This bitcoin conversation has run for almost a week now, and given the site I’d expect the level of reasoning to be quite high, yet when I hit “^Ftax” or “^Fgovern” or “^Fpolitic” almost nothing shows up, which causes me a measure of confusion, because these (much more than “magnitudes”) are key nodes in my causal reasoning about the future value of bitcoins.
From my perspective, the plausible socio-political implications of bitcoin are large enough, and different enough from what I see commonly discussed, that it causes me to question the quality of my own thinking and seek education.
In 1789 Benajmin Franklin wrote a letter wherein he said:
Our new Constitution is now established, and has an appearance that promises permanency; but in this world nothing can be said to be certain, except death and taxes.
It could be that I’m wrong in my reasoning, but it appears to me that bitcoin allows tax evasion and black markets to function on such a breathtaking scale that if bitcoin persists and expands into common use then I anticipate, like tomatoes in winter, the withering of formal governmental power in its current form (based as it is on tax collection and the ability to regulate the market via indirect oversight) and perhaps even the withering of the public good of reasonably just protection services provided by democratically elected law makers.
Sharply put, it seems moderately plausible to me that either extant governments smash the bitcoin infrastructure, or bitcoin financially strangles modern nation states.
In more detail: If bitcoin turns out to be ineradicable so long as people have access to the untamed Internet (and this seems like an open but fundamentally empirically determinable question) it suggests to me that human communities may collectively face a choice between cutting their wires and jamming their airwaves or else lose the ability to form reasonable transparent organizations with elected officials who manage the local violence monopoly by paying law enforcers better wages than are available to criminals.
Or perhaps I’m underestimating the extent of the revamping that would be necessary? Still, it is hard to see how the IRS, SEC, ATF, or Fed could maintain their status quo operations if bitcoins become the de facto world currency. Traffic in drugs and slaves are relatively limited now, but I’m not sure it would stay so in a bitcoin dominated economy. Ransom payments become significantly more feasible with bitcoin, and the kidnapping market seems likely to grow if bitcoins persist.
Not that payment for protection services would completely disappear forever… Presumably we would switch to tax collectors (either hired by the existing but revamped governments or perhaps the henchmen of whatever violence monopolies replace them) who force people to transfer digital cash in amounts assessed based on visible or statistically inferrable indicators of wealth, or be jailed. Tax evasion in such a world seems likely to take the form of pretending to be poor, which seems to have weird implications for the personal status of the super rich? Facebook-based estimates of taxes owed would be amusing, but less ironic forms of surveillance could work as well. If the super rich were the ones hiring the tax collectors, that could reduce the number of sociologically confusing discrepancies, but it starts sounding somewhat feudal...
The Treasury Department must have people thinking about this? Or maybe the private individuals composing the Treasury Department have non-trivial personal stakes in bitcoin and no civic virtue? Or maybe the problem is international in scope and there’s an element of realpolitik where some nation states expect to weather the “bitcoin winter” better than others? Or maybe… I don’t know… There are a lot of things that could be going on...
In this family of scenarios, it seems like there would be large changes to many parts of the economy, many of which I expect would take a lot of people, including me, by surprise. Maybe drone-based mass surveillance and law enforcement could patch the gaps by enforcing laws so thoroughly at the physical layer than the digital layer can remain anarchic for a while longer? It seems like the kind of “everything is changing, faster and faster” thing that I might expect to be sprung on people in the lead up to various (somewhat disturbing) versions of an Kurzweil-style “smooth singularity”… Kurzweil did predict runaway deflation after all, and 2014 is the sort of year you’d read about something like this happening in a Stross novel.
So, anyway...
I see people trading in bitcoins. I don’t see the government moving to destroy the bit coin markets, or talking about the bitcoin market as though bitcoins were a social scourge that fundamentally disrupts the business model of status quo governments. But I also I don’t see people preparing for a profound restructuring of the political economy and everything effected by the current political economy. Thus, I am confused. I don’t see other people even talking about these sorts of implications, as though they are important open questions. Thus, I am doubly confused.
