Rick Falkvinge's Blog, page 7

Old world squanders opportunity to tame bitcoin a little

Bitcoin: The American SEC, which oversees financial institutions, has rejected a bid to create a traditional trading fund (an ETF) based on bitcoin. The trading fund was the initiative of the Winklevoss brothers, who had seen this as a way to bring bitcoin to the masses and make money in the process. While a lot of the bitcoin world talked about the ETF, caring too much about the approval of the old world is ultimately misguided.

The bitcoin community had been awash in buzz all week about the Securities and Exchange Commission (SEC) promising a decision by March 11 on whether the Bitcoin ETF had governmental approval or not. The decision was delivered at 21:00 UTC on Friday, and the bitcoin exchange rate took an immediate nosedive, from 1300 USD per coin earlier in the day to below 1000. It has since recovered to just under 1200.

It should be noted that other similar constructs, with non-American names, exist elsewhere since some time ago. For example, bitcoin is already traded as a security like this on the Stockholm Nasdaq exchange, where it was first to launch.

At the end of the day, though, seeking the approval of the SEC and other governmental financial bodies is ultimately misguided. Bitcoin was specifically designed to not submit or yield to their jurisdiction; bitcoin was designed to replace the old corrupt financial world. Thinking of bitcoin’s success in terms of uptake by the old world is like measuring the success of mammals in terms of their approval by dinosaurs.

Thinking of bitcoin’s success in terms of approval by the SEC is like measuring the success of mammals in terms of their approval by dinosaurs.

The SEC justified their decision by noting that bitcoin cannot be regulated enough to meet approval standards. In other words, they denied the bitcoin ETF’s stamp of approval of the old world specifically because bitcoin does not submit to the rules and the frauds of the old financial world.

That, if anything, shows that bitcoin is working exactly as intended. And in this decision, the SEC squandered an opportunity to delay their own replacement a little: if they had brought bitcoin into the old world, it would replace the old world at a slower pace.

Syndicated Article

This article has previously appeared at Private Internet Access.

(This is a post from Falkvinge on Liberty, obtained via RSS at this feed.)

Switzerland proposes net censorship to protect domestic gambling against competition

Corruption: In a surprise move, Switzerland has a bill passing through parliament that would introduce net censorship to protect domestic gambling against foreign competition. This is as dangerous as it is misguided and utterly ineffective, and it is alarming to see that even a strong democracy like Switzerland not seeing censorship for what it is, especially when it’s being used for protectionist means.

This Swiss bill, which has moved through several legislative steps and is on its way to becoming law, mirrors similarly misinformed initiatives in other countries. It is still something of a shock to see it happen in Switzerland, which is known for having a very strong protection of civil rights.

A recurring theme in facepalms like this is how legislators don’t understand that the Internet is inherently borderless, in combination with everything on the Internet being private communications. There just isn’t something on the Internet that is “a commercial service” that isn’t also private communications while using said service – and thus, blocking a foreign commercial service on the net is indistinguishable from general censorship of certain private correspondence.

Blocking a foreign commercial service on the net is indistinguishable from general censorship of certain private correspondence.

What’s particularly interesting is to observe how legislators are bending over backwards to explain how this is “not censorship”, even to public state media, which is a telltale sign they’re well aware of 1) that it technically is censorship, and 2) that such censorship is illegal, and 3) that they therefore must bend every definition in existence to get away with doing it anyway.

Other countries have tried similar bills. In Sweden, there was a bill in 2008 trying the same thing which was summarily discarded, which didn’t deter the local lobbyists; another was just initiated with the same purpose.

The real danger lies in establishing the idea that censorship can be an acceptable method of protecting an industry’s legacy market position against competition.

At the end of the day, the efforts are utterly futile, as such censorship is trivially circumventable by using a VPN; sometimes even just by changing your DNS settings to use a public uncensored DNS server. But the danger isn’t in its ineffectiveness; the real danger lies in establishing the idea that censorship can be an acceptable method of protecting an industry’s legacy market position against competition.

Privacy and free speech remain your own responsibility.

Syndicated Article

This article was published at Private Internet Access.

(This is a post from Falkvinge on Liberty, obtained via RSS at this feed.)

Is it reasonable for a private industry to demand governmental censorship power over general communications?

Copyright Monopoly: The copyright industry is trying – again – to forcefully conscript Internet Service Providers into doing their bidding. This time, the RIAA and other organizations are demanding “filtering”, which is a pretty word for censorship, of anything they don’t want people to send to each other privately.

Ask yourself this one question: is it any shade of reasonable that a private industry gets a governmental mandate to silence our phonecalls when we talk about things that the private industry in question don’t want us to talk about? Because that’s exactly what the copyright industry is demanding here, exactly what they’re demanding, as applied to the Internet.

This demand is so audacious, so revolting, so utterly despicable I don’t really know where to start. These are rent-seeking parasites* who are so completely shameless they claim they have a moral high horse in demanding censorship of general private communications when it goes against their profit interests.

This is completely in line with my previous column about how the copyright industry is so bothered by civil liberties and due process, they are trying to circumvent and eliminate both. In particular, note how this fits with the line of action of having ISPs be governmentally forced to be non-accountable thugs of the copyright industry.

