This is an opinion piece by Jimmy Song, a Bitcoin developer, educator, entrepreneur and programmer with over 20 years of experience.
Link to audio reading of the article here.
It’s a weird zero-sum status perception game where winners make the rules. Everything is judged by intentions and nothing by results. This offends me as an engineer because it’s really a way of saying that reality doesn’t matter and that majority opinion can trump facts. It is a collective illusion about the importance of our opinions. When discussing politics, everyone is the smug, arrogant, smart teenager who thinks he knows everything.
The worst is the falsity of all this and the false intellectual arguments that dominate. Sounds good beats reality and only the most sociopathic seem to be able to play well enough to win. Propaganda trumps reality and this attitude is seeping into everything like sand after a walk on the beach.
Worse still, the policy is much more consequential because of fiat money. Effective policy now has a prize of immense value in the ability to create money out of thin air. This game of posture, perception and propaganda kills, steals and destroys. Politics is a horde of zombies eating away at civilization and multiplying its destruction by creating even more zombies.
What I hope to show in this article is how terrible things have gotten and how almost everything in our current society has become political.
The Great Financialization
We’ve seen almost everything get financialized. Fiat education, fiat health, fiat real estate, fiat companies and even fiat property are all infected with fiat money. You can tell these things are being financed because there are so many loans and insurance products around you. Student loans, mortgages, health insurance, corporate bonds, auto loans, unemployment insurance, and even life insurance are evidence of the financialization or government manipulation of each industry. Almost anything can be leveraged for quick consumption and degenerate play. It’s like we’re transforming the world in Las Vegas.
Loans and insurance are the cogs in the fiat money system. Loans create new money and insurance is an outlet for all the leverage on these loans. In many ways, they tax the strong, subsidize the weak, and protect the interests of those in power. On the same subject : New research suggests that music can be key to improving your memory. Each financialized sector adds even more income seekers as more people enjoy their path to consumption rather than earn their way. In a financialized world, everyone becomes Wimpy from the Popeye cartoons, the guy who “will gladly pay on Tuesday for a hamburger today”.
Financialization is really the process of making fiat money. That is, it is the subjection of an industry to government control. And companies agree with that because it’s much easier than actually innovating. Why try hard when you don’t have to? Corporate wellness isn’t all that different from normal wellness, just much more expensive. Both remove incentives to be productive or provide value. Every financialized sector slowly degrades into DMV-like inefficiency as it gets fatter on the trust subsidy.
Financialization has a bigger problem than just the non-productivity of subsidized entities. The biggest problem is that they become state endorsers. After taking the King’s Coin, you become the King’s Man.
Messing With The Market
The main effect of financialization is that it supports companies that would otherwise go bankrupt. By lending money to companies or their customers to buy the products of that industry, the entire industry is subsidized. These companies become like that guy who always seems to have problems and is bailed out by his family. Financialization encourages mediocrity.
In other words, merit takes a back seat whenever fiat money is involved. Instead of market forces creating better goods and services, worse goods and services continue to be pushed onto the market, often at cheaper prices to compensate for their lack of quality. This is the real reason why subsidized industries produce inferior goods. On the same subject : Follansbee Community Days offers music, food and fun. The subsidy leads to the degradation of goods and services. If you’re wondering why products and services have gotten so much worse during the pandemic, here’s your answer; it is mediocrity subsidized by inflation.
What comes first are political considerations. Right now in the US, those considerations include how diverse the executive team is, how environmentally friendly the products are, and how much they support the war in Ukraine. These policy considerations are called “environmental, social and corporate governance” (ESG) and have nothing to do with profit and everything to do with perception and advertising. The government manages to create its own sock puppets in the industry to give itself more power.
That’s not news. In other political regimes, industries have had to align themselves with war efforts, racial segregation, ethnic cleansing, and worse. The more authoritarian a government is, the more aligned you need to be, so Nazis and Communists demanded far more political compliance than, say, the 19th century US government. The politicization of the industry is an indicator of how authoritarian the government is getting. The last two years have shown this with vaccine mandates, support for Black Lives Matter and support for the war in Ukraine.
The main tool in the game is money. Financialization ensures alignment with those in power. Entire industries are bought and enslaved by the money printer. Needless to say, this is not good for the people and they bear the heavy burden of sustaining all this with their economies degrading.
The People In Power
The incentives of people in power are terribly misaligned with what is really good for people. As elected officials usually don’t stay long, they tend to have a short-term focus. Read also : Catfish River Music Festival to fill the streets of Stoughton with music. That is, they generally have a high time preference and the policy reflects this. Every elected official is like the many millions of today who live paycheck to paycheck, covering only today’s bills, not worrying about planning for tomorrow.
I started paying attention to US presidential politics in 1988. Every presidential election I observed was called “the most important election of our lives.” And it’s not just one side, it’s both sides and they encourage that kind of thinking. People who win in politics have a higher time preference than people who win the lottery.
How many political scandals last longer than a week these days? What seems so important this week is forgotten three weeks later by almost everyone. People in power have the attention span of squirrels. What matters to people in politics is now and there is little concern about what will happen to civilization tomorrow.
Deference To Power
However, despite this obvious lack of prudence or wisdom on the part of our leaders, there is significant deference to their views. Unsurprisingly, this means that most people either become very high time preference, or impulsive and reckless. You wouldn’t normally trust an impulsive person to be the designated driver, for example, but people defer to government leaders because of the significant power they hold. To disobey would mean to be cancelled. Financialization has hit everyone and noncompliance means economic death.