My best guess as to my confusion’s cause is twofold. I probably lack an adequate understanding of the big picture pragmatics of political economy, also I suspect that the really smart money in the bitcoin market is staying mostly silent so as to harvest money more efficiently. For myself, the political/moral dimension of the bitcoin market has frightened me away from it thus far… whether there is a “bitcoin winter” or a successful smashing of the bitcoin infrastructure, both outcomes seem to suggest that personal and/or political action might be prudent.
The value of information seems high. If anyone could respond here or via PM to help correct my confusion, I would very much appreciate the education!
I’d take bets against Bitcoin resulting in any significant restructuring of government. Remember, Warren Buffett pays lower tax rates than his secretary. Criminals around the world are already quite successful at money laundering. And yet society has not collapsed. This won’t collapse it either.
I have studied “secular/materialist eschatologies” as a reference class, and probably my biggest heuristic-level updates is “catastrophism memes spread fast and wide while being wrong in their catastrophic details and they are harbingers of the existence of a gradualist version of the same theory that is important for quantitative historical models with genuine human implications”. Less “zombies”, more “soft apocalypse”.
And yet society has not collapsed. This won’t collapse it either.
This is true, but I don’t think it responds to the heart of my concern. I could potentially rewrite this to something I think might be “gradualized” (with links to make it more local and near mode) but which is also potentially false.
And yet society is not stagnating. This won’t change the rate of stagnation, just as, for example, the failure of Bretton Woods had no effect on general prosperity.
I don’t mean to strawman you and claim you “said” the rewritten version. I’m just trying to show that your statement didn’t connect with my reasoning in a way that alleviates concerns, because I don’t think that I’m worried in a way that your statements (true as they may literally be) would mollify.
Nornagest proposes property taxes to replace income taxes, which is not too far my suggestion that “Facebook-based estimates of taxes owed would be amusing, but less ironic forms of surveillance could work as well.” But if that’s the case then it seems to predict that there should be long term arbitrage opportunities between real estate and bitcoins and that kind of insight seems unavailable in the normal ambit of bitcoin discussion… and maybe I need to go looking for such correlations before saying they don’t exist? :-P
Izeinwinter proposed that hedge funds were trading in Bitcoins while using government insider contacts to know when to bail out of the bubble in advance of the sheep. This seems not too far from my suggestion that “maybe the private individuals composing the Treasury Department have non-trivial personal stakes in bitcoin and no civic virtue?”
Ygert suggests I turn my point into a top level discussion post, which isn’t really my personal style. In the meantime he or she basically accepted that bitcoins threatened status quo government operations and vaulted from there into political theology, with mention of tradeoffs between Democracy and Monarchy themselves. If these kinds of tradeoffs were really on the table, I think I’d expect to see more waves in the mainstream?
Even if bitcoin does entail the end of nation-states in current form, a soft transition to anarcho-capitalism need not be apocalyptic. In fact I see signs that we are already moving in that direction, and are already much less of a democracy than is commonly believed.
On the other hand, the USGov by itself is perhaps around 30% or more of the US economy, and it will not be switching to bitcoin anytime soon, if ever. If we add in its influence on the military-industry complex and associated large corporations, there is a very large core base of support for the dollar.
Money laundering at casinos in Australia is as simple as swapping cash for chips then chips for cash in sums of less than 10,000 (the figure above which transactions must be reported to authorities). Society may not collapse, but that’s funding a whole lot of problem gambling misery.
It could be that I’m wrong in my reasoning, but it appears to me that bitcoin allows tax evasion and black markets to function on such a breathtaking scale.
Bitcoin has less anonymity than cash. Every movement of coins is recorded in a publicly verified ledger. You can use some trickery like CoinJoins to try to regain some privacy, but even these can be mitigated by state-level actors, and don’t solve the problem that actually spending coins typically revels your real-world identity to the merchant you are interacting with (who must comply with local KYC laws).
