Mises Wire: The Government Wants Your Crypto Data. And Lots of It.

Bitcoin Manifesto author Allan Stevo has an article at the Mises Institute about how the government would like to track your crypto transactions, as well as ways that can help anonymize your cryptocurrency use – The Government Wants Your Crypto Data. And Lots of It. Don’t be scared off of cryptocurrency just because governments want to control them. It takes some time and effort to understand and take countermeasures. While governments would have you think otherwise, the money you have earned is yours not theirs.

he Venezuelan government recently announced that its Administrative Service for Identification, Migration and Foreigners (SAIME) is now accepting bitcoin as a payment method for passports.

The problem with that is that bitcoin is not anonymous but pseudonymous.

To interact with any government using bitcoin is to reveal to them the wallet you are paying from. The blockchain is public. When commentators like Caitlin Johnstone and Stefan Molyneux or organizations such as the Mises Institute or TOR Foundation ask for bitcoin contributions, one can follow the money with a blockchain explorer to see how much comes in and how it is spent. One can also see who gave it to them if a donor hasn’t exercised some caution in protecting their privacy.

I would never want the Venezuelan government, the US government, or anyone else who might misuse that information to be able to peek into my crypto finances, especially not through a transaction tied to my passport. Who’s to say that the next time I appear at an immigration checkpoint I won’t be flagged for having too fat of a bitcoin wallet or putting money toward some politically incorrect use?

Though the Venezuelan government dedicates a fraction of the resources to spying on its citizens that the US government does to spying on Americans, there is no need to carelessly provide any government with extra personal data. Knowledge in the hands of the state will be used as a weapon in the hands of the state.

There are plenty of lists of big bitcoin wallets and there are people who make a name for themselves by watching bitcoin move from one account to another. Among them is the US government.

On February 6, 2018, Commodity Futures Trading Commission (CFTC) chairman Chris Giancarlo before the US Senate Banking Committee revealed that the US government uses spot exchanges such as Bitstamp, Coinbase, itBit, and Kraken to glimpse into the industry.

Chainalysis, run by Kraken’s cofounder and former COO Michael Gronager, exists to tie personal identity to bitcoin transactions. Their business model is the reduction of other people’s personal privacy, data that they then monetize by selling it to their customers. Far more sinister than Google or Facebook, which at least anonymize data prior to selling it to advertisers, Chainalysis links real-life personal data, including legal name, to a specific wallet. Many blockchain analysis competitors exist.

Coinbase has recently come under fire for having a similar service, Coinbase Analytics, which has a contract with the US Department of Homeland Security. “Coinbase joins a crowded field of cryptocurrency analytics companies – Chainalysis, Elliptic, CipherTrace and others – vying for a piece of the federal pie. Agencies from all corners of the U.S. government regularly contract with crypto intel firms, inking deals for their tracing software worth millions, and sometimes stretching years,” reports Coindesk.

The bitcoin exchanges that KYC (know your customer) their customers are a perfect place for industry data collection to take place. Coinbase could monetize and simplify that data collection process, not only charging fees for their exchange services, but taking it a step further and monetizing their user data, making their users the product. This is especially pernicious in the privacy obsessed, smaller-government realm of cryptocurrency.

How much money did it take for this $8 billion company to sell out crypto consumers to the US government? Government disclosure shows that the contract has a current award amount of $49,000, with potential for another $134,750 total over the next four years.

Coinbase has reassured users that it is only collecting publicly available data about its users, nothing more, and packaging that for government use. Its CEO, Brian Armstrong, has encouraged users not to use bitcoin if they don’t want to be snooped on by Coinbase, but to use privacy coins instead.

Luckily, the marketplace is responding to privacy incursions like this:

  • There are decentralized exchanges like Bisq that can’t easily be subpoenaed because there is no central entity to subpoena.
  • Additional ways of anonymizing bitcoin purchases exist, such as with cash or through ATMs, which may or may not KYC customers.
  • We are now witnessing the introduction of “privacy coins.” These are designed to be far more difficult to trace—some might even say impossible—though I long ago learned that the word “impossible” is not really that accurate, as possibility or impossibility is merely a question of will and available resources.

This topic of maintaining privacy in bitcoin transactions is especially pertinent as personal privacy comes under attack.

