Labor costs and prices in an economy using bitcoin exclusively

[FatherMcGruder]

Managing workers requires time and effort. I am indirectly working the land.

If the workers want management, they will democratically choose a manager and give him a share of the harvest equal to the work he contributes relative to everyone else.

I think I see a point at which compromise can be attained.

Correct me if I am wrong:

A "rich guy" owns 200,000 acres of land, and a "poor guy" owns nothing, but sneaks onto the rich guys land and grows potatoes. You say the potatoes belong to the poor guy because he "labored" for them. If the rich guy "lords" over the poor guy he is wrong. I think you might have a point here somewhere but an acceptable compromise must be attained. The "rich guy" labored to acquire land, instead of "potatoes", so he should also bare the "fruits" of his labor and not let the "poor guy" steal it from him. Just like the rich guy shouldn't steal the "poor guys" potatoes.

How can someone compromise this? Well the poor guy should give "something" to the rich guy where both can benefit from each of their "laboring".  Technically this is "squatting". 

Which in the United States is taken into account:

In time, squatters can actually earn ownership of the dwelling. There's a legal precedent in most of the United States called adverse possession. This doctrine says that if a squatter lives "openly, continuously and hostilely" in a home for a prescribed number of years, he or she can become the owner. This applies to property that's vacant and where property taxes aren't being paid. The three criteria that must be met are making no attempts to hide the inhabitation (open), living in the dwelling continuously and without permission (hostile). If the squatter pays property taxes on the home, when the time limit is reached, he or she is considered the owner.

So if the "Rich Guy", never notices or doesn't do anything, the "poor guy" can become the owner. This will let land the "isn't really being used to be re-proportioned."

But if the "Rich Guy" takes notice because he is in some fashion "using it". There must be a solution. The sympathetic solution, would be to let the "poor guy" continue but pay the rich guy a portion of proceeds for his labors. A win/win solution.

But if the "Rich Guy" wants to stop the "poor guy" and make him leave. You say he shouldn't be able to do it. But that will allow the poor guy to become the rich guy and the rich guy to become the poor guy. All because one put his labors into potatoes instead of land.

I say the rich guy should be able to make the poor guy leave BUT the rich guy shouldn't get the potatoes or any profit from them. That seems fair.

Please consider this as pointed out below by a poster: If there is not "Land Ownership" being paid for by the fruits of ones labors, there will be great fighting over use of the land. All the Potato growers will fight for the best place to grow potatoes, mine, drill, etc...

If you own to much land to properly oversee then "Squatters" will occur and ownership transferred.  The U.S. and Australia have law sympathetic to squatters, because of extreme land grabs where people claimed hundreds of thousands of acres for themselves. So our two countries have as a foundation and rarely used principle of "Use it or loose it".  People still do this and cases come up almost every year, but as soon as you are declared the new owner, you must pay the taxes.  Death and Taxes, you know.

Of course disputes will occur, but the person with the greatest might shouldn't unilaterally devise the solution. If the disputing parties cannot reach a solution without one using power over the other, perhaps they’ll take the issue to some kind of court in which individuals of equal relation to both parties investigate and come up with a solution. Of course the court will have no power except to publish its findings. This way, others will have information by which they can voluntarily modify their behavior towards the disputing parties so as to affect justice. If the stronger claimant doesn’t follow the court’s findings, he’ll have a lot of people to answer too.

Now compare to the capitalist system of the USA that you depicted. It clearly benefits those with the power to regularly patrol their property claims and pay taxes. It pays no regard to how the claimants use the property, if at all.

I hate the terms Rich and Poor. Material amount has little significance if the individual sufficiently sustains themselves.

I agree with you, but one must use a means of communicating that others can easily quantify. Personally, I think Mother Terresa was one of the "Richest" people on earth.

And she had the audacity recognized the existence of poor and unfortunate people, unlike Atlas apparently.

You have not answered. Stop hiding behind rethoric and answer clearly.

In the example above, the original, how can I know if someone is just obtaining surplus in a moral way (according to you) or someone is obtaining a surplus inomorally (according to you)?

