A Lesson in Markets and Bureaucracies: The Very Instructive History of Rat Farms by
Charles Hugh Smith@ Of Two Minds
The first rat farm was unintentional. French colonial authorities decided to modernize the French Quarter of Hanoi (where Westerners lived) by constructing a modern sewer system, the overall goal being to establish “a little Paris in the East.” Their understanding of sewers was limited to the first-order effects: sewers safely collected and disposed of human waste. They did not anticipate the second-order effect: the sewer was Rat Paradise, as “the pipes offered rats a new ecological niche, free of predators and full of food.” …
To combat the exploding rat population, authorities hired crews to enter the sewers and kill the rats– unpleasant and hazardous work. Despite killing thousands of rats per day, the rats’ tremendous fertility was more than a match for the extermination crews. In an effort to recruit the local populace as rat-catchers / killers, the authorities offered the public a bounty for every dead rat, and later on for every rat-tail when the pile of rats waiting to be incinerated became too high. Authorities then noticed tail-less rats around Hanoi: residents caught the rats, cut off their tails, and then freed them to continue breeding to insure a steady supply of profitable rat-tails.
Once again, authorities had failed to consider second-order effects.
Where Crypto Went Wrong by
Charles Hugh Smith@ Of Two Minds
You want to fix the world with finance? Then fix this: wages’ share of a financialized, globalized, speculative-bubble dependent economy have been falling for decades. Fix this and you really will change the world. Anything less changes nothing.
Let’s start by stipulating my perspective on cryptocurrencies is neither positive nor negative in the usual context of “to the moon” or “worthless,” nor does it track any of the conventional narratives (decentralized finance will conquer the world, etc.)
I’ve thought a lot about “money” and its role in the economic-social order, and its role in the extreme asymmetries of wealth-power-income inequalities that are dismantling the social order in broad daylight. I’ve also thought a lot about work and its role in social cohesion, individual fulfillment and a productive, level-playing-field economy.
I’ve written two books on “money” and the potential utility of cryptocurrencies in reversing the extremes of wealth-power inequality that are destabilizing the social order. I invite you to read both books if these topics interest you:
Money and Work Unchained (2017)
A Radically Beneficial World: Automation, Technology and Creating Jobs for All: The Future Belongs to Work That Is Meaningful (2016)
Once you grasp the potential of community-based labor-backed cryptos, you realize cryptos took the greed-soaked path to the Dark Side of a destructive asymmetry of wealth and power: those who issued blockchain cryptos (in all their forms) would become the new Extractive Elite, the new Power Elite, the New Parasitic Elite, buying the wealth generated by the labor of others for peanuts.
Scrape away the high-falutin rhetoric, and blockchain/crypto distills down to the same old greed and avarice that powers traditional finance: those who own the mines gain wealth from the issuance of “money” and its proxy, credit, and those who control the spigots of “money” and credit then buy control of governance, labor and the productive assets that generate real-world wealth.
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