  • US Senators Lindsey Graham (R-South Carolina), Tom Cotton (R-Arkansas), and Marsha Blackburn (R-Tennessee) have introduced the “Lawful Access to Encrypted Data Act,” an antiencryption bill that insists that all encryption without a government back door is illegal. To follow such an order would spell the death of encryption. Any encryption with a back door is not actually encryption.
  • The pseudonymous Scott Alexander of Slate Star Codex was under threat of doxxing by the New York Times and consequently deleted his popular blog out of privacy concerns. The New York Times defended itself by saying it has a policy to identify all people it writes about. Alexander, after a month of silence from the New York Times on the topic, believes the threat has subsided. The callous disregard for privacy remains.
  • Google and Apple are begging governments to let them use mobile phones to monitor the whereabouts of users in the name of the latest cause against liberty—public health.

As journalist Peter Chawaga has pointed out, “Privacy is becoming one of the most scarce resources in the world.”

If these attacks on privacy were without consequence, then perhaps one might feel better about them, but as the current spate of cancel culture demonstrates—from Central Park Karen to Seattle’s middle finger Karen—merely having a camera turned on a person when they’re showing disagreeable behavior can be enough to shatter the fragile lives that many live. There’s almost a sociopathic hunger to destroy a person intertwined in some of this behavior. How much worse would the impact of that mob of sociopaths be if they also had access to all of a person’s financial data?

It’s a great time for more encryption and more privacy, and an awful time for helping governments or any other organization populate databases that you can guarantee will one day be used heartlessly against you.

Mises Institute: Americans Are Buying Guns in Record Numbers

Ryan McMaken at the Mises Institute writes Americans Are Buying Guns in Record Numbers. The Washington Post Isn’t Pleased. about how rising political instability and violence in the US has led to a record surge in gun sales and especially sales to first time gun owners and how the media is desperately trying to spin this as increased gun ownership causing increased crime.

Social scientists have been trying for many years to blame homicides on the presence of guns. A favorite tool in this quest is the use of studies that show a correlation between gun ownership and crime. These studies are then reported as “evidence” that the presence of guns causes crime.

But there’s always been a problem with this attempt at showing causality between guns and homicides: causality can just as plausibly go the other way. That is, in times and places where the local population feels they are in danger of being crime victims, people are more likely to purchase guns for protection. So, rather than saying “guns cause crime,” we should be saying “crime causes guns.”

New Gun Purchases Soar as Uncertainty and Violence Increase

We’re likely seeing this phenomenon at work now.

In recent months, according to the firearm industry’s trade group National Shooting Sports Foundation (NSSF), Americans have purchased millions of guns:

The early part of 2020 has been unlike any other year for firearm purchases—particularly by first-time buyers—as new NSSF® research reveals millions of people chose to purchase their first gun during the COVID-19 pandemic.

Fox News reports:

Gun sales have skyrocketed during the past three months, and a record-breaking 80.2 percent increase in sales was reported in May compared to last year, according to the shooting foundation. April’s data showed a 71.3 percent increase from 2019, and there was an 85.3 percent increase in March, according to information previously released by Small Arms Analytics and Forecasting.

Many new gun owners during this period feared general unrest as a result of the government-mandated lockdowns. Potential first-time buyers still on the fence about buying a firearm in May were perhaps confirmed in their fears by the riots that erupted after the killing of George Floyd by Minneapolis police officers. Then, in the wake of the riots, serious violent crime appeared to spike. It was widely reported, for instance, that homicides in New York City spiked “21 percent in first six months of 2020.” Crime in other cities increased as well, ranging from a jump of over 200 percent in Nashville to 23 percent in Kansas City, Missouri.

Naturally, seeing these news stories, many potential gun owners are more likely to conclude that they need a gun for personal protection. This is especially true when combined with a perception that police organizations cannot be relied upon to engage in crime prevention and enforcement. And this has indeed been the perception in many places where police have appeared unwilling to intervene in June’s riots.

Many normal people would see these events as an illustration of how gun purchases result from fears over crime and uncertainty.

But now, perhaps predictably, left-wing media organizations like the Washington Post are trying to turn this narrative around: people aren’t buying guns as a reaction to violence and social disarray, the Post insists. All those new gun purchases are what’s causing the violence in the first place.

Says the Post:

Americans purchased millions more guns than usual this spring, spurred in large part by racial animosity stoked by widespread protests over the killing of George Floyd in Minneapolis, as well as anxiety over the effects of the covid-19 pandemic.