Okay, here's the simple English version: When someone sells you something, you pay for it and you own it. When someone rents something to you, you pay for it but the he keeps owning it while you get nothing. Renting is bad because the person you rent from gains at your expense.

[1714790331]

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[wb3]

Of course disputes will occur, but the person with the greatest might shouldn't unilaterally devise the solution. If the disputing parties cannot reach a solution without one using power over the other, perhaps they’ll take the issue to some kind of court in which individuals of equal relation to both parties investigate and come up with a solution. Of course the court will have no power except to publish its findings. This way, others will have information by which they can voluntarily modify their behavior towards the disputing parties so as to affect justice. If the stronger claimant doesn’t follow the court’s findings, he’ll have a lot of people to answer too.

Hmm... a system of Judges, but to be fair it would have to have an equal amount of Land Owners and Potato Growers. Something tells me there will be a lot of unresolved cases.

Just because the Land Owner put the "Fruits" of his labors in owning Land instead of Growing Potatoes. Who should Lord over him and tell him how to use and what to do with his land.
You have turn the land owner into the Potato Grower, Whoever gets to tell the Potato Grower what to do with his potatoes should be able to tell the Land Owner what to do with his Land. If no one gets to tell the Potato Grower what to do with his Potatoes, then no one should tell the Land Owner how to use his land.

Now compare to the capitalist system of the USA that you depicted. It clearly benefits those with the power to regularly patrol their property claims and pay taxes. It pays no regard to how the claimants use the property, if at all.

Nor should it, the Land owner if he chooses to not use it has as much right as the Potato Grower that chooses to throw the Potatoes away. They both Labored for their work, they both received something for their work, Who should tell them to what to do with what they earned.

It seems like you are against surplus. Am I committing a crime when I only eat half of my sandwich. Or should I throw it to the ground and let others (ants, etc...) eat it?

While I agree there is to much surplus that leads to waste, it is their surplus. A law that says only make what you need will have drastic consequences on a multitude of people. Especially since needs change day to day. And who gets to determine needs? Me or the Government?

Oh, BTW: In the U.S. what the Land Owner does with the Land determines the tax rate. If the Land Owner chooses to turn it into farm land, he is rewarded with the lowest tax rate. If he just wants to look at it, he pays the highest rate. *Exception: Churches don't pay tax on their land, but they still must buy it.

[FatherMcGruder]

Hmm... a system of Judges, but to be fair it would have to have an equal amount of Land Owners and Potato Growers. Something tells me there will be a lot of unresolved cases.

Just because the Land Owner put the "Fruits" of his labors in owning Land instead of Growing Potatoes. Who should Lord over him and tell him how to use and what to do with his land.
You have turn the land owner into the Potato Grower, Whoever gets to tell the Potato Grower what to do with his potatoes should be able to tell the Land Owner what to do with his Land. If no one gets to tell the Potato Grower what to do with his Potatoes, then no one should tell the Land Owner how to use his land.

I think you misunderstood. Such disputes would come as a result of workers trying to use the same resource. Only a minority of people would ever respect a land claim wherein the claimant doesn't work the land himself.

Nor should it, the Land owner if he chooses to not use it has as much right as the Potato Grower that chooses to throw the Potatoes away. They both Labored for their work, they both received something for their work, Who should tell them to what to do with what they earned.

Well, a land owner doesn't really earn anything by owning land. He directs his workers to earn it for him. And I think hungry people have every right to take food from someone who intends to let it rot.

It seems like you are against surplus. Am I committing a crime when I only eat half of my sandwich. Or should I throw it to the ground and let others (ants, etc...) eat it?

I am not against surplus. I am against the abuse of surplus. Overeating, while others starve, is wrong because in doing so, you make food scarcer and thus more difficult to obtain. I don't think anyone would ever get in trouble for procuring too large of a sandwich. Whoever does find himself with excess sandwich should not mindlessly waste it by interring it in a landfill. If he can't fine anyone who wants a half eaten sandwich, perhaps someone might need it for compost to grow more food, or to feed pigs.