You know what allows tax evasion and black markets on a breathtaking scale? Greenbacks. Do you think a criminal—even a technically competent one—would prefer a suitcase of cash or bitcoin transaction? One of these is, outside of extenuous circumstances, truly anonymous and untraceable.
it appears to me that bitcoin allows tax evasion and black markets to function on such a breathtaking scale that if bitcoin persists and expands into common use then I anticipate, like tomatoes in winter, the withering of formal governmental power in its current form
I don’t think this is true.
Let me list some points in random order.
Cash allows tax evasion and black markets to function. In the years BET (Before Electronic Transactions) cash and similar pieces of paper were very very popular and they did not destroy governments.
Bitcoin is not anonymous. It’s pseudonymous with transactions being always public. An actor with state-level resources (e.g. the NSA) would likely be able to track sufficiently large amounts of BTC.
Governments have official currencies. There are enough coercive pieces in there so that you can’t just run a whole economy on bitcoins and simply ignore the official currency. This means there must be exchanges and they will be very very important. These exchanges are / will be under full effect of government regulations.
Non-virtual businesses cannot and will not just pretend not to exist and so not owe any taxes (e.g. payroll taxes). Tiny businesses can try to stay under the radar, medium and large businesses can not.
Consider a typical contemporary office worker. He gets a salary, say, in USD. His employer reports that salary to the government so that the government withholds a variety of taxes. Let’s say that worker now gets his salary in bitcoins—how does it improve his capability to evade taxes? His salary is still reported to the government.
I think the potential society-level impact of Bitcoin has been seriously overestimated.
There are plenty of revenue sources available even to a government that can’t effectively track financial transactions. To name one, you can’t hide real estate, or other physical commodities, behind crypto.
You sort of seems to be proposing that the US federal government is similar to the government of China, with each using the barrier of trivial inconvenience to forestall otherwise revolutionary processes (non-fiat currency and the free flow of information respectively). Your admonition to “read the whole post” makes me think you’re offering a latent suggest that “libertarian paternalism” might be de facto implemented by creating a bitcoin market that sells banned things and is allowed to exist so long as dumb people can’t be victimized by it because they aren’t smart enough to strategically access it.
I think this is something I’ll have to ponder for a while. Thanks :-)
I indeed explicitly pointed that out in a comment, but as Nornagest mentions it sounds like they have since changed their minds. (Or maybe they were previously unaware of such a market. Prob’ly Gwern has a better explanation for why they left it alone until last October and then cracked down on it than I can think up.)
You are underestimating… Very badly.. Both the coercive power of a modern government and the sheer bloody-mindedness of a modern government in the face of overt threats.
If what it takes to stop that senario from happening is a zero’th level block in every motherboard, tablet and smartphone sold then you will not be able to buy hardware without that lockout. Chipfabs and assembly plants cant hide from the nice people with the automatic weapons, after all.
Current tax havens exist—at all—because politicians are not really very interested in shutting them down. It would be trivial to destroy them, and wouldn’t take a single bullet. All it would take would be to stop recognizing money transfers to and from those jurisdictions, and the caymans would be nothing but a serverfarm with a bunch of pointless ones and zeroes on it. Escalating to the point where tax evasion become an actual threat, rather than a reason for more donations to politicians would be darwin award level of stupid. Bitcoin is that stupid, by design. Thus it is going to get stomped on.
Which means “the smart money” are likely viewing the bitcoin market as a classic case of tulip mania. This does not mean they are not investing—it is really easy to make money in an inflating bubble if you know you are going to get early warning before it collapses. Hedgefunds have congress critters on payroll, and can therefore be confident that they are going to know that the hammer is about to drop in advance of every other player in the market, and unwind their position onto suitable patsies. Such as tech-libertarians who are buying into the narrative. In the final reckoning, bitcoin might as well have been deliberately designed to separate you. Yes, you. The person reading this. From your money.
