I do not own or seek to own Bitcoins. Something about the idea of harvesting and selling unique, computer-generated numbers strikes me as silly. That this medium of exchange is intrinsically worthless, volatile, and shows all the signs of being a bubble also does little to endear me to it. However, earlier I was reading about a new possible niche for Bitcoin: providing an escape valve for people who have to live under dysfunctional economic systems. Like Argentina. Or Venezuela. I recently learned that it has become next to impossible to travel to that increasingly loony place — a place where mere discussion of prices is called “economic warfare.”

 that’s what President Maduro, the rather hapless inheritor of the mess that is the economy in Venezuela under the Bolivarian socialist revolution, seems to think. For he’s arguing that people who simply report the prices at which things change hands are waging economic war upon the country and its economy. The actual point at issue is the black market exchange rate for the bolivar, the country’s currency. Given the, umm, excellence with which the economy has been managed that black market rate is well over an order of magnitude different from the official rate. And that, ahem, excellence with which the economy is being managed is such that the value has fallen another 25% in the last week alone. […] The basic problem is the same one that the more stupid leftists make all the time. Sensible ones know that you don’t mess with markets nor market prices. You want to change the distribution of incomes in the country? Fine, we might not agree, but if you do then tax and redistribute. But don’t go around messing up that price system which is the only way that anyone can ever calculate what people desire and what people are willing to make. But they keep making this mistake. From rent control in my native UK or New York City making affordable housing more difficult to find all the way through to this complete and total mess that they’ve made of the Venezuelan economy (and where is Mark Weissbrot these days? We don’t seem to hear much of his cheerleading any more, do we?). An interim position was that of Argentina. They had issued bonds that paid interest according to the inflation rate. As that began to rise some private sector economists noted that the official inflation rate seemed to be lower than that observable in the real economy. The Argentine government threatened to jail those economists.

Nothing surprising about that. As a friend put it, “Venezuela is proof of socialism’s idiocy.”

Socialism’s inherent unworkability provides the perfect incentive to establish a dictatorship, though. People will not cooperate voluntarily, so ultimately — if there to be is any hope of making socialism work — they will have to be forced.

But even after they are forced into submission, with private property nationalized at gunpoint, etc., the end result is a numbing lack of incentive. That lack of incentive leads those who have power to supply an incentive.

How do you motivate people lacking incentive into being productive?

Using the traditional slavery model, the answer was rewards and of course punishments. The reason slaveholder George Washington became so philosophically opposed to slavery was that he saw that his slaves had no reason to better themselves, no work ethic, and why should they? He saw it as inherently corrupting of both masters and slaves, and he became determined to eventually divest himself from owning slaves.

Stalin (and his followers) learned that the most efficient way to provide an incentive was fear. Fear of death motivates people, and socialism arguably can be made to work that way. But the question then becomes (at least, for those who think about such things), is that really the best way to build a better world? It certainly was not classical Marxism, but I think Marx was not very smart where it came to human nature. Granted that the exploitative capitalist bourgeois classes were in fact greedy and selfish, it never seemed to occur to him that the majority of humans are the same way. Especially those who want power.

Naturally, our government betters are doing everything possible to stymie Bitcoin in the United States.

If Bitcoin is in fact intrinsically worthless and a bubble, people might start wondering why the antipathy. History shows that driving things underground tends to increase their “value.”