Mark Shuttleworth, gold, Ubuntu, capitalism, freedom and software  

November 17th, 2008 by Irdial 1DnwFLXczVZV8kLJbMYoheUrpqHesjxrSi

Let’s start with a superb essay by Lew Rockwell:

The Myth of Good Government

by Llewellyn H. Rockwell, Jr.

One of the great and most persistent errors of classical liberals is to believe in “good government,” a government that does “what it is supposed to do.”

There is nothing the state can do, which society needs done, that cannot be done far better by the market. Another point that is just as telling: no state empowered to do what is supposedly necessary will restrain itself to those things. It will expand as much as public opinion will tolerate.

Sometimes the point is easier to see when looking at foreign governments, such as the tragic case of China. The government is embarking on an explosive venture to dump $586 billion into “infrastructure” over two years. The reason is the classic Keynesian excuse: the spending is needed to stimulate investment. Never mind that this trick has never worked in all of human history. This is instead a grand plan to loot the private sector on behalf of the Communist Party, which will then spend the money bolstering its power.

No country knows more about the failures of this type of central planning than China. Every form of collectivism has been tried out on these poor souls, and tens of millions lost their lives in the course of Mao’s insane collectivist experiments. That this new plan is being enacted in the name of Lord Keynes rather than Karl Marx is irrelevant. The effects are the same: expand power and reduce liberty.

China’s recovery from communism is one of the most inspiring stories in the history of economic development. The country went from being a suffering and impoverished land of catastrophe to being modernized in just 15 years. The state shrunk in scope nearly by default as the private sector grew and grew. This wasn’t the plan. It was the de facto result of the new tolerance of free economic activity. The state went into protective mode to keep its power, and did nothing to stop the swell of private enterprise. The result was glorious.

Keep in mind this critical point. China’s restoration as a civilized society came about not due to some central plan, but by its absence. The fact that the state did not intervene led to prosperity. Again, it wasn’t a policy or a constitution or a law that made the difference. There was no switch from a communist-style government to a night-watchman state. Because the state abandoned its posts under public opposition and contempt, society could flourish.

But the state never went away. It’s just that its depredations have been spotty and unpredictable. Had history taken a better course, the central state would have melted away completely, and law would have devolved to the most local levels. Sadly for the Chinese, the state persisted in its old structure, even as the private sector grew and grew. The state still had its hand in the large industries such as steel and energy, and, of course, it controlled the banking sector.

The government never became good (an impossibility). It was and is bad. It was just less bad than in the past because it did less. But all states lie in wait for a crisis. The earthquake in the southwest provided one great excuse for intervention. But nothing except war compares with an economic crisis as a great excuse for state expansion. Chinese officials can count on support from Western “experts” here, and the thoroughly disgusting US response to our own economic downturn has provided an awful model for the world. Think of it: the Communist Party in China is now citing the US as the main reason for its plot to loot the private sector and bolster its own power at the expense of the country.

So much for being a beacon of liberty in a dark world! Instead, the US is helping to shut out the lights and bolster decrepit despotisms. This is surely one of the great ironies of the current political moment. Instead of teaching the world about liberty, the US’s newly empowered unitary executive is christening various forms of dictatorship.

There can be no question that China’s spending will not improve economic growth. It will instead extract $586 billion from the private sector and spend on political priorities. Never forget that no government has wealth of its own to spend. It must come from taxation, monetary inflation, or debt expansion that must be paid later. And government’s spending choices will always be uneconomic relative to how society would use that wealth. That is to say, it will be wasted.

But won’t the spending spur investment? It can create local boomlets, but they will be temporary. To the extent that the new spending causes a spending response from investors and consumers, this is more evidence of an uneconomic use of scarce resources. If the money is used to prop up failing companies, that’s particularly bad since it is an attempt to override market realities, an attempt that is about as successful as trying to repeal gravity by throwing things up in the air.

The nature of the state – and the core of its rationale for existence – is the conviction that it stands apart from and above society, to correct the failings of the market and individuals. A presumption of superiority is at the very claim of the state, whether it is minimal or totalitarian. Who is to say when and where it should intervene? Well, think about it. If the state is inherently wiser than and superior to society, standing in judgment over what is working and what is not working, the state alone is also in a position to decide when it should intervene.

No government is liberal by nature, said Ludwig von Mises. This is the great lesson that people who advocate “limited government” have never learned. If you give the government any jobs to do, it will presume the right to police its own conduct and then inevitably abuse its power. That is true in China and it is true in the US.