It could be that I’m wrong in my reasoning, but it appears to me that bitcoin allows tax evasion and black markets to function on such a breathtaking scale that if bitcoin persists and expands into common use then I anticipate, like tomatoes in winter, the withering of formal governmental power in its current form (based as it is on tax collection
Do you know how they catch tax evaders in Italy? They go to the harbour and look at the yachts. edit: and pretending to be poor to cheat taxes completely defeats the point of being rich. Granted, some people will do that, but they effectively eliminate themselves from the economy, as if those coins disappeared, raising the value of all other coins. They pay nearly 100% tax rate. It would be worthwhile to encourage that kind of behaviour, it’s good for the environment, and it taxes more than any government taxes.
The budget has to be in defecit, or else the whole system falls apart. That’s the modern system of fiat money—it’s based on continued issuance through deficit spending. Just not too much deficit or you end up in hyperinflation.
This is a long and well presented comment: I will chime in with army1987 that you could certainly write this up as a top level discussion post.
My response to it is that I think you are overestimating the value of our current form of government. This could be taken the wrong way, so let me be clear: It is a very good thing that w have a government. Without it, our lives would be nasty, brutish and short. Despite this, government-as-we-know-it (nationalism) is a very recent invention, and while it does some great things (and some not-so-great things), it (in its current form) is far from essential for society.
Democracy is better than monarchy, yes, but that does not mean it is the ideal government. (Recall that famous Churchill quote.) Trying to preserve it when future technology renders it obsolete is a bad idea, in my opinion.
So what should replace it? That is a deep and important issue, and one I can philosophise in depth over. This comment is already long, so I will spare a lengthy discussion here, but it suffices to say that while I am not sure, and this is a topic that needs much deep research and serious thought, I do see several possible directions and solutions that could bare fruit. If you are interested in continuing this conversation I would be happy to expound upon them.
In short, my two related arguments are that: 1) While Bitcoin may or may not bring down nationalism, that in itself does not mean anarchy and and a Hobbesian state of nature; and 2) Democracy is nice, in that it’s better than most other forms of government, but it’s by no means essential.
This bitcoin conversation has run for almost a week now, and given the site I’d expect the level of reasoning to be quite high, yet when I hit “^Ftax” or “^Fgovern” or “^Fpolitic” almost nothing shows up, which causes me a measure of confusion, because these (much more than “magnitudes”) are key nodes in my causal reasoning about the future value of bitcoins.
From my perspective, the plausible socio-political implications of bitcoin are large enough, and different enough from what I see commonly discussed, that it causes me to question the quality of my own thinking and seek education.
In 1789 Benajmin Franklin wrote a letter wherein he said:
It could be that I’m wrong in my reasoning, but it appears to me that bitcoin allows tax evasion and black markets to function on such a breathtaking scale that if bitcoin persists and expands into common use then I anticipate, like tomatoes in winter, the withering of formal governmental power in its current form (based as it is on tax collection and the ability to regulate the market via indirect oversight) and perhaps even the withering of the public good of reasonably just protection services provided by democratically elected law makers.
Sharply put, it seems moderately plausible to me that either extant governments smash the bitcoin infrastructure, or bitcoin financially strangles modern nation states.
In more detail: If bitcoin turns out to be ineradicable so long as people have access to the untamed Internet (and this seems like an open but fundamentally empirically determinable question) it suggests to me that human communities may collectively face a choice between cutting their wires and jamming their airwaves or else lose the ability to form reasonable transparent organizations with elected officials who manage the local violence monopoly by paying law enforcers better wages than are available to criminals.
Or perhaps I’m underestimating the extent of the revamping that would be necessary? Still, it is hard to see how the IRS, SEC, ATF, or Fed could maintain their status quo operations if bitcoins become the de facto world currency. Traffic in drugs and slaves are relatively limited now, but I’m not sure it would stay so in a bitcoin dominated economy. Ransom payments become significantly more feasible with bitcoin, and the kidnapping market seems likely to grow if bitcoins persist.
