Bitcoin: low transaction fees, I don't think so

[fergalish]

It is natural, moral, legitimate, efficient, and productive to seek the highest profit one can obtain, so long as one doesn't resort to fraud, deception, trickery, or theft in order to obtain it. It is by the mechanism of each individual seeking to maximize profit (so long as it's done honestly) by which proper market price discovery occurs, and resources are allocated most effectively.

Are you saying that it's not possible to be greedy?  Is there never a point at which an asking price is unfair?

How about this.  I could agree with you and say profiteering is legitimate.  I could then go further and say that profiteering through fraud and deception is also legitimate.  Well, why not?  If I can convince someone to part with their money, could I not then put that money to better use in the market?  Give me a really good reason why dishonesty shouldn't be allowed and yet profiteering should.  No appeal to morals, please, nor to "the greater good" or "market efficiency" etc, please, as these are statements about a theoretical markets.  After all, if it's a free market, my dishonesty will soon be discovered and my customers will go elsewhere. What's the problem? In fact, by dishonestly trading, I'd even be helping the economy - think about it, my defrauded customers will become much more careful and discriminating in their future purchases and the economy as a whole will be more resilient and less susceptible to fraudsters..... Can you *logically* refute that and *still* claim that profiteering is natural, moral, legitimate, efficient, and productive?

I've realized that there is an analogy to the Non Agression Pact of Libertarianism, and have started a thread apropos: https://bitcointalk.org/index.php?topic=88184.0

If you charge below what you can otherwise obtain, you are sending a signal that the service you're providing is less valuable than otherwise, meaning production of that service will be lower than otherwise, meaning other market participants will be misled by a price signal that was distorted.

Decades, if not centuries, of standard economic theory says demand is a decreasing function of price. Are you saying all that is wrong now? If your product is good value, the shouldn't the free market (eventually) select it even if it's much cheaper than the competition? Wouldn't your customers spread the word about what a great guy with a great product you are?

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[Portnoy]

It is natural, moral, legitimate, efficient, and productive to seek the highest profit one can obtain, so long as one doesn't resort to fraud, deception, trickery, or theft in order to obtain it.

That doesn't have to mean trying to extract as much material profit as one can from every person, situation, and environment one encounters in life.

I don't see anyone trying to deny you or anyone a fair return on your efforts. If you were paying attention you may have noticed that both fergalish  
and I provided an example where one could get even greater profits while at the same time serving ones customers in the best possible way at
fair prices.

I too am disappointed at the way you seem to often want to reduce things to a simplistic level in discussions like this, as if it is only possible to see
profit in terms of a choice between the two absolutes of "good" and "bad".  

I see it as more of a choice between the exercise of creativity and a more long term, wider and deeper vision, or the more lazy and shortsighted ways
of trying to grab a quick buck.  

It is by the mechanism of each individual seeking to maximize profit (so long as it's done honestly) by which proper market price discovery occurs, and resources are allocated most effectively. If you charge below what you can otherwise obtain, you are sending a signal that the service you're providing is less valuable than otherwise, meaning production of that service will be lower than otherwise, meaning other market participants will be misled by a price signal that was distorted.

Indeed, one could make the argument that charging less than you can, while being good for the person on the other side of the transaction, is in fact harmful in aggregate to those around you.

Sounds like little more than justifications to me. There are many examples of things like generosity and philanthropy resulting in great good for businesses which embrace such ways.  

If you find a service provider's fee to be too high, then don't use them. Simple simple!

I find this a disappointing attitude coming from a business man as well.  Take it or leave it?  I would suggest it makes for a better business to treat customers, and potential customers, with greater respect. The best businesses I have known, and been lucky enough to be a part of at times, encourage feedback, even if it is negative.  I see such businesses thrive which do the best job of cultivating open discussions and two-way relationships with their customers.  

