Myth busting: Cardano is not like the current fiat system

PoS networks like Cardano are said to be the same as the current fiat system. This is because if someone is rich, they can buy large amounts of coins and thus retain power forever. Moreover, the rich investor is getting richer also forever. Another concern is that the coins will be held by the centralized exchanges, so they will decide for the people.

Jimmy Song said:

“Definitely a big risk and the reason why PoS doesn’t work. It’s essentially paying rich people to be rich and it’s a permissioned system and therefore not decentralized.”

He added:

“I suspect exchanges will basically be the controllers of such coins. This is similar to how the current central-bank backed fiat money system works in that banks have undue influence over money.”

Pavol Rusnak said the following on the topic:

“Buying mining equipment is not enough, you need to keep it running to maintain the stake in PoW. With PoS you can just buy the coins once and own the stake forever.”

The criticized problems are mainly that the stakes can be held by the people forever and that centralized entities will hold the coins instead of the people so that they can make decisions for them. They also think it is easy to change monetary policy in PoS networks. Let’s discuss these arguments in detail.

A stake is forever in PoS networks

The “rich get richer” argument applies more to PoW networks than to PoS. Mining requires high input costs. Staking does not. The rich have an advantage due to the economy of scale and can better withstand short-term market fluctuations. The rich may gradually drive small and less successful players out of business. For PoW networks, it is possible that smaller miners may not be able to maintain their stake (in the form of hash rate) forever because mining may not be profitable as it used to be before. Mining is a competitive environment in which only the successful can keep the business running. Is this good or bad for the network?

In a decentralized network, everyone should be on equal footing with each other. That’s an unattainable ideal, but it’s useful for the network to have incentives and rules set so that we get closer to the ideal. The ability of the big to crowd out the small is certainly a principle that runs counter to the network’s desire to achieve a high degree of decentralization.

From a decentralization perspective, it is beneficial for the network if people can keep the stake they have once acquired forever. It is mainly important for people with smaller stakes. No one can displace them from their position as a stronger player. However, this principle may appear to be a problem in the case of the rich.

Even Bitcoin has no defense against the big miners and the gradual centralization of the network. The problem of the rich is valid for both PoW and PoS networks. The difference may be that if one rich PoW miner wants to displace another rich miner, it may go into economic loss, subsidize mining and displace the competition. Imagine that Alice is an honest miner and is acting in the best interest of the network. Bob, another big miner, shows up and wants to try to compromise the network with some kind of attack. He will therefore try to displace Alice and has a chance to succeed. Is that good or bad?

In this case, it is obviously detrimental that the honest miners may lose their stake if someone bigger comes along. If a very rich miner comes along who wants to do damage, he can do so. He only has a chance because he can get rid of a bunch of small honest miners or even the big ones. From a decentralization perspective, it is beneficial to support as many small stakeholders as possible. Cardano makes it possible to participate in decentralization even with a very small stake. The smaller your stake, the more likely it is that you will not want to harm the network. The network protects your assets.

It is not good that honest miners can be pushed out of the system. It is true that the reason may be a less efficient business model. The more efficient miners are crowding out the less efficient ones. However, this again can lead to centralization. Mining used to thrive in China, but now it is in the USA. We can imagine that some miners may gain an advantage through laws or major technological advances in technology. A monopoly may emerge.

On the other hand, it is a disadvantage for PoS networks if someone who wants to harm the network holds a large stake. In that case, he can attack the network forever and cannot be deprived of the stake. This is theoretically possible, but the question is whether it is feasible in practice. An attacker would have to acquire more than 50% of the ADA coins in circulation. High demand for ADA coins would certainly drive up the market value, making them economically costly to buy. Moreover, the attacker would actually be attacking his own wealth. It’s basically the same principle as if someone in the PoW network invested in an attack. Only the technological feasibility and cost of the attack prevent it. In PoW networks, the attack is riskier because the cost of the attack must be continuously covered. However, the attacker will eventually get block rewards.

From our point of view, it seems to us to be an advantage that users can keep the stake forever. The way the fiat system works is that the rich decide, or that decisions are made centrally. Less well-off individuals have an increasingly minor position. PoW suffers more from the phenomenon of wealthy entities emerging at the expense of small ones. PoS networks give a better chance for a large number of small stakeholders to exist in it.