Not that payment for protection services would completely disappear forever… Presumably we would switch to tax collectors (either hired by the existing but revamped governments or perhaps the henchmen of whatever violence monopolies replace them) who force people to transfer digital cash in amounts assessed based on visible or statistically inferrable indicators of wealth, or be jailed. Tax evasion in such a world seems likely to take the form of pretending to be poor, which seems to have weird implications for the personal status of the super rich? Facebook-based estimates of taxes owed would be amusing, but less ironic forms of surveillance could work as well. If the super rich were the ones hiring the tax collectors, that could reduce the number of sociologically confusing discrepancies, but it starts sounding somewhat feudal...
The Treasury Department must have people thinking about this? Or maybe the private individuals composing the Treasury Department have non-trivial personal stakes in bitcoin and no civic virtue? Or maybe the problem is international in scope and there’s an element of realpolitik where some nation states expect to weather the “bitcoin winter” better than others? Or maybe… I don’t know… There are a lot of things that could be going on...
In this family of scenarios, it seems like there would be large changes to many parts of the economy, many of which I expect would take a lot of people, including me, by surprise. Maybe drone-based mass surveillance and law enforcement could patch the gaps by enforcing laws so thoroughly at the physical layer than the digital layer can remain anarchic for a while longer? It seems like the kind of “everything is changing, faster and faster” thing that I might expect to be sprung on people in the lead up to various (somewhat disturbing) versions of an Kurzweil-style “smooth singularity”… Kurzweil did predict runaway deflation after all, and 2014 is the sort of year you’d read about something like this happening in a Stross novel.
So, anyway...
I see people trading in bitcoins. I don’t see the government moving to destroy the bit coin markets, or talking about the bitcoin market as though bitcoins were a social scourge that fundamentally disrupts the business model of status quo governments. But I also I don’t see people preparing for a profound restructuring of the political economy and everything effected by the current political economy. Thus, I am confused. I don’t see other people even talking about these sorts of implications, as though they are important open questions. Thus, I am doubly confused.
My best guess as to my confusion’s cause is twofold. I probably lack an adequate understanding of the big picture pragmatics of political economy, also I suspect that the really smart money in the bitcoin market is staying mostly silent so as to harvest money more efficiently. For myself, the political/moral dimension of the bitcoin market has frightened me away from it thus far… whether there is a “bitcoin winter” or a successful smashing of the bitcoin infrastructure, both outcomes seem to suggest that personal and/or political action might be prudent.
The value of information seems high. If anyone could respond here or via PM to help correct my confusion, I would very much appreciate the education!
I’d take bets against Bitcoin resulting in any significant restructuring of government. Remember, Warren Buffett pays lower tax rates than his secretary. Criminals around the world are already quite successful at money laundering. And yet society has not collapsed. This won’t collapse it either.
I have studied “secular/materialist eschatologies” as a reference class, and probably my biggest heuristic-level updates is “catastrophism memes spread fast and wide while being wrong in their catastrophic details and they are harbingers of the existence of a gradualist version of the same theory that is important for quantitative historical models with genuine human implications”. Less “zombies”, more “soft apocalypse”.
This is true, but I don’t think it responds to the heart of my concern. I could potentially rewrite this to something I think might be “gradualized” (with links to make it more local and near mode) but which is also potentially false.
I don’t mean to strawman you and claim you “said” the rewritten version. I’m just trying to show that your statement didn’t connect with my reasoning in a way that alleviates concerns, because I don’t think that I’m worried in a way that your statements (true as they may literally be) would mollify.
Nornagest proposes property taxes to replace income taxes, which is not too far my suggestion that “Facebook-based estimates of taxes owed would be amusing, but less ironic forms of surveillance could work as well.” But if that’s the case then it seems to predict that there should be long term arbitrage opportunities between real estate and bitcoins and that kind of insight seems unavailable in the normal ambit of bitcoin discussion… and maybe I need to go looking for such correlations before saying they don’t exist? :-P
Izeinwinter proposed that hedge funds were trading in Bitcoins while using government insider contacts to know when to bail out of the bubble in advance of the sheep. This seems not too far from my suggestion that “maybe the private individuals composing the Treasury Department have non-trivial personal stakes in bitcoin and no civic virtue?”