And that is the point I feel. There is I feel new and better ways ( actually very old ways ) of doing business than a lot of what I have witnessed in many modern corporations and initiatives etc.  It is about thinking a little bit less, just a little, about what one can personally gain and just a little more about how one can serve not only ones customers but ones communities and the greater economies we are all a part of.

There is a sweet spot ( maybe more than one... maybe several... )  between the relative goods and bads, where ones most optimal result is obtained by helping the other
find theirs. Where customers are excellently served and merchants are amply rewarded.

And it seems to me that it is the seeking of that ideal which brings the greatest reward, not only in material terms, and makes for not only better business but more harmonious relations among people in general.  

I see Bitcoin as being a potentially helpful tool in moving us in these directions and am just disappointed when I see so many new Bitcoin businesses fail to see such potentials and instead resort to the usual money grubbing ways which seem common for our time.  

I see fergalish has posted a response while I have been typing this, but I will post this anyway even though I am sure he already did a good job.  Besides I spent too much time on this just to throw it away...  

[TangibleCryptography]

Profiteering can rarely occur in free markets.  Cornerstone of free markets is low barriers to entry and lack of govt interference.  Without those profiteering can't occur.  someone charging 20,000% markup will be replaced by someone charging 100% and him replaced by someone charging 50%, 20% etc.  Until prices are driven down to a fair compensation of risk, and value.

[wachtwoord]

Sadly such markets don't exist

[fergalish]

I see Bitcoin as being a potentially helpful tool in moving us in these directions and am just disappointed when I see so many new Bitcoin businesses fail to see such potentials and instead resort to the usual money grubbing ways which seem common for our time.  

I feel exactly the same way.  I admire bitcoin very much, and the opportunities for an equitable society are plain for all to see; pity it's being usurped by the money-makers.

To all those that say "do it yourself", well, if I could, I would. I would cover costs and take no profits, but I would ask for donations.

[wachtwoord]

I see Bitcoin as being a potentially helpful tool in moving us in these directions and am just disappointed when I see so many new Bitcoin businesses fail to see such potentials and instead resort to the usual money grubbing ways which seem common for our time.  

I feel exactly the same way.  I admire bitcoin very much, and the opportunities for an equitable society are plain for all to see; pity it's being usurped by the money-makers.

To all those that say "do it yourself", well, if I could, I would. I would cover costs and take no profits, but I would ask for donations.

Okay check out the website in my sig then because this is exactly the way I work [Sorry for the shameless advertizing but I couldn't resist]

[rjk]

I see Bitcoin as being a potentially helpful tool in moving us in these directions and am just disappointed when I see so many new Bitcoin businesses fail to see such potentials and instead resort to the usual money grubbing ways which seem common for our time.  

I feel exactly the same way.  I admire bitcoin very much, and the opportunities for an equitable society are plain for all to see; pity it's being usurped by the money-makers.

To all those that say "do it yourself", well, if I could, I would. I would cover costs and take no profits, but I would ask for donations.

Welcome to freedom! Enjoy your stay.

BTW, if you can't do something, you are also free to hire someone that can. But then you would be forced to charge your customers more in order to pay that someone. See how it works?

Take for instance Bitinstant: They charge one of the largest premiums I have seen around here, but for convenience. Because no one else has stepped up to provide an equivalent service, they are the only game in town, and because they are successful it is obvious that customers don't mind paying a premium to use their service. Sure, the customers could deposit cash to Bitfloor for no fee at all, but most of them want the convenience of depositing at Wal-mart, CVS, 7-Eleven, and many other locations.

The customers are even calling for Bitfloor to have Bitinstant integration, even though they know they they would be paying up to a 4% fee! This is indeed supply and demand at work - the demand is high, and the price is high to match. Eventually there would be a crossing point, but the market would have to find out where that point is, and it hasn't yet apparently, according to the success of Bitinstant.