As long as the smaller honest players collectively retain a majority stake in the PoS network, no one extremely rich can come in and gain control of the network. No amount of money will help an attacker buy 51% of the ADA coins if people hold on to them and don’t sell them. This is not the case with PoW. For the money, an attacker can always gain control of the network.

Hypothetically, if Cardanization occurred and the entire world was using ADA coins, getting the stakes needed to attack would be nearly impossible.

How to change the monetary policy of the blockchain project

National monetary policy is decided by central banks together with commercial banks. They are centrally managed. Let’s look at how monetary policy can be changed by blockchain networks.

If the monetary policy of Cardano or Bitcoin were to change, the team would have to create a new version of the client to incorporate the changes. No stake in the network consensus is required to create such a client version.

Anyone in the network who runs full-node can voluntarily decide which version of the client to install. Full nodes are not equal to each other. Nodes of pool operators have a more significant status in the network. In the case of both Cardano and Bitcoin, new blocks are produced by pools.

If you look at the number of pools in the Cardano network and compare it to the number of pools in the Bitcoin network, you will clearly see that Cardano has a more decentralized block production. In order to change the monetary policy of the blockchain protocol, pool operators would have to agree and install a version of the client with the changes.

In order for a change in monetary policy to take hold, a majority of the network must agree on it. The stakes of individual participants in the consensus come into play. The ADA holders and their stakes in the Cardano network or the miners and their hash rate in the Bitcoin network are important for the change to happen. The pools that will produce the majority of blocks are decided by stakeholders or miners in a given network. The version of the client for which there is a higher stake will prevail.

Note that the number of persons holding stakes is not important. A majority stake can theoretically be held by one person.

In the PoW network, miners, not BTC coin holders, make the decisions. Only a small group of businessmen make decisions, not those for whom the decision is most important. Recent studies have shown that 50% of the hash rate is controlled by about 50 large miners. This means that a relatively small number of people could push through change. If someone very rich wanted to force the change, they could try to take control of the network in the short term. Theoretically, the attacker only needs a single pool to do so. There would probably be a split in the network. There would be a blockchain with the old rules and a blockchain with the new rules changing the monetary policy. Let’s leave the other implications aside in this article. Consider that Cardano has a hard-fork combinator so it is not so easy to create a fork of the blockchain.

In the Cardano network, all ADA holders participate in making decisions. Total stakes of pools are made up of all those who have delegated their ADA coins to the pool. This is similar to miners delegating a hash rate to a chosen pool. ADA delegators can keep track of which version of the client the pool is running. If they don’t agree with the version, they can delegate coins elsewhere at any time. This will reduce the stake of the pool, which will have a negative effect on the number of blocks it will produce. PoW miners can do the same.

While the principle of delegating decision-making power to a pool is similar, there is a fundamental difference between Cardano and Bitcoin.

In the Cardano network, it is much more difficult to enforce a change in monetary policy because it is decided by a much larger number of actors. In the Bitcoin network, there will always be a larger number of BTC holders than miners. In the case of Cardano, the ADA holders are also the ones who hold the decision-making power.

Rich stakeholders have more decision-making power, but that’s exactly the same as in the Bitcoin network. The important thing is that all ADA holders can decide, and no one can take away their right to stake and vote. In the Bitcoin ecosystem, the rich miners are getting bigger and the number of smaller ones is decreasing. Besides that, there are a growing number of BTC holders, but they have no direct rights in the network consensus.

Now let’s look at what more closely resembles the current fiat system. If the minority decides the majority, it is similar to the fiat system. BTC holders definitely make up the majority. This group has no rights in the decision-making power. Only a small percentage of BTC holders run their own node, but that may not be significant in pushing for change. The longest chain decides the true Bitcoin, and miners decide that, not BTC holders.

In the Cardano ecosystem, there are not two separate groups of miners and coin holders. Each ADA holder has decision-making rights, i.e. something like a miner in the PoW network. The Cardano ecosystem is more democratic. Everybody decides by ADA coins.

What if the exchanges decide?