It’s important to notice three things here:

First, it is not reasonable to prevent transmission of a particular movie or music, even if it breaks the law. We have a judicial system where somebody is punished after the fact, and after something called due process. This demand is Minority Report pre-crime bullshit.

Second, this completely eliminates fair use as a concept. There are millions of cases where publishing something on YouTube is illegal in one context (say, just sharing it), and completely legal in another context (say, providing political commentary on the exact same piece). Blanket censorship, as the copyright industry demands here, would be completely blind to all the exceptions to copyright distribution monopolies – exceptions without which the copyright monopoly would be in direct conflict with the First Amendment in the US and freedom of speech in general elsewhere. These exceptions, which are rights and not defenses, are what allows the copyright monopoly to even exist from a constitutional standpoint. Blanket, automated censorship would just strike out this entire field, which is exactly what the copyright industry wants (until somebody would challenge its following constitutionality, but still).

Third, copyright law is immensely complex, and cases are frequently being decided in Supreme Courts. Despite this, the copyright industry likes to pretend that it’s dead simple, and basically they’re arguing it’s dead simple because the copyright industry is always in the right. (Hint: they’re not.) So instead of due process in a proper judicial system, you would have an automated censorship process at worst, and being casually decided by a minimum-wage clerk at best.

These are the same things the copyright industry is pushing for in Europe under the notion of changing “notice-and-takedown” to “notice-and-staydown“, which is nothing but blanket governmentally-sanctioned censorship completely ignores all the checks and balances that have been struck over the years, decades, centuries.

Why are we literally letting a cartoon industry regulate our most important infrastructure?

Note that this doesn’t even go into the shamelessness of wanting to dump your problems on somebody else – the cost for any website operator and ISP to fulfill these insane demands would be enormous, just because the copyright industry thinks it is more important than the Internet. Why are we literally letting a cartoon industry regulate our most important infrastructure?

On the other hand, the blame isn’t really with the copyright industry: they’ve just learned that they get what they want when they throw a tantrum, after all. The real problem and the blame lie with the politicians who keep giving them whatever they ask for just because they’re loud.

Privacy and freedom of speech remain your own responsibility.

Syndicated Article

This article has previously appeared at Private Internet Access.

(This is a post from Falkvinge on Liberty, obtained via RSS at this feed.)

Why Google is making a mistake in demoting “pirate” sites from search results

Copyright Monopoly: Google has agreed to demote so-called “pirate” sites from its search results, at the demands of the copyright industry. All experience from the past 600 years says this is a mistake.

A story in Ars Technica and elsewhere celebrates that Google will hide the sites people are looking for, because there are others that don’t want people in general to find them. When phrased like this, it becomes obvious that Google has little or nothing to gain from this move, and that throwing whiners a bone of meat to make them shut up is a mistake, for two reasons working together.

Reason #1: The easy-to-use, friendly sites are what people are actually looking for, and legality is utterly secondary. 70% of young men in Sweden state they’re using video services outside of the copyright distribution monopolies. That effectively means that every household is doing it: Every. Single. One. It’s considered completely socially acceptable: the copyright distribution monopoly enjoys less acceptance even than speed limits. (Far less, even.)

Google is choosing to bring less value to its customers in this move, and that’s never a good business move. Whether somebody else approves of what people are looking for is completely beside the point. There are tons of vested interests who would seek to prevent people from finding certain information.

“Beware of he who would deny you access to information, for in his heart, he dreams himself your master.” — Commissioner Pravin Lal

Reason #2: Appeasement has not worked toward the copyright industry at any time in history for the past 600 years; they always come back demanding more and more and more, simply because it has worked for them for the past 600 years. You’re just not getting anything from giving them what they’re throwing a tantrum over, because they’ll be back the next day and throw the same kind of tantrum over the next inch of territory.

This is the same reason that a flat cultural extra fee for “allowing” or “permitting” personal downloads outside of the copyright distribution monopoly, an idea that pops up every so often, would be a huge mistake: free uploading (and therefore personal sharing) would still be prohibited, and therefore, such a scheme would just give the copyright industry a perpetual free income in return for no effort or progress at all, an income they could (and would) use to fund further curtailment of liberty.

Syndicated Article

This article has previously appeared at Private Internet Access.

(This is a post from Falkvinge on Liberty, obtained via RSS at this feed.)

A Simplified Taxless State: A Proposal (part 3 of 3)

Civil Liberties: In this three-part series, I’m going to show how a state can be a pure market actor and not require taxation. The state will still have an income – cynics would call it taxes under any other name – but the key difference is that the income is obtained through market means, based on a state’s USP, and not through coercion by force. This leads to a society where the state does not need to know anybody’s income, wealth, or transactions, leading to the obsolescence of most registers and reporting requirements (including the elimination of a corporate register), and where a “black market” is a contradiction in terms, as the state does not interfere with the market it is a natural part of. It also means an end to victimless crimes by its very nature.