[fergalish]

Profiteering can rarely occur in free markets.  Cornerstone of free markets is low barriers to entry and lack of govt interference.  Without those profiteering can't occur.  someone charging 20,000% markup will be replaced by someone charging 100% and him replaced by someone charging 50%, 20% etc.  Until prices are driven down to a fair compensation of risk, and value.

Insofar as a monopoly can occur in a free market, then so can profiteering.  I can't wait for the alternative lower-cost bitcoin services to spring up.  Given that first-movers have the advantage, and second and third-movers will probably just maintain the status quo, well, I'm not so hopeful.  Let me ask you a question.  Do you suppose there are any price-fixing cartels in bitcoin-dom yet?

[TangibleCryptography]

To all those that say "do it yourself", well, if I could, I would. I would cover costs and take no profits, but I would ask for donations.

One form of "cost" is risk.  It is entirely possible that in our instance we could be double spent, or have funds wrongly held hostage by an exchange, we have already had withdrawals delay 18 days before clearing.  The largest risk is in currency movement.  While Bitcoin was pretty stable last month volatility (hmm someone should maybe a VIX like indicator for BTC) has increased lately.  Trying to run a business at "cost" (which is likely more than you think) is naive.  One catastrophic event and your cashflow liquidity is gone.    Doing that with everything in life means eventually you are going bankrupt.  You can only be lucky for so long.  Eventually the law of averages catches up.  You will take loses due to fraud, you will have unexpected costs/failures, you will have funds stolen.  Those have to be planned for to ensure your capital can survive and expand.

Risk is a cost and margin is a method to partially mitigate that risk.  If you would be willing to put up $50K capital and take upon yourself all currency risk we face with no compensation (i.e. you profit or lose one any currency move between time we buys coins and we are able to sell them) we would be happy to remove that cost (~0.5% in our estimate) from the retail price.  

I have a feeling we aren't going to find any takers to absorb that risk for free as such that risk is passed on to the consumers.

One thing I would point out is sell wireless airtime at a discount and offer quick sales of BTC at a premium (no different IMHO than an ATM service fee).  Personally I think the former is far more valuable however to date our revenue has been about 95% from the later so it would seem consumers care very little about fees.   I am still optimistic this will change.  I will be very happy the day we generate more revenue by selling goods and services than by buying/selling BTC. 

[TangibleCryptography]

Insofar as a monopoly can occur in a free market, then so can profiteering.

Monopolies (with the exception of natural monopolies) generally require the assistance to maintain their monopolistic position.

There certainly may be "cartels" which attempt to manipulate the exchange rate (I assume that is what you mean by price fixing) but that isn't a monopoly.  As long as the cartels are competing for profits a free market* is taking place.  


* free markets tend to be impossible.  We can however strive for free[er] markets.  The lack of govt control and manipulation makes me believe BTC/USD is a freeer market than say the price of oil or EUR/USD forex market.

[fergalish]

One form of "cost" is risk.  It is entirely possible that in our instance we could be double spent, or have funds wrongly held hostage by an exchange, we have already had withdrawals delay 18 days before clearing.  The largest risk is in currency movement.  While Bitcoin was pretty stable last month volatility (hmm someone should maybe a VIX like indicator for BTC) has increased lately.  Trying to run a business at "cost" (which is likely more than you think) is naive.  One catastrophic event and your cashflow liquidity is gone.

I agree with all you say and, while I would very much like to be the good philanthropist and put up the $50K you require, well firstly, I don't have it and secondly if I did, there are plenty of other things I'd do with it first.

How come you're afraid of being double-spent? Bitcoins don't permit double spending, unless you're doing something specifically to re-expose that risk, such as offering wealth on foot of zero-confirmation bitcoin receipts...? Exchange rate risk... yes, but then, when volatility goes down, you'll be able to (nearly) eliminate the fee for that risk, right?

Certainly one should have a buffer of capital to cover for unlikely events, but once you've put enough capital aside to do that, then the fees should come down, right?  i.e. you need $50K to cover for unlucky exchange rates.  So how long, at 0.5% fee, will it take you to put $50K aside?  A few months?  A couple of years?  So do that, then put a big banner on your site saying how you're now able to reduce fees by 0.5% due to the excellent risk management strategy devised by the managerial team.