While I agree there is to much surplus that leads to waste, it is their surplus. A law that says only make what you need will have drastic consequences on a multitude of people. Especially since needs change day to day. And who gets to determine needs? Me or the Government?

Putting someone in charge will not solve the problem of waste. He will pleasantly wallow in as much as he can while his subjects endure scarcity. As a better alternative, every individual should take it upon himself to not tolerate waste.

Oh, BTW: In the U.S. what the Land Owner does with the Land determines the tax rate. If the Land Owner chooses to turn it into farm land, he is rewarded with the lowest tax rate. If he just wants to look at it, he pays the highest rate. *Exception: Churches don't pay tax on their land, but they still must buy it.

I know, but they give those breaks to the land owners and not to the people who actually work the land. Of course, I don't expect the state to do so. Even if they did, it would be to pacify the workers so as to prevent mutiny.

[spenvo]

I am simply disappointed that the author of the original post has not been engaged in this discussion whatsoever. 

[hugolp]

Okay, here's the simple English version: When someone sells you something, you pay for it and you own it. When someone rents something to you, you pay for it but the he keeps owning it while you get nothing. Renting is bad because the person you rent from gains at your expense.

So basically you want to ban lending but not stricly ownership. Now that you have stated what you think is moral, I would like to understand why (and please, for the sake of understanding, keep the clear and understandable language going on).

[ffe]

I am simply disappointed that the author of the original post has not been engaged in this discussion whatsoever. 

Ditto...

This discussion is sooo far from the original post I am at a loss for anything to say. 

[hugolp]

I'll start by saying it is a bit of a stretch to consider an exclusive Bitcoin economy as existing in a vacuum. The very nature of Bitcoin virtually ensures there will at least be several of them. It may very well be the case that there are rules that could be applied to one of many parallel Bitcoins which is better suited to paying wages much in a way people are presently used to. But I doubt that there is a one-size-fits-all solution that will work well with all market segments.

And vendors can easily adapt to having different e-currencies, because a website can automatically adjust prices and even automatically exchange from one e-currency to the one preferred by the vendor. I mean that the vendor could deal only in currency C, but accept currencies A, B, C and D. When someone goes to his/her website and pays in currency B, the system can automatically send that money to an exchange and receive payment in currency C. That way the vendor only deals with his preferred currency while still accepting a lot of them. In an unregulated economy the cost of the exchange would probably be minimal, there could even be vendor associations that exchange the currencies among themselves, a sort of vendor cooperative exchange.

PS: There goes my part to get the post back on track.

[FatherMcGruder]

So basically you want to ban lending but not stricly ownership. Now that you have stated what you think is moral, I would like to understand why (and please, for the sake of understanding, keep the clear and understandable language going on).

No, I want the majority of folks to not tolerate usury. Usurers might still exist, but they'd have trouble finding borrowers. It is immoral for the same reason that theft is immoral.

Others have rightfully complained about this tangent. Let's consolidate and continue at the "Do you like profit?" thread that Kiba started.

[ffe]

I am simply disappointed that the author of the original post has not been engaged in this discussion whatsoever. 

Ditto...

This discussion is sooo far from the original post I am at a loss for anything to say. 

Bring it back.

"You can do it."

I'll start by saying it is a bit of a stretch to consider an exclusive Bitcoin economy as existing in a vacuum. The very nature of Bitcoin virtually ensures there will at least be several of them. It may very well be the case that there are rules that could be applied to one of many parallel Bitcoins which is better suited to paying wages much in a way people are presently used to. But I doubt that there is a one-size-fits-all solution that will work well with all market segments.

ok...



I’ve only known about bitcoin for a few weeks. It’s been fun learning so much as I read the forums.

The initial discussion was focused on the fixed number of bitcoins that will be issued. My initial post described three uses for money; Store of Value, Medium of Exchange, and Unit of Account. I’ve come to realize that governments manipulate money for a fourth use, Stabilizing Demand.

Money is so integral to the real economy that it becomes the major symptom/cause of downturns. During downturns overall economic activity is reduced and this is reflected/measured as lower money transactions. Central banks try to boost economic activity by boosting the supply of money in the hope of increasing money transactions.