That gun-buying binge is associated with a significant increase in gun violence across the United States.

The Post cites two new reports, one from the Brookings Institution and another from the University of California, both of which conclude that the rise in gun purchases has likely caused more “gun violence.”

Note the careful use of language here, though: the gun purchases are “associated” with an increase in gun violence, since causality cannot be established. Indeed, near the bottom of the Post article, the author admits:

The authors [of the Brookings and UC reports] caution that a study of this nature cannot prove causality, particularly at a time of massive social upheaval in a country dealing with an unprecedented public health crisis as well as a nationwide protest movement.

Of course, if one is already committed to the idea that guns cause crime, it makes perfect sense that millions of Americans in early 2020—after passing a criminal background check—will buy guns, and then almost immediately use those guns to commit crimes.

Moreover, it’s unclear that the two studies referenced by the Post article even imply that homicides result from more gun purchases.

The Brookings study, for instance, is more of an op-ed than a study. It’s simply a review of some past events which were followed by surges in gun purchases, including the Sandy Hook and Parkland shootings. This appears to be true indeed, and is a helpful reminder that people do often purchase firearms in light of concerns over personal safety, or at least in light of concerns about future access to firearms.

The UC study is a bit more specific, but even this is far too general to be of any use in concluding that gun purchases lead to violence. Because of data limitations, the UC report, of course, doesn’t establish that the people who bought firearms this year are responsible for any increase in crime that may be occurring. But it’s not even established that surges in gun purchases correlate with surges in crime at the city or neighborhood levels. This is critical, since trends in homicides are not really on a statewide or even metro-wide level. Homicide trends in the US tend to be dominated by homicides in a relatively small number of cities and neighborhoods. For example, the homicide rate in Baltimore is ten times that of the US overall. But this doesn’t mean homicides in Maryland are remarkably high.

So, have firearms purchases surged near the neighborhoods in Chicago, New York, and Kansas City where surges in crime have also occurred? It’s possible, since people bordering the most violent neighborhoods may feel the most at risk. On the other hand, it’s also entirely possible that firearms sales are occurring in places relatively distant from the places with surging homicides. The UC study only appears to give a state-level reading on this. In other words, the study really tells us very little.

Mises Institute: The State – The Deadliest Virus

Professor Jesús Huerta de Soto, a Spanish economist, writes this piece for the Mises Institute about government tyrannies in Spain, but most of them could just as easily be applied to the US government — The State: The Deadliest Virus.

The deadliest virus is the institutionalized coercion which lies in the very DNA of the state and may even initially permit a government to deny the outbreak of a pandemic. Evidence has been suppressed, and heroic scientists and doctors have been harassed and silenced simply because they were the first to realize and expose the gravity of the problem. As a result, weeks and months have been lost, at an enormous cost: hundreds of thousands of people have died due to the worldwide spread of an epidemic which, in the beginning, the shamefully manipulated official statistics made appear less dangerous than it actually was.

The deadliest virus is the existence of cumbersome bureaucracies and supranational organizations, which did not manage or wish to monitor in situ the reality of the situation, but instead endorsed the information received, while offering constant support and even praising—and thus becoming accessories to—all the coercive policies and measures adopted.

The deadliest virus is the notion that the state can guarantee our public health and universal welfare, when economic science has demonstrated the theoretical impossibility of the central planner’s giving a coherent and coordinating quality to the coercive commands it issues in its attempt to achieve its pompous objectives. This impossibility is due to the huge volume of information and knowledge which such a task would require and which the planning agency lacks. It is also, and primarily, due to the fact that the institutional coercion typical of the agency impacts the social body of human beings, who alone are capable of coordinating themselves (and do so spontaneously) and creating wealth. Such coercion prevents the emergence of precisely the firsthand knowledge the state needs to bring about coordination with its commands. This theorem is known as the impossibility of economic calculation under socialism. Mises and Hayek discovered the theorem in the 1920s, and the events of world history cannot be understood without it.

The deadliest virus is the dependency and complicity shown toward the state by countless scientists, experts, and intellectuals. When authorities are drunk with power, this symbiosis leaves a manipulated civil society unarmed and defenseless. For instance, the Spanish government itself urged citizens to take part in mass demonstrations of hundreds of thousands of people while the virus was already spreading exponentially. Then, just four days later, the decision was announced to declare a state of alarm and coercively confine the entire population to their homes.