Exchanges hold significant amounts of ADA and can theoretically use them to vote. As far as Catalyst is concerned, it has not yet been proven that exchanges have misused users’ ADA coins to vote. The point of decentralization is to get people to keep coins in their wallets. It’s not a problem for Bitcoin that BTC coins are on centralized exchanges because they have no decision-making power in the network consensus. The Cardano community needs to continue to educate newcomers. Fortunately, this is being done.

It is unlikely that one exchange would hold 50% of the coins. We expect the number of coins on the exchanges to decline. In addition, new exchanges will appear, so that the ADA coins will be spread across all of them in some proportion. This fact reduces the risk of abuse by one entity.

You may be surprised to learn that Bitcoin suffers from a similar problem. People are willing to pay third parties to mine for them. The reasons may be different. People don’t want to keep the miner at home, they don’t want to deal with the technical problems, or it’s not economically viable to mine in a given country. So third parties have a huge hash rate that someone else is paying. This hash rate can be used to attack the network very much like coins on the exchanges.

Even in this case, the criticism of PoS networks is not entirely correct, as even PoW does not have a solution to the centralization of mining in the hands of third parties which operate in countries where it is more profitable. Again, the economy of scale is important. Mining through third parties may be more economically viable, so this forces smaller participants to use these services. For both PoS and PoW, there is a risk that a third party will abuse its position.

Conclusion

PoW proponents use arguments from the past and do not reflect reality. When people were mining on computers, Bitcoin decentralization was at its greatest. The emergence of pools and the development of ASIC miners changed everything. People have stopped being critical of Bitcoin and are trying to blindly defend how it works. Unfortunately, they often run into argumentative difficulties because they criticize things on PoS that PoW suffers from as well.

In my opinion, both Jimmy Song and Pavol Rusnak are wrong or not intellectually honest. The current fiat system will more closely resemble Bitcoin. Cardano is more decentralized than Bitcoin when it comes to the production of blocks. Cardano has multiple pools and literally, all the ADA holders make the decisions. Fewer actors would decide on any violent change in monetary policy in the case of Bitcoin. However, such an attack is unlikely in both cases. In the case of Bitcoin, such an attack might be easier for a very wealthy entity. Cardano could be more resilient if ADA holders having the majority don’t sell their coins. With adoption on the rise, this will be an increasingly difficult task. Keeping a stake forever seems like an advantage to us, not a disadvantage. This is only a disadvantage if there is a 51% attack in progress. IOG has a plan to detect and prevent this attack at the protocol level. Both PoW and PoS networks are at risk of third parties that can abuse delegated power. There is no major difference between a centralized exchange and a cloud mining service.

In the end, there is no point in looking for a better solution, but to correctly name the risks and mitigate them. Both PoW and PoS have problems that should be addressed. It must be said that PoS is certainly not fundamentally inferior to PoW.

This article was prepared by Cardanians with support from Cexplorer.

Read the article: Myth busting: Cardano is not like the current fiat system | Cardano Explorer

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In the main part of the article, you argue why PoS/Cardano is not worse than Bitcoin. I wholeheartedly agree with it. There is not much difference in the investment needed to get profitable BTC mining and the investment needed to get profitable Cardano staking.

But that is not the comparison with fiat promised in the title.

You have the rich get richer effect in all three – fiat, Bitcoin, and Cardano. This is not surprising. Charles even says that he is a captialism believer (one of the things that puts me off personally).

Unfettered rich get richer can hardly be countered by the design of a monetary system, but it needs strong governments that can tax the shit out of the rich. So, the best system is the one that lets democratically elected governments do just that.

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I may have misinterpreted the context of the article. PoS critics often claim that “PoS is like fiat” and the main reasons are:

  1. Stake can be held forever.
  2. The rich get richer than the poor and forever.
  3. It is easy to manipulate monetary policy with PoS.

In a previous article, I tried to refute the “rich get richer” argument, so in this one I just summarized it and mainly addressed points 1 and 3.

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Has this ever existed in the history of taxes going all the way back to the Romans?

As a peasant of the United States I would be all for abolishing the existing disastrous mess of tax laws in favor of a flat 10% income, 15% capital gains, 20% corporate tax is perpetuity. Unfortunately would probably need a constitutional amendment to bring back any illusion of fairness at this point.

