Wednesday, October 22, 2014

Making Picketty's R > G work for the poor

Thomas Piketty's Capital in the 21st Century tells us that the rate of return for capital exceeds the rate of economic growth. Putting aside the many problems of the book, this, in itself, is not very controversial. It's an expected result when you have a shortage of capital compared to the labor prepared to use it. But it is a result that can be reversed by increasing the available capital pool.

Bitcoin and the rest of the alt-coin world are an opportunity to do this. A bitcoin might be $380 today but the smallest unit is the satoshi, a fraction equal to 1/100,000,000th of that. People will pay tens or hundreds of satoshis just to get you to look at an ad for a few seconds. With some applied effort at a public library, it's possible to get perhaps 40k satoshi in a day (not easy but possible) in this way so even if you're in a jobs wasteland with no employment prospects, this option is still available for you. Those satoshi are loanable funds over at BTCJam and other P2P lending sites but unlikely to trigger the first world welfare state's various poverty traps that keep the poor down. Returns are advertised at just under 20% for a doubling time of three and three quarters years.

In short, you have a road out of poverty that doesn't require any action on the part of the government other than the willingness not to investigate the blockchain so closely that we enter the unjust world of Javert. This is possible because it's so cheap to move bitcoins around that even the poor in the US can be part time capitalists. They have the money.

Is anyone telling them this?

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