Friday, July 26, 2019

How to Find Substantive Remote-Work Opportunities

Digital nomads use telecommunications technologies to earn a living. I’ve been working remotely since 2016 and have been a digital nomad since July 2018. I often work remotely from countries other than the United States, coffee shops, public libraries, and sometimes co-working spaces.

It’s starting to become the newfound “millennial dream,” but without hard work, it can be difficult to make it a reality. The daily grind, cultural norms, and rising student debt can also get in the way. Though landing a remote position may seem daunting, nearly 38 percent of workers will be able to work remotely in some capacity over the next decade, according to Remote.co.

Here are some easy ways to get started researching opportunities regardless of your background to begin settling into remote work.

Though it may seem impossible to earn remote status with your employer, step out of the lens in which you view your position and ask yourself: “Is it possible to work remotely within my current role? Does anyone else at my company do this?”

Though it may mean moving to a different position or leveraging odd hours, be open to discussing new possibilities.

Even if only one person works remotely, you may have the leverage to begin initiating conversations with your employer if you’ve paid your dues.

Though it may seem to be a risk, if you’ve been loyal to your company, nothing is impossible. Though it may mean moving to a different position or leveraging odd hours, be open to discussing new possibilities.

If you’re interested in this workstyle but are unsure if working remotely may be the right lifestyle for you, consider taking on several clients as a freelancer, initially.

This way you can begin to establish work rhythms that will benefit you if and when you do make the decision to transition into remote work.

If you have a skill like graphic design or photography where you could grow your client base, consider starting your own small business.

There are websites that can guide you on your search to finding the right remote positions, just like Angie’s List. Many tech companies offer remote opportunities directly from this website. As you search for positions online, Google also offers “work from home” as a filter as you aspire to search for positions as well.

Consider making a spreadsheet of all the companies you find that have these opportunities, and connect with hiring managers on LinkedIn. Though there may not be a position you qualify for immediately, begin scoping out companies you would like to work for and continue to check back for the right opportunity.

Creative Mornings and Creative Circle are great resources as you continue the search to help you land remote work, in addition to networking with like-minded digital nomads. Co-working spaces are another creative outlet to network and collaborate with other entrepreneurs.

Co-working spaces are another creative outlet to network and collaborate with other entrepreneurs. Seek out any opportunity to cultivate relationships with people who currently work remotely and aspire to learn from them.

Though some may find certain jobs unappealing, a compromise to obtain a remote lifestyle may mean sacrificing your full-time salary, in exchange for a lower paying job.

Therefore, taking on multiple passions⁠—like your remote position that gives you work flexibility in addition to another revenue stream⁠—may make this lifestyle possible for you a bit sooner. Explore different options and combine the passions that generate revenue.

Even if you hate your job, remember that no one is forcing you to work there. Be thankful for the income, development, and stability your company provides no matter your frustrations.

But when the time comes, don’t be afraid to take the leap and go all in to embrace remote work.

This article was republished with the author's permission. 

Chloe Anagnos
Chloe Anagnos

Chloe Anagnos is a professional writer, digital strategist, and marketer. Although a millennial, she's never accepted a participation trophy.

This article was originally published on FEE.org. Read the original article.

Wednesday, July 10, 2019

Rising Anger in America. The Stoics Taught How to Keep Your Cool

According to the latest NPR-IBM Watson Health poll, “42% of those polled said they were angrier in the past year.”

Most of us think we are better than average. We believe others are getting even angrier than we are: “Some 84% of people surveyed said Americans are angrier today compared with a generation ago.”

No wonder some popular politicians speak like they are in a perpetual rage. Joseph Epstein, writing in the Wall Street Journal, observes of Bernie Sanders:

In his earnest self-righteousness and inflexibly held positions, Mr. Sanders reminds one of the Stalinists of old. Whenever I hear him hammering home his points in his staccato speech, using his hands for italics, I recall that old phrase of Jewish mothers of an earlier generation being nagged by their children: "Hak mir nisht keyn tshaynik!” Loosely translated: “Stop rattling that tea kettle in my face.”

Epstein adds, “Mr. Sanders isn’t a Stalinist, but, judging by his temperament and rigidity, in Stalin’s day he might have been.”

Sanders won’t be giving up his anger anytime soon; his success depends upon attracting angry voters.

And it’s not just in the political arena that anger rules the day. Harvard University law professor Ronald Sullivan, forced to step down as a faculty dean, wrote of “angry demands” on college campuses:

Unchecked emotion has replaced thoughtful reasoning on campus. Feelings are no longer subjected to evidence, analysis or empirical defense. Angry demands, rather than rigorous arguments, now appear to guide university policy.

In his Meditations, Marcus Aurelius observed, “It’s courtesy and kindness that define a human being. That’s who possesses strength and nerves and guts, not the angry whiners.”

A few months ago, my wife and I missed our highway exit. When we exited to retrace our steps, we found ourselves backed up at a traffic light. Each time the light turned green, only five cars could make it through before it turned red again. My thinking riffed on getting to our destination on time. As I railed against reality and behaved boorishly, my wife sat still, well, stoically.