It was the science of economics that first discovered the radical incapacity of the state to make any improvements in the social order. It turns science on its head to invoke economics as a reason for the government to loot and pillage in the name of “stimulating investment.” Stimulation here, there, and everywhere amounts to a diminution of freedom, security of property, and prosperity.

Keynes famously praised Nazi economic policies in the introduction to the German edition of his worst book, the General Theory. After a century of horrors, free men and women, in China, the US, and the world surely deserve better.

[...]

Lew Rockwell

Fascinating and true.

If China can turn itself around in 15 years and the state shrink in scope nearly by default, and if banking is the last and most important bastion of state control, what could we expect if the resourceful Chinese adopt a private currency on a large scale?

There would be nothing that the state could do without destroying the economy if the currency was spread quickly and widely enough.

The question is how should such a currency be designed and rapidly deployed?

It would have to be some form of precious metal in denominations that made it practical for many types of transaction, from small groceries to buying a car.

In the past the wealthy of China used ingots:

and of course, the peasants used many different types of coin:


Chinese bronze coin from the Han Dynasty

and look at these coins, with their tamper evident edges:

And this is pretty…sorry, just had to throw it in:

Essentially, you need a mint, to think about the denominations and then to distribute the coins and bullion. It would be a good idea to get hundreds of millions of people to use vast amounts of low denomination gold coins; then by exchange, certain individuals, probably shop owners, would start to accumulate large numbers of coins.

Thinking about it, that is absolutely the way to seed a new economy that runs on a private currency; many small coins whose value goes up to, say the equivalent of a €500 note, spread to as many individuals as possible, so that daily exchange is made as easy as possible for everything from a bowl of noodles to a bicycle.

This brilliant piece by Lew Rockwell is well timed. Some people are organizing demonstrations outside every Federal Reserve building to ‘End The Fed’. These people haven’t got a hope in hell of ending the Federal Reserve system if all they have in their arsenal are the discredited tactics of the twentieth century.

They correctly identify the Federal Reserve as the cause of many ills and the recent crash; what they do not understand is the true nature of the force that should operate to control interest rates in absentia of central banks. The Market.

If they understood the true the power of the market, they would try and harness it directly to end the Fed, and not protest like beggars asking for oatmeal in the poor house. If they understood anything at all about problem solving they would never opt to demonstrate. Readers of BLOGDIAL know the truth about demonstrating.

If they want to solve this problem, they need to attack it directly. That means attacking the Federal Reserve Notes by issuing their own private currency, and then using it for all their transactions. There are difficulties in doing this, and one of them is Gresham’s Law:

Britannica Concise Encyclopedia: Gresham’s law

Observation that “bad money drives out good.” It is named for Sir Thomas Gresham (1519 – 1579), financial agent of Queen Elizabeth I, who was one of the first to elucidate it (he had been preceded by Copernicus). The meaning expressed is that, if two coins have the same face value but are made from metals of unequal value, the cheaper will tend to drive the other out of circulation; the more valuable coin will be hoarded or used for foreign exchange instead of for domestic transactions.

If that law is true, then issuing a private currency made of gold will have difficulty driving out Federal Reserve Notes. Hmmmmmm.

Small digression.

With the internet, it should be possible to distribute a private physical currency everywhere in a very short amount of time, and to spread information about it virally.

While we are at it, Obama wants to shut down internet payment systems that he does not like:

Develop a Cyber Crime Strategy to Minimize the Opportunities for Criminal Profit: Barack Obama will shut down the mechanisms used to transmit criminal profits by shutting down untraceable Internet payment schemes. Barack Obama will also initiate a grant and training program to provide federal, state, and local law enforcement agencies the tools they need to detect and prosecute cyber crime.

[...]

Barack Obama

“shutting down untraceable Internet payment schemes” means shutting down any payment system that does not allow back door automatic surveillance. Obviously. It means more laws to meddle in our internetz; laws that will inevitably have spill-over into things other than ‘payment systems’.

Another small digression.

Other private currency vendors (Mints) would no doubt spring up with their own coins, adding to the choices and flexibility.

Either way, you will not stop the bailouts, stop the war machine, or end the Federal Reserve if you do not have control of the money. A private currency is not going to appear from nowhere by magic; someone has to design it properly and release it, and according to this post on mises.org, the Liberty Dollar is not what it should look like:

Silver

As a student of Austrian Economics and supporter of commodity money, I regard the assault upon the American Liberty Dollar (ALD) with alarm and sadness, but not surprise.

