Turning Socialism Against Itself
By Amy Willis
If you lived in a country ravaged by crime and widespread food shortages, what lengths would you go to in order to feed your family? We’ve all heard stories of the dangers people bravely face to do just that. According to Reason’s Jim Epstein, guest on this EconTalk episode, a growing number of people in Venezuela have found a safer- thus far- method. The price controls that have kept grocery shelves empty have also created a cheap supply of electricity, and some enterprising young Venezuelans have set up shop as Bitcoin miners. While it’s harder to squeeze value out of this in more developed countries, “it’s like having a home mint” in Caracas.
While the technology underlying this process is fascinating, the really intriguing part of the story is the part Bitcoin may- or may not- be able to play in freeing up the economy.
1. The title of this Extra comes from Epstein…What does he mean when he says Bitcoin is “turning socialism against itself?” To what extent do you share his optimism?
2. In describing the secret Facebook group used to facilitate exchange with Bitcoin, Epstein reports that while the group was originally intended to share ideas about libertarian economics, the focus has changed. Participants are interested in commerce, not ideology, he says. How does this bode for the future of freedom? Put another way, is commerce or ideas more likely to further individual freedom?
3. Roberts asks Epstein why the Venezuelan (or later, Brazilian) government doesn’t crack down on Bitcoin miners. How does Epstein respond? How could the state get tighter control over Bitcoin mining and exchange, and how valuable would such control be?
4. Epstein describes Bitcoin as “a database that nobody controls but everyone can trust.” What does he mean by this, and how can such trust be maintained?
5. Toward the end of the conversation, Roberts and Epstein hint at other ways that Bitcoin might reduce transaction costs. In what other kinds of markets might Bitcoin serve this function? Have you had such an experience with Bitcoin? In what other ways might Bitcoin also be freedom-enhancing?