At that moment, I was sure my anger was coming from the traffic light. I didn’t sign up for a poorly controlled intersection and a delayed trip. Take the issue away, and I would be calm again. Wrong. Anger starts with an internal decision to be angry. If we want to be angry, we will find things to be angry about.

If you shouldn’t trust yourself when you are angry, surely you shouldn’t trust others who are angry.

My momentary agitation was made of the same stuff as full-blown road rage. I had given the world, in the form of a traffic light, power over my peace of mind. “You shouldn’t give circumstances the power to rouse anger, for they don’t care at all,” Marcus Aurelius counseled.

The moment I stopped feeding my anger with more thinking, the anger was gone. In their book The Daily Stoic, Ryan Holiday and Stephen Hanselman write:

The first rule of holes, goes the adage, is that “if you find yourself in a hole, stop digging.” This might be the most violated piece of commonsense wisdom in the world. Because what most of us do when something happens, goes wrong, or is inflicted on us is make it worse—first, by getting angry or feeling aggrieved, and next, by flailing around before we have much in the way of a plan.

Life will often not meet our expectations. The traffic light will only let five cars through when you have to get somewhere. But do you have to allow your thinking to make the situation even worse? If you keep pinching your arm, don’t be surprised if you get bruised.

James Romm is a professor of classics at Bard College. His book How to Keep Your Cool: An Ancient Guide to Anger Management is a new translation of the Stoic philosopher Seneca’s work On Anger.

In his introduction to his book, Romm asks us to recall “the last minor incident that sent you into a rage.” He asks us to reflect on these questions: “You were injured—or were you? Were you notably worse off, a day or two later, than before the incident occurred? Did it really matter that someone disrespected you?”

Then Romm offers this pointed advice:

By shifting our perspective or expanding our mental scale, Seneca challenges our sense of what, if anything, is worth our getting angry. Pride, dignity, self-importance—the sources of our outrage when we feel injured—end up seeming hollow when we zoom out and see our lives from a distance.

In Seneca’s words, “Your anger is a kind of madness, because you set a high price on worthless things.”

Using the common example of road rage, Romm explains the price of our madness:

In your momentary road rage, in your desire to honk at, hurt, or kill the other driver, lie grave threats to the sovereignty of reason in your soul, and therefore to your capacity for right choice and virtuous action. The onset of anger endangers your moral condition more than that of any other emotion, for anger is, in Seneca’s eyes, the most intense, destructive, and irresistible of the passions. It’s like jumping off a cliff: once rage is allowed to get control, there’s no hope of stopping the descent.

Awareness cures anger. Look at “all the vices anger gives rise to and take good measure of them.” Seneca was adamant:

If you truly want to examine its effects, the damages it causes, I say that no plague has done more harm to humankind. You’ll see slaughters, poisons, mutual mud-slinging of litigants, wreckage of cities, extinctions of whole races, lives of leading men sold at public auction, torches touched to buildings, flames not contained within walls but, held by an enemy host, gleaming over vast spans of territory.

Anger harms the angry host. Seneca taught:

Deaf to reason and advice, stirred up by empty provocations, unsuited to distinguishing what’s just and true; [anger] resembles nothing so much as a collapsing building that breaks apart upon that which it crushes.

The Stoics advised that you can do your “duty” without anger. There is no such thing as healthy anger, taught Seneca.

Some men think it valuable to moderate anger rather than set it aside, to force it to conform to a healthy measure and restrain its overflows, to hold on to that part without which action grows weak and the force and energy of the mind is dissipated. First, however, it’s easier to shut out harmful things than to govern them, easier to deny them entry than to moderate them once they have entered. Once they’ve established residence, they become more powerful than their overseer and do not accept retrenchment or abatement.

In short, “Once shaken and overthrown, the mind becomes a slave to that which drives it.” Choose against anger as soon as you recognize it. Seneca instructs:

It is best to repel instantly the first prickings of anger, to stamp out its very seedlings, to take pains not to be drawn in. For once it has knocked us off course, the return to health and safety is difficult; no space is left for Reason once passion has been ushered in and given jurisdiction.

Here is Seneca’s timeless thumb rule: Don’t trust your first angry thoughts shrieking insane advice. He explains:

Since we ought to fight against first causes, the cause of anger is the sense of having been wronged; but one ought not to trust this sense. Don’t make your move right away, even against what seems overt and plain; sometimes false things give the appearance of truth. One must take one’s time; a day reveals the truth.

Like other Stoics, Seneca advised mind training. Each of us must come to know our personal storm warnings. He instructs:

It is best therefore to restrain oneself at the first sign of the evil, then to give as little rein as possible to one’s words and to block the onset. It’s easy to detect when one’s emotions first arise, since the hallmarks of the ailments precede them.

Seneca asked, “Won’t everyone want to call themselves back from anger’s borders, once they understand that its first onset is to their detriment?”

If you shouldn’t trust yourself when you are angry, surely you shouldn’t trust others who are angry. “There is no reason to trust the words of angry people, which make loud and menacing noise despite the great timidity of the mind that lies beneath,” advised Seneca.

