An option for Greece

There is a succinct piece on explaining that Greece has 5, not 2 options before it. I want to put forward a sixth.

Before I do that, a summary of the other 5:

1. Greece stays in the Eurozone

2. Greece keeps the euro, but stays outside the eurozone – “The Montenegro Option”

3. A Currency Board – a new currency, but locked to the Euro.

4. A Dual system – a Drachma and the Euro circulates side by side

5. The New Drachma – possibly growing out of option 4, above, due to Gresham’s Law.

Option 6 – Currency Freedom

This is to end currency monopoly formally, not just to a dual currency arrangement, but a true acknowledgement of plurality, as decided upon by each member of the Greek citizenry.

US dollars, euros, RMB, gold, Bitcoin, anything, if agreed by both parties in the transaction.

It would be likely, IMHO, for the Greek govt to have its own currency again, free from external control by states or private sector banks, but this time it would be without a monopoly. The government can, of course, require payment of taxes in its own currency, and decide to pay suppliers and employees in it, too. This would add some heft to it.

What this will do, however, is not grant it as much power to print at the expense of savers, creditors and wage earners. It will impose much needed discipline and awareness of consequences. The government would need to become more like a going concern, able to raise funds for investment purposes that yield return, but the Government would find it hard to borrow on the never-never for ongoing overheads and obligations. A Drachma will be, more than most currencies, a share certificate in The Greek State Inc. And for those who think one cannot borrow/lend shares, well, one can, and many do already.

The role of the central bank would not go away, but be limited to institutions handling Drachma, as mentioned. Most banking organisations are operating under global agreements such as Basel3, anyway, and if taxes are paid in Drachma,

most banks will need to handle it one way or another and thus have a state license and deposits lodged at the Central Bank.

The freedom in currency will mean an organisation that has costs in us dollars can bill in us dollars. It means routinely,

savers need not keep their wealth hostage to one currency or politicians. Banking solutions can and would be found to handle the exchanges efficiently. It is not beyond the wit of banks to perform immediate, low margin, zero commission foreign exchange via multiple accounts in different currencies. In Hong Kong, my moderate transfers had a 0.3% spread 15 years ago. Multi currency credit or debit cards, or other payment solutions such as gold linked or bitcoin based, that detect the destination currency, would deduct the appropriate account or perform the necessary conversions.

With the 6th Option, people will be free of currency slavery. Even if they did continue to use the domestic State currency, it would be more exposed to reality, and thus give the State a moment of pause before they acted. Life could continue if a person chose to back out of its use partly or completely.

The state is, however, faced with a society that has, for all intents and purposes, pulled out on the implicit, if grudging, compact that sustains taxation. Taxation has to be seen to be fair not just by the majority, but also by those shouldering the burden. Flat? Land ? Consumption? A mix of all three? It is a problem that faces the nation, no matter what option was chosen.



Image © Alehins

Conceptual accuracy will not persuade ostriches

Libertarianism is a set of accurate political ideas, and objectivism a set of compatible accurate philosophical ones. Like many I was drawn to both by the fact that they made sense and were consistent. Arguments for libertarianism, and austrian economics in particular, would use day to day examples of individual human decisions that I could relate to and use to build up a logical conceptual model of the world at large, and make predictions about that world. A lot of philosophy rejects this kind of jump from the real into the conceptual, but since I had somwhow already rejected the analytic synthetic dichotomy (even before I knew what it was) I very quickly knew I had found some real answers in libertarian ideas. Suddenly, I knew why the world is as messed up as it seems.

If those examples and those arguments were nonsensical or fanciful, or if they held between them logical inconsistencies then I would not have been persuaded by libertarian arguments just as I was not persuaded by 22 years of left-biased media and statist assumptions. Yet the road to libertarianism was a long one, nagging doubts and idle thoughts had to build up over time.

This journey-to-libertarianism isn’t uncommon, it tallies with the experiences of libertarians I have spoken to. What worries me is precisely that this gradual and lengthy process of being drawn into libertarianism is as common as it is, because it seems to me that the French and Greek voters are using a different process entirely.

Sam Bowman produces a graph of rising (real terms flat) spending and writes:

What European voters have rejected is the idea of austerity. The very suggestion that their governments should live within their means is, apparently, unacceptable to the majority of voters in France, Greece and, as seems likely, the Netherlands.


If these voters had been through years of hard cuts and belt-tightening, a backlash would be understandable. But these voters haven’t lived through that yet.

Libertarian have spent time, on this blog and others, thinking about how to trigger emotional reactions that lead to more rational thought. That cause people to stop and think, or to contemplate stronger memes hidden in slogans. That can help campaign against emotive thinking, or help to inform, and might lead to more rational longtermist voting, but if the reason for voting against auserity is because they don’t want to face up to the challenge then that is actually evasion – a desire to avoid thinking about the lack of money – and it’s not obvious to me what could be effective in the face of that.

Voters unwilling to vote with common sense when reality is biting them on the arse are not going to pause and comtemplate nagging theoretical inconsistencies. We need a better strategy.