The deadliest virus is the demonization of private initiative and of the agile and efficient self-regulation characteristic of it, combined with the deification of the public sector in every area: the family, education, pensions, employment, the financial sector, and the healthcare system (a particularly relevant point at present). Over 12 million Spanish people, including—quite significantly—almost 90 percent of the more than 2 million government employees (and among them a vice president of the Spanish government), have freely chosen private healthcare over public healthcare. The doctors and nurses of the public healthcare system work hard and selflessly, and their heroic efforts are never sufficiently recognized. However, the system cannot possibly do away with its internal contradictions, its waiting lists, or its proven incompetence in the matters of universal prevention and the protection of its own workers. But, by a double standard, any minor defect in the private sector is always immediately condemned, while far more serious and flagrant defects in the public sector are viewed as definitive proof of a need to spend more money and increase the size of the public sector even further.

The deadliest virus is the political propaganda channeled through state-owned media and also through private media outlets which, nonetheless, are dependent on the state as if it were a drug. As Goebbels taught, lies repeated often enough to the population can be turned into official truths. Here are a few: that the Spanish public healthcare system is the best in the world; that public spending has continued to decrease since the last crisis; that taxes are to be paid by “the rich” and they are not paying their fair share; that the minimum wage is not detrimental to employment; that maximum prices do not cause shortages; that a universal minimum income is the panacea of well-being; that the northern European countries are selfish and unsupportive, because they do not wish to mutualize the debt; that the number of deaths officially reported reflects the actual number of deaths; that only a few hundred thousand people have been infected; that we are performing more than enough tests; that face masks are unnecessary, etc. Any moderately diligent citizen can easily verify that these are all lies.

The deadliest virus is the corrupt use of political terminology involving misleading metaphors to mesmerize the population and make people even more submissive and dependent on the state. We are told that we are fighting a “war,” and that once we win, we will need to begin the “reconstruction.” But we are not at war, nor is it necessary to reconstruct anything. Fortunately, all of our capital equipment, factories, and facilities are intact. They are there, waiting for us to devote all of our effort and entrepreneurial spirit to getting back to work, and when that happens, we will very quickly recover from this standstill. However, for this to occur, we must have an economic policy that favors less government and more entrepreneurial freedom, reduces taxes and regulations, balances public accounts and puts them on a sound footing, liberalizes the labor market, and provides legal certainty and bolsters confidence. While such a free market policy enabled the Germany of Adenauer and Erhard to recover from a far graver situation following World War II, Spain will be impoverished and doomed to move at idling speed if we insist on taking the opposite path of socialism.

The deadliest virus consists of the deification of human reason and the systematic use of coercion, which the state embodies. It appears before us in sheep’s clothing as the quintessence of a certain “do-goodism” that tempts us with the possibility of reaching nirvana here and now and of achieving “social justice” and ending inequality. However, it conceals the fact that the Leviathan thrives on envy and thus fuels hatred and social resentment. Hence, the future of humanity depends on our ability to immunize ourselves against the most deadly virus: the socialism which infects the human soul and has spread to all of us.

Mises Institute: COVID Lockdowns Crippled the Division of Labor, Setting the Stage for Civil Unrest

Photo courtesy Associated Press

Associate Professor Jonathan Newman of Bryan College writes for the Mises Institute about how the breakdown of voluntary participation in the economy created fuel for social disturbance in COVID Lockdowns Crippled the Division of Labor, Setting the Stage for Civil Unrest.

In his podcast, Dave Smith has likened the lockdowns to gasoline and the murder of George Floyd to a spark.

But why were the lockdowns fuel for social unrest? One of the reasons the lockdowns paved the way for social unrest is that they led to a widespread breakdown in the division of labor. This could only result in more conflict and social unrest.

Economist Ludwig von Mises has explained why this is so. In Human Action, Mises presents the division of labor as more than a purely economic concept. Although he certainly expounds the increased productivity attributable to the division of labor, he also heralds it as civilization itself. It is social cooperation and mutuality. He presents it in opposition to conflict and violence. The division of labor is predicated on and also results in peaceful relations between individuals.

Here, I want to discuss the gasoline, and not the spark. Mises.org writers have discussed the spark and the related issues of institutional problems with police departments, police brutality, a breakdown in trust in the police, and police militarization.

What Is the Division of Labor?