Angry politicians believe they are wise. Enraged college students believe they are just. A driver overcome by road rage believes he is in the right. Seneca would say they are all insane.

Everyone who’s transported beyond mortal thinking by an insane mind believes he’s breathing in something elevated and sublime. But there’s nothing firm underneath; things that grow without foundations are likely to slide into ruin. Anger has nothing on which it can lean; it arises from nothing steady or durable.

Some may believe that the ability to be angry with impunity is a perk of their power. Seneca would say getting angry is a booby prize.

Don’t you want me to advise those people who wield anger from the height of power, who think it a testament to their strength, who reckon a ready revenge to be one of the great benefits of great wealth, that he who is a prisoner of anger cannot be called powerful, or even free?

Can we reduce our attraction to anger? Can we keep our cool while others lose theirs? If enough of us can, there will be less demand for angry politicians.

Romm places On Anger in context: “By the time he came to write On Anger, or at least the greater part of it, he had witnessed, from the close vantage point of the Roman Senate, the bloody four-year reign of Caligula.”

Most of us are not pure saints nor demented souls like Caligula. Seneca wrote, “Even in good characters there is something rather unsavory. Human nature contains treacherous thoughts, ungrateful ones, greedy and wicked ones.”

How we spend our days becomes how we spend our life.

Understanding human nature allows us to be “kinder to one another.” Seneca advised us to forgive the foibles of others: “We’re just wicked people living among wicked people. Only one thing can give us peace, and that’s a pact of mutual leniency.”

Always see your common humanity with others, counseled Seneca.

The majority of humankind gets angry not at the wrongs but at the wrongdoers. A good look at ourselves will make us more temperate if we ask ourselves: “Haven’t we ourselves also done something like that? Haven’t we gone astray in the same way? Does condemning these things really benefit us?”

Seneca pointed to our hypocrisy:

Each of us has the spirit of a king inside us: We want total freedom to be granted to us but not to those acting against us. It’s either our ignorance or our arrogance that makes us prone to anger. For what is so surprising if wicked people do wicked things?

And when we forget our ignorance and arrogance, Seneca suggests we recall “every time we find it hard to forgive, whether it’s to our benefit that everyone be implacable. How often has the one who refused mercy later sought it?”

Today, like every day, the world will provide ample opportunity to practice Seneca’s wisdom. How we spend our days becomes how we spend our life. Are we willing to learn, as Marcus Aurelius puts it, that we “have something in [us] more powerful and divine than what causes the bodily passions and pulls [us] like a mere puppet”?

Barry Brownstein
Barry Brownstein

Barry Brownstein is professor emeritus of economics and leadership at the University of Baltimore. He is the author of The Inner-Work of Leadership. To receive Barry's essays subscribe at Mindset Shifts.

This article was originally published on FEE.org. Read the original article.

Saturday, June 29, 2019

Harvard Study Examines the Dangers of Early School Enrollment


For a weekly newsletter from Kerry McDonald on parenting and education, sign up here.

Every parent knows the difference a year makes in the development and maturity of a young child. A one-year-old is barely walking while a two-year-old gleefully sprints away from you. A four-year-old is always moving, always imagining, always asking why, while a five-year-old may start to sit and listen for longer stretches.

Children haven’t changed, but our expectations of their behavior have. In just one generation, children are going to school at younger and younger ages, and are spending more time in school than ever before. They are increasingly required to learn academic content at an early age that may be well above their developmental capability.

In 1998, 31 percent of teachers expected children to learn to read in kindergarten. In 2010, 80 percent of teachers expected this. Now, children are expected to read in kindergarten and to become proficient readers soon after, despite research showing that pushing early literacy can do more harm than good.

In their report Reading in Kindergarten: Little to Gain and Much to Lose education professor Nancy Carlsson-Paige and her colleagues warn about the hazards of early reading instruction. They write,

When children have educational experiences that are not geared to their developmental level or in tune with their learning needs and cultures, it can cause them great harm, including feelings of inadequacy, anxiety and confusion.

Instead of recognizing that schooling is the problem, we blame the kids. Today, children who are not reading by a contrived endpoint are regularly labeled with a reading delay and prescribed various interventions to help them catch up to the pack. In school, all must be the same. If they are not listening to the teacher, and are spending too much time daydreaming or squirming in their seats, young children often earn an attention-deficit/hyperactivity disorder (ADHD) label and, with striking frequency, are administered potent psychotropic medications.

The U.S. Centers for Disease Control and Prevention (CDC) reports that approximately 11 percent of children ages four to seventeen have been diagnosed with ADHD, and that number increased 42 percent from 2003-2004 to 2011-2012, with a majority of those diagnosed placed on medication. Perhaps more troubling, one-third of these diagnoses occur in children under age six.

Children who start school as the youngest in their grade have a greater likelihood of getting an ADHD diagnosis than older children in their grade.

It should be no surprise that as we place young children in artificial learning environments, separated from their family for long lengths of time, and expect them to comply with a standardized, test-driven curriculum, it will be too much for many of them.

