Caring for the poor – From Mutual Aid to the Welfare State

Before the welfare state, private means of helping the less fortunate were more prominent. A reasonable case can be made to show that the welfare state has eroded self-reliance and private giving. I recently read From Mutual Aid to the Welfare State: Fraternal Societies and Social Services, 1890 – 1967 by David Beito.

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They were prevalent:

Even the data in Middletown, a study that often presents a bleak portrait, testifies to this fact. The authors found that 48 percent of working-class adult males in 1924 were lodge members. Fraternalism was still formidable.

Mutual aid societies helped foster self-reliance and strong values:

By joining a lodge, an initiate adopted, at least implicitly, a set of values. Societies dedicated themselves to the advancement of mutualism, self-reliance, business training, thrift, leadership skills, self-government, self-control, and good moral character. These values reflected a fraternal consensus that cut across such seemingly intractable divisions as race, gender, and income.

From this book, we can also see how mutual aid societies became marginalised because of government insurance regulation and perhaps also from other cultural and economic shifts. But the general point stands, it is not true to say that without government welfare, the poor would all suffer in the streets.

So when people make arguments of the form, “the rich should ‘give back’ more, look at how unfair and hard life is for the poor” – I think they are neglecting that the state is one big driver behind why this many people are poor to begin with. It crowds out private charity, it denies the poor abilities to enrich themselves (regulations, minimum wage etc), and it breeds the dependency mindset.

It’s my hope that as the world transitions to a more libertarian free market society, we build a private charity ethic to go with it.

Taking freedom for granted

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If you look at the typical way political arguments happen, rarely is it that you will see people valuing the actual liberty of other people for liberty’s sake. The arguments I see often entirely skip over this vital consideration, instead thinking that with “just one more rule” the government can regulate away all the bad things and ‘bad choices’ and leave only the good choices and good outcomes. Sometimes we have to be willing to let some small bad things happen, in order to allow massively good things.

It is the job of the libertarian to refocus other people onto the vital importance of liberty. Otherwise, we risk killing the goose that laid the golden egg.

Picture via Mises Canada Facebook page

There is no ‘monetary stability’

I enjoyed this podcast by Daniel Krawisz and Michael Goldstein of the Nakamoto Institute:

The desire for monetary stability is perfectly understandable. However, this does not mean that a central authority or bank can actually achieve ‘monetary stability’. Remember, we are talking about prices, which are the result of subjective valuation and interaction between people. So ‘monetary stability’ could only be achieved if the central authority was actually controlling the interactions between those people.

Attempts to remove volatility and only have ‘modest price inflation’ will end up being arbitrary. Even talking about price inflation in a given basket of goods won’t do. We could debate over what level of quality and what availability of goods should be the standard. For example, a TV from 1980 is terrible compared to a TV from today, even though TVs today are much cheaper in real terms. How would we best account for that aspect of the price difference?

Daniel also makes the point that what monetary stability we can have, comes from when many people have chosen the same asset as money. Bitcoin is just going through a phase where people are still realising or deciding to use bitcoin as money.

Bitcoin may someday have a sense of stability in terms of real purchasing power, if/when it becomes mainstream adopted. But until then, volatility is necessarily here to stay.

Entrepreneurs make you safer

Here’s a quick example of how entrepreneurs are better at making you safer. See this car light beam technology:

Contrast this with the typical government methods of trying to make people safer, upfront licensing or registration/vetting.

Governments tend not to be good at innovating in economically useful ways. It’s not that they don’t try, it’s that they lack the requisite information (prices), and in some cases – they don’t care enough. Not like a profit-driven entrepreneur does.

Via EVO UK

Bitcoin and the marshmallow

I recently read this profound post by Martin Berkhan: The Marshmallow Test. You should read it all, but for the lazy/time poor, here is a snippet:

In the early 1970s, a psychologist named Walter Mischel conducted an experiment involving four-year-olds. He placed each child in a room, where they sat down at a table. In front of them, a marshmallow. Mischel then made each child an offer. He could eat the marshmallow right away or wait for a few more minutes and receive another one. Almost everyone decided to wait. Mischel then left the room for twenty minutes.

While a few of the four-year-olds were able to resist the temptation for up to fifteen minutes, many lasted less than one minute. Others just ate the marshmallow as soon as Mischel left the room.

This was a test of self-control. If the child wanted to achieve the goal of receiving another marshmallow, then he needed to temporarily ignore his feelings and delay gratification for a few more minutes. What this study showed was that some children at the early age of four were much better at this than others.

What I found interesting are the strategies the successful children employed in order to endure the experiment. They kept themselves distracted. Covered their eyes, played with their hands or just entered a trance-like state where it seemed they were lost in their thoughts. Their attention was elsewhere.

The failed strategy of the unsuccessful children was the complete opposite of that; in essence, they fixated on the marshmallow almost as if attempting to stare it down, actively fighting the temptation.

Are you glued to the bitcoin price charts? Do you constantly discuss price movements with your friends? Are you finding yourself fretting over the recent price drop? The people overly focused on the price of bitcoin are the unsuccessful children in the marshmallow test.

Bitcoin was always going to be a rollercoaster ride, people who bought in must have known this. If you understand and agree with the case for bitcoin as a superior money, then what you should be doing is:

  1. Buy bitcoin
  2. Secure it – e.g. offline storage where you alone hold the private keys, multi signature, encryption, back up(s)
  3. Live your life and focus on other things

The exception to the above is if you are a bitcoin entrepreneur or coder.

10 years from now, bitcoin will either be worth millions in real terms today, or it will fail and be worth zero. If you think there’s a reasonable chance bitcoin will achieve the desired outcome, you should not be fazed by the recent price crash. Instead, view it as noise to be disregarded on the way up.

Nobody said being an early adopter was easy or risk-free. The best strategy is to own some, and then go live your life.

Governments will drive people to use bitcoin

It Begins: IRS Launches International Data Exchange Service http://www.zerohedge.com/news/2015-01-14/it-begins-irs-launches-international-data-exchange-service

If you’ve not heard of it, it’s is an outgrowth of the Foreign Account Tax Compliance Act (FATCA), which requires every single bank in the world to get in bed with IRS to share information about customers.

Governments are doing their best to push people into using bitcoin instead.

Paying attention to a falling bitcoin price now and saying bitcoin is dead is missing the forest for the trees.

They’ve proclaimed bitcoin dead many many times before.