The division of labor is just what it sounds like: one person does one job while another person does a different job. In a market economy, these jobs are not assigned randomly, but are purposefully chosen by each individual according to his or her own skills and values. Instead of trying to produce everything we want to consume on our own, we produce one good and offer it in exchange for a variety of goods we prefer.

The ability to consume a larger variety of goods is not the only benefit of the division of labor. Total production increases enormously, such that each individual who participates in the division of labor enjoys a massive increase in his standard of living. The division of labor allows us to emerge from bare subsistence and flourish as a civilization, producing art, writing philosophy, celebrating holidays, and exploring space. These things are impossible for man in economic isolation.

One of the greatest laws of economics is the law of association, which Mises proves mathematically (uncharacteristically) in Human Action. The law of association shows that everyone who participates in the division of labor gains as a result. No one is excluded from this opportunity. Thus,

The law of association makes us comprehend the tendencies which resulted in the progressive intensification of human cooperation. We conceive what incentive induced people not to consider themselves simply as rivals in a struggle for the appropriation of the limited supply of means of subsistence made available by nature. We realize what has impelled them and permanently impels them to consort with one another for the sake of cooperation. Every step forward on the way to a more developed mode of the division of labor serves the interests of all participants. (p. 159)

Unraveling the Division of Labor

The undoing of the division of labor and the social cooperation that it both requires and entails is social conflict.

The market economy involves peaceful cooperation. It bursts asunder when the citizens turn into warriors and, instead of exchanging commodities and services, fight one another. (p. 817)

During the months of government-imposed lockdowns, everybody was prevented from participating in the division of labor as they were accustomed to. Even those who kept their jobs could not exchange goods with those who did not keep their jobs. The entire social nexus was reduced to a small list of government-defined “essential” services. The increase in unemployment is really only a part of the picture of the economic harm caused by the lockdowns. Everybody who relied on the goods and services produced by the so-called nonessential businesses was harmed: consumers, employees, and proximate businesses in the structure of production alike.

Man shall not live by government-defined essential services alone, however. For a short time, and where possible, citizens resorted to black markets and self-sufficiency (which, as we have seen, is hardly sufficient). But a spark and the cover of protests in the streets gave some a chance to acquire goods by theft. These opportunists are aided by additional mayhem like vandalism, violent assault, and arson. Unfortunately, both insufficient and over-the-top responses by police also add to the mayhem, giving violent rioters more opportunity and also poorly reasoned, two-wrongs-make-a-right self-justification for their aggression.

We only have three options for getting what we want: we can produce it, we can take from somebody who has produced it, or we can exchange peacefully with somebody who has produced it. The third option is the division of labor, and it is the only one that involves peaceful cooperation with others. It is also the only option that sustains civilization. Looting, vandalism, assault, and arson are regressive—they are not a means to advance society. They are the unraveling of society and the social harmony brought about by the division of labor…

Peace can only resume when entrepreneurs find it profitable to reopen their businesses. Government lockdowns and violent mobs are data for the entrepreneur’s decision-making process. Mises warns that it can get so bad that civilization crumbles…(continues)

Mises Institute: Three Ways Lockdowns Paved the Way for Riots

Ryan McMaken at the Mises Institute has an article on Three Ways Lockdowns Paved the Way for These Riots

There were many reasons to oppose the COVID-19 lockdowns.

They cost human lives in terms of deferred medical treatmentThey cost human lives in terms of greater suicide and drug overdoses. Domestic abuse and child abuse have increased. There is also good reason to believe that lockdowns don’t actually work. The lockdown activists capitalized on media-stoked fear to push their authoritarian agenda based not on science, but on the whims of a handful of experts who insisted that they need not present any actual evidence that their bizarre, draconian, and extreme scheme was worth the danger posed to human rights, health, and the economic well-being of billions of human beings.

Those who lacked the obsessive and irresponsible tunnel vision of the prolockdown people warned that there were other dangers as well, in terms of social and political conflict.

It didn’t require an especially clear crystal ball to see that destroying the livelihoods of countless millions while empowering a police state to harass and arrest law-abiding citizens would create a situation that maybe—just maybe—could lead to greater social and political conflict.

Specifically, there are three ways in which the lockdowns laid the groundwork for our current state of unrest.

The Lockdowns Created an Economic Disaster

The COVID-19 stay-at-home orders, business closures, and other forms of coerced social distancing have so far led to job losses for well over 30 million Americans. The unemployment rate has risen to levels not seen since the Great Depression. Food banks are under strain as Americans line up for free food. Thanks to government moratoria on evictions in many areas, it is still unknown to what extent homeowners and renters are unable to pay mortgages and rents, but a wave of delinquencies is almost certainly coming.