Recap

In part one, we observed that there are different tiers of land ownership, where a higher-tier owner (say, a landlord) has the say over which lower-tier land owners get to believe they own the land – and that the highest-tier land owner are today’s states (countries), which are the only actors capable of repelling other tier-one land owners. Thus, a state is the only actor capable of owning land, and can therefore lease it to lower-tier actors to generate income.

In part two, we see that this proposal leads to a low-friction economy where there are no taxation, reporting, or recording burdens on any transaction, and which therefore is in prime state to maximize the sheer quantity of value-optimizing voluntary transactions, thereby creating wealth better than the economies in competing states. Further, we observe that all taxes – income tax, corporate tax, sales tax, etc – go out the window. In turn, we also see that there is no tax wedge at all which would prevent profitability of division of labor, and therefore, this proposal also enables an efficiency optimization not present anywhere else.

Part Three: How a land lease would work

This leads us to the question of how such land leases would work in practice, since it’s absolutely crucial to get the incentives right. We want to encourage development and land improvement that facilitates additional trade, after all. We also want to facilitate urbanization, as physical proximity of people naturally increase the number of trades taking place. This is therefore a proposal with all its possible flaws for further development.

Absent a tabula rasa state where there is no existing ownership or lease of land plots, a proposal like this must relate to the previous order of things. It is therefore desirable to mimic the current tier-two ownership of land as closely as possible, maybe even to the point of calling the lease a “land ownership tax” under any other name. Economies do not respond well to changes to fundamental frameworks and we want to minimize systemic disruption while optimizing wealth and efficiency potentials.

In particular, we want to ensure that market actors feel secure in investing in their land plots – to make sure that there’s no yearly bidding process or similar where they can be overbid after having spent enormous amounts improving their plot. Therefore, it’s important that a lease lasts until surrendered one way or the other – closely mimicking the way we think of ownership. However, the lease contract can and would typically stipulate that pricing will vary with market conditions – possibly within a limited scope, to reduce risk to land improvement on the plot.

When a lease expires, though – either due to being surrendered or due to serious lapse of payment – the plot can be auctioned off to a new lease for proper price discovery, and this can be weighted in to the general price landscape of the area. More on this later.

Thus, only a very small part of the population would have to deal with the state at all. The rest would have a functioning economy that just needed to feed landlords for their lease costs, and that could work however they please to set up a low-friction economy.

Grandfathering and Initial Pricing

This leads to the question of how you phase in a system like this. Realistically, you’d need a lot of political capital and a desire to move the entire state construct in this direction, so we can safely assume that a lot of the current state expenditure will be cut rather unceremoniously. Regardless, at the end of the day, you’ll have a budget which states an income you desire for this state construct. Let’s call this number X for now – an income which will need to come from land leases, and only from land leases.

I propose this X be divided across all current plots of land by area, weighted by the square root of nearby population density, so that the total leasing price arrives at X plus some safety margin of about 5%. This solves a number of problems and doesn’t solve a few others:

First, leasing the plot price proportional to land area makes sense – that 1 km² costs half of 2 km².

Second, making land significantly more expensive in cities than out on the countryside also makes obvious sense (hence the weighting by “nearby population density” – a number which will be single-digit on the countryside and four- or five-digit in the cities).

Third, why weight by the square root of population density, rather than linearly? This is actually rather important, because if the weighting was linear, you would not gain from trying to stack people more densely together in land improvement. But when weighting logarithmically, by using the square root, we’re creating an enormous incentive to use land in the cities more effectively, to house more people per square meter – essentially a developer getting more rent income at a lower land cost. If the weighting was linear, an increase in people would correspond to a linear increase in land cost, removing this incentive.

What this doesn’t factor in – can’t factor in – are the sparsely populated and hugely expensive areas, akin to the mansion area in Beverly Hills. It also doesn’t factor in resource deposits (a gold mine in the wilderness would be dirt cheap, and this may need adjustment to enter ballpark of reason). But the next section fixes that over time.

In any case, with this weighting, we can set our initial state income from contractual land lease by applying X over the respective plot weights. This assumes, of course, that the existing plot owners choose to agree to those leases – but most plots of land should find a customer, and the 5% safety margin above is to factor in a certain initial healthy vacancy.

Adding market incentives to pricing

After the initial pricing, when leases are terminated by the customer (or the customer defaults on payment), land plots can be auctioned for lease moving forward. This creates a price discovery mechanism for the general area that can be factored in to the nearby plot lease pricing according to some to-be-determined mechanism that’s left as a minor implementation detail.

We’re also creating a secondary market where customers can trade leases directly between themselves, in what was previously buying and selling plots of land in tier-two ownership. This also assists in price discovery and highlights value differentials in the market.

Problems and considerations

With a shift in how you regard a state as large as this proposal, there are a number of problems and questions to consider.

One of the first is whether someone can opt out of the lease entirely and still occupy the land, excluding others from its utility. The answer to that question, under this proposal, would be no. Such a mechanism would create an incentive to let all the border plots of land pay for the military defense of the entire country. It’s noteworthy, that under Land Value Tax philosophy which is similar in implementation but not philosophy, a payment for lease of the land is also a compensation to the community for a right to exclude other people of the same community from said land – after all, land property is of a completely different type than property you can hold in your hand and move physically, like an apple. But this proposal focuses primarily on the state as a fair market actor, rather than justifying a taxation with some obligation to compensate others for exclusion.