New findings by Harvard Medical School researchers confirm that it’s not the children who are failing, it’s the schools we place them in too early. These researchers discovered that children who start school as among the youngest in their grade have a much greater likelihood of getting an ADHD diagnosis than older children in their grade. In fact, for the U.S. states studied with a September 1st enrollment cut-off date, children born in August were 30 percent more likely to be diagnosed with ADHD than their older peers.

The study’s lead researcher at Harvard, Timothy Layton, concludes: “Our findings suggest the possibility that large numbers of kids are being overdiagnosed and overtreated for ADHD because they happen to be relatively immature compared to their older classmates in the early years of elementary school.”

Parents don’t need Harvard researchers to tell them that a child who just turned five is quite different developmentally from a child who is about to turn six. Instead, parents need to be empowered to challenge government schooling motives and mandates, and to opt-out.

As universal government preschool programs gain traction, delaying schooling or opting out entirely can be increasingly difficult for parents. Iowa, for example, recently lowered its compulsory schooling age to four-year-olds enrolled in a government preschool program.

As New York City expands its universal pre-K program to all of the city’s three-year-olds, will compulsory schooling laws for preschoolers follow? On Monday, the New York City Department of Education issued a white paper detailing a “birth-to-five system of early care and education,” granting more power to government officials to direct early childhood learning and development.

As schooling becomes more rigid and consumes more of childhood, it is causing increasing harm to children. Many of them are unable to meet unrealistic academic and behavioral expectations at such a young age, and they are being labeled with and medicated for delays and disorders that often only exist within a schooled context. Parents should push back against this alarming trend by holding onto their kids longer or opting out of forced schooling altogether.

Kerry McDonald
Kerry McDonald

Kerry McDonald is a Senior Education Fellow at FEE and author of Unschooled: Raising Curious, Well-Educated Children Outside the Conventional Classroom (Chicago Review Press, 2019). Kerry has a B.A. in economics from Bowdoin College and an M.Ed. in education policy from Harvard University. She lives in Cambridge, Massachusetts with her husband and four children. Follow her on Twitter @kerry_edu. You can sign up for her weekly newsletter on parenting and education here.

This article was originally published on FEE.org. Read the original article.

Saturday, June 22, 2019

How Joe Biden Became the Architect of the Government's Asset Forfeiture Program

In 1991, Maui police officers showed up at the home of Frances and Joseph Lopes. One officer showed his badge and said, “Let’s go into the house, and we will explain things to you.” Once he was inside, the explanation was simple: “We’re taking the house.”

The Lopeses were far from wealthy. They worked on a sugar plantation for nearly fifty years, living in camp housing, to save up enough money to buy a modest, middle-class home.

But in 1987, their son Thomas was caught with marijuana. He was twenty-eight, and he suffered from mental health issues. He grew the marijuana in the backyard of his parents’ home, but every time they tried to cut it down, Thomas threatened suicide.

That statute of limitations for civil asset forfeiture was five years. It had only been four.

When he was arrested, he pled guilty, was given probation since it was his first offense, and he was ordered to see a psychologist once a week. Frances and Joseph were elated. Their son got better, he stopped smoking marijuana, and the episode was behind them.

But when the police showed up and told them that their house was being seized, they learned that the episode was not behind them. That statute of limitations for civil asset forfeiture was five years. It had only been four. Legally, the police could seize any property connected to the marijuana plant from 1987. They had resurrected the Lopes case during a department-wide search through old cases looking for property they could legally confiscate.

The roots of the law that allowed the police to take their home ran all the way back to 1970. Prior forfeiture laws only applied to goods that could be considered a danger to society—illegal alcohol, weapons, etc. But with the birth of the modern War on Drugs, lawmakers wanted something with more teeth. Prosecutor Robert Blakey, having worked under Attorney General Robert Kennedy and various Congressmen, provided the teeth. He helped draft a bill for a new legal concept, “criminal forfeiture,” which would allow police to seize the illegally acquired profits of a convicted criminal.

In 1970, the targets were wealthy crime bosses, but the assets that could be seized consisted of anything that was funded with money connected to criminal activity. To appease those worried about abuses of power, Blakely assured them that prosecutors would have to prove beyond a reasonable doubt that the criminal was guilty of a crime before the assets could be seized. There was nothing to worry about; only legitimate bad guys would suffer.

The new policy was passed as part of the Racketeering Influence and Corrupt Organizations (RICO) Act. Blakely was a fan of the 1931 movie Little Caesar, and the acronym was crafted to honor Blakely’s favorite character from the movie: the gangster Rico Bandello.

The RICO act wasn’t actually designed as part of the War on Drugs; it was just meant to target criminals. But when Richard Nixon took office, the RICO Act was one of a number of new tools that the members of his newly created Bureau of Narcotics and Dangerous Drugs (precursor to the Drug Enforcement Administration) could use to fight his Drug War. Combined with other legal innovations, such as no-knock raids and mandatory minimum sentences, Nixon and his administration would cure America of the drug menace.

At Bourne’s urging, Congress modified the RICO Act to allow the DEA to confiscate assets without a conviction.