While nothing the ALD firm did was clearly criminal, in that no force or overt fraud was used, their tactics could charitably be described as sleazy. They were designed to trade silver medallions to the ignorant and unwary at premiums that were many multiples of the market norm. In doing so, they created unnecessary complexity and confusion about hard money.

Consider:
1) Appropriating the face of Ron Paul without so much as asking his permission. Yes, he is a public figure so the appropriation will not be considered criminal, but it is feels sleazy.

2) Erecting a multilevel marketing scheme that provides profits that have at times exceeded 100% to insiders. The tale (face value) of the ALD was raised from $10 to $20 when the market price for an ounce of silver crossed $7.50. ALD dealers split the $12+ profit with the ALD firm. I am not against profits, I seek them. But I know where I can buy 1 ozt silver medallions, including ALDs, at less than $1 over spot silver. Only the ignorant pay such exorbitant prices for silver coins.

3) Creating confusion and needless complexity by marking their coins with a dollar-denominated tale. Unlike countless other silver coins with tales denominated in STU (silver trade unit), WTU, Sovereign, or simply weight, the ALD was denominated in dollars, a figure reserved to government-issued, primarily US and Canadian, currencies.

Mises himself taught, in The Theory of Money and Credit “…at all times and among all peoples the principal coins have been tendered and accepted, not by tale without consideration of their quantity and quality, but only as pieces of metal of specific degrees of weight and fineness. Where coins have been accepted by tale, this has always been in the definite belief that the stamp showed them to be of the usual fineness of their kind and of the correct weight. Where there were no grounds for this assumption, weighing and testing were resorted to again.

Nevertheless, in defiance of all official regulations and prohibitions and fixing of prices and threats of punishment, commercial practice has always insisted that what has to be considered in valuing coins is not their face value but their value as metal. The value of a coin has always been determined, not by the image and superscription it bears nor by the proclamation of the mint and market authorities, but by its metal content. Not every kind of money has been accepted at sight, but only those kinds with a good reputation for weight and fineness.”

4) Exploiting the self-made confusion of the tale by crowing about the “doubling” of the ALD when they changed the tale from 10 to 20 “dollars” per ozt. “Immediately all Liberty Dollars, in specie, paper and digital forms DOUBLED. If you had Liberty Dollars before the Move Up you profited because the underlying commodity increased in value. If you had digital, your eLD doubled the next day. If you had paper Silver Certificates, you could redeem them for the new $20 Silver Libertys. If you had Silver Liberty in specie form, you were offered a special re-minting rate to exchange them for new $20 Silver Libertys.” Liberty Dollar Doubles

Of course, nothing had changed, 1 ozt of silver remained 1 ozt of silver, and by marking their coins in “dollars” they were caught in the inflation of FRNs. Few “$10″ ALDs were actually re-minted; they now circulate with all other silver medallions, currently at premiums of $0.60 to $1 over spot in small quantities (1 to 500 coins).

5) Slander of Walmart (big firm in Bentonville) and the implication that competing silver medallions are not pure in The Liberty Dollar Merchant Script.

6) Note also in that document the multiple referrals to “local business referral currency.” The appeal is to autarky rather than free commerce, with more slander to the effect that “big box retailers are in bed with the big bankers.”

The ultimate argument of the ALD firm boils down to this: A number stamped on an ounce of silver changes its value, and so determines whether it will or will not circulate. The explicit assumption is that “average” people are too stupid to know that a Liberty mint or A-mark 1 ozt silver coin with no dollar figure stamped on it and a norfed ALD with some fictional number of “dollars” stamped on it are really and truly the same thing: 1 ozt of fine silver with markings to prove that fact. Period.

The arrogant conceit that most people are too stupid to understand weight of metal without the assistance of a self-proclaimed “monetary architect” is breathtaking. History and present-day practice shows that always and everywhere precious metal coins are valued by weight and fineness (purity) with minor adjustments for being widely recognized, particularly beautiful, or other characteristics.

The aggressive tactics created by the ALD firm and taught to ALD dealers were designed to fool the unwary into believing that an ounce of silver was worth far more than the free market price. Indeed, some ALD dealers vehemently defend the large premiums attached to their products. In at least some cases, ALDs were passed to unsuspecting clerks with a casual “Oh, that’s the new twenty dollar coin.” Owners and managers discovered the deciet in the till only after the dealer was long gone. These tactics caused an increasing number in inquiries to government agencies, district attorneys, and police. It was not successful competition with FRNs that killed the ALD, it was attracting the attention of government agents with methods that had the look and feel of a scam.

