Release of the Russian Elephant

On September 3, I published an interview with the Russian Elephant, where the venerable animal explained the goals of the project in detail and answered all other questions as vaguely as possible. Generally speaking, this is a rather correct tactic for presenting information about a project that is still under development and for which interest needs to be stirred up. Well, today the project was released.

As of today, only two options are available on the Russian Elephant website: donate money for the project’s development and create a case page for the Elephant. To create a page, you are expected to create your own account and then link it to your Twitter by posting a message with a generated code. Thus, the principle designated by the Elephant—”I will never forget you, you will never see me”—will only work fully if the Twitter account is anonymous, but this in turn calls into question the very necessity of such a link. In short, I didn’t understand the Twitter linking. In any case, after successful linking, the user finally gets the opportunity to upload their materials to the site for subsequent verification and publication.

It is assumed that the user will upload one or more photos to the Elephant’s site depicting a criminal, as well as a text description of their crime. As I understand it, it is desirable that the criminal event is also visible in the photos; otherwise, it is unclear why the Elephant should take the information on faith.

It is promised that we will soon see the actual database with evidence of various crimes, and then a list of successful cases—without which the whole endeavor is pointless. But for now, let’s fill up this piggy bank.

Я тебя никогда не забуду, ты меня никогда не увидишь (С) Русский Слон

Ancoms discuss libertarianism, part 2

On the left-anarchist channel Prometheus, the analysis of an overview article on libertarianism from the LPR website continues. Once again, the focus is on the non-aggression principle. The article under discussion simply explains what this principle is and indicates that it pertains to ethics. It is implied that the mechanisms for implementing this ethical principle are also ethical, meaning reputational. Naturally, the opponent notes that an ethical principle is an extremely shaky foundation for building a society.

Next, there are many reflections on how, in the author’s opinion, a libertarian society should ensure compliance with the aforementioned principle. Naturally, private military companies are mentioned—heaven forbid—and it is then quite logically pointed out that if they are hired by end clients for aggressive operations against competitors, everything will degenerate into the right of the strongest, and subsequently into the reinstallment of the state. Logistic problems are also pointed out, as a result of which each territory would be “protected” by its own security forces, and deploying security forces from a foreign territory would prove to be a costly endeavor.

What nuances did the author fail to consider?

Firstly, for some reason, he considers a situation in which certain private military companies have a monopoly on violence and contrasts them with classical anarchy, based on universal armament and voluntary territorial militias. But under free market conditions, anyone who wishes has the right to arm themselves, not just licensed companies, so potential lawlessness will be countered not by a powerless crowd, but by armed people.

Secondly, the insurance principle of the functioning of any rights enforcement companies is completely ignored. A situation in which a person hires thug-bodyguards is marginal. Much more often, a person simply buys insurance, and if they are attacked and suffer damage, it is an insurance event, and they can expect a payout from the company. This removes logistic problems (the insurance company has its own agreements with various local security groups for rapid response to serious insurance events, and for minor ones, it simply pays out the insurance and doesn’t sweat it). I won’t recount the script of my video on ancap; I just recommend watching it.

However, the fact that all these questions surfaced during the analysis of the article on libertarianism can safely be attributed to the article’s shortcomings. I hope someone from the LPR editorial staff considers this high-quality feedback from an ideologically kindred organization and uses it to improve the material.

Taking this opportunity, I will also announce that our next video will be entirely dedicated to the non-aggression principle. The video is currently being filmed. I hope we will also be able to resolve some of the left-wing audience’s questions regarding this principle.

A couple of discussions on direct democracy

Regarding Bitcoins

Regarding yesterday’s note on comparing Bitcoin with low-inflation fiat, I received a detailed response. In short, it postulates the importance of stable prices when using a currency as a medium of exchange. To ensure this, a decentralized cryptocurrency fiat is proposed: a crypto whose emission parameters are set by a vote of the currency holders.

To this, I can briefly respond: if anything is a fundamental property of prices, it is their variability. Price carries information about the relative need for goods for specific buyers at a specific moment. If you want the price of a specific good, expressed in a specific currency, to remain unchanged, your only option is to peg the exchange rate of that currency to the value of that good—effectively backing the currency with the commodity. There is no problem with creating a Bitcoin sidechain, freezing a certain amount of Bitcoins, and pegging the tokens issued against them, for example, to oil. That’s it; now one barrel of, say, Brent costs one token. Always. You just have to monitor the collateral size, because if oil becomes significantly more expensive in Bitcoins, the collateral will have to be increased. At the same time, when buying some aluminum or grain with “oilcoins,” you will inevitably encounter price changes.