Another problem with strong government is that while it has the ability to be fair it also has the ability to be unfair, and a strong and unfair government usually uses its power to make its reign permanent by dissolving democratic institutions and practices. What you end up with is a strong, permanent and unfair government. Think about China, Russia, Turkey or Hungary (where I live).

About the original topic and similar conversations I think that they underestimate the significance of the mental and moral qualities of the community. I think that no monetary policy, no power arrangement and no design choices of any cryptocurrency can guarantee the fair behavior of its users. Of course we must try to come up with systems that at least doesn’t obviously flawed, like the fiat system IMHO. But fairness is an ethical and moral problem so even in a less flawed system we need people to be fair with each other.

Of course people will always look for their own interest in a trust-less system. This is why we need more conversation about about what is our own interest in the Cardano ecosystem. For example would I be extremely rich if I would have all the ADA in the world? No. It would be worthless, even meaningless. And it’s a spectrum. Whales are bad for the ecosystem, so they are hurting themselves. It’s easy for me to say this, because I’m not one, but I hope that if I’m right sooner or later they will realize this.

Sticking to the old drill “the more money I have the better” is just simply dumb, and in practice nobody really behaves like that. And fixed supply - which is by the way the differentiating factor from fiat - at least let us know how much we really have, so we have a much better framework to stop being unreasonably greedy.

Anyway, thanks for the great read @Jaromir !

We will see.

Yes it did :+1:! In USA from 1945 to 1980. It’s what created the most powerful middle class in a world. It allowed USA government to spend money on empowering people by providing free education, training as well as farming and business loans. It allowed people to build cities, suburbs and modernized their businesses and farms. Also, it created programs to help military veterans which are still in use today.
Tax
Tax2

Source: Historical Highest Marginal Income Tax Rates | Tax Policy Center

However, there must be good spending policies in place whit no loopholes. Otherwise taxation becomes theft. Whit out transparency and clarity tax money can easily be wasted and/or funneled away. Which seems to have started happening with USA starting with Regan/Nixon years. For example: USA has spent over a trillion dollars on their War-On-Drugs program, yet there is more drugs and more drug related crime in USA today then ever before in history. This program is an obvious failure and it has been for decades. If tax money is diverted on useless non-functional bureaucratic mess such as that, then it becomes a burden on a whole nation and starts dragging everyone down with it (just using war on drugs as a well know example, there are many more).

Back to OP @Jaromir Cardano vs. Fiat debate. I don’t think we can compare fiat and crypto on any meaningful level.

Fiat currency is a law, a government policy that is enforced and maintained but a government. Each fiat currency takes on characteristics of the policy and government that created it and that is maintaining it. Fiat exist and behaves as it is regulated to do so. Usually it is regulated to allow for sovereign state to have monetary and financial control over it’s economy and population.

Layer 1 crypto, such as ADA, exist only to run the network they are on. If you think of Cardano network as a city, then ADA is the electricity that powers that city. The whole point of level 1 crypto is that no one is using it to control any country or any population. It is supposed to be as natural as code and protocol can allow it with out loosing trust and security. It is just a tool that anyone can use to be part of Cardano ecosystem regardless of ideology, wealth, location,… and so on. And it is because of Cardano neutrality that is has potential to provide economic freedom that is impossible to achieve for many in locations where fiat currency system is built to favor one group over another.

Cardano and ADA must never try to mimic fiat. While there are many real world issues that Cardano (and other layer 1 blockchains) can be used to solve, this should not be done on base protocol level. These issues are for to be tackled in layer 2 by those who are willing and able to build solutions on layer 2. If you start compromising layer 1 with special projects, ideologies and arbitrary rules it will only lead to centralization trough specialization.

Yes, I know it’s difficult for many of us to wait for that layer 2 opportunity to get involved in those things that are meaningful to us. Fair trade, charity, environment, equality, wealth gap, political oversite, poverty, equal access, education, human rights and so many more things to work on… to improve on…

But if we are not patient about building a neutral foundation, we will loose any chance for the future of network. At that point we might as well just all use Binance coin and ask Chengpeng Zhao to support the “Cause-of-the-day” so we can feel good about something.