Still, in the realm of politics, this proposal takes the state construct 75% of the way toward such an opt-out being possible in the future.

A second good question is whether this isn’t just a reset button on state power, and which would enable the state to slowly grow back over time. This may be true, even if the proposal severely hinders such a growback by getting rid not only of taxation mechanisms, but also of the taxation discovery mechanisms (transaction reporting and recording infrastructure). That said, a hostile takeover could build such structures back over a 20-30 year period. But expressed differently, if you did have a reset button on the state’s ability to commit violence, would you not push it?

A third question that has popped up is the existence of a social safety net. There’s nothing in this proposal that precludes the state from providing civil services. For myself, I’m a warm proponent of Friedrich Hayek’s and Milton Friedman’s proposal of a Universal Basic Income to all citizens, as it does not require any bureaucracy at all for qualification, and allows the recipients to provide price discovery in how such a small basic income is best spent.

Conclusion

A state can be a pure market actor and not require taxation. This enables enormous gains in efficiency, as the tax wedge can be completely eliminated, and enables wealth creation through maximization of the quantity of voluntary trades. Doing so does not preclude civil services or a social safety net. The proposal also allows for the elimination of all state databases except the citizen registry and the land registry, drastically reducing bureaucracy, and eliminates victimless crimes just by its nature of being a market actor.

Syndicated Article

This article was previously published on Steemit with about fifty comments.

(This is a post from Falkvinge on Liberty, obtained via RSS at this feed.)

A Simplified Taxless State: A Proposal (part 2 of 3)

Civil Liberties: In this three-part series, I’m going to show how a state can be a pure market actor and not require taxation. The state will still have an income – cynics would call it taxes under any other name – but the key difference is that the income is obtained through market means, based on a state’s USP, and not through coercion by force. This leads to a society where the state does not need to know anybody’s income, wealth, or transactions, leading to the obsolescence of most registers and reporting requirements (including the elimination of a corporate register), and where a “black market” is a contradiction in terms, as the state does not interfere with the market it is a natural part of. It also means an end to victimless crimes by its very nature.

Part Two: A low-friction voluntary economy

In the first part of this series, I introduced necessary new way of thinking of land ownership – how there are tier-one and tier-two land owners, and a nation-state is the only type of entity capable of owning land, on the basis that it’s the only type of entity able to maintain a military capable of repelling other tier-one land owners (other countries).

This leads us to part two, where I elaborate on the gains this brings, given that one accepts the premise that the state owns all land (even if it pretends to give sub-ownership, that’s still sub-ownership, as argued in part one). This means that people who formally lease a land plot pay a lease for that plot to the state. Everything is voluntary and on market terms, and this gives the state an income with which to uphold basic internal and external security, civil services, and a social safety net (probably universal basic income) to its liking – but just as probably not enough money to employ scores of unnecessary bureaucrats and gender study battalions.

(Let’s skip for now exactly what a land lease will look like – I’ll be returning to some basic thoughts around that and possible models in part three.)

Wealth is created in the quantity of voluntary trades

Remember how, if we want to create wealth in a nation, our objective is to maximize the quantity of voluntary trades? This means we should enable people to trade how they want, when they want, what they want, and without any burden of taxing, recording, or reporting any of it.

This structure, where the state gets all its income from voluntary land lease and nowhere else, enables a society to have exactly that.

There is no longer any need for bookkeeping regulation. There is no longer any need for banking regulation. There is no car register. Apart from leasing land, there are no forms whatsoever.

[image error] Gold bullion with the Bank of England. Did not really need taxation to be collected.

The state gets its income at the bottom of the stack, literally on ground level of the economy. Every other cost must be enough to cover that land lease. The rest of the economy can work exactly how it wants, and will work exactly how it wants.

There are no income taxes, which leads to people being able to make income how and when they please, from one or many sources. There are therefore no personal tax declaration and no tax return forms. There is no corporate registry and therefore no corporate taxes either — investment and bankruptcy protection can be well handled contractually — and therefore no bookkeeping requirements. There are no authority forms whatsoever for regular everyday business over and above the state income, which is land lease and only land lease.

(Obviously, corporations could keep proper bookkeeping anyway. If they want to. In any form they want. That’s the whole point! Maybe there are better forms of bookkeeping today than the double Venetian bookkeeping from 1495. Yes, you read that right: fourteen ninety-five.)

Imagine the amount of trade that can happen if you just allow it to happen, if you don’t burden it down with recording and reporting requirements for every single transaction – if you don’t have to care about any one single transaction and can have the state work just fine anyway!

This also means that there’s no tax wedge at all into the efficiency gains from division of labor. If there’s a few percent of efficiency to gain from exchanging services, there’s no longer a state which makes that unprofitable before there’s a 150% gain – or more usually a 500% gain. Imagine the efficiency gains unlocked!

As a corollary, imagine the wealth that can be built if you remove all – all – obstacles to trade like this! It has the potential to be running circles around a traditional society with an overdeveloped sense of bureaucratic order.