Don't get me wrong - read my OP again. I'm all for a fair price and a fair profit. Seems to me, though, that the "Great Bitcoin Opportunity To Give Economic Power Back To The People" is being abused by some players (and, again, I mentioned some specific websites only as representative examples).

Monopolies (with the exception of natural monopolies) generally require the assistance to maintain their monopolistic position.
There certainly may be "cartels" which attempt to manipulate the exchange rate (I assume that is what you mean by price fixing) but that isn't a monopoly.  As long as the cartels are competing for profits a free market* is taking place.

I mean price-fixing monopoly cartels. Like OPEC, right? (though maybe their monopoly is dwindling). A powerful monopoly needs no assistance. It can purchase its own violence without requiring the state to provide any.

[TangibleCryptography]

The 51% attack is always a risk.  Currency exchangers are a likely and lucrative target in the event of a 51% attack.  Our pricing does take into consideration the current volatility by comparing the differences between the last trade, the 24 hour weighted average, and 60 minute price velocity.  The margin adjusts based on the projected 60 min forward volatility. Of course that introduces another form of risk.  Our model could be flawed and we haven't mitigated anything.  That puts a lower limit on how comfortable we are in reducing the margin.

While eventually the profits from the margin spread will grow the capital it is very likely (hopeful) that daily volume will continue to grow requiring more capital.  We do hope to improve our price spreads and will continually re-evaluate it.  The larger point is that what an outsider looking in may consider "excessive" may be the minimum margin suppliers are willing to risk their capital at.   

You either believe in free markets or you don't.   If the profit is truly excessive (which given not a single investor has receive a penny in dividends I don't think it is) then competition will drive those margins down as other greedy business seek to gain marketshare.  On the other hand if the profit margin isn't excessive those who attempt to do so will find themselves bankrupt. 

If the market is free then given enough supply and demand the price reached IS the fair price.

I mean price-fixing monopoly cartels. Like OPEC, right? (though maybe their monopoly is dwindling). A powerful monopoly needs no assistance. It can purchase its own violence without requiring the state to provide any.

I stand by the assertion that monopolies (except in the rare instances of natural monopolies) are simply not sustainable without the assistance and coercion of the state.  If you feel banks are predatory your can't form a "fair bank" or at least your ability to is significantly hampered by the State.  If you feel Bitcoin businesses are predatory you don't have those artificial higher barriers to entry which allows monopolies to exist.

[asdf]

It is natural, moral, legitimate, efficient, and productive to seek the highest profit one can obtain, so long as one doesn't resort to fraud, deception, trickery, or theft in order to obtain it. It is by the mechanism of each individual seeking to maximize profit (so long as it's done honestly) by which proper market price discovery occurs, and resources are allocated most effectively.

Are you saying that it's not possible to be greedy?  Is there never a point at which an asking price is unfair?

what is "fair"? If you don't like the price. Don't buy.

Besides, don't you see the symmetry of the situation. Any argument you apply to the sale of goods can be applied to your labor. How many raises will you demand before it's "unfair"? Supply and demand meet at the fair price (as long as there is no monopoly or special privileges, enforced with violence).

How about this.  I could agree with you and say profiteering is legitimate.  I could then go further and say that profiteering through fraud and deception is also legitimate.  Well, why not?

Fraud is illegitimate. It's an orthogonal argument.

If I can convince someone to part with their money, could I not then put that money to better use in the market?

That's the beauty of capitalism. The money ends up in the hands of the people who are best at efficiently allocating resources.