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It’s funny that we want governments to solve the problems that we cause. Governments that we elect. So the solution is to educate ourselves to elect governments - because right now we obviously don’t - that will counteract our greed. Is it? Wouldn’t be simpler to educate ourselves not to be greedy?

Or do you think that it’s only the rich’s fault that they are rich? I think our whole society encourages and expects you to be rich, and we doesn’t ever talk about the fact that being rich is relative: to one to be rich somebody else need to be not rich. In other words poor.

It might seem utopistic to think that we can do about this sentiment (craving to be rich), but for me it’s the hope of an economical and/or political system that solves this is off. What matters is how people behave and not the system itself. Again a system can be that awfully bad that it even makes it impossible to behave correctly in it. I’m far from being a fan of the fiat system, but even that flawed system of a mess is far from a system that prohibits fair behavior.

If people crave to be rich and the whole society supports and encourages this sentiment, you can come up whatever system you like and people will find the loopholes to get rich.

It’s like the corset was in the 19th and early 20th centuries. Everybody knew it’s unhealthy, but aesthetically it was the norm, so 99% of women were wearing it. Nobody could imagine a world without corsets and yet came Coco Channel in 1919 and introduced a knit dress with a flat tubular shape, and in one year the corset was gone. Prior to that doctors and activist was fighting the corset for 70 years.

If being rich is fashionable it’s no wonder that democratically elected governments doesn’t want to go against it too much. Interestingly enough if you substitute “want to reach financial security” for “want to get rich”, being fair with each other, and supporting causes voluntarily will instantly become your self interest.

No, it simply won’t. If there even was a point in ancient history, where complete self-organisation was possible, it is long gone. Modern societies are much too complex to work with just self-organisation of “free” people and without any system in place to decide on and then enforce rules. And such a system is a government.

It is even necessary on smaller scales – in a single town or even in a single company. In all these settings, you can dream of a world, where everybody gets their say, but that will quickly deteriorate into chaotic chatter and some system will emerge to organise that chaos and – bam – you have a government again.

Even if things are still voted on by all, there will always be some written or unwritten rules, who gets the resources and the audience to prepare these decisions, to propose something to the general assembly of people. And even if everybody could in theory propose something – chaotic chatter again, nobody can read all the proposals – there will be mechanisms making some proposals more visible, more promising than others, if not formal, than informal.

And there will always be someone to execute and thereby interpret those decisions, to organise the day to day operation of a company, a community, or a nation state, to allocate resources, tell a single service worker or a whole police force where to pay their attention today.

(That you can get rid of all interpretation and make the original decision completely unambiguous is one of the pipe dreams of crypto – “Code is law!”. It doesn’t even work in the very restricted environment of blockchains. There are bugs, cases nobody thought about, unforeseen events. It will never work on the scale of the real world.)

You can even see those effects already at play in Cardano itself and especially in Catalyst.

Even if you get all the rich and powerful to voluntarily renounce part of their wealth and other resources (which part?), what shall that look like? Shall they decide to which people in need they donate? That’s philanthropy and popular in the USA: “We don’t need to take it from the well-off, they donate so much voluntarily.” And philanthropy is highly problematic in itself, because the visible and likeable of the ones in need tend to get almost everything and there is still nothing for the invisible ones. (Partly a problem also present in mission-driven pools, donation campaigns by companies, …)

If for that reason you organise a system, where you try to find everyone in need in a certain area and get the wealthy to give to that system and then distribute according to some, hopefully well thought-out idea of fairness, … you have a government again. A government that is dependent on voluntary donations, which is not ideal.

Because not everybody will renounce voluntarily – as you say: if it is yourself, you are not “rich”, just “financially independent”, and you won’t want to give away that independence. That’s why there are taxes, why people have to be forced to give away part of their wealth.

The self-organised alternatives are worse. The Robin Hood alternative only exists in literature. In the real world, it will more likely be the French Revolution alternative. And I would much prefer to just tax the Bezos’, Musks, Gates’, and Hoskinsons of the world than chop their heads off. (And revolutions are not an alternative to governments. They bear new governments, often quite bad ones.)