Still, the pesky “conviction” requirement stood in the way of law enforcement’s ability to seize criminal assets. In 1978, Jimmy Carter’s Director of the Office of Drug Abuse (the title “Drug Czar” is often retroactively applied), Peter Bourne, decided that the law needed to be changed. Bourne learned of an incident in which a suitcase at the Miami International Airport had been left on the baggage carousel for three hours before police picked it up and found $3 million inside. If Drug Kingpins could afford to abandon so much money, they must be flush with enough cash to hardly worry about criminal forfeiture laws.

So, at Bourne’s urging, Congress modified the RICO Act to allow the DEA to confiscate assets without a conviction. The burden of proof wasn’t entirely gone (yet), but the government only needed an indictment, rather than a full conviction, to justify asset seizure. After all, the government knew who a lot of these Kingpins were, but the criminals continued to get rich while the DEA struggled to build cases against them.

Even here, though, real estate was off limits. Asset forfeiture had evolved from the seizure of dangerous items to criminal profit following a conviction to criminal profit (and its “derivative proceeds”) without the conviction requirement. But real estate—like the Lopes house—still couldn’t be touched.

But through the 1970s, the RICO Act was still largely ignored by prosecutors. Blakely was holding seminars out of Cornell University, which were attended by federal law enforcement agents and prosecutors, to urge them to take advantage of the RICO Act in the War on Drugs. He made few inroads. The law was unwieldy, and prosecutors were overworked. More often than not, it wasn’t worth their time. While Blakely was proselytizing the virtues of his law to little effect, he was unwittingly gaining an ally in Congress: Senator Joe Biden.

Biden, a young Senator from Delaware, had to do something to show that despite his “liberal” reputation, he could be just as tough on crime as his Republican colleagues. He took notice of the RICO law, and he realized that law enforcement agencies were not taking advantage of it, particularly in regards to the Drug War. He turned to the General Accounting Office and asked them to produce a study on the potential uses of RICO for drug enforcement.

Reagan brought the FBI into the Drug War. Drug cartels must be rendered unprofitable.

The report showed that the RICO Act granted enormous powers to police to confiscate drug-related assets, but these powers were not being taken advantage of: “The government has simply not exercised the kind of leadership and management necessary to make asset forfeiture a widely used law enforcement technique,” the report stated. By the time the report came in, Ronald Reagan was settling into office and getting ready to wage a renewed War on Drugs.

Reagan brought the FBI into the Drug War, and he gave the director, William Webster, a mission. His agents would use the RICO Act powers to find drug rings and take away their assets. Drug cartels must be rendered unprofitable.

As the 1980s progressed, the War on Drugs would be the country’s biggest political issue. Politicians from both parties would work to show that they could out-Drug-Warrior their opponents. One Democratic Representative from Florida, Earl Hutto, said, “In the war on narcotics, we have met the enemy, and he is the U.S. Code.” Biden brought the RICO law to the attention of the Federal Government, Reagan enlisted the FBI to use it against drug traffickers, and now both parties would work to dismantle any legal limitations the law might still impose.

The Drug War became a contest of political one-upmanship. Reagan’s Justice Department fought for all kinds of new powers. Attorney General Edwin Meese and his Assistant Attorney General William Weld (yes, that Bill Weld) railed against the limitations on their legal prerogative. Weld went so far as to argue in favor of the legality of using the Air Force to shoot suspected drug-smuggling planes out of the sky, a policy that even his boss was unwilling to endorse.

With this law, federal agents had nearly unlimited powers to seize assets from private citizens.

But Meese, Weld, and everyone else seemed to agree that forfeiture laws didn’t go nearly far enough. By requiring an indictment, the government still had to meet some standard of reasonable guilt before seizing property, which allowed far too many criminals that law enforcement knew to be guilty (but couldn’t build a case against) to keep their ill-gotten gains.

To take things further, the Justice Department argued that law enforcement should be allowed to take “substitute” property; they knew they wouldn’t be able to take everything that was paid for with drug money, so it stood to reason that they should be able to take legally acquired assets of equal value (however that was determined). And finally, with real estate off limits, the government was unable to seize marijuana farms, drug warehouses, and criminal homes.

The Comprehensive Forfeiture Act fixed all of these problems. The new bill was introduced by Senator Joe Biden in 1983 and it was signed into law the next year. With this law, federal agents had nearly unlimited powers to seize assets from private citizens. Now the government only needed to find a way to let local and state police join the party.

This came with the 1984 Comprehensive Crime Control Act. In addition to a slew of new powers for prosecutors, the burden of proof for asset seizure was lowered once again (agents had to only believe that what they were seizing was equal in value to money believed to have been purchased from drug sales). More significantly, the bill started the “equitable sharing” program that allowed local and state law enforcement to retain up to 80 percent of the assets seized.

The Lopes story merely illustrates that criminals are hardly the only people falling victim to this policy.