Give me a really good reason why dishonesty shouldn't be allowed and yet profiteering should.  No appeal to morals, please, nor to "the greater good" or "market efficiency" etc, please, as these are statements about a theoretical markets.  After all, if it's a free market, my dishonesty will soon be discovered and my customers will go elsewhere. What's the problem? In fact, by dishonestly trading, I'd even be helping the economy - think about it, my defrauded customers will become much more careful and discriminating in their future purchases and the economy as a whole will be more resilient and less susceptible to fraudsters..... Can you *logically* refute that and *still* claim that profiteering is natural, moral, legitimate, efficient, and productive?

What good is defrauding you customers with the end of making them better able to identify a fraudster? Let them get defrauded if they will and the end will be the same, except your guaranteeing fraud rather than leaving it to chance. This doesn't help the economy.

Imagine there is a flood and the roads are blocked. The corner store can't get new deliveries of milk so they raise the price. This is profiteering. Now less people will buy milk because some will decide that it's not worth the extra cost. Those that really need milk can still get it.

Now, if the store is prevented through force to keep his prices stable. All the milk will be bought by regular customers and quickly run out. Now the people who especially need the milk will be unable to get it. Resources have not been efficiently allocated. This is a called a shortage and it is a result of the price fixing.

[fergalish]

what is "fair"? If you don't like the price. Don't buy.

Please read the previous posts.  I said it's not a black and white situation.  It's not like $99 is fair, but $100 is unfair - there's no sudden line that you cross.  If something costs $10 to produce, then is $10,000,000 a fair price (suppose you own the only squieegligook mine, and people want squieegligooks)?  Answer my question - is it possible to be greedy when setting a price?

Fraud is illegitimate. It's an orthogonal argument.

Is that your best argument as to why fraud is illegitimate?  Just "because"?  I'm hypothesising a truly free market, where there are absolutely no regulations.  Buyer beware, is the order of the day.

That's the beauty of capitalism. The money ends up in the hands of the people who are best at efficiently allocating resources.

Great! Do we agree then, that if I can separate a fool and his money, it matters not how I do that?

What good is defrauding you customers with the end of making them better able to identify a fraudster? Let them get defrauded if they will and the end will be the same, except your guaranteeing fraud rather than leaving it to chance. This doesn't help the economy.

Wouldn't it be great if all consumers were perfectly good at spotting and avoiding fraudsters? My question remains:

Give me a really good reason why dishonesty shouldn't be allowed and yet profiteering should.  No appeal to morals, please, nor to "the greater good" or "market efficiency" etc.  ..... ..... Can you *logically* refute [fraud] and *still* claim that profiteering is natural, moral, legitimate, efficient, and productive?

Personally I am of the opinion that profiteering is immoral, illegitimate, inefficient and unproductive, and nothing other than a fraudulent misrepresentation of the value of a product or service. It just seems to me that the pro-free-market position is untenable. Why is profiteering considered ok, yet fraud is not? Don't ignore the question by saying it's "orthogonal" like as though that means something.

Imagine there is a flood and the roads are blocked. The corner store can't get new deliveries of milk so they raise the price.
<snip>
Now, if the store is prevented through force to keep his prices stable. All the milk will be bought by regular customers and quickly run out. Now the people who especially need the milk will be unable to get it.

You're equating "those who especially need milk" with "those with the resources to pay elevated prices".  If your corner store raises prices, it won't be the needy that can still buy milk, but the wealthy. These two groups will be almost mutually exclusive (i.e. the needy will probably be poor, and the wealthy will probably not be needy).

[Elwar]

Personally I am of the opinion that profiteering is immoral, illegitimate, inefficient and unproductive, and nothing other than a fraudulent misrepresentation of the value of a product or service. It just seems to me that the pro-free-market position is untenable. Why is profiteering considered ok, yet fraud is not? Don't ignore the question by saying it's "orthogonal" like as though that means something.

An individual's primary moral obligation is to achieve his own well-being—it is for his life and his self-interest that an individual ought to adhere to a moral code.