To advocates of lockdowns, this is all “worth it” even though these sorts of economic stresses often lead to suicide, stress-induced disease, and death. But impoverishment, unemployment, and financial ruin are all merely “inconvenient,” as described by head lockdown advocate Anthony Fauci.

To someone who isn’t enamored of lockdowns, however, it is clear that millions of job losses are likely to worsen a variety of social ills, sometimes even resulting in violence. Moreover, the current job losses appear to be affecting the young and those who earn lower incomes most.

Lockdown advocates have attempted to avoid responsibility for all this by claiming that it is the pandemic itself that has caused the current economic disaster, and not the lockdowns. This is a baseless assertion. As has been shown, neither the pandemics of 1918 or 1958 led to the sorts of job losses and decline in economic growth that we’re now seeing.

The Lockdowns Destroyed Social Institutions

Another outcome of the lockdowns has been the destruction of American social institutions. These institutions include schools (both public and private), churches, coffee shops, bars, libraries, barbershops, and many others.

Lockdown advocates continue to claim that this is no big deal and insist that people just sit at home and “binge watch” television shows. But researchers have long pointed to the importance of these institutions in preserving peace and as a means of defusing social tensions and problems.

As much as lockdown advocates may wish that human beings could be reduced to creatures that do nothing more than work all day and watch television all night, the fact is that no society can long endure such conditions.

Human beings need what are known as “third places.” In a 2016 report, the Brookings Institution described what these places are:

the most effective ones for building real community seem to be physical places where people can easily and routinely connect with each other: churches, parks, recreation centers, hairdressers, gyms and even fast-food restaurants. A recent newspaper article on McDonald’s found that for lower-income Americans, the twin arches are becoming almost the equivalent of the English “pub,” which after all is short for “public house”: groups of retirees meeting for coffee and talk, they might hold regular Bible study meetings there, and people treat the restaurant as an inexpensive hangout.

Third places have a number of important community-building attributes. Depending on their location, social classes and backgrounds can be “leveled-out” in ways that are unfortunately rare these days, with people feeling they are treated as social equals. Informal conversation is the main activity and most important linking function. One commentator refers to third places as the “living room” of society.

The lockdown advocates, in a matter of a few days, cut people off from their third places and insisted, in many cases, that this would be the “new normal” for a year or more.

Yet, these third places cannot simply be shut down—and the public told to just forget about them indefinitely—without creating the potential for violence and other antisocial behavior.

Indeed, third places act as institutions that provide a type of social control that is key to a well-functioning society. In his trenchant book The Revolt of the Elites and the Betrayal of Democracy, historian and social critic Christopher Lasch described the importance of third places in communicating political and social values and conventions to young people, and in setting the bounds of acceptable behavior within the community. Lasch notes that these institutions are also important in defusing violent impulses among the young. Also of great importance is the fact that third places provide a means of social control that is voluntary and not a form of state coercion.

Writing in the 1990s, Lasch was lamenting the decline of third places, although he emphasized their importance even in their modern reduced form. Thanks to the lockdowns, however, these places have been crippled far beyond what Lasch might ever have imagined.

The Lockdowns Empowered the Police State

The lockdowns have created a situation in which millions of law-abiding citizens have been deemed criminals merely for seeking to make a living, leave their homes, or engage in peaceful trade.

In many areas, violations of the lockdown orders have been—or even still are, in many places—treated as criminal acts by police. This has greatly increased negative interactions between police and citizens who by no moral definition are criminals of any sort.

Many have already seen the stories: police arresting mothers for using playground equipment, police arresting business owners for using their own property, police beating people for the “crime” of standing on a sidewalk.

Complicating the issue is the apparent fact that police have not enforced social distancing edicts “uniformly.” Some have alleged, for example, that the NYPD has lopsidedly targeted nonwhites in enforcement:

of the 40 people arrested [for social distancing violations in Brooklyn between March 17 and May 4], 35 were African American, 4 were Hispanic and 1 was white. The arrests were made in neighborhoods—Brownsville, Bedford-Stuyvesant, Cypress Hills and East New York—which have large concentrations of blacks and Latinos.