Do you realise you are promoting communism? because the sentence you wrote is the essence of it.
As there is a spectrum of people from stupid to genius, lazy to hard working, etc. there must always be as a result a full spectrum from the very poor to the very rich.
Taxing the shit out of the rich does not make the poor any better. On the contrary, it will remove the financial motivation and make on average everyone poorer.

I wasn’t talking about complete self organisation. Did I? I just said that hoping that any government will solve the problem of greed is just daydreaming. If it could it would already did so. Even if you take away 90 percent from the rich then what? Who decide how to spend it and if that entity is greedy or not, clever or not, responsible or not. You just take the problem and throw it into your magic hat called government and hope that it will solve your problem. You’re just outsourcing problem solving to some other people, who - to a huge surprise for everyone - can be greedy and selfish as well.

I’m not even saying that we don’t need government, far from that, and I’m really far from saying we need any kind of revolution. I’m just saying that any system, rule or law is only as good as the people using or misusing them. Look for example at the idea of private property: does it mean that you can do whatever you want with what’s yours, or does it mean that you are responsible for it to use it properly? It’s our understanding of our self interest that makes the difference. If I think that it’s my best interest to spend all my salary on alcohol, I can do that. Is it a good thing? No. Should the government ban alcohol? No. The government must educate people not to drink excessively, to understand their self interest.

The same goes with being excessively greedy and thus rich. It should be looked at something like alcoholism, or smoking inside your flat. Yeah, you can do that, but it’s not cool by any means. And until these sentiments are not popular enough no government will install any enforcing measures. Why? Because it’s unpopular and they are elected.

Public opinion comes first, then governments can make the change happen faster, not the other way around.

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I don’t think so. I was not talking about communisation of the means of production at all, which to me would be one of the defining features if not the defining feature of communism.

As @Neo_Spank showed above, margin tax rates in the range of 90% were a reality in the most non-communist state of the world – the USA. … and also, for example, in the Scandinavian countries during large parts of the 20th century, which can maybe be called socialist – rather social-democratic – but definitely not communist.

Among leftists, I tend to be not socialist, not communist enough, but if you want to call it that despite all this: Feel free! I’d rather be called a communist than a capitalist.

I don’t buy into that ideology and, frankly, deem it quite repulsive.

Oh, it does! As long as the redistribution is used to finance social security, free health care and education, universal basic income, … That’s what society should demand from the elected.

Definitely not a rigorously proven fact. There should still be incentives to earn more in the range of the median incomes, but do we really need the motivation that someone can get a second million dollars of yearly income? Do we need the motivation that someone can get so obscenely rich that they can privately finance spaceflights? I definitely do not think so!

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Oh, you haven’t lived under communist rule, have you? I did. Man, you’re funny… Communists are responsible for far more deaths than the nazis, yet here are the new generation of proud communists, finding capitalism repulsive because of its inbalances, but having no problem with the horrors of governmental communism.

As long… But it’s not. It’s spent on the milirary and other things. Just look around.

So the society’s responsibility is to expect something instead of doing something. That’s what I’m disagreeing with, not the theoretical details.

Yet we celebrate the ones doing so. If every Lamborghini would get a “boo” instead of a “wow” people would stop buying them.

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I didn’t mean to offend you, but having grown-up in an eastern-block country made me experience your proposals in real life. We had some of the highest level of income equality, social security, free health care and education, universal basic income in the form of guaranteed job. And it sucked big time, rigorously proven by millions of people. At that time a lazy uneducated alcoholic with zero motivation would live on similar income to Elon Musk. Needless to say Elon Musk would not create anything, there would be no Paypal, no Tesla, no starlink, no spacex, …
I am absolutely fine with people being poor by their choice or lack of effort/talent and with others being extremely rich for being exceptionally good at what they do.

Why should anyone be ripped off the fruit of their efforts? and is 90% enough to beat the crap out of them? maybe 98% is better, or 105% right?

I also didn’t meant to offend anybody. I’m arguing with @HeptaSean long enough to know that how he meant that comment on being called a communist. He is not. I heard him defending the bank sector in the name of job creation which is as capitalist as it gets. Anyway, these labels doesn’t mean shit in practice IMHO. You can be righteous or full of it under any of these banners.