In this sense, every CEO of a large company is really a politician. They have the power to dispense favors because they have the newly printed money at their disposal through loans. No wonder these positions have become so political. Winning favors with money printers through marketing is much more important to a CEO now than actually making good products.
Instead of submitting to the market, companies submit to power. No wonder so many industries have seen little to no innovation for decades. Non-compliance means economic death and subsidy means stagnation. It’s not a great environment to thrive as a business.
And guess who gets screwed? Instead of customers, the community or society at large being the beneficiaries of the company’s products, we make sure that the people in power get all the benefits. CEOs, politicians and investment bankers manage to advance their agenda at our expense.
Whatever Is Convenient For The Powerful
The powerful get what they want at the expense of everyone else. In a poorly aligned system like politics, this often means value destruction. Rent-seekers will spend other people’s money for their own benefit without providing value to anyone else. This often includes creating more rent-seeking positions! The zombie horde grows.
Instead of innovations, regulations prevent any competition from existing operators. Nuclear power hasn’t progressed since the 1970s, and neither have airlines. Gosh, I wonder what happened in 1971?
Unfortunately, this is the normal course of business, as financialization has essentially placed the power of money printing in the hands of the politically connected. Becoming friends with politically connected people pays better than creating a useful good or service. It would be like selecting a quarterback based on who the team owner is friends with. It won’t lead to much progress or prosperity.
Bitcoin And Politics
If all of this so far seems depressing, that’s because it is. There is no doubt that financialization has worsened, subsidies more plentiful and politics more ubiquitous. However, there’s one thing we’ve seen going against the tide of all this value destruction: Bitcoin.
We saw that Bitcoin was different five years ago during the Blocksize Wars. One side was a powerful group of well-connected CEOs who came to a consensus among themselves about what Bitcoin should be. They wanted to define and control Bitcoin through changes to its protocol.
On the other side were the users. They are what would be considered irrelevant in politics. In the normal course of politics, these were, at best, people who could be easily manipulated by advertising and, at worst, people who could be cancelled.
By now, any outside observer would have predicted that the powerful companies would win. They were the best political actors and knew how to seize power in any governance structure. This was a professional football team going up against a local high school’s JV team. One side seemed ready to easily get what it wants and use politics to get it. Whether through regulation, subsidy, or cancellation, CEOs had the tools to get what they wanted.
But something strange happened; the JV team started to win. And the reason was because there is no central authority in Bitcoin. There was no group to bribe. There was no governing board to appeal. They had to deal with the market, the people, the users. They couldn’t get around them with some authority that could change the rules for them. We found that they weren’t a professional football team as much as they had referees in their pockets. Bitcoin created a fair match.
And users, people or the market responded. They said no. And won.
Bitcoin Is Anti-Political
There were many people who bet on the side of corporations and the powerful. These were seasoned professionals when it came to propaganda and politics and would surely find a way to beat some commoners on Twitter? However, they couldn’t. Corporations could not change Bitcoin because Bitcoin was different. Users decided what was and what was not Bitcoin. The playing field was frustratingly fair and level, to the detriment of people who specialize in influencing the referees.
Bitcoiners not only resisted protocol changes, but any attempt to proxy them. Erik Voorhees stated that they represented them because these users were customers of these companies. The market spoke clearly and loudly in the futures markets that this was not the case. Despite all the money and resources being clearly on one side of the debate, the plebs won. Users had a voice, not through some intermediary or trusted third party, but directly, through the marketplace. And they spoke. Turns out we were the pro football team all along and they were the JV team specializing in bribing referees. The plebs won and were not particularly close.
Bitcoin is anti-political. It resists political processes because change requires consensus. Even a small minority can resist rule changes. There is no bribery of the referee or the rules committee. Bitcoin took politics out of the equation.
Altcoins Are Political
Compare that to altcoins and the difference couldn’t be more stark. Altcoins operate completely on a political level, controlling public perception through massive advertising campaigns. They have a habit of subsidizing anything and everything that makes their currency look good while spreading FUD over anything that makes their currency look bad.
They submit completely to the people in power, like the creator or the foundation. They bribe influencers and give them profitable positions. They rob people while saying it’s good for them.
If you doubt me, think about this thought experiment. Would an altcoin be able to resist the SegWit2x deal from five years ago? The answer is no. The people in charge of the altcoin would have decided and that would be it. In fact, SegWit2x-like deals are happening all the time on Altcoinland. They are called hard forks and they show how centralized and political these coins are.
Bitcoin Is Living The U.S. Constitution’s Ideal
Interestingly, consensus decision-making was the original design of the US Constitution. It was supposed to be very difficult for any law to pass and, for a while, even a senator could make it unfeasible. This meant that every change and every law had to take into account everyone it would affect. If it didn’t satisfy all those people, then it wouldn’t pass. Unfortunately, that changed as checks and balances continued to be degraded. Rule changes have gotten easier and easier, even with the stagnant economy.
Unlike the US government, Bitcoin lives up to this idea that every person has a say. You can’t just take things away from someone without their consent. Cynically, you can say that politics is the agreement of the majority to take things away from the minority. This is simply not possible with Bitcoin. It is for this reason that Bitcoin is anti-political.
If you hate politics, you will love Bitcoin. Happy Bitcoin Independence Day.
Twelve New Altcoins Coming Soon:
This is a guest post by Jimmy Song. The opinions expressed are entirely my own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.