In bitcoin the comparable measure is the total value of the transactions captured in the blocks. In a sense this is independent of the fixed supply of bitcoin. The 21 milloin bitcoins can roll over once per year causing β21M/year of economic activity or they can roll over 10 times per year causing β210M/year of economic activity. A level of transaction activity consistant with the level of the economy is healthy and is what stabilizing demand tries to do.

With a fixed supply of bitcoin we are saying that no one will try to stabilize demand by debasing the curency. For all I know this may be a good thing. As we’ve discussed, debasing the currency does not necessarily lead to inflation if the economy is growing, but on the other hand it may. This is because human management of the currency is never perfect and temptation will always be there to “prime the pump” a little too much.

I agree bitcoin may never be the exclusive currency in a modern economy. So maybe it doesn’t have to be a tool to stabilize economic activity and that’s ok.

[ffe]

And vendors can easily adapt to having different e-currencies, because a website can automatically adjust prices and even automatically exchange from one e-currency to the one preferred by the vendor. I mean that the vendor could deal only in currency C, but accept currencies A, B, C and D. When someone goes to his/her website and pays in currency B, the system can automatically send that money to an exchange and receive payment in currency C. That way the vendor only deals with his preferred currency while still accepting a lot of them. In an unregulated economy the cost of the exchange would probably be minimal, there could even be vendor associations that exchange the currencies among themselves, a sort of vendor cooperative exchange.

PS: There goes my part to get the post back on track.

I agree. One of the best features of bitcoins is the ability to transfer wealth in an easy convenient way. Setting up markets for buying and selling bitcoins in local currencies in every country will give us the biggest bang for the buck in terms of getting bitcoin established.

You could even automate a buy in one currency associated with a sell in another currency so the customer never owns bitcoins for more than a few minutes. Only local market agents would need to hold enough bitcoins to facilitate the trade for a fee and they would be strictly local actors in each country, not international players with contacts across the world.

The value here is in the ease of transfer and the ease of entry into the business in each country. No need to wire money in an international currency. No need to trust an agent in another country. No central clearing house, etc..

[hugolp]

As we’ve discussed, debasing the currency does not necessarily lead to inflation if the economy is growing, but on the other hand it may. This is because human management of the currency is never perfect and temptation will always be there to “prime the pump” a little too much.

People tend to focus too much in the inflation is theft problem and leave asside the biggest problem of inflation: the discoordination that creates in the market that leads to inefficiencies, lower standard of living and boom and bust cycles.

You can have no increase in prices even if there is (monetary) inflation because of productivity increase. But that does not mean everything is fine and dandy. During the roaring 20's Fisher congratulated the Federal Reserve for how well they managed the money supply. There was no price increases in the CPI index. Keynes said in 1927 that they had now control over the economy and crsis were a thing of the past. On the opposed side, Mises and Hayek warned of a coming crisis. Mises even rejected a well payed job at a major bank and stayed in his low paying job as academic (his wife wasnt happy about it) because he said the banks were going bankrupt and he didnt want his name associated with it.

Then the 1929 crash arrived and developed into the Great Depression because of the interventionist policies of Hoover and FDR. And btw the bank Mises rejected did go bankrupt. What did Mises and Hayek saw or knew that Keynes and Fisher didnt? Why those two that are still today considered valid economists got it so wrong? Both Keynes and Fisher went bankrupt themselves in the Great Depression. Keynes came from a wealthy family so his parents came from England and rescued his mess. Fisher lost all of his family savings but was given a job at a elitist university so he could earn some money.

So again, the price index were flat under the Federal Reserve management during the roaring 20's. What did Mises and Hayek saw or knew that Fisher and Keynes didnt? Its simple. It does not matter if the price index is flat, (monetary) inflation can still cause changes in the relative price levels of the different goods in the market creating disbalances that produce inefficient outcomes and if continued for some time bring about a crisis as the only way to correct those inbalances. Fisher and Keynes focused so much in aggregates, analizing all the goods as if they were the same goods, that did not take into account the distortions inflation causes even when price index are flat.