The huge problem with that is that the vast majority of poor people doesn’t choose to be poor: they simply doesn’t have equal chances at the beginning. I fully agree with @HeptaSean that we need to be fair, we need to spend more on health-care and education, we need to provide equal opportunities to start with. Our disagreement is that who’s responsibility is to initiate such an effort. I say its ours, he says - if I understand him correctly - that its the governments.

That 90% is bollocks. I don’t remember the technical details, but I read that in practice that didn’t meant shit. If I’m right I read it in “The Price of Inequality”, which is not a well written book IMHO, but describes this problem space pretty well. (Stigliz is also a big proponent of regulation and taxing by the way.)

I’m not because just like @Triton-pool I’m lived under communist (and/or socialist) rule, and I’ve seen (and seeing it currently in a different form) of the dangers of a strong government going wrong. Ask for the details if you’re interested, it’s happening right now in my country.

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No, Germany, born and always lived in the western part of it.

You deleted the part of the quote, where I say that I would not consider myself a communist, as you also already said in the later post. (Thank you!)

But I definitely know a few people who would …

… and I wouldn’t make them responsible for the atrocities done under the same label in the former Eastern bloc. I don’t think, most communists today would defend those dictatorships, but I will concede that there were too many western leftists who had too much appeal for them up to the 1980s.

There are a lot of atrocities done under the label of capitalism, also, from slave trade through the working conditions in early Manchester capitalism to the sweatshops of today, to corporate greed destroying climate, nature, and the livelihoods of billions.

We do not know if the crypto flavour of capitalism already started to have a significant death toll, but there definitely were a few people coming dangerously close to giving up in the last crash, because – “Have fun staying poor!” – they were talked into putting more into it than they could afford to lose.

It’s always the question, how inevitably those atrocities follow from the very foundations of the system. Proponents will always say: “Nah, that’s not the real thing! That were just a few outcasts! The real thing doesn’t do that harm!”

By far the largest part of my country’s budget is social security. And it’s still obviously not enough. Another large part is education, science, culture. Yes, there maybe is too much military (on the other hand, there currently is a situation that looks like it is still needed). Yes, the infrastructure is still too many free streets for cars and too little public transportation, but I cannot see evidence for the claim that the majority of it is wasted.

Demanding that, participating in the political discourse of the country, working in political parties, electing better politicians is doing something. There are a lot of problems that cannot be solved in a grass-roots manner. Climate change adaption and mitigation, wealth redistribution, large infrastructures, health and education are all things that need society-wide, even world-wide efforts.

I think, the hopes to solve the problems of the world with a blockchain are too often greatly overstated. A cryptocurrency ecosystem such as Cardano can maybe organise a part of the economy with new, interesting mechanisms, but it is years away from having the magnitude to tackle the relevant problems of the world and up to now it also lacks the concepts for doing so. Crypto – even Bitcoin – is still a miniscule part of the economy.

So, even if current governments are something between disappointing and outright frightening – mine and the current US one more the former, yours among too many others more the latter, I really do not see an alternative to the attempt to change them for the better.

As said above and in the previous post: I do not consider myself a communist, just a proponent of high margin taxes and solid social security and public infrastructure. Things that did not only exist in the dictatorships labelled communist in the last century, but also in other countries, even to some degree in the US.

As said in the previous post: I don’t propose total equality. There can still be a spectrum. But there needs to be a minimum that allows a life in dignity and that – and all the other things that a society needs, that only allow companies to thrive, because their employees and customers get education, means of transportation, … – should be taken progressively from those who have more than enough.

You do realise that he did not invent and build all that himself? He just paid the right people to do it, had some visions and a lot of luck. And he could start doing it, because he was a rich kid in the first place. I’m sure the more-qualified people in his companies got a fair share of the success they helped to build. I’m not so sure if the peasants also did. That’s even more of a problem with the other US oligarch. Amazon is build on pretty precarious working conditions for hosts of workers.

The framing that people deserve – or even choose – to be poor, because they were too lazy to learn, are too lazy to work is just not true for too many of them. And if they are not able to work fully because of medical conditions, your example alcoholism being one of the more stigmatised of them, it’s also hard to judge, how much of that is their own fault. I’d opt for not so much in case of doubt – and it’s also mostly none of my business. And they should get help not spite in any case.