The ALD firm did not deserve to be shut down, but if commodity money ever makes a return, it will do so in spite of ALD-created confusion and without multilevel marketing profit margins. In the happy future where silver and gold coins are used in daily commerce, the markups associated with minting and distributing the coins will fall to their historical norms of a few percent over melt value.

[...]

The Liberty Dollar Question – Mises Economics Blog

Clearly there are a substantial number of people with sufficient knowledge to design a optimal currency to replace Federal Reserve Notes, and there is a demand for this service that will only grow stronger as the value of everyone’s savings starts to evaporate at an ever greater pace thanks to the heat of inflation boiling away the value of the dollar.

We wrote before about the Totnes Pound; there is a demand for clean money not only in the USA but in Great Britain.

The question I have is, who is going to be the one to put their fortune into launching a private currency? What sort of person are we looking for? It seems to me that a Mark Shuttleworth type is the most likely candidate; someone who has been made aware of these problems and the solution and who will see in themselves a beneficial instrument of liberation:

This is not the end of capitalism

Some of the comments on my last post on the economic unwinding of 2008 suggested that people think we are witnessing the end of capitalism and the beginning of a new socialist era.

I certainly hope not.

I think a world without regulated capitalism would be a bleak one indeed. I had the great privilege to spend a year living in Russia in 2001/2002, and the visible evidence of the destruction wrought by central planning was still very much present. We are all ultimately human, with human failings, whether we work for a state planning agency or a private company, and those failings have consequences either way. To think that moving all private enterprise into state hands will somehow create a panacea of efficiency and sustainability is to ignore the stark lessons of the 20th century.

The leaders and decision makers in a centrally-planned economy are just as fallible as those in a capitalist one – they would probably be the same people! But state enterprises lack the forces of evolution that apply in a capitalist economy – state enterprises are rarely if ever allowed to fail. And hence bad ideas are perpetuated indefinitely, and an economy becomes dysfunctional to the point of systemic collapse. It is the fact that private enterprises fail which keeps industries vibrant. The tension between the imperative to innovate and the consequences of failure drives capitalist economies to evolve quickly. Despite all of the nasty consequences that we have seen, and those we have yet to see, of capitalism gone wrong, I am still firmly of the view that society must tap into its capitalist strengths if it wants to move forward.

[...]

http://www.markshuttleworth.com/archives/227

In fact, Mark Shuttleworth is a PERFECT candidate, as we can see. He just doesn’t know it yet.

In case you didn’t know, Mark Shuttleworth is a South African philanthropist genius billionaire who single handedly accelerated the adoption of Linux and put it into the hands of the masses with Ubuntu. I say single handedly because he financed it by himself; where other distributions were getting better and better slowly like Fedora, Mark Shuttleworth took the Debian distribution and turned it into something that anyone anywhere could use by pouring money, philosophy and hard work onto Debian. The result has been a complete success, and now Ubuntu is being sold on Dell laptops as standard.

There are not many capitalists who understand the Open Source business model and its associated philosophies. Just look at the irrational buggy whip thinking of the music and film industry to hear what ordinary, unintelligent business people think about making money from giving away something for free.

The right man for this job would understand scale. He would understand networks, both internet and real world. He would be driven by philosophy as much as the desire to make money. He would understand the philosophy behind the Free Software movement. He would also have a grasp of banking and how currencies work. He would be able to apply and to synthesize all of this into a project to spread debt free, central banking free currency that is owned by and for the benefit of the public…just like Ubuntu is.

I could not think of a better time to launch such a project; the dollar is collapsing, the headless chickens of the G20 are all jockeying around for a ‘solution’. What better time to checkmate them all with the release of a new, private currency that trumps them all, into which everyone can convert their savings and buy their bread with.

Now that would be something worth while!

Share/Save

One Response to “Mark Shuttleworth, gold, Ubuntu, capitalism, freedom and software”

  1. BLOGDIAL » Blog Archive » Slaves of Iceland: Libertarians have your way out Says:

    [...] real need for, which they can use to make more money. This is a great business opportunity for entrepreneurs to step in and create a good set of monetary units for [...]

Leave a Reply

You must be logged in to post a comment.