In the previous three parts of this series, we examined how Bitcoin creates positive incentives. Specifically, people are motivated to plan for the future, find the sweet spot between lazy and greedy, and finally trade fairly.
In this article, I’ll examine how Bitcoin and sound money encourage bravery, grit, courage, or what ancients called fortitude.
Rent Seeking vs Producing
One of the realities of a fiat-based economy is that the government can produce money at any time. If this sounds like a big responsibility, it is. Making sure that nobody abuses this power to enrich themselves can itself be a big bureaucratic mess.
Preventing abuse of power is hard enough as it is. When enhanced with the power to print money, the potential for abuse of power gets multiplied that much more. To prevent abuse, more bureaucracy needs to be added. Indeed, most government bureaucracy jobs essentially start as some way to prevent some form of fraud.
Unfortunately, a larger government also means a larger rent-seeking opportunity — rent seeking here broadly means changing government policy for profit to a specific group. Most businesses and certainly the bureaucrats themselves largely engage in some form of rent-seeking.
What’s terrible is that rent-seeking doesn’t actually add anything to the productive capacity of society. Such efforts stifle innovation and keep bloated bureaucracies (in both government and industry) alive through subsidies.
Under a sound money system, the power of government to dictate economic policy, and to grant rent-seekers what they want, is limited. This is by no means an absolute rule, but sound money prevents the most egregious abuses of allowing businesses and individuals to rent-seek.
Furthermore, as the status quo players are not subsidized by government backed fiat money, innovation isn’t stifled as much. This means that the risk to creating a new business isn’t nearly as much — the red tape that is typically meant to hinder them isn’t as prevalent. There is simply less friction in a sound money system to innovating.
Source/More: Bitcoin and Virtue Part 4: Fortitude – Jimmy Song – Medium