In part three, we’ll return more precisely to a few models of how the land lease could work in terms of market pricing and trade. There’s also the important question on how to value land improvements.

Victimless crimes cease to exist

As a final note on this part, it is absolutely key that the Simplified Taxless State remains a non-privileged market actor, even if it is also the arbiter between market actors in another role. By this, I mean that the state is strictly prohibited from inventing “collective problems” and give itself the right to use force against citizens to “solve” those problems. This has the very important side effect that the state can’t enforce arbitrary behavioral rules against citizens where there’s no victim, and therefore, no claim.

In other words, in just that definition of the state duty, we have introduced a requirement onto the definition of a crime: There must be a victim pressing charges. This basically means that everything except crimes against life, liberty, and property cease to be criminalized immediately – just as it should be. There is no reason for a state to interfere with somebody exercising their property rights to manufacture slippers, a chair, or a DVD from their own materials. There is no reason for a state to interfere with voluntary trade of goods and services, except moralistic reasons, which should go out the window yesterday anyway.

Oh, and what about pollution, which is the most common objection to this? How would this scheme handle pollution? That’s actually one of the easiest things in this entire picture. Remember how, when you lease a residence, you’re liable for any damages caused to the residence by you during your lease? The exact same standard boilerplate could just as well apply to a land lease, and it’s as simple as that.

In part three, we’ll look more at the land leases that make up the state’s voluntary income.

Syndicated Article

This article was previously published on Steemit with about fifty comments.

(This is a post from Falkvinge on Liberty, obtained via RSS at this feed.)

A Simplified Taxless State: A Proposal (part 1 of 3)

Liberty: In this three-part series, I’m going to show how a state can be a pure market actor and not require taxation. The state will still have an income – cynics would call it taxes under any other name – but the key difference is that the income is obtained through market means, based on a state’s USP, and not through coercion by force. This leads to a society where the state does not need to know anybody’s income, wealth, or transactions, leading to the obsolescence of most registers and reporting requirements (including the elimination of a corporate register), and where a “black market” is a contradiction in terms, as the state does not interfere with the market it is a natural part of. It also means an end to victimless crimes by its very nature.

What is a state’s unique selling point? What can a state construct do, that nobody else can do (or do nearly as well)?

I would argue that the value proposition of a state consists of three unique activities:

Defend the territory from aggression from other state actors which want to control the territory;
Act as an arbiter in civil disputes, enforcing arbitration with force where necessary; and
Defend actors in territory from aggression from other actors in the territory.

The problems with this set of state activities started when the state found out it was able to abuse its power as arbiter of civil disputes to give itself preferential treatment as a market actor, something we would describe as corruption in everyday terms. (Technically speaking, a state can’t think, so it was nobles and kings of flesh and blood who walked down this path, but let’s talk in terms of abstractions for the sake of simplicity.)

In any case, these are three things that a state is uniquely positioned to do well. A state that does this, and only this, is known as a Night-watchman state. However, as we shall see, when the state is treated as a market actor, it gets the ability to offer some other services over and above this basic set like various civil services – but only on market terms, never coercively.

What is land property, when you look at it up close?

In order to model the Simplified Taxless State, we need to remodel our view of land ownership based on some harsh realities. To do this, we need to compare the property rights of land to the property rights of objects.

If the Russian Embassy were to steal an object from me here in Berlin, I would be able to seek redress and have Berlin order the property returned (or the value thereof), and the Russian Embassy in Berlin would have to comply, being on Berlin soil and Berlin jurisdiction. In this dispute, the Russian Embassy and I are equal-level market actors with Berlin as arbiter of a dispute.

However, a plot of land I have in Berlin is written into the Berlin ledger (land register), which – important! – assumes that the ledger itself is the authoritative source of who owns what land in a particular Berlin-controlled territory. If Russia were to steal that plot of land,< by rolling in tanks over that plot and others, then they would not just deny its use to me, they would be stealing it from Berlin – or from Germany – and directly from the ledger that says I own it, thereby negating the ledger’s authoritativeness over what-used-to-be-my-plot-of-land.

[image error] It has happened in the past, after all.

In this scenario, my plot of land would be transferred from the Berlin ledger to the Russian ledger, and that Russian ledger would completely disregard what the Berlin ledger asserted about “ownership”. And unlike the case with the object where I can seek redress in a dispute, there is no international arbitration for land ownership between states’ ledgers except brute military force. You own what you defend.

Thus, we can talk of tier-one and tier-two land owners, where tier-one owners are those land owners capable of defending their territory against state-level aggression (or capable of performing state-level aggression), and tier-two land owners are those who are somehow at the mercy of the tier-one owners retaining ownership of the land the tier-two owners think they own, but actually don’t when push comes to shove.

In cleartext, a state-level actor is the only type of actor capable of owning land. Within a state, there is arbitration for when tier-two “owners” are in dispute over a piece of territory. But between states, there is no international arbitration of land ownership – brutal aggression decides who owns what (whether one approves of that fact or not). When tier-two “owners” are in dispute, it is not much different from when two children are fighting over who gets to use family property: at the end of the day, it’s still the adults’ property.

