It’s always important, and always hard, to distinguish positive economics (how things work) from normative economics (how things should be). Indeed, with many of the macroeconomics issues I’ve written about, it has been obvious that large numbers of economists can’t bring themselves to make that distinction; they dislike an activist government on political grounds, and this leads them to make really bad arguments about why fiscal stimulus can’t work and how monetary stimulus will be disastrous.
But I’d like to talk not about macroeconomics but about money – specifically, about Bitcoin, the virtual currency. So far, almost all of the Bitcoin discussion has centered on positive economics – can this actually work? And I have to say that I’m still deeply unconvinced.
To be successful, money must be both a medium of exchange and a reasonably stable store of value. And it remains completely unclear why Bitcoin should be a stable store of value. The economist Brad DeLong explained it earlier this month in an online article for the Washington Center for Equitable Growth:
“Underpinning the value of gold is that if all else fails you can use it to make pretty things,” he wrote. “Underpinning the value of the dollar is a combination of (a) the fact that you can use them to pay your taxes to the U.S. government, and (b) that the Federal Reserve is a potential dollar sink and has promised to buy them back and extinguish them if their real value starts to sink at (much) more than 2 percent/year.”
“Placing a ceiling on the value of gold is mining technology, and the prospect that if its price gets out of whack for long on the upside a great deal more of it will be created. Placing a ceiling on the value of the dollar is the Federal Reserve’s role as actual dollar source, and its commitment not to allow deflation to happen. Placing a ceiling on the value of Bitcoins is computer technology and the form of the hash function … until the limit of 21 million Bitcoins is reached. Placing a floor on the value of Bitcoins is … what, exactly?”
I have had, and am continuing to have, a dialogue with smart technologists who are very high on Bitcoin – but when I try to get them to explain to me why Bitcoin is a reliable store of value, they always seem to come back with explanations about how it’s a terrific medium of exchange. Even if I buy this (which I don’t, entirely), it doesn’t solve my problem. And I haven’t been able to get my correspondents to recognize that these are different questions.
President Rand Paul may not sound too catchy, but Rand Paul being the Republican nominee for president in 2016 could be the best thing that’s happened to Democrats and our nation in a long time.
Political commentator Peter Beinart has a new piece in The Atlantic, where he writes that now that Chris Christie has been knocked out of the number one spot in the Republican Party, Rand Paul is now the likely front-runner for the Republican presidential nod in 2016.
Beinart writes that, “If Chris Christie was ever the frontrunner for the 2016 Republican presidential nomination, he isn’t anymore…So if Christie is no longer the candidate to beat in the 2016 Republican race, who is? Believe it or not, it’s Rand Paul.”
He goes on to write that the 2016 election could turn out to be like the election of 1964, when the dark-horse, weird, fringe, ultra-conservative candidate, Barry Goldwater, became the Republican Party’s nominee.
As Beinart puts it, “It’s just possible that 2016 could be another 1964 or 1980, years when the Republican establishment proved weak and pliable enough to allow a candidate previously considered extreme to come in from the cold.”
Beinart says the reason for this, in addition to the fact that Rand Paul has good polling numbers, is that there is an existing infrastructure of Paul support within the Republican Party, thanks to Ron Paul taking big chunks of support from Republicans in 2012.
Those people who were Ron Paul followers in 2012 are now Rand Paul supporters, and they’re embedded in the Republican Party.
Basically, Rand Paul has a very good shot at becoming the Republican nominee for president in 2016.
So why is that such a good thing for Democrats and our nation?
He could force Democrats to move way to the left.
Rand Paul hates things like Social Security and Medicare. He thinks both programs should be handed over to Wall Street CEO’s and health care executives, so that they can be privatized and made profitable.
He hates long-term unemployment benefits and opposes a minimum wage altogether.
He has even said that companies should be able to discriminate based on race, gender or sexual orientation.
Economically, he thinks everything should be privatized, with the only exceptions being the military, police forces and the judicial system.
And he is totally opposed to a woman’s right to choose to have an abortion.
But most people don’t know that these are Paul’s positions.
What people do know is that Paul is strongly opposed to the NSA spying on American citizens.
They know that he is incredibly skeptical of our nation’s drone program, and that he’s in favor of gay marriage.
And people also know that Paul is in favor of decriminalizing all drugs, not just marijuana.
When you look at Rand Paul’s position on just these issues, he appears to be way to the left of much of the official Democratic Party.
If he were to run in 2016, and secure the Republican presidential nomination, it’s very possible that not only would he pick up Conservative votes, he could also pick up progressive votes as well based on his stance on issues like domestic spying, marriage equality and drug decriminalization.
So, if the Democratic nominee wanted to have any chance at defeating Paul, whether that nominee was Hilary Clinton, Elizabeth Warren or Andrew Cuomo, they would have to move way to left of the current mainstream Democratic Party’s positions.
If things were to play out just like this, and if Paul did become the Republican nominee in 2016, it’s likely that the 2016 election could be the election where things really start getting populist.
Can you imagine if Democrats had to become more progressive to take on a libertarian Republican candidate?
Creating protectionist trade policies and decriminalizing pot could become parts of the official Democratic platform.
Suddenly, pushing for things like healthcare for all and legalizing marijuana would seem mainstream.
Make no mistake about it.
Rand Paul being on the Republican ticket for president in 2016 could be the powerful force needed to move the entire Democratic Party, from presidential nominees to state assembly nominees, to the left.
What a remarkable outcome that would be.
This article first appeared on TruthOut.
Thom Hartmann is an author and nationally syndicated daily talk show host. His newest book is “The Crash of 2016: The Plot to Destroy America — and What We Can Do to Stop It.“