Bitcoin’s Creation of Order without Law

Concept Of Bitcoin Like A Computer Processor On Motherboard

Modern fiat currencies depend for their value on confidence in the laws of the states that issue them. Some nations, like the United States with its established central bank, inspire substantial confidence relative to nations that may debase for their currency for political objectives. But no nation can absolutely insulate its currency from political manipulation.

That is what gives Bitcoin the opportunity to succeed as a currency. But what gives users confidence in Bitcoin? It is precisely the fact that the rules regulating its currency do not depend on the currency law of any nation state. Bitcoin provides an example of order without law or at least without currency law.

Order without law is not unknown to society. Social norms often regulate behavior without the benefit of formal law. Rules of etiquette tell people how to behave at table without causing offense. Coordination rules help people walk down the street without bumping into one another. In a major work, Robert Ellickson showed that social norms, not law, governed responsibility in a community of cattle ranchers and farmers for the damage caused by cattle straying on the range.

But while order without law is possible without software, software can improve on the enforcement of that order. The beauty of Bitcoin’s design is that its mechanism for enforcement can not only be more powerful than the informal mechanisms that enforce social norms but even more powerful in some respects than the formal mechanisms of law.

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A Star is Torn

In the Energy Star Program, the Energy Department rates energy-efficient and otherwise green appliances. The New York Times has reported that government officials in charge of Energy Star did not do a good job of monitoring compliance with the program’s standards and valorized a host of products that fall far short of the proclaimed criteria. In addition, some of the companies actively misled government officials.

Trial lawyers are now in the wings, ready to sue companies that  they allege were serpentine rather than stellar.  According to the Times, a congressman who represents a district where a company that used the Energy Star program has a large factory has introduced legislation to prevent class action lawsuits from being brought in connection with the Energy Star program.

In general, I believe that class actions for failure of a product to meet its quality claims are a mistake. 

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Law and Liberty at 30,000 Feet

Cell phones on airplanes frighten a lot of people and not for safety reasons. Few people want to listen to a seatmate discuss his cat’s health or other trivia for hours. As someone who flies a good deal and values a trip in the clouds for wispy and random reflection, I deeply sympathize. But as a friend of liberty, I oppose a law to ban phone calls on planes.  Private ordering can better determine when and where passengers may make calls in the air.

In the same week in December that the FCC voted to consider lifting its ban on cell phones for airplanes, members of Congress introduced legislation to ban calls, regardless of an inquiry into their safety.  This position allows our representatives to pose as tribunes of the people’s ear. But left to their own devices, airlines have an interest in maximizing revenue by satisfying both cell phone users and devotees of peaceful glide time.

First, some airlines might permit cell phone uses and others not, giving customers a choice. Southwest, for instance, has said it will not allow phone service, regardless of its legality. Second, airlines could have quiet sections where no cell phone is permitted and sections where travelers can connect with the world outside. Even the government monopoly of Amtrak offers inspiration here with its quiet cars in several sections of the nation.

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