If one accepts this reality – that the state is the only actor capable of owning land within its territory, and all other territorial actors are at the mercy of the state retaining ownership of that land – then one can also stop pretending that a tier-two ownership of land, an “ownership” within a state, defended by a state, and contingent on a state, is on the same level as a tier-one ownership of land.

And if the state is the only actor capable of owning land, then that land can be leased at market rates, thus giving the state an income with which to defend such territory and fulfill its three obligations on it – obligations possibly even specified as part of the lease. We’ll be looking closely at such income structures in parts two and three of this series, and how they encourage urbanization, resilience, and free trade.

In practical terms, absent a tabula rasa state like Liberland, a change like this can be a hard sell politically and make many enemies, as it obviously changes existing wealth structures and removes subsidies that are taken for granted. People who have “owned” land for generations (and have had it defended for free) will no longer have such a service provided for free, subsidized by coercive taxation of others. Therefore, it needs to be said that while this can easily be portrayed as a seizure of property from its current owners, it is not: it is an acknowledgement of the reality described above, that land owners operate in different tiers, and that a “land owner” on any tier below the first is completely at the mercy of the ledger maintained by the state — a ledger which would not be respected by a different state should it seize the territory in question.

Such a rethinking of land property, were it difficult to portray as the acknowledgement of tier-two property, could also be framed as a rewriting of tax rules: doing this while calling it “revising the taxation framework” would be completely within the bounds of the current corrupt state construct, but would set it on a path to rapidly and completely eliminate the coercive taxation construct as such and to make it very difficult to rebuild such state corruption, absent the databases and infrastructure supporting taxation.

What this means is not only that the state needs to behave as a market actor among many, but also that it can’t arbitrarily raise its income by the popular-but-harmful notion of “raising taxes”. Instead, a state has as much income as the market will determine (by auction, or by vacancy), and will have to adjust ambitions to actual capacity.

In parts two and three of this series, we’ll examine how such a remodeling to market principles results in a possible eradication of not just all taxes, but also all the supporting structures required for collecting taxes: the only databases necessary are a citizenship register and a land register. There’s no further need for a car register, a corporate register, coercive bookkeeping requirements, income reporting, tax returns, and so on. We’ll also look at a complete elimination of victimless-so-called-crimes as a result of the Simplified Taxless State.

(For people on the traditional left in politics, this proposal can also be called a Simplified Fair State, as the state doesn’t give itself preferential treatment in the market. Words are important and “fair” is classically a left-wing buzzword like “taxless” would be for libertarians.)

Syndicated Article

This article was previously published on Steemit with almost a hundred comments.

(This is a post from Falkvinge on Liberty, obtained via RSS at this feed.)

The Wealth of a Nation: Why Capitalism Works

New World: Politicians and policymakers don’t understand where wealth comes from. They don’t understand the very basics of why capitalism works, they don’t understand how the wealth of a nation can increase – and as a result, almost every single policy is counterproductive to a country’s competitiveness. This is despite the observation that the free market builds wealth due to one of the simplest of reasons, and once policymakers understand this, a completely different support structure would emerge.

Politicians and activists frequently regard the economy as a zero-sum game, where somebody must lose for another to gain. This is despite the quite trivial observation that we have built quite a lot of wealth from the Ice Age up until present day, and almost nobody is as bad off today as everybody was during the Ice Age. In this, it is baffling why politicians and pundits focus on redistribution, when the focus should be building of wealth.

But it’s counterintuitive for politicians to focus on building wealth, because doing so requires relinquishing control. Regulators can’t build wealth and competitiveness. They can only destroy it to various degrees. A lot of this comes from not understanding just why, and how, capitalism and the free market works to increase overall wealth, and not just redistribute it.

The free market brings 179,000 people out of extreme poverty every day. Not politicians. Not foreign aid. Not seized and redistributed wealth (minus the usual cuts to the redistributors). In my work in the European Parliament and elsewhere, I have rarely met a politician who understands the very fundamentals of why capitalism builds wealth – despite it being so ridiculously simple.

Capitalism works because it is voluntary.

It works because people seek to maximize their wealth, on a completely subjective basis. Some people value free time, some value money, some value happiness, some value rare Pokémon. That’s fine, all of it. The only thing you need to do as a politician is to get out of the way of millions of people trying to maximize their own value by trading something with other people.

In order to maximize overall wealth, you want to maximize the quantity of voluntary trades. That’s it.

Since every trade is voluntary, both voluntary parties consider themselves gaining in value from the transaction. This is key. As a result, a voluntary transaction adds value to the nation as a whole. Every voluntary trade adds a small bit of value, with both parties having gained from it, and maximizing wealth is about merely maximizing these voluntary trades on a purely quantitative basis. The more trades you have, the more increases in value you get.

Now, every person’s perception of “value” is arguably subjective. Some of it can be measured in terms of GDP, other subjective value is just happiness in various forms. The good part about the many forms of value is that you don’t have to concern yourself with this at all; people’s completely subjective understanding of value is much better than yours when distributed across millions of people.

The distributed free market is better even at determining and valuing the precise definitions of “value” than any bureaucrat has ever been.

Now, compare this with how politicians today try to “build wealth” or “create jobs” and thump themselves over the chest about it.