The law took effect in 1986, the year before Thomas Lopes pled guilty to charges of growing a marijuana plant in his parents’ backyard. In 1987, when Thomas faced the judge, the government had just made it so that his local police had an enormous incentive and unchecked authority to seize property from private citizens, as long as they could show any flimsy connection to drugs. By 1991, the Maui police were running out of easily-seized property, so they started combing through case files within the five-year limit to find new ways to enrich their precinct from the expanded RICO powers. One such file brought the Lopes home to their attention.

But the Lopeses are only one example out of millions. In the year their home was confiscated by police for a minor, four-year-old drug charge, $644 million in assets were seized. In 2018 alone, the Treasury Department’s Forfeiture Fund saw nearly $1.4 billion in deposits. The Lopes story merely illustrates that criminals (regardless of how one might feel about drug laws) are hardly the only people falling victim to this policy.

The decades-long abuse of this policy has reached such extreme proportions that people on all sides of the political aisle have been turning against it. As I am writing this (February 20th, 2019), the Supreme Court has unanimously voted in favor of Tyson Timbs, whose $42,000 Land Rover was seized in 2015 following a conviction for selling $400 in heroin. The Court is asserting that asset forfeiture constitutes a fine, and the Eighth Amendment—which protects citizens from excessive fines—applies to both state and local governments. The consequences of the ruling remain to be seen, but it seems nearly certain that the unanimous decision was motivated by the increasing outrage against the Civil Asset Forfeiture policies.

References:

Baum, Dan. Smoke and Mirrors: The War On Drugs and the Politics of Failure. Boston: Little, Brown, 1996.

This article was reprinted from the Mises Institute.

Chris Calton
Chris Calton

Chris Calton is a graduate student of history at Marshall University.

This article was originally published on FEE.org. Read the original article.

Saturday, June 15, 2019

Good Money, Bad Money -- And How Bitcoin Fits In


Let us start with talking about bad money, by which I mean the US dollar, the euro, the Japanese yen, the Chinese renminbi, the British pound, the Swiss franc, and basically all official currencies.

They all represent fiat money. The term fiat is derived from the Latin word fiat and means “so be it.” Fiat money is “coercive money,” or “money forced upon the people.”

There are three major characteristics of fiat money:

  1. The state (or its agent, the central bank) has a monopoly on money production.
  2. Fiat money is produced through bank credit expansion; it is literally created out of thin air.
  3. Fiat money is intrinsically valueless. It is just brightly colored paper and intangible bits and bytes that can be produced at any time and in any amount deemed politically expedient.

Just in passing, I would like to let you know that fiat money has not come into this world naturally. States have worked long and hard to replace commodity money in the form of gold and silver with their own fiat money.

The final blow to commodity money came on August 15, 1971: US President Richard Nixon announced that the US dollar would no longer be convertible into gold. This very decision (which I like to call the greatest monetary expropriation in modern history) effectively put the world on a fiat money regime.

Against this backdrop, it may not come as a surprise that fiat money suffers from economic and ethical deficiencies.

First, fiat money is inflationary. Its buying power dwindles over time, and history has shown that this entropy is almost as irreversible as gravity.

Second, fiat money enriches a chosen few at the expense of many others. The first receivers to get a hold of the new money benefit to the detriment of latecomers.

As the state expands and sprouts like weeds in an untended garden, fiat money strangles—even destroys—individual freedom and liberty.

Third, fiat money fosters speculative bubbles and capital misallocations that culminate in crises. This is why economies boom and bust.

Fourth, fiat money lures states, banks, consumers, and firms into the pitfall trap of excessive debt. Sooner or later, borrowers find themselves in a deep hole with no way out.

Fifth, fiat money feeds big government. And as the state expands and sprouts like weeds in an untended garden, this outgrowth strangles—even destroys—individual freedom and liberty.

I have spoken enough about bad money. Let us talk about good money.

What is good money? To answer this question, we just have to think about how a free market in money works.

Here, people are free to decide which kind of money they would like to use, and they also have the freedom to cater to the needs of fellow people seeking good money. Money has emerged from a commodity and spontaneously from the free the market: no state or no central bank was needed in the process.

The outcome of a free market in money will be good money simply because people will demand, out of self-interest, good money—not bad money. This is actually what sound monetary theory would tell us. Money has emerged from a commodity and spontaneously from the free the market: no state or no central bank was needed in the process.

To qualify as good money, the “thing” or good in question must have specific properties. It must be scarce, homogeneous, divisible, durable, transportable, mintable, etc. Gold and silver meet these requirements par excellence, and this is why they were chosen as the universally accepted means of payment whenever people were free to choose.

How does Bitcoin fit in?

I would argue that from a monetary theory point of view, Bitcoin qualifies as a good money candidate. It has emerged from the free market through the voluntary actions of all participants involved, respecting individual freedom and private property rights.

I would also argue that Bitcoin complies with the regression theorem and thus provides the crypto unit with a necessary requirement to potentially become money. The key question, therefore, is whether Bitcoin will stand a chance in challenging and outcompeting official fiat currencies or gold money. Let us think about this in further detail.

One exciting feature of Bitcoin is that its quantity is limited to 21 million units. This hard cap means that at some point, the quantity of Bitcoin will not grow any further. If the quantity of money is constant and the economy expands, prices for goods and services will fall.

