers not only from a problem of incentives, but also from a problem of knowledge.”

Government Clowns to Gather at The Summit of Hypocrisy

The United States isn’t the only government clamouring about tax evasion. Prime Minister David Cameron will host the global anti-corruption summit that will involve political leaders from 40 countries congregating in London to talk about money laundering and terrorist finance. Cameron is expected to propose new anti-money laundering policies that will force citizens to disclose the origins of their assets. The legislation will involve what’s called “unexplained wealth orders” (UWOs) that are supposed to reform money transmission laws.

This follows the letter from more than 300 leading economists from 30 countries who warn that there is “no economic justification for allowing tax havens to continue.” Of course, ironically it was the politicians who started these offshore hideouts in the first place. Economist Jeff Sachs states in the letter announcement saying:

“Tax havens do not just happen. The British Virgin Islands did not become a tax and secrecy haven through its own efforts. These havens are the deliberate choice of major governments, especially the United Kingdom and the United States, in partnership with major financial, accounting, and legal institutions that move the money.

As usual, bureaucrats have a problem with people other than themselves hiding from tax agencies. Fortunately, encryption and Bitcoin have enabled ordinary citizens to avoid some of the pillaging from officials. The nation-state has run the economy into the ground. Now they feel they need to squeeze more out of the “rich” and everyday citizens with austerity measures. People are now realizing that the central banking system used by these political clowns have also deeply scarred the global economy. The fact is they know their system is failing so they are looking to nullify or pillage the opportunities these free market technologies bring to the people.

Regulating Decentralized Technology Will Fail

Officials will never successfully regulate cryptocurrency, encryption or the Internet unless they pull the plug on the entire grid. Politicians don’t run businesses or corporations so when these firms get squeezed ultimately they leave the country.

This can be seen all around the world with profit-seeking companies moving to lesser-regulated jurisdictions. The nation-state is a failed attempt at socialism and interventionism, and in 2016 people are recognizing this fact in greater numbers. If they didn’t, they wouldn’t spread data like the Panama Papers, or be involved in a decentralized digital currency with a market cap exceeding $7 billion USD.

Governments will constantly fail and it’s because they think they should be involved with everything. So they stifle tech innovation, they decrease basic utility and eventually nullify proper exchange for something much uglier. Mises again, regarding this matter, says:

“A bureau is not a profit-seeking enterprise; it cannot make use of any economic calculation.” And this inevitably leads to regulatory failure as: “… [t]he lack of [profit-and-loss, price and customer-oriented] standards [which] kills ambition, destroys initiative and the incentive to do more than the minimum required.”

Overall, politicians and “economists” from all around the world will gather in London to discuss how they can squeeze, pillage, and destroy free exchange. Obama may just believe his comrade Bart Chilton and jump on Bitcoin so they can have a piece of the action. As long as they can get a few shillings out of your pocket-sized “Swiss Bank” account, they just might let you play with cryptocurrency. They surely will allow you to have a smartphone as long as they can read your messages. And clearly the internet is ideal for sharing on Facebook but disclosing dirt on the utterly corrupt system they operate is not a good idea. Repeat after me…

“War is peace, freedom is slavery, and ignorance is strength” — 1984

What do you think about the nation state’s recent tax haven hypocrisy? Let us know in the comments below.

Images courtesy of Pixabay, Wiki Commons, and Crypto-graphics.com