The ever increasing gap between the richest and the poorest might perhaps be explained in part due to blatantly discriminatory laws on private companies investments.
Laws written almost one hundred years ago, at a time when cars were subject to red flags requirements, when streets were lit by candle-light, when the idea man could fly was but a dream, when even photography was barely a thing.
If a man or woman was to be transported from that time, they would have the capacities of but a child. An airplane in the sky might terrify them for they might think it a monster. Unguided exposure to cars might have tragic results. People talking on the phone might lead them to think everyone is mad, and any understanding of such fine things as social media would probably take quite some time.
Yet the same laws on investments that applied to a vastly different world, now apply to a digital age. An age where money itself is code.
Laws that in effect ensure capitalism isn’t really a thing, except for the very rich, as to fund an innovative company you can’t just ask the people directly. You are restricted to those who earn $200,000 a year or more, some 10x the median wage, unless you are sufficiently rich to afford very expensive lawyers that will spend months complying with the maze of SEC regulations.
“If tradeable gift cards and prepaid cell phone minutes are not regulated as money or securities, why should prepaid software licenses fall into those categories?” asks Rep. Tyler Lindholm, a Republican member of the Wyoming House of Representatives, before further adding:
“Wyoming’s consumers will be protected by its strong anti-fraud and consumer protection laws, which we believe are sufficient to deter bad actors from doing business in the state.”
The highest principle in any free land is innocent until proven guilty, but SEC’s registration requirements in effect presume guilt until you prove innocence, an impossible task.
Not that such requirements have prevented companies from going bust, we know 95% of them fail. A failure which is the engine of capitalism. Indeed of life. If trees do not shed their greens in autumn, the ecosystem would probably be unable to maintain equilibrium.
There are, of course, bad actors, but locking them up and throwing away the key should be a sufficient deterrent, instead of locking everyone up unless the SEC gives you the key.
Collective guilt, that’s what these registration requirements in effect amount to. Everyone is guilty, because some are.
We’ll show with an example what we mean. AriseBank admitted it misled the public when raising funds, SEC took action. We fully support that. Munchee Inc did not register with the SEC, and as far as we are aware that is their only fault. Their lawyers told them they did not have to because it was classified as utility, SEC halted the ICO. We think SEC’s action was revolting.
The amount Munchee was aiming to raise was just $15 million, not even a drop in the trillions we spent to bail out the banks, banks which the current chairman of the SEC, Jay Clayton, extensively advised and was paid by.
It is proven that the chances of you winning the lottery are pretty close to zero. Just as it is proven than the chances of winning in gambling are eventually zero due to rake. But the chances of you becoming wealthier by investing in start-ups are considerable.
The sums here from a probabilities perspective would be simple. If you have $100, $95 of it will be burned, but the $5 might turn into $5,000.
That, of course, doesn’t mean the optimal strategy is to just give $1 to each of the 100 companies, not least because there may be thousands or even millions of them, then there is the natural competition with others trying to front-run in regards to the best potential offers and so on.
But take the stock-market. Most of those companies were initially a start-up. Rich people exempt from any SEC regulations gave them money for 20%, 30% and in some cases even 49% of the company. They grew incredibly, making the rich VCs even richer billionaires, then had an initial public offering, and now you can invest in them.
Say you have $1,000 to invest, you might expect a 10% growth at best from the stock market, so $100 a year (if that due to broker fees). Even at $10,000, it is merely $1,000 a year. For you to double your money you might have to wait a decade or more and by then inflation would make it all worthless anyway.
Most of the gains, by far, have gone. Your are left with the granny turtle after everyone else rode the rocket. So you stay poor, stuck in your 9-5 job, obeying the orders of your corporate boss, unable to engage in the value creation process that has given the world so much wealth.
Undoubtedly some will say that is for your own good, that you are too stupid to know how to spend your own money for which you worked so hard, that the far away unaffected unelected and unaccountable bureaucrats know better.
But communism failed, and this crony version of capitalism will fail too if the rich keep taking all our value creation by the force of law itself.
Laws which fundamentally are based on consent. Just like Nakamoto forced a people’s money, it would be very easy to force a people’s investment, but the injustice of the situation should be sufficient for bureaucrats to realize they have to update these outdated laws, or at least not enforce them unreasonably.
For a situation where only the rich can take part in value creation is unsustainable. A situation where VCs treat like dirt potential Einsteins can barely last when alternatives are on offer. A situation where everyone sits in a cubicle when much will be automated is not a situation.
The people must be empowered and must be freed to leapfrog forward to a world of intellect and a digital economy, where manual tasks are done by bots, with our aid in lateral thinking.
A world more flat, where we are not bound by the 9-5 compartmentalized dictates but operate in a peer to peer network, with you free to fund my ambitions, projects, and innovations, as I yours.
A world where discriminatory laws have no role. Where the rich, gotten so usually by the luck of birth, do not rule like the aristocrats of old.
A world where the engine of ambition, where the drive of desire, where the glory of name, is not chained by unelected and unaffected committees.
A world where the law must change, or the law is not law.