This may or may not reflect the reality of the general situation, but the fact is that the lockdowns created the perception among many that this is just yet another case of law enforcement targeting certain populations over small-time violations.

Moreover, it is quite plausible that lower-income populations have more often been on the receiving end of state harassment in the name of social distancing. After all, compliance with lockdowns is something of a luxury reserved for higher-income, white-collar residents who can work from home and remain comfortable for long periods in their roomy houses. Working-class people and those with fewer resources are far more likely to need to find income and venture outside during lockdowns. This attracts the attention of police.

Lockdown advocates, apparently in their usual state of extreme naïvete, perhaps believed that further empowering police to violently enforce government decrees against petty infractions would not lead to any unfortunate side effects down the road. Yet criminalizing millions of Americans and subjecting them to heightened police harassment is not a recipe for social tranquility.

Worsening a Volatile Situation

Of course, my comments here should not be interpreted as making excuses for rioters. Smashing up the property of innocent small business owners—or worse, physically harming innocent people—is reprehensible in all circumstances. But this isn’t about making excuses. We’re talking about avoiding extreme and immoral government policies (i.e., police-enforced lockdowns) that remove those institutions and conditions which are important in helping minimize conflict.

Some may insist that the riots would have occurred no matter what, but it’s easy to see how the lockdowns made a bad situation worse. Yes, some of the rioters are lifelong thugs who are always on the lookout for new opportunities to steal and maim. But experience suggests that the pool of people willing to engage in riots is often larger during periods of mass unemployment than during other periods. In addition, those people who exist on the margins of criminality—the sorts of people for whom third places serve an important role in moderating their more antisocial tendencies—are more likely to be swept up in these events when third places are abolished. And, as we have seen, lockdowns also create more opportunities for police abuse that ignite riots of the sort we’ve seen in recent days.

It’s true the responsibility for the riots lies primarily with the rioters. But we cannot deny that policymakers fuel the flames of conflict when they outlaw jobs and destroy people’s social support systems by cutting them off from their communities. It’s also wise to not provoke people by pushing for widespread human rights violations and additional police harassment. But this is what lockdown advocates have done, and their imprudence should not be forgotten.

Mises Institute: The School Closures Are a Big Threat to the Power of Public Schools

Ryan McMaken at Mises Institute writes about how US school closures during this pandemic are changing the way people think about schools, confidence in the institution, and how it may lead to changes in the future. The School Closures Are a Big Threat to the Power of Public Schools

Twenty twenty is likely to be a watershed year in the history of public schooling. And things aren’t looking good for the public schools.

For decades, we’ve been fed a near-daily diet of claims that public schooling is one of the most important—if not the most important—institutions in America. We’re also told that there’s not nearly enough of it, and this leads to demands for longer school hours, longer school years, and ever larger amounts of money spent on more facilities and more tech.

And then, all of sudden, with the panic over COVID-19, it was gone.

It turns out that public schooling wasn’t actually all that important after all, and that extending the lives of the over-seventy demographic takes precedence.

Yes, the schools have tried to keep up the ruse that students are all diligently doing their school work at home, but by late April it was already apparent that the old model of “doing public school” via internet isn’t working. In some places, class participation has collapsed by 60 percent, as students simply aren’t showing up for the virtual lessons.

The political repercussions of all this will be sizable.

Changing Attitudes among the Middle Classes

Ironically, public schools have essentially ditched lower-income families almost completely even though school district bureaucrats have long based the political legitimacy of public schools on the idea that they are an essential resource for low-income students. So as long as the physical schools remain closed, this claim will become increasingly unconvincing. After all, “virtual” public schooling simply doesn’t work for these families, since lower-income households are more likely to depend on both parents’ incomes and parents may have less flexible job schedules. This means less time for parents to make sure little Sally logs on to her virtual classes. Many lower-income households don’t even have internet access or computing equipment beyond their smartphones. Only 56 percent of households with incomes under $30,000 have access to broadband internet.

Nonetheless, working-class and lower-income parents are likely to return their children to the schools when they open again. Many believe they have no other choice.

Attitudes among the middle classes will be a little different, however, and may be more politically damaging to the future of the public schools.

Like their lower-income counterparts, middle class parents have long been happy to take advantage of the schools as a child-care service. But the non-educational amenities didn’t stop there. Middle-class parents especially have long  embraced the idea that billions of dollars spent on school music programs, school sports, and other extracurriculars were all absolutely essential to student success. Sports provided an important social function for both the students and the larger community.