Ygert suggests I turn my point into a top level discussion post, which isn’t really my personal style. In the meantime he or she basically accepted that bitcoins threatened status quo government operations and vaulted from there into political theology, with mention of tradeoffs between Democracy and Monarchy themselves. If these kinds of tradeoffs were really on the table, I think I’d expect to see more waves in the mainstream?
I think I remain confused :-(
Even if bitcoin does entail the end of nation-states in current form, a soft transition to anarcho-capitalism need not be apocalyptic. In fact I see signs that we are already moving in that direction, and are already much less of a democracy than is commonly believed.
On the other hand, the USGov by itself is perhaps around 30% or more of the US economy, and it will not be switching to bitcoin anytime soon, if ever. If we add in its influence on the military-industry complex and associated large corporations, there is a very large core base of support for the dollar.
Money laundering at casinos in Australia is as simple as swapping cash for chips then chips for cash in sums of less than 10,000 (the figure above which transactions must be reported to authorities). Society may not collapse, but that’s funding a whole lot of problem gambling misery.
Bitcoin has less anonymity than cash. Every movement of coins is recorded in a publicly verified ledger. You can use some trickery like CoinJoins to try to regain some privacy, but even these can be mitigated by state-level actors, and don’t solve the problem that actually spending coins typically revels your real-world identity to the merchant you are interacting with (who must comply with local KYC laws).
You know what allows tax evasion and black markets on a breathtaking scale? Greenbacks. Do you think a criminal—even a technically competent one—would prefer a suitcase of cash or bitcoin transaction? One of these is, outside of extenuous circumstances, truly anonymous and untraceable.
Suitcases of cash are harder to ship long distances.
I don’t think this is true.
Let me list some points in random order.
Cash allows tax evasion and black markets to function. In the years BET (Before Electronic Transactions) cash and similar pieces of paper were very very popular and they did not destroy governments.
Bitcoin is not anonymous. It’s pseudonymous with transactions being always public. An actor with state-level resources (e.g. the NSA) would likely be able to track sufficiently large amounts of BTC.
Governments have official currencies. There are enough coercive pieces in there so that you can’t just run a whole economy on bitcoins and simply ignore the official currency. This means there must be exchanges and they will be very very important. These exchanges are / will be under full effect of government regulations.
Non-virtual businesses cannot and will not just pretend not to exist and so not owe any taxes (e.g. payroll taxes). Tiny businesses can try to stay under the radar, medium and large businesses can not.
Consider a typical contemporary office worker. He gets a salary, say, in USD. His employer reports that salary to the government so that the government withholds a variety of taxes. Let’s say that worker now gets his salary in bitcoins—how does it improve his capability to evade taxes? His salary is still reported to the government.
I think the potential society-level impact of Bitcoin has been seriously overestimated.
There are plenty of revenue sources available even to a government that can’t effectively track financial transactions. To name one, you can’t hide real estate, or other physical commodities, behind crypto.
Maybe they’re not cracking down on Bitcoin for the same reason China isn’t cracking down on free online proxies. (Read the whole post.)
You sort of seems to be proposing that the US federal government is similar to the government of China, with each using the barrier of trivial inconvenience to forestall otherwise revolutionary processes (non-fiat currency and the free flow of information respectively). Your admonition to “read the whole post” makes me think you’re offering a latent suggest that “libertarian paternalism” might be de facto implemented by creating a bitcoin market that sells banned things and is allowed to exist so long as dumb people can’t be victimized by it because they aren’t smart enough to strategically access it.
I think this is something I’ll have to ponder for a while. Thanks :-)
I indeed explicitly pointed that out in a comment, but as Nornagest mentions it sounds like they have since changed their minds. (Or maybe they were previously unaware of such a market. Prob’ly Gwern has a better explanation for why they left it alone until last October and then cracked down on it than I can think up.)
