In 1845 French economist Claude Frédéric Bastiat penned what is now a fairly famous bit of political satire: The Candlemakers’ Petition (French|English). This took the form of a petition written to the French government by a body of candlestick makers and railed against protectionism by holding it up for ridicule: The candlemakers suggested a number of economic benefits to be achieved by blocking out the sun.
Light bulbs did exist in various forms at the time, but the first commercially viable bulb wouldn’t be produced for another 30+ years – if a commercially viable light bulb had existed at the time I can imagine Bastiat’s candlemakers to suggest it be banned, too. The attitude expressed by Bastiat’s Candlemakers’ Petition suggests to me that, were he alive today, he would probably be a big fan of disruptive technologies. To that end, I hope he won’t spin in his grave too much if I put my own twist on one of his most famous works.
To the Honorable Members of the Office of the Comptroller of the Currency and the Department of Commerce
You are on the right track. You reject Austrian economic theories and have little regard for so-called “sound currency.” You concern yourselves mainly with the profit motive, the very cornerstone of capitalism, and we applaud you for it.
We come to offer you a wonderful opportunity.
We are suffering from the ruinous competition of rivals who apparently use methods so far superior to our own for the production of money that their international adoption rate and face value of their currencies has increased at a staggering rate. Indeed the moment that any of these rivals enter a market, so-called “visionaries” adopt them with immediate preference to our currencies and begin relentlessly proselytizing to the general public to ruinous effect.
We ask you to be so good as to pass a law prohibiting the use of any items as currency aside from the currencies we have traditionally produced. This includes gold, silver, all other precious metals, gemstones, bitcoins, berkshares, baseball cards and all other manner of supposedly “valuable” items and release us from the fractional reserve requirements which operate to the detriment of the fair industries with which, we are proud to say, we have endowed the country – a country that cannot, without betraying ingratitude abandon us today to so unequal a combat.
Be good enough to take our request seriously and do not reject it without at least hearing the reasons that we have to advance in its support.
First, if you outlaw transactions in the form of alternate currencies or barter, what industry in America will not ultimately be encouraged?
If Americans may keep no precious metals for their “inherent value” then a great deal of such is freed up for use in industry, thus increasing its productive use and lowering the cost of a great many products. The increased speed at which Americans may adopt these cheaper technologies will drive employment and profit in the manufacturing, marketing and ultimately disposal industries for all affected products. Additionally, the unwanted expense of silly recycling technology and research might be eschewed much longer as the ceased hoarding of supposedly valuable materials results in more raw materials being available for industrial use – no more pulling the gold and copper out of old used cellphones, they can go straight to a nice cheap landfill now.
Second, if American banks are not required to keep a minimum reserve amount, fractional reserve banking may inflate the currency supply at a dramatically higher rate, thus providing many economic benefits.
If the value of the dollar is decreased through inflation and other “currencies” are outlawed, Americans will be less inclined to save, since the only legal manner of saving money will lose its value too quickly. This means a higher amount of individual spending, to the benefit of the whole of the economy. Further, as the value of the dollar declines, more notes and higher denomination notes will be required. This dramatic uptick in production can employ many for the design, printing and distribution of new units of currency. Unable to save, American workers will continue to be productive long past the age at which they would normally have retired thus providing the benefit of an increased work force. Furthermore, the decreased regulation would dramatically increase the profit margin of existing banks who, having the same disincentives to save, would also spend more and contribute to the economy.
We anticipate your objections; but there is not a single one of them that you have not picked up from the musty old books of the advocates of “sound money.” We defy you to utter a word against us that will not instantly rebound against yourselves and the principle behind all your policy.
Will you tell us that, though we may gain by this protection, America will not gain at all, because the consumer will bear the expense?
You no longer have the right to invoke the interests of the consumer. You have sacrificed him whenever you have found his interests opposed to those of the producer. You have done so in order to encourage industry and to increase employment. For the same reason you ought to do so this time, too.
Indeed, you yourselves have anticipated this objection. When told that the consumer has a stake in the freedom of markets, “Yes,” you reply, “but the producer has a stake in reducing those freedoms.” Very well, surely if consumers have a stake in the freedom of currency, producers have a stake in reducing those freedoms as well.
Much as Bastiat (and frankly every reasonable human being alive in 1845) considered sunlight to be a “gratuitous gift of nature” that it would be absurd to deny others access to for the profit of a few. Items of inherent value, competing currencies and even online payment systems like Bitcoin are today the gratuitous gifts of nature, globalization and technology. For any government to prohibit access to those gifts should be held to the same level of ridicule – and yet, they’ve done it before.
On April 5, 1933, Roosevelt signed Presidential Executive Order 6102 making private ownership of gold illegal in the U.S. There is also a long history of governmental shutdowns of alternate currencies, especially those minted from precious metals that tend to hold value better than the government’s own inflationary fiat, like the Liberty Reserve Dollar.
Some have accused me of being a head-in-the-clouds dreamer for going against my typical patterns and adopting Bitcoin far earlier than I would have adopted any other technology. Truthfully, for every person I convince of the merits of Bitcoin, a dozen stare at me with that standard puzzlement that is so often co-morbid with paradigm shifts. They don’t understand the technology and so they don’t understand the value, but some day when another presidential executive order outlaws their preferred value store – then they’ll understand the value of a distributed, mildly deflationary asset that, worst case scenario, you can store in your brain.