"I swear—by my life and my love of it—that I will never live for the sake of another man, nor ask another man to live for mine." -Ayn Rand

[Portnoy]

An individual's primary moral obligation is to achieve his own well-being—it is for his life and his self-interest that an individual ought to adhere to a moral code.

Can't you see how in many ways ones own well-being is dependent on the well-being of others?
Greed is only good for isolating oneself from the world and perpetuating social pathologies.  

"I swear—by my life and my love of it—that I will never live for the sake of another man, nor ask another man to live for mine." -Ayn Rand

This quote, which some other forum member uses as a sig, I find much better:

"There are two novels that can change a bookish fourteen-year old's life: The Lord of the Rings and Atlas Shrugged. One is a childish fantasy that often engenders a lifelong obsession with its unbelievable heroes, leading to an emotionally stunted, socially crippled adulthood, unable to deal with the real world. The other, of course, involves orcs." - John Rogers

/edit
Here are also some other interesting articles on that person:

http://www.guardian.co.uk/commentisfree/2012/mar/05/new-right-ayn-rand-marx

---

http://www.firstthings.com/onthesquare/2011/06/the-fountainhead-of-satanism

You can replace the pentagrams of LeVayian Satanism with the dollar sign of the Objectivists
without changing much of the substance separating the two. The ideas are largely the same,
though the movements’ aesthetics are different...




/edit 2
I am not a Christian btw...  but that second article does speak to a certain hypocrisy. 

[fergalish]

An individual's primary moral obligation is to achieve his own well-being—it is for his life and his self-interest that an individual ought to adhere to a moral code.

Can't you see how in many ways ones own well-being is dependent on the well-being of others?

Well, maybe (s)he does. This philosophy is quite compatible with anything really - if you happen to think that your well-being is best served by a tyrannical despotic ruler, well, that'll work for you. If you think it's best served by complete lawless anarchy, well, that's what you think. The point is that, when you have sufficiently achieved your own well-being, you can afford to dedicate some of your productive capacity to the well-being of others; the question that arises is whether there exists a moral obligation to do so. Personally, I don't think there is any such a moral obligation, but I do think that it's a sign of greed when people take more cake than they can eat.

edit: the real problem with Elwar's statement is that it says nothing about what to do when two people's ideals conflict.

[Elwar]

edit: the real problem with Elwar's statement is that it says nothing about what to do when two people's ideals conflict.

It is called the non-initiation of force.

If two people's ideals conflict. The moral person will be the one who does not initiate force upon the other.


You could love communism and I could love liberty. As soon as you see me make money and attempt to take that money, then you have committed the immoral act.

If I see you spread your wealth equally among your commune and I come in and force you to keep it all and not give it away, then that is the point of immorality.


And if everyone lived their lives with the goal of being self reliant, then there would be no one that would need society to take care of.

And to stifle one's self reliance is an act of stifling one's ability to live. You are basically attacking life and embracing death with every shot at anyone trying to get ahead. And in many ways, a lot of people just yearn for death and an end to human existence. That is their choice. That is something for you to deal with on your own, if you do not like life then embrace death on your own instead of trying to take everyone else down with you.

As for Ayn Rand...better to attack the person than the philosophy right?

And I do see how one's own well-being is dependent on the well-being of others. All boats rise with the tide. So if one person is able to make a buttload on a Bitcoin service and I start my own service and that person's buttload of Bitcoins gets others to use Bitcoin then I benefit. It would also encourage others to start their own Bitcoin businesses in order to prosper as well. And with that comes competition and better/cheaper services. So yes, someone making huge profits does contribute to my well-being.

Greed does not isolate, it leads us all to prosperity.

To not be greedy would mean that we do not work for reward. If you do not work for reward you will avoid work. If nobody works, we all die.

[Portnoy]

As for Ayn Rand...better to attack the person than the philosophy right?