Would that be a problem for money users or the economy? No, it would not. Firms can still be successful if prices decline. Their profits result from the spread between revenues and costs. If goods prices fall (in nominal terms), firms just have to make sure that revenues keep exceeding costs.

Consumers would be pleased to see the prices of goods fall. Their money becomes more valuable. They can reduce their cash balances and increase spending.

But wait: would consumers not refrain from buying goods if and when prices can be expected to fall over time? Imagine a car costs $50,000 today and only $40,000 in a year. If I need the car right now (because my old one has broken down), I would have to buy a new one right away, I would not and could not wait.

The general answer is this: People make their decision to buy now or later based on discounted marginal utility. The marginal utility of buying the car for $50,000 ranks lower on people’s value scale than paying only $40,000. But the car available forThere is no reason to fear that the economy will come to a standstill if and when the prices of goods decline over time.

$40,000 is not for sale now but in a year. When it comes to decision-making, people will, therefore, discount the marginal utility of purchasing the good for $40,000 in a year using their individual time preference rate.

They will then compare the result with the marginal utility of buying the good now for $50,000. If the discounted marginal utility of buying the car for $40,000 in a year is lower than the marginal utility of buying at $50,000 now, people buy now. If it is higher, they will postpone their purchase.

The important point is: There is no reason to fear that the economy will come to a standstill if and when the prices of goods decline over time. Money that has a limited quantity, such as Bitcoin, would work just fine!

Let me stress something fundamentally important here: The quantity of money in an economy does not have to grow to make increases in production and employment possible. The sole function of money is exchange, and so a rise in its quantity does not make an economy richer; it does not bring about any social benefit.

All an increase in the quantity of money does is lower the purchasing power of one money unit compared to a situation in which the quantity of money has not been increased.

We just heard that in a Bitcoin money regime, we would have to expect price deflation. What would that do to the credit market? As the prices of goods fall, holding money becomes more profitable.

If, for instance, prices fall by three percent per year, the purchasing power of money increases by three percent. In this case, I would not exchange my money for a T-Bill that yields only, say, two percent per year.

In an economy where there is a constant quantity of money, the credit market will remain relatively small. 

To make me part with my money, a borrower would have to offer me a return on the investment that is higher than the increase in the purchasing power of money. Borrowers would be careful taking up debt because they know that in times of stress, they will not be bailed out by an inflationary monetary policy.

Therefore, it is likely that in an economy where there is a constant quantity of money, the credit market will remain relatively small—especially compared to the debt pyramid that comes with today’s fiat money regime.

At the same time, firms retaining earnings and issuing equity for funding would be much more commonplace. People would invest their life savings in company stock rather than debt (be it issued by banks, governments, or corporations).

What about the market interest rate in a world in which price deflation occurs? We know that in a free market, the nominal interest rate cannot drop below zero. This is easy to understand: if I lend $100 to you for one year at, say, minus 5 percent per annum, you would have to return $95 in one year.

Of course, any lender (who is not out of his mind) would politely reject this kind of deal. They would be better off just holding on to cash and would not lend at a negative interest rate. I cannot go into detail here but will simply say that in a free money market, the market clearing interest rate is determined by people’s time preference. Time preference is always and everywhere positive, and so is its manifestation, the originary interest rate. In other words: the interest rate would not and cannot fall to zero, let alone into negative territory.

So far, I have argued that the limited quantity of Bitcoin does not stand in the way of the crypto unit becoming money. However, some aspects appear to be disadvantageous for Bitcoin's aspirations to become money.

From the current state of technical capabilities, distributed ledger technology is unlikely to be put to widespread use in retail and large value payments. Currently, there are around 360.000 Bitcoin transactions per day, and given its current configuration, the Bitcoin network is presumably running at full capacity. This is not enough. For instance, in Germany alone there is an average of around 75 million transactions per business day!

Where to store your private cryptographic keys?  Offline, secure, and immune to electromagnetic fields.

What is more, Bitcoin transaction costs vary widely. For instance, in July 2016, it cost around $.08 for a transaction mined on the block (data recorded in files) in the next 10 minutes. In December 2017, it cost more than $37. Currently, the price is around $4. High and volatile transaction costs might discourage the use of Bitcoin from the viewpoint of many people and institutions.

Another aspect is finality. Financial transactions require a point in time from which they can be taken as valid. However, not all DLT (distributed ledger transaction) consensus mechanisms offer this. The “proof of work” protocol, for instance, merely provides a probabilistic finality (due to the creation of forks).

What about safety? Progress has been made in Bitcoin safekeeping (think of, for instance, cold storage wallets). However, vulnerabilities remain, as scams and thefts at even the largest and most sophisticated crypto exchanges prove.

A central issue in this context is where to store your private cryptographic keys. They need to be stored offline (so they cannot be hacked), and the place of storage must the secured (to prevent theft) and immune to electromagnetic fields (otherwise the stored codes could be destroyed).

For professional investors, this is a challenge. They might need a bunker storage solution, but this could turn out to be quite inconvenient. How does one get access to private keys quickly and at low costs?

