Thread by @GeorgeSelgin

Dan asks a question of crucial importance. I want to share my answer it as publicly as possible. Hence this new thread.

https://twitter.com/DanEricRohde/status/1409685943540326405?s=20

To begin, despite my work on free banking and all that, I'm not concerned here to argue against any government regulation of money whatsoever. I think, indeed, that we are long past the point of being able to dispense with it: the switch to fiat makes such control inevitable.

What I utterly reject is the notion that an adequate case for such control can consist solely of an appeal to the idea that controlling money is "fundamental to being an independent polity" or somehow "central to the state."

To me, such thinking is reminiscent of the once popular view that every government needed its own airline, or telecommunications monopoly, and is wrong for the same reason those arguments were: for a state need be no less legitimate without these embellishments.

True, control of money is a much older sovereign "prerogative," with roots in ancient times. But that shouldn't necessarily make it more venerable. On the contrary: the further back one goes, the longer the list of princely "prerogatives" gets.

Yet most have long since been rejected as relics of absolutist government, unfit for modern, democratic societies. Indeed, the very idea of "sovereign prerogatives" strikes many, and I think ought to strike more of us, as an anachronism.

In ours and other modern states sovereignty ultimately resides with the people. That should mean that the choice of whether or not government should control money, and how, resides with the people: that control it should not be considered a "given."

A truly independent polity may just as well elect to do without it as some elect to do without a national airline. And some countries have done just that, by electing to dollarize or to establish currency zones or to join multinational currency systems.

Nations do not become less sovereign by making such choices, in so far as the choices are themselves exercises in popular government.

Likewise, the legitimacy of our present government-controlled fiat U.S. dollar rests, or ought to rest, on popular will. That is, it should be understood as a choice, where a different choice, based on the same will, would be no-less legitimate.

By the same token, the people may decide what sorts of private substitutes for fiat dollars to tolerate, and how to regulate them if they're tolerated. Tolerating such substitutes does not make them any less an "independent polity."

What I've argued boils down to this: questions like whether we should tolerate stablecoins or other private currencies or grant the government of digital currency monopoly should be answered by appeal to the likely consequences of the different alternatives.

The question should be "which option will make people better off." That is, it should be the same sort of question we ask in making other policy choices. To ask instead whether an option would somehow undermine the government's sovereign authority makes no sense in a democracy.

For the sovereign authority in a democracy rests with the people, and the people exercise it most responsibly by asking what is best for themselves, and nothing else. To suppose that they must recognize some inviolable gov't money "prerogative" is to cling to a medieval notion...

...which, as I said earlier, ought long ago to have gone the way of salt and soap monopolies and other feudal arrangements that were swept away by the Statute of Monopolies. The money prerogative somehow survived. It's long overdue for joining the others.

@threadreaderapp kindly unroll.