Oh come on!  Those links were all about criticizing her "philosophy." It isn't like it is name calling and suggesting we should reject her views because the writers think she is ugly, stinks and talks with a funny accent.  One of the few places it even touches on her personal life is where it points out how she can't even live up to her own convictions:
"I wonder how many would continue to worship at the shrine of Ayn Rand if they knew that towards the end of her life she signed on for both Medicare and social security."

Which surely tells us something about her philosophy and not just her since such hypocrisy seems not uncommon among Randians.  

How do you explain how so many who follow Any Rand also call themselves Christians? How does one reconcile Atlas Shrugged with the Sermon on the Mount for example?

But nevermind... if this thread is going to get into discussions of Any Rand's ideas I will bow out... I think I would rather debate evolution with fundamentalists...

And I do see how one's own well-being is dependent on the well-being of others. All boats rise with the tide. So if one person is able to make a buttload on a Bitcoin service and I start my own service and that person's buttload of Bitcoins gets others to use Bitcoin then I benefit. It would also encourage others to start their own Bitcoin businesses in order to prosper as well. And with that comes competition and better/cheaper services. So yes, someone making huge profits does contribute to my well-being.

Greed does not isolate, it leads us all to prosperity.

To not be greedy would mean that we do not work for reward. If you do not work for reward you will avoid work. If nobody works, we all die.

It seems that idea has been expressed more than once already.  Fergalish, in answer to that it seems, has some other great questions. Why don't any of you greedsters have a go at answering those?

 

[Rassah]

I read through this thread and saw plenty talking about why charging higher prices is good, but little about why lower prices are bad. So, to answer that question:

Bitcoin services charging lower, more "fair" fees, would be VERY bad, because that would mean everyone who is using their service would be satisfied with what they are getting. There would be no incentive for anyone to come up with a better system, since what works already works, and anyone inventing a new system will likely have development costs that exceed the artificially low "fair" prices charged by the first movers. It will also mean that we will be limited to the few first-movers that joined the field to begin with, and no one else will bother to join, since they won't be able to compete or make any money. We'll have centralization of services and monopolies. Fees being high as they are now means that there is plenty of room for others to come in and try to compete with those first-movers, meaning we'll have more choices, and that there is extra money in the profits that can be spent above the base costs on developing new things that may improve service.

We have a pretty good real world example of this problem btw. Currently, gas prices in the US are about $3.30 per gallon. This is not the free market price, but a MUCH lower "fair" price that is supported by oil subsidies, government cleanup of spills, and US military fighting to defend oil fields around the world. The benefit is we get cheap, "fairly" priced, gas, and Joe Everyman can afford to drive his car just like the rich folks. The downsides are: almost no choices regarding what type of energy source we use for transportation, very little choice in whom we buy gas from, and externalities like oil spills, smog, wars, and contribution to global warming. The alternative is a free market price, i.e. "unfair, greedy, profiteering" price. Without those subsidies, the price of gas would likely be around $5 to $6 per gallon. At that price, suddenly things like ethanol, natural gas, and even solar, wind, and hydrogen fuel cell based energy systems become competitive. With the free market price, filling your car up with gas will cost a lot more, and poor people will suffer at first, but companies will see huge profit potential in actually competing with gasoline (something they can't do now), meaning they will dump lots of money into research to get electric and alternative fuel cars out to the market. Rich folks will buy the new models (like they do with Tesla cars now), the produced number of those cars will greatly increase, and before long the new technology will be just a common thing everyone can afford. The result will be that you can either still buy a gasoline car, or have the option to buy something else, including something you charge or generate hydrogen for at home, and can actually become cheaper than gasoline. And the externalities will greatly decrease as well. Right now, if there is an oil spill or some oil related war, we have to grin and bear it, since we have no choice but to keep using that oil. Under the free market system, if there is an oil spill, or some oil companies decide to have a war in some country, we can actually chose to go with something else. Same for polution: if someone decides to drive something that pollutes the air around me, I can actually take them to court without being laughed out of it, since NOT to pollute will be a viable choice, and buying something that creates smog will be a conscious, specific decision.