But all of this has nothing to do with direct democracy, because you can never predict in advance what emission parameters the holders of your crypto-fiat will set. Perhaps they won’t want stable prices for some basket of consumer goods, but will simply take advantage of the fact that the emitter always profits from emission—and issue more tokens to quickly buy up Bitcoins with them. Or do you intend to build a managed democracy and prevent holders from acting so unsightly?

Regarding Self-Ownership and the NAP

The channel Prometheus, whose programmatic article I recently analyzed, decided to return the favor and began analyzing an overview article on libertarianism from the LPR website. In the first part of the analysis, they touched upon the principles of self-ownership and non-aggression.

After logically poking at the boundary conditions of the two principles (if a person belongs to themselves, they should be entitled to sell themselves, and may also be stripped of themselves by court decision; as for the application of the non-aggression principle, everything boils down to the definition of aggression, which is subjective, and one cannot build stable orders on such a shaky foundation), they point out that left-anarchism has a solution. As a solution, that same direct democracy is proposed: all orders are established by all members of society.

Here I can only point out that a society of total direct democracy would require some criteria for who to include in the set of voters for each specific issue. Where is the line that, once crossed, a person loses the right to vote on a certain topic because it does not concern them? If there is no such line, we get a society where everyone is obliged to ask everyone’s permission for everything—a legal absurdity worse than the city of Morlow from Interstate 60. I hope to see an answer in the following parts of the review (in the article I analyzed, there is no such answer).

The image of legal absurdity—may it haunt you as well

Bitcoin vs fiat during freebanking

I keep wondering which currency will prevail in conditions of free currency circulation: a guaranteed hard currency or one with an emission center?

Let’s imagine a hypothetical case of gold/bitcoin versus paper money. In this case, paper money could be issued by a Central Bank or a private issuer (like MMM) and have a pre-announced inflation rate at the beginning of the year (for example, 0.5%). They could also be stored on cards, meaning everything would be like with the dollar, but without the obligation to use it specifically in a certain territory. Mainstream proponents claim that this is better than hard money (because there are fewer crises, as far as I can understand), and I am supposedly some kind of backward Austrian. But I want to argue that it is their statism that has skewed everything in the modern economy, and free people use free money. In short, my question is: which money will win under conditions of freedom—money controlled by a group of economists or free money?

Attached to the question is a donation in the amount of 0.00118933btc

Since you are a proponent of AES, you most likely mean not “price increases”—that is, a decrease in the value of the currency relative to some hypothetical basket of goods—by inflation, but purely monetary inflation, meaning the rate of increase of the money supply. For gold in 2017, inflation was 1.5%. For bitcoin today, it is 3.65%. Presumably, it will equal gold in terms of inflation rates in 2022. Thus, the hypothetical fiat money with 0.5% inflation that you propose comparing with gold and bitcoin appears, at first glance, to be an even better store of value than gold or bitcoin.

However, you did not mention such a parameter as the hardness of money for nothing. By hardness, we mean the elasticity of the money supply in response to a price increase. Let’s say, if the price of gold rises sharply, it becomes more profitable to invest in its development at deposits previously closed as unprofitable, or even in extracting dispersed gold from seawater. Thus, gold is not a very hard currency, but due to the enormous stock of gold accumulated by humanity, even a twofold increase in the global production of this metal would still only increase its inflation to 3%.

In order to increase the supply of bitcoins, a hard fork is necessary. But a hard fork means a split of the chain and the creation of two cryptocurrencies with different emission rates. Naturally, the main mining power will work on producing the less inflationary old bitcoin, and the fork will remain a toy for speculators, losing value even more strongly than could be attributed to the difference in inflation rates. In other words, one can quite confidently assert that bitcoin is an absolutely hard currency, and there are no scenarios in which the production of new bitcoins could increase in response to a price increase.