Bitcoin was developed for peer-to-peer (P2P) exchange without any intermediation. But would people really want a monetary and financial system without any middleman? For some payments, you may not need intermediation (e.g. to buy a book).

For others, you may wish to involve an intermediary. Imagine you mistakenly send 100 Bitcoins instead of just one. How would you get it back? Who is going to help you out in a P2P world without any intermediation? The answer is nobody, and nobody would help you if your wallet got hacked.

To support economic progress and a sophisticated monetary sphere, a currency must be compatible with some form of financial intermediation.

What about more sophisticated financial transactions like borrowing and lending? It is hard to imagine that this can be done in an anonymous and trustless regime as envisaged by the Bitcoin protocol. Interestingly enough, many Bitcoin owners seem to keep their coins on crypto exchanges, which control the private keys of the Bitcoins. Obviously, people trust some intermediaries in the Bitcoin space, actively demanding the services supplied by these “middlemen.”

This observation points us toward a rather important but unfortunately often neglected issue: To support economic progress and a sophisticated monetary sphere, a currency must be compatible with some form of financial intermediation. Otherwise, it will be difficult to compete effectively with existing fiat currencies, which offer money users many convenient intermediary services.

How would an intermediation structure look in a free market of money? For the sake of illustration, let us review the workings of a digitalized gold money system.

Let us say Mr. Miller owns one ounce of gold (31,1034 … grams). It is recorded on the asset side of his private balance sheet.

For greater convenience, he deposits 10 grams of gold with a money warehouse, which offers security, storage, and settlement services.

The 10 grams of gold are credited on Mr. Miller’s account with the money warehouse, and the accounting unit is gold gram.

In return, Mr. Miller gets a digital gold gram certificate (which may be called a money certificate) documenting that he owns 10 grams of gold deposited with the money warehouse.

In a free market of money, you would not only have money warehouses but also institutions specialized in credit, hedging, pooling risks, insurance, etc.

The digital gold gram certificate serves as a means of payment, and it can be redeemed into gold at any time at par with the money warehouse.

Now there is a steel company that wants to raise money by issuing a bond. Mr. Miller wishes to earn some return, so he decides to exchange his digital gold gram certificate against the bond. In Mr. Miller's balance sheet, the digital money certificate is replaced by the bond. The steel company records the digital gold gram certificate as an asset on the left side of its balance sheet and a liability on the right side of its balance sheet. Now the steel company can spend the money on input factors, salaries, rents, etc.

In addition to this “direct credit transaction,” a digitalized gold money also facilitates all sorts of “indirect credit transactions,” as well as all kinds of transactions in stock and bond markets, derivative and commodity markets, M&A markets, and so on.

In fact, in a free market of money, you would not only have money warehouses (offering safekeeping and settlement services for money proper) but also institutions specialized in credit, hedging, pooling risks, insurance, etc.

Of course, we could imagine Bitcoin, rather than gold, being "base money," and digital Bitcoin certificates, rather than digital gold certificates, being used as a means of payment. Either way, intermediation would work just fine, and unhampered competition would effectively prevent the practice of money warehouses operating on fractional reserves.

However, with the need for an intermediation structure, it is hard to see how the monetary system—whether Bitcoin or gold serves as “base money”—could escape the repression of the state. Under intermediation, it is no longer possible to have transfers of any kind confined to the purely virtual realm; States might no longer be in a position to stamp out cryptocurrencies, but they will increase the hurdles preventing money candidates.

transfers would have a point of reference in the real world where the state has become overwhelmingly powerful.

While states might no longer be in a position to stamp out cryptocurrencies, they can and actually will do everything in their power to increase the hurdles preventing money candidates—be they cryptocurrencies or precious metals—from replacing fiat currencies.

For instance, states impose VAT and capital gains taxes and restrictive regulations on potential money candidates, and they bestow the privilege of legal tender status on their own fiat currency. All of these are hostile to the idea of good money.

The emergence of cryptocurrencies has given great impetus to the search for better money. As paradoxical as it sounds, it is the state that is one of the greatest allies of Bitcoin in particular or any other crypto unit in general. If there were no state (as we know it today), we would undoubtedly have a free money market. People would be free to decide what money they would choose. No one would have to hide. In a genuinely free market of money, it would be far from a done deal that Bitcoin would outcompete digitalized gold money.

The world is as it is, however, so I would like to conclude by saying that technological progress is just one aspect of making the emergence of good money possible. The other aspect is to inform the public at large that fiat money is bad money, that good money is possible, and that it is advantageous for them, and that all it takes is a free market in money unimpeded by the state.

Technology alone might not do the trick of putting an end to the tyranny of fiat monies—it also requires people to actively invoke their right to self-determination in monetary affairs.

***

This talk was given at the Value of Bitcoin Conference in Munich, 3 June 2019.

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Thorsten Polleit
Thorsten Polleit

Thorsten Polleit, Chief Economist of Degussa, Honorary Professor at the University of Bayreuth, and Partner of Polleit & Riechert Investment Management.

This article was originally published on FEE.org. Read the original article.