It usually involves creating horrible burdens on every single transaction. At a minimum, a receipt must be created (usually with penalties for not offering it). Moreover, transactions must be summarized to some kind of tax authority at regular intervals, and often to more than one authority. Meticulous bookkeeping is required – not for your sake, but for the sake of authorities. All this creates a wet blanket of unhappiness smothering the will to make voluntary transactions.

And then, of course, other politicians have the idea that regulated transactions are good for wealth, transactions which aren’t voluntary and therefore contain at least one losing party, if not two. These don’t build wealth. They may make the politician or regulator look good, but they aren’t a transaction in the free-market sense because they’re not voluntarily agreed upon by two consenting parties.

To top this off, all of the burden is usually directed toward subsidizing obsolete industries because they’re a vested interest and/or contributed a lot to somebody’s election campaign.

Politicians basically behave toward the free market and wealth-building like drunken elephants trumpeting about in a porcelain factory.

No, I don’t have an illustration for that.

Let’s do a thought experiment if we really wanted to create wealth in a nation, and just quantitively maximize the number of voluntary trades. How far can we go in making a nation competitive in this measure?

We’re eliminating all requirements to tell authorities about your transactions. No wet blanket of despair. That means no income taxes, no sales taxes, no bookkeeping requirements. You let people trade and be happy. This means you can’t have a corporate registry, there’s no regulation of employment (as that’s a special form of regular transaction), there’s possibly not even a concept of a corporation at all. There’s just people trading and taking entrepreneurial investment risks. Such risks can be detailed contractually in a project-by-project basis to eliminate the need for bankruptcy law and therefore the need for corporate legal entities and the heavy supporting authority bureaucracy.

There is still a need for a social safety net of some kind, not for compassion reasons, but for straightforward competitiveness reasons. You could solve this with a universal basic income like Friedrich Hayek and Milton Friedman have suggested. That would also be cheaper than building a bureaucracy for somehow determining who’s “worthy” of support. With such a general safety net, you create competitiveness for the nation overall as a lot more people will try out business ideas in entrepreneurship.

Society as a whole benefits from a risk-positive environment, and if you can provide a mechanism where anybody can try any stupid commercial idea without risking becoming homeless and indebted, more people will innovate and take risks – and the society using this mechanism will get a competitive edge.

So what you need is a population register with people who qualify for UBI (citizens or similar). You also need a land registry, for reasons I’ll be returning to. But that’s it. All other registers can be scrapped. Every one. Car plates, driver’s licenses, corporate registers, boat registers, every other database that requires data collection, and therefore puts obstacles in the way of maximizing the sheer quantitative amount of voluntary trades.

All this is perfectly doable today. It’s just that politicians think that Regulating More is the answer to creating wealth. It’s not, obviously. They Regulate More instead of focusing on something really simple – like the mere quantity of voluntary trades – and just doing everything possible to maximize that number, to get rid of obstacles for voluntary trades. As it turns out, you don’t even need taxes. Taxes require paperwork. There are ways to fund a state-construct maintenance that don’t require taxation and therefore don’t require paperwork.

I’ll be returning to that with a proposal for a Simplified Taxless State in a three-part series over the coming days.

Syndicated Article

This article was previously published on Steemit with almost a hundred comments.

(This is a post from Falkvinge on Liberty, obtained via RSS at this feed.)

History tells us the wars on privacy and sharing will get worse before it gets better

Repression: All governments of the world are cracking down on privacy and increasing mass surveillance, sometimes in the name of copyright enforcement, sometimes in the name of fighting terrorism, sometimes because they just want to. There’s a pattern here of similar things in the past – something is horrible, horrible, horrible, until the point where fighting the phenomenon just looks silly, counterproductive, and inhumane. Cannabis is there today, and it’s going to be years if not decades until it’s just as silly to fight people sharing knowledge and culture with each other, trying to brand them as awful people.

The striking pattern here is that people in power may regard an issue as completely peripheral, even downright uninteresting – like powerholders regard copyright – and still use the push from legacy industry interests as an excuse to get what they really want, like the copyright industry demanding mass surveillance.

Nixon declared war on cannabis… what year was it again? Oh nevermind exactly what year, it was as far back as when Nixon was president, which says a whole lot more than an exact year (it was 1968). His campaign advisor has since gone on record saying they knew all along they lied about the dangers of drugs, but that declaring war on them helped them shatter the communities that threatened Nixon’s re-election, specifically the hippies that opposed the Vietnam war.

“Did we know we [the Nixon administration] were lying about the drugs? Of course we did.” — John Erlichman

The pattern seems to be that social breakthroughs, getting rid of the old taboos, happen in a few areas first that test the waters, and when nothing bad happens, the floodgates open. Bloomberg did a good feature of it from a US perspective, analyzing US breakthroughs like women’s suffrage, marriage between people of different skin tones (which was once illegal!), and other similar issues.