Now let’s consider a private fiat MMM-coin. Yes, we know that today the inflation rate is 0.5%. But we have no guarantees that tomorrow the emission center will not decide to make inflation 1% or 10%. Fiat whose emission is centralized is absolutely soft money; therefore, its use as a means of saving only makes sense if the investor in this currency has reasons to trust the issuer that the supply of new money will remain low in the future. For example, he holds a hypothetical gun to the issuer’s hypothetical temple, but even in this case, hackers could be a serious problem.

However, the function of storing value is not the only task set for money. The second function is the use of money for settlements. And here, fiat certainly holds all the trump cards. Distributed ledger technology, which underlies bitcoin, will be inferior to the centralized ledger technology used in fiat settlements in terms of speed and cost—at least in the part of the operation where end users of the settlement system are served.

Naturally, the bitcoin community is also solving this problem by proposing the use of technology such as Lightning or sidechains. Their essence is that a certain amount of bitcoins in the blockchain is frozen, and in return, exactly the same amount is launched to move outside the main blockchain. In other words, we are talking about the issuance of fiduciary means of circulation, and if bitcoin is digital gold, then Lightning or Liquid is the technology for issuing digital banknotes.

What can a centralized money producer oppose this with? First and foremost—aggressive marketing. Imagine that tomorrow total ancap and free banking arrive, and the day after, Jeff Bezos releases a fiat Amazoncoin. He can offer his store customers a 10% discount when paying with Amazons. He can provide any other stores with terminals for accepting Amazons for free and charge them less for acquiring than Visa does, or charge nothing at all for the first year. Finally, he can invest tons of money in advertising.

So I wouldn’t write off fiat just yet; it will leave the stage slowly and majestically, and most likely will eventually simply merge with the crypto-economy, turning into fiduciary money backed by bitcoin, just as it once grew out of fiduciary money backed by gold.

For a deeper mastery of the material, I recommend reading the article “Modeling the Value of Bitcoin Considering Limited Emission”, as well as the monograph by Saifedean Ammous “The Bitcoin Standard”.

Well, Hoppe didn’t come for nothing

I don’t particularly enjoy writing long-reads (which isn’t very smart of me, as they are how I make more money). Therefore, I am always glad when someone creates a detailed text that I mostly agree with, thereby saving me a great deal of effort.

After Hoppe’s lecture in Moscow (I’m waiting for the recording to appear so I can formulate my own opinion on it), a discussion began among the authors of several medium-sized channels and public pages, which seemed quite fruitless to me: arguments over terminology, personal attacks, distortions—what could be more vulgar? But I was wrong. A stupid argument, the course of which I won’t even summarize here, prompted Ved Neuman, the author of my favorite channel Antistate, to put together an excellent programmatic article.

The article clearly explains that ancap is not reduced to Rothbard-Hoppe-Svetov and the construction of a society based on the absolutization of the non-aggression principle, and that economic theory is not reduced to the classical Austrian School of Mises’ time. It provides a professional lead-in to panarchism and explains quite reasonably why this is a promising direction for real work.

I hope that in a couple of weeks, once the online flame war that gave birth to this article loses its relevance, the author will rewrite it, removing the polemical specifics and changing the title while keeping the conceptual content; then it will be truly great. But the article is definitely worth reading already now.

This question stumped me in an argument. Why is it necessary to privatize a state enterprise if it is profitable?

Bvl72

Let’s figure out where this enterprise came from.

First, the state could have collected taxes from citizens, spent less on citizens’ needs than was collected (or borrowed money, or printed new money) — and bought a profitable enterprise. Thus, this results in a misappropriation of funds: money was collected under the pretext of providing services to citizens, but instead was spent on running a business. Legal logic dictates the solution: sell the enterprise, divide the proceeds among the citizens — and henceforth, do not acquire enterprises at the expense of the budget.

Second, the state could have provided the state-owned company with preferences, thanks to which it prospers. For example, the state enterprise fulfills government orders, or trades duty-free, or has preferential loans, or uses insider information, or is simply a monopoly. Thus, we have unfair competition, as a result of which the competitors of the state enterprise receive less profit or even incur losses. Legal logic requires eliminating this conflict of interest and removing the referee from the field of play.