As conclussion, inflation does finance the government and the banking sector at the expense of the rest, but so do taxes and people tend to accept them beter. The real problem with inflation is that distorsts the capital structure making the system less efficient, more wasteful and makes everybody poorer.

[marcus_of_augustus]

And vendors can easily adapt to having different e-currencies, because a website can automatically adjust prices and even automatically exchange from one e-currency to the one preferred by the vendor. I mean that the vendor could deal only in currency C, but accept currencies A, B, C and D. When someone goes to his/her website and pays in currency B, the system can automatically send that money to an exchange and receive payment in currency C. That way the vendor only deals with his preferred currency while still accepting a lot of them. In an unregulated economy the cost of the exchange would probably be minimal, there could even be vendor associations that exchange the currencies among themselves, a sort of vendor cooperative exchange.

PS: There goes my part to get the post back on track.

I agree. One of the best features of bitcoins is the ability to transfer wealth in an easy convenient way. Setting up markets for buying and selling bitcoins in local currencies in every country will give us the biggest bang for the buck in terms of getting bitcoin established.

You could even automate a buy in one currency associated with a sell in another currency so the customer never owns bitcoins for more than a few minutes. Only local market agents would need to hold enough bitcoins to facilitate the trade for a fee and they would be strictly local actors in each country, not international players with contacts across the world.

The value here is in the ease of transfer and the ease of entry into the business in each country. No need to wire money in an international currency. No need to trust an agent in another country. No central clearing house, etc..

This, in my opinion is the very near future killer app. for bitcoin. A network of small to medium local exchange agents competing for a share of the international money transfer business.

[wb3]

As we’ve discussed, debasing the currency does not necessarily lead to inflation if the economy is growing, but on the other hand it may. This is because human management of the currency is never perfect and temptation will always be there to “prime the pump” a little too much.

People tend to focus too much in the inflation is theft problem and leave asside the biggest problem of inflation: the discoordination that creates in the market that leads to inefficiencies, lower standard of living and boom and bust cycles.

You can have no increase in prices even if there is (monetary) inflation because of productivity increase. But that does not mean everything is fine and dandy. During the roaring 20's Fisher congratulated the Federal Reserve for how well they managed the money supply. There was no price increases in the CPI index. Keynes said in 1927 that they had now control over the economy and crsis were a thing of the past. On the opposed side, Mises and Hayek warned of a coming crisis. Mises even rejected a well payed job at a major bank and stayed in his low paying job as academic (his wife wasnt happy about it) because he said the banks were going bankrupt and he didnt want his name associated with it.

Then the 1929 crash arrived and developed into the Great Depression because of the interventionist policies of Hoover and FDR. And btw the bank Mises rejected did go bankrupt. What did Mises and Hayek saw or knew that Keynes and Fisher didnt? Why those two that are still today considered valid economists got it so wrong? Both Keynes and Fisher went bankrupt themselves in the Great Depression. Keynes came from a wealthy family so his parents came from England and rescued his mess. Fisher lost all of his family savings but was given a job at a elitist university so he could earn some money.

So again, the price index were flat under the Federal Reserve management during the roaring 20's. What did Mises and Hayek saw or knew that Fisher and Keynes didnt? Its simple. It does not matter if the price index is flat, (monetary) inflation can still cause changes in the relative price levels of the different goods in the market creating disbalances that produce inefficient outcomes and if continued for some time bring about a crisis as the only way to correct those inbalances. Fisher and Keynes focused so much in aggregates, analizing all the goods as if they were the same goods, that did not take into account the distortions inflation causes even when price index are flat.

As conclussion, inflation does finance the government and the banking sector at the expense of the rest, but so do taxes and people tend to accept them beter. The real problem with inflation is that distorsts the capital structure making the system less efficient, more wasteful and makes everybody poorer.

Very Good Post, I learned something. Thanks.

While being Anti-Keynesian, I tend to try to find the fundamentals that drive a market, the resources. Sometimes I think people look at the Effect as the Cause, instead of finding the true Cause.