“A few pioneer states get out front before the others, and then a key event—often a court decision or a grassroots campaign reaching maturity—triggers a rush of state activity that ultimately leads to a change in federal law.” — Bloomberg

When it comes to privacy in general, and sharing music, movies, culture, and knowledge between each other in particular, we can tell that we’re not at the “okay, this policy is just silly, everybody’s doing it and nobody cares” phase yet. Everybody’s sharing and nobody cares, except the copyright industry, and the powers that be are using every excuse of that industry to crack down and toughen existing laws. Even though everybody who knows something understands that the laws are not just ineffective, but counterproductive and silly, there’s no room for such thinking where the lobbyists of legacy industries roam unchallenged.

It took some 50 years to get to the “okay, this persecution is just silly” phase with cannabis. Let’s not make it fifty years with sharing and digital civil liberties.

Privacy remains your own responsibility.

Syndicated Article

This article was previously published on Private Internet Access.

(This is a post from Falkvinge on Liberty, obtained via RSS at this feed.)

How cryptocurrency will cripple today’s governments – and they won’t see it coming

Cryptocurrency: Cryptocurrency will cripple governmental ability to collect taxes, and they won’t see it coming. When it’s already happened, expect major changes to take place in how society is organized on a large scale – but also expect governments to act in desperation to retain control.

As bitcoin launched in 2009, most early adopters saw its disruptive potential. While bitcoin has stalled for some time approaching a valid use of the term “stagnation”, cryptocurrency in a larger context is still just as disruptive. In 2011, I stated that bitcoin (cryptocurrency) will do to banks what e-mail did to the postal services. This is not just true, but it will be even more brutal to governments, and by extension, governmental services.

Now, governments love anything that smells like innovation, because it means jobs, this magic word that smells of magic unicorns to anybody in government. Therefore, people who like innovation are nurturing this bitcoin thing, this cryptocurrency thing, this ethereum thing (as if governments made a difference, but still). Lots of startups in tip-of-the-spear financial technology means that their government may get a head start over other governments. They have no idea that cryptocurrency will radically scale back the power of government, not just their own one, but also all those other governments over which it seeks a competitive edge.

Individual people in government can also love bitcoin because it gives them something to do. More specifically, it gives them something to regulate. Fortunately, other people in government see that this gives them something to do, which is to hold those government regulators with an overdeveloped sense of order somewhat in check. You’ll hear no shortage of wannabe regulators saying that “bitcoin is bad because it’s being used in crime and contraband trade!”, to which I usually respond, “well, bitcoin is a currency, so I mean you put it in relation to the US Dollar, which then… is not used in crime and contraband trade, is this the argument you’re using to support your position?”, at which point the discussion generally changes topic.

This completely disregards the observation that bitcoin and cryptocurrency were designed to not submit to regulation in the first place. Well, at least not governmental regulation. It is heavily regulated – but by its source code, and by its source code alone.

The reason this will cripple today’s governments — today’s idea of what a government is and does — is because today’s economy is built on one layer doing actual work and three layers of abstraction on top.

At the first and bottom layer of our economy are the individual people doing all the actual work.

The second layer on top of the first is the abstraction we call corporations, which is a way to organize our economy and optimize transaction costs.

The third layer on top of the second would be banks, which handle money for corporations and individual people in a middleman gatekeeper position.

Finally, the fourth layer is the government, which takes advantage of the banks’ gatekeeper position to siphon off taxes from money flows in order to fund itself and governmental services. In other words, layer four completely depends on layer three for its operations – or at least for the relative simplicity of funding its operations.

Now, what bitcoin and cryptocurrency do is make away with the banks – cutting them out of the loop entirely, making them redundant, obsolete, dinosaurified. This resulting absence of anything where banks used to be creates an air gap between the functional part of the economy – people and corporations – and governments who want funding.

The way governments want to tap all money flows in order to fund itself is not entirely unlike how the surveillance agencies want to tap all information flows in order to have an information advantage. In this way, the deployment of cryptocurrency is to tax collection what deployment of end-to-end encryption is to mass surveillance. The government can no longer reach into money flows and grab what it wants, but will be dependent on people actively sending it money. The government can’t point a gun at a computer and have it give up its money; you can only make a computer operator feel very sorry for not voluntarily producing the keys to that money. So the government is no longer able to collect taxes without the consent – even if coerced and forced consent – of the people being thus collected.

The deployment of cryptocurrency is to tax collection what deployment of end-to-end encryption is to mass surveillance.

Governments, and individual people in government, have no idea about this bigger picture. They’re far to wrapped up in things-as-usual to notice. They won’t see it coming until it’s already happened.

When this happens, there will be no shortage of people in government who suddenly want to regulate cryptocurrency – only to find out it will be as effective as regulating gravity. When this happens, government as we know it will be redefined from a coercive Colossus able to take what it wants and do what it wants into a construct that actually depends on people wanting to fund it. This will be a very interesting time to live in. While today’s governments will see themselves as getting crippled, I suspect most citizens will regard it as unquestionably healthy that governments will actually begin to depend on the approval of the people at large.

We’re just beginning to see the changes to society that the Internet brings. This is one of them.

(Note: I write cryptocurrency and not bitcoin on purpose here, just as I’d prefer proclaiming the success of social media over the success of Myspace.)

Syndicated Article

This article has previously appeared at Private Internet Access.

(This is a post from Falkvinge on Liberty, obtained via RSS at this feed.)