That would have been a fair description of Silk Road, before it was shut down. Suppose it depends on your parameters for “dumb”, though.
That could be a top-level Discussion post.
You are underestimating… Very badly.. Both the coercive power of a modern government and the sheer bloody-mindedness of a modern government in the face of overt threats.
If what it takes to stop that senario from happening is a zero’th level block in every motherboard, tablet and smartphone sold then you will not be able to buy hardware without that lockout. Chipfabs and assembly plants cant hide from the nice people with the automatic weapons, after all.
Current tax havens exist—at all—because politicians are not really very interested in shutting them down. It would be trivial to destroy them, and wouldn’t take a single bullet. All it would take would be to stop recognizing money transfers to and from those jurisdictions, and the caymans would be nothing but a serverfarm with a bunch of pointless ones and zeroes on it. Escalating to the point where tax evasion become an actual threat, rather than a reason for more donations to politicians would be darwin award level of stupid. Bitcoin is that stupid, by design. Thus it is going to get stomped on.
Which means “the smart money” are likely viewing the bitcoin market as a classic case of tulip mania. This does not mean they are not investing—it is really easy to make money in an inflating bubble if you know you are going to get early warning before it collapses. Hedgefunds have congress critters on payroll, and can therefore be confident that they are going to know that the hammer is about to drop in advance of every other player in the market, and unwind their position onto suitable patsies. Such as tech-libertarians who are buying into the narrative. In the final reckoning, bitcoin might as well have been deliberately designed to separate you. Yes, you. The person reading this. From your money.
Do you know how they catch tax evaders in Italy? They go to the harbour and look at the yachts. edit: and pretending to be poor to cheat taxes completely defeats the point of being rich. Granted, some people will do that, but they effectively eliminate themselves from the economy, as if those coins disappeared, raising the value of all other coins. They pay nearly 100% tax rate. It would be worthwhile to encourage that kind of behaviour, it’s good for the environment, and it taxes more than any government taxes.
You could spend the tax-evaded income on the black market, since you’re hiding contraband from the police anyway.
However they do it, it’s not terribly effective, tax evasion being about 18% of the Italian GDP.
Still quite enough to run the government. One doesn’t even have to try that hard.
Actually we’ve been running deficit for as long as I can find data for, except for about a decade in the 1990s.
But then, who hasn’t? The US?
(edit: Speaking of which, US has the tax law that is effectively anti-progressive on the high range—every big company exploits loopholes)
Good point.
The budget has to be in defecit, or else the whole system falls apart. That’s the modern system of fiat money—it’s based on continued issuance through deficit spending. Just not too much deficit or you end up in hyperinflation.
They mostly don’t. ba-dum tsssh
This is a long and well presented comment: I will chime in with army1987 that you could certainly write this up as a top level discussion post.
My response to it is that I think you are overestimating the value of our current form of government. This could be taken the wrong way, so let me be clear: It is a very good thing that w have a government. Without it, our lives would be nasty, brutish and short. Despite this, government-as-we-know-it (nationalism) is a very recent invention, and while it does some great things (and some not-so-great things), it (in its current form) is far from essential for society.
Democracy is better than monarchy, yes, but that does not mean it is the ideal government. (Recall that famous Churchill quote.) Trying to preserve it when future technology renders it obsolete is a bad idea, in my opinion.
So what should replace it? That is a deep and important issue, and one I can philosophise in depth over. This comment is already long, so I will spare a lengthy discussion here, but it suffices to say that while I am not sure, and this is a topic that needs much deep research and serious thought, I do see several possible directions and solutions that could bare fruit. If you are interested in continuing this conversation I would be happy to expound upon them.
In short, my two related arguments are that: 1) While Bitcoin may or may not bring down nationalism, that in itself does not mean anarchy and and a Hobbesian state of nature; and 2) Democracy is nice, in that it’s better than most other forms of government, but it’s by no means essential.