Additionally, a lot of the working poor are doing jobs that are absolutely necessary for a functioning society. It’s super-cynical to tell them, they’d better have become a programmer or the CEO of Amazon so that they would not have been poor.

Tax! It was tax the crap out of them, so that we do not have to beat it out of them.

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Hmmm so all we need is WWIII and then we can pay 95% income tax instead of 40% and that will definitely improve things :smiley:

The rich do not pay income tax because they do not have income. Steve Jobs was notable for his $1 salary, that’s tax evasion 101. Once the fiat money printer was invented in the 70s the government realized it no longer needed as much tax revenue as it could make money out of thin air at the expense of the working class peasants which have seen erosion of buying power due to inflation ever since. It’s the longest running scam / theft I know of …

My grandparents generation: 6 hour shift, Public education (craft > college), married til death, single income (pro-moms), big family (3-7 kids), union job, houses, vehicles, boats, retirement, health care, etc. $10 for a family outing (camping, potlucks at church, beach picnics, etc)

My parents generation: 9-5, College education (scholarship or summer job), married til divorce, dual income, 1-2 kids, small businesses, houses, vehicles, retirement, health care, etc. $100 for a family outing (hotels, parks, dining out for 4+, etc)

My generation: 8-6, College education (student loans + full-time job), no marriage, certain fields still make income, no family, big corporations, a house, a vehicle, no retirement, sometimes health care, etc. Recent weekend getaway with girlfriend was about $1,000 (AirBnB, average of $100 including 20% tip for 2 people dining out, etc)

Current generation: ? (12 hour work days soon maybe), education? (college = lifetime debt), marriage?, income?, family?, youtube?, no house, ride share?, no retirement, no health care, etc. $? outing (seem to mostly play on smart phones?!?!)

Future generations: virtual reality or no reality? slavery or revolution? TBD? [the most depressing thing I overheard recently was a little boy about age 6 shouting he wants to be a tiktok influencer when he grows up]

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Do the US not tax dividends and capital gains? That would be stupid.

If he neither had salary nor dividends nor capital gains, it’s hard to see how he could be rich.

How that?

Irrespective if you think increasing money supply is a problem or not (I don’t necessarily think so as you probably know by now), it should be clear that the government cannot just print money to directly use it on their spendings. They still have to borrow it from the private sector and the banks in that sector are the ones who – in a way – print it.

But, surprisingly, we could come to similar conclusions: The problem – at least for you over there – started with Reagan’s tax and spending cuts and dept explosion (=money printing). The difference, of course, is that I deem the spending cuts the bigger problem and you the money printing.

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And here we come again!

The government sustains the status quo that the central and private banks can print money. The government issues bonds that the central and private banks buy up in exchange of high interest rates and the status quo. Later these interest rates are payed from the income of the government which is tax money and issuance of new bonds! How good is that!

This whole scheme is just smoke and mirrors to somewhat hide the fact that they are stealing from the public. To make it just a bit less obvious.

A form of tax if you will, but a form of tax that doesn’t depend on the income. If you add to this how credit is distributed, that the poor has much smaller chance to get credit you will understand how this system punishes the poor. Credit that is printed. If something repulses me that’s this.

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It does but at a MUCH lower rate than income tax and with a lot more loopholes for corporate entities that seem to have more rights than individuals. The truly wealthy basically don’t pay as much taxes by living off of debt while writing off realized gains against asset acquisitions. Thus how the rich get richer …

Bill Gates is one of the richest Americans having something like $120B total net worth. By various accounts, including his own admissions when discussing a wealth tax proposed recently, he has only paid about $10B in taxes.

Meanwhile the average “retail investor” like me despite relatively high income does not benefit from capital class vehicles to wealth accumulation. I have actually paid MORE in taxes than my net worth over the years :scream:

The size of government has been increasing for decades and is reducing the productivity of the economy.

One of the things I found quite useful was thinking in terms of how efficiently money is allocated depending on who gets to spend it. I have seen this explained before but Eric Basmajian does a great job in a recent 11 minute video “Why The US CAN’T Fix It’s Productivity Crisis”: Why The US CAN’T Fix It’s Productivity Crisis - YouTube

He also has some other great short explainers about how the housing market IS the economy.