Third, the state could have bought out a loss-making private enterprise in a pre-bankruptcy state, and then the market conditions changed, and that same activity began to yield a profit. In other words, the state took a significant entrepreneurial risk, which in this particular case paid off — but how many cases were there where the purchased loss-making enterprise continued to suck money from the budget, or eventually went bankrupt! Thus, taxpayers are exposed to the risk of serious economic losses without their consent. Legal logic requires coordinating investment policy with shareholders, and if the management of an investment fund behaved this way, it would lead to their removal.

In short, any attempt by the state to engage in entrepreneurial activity one way or another violates the rights of citizens, and therefore consistent libertarian reforms must inevitably include the full privatization of state property.

Mechanics of Freedom, Part 2, Chapter 6. Selling the Streets.

In another chapter of The Machinery of Freedom, which I would like to present to you today, David Friedman puts forward a number of proposals that clearly run counter to the urban planning ideas of both his time and the present, but are quite capable of solving many problems of city traffic. Of course, for Russia, the mentioned problems were completely irrelevant in 1969 due to the lack of private transport in quantities that would cause traffic jams, but now we are experiencing them in full, and therefore the book should be quite timely.

Support for Mikhail Svetov’s Tour

After yesterday’s announcement, I thought about letting you rest, but now I have a selfish interest.

On October 16, Mikhail Svetov will perform in Novosibirsk. This visit is part of the month-long tour of 29 cities that I previously described, of which only Saransk has fallen through so far.

On the official website of Svetov’s team, funds are being raised to support the tour as a whole. However, as I understand it, although it is written there that the money will go toward tickets and venue rentals, in reality, only tickets are paid for from there. The local organizing team claims that due to the influx of people wishing to attend the lecture, they had to find a large hall, which means the need to find 32,000 rubles for its four-hour rental. In this regard, in the Novosibirsk LPR Telegram channel (by the way, please subscribe), an additional fundraiser has been announced; the payment details differ from the official Svetov ones, don’t be alarmed.

The theme of the lecture is the new federal treaty. There is a short five-minute clip about this on the SVTV channel; he also seems to have given this lecture in several cities, but I only managed to find a recording from Yekaterinburg in terrible quality. Local organizers promise to try and make a more decent recording and a separate stream this time.

Thanks in advance to everyone who chips in for the lecture; I’ll provide a review of how it went.

Monopolies are returning

About three weeks ago, among other things, I happened to announce an event by the Tea Club with the long title “The Splendor and Misery, Fear and Hatred of Monopolies.” At the time, I complained to the club that their previous event had been poorly recorded and expressed hope that they would succeed on their second attempt. In short, they succeeded.

Recordings of all five speakers’ presentations have been posted and collected in a playlist on the Tea Club’s YouTube channel (by the way, please subscribe). It contains only the lectures, without the Q&A sessions, so it’s quite compact, which motivates one to attend such events in person whenever possible.

I will briefly share my impressions.

  1. Alexander Litreev. Monopoly in the Network. He discussed how the state, in its attempts to monopolize internet censorship, constantly swings for a dollar but hits for not just a penny, but rather millions of rubles in losses for innocent parties, all while completely failing to achieve its actual goals. It was delivered energetically; I learned a few new things, although mostly well-known facts were presented.
  2. Sergey Zhavoronkov. Can a Monopoly Be Useful?. He explains the difference between market and non-market monopolies, and why the former are not scary, while the latter cannot be cured by antitrust laws. My impression was mixed: Sergey distorted the plot of the trampoline case, confusing the Altai Krai with the Altai Republic, and a square with a shopping center—in short, it would have been better to stick to a simple mention without a retelling. Otherwise, suspicions arise as to whether he was mistaken in the details of less-known historical anecdotes, and then the logic itself can be called into question.
  3. Matvey Tzen. Monopoly on Violence. The longest lecture, but the most saturated with various little-known historical anecdotes. He talks about the difference between positive and natural law, the difference between laws and law enforcement practice, why Weber, with all due respect to his merits as a sociologist, is not particularly revered today in legal terms, but most importantly—why the state dislikes grassroots initiatives to help the state. I liked it very much.
  4. Egor Zhigarev. Is There a Monopoly in the Video Game Market?. The most compact presentation on the most specialized topic. In short, the industry is highly competitive, and no matter how hard market agents try, none of them have managed to even come close to a monopoly.
  5. Alexey Markov. The Splendor and Misery of Monopolies. Also a narrative very rich in historical anecdotes. He discusses the history of the very concept of monopoly, and how they were initially perceived as an unconditional good, while the idea of the benefit of competition is a merit of later economists. He analyzed cases of several monopolies, from the Russian Company to Gazprom, and how they all decayed. He also touched upon a specific case of monopoly, such as the patent monopoly, and where that can lead.