But as the list of amenities we once associated with schooling gets shorter and shorter, households at all income levels will start to wonder what exactly they’re paying for.

Stripped of the non-academic side of things,  public schools now must sell themselves only as providers of academic skills. Many parents are likely to be left unimpressed, and this will be all the more true for middle class families where the parents are able to readily adopt homeschooling as a real substitute. The households that do have the infrastructure to do this are now far more likely to conclude that they simply don’t need the public schools much of the time. There are now so many resources provided for free outside the schools—such as Khan Academy, to just name one—that those who are already savvy with online informational resources will quickly understand that the schools aren’t essential.

In addition to this, many parents who were on autopilot in terms of assuming they were getting their money’s worth may suddenly be realizing that public schools—even when they were physically open—weren’t that much of a bargain after all…(continues)

Mises Institute: Bitcoin and the Theory of Money

It has been a while since we last ran a bitcoin article, but we certainly haven’t forgotten about it. With the economic woes gripping the world, the precarious place of the US dollar, and a lot of uncertainty about everything, gold has risen 12.8% year to date and thoughts turn to alternative money. Here’s Robert Murphy at Mises Institute with Bitcoin and the Theory of Money.

In a modern primer on money mechanics, it is necessary to provide at least an introduction to Bitcoin.1 Consequently, in this final chapter we will first give a basic explanation of what Bitcoin is and how it works. Then we will place Bitcoin in the framework of money that we developed in chapter 2, seeking to answer the fundamental question: Is Bitcoin money?” Finally, we will relate Bitcoin to an important component in the Austrian school’s discussion of money, namely Ludwig von Mises’s “regression theorem.”

Explaining Bitcoin with an Analogy2

“Bitcoin” encompasses two related but distinct concepts. First, individual bitcoins (lowercase b) are units of (fiat)3 digital currency. Second, the Bitcoin protocol (uppercase B) governs the decentralized network through which thousands of computers across the globe maintain a “public ledger”—known as the blockchain—that keeps a fully transparent record of every authenticated transfer of bitcoins from the moment the system became operational in early 2009. In short, Bitcoin encompasses both (1) an unbacked digital currency and (2) a decentralized online payment system.

Bitcoin

According to its official website: “Bitcoin uses peer-to-peer technology to operate with no central authority; managing transactions and the issuing of bitcoins is carried out collectively by the network.”4 Anyone who wants to participate can download the Bitcoin software to his or her computer and become part of the network, engaging in “mining” operations and helping to verify the history of transactions.

To fully understand how Bitcoin operates, one needs to learn the subtleties of public-key cryptography, which we briefly discuss in a later section. For now, we focus instead on an analogy that captures the economic essence of Bitcoin, while avoiding the need for new terminology.

Imagine a community where the money is based on the integers running from 1, 2, 3, … up through 21,000,000. At any given time, one person “owns” the number 8, while somebody else “owns” the number 349, and so on.

In this setting, suppose Bill wants to buy a car from Sally, and the price sticker on the car reads “Two numbers.” Bill happens to be in possession of the numbers 3 and 12. So Bill gives the two numbers to Sally, and Sally gives Bill the car. The community recognizes two facts: first, the title to the car has been transferred from Sally to Bill, and second, Sally is now the owner of the numbers 3 and 12.

Further suppose that in this fictitious community an industry of thousands of accountants maintains the record of ownership of the 21 million integers. Each accountant keeps an enormous ledger in an Excel file. The columns run across the top, from 1 to 21 million, while the rows record every transfer of a particular number. For example, when Bill bought the car from Sally, the accountants who were within earshot of the deal entered into their respective Excel files “Now in possession of Sally” in the next available row, in the columns for 3 and 12. In these ledgers, if we looked one row above, we would see “Now in the possession of Bill” for these two numbers, because Bill owned these two numbers before he transferred them to Sally.

Bitcoin Car Sale

Besides documenting any transactions that happen to be within earshot, the accountants also periodically check their own ledgers against those of their neighbors. If an accountant ever discovers that his neighbors have recorded transactions for other numbers (i.e., for deals for which the accountant in question was not within earshot), then the accountant fills in those missing row entries in the columns for those numbers. Therefore, at any given time, there are thousands of accountants, each of whom has a virtually complete history of all transactions involving all 21 million numbers…

Click here to read the entire article at Mises Institute.