TL;DR: According to the Independent Institute, a World Bank study of nine years between 2005 through 2013, a time period where extreme poverty rates were cut by half, “discovered that much of this reduction in global poverty came about because of deregulation, as governments around the world have been reducing the regulatory burdens they impose on their citizens.”

World Bank: Deregulation Reduces Extreme Poverty

Craig Eyermann, Research Fellow at the Independent Institute, notes “if you live on less than $2 a day, you would be considered to be living in extreme poverty.” Less than five years ago, that was 736 million people, 10% of all humans. “Believe it or not, that is extraordinarily good news because poverty rates around the world have fallen dramatically since 1981 when 42 percent of the world’s population lived on an inflation-adjusted $1.90 or less per day,” Eyermann explained.

What happened in those more than three decades? World Bank economists studied a latter nine-year period slice of that time period when rates fell by half, showing “that business-friendly regulations are correlated with the poverty headcount at the country level,” researchers stressed. “The findings suggest that the conduit for poverty reduction is business creation, as a source of new jobs and a manifestation of thriving entrepreneurship.”

Contrary to popular opinion, regulation tends to come as a method of blocking access to markets. This can be observed in mature economies such as the United States, for example. Major retailers like Walmart often lobby-for and champion federal minimum wage hikes. An effort in that direction gives cover to politicians, who can claim benevolence while serving to stifle Walmart competitors from hiring more employees or even starting a business altogether. Generally speaking, the more something costs in price, be it labor or automobiles, fewer folks are able to participate.

Cronies Capture Governments

“Regulations can restrict the ability of individuals to find jobs or start businesses,” Eyermann emphasizes, “because politicians and bureaucrats often write them to benefit the interests of large, established interests, who would rather not have to compete for business in a free market.” Deductive logic takes over from there. Cronies capture governments, which are by definition regulation machines, and wield them in their respective directions.

Higher prices on everything follows, and bureaucracy grows in order to monitor enforcement of those regulations. Government minders are paid for mostly through taxation, arguably the most regressive financial force on poorer people in the form of a an income tax or sales tax variation. “Historically in much of the world, the yoke of regulatory burden has contributed to the impoverishment of billions,” Eyermann contends. “Reducing that burden by lifting the heavy hand of government regulation has successfully diminished extreme poverty around the world in recent decades. It’s a lesson that everyone should learn.”

For cryptocurrency enthusiasts, regulation and extreme poverty are among its more pressing issues of late. Debate about just how much regulation has taken greater importance to the ecosystem, as established Western governments are beginning to press. Predictably, more established crypto businesses have embraced regulation, in some cases touting it as a marketing ploy. Those who view the currency aspect of crypto often look to places such as Venezuela and South Sudan as models for a kind of anti-devaluation refuge cryptocurrency might provide.

It’s an interesting potential contradiction, if the World Bank study is to be believed. Bitcoin was created not through regulation but in spite of it. In fact, there are plenty of theories about cryptocurrency being illegal by simply existing. Businesses rushing to regulators now are essentially begging for their financial lives, others be damned. They wish to mimic if not outright join the legacy finance world which would sooner not have them at all. Add to it the notion of offering stateless currency alternatives to the Venezuelas of the world, and cognitive dissonance grows stronger. It will be regulations, national and international, that might end up slowing cryptocurrency adoption in places where crypto’s benefits would be felt the most.

DISCLOSURE: The author holds cryptocurrency as part of his financial portfolio, including BCH.

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