In short, the experience turned out to be very successful, and now the organizers want to make it a regular occurrence. The format was named TNT – Tea’n’talks. An announcement for the second part of “Monopolies” has already been posted on the newly created TNT page on the Tea Club website.

So as not to weary the readers, I will probably announce further events in this genre very selectively, so you’re on your own from here on. I hope you enjoy them.

How can the possession of some kind of extra benefits, like a car, affect your social status, your career, and the definition of you as a person?

I am a good architect, a pro at my craft, but I don’t have a car, and at the office they consider me a loser. Among my acquaintances, I know examples of people who are talented but live modestly, or just barely make ends meet. Sometimes this traps them in a conditional framework of poverty. Can an ascetic lifestyle correlate with success, and vice versa? Is a conditional car or an iPhone bought on credit an indicator of success?

Gvidon

Hello, you are listening to the program “Status,” in the studio are Ekaterina Schulmann and I, Michael Naki… Sorry, I couldn’t help myself.

The demonstration of status is a very ancient cultural quirk which, as far as one can judge, has accompanied humanity since pre-rational times. Its purpose is quite clear. The demonstration of status exists to save effort. Having once won in a competitive struggle, a person can continue to confirm their position as a winner through new clashes, but this is a rather burdensome strategy. However, if a tradition has developed in society that status is confirmed by some identifying mark, then it is convenient for both the person who has the status—they do not need to spend energy on confirming it every minute—and the person who does not have the status—they do not risk running into a strong opponent out of ignorance and simply will not get in their way.

Usually, status was confirmed through the possession of certain rare artifacts. Obviously, many were tempted to acquire these very rare artifacts without actually earning the status, which effectively means forging a certificate. Naturally, this led to such forgeries being strictly prosecuted: in some places commoners were forbidden from wearing lace, in others slaves were forbidden from wearing belts—who knows how many such rules the rich human imagination can invent!

As society transitioned from a class-based system to a model where a person’s status clearly correlated with their wealth, conspicuous consumption blossomed. Every society goes through this stage in its own way; the surge of such conspicuous consumption after the collapse of socialism in the USSR was quite curious. All those anecdotal gold chains as thick as a finger are exactly that.

However, egalitarian trends in society, as well as the multi-factored nature of the concept of status itself, have led to the fact that shoving demonstrative attributes of wealth in people’s faces is no longer fashionable. Why? Because a single scale of statuses has disappeared. You might be a billionaire, while your interlocutor is an FSB colonel, or the Pope, or a world tennis champion. Whose status is higher is determined by the context, which means this entire complex system of visual markers begins to work poorly—and gradually disappears due to lack of necessity. Kadyrov wears tracksuits, Zuckerberg wears a t-shirt, monarchs wear jeans, prime ministers ride bicycles—complete Sodom and Gomorrah, in short. People with means choose things based on their functionality, not on their status.

On the other hand, the status race still continues at the grassroots level. A vacation in Nice beats a vacation in Turkey, an iPhone beats a Huawei, and having a car beats not having one, even if the car owner has switched to instant noodles to afford it, while the one without it takes taxis and doesn’t give it a second thought. Also, in wealthy corporations, an employee may be required to engage in certain status consumption simply to demonstrate the company’s success.

It makes sense to obsess over conspicuous consumption where it actually allows for smoothing over edges and building informal hierarchies for everyone’s convenience. Moreover, the aforementioned multi-factored nature of statuses allows you to maneuver within fairly wide limits. Let’s say it is too costly for you to demonstrate status in the workplace by buying a car because you already have a mortgage and need to get a child ready for school—but you can be the life of the party, and at any corporate event, you are the one entrusted with the opening remarks. And, by the way, during one of those speeches, nothing stops you from selling your colleagues the line that the material demonstration of status is a sign of poverty, and that the “right” people have long since moved from collecting things